-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BFceCHETo2AxDQ+UEekrkN4njuyM3RDXREBQ6jzBDEJrPHdcywrFUPFl95b9sH3v jl2nj/mFmFXDnh4uyTsqgQ== 0000950168-99-000782.txt : 19990323 0000950168-99-000782.hdr.sgml : 19990323 ACCESSION NUMBER: 0000950168-99-000782 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 36 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990322 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANKAMERICA CORP/DE/ CENTRAL INDEX KEY: 0000070858 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 560906609 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-06523 FILM NUMBER: 99569860 BUSINESS ADDRESS: STREET 1: NATIONSBANK CORPORATE CENTER STREET 2: 100 N TRYON ST CITY: CHARLOTTE STATE: NC ZIP: 28255 BUSINESS PHONE: 7043865000 MAIL ADDRESS: STREET 1: NATIONALSBANK CORPORATE CENTER STREET 2: NC1007 19 04 CITY: CHARLOTTE STATE: NC ZIP: 28255 FORMER COMPANY: FORMER CONFORMED NAME: NATIONSBANK CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: NCNB CORP DATE OF NAME CHANGE: 19920107 10-K 1 BANKAMERICA CORPORATION 10-K - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- Form 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 1998 - Commission File Number 1-6523 --------------- BankAmerica Corporation (Exact name of registrant as specified in its charter) Delaware 56-0906609 - -------------------------------------- -------------------------------------- (State of incorporation) (IRS Employer Identification No.) Bank of America Corporate Center Charlotte, North Carolina 28255 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) 704/386-5000 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class Name of each exchange on which registered Common Stock New York Stock Exchange London Stock Exchange Pacific Stock Exchange Tokyo Stock Exchange 7 3/4% Debentures, due 2002 American Stock Exchange 9 7/8% Subordinated Notes, due 2001 New York Stock Exchange 8 1/2% Subordinated Notes, due 2007 New York Stock Exchange 10 7/8% Subordinated Notes, due 2003 New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or in any amendment to this Form 10-K. [ ] The aggregate market value of the registrant's common stock held by non-affiliates is approximately $126,732,283,000 (based on the March 15, 1999, closing price of such common stock of $73.75 per share). As of March 15, 1999, there were 1,739,020,301 shares of the registrant's common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE
Document of the Registrant Form 10-K Reference Location Portions of the 1999 Proxy Statement PART III
- -------------------------------------------------------------------------------- BANKAMERICA CORPORATION Form 10-K Index
Page ----------- PART I Item 1. Business ..................................................................... 2 Primary Market Areas ......................................................... 2 Acquisition and Disposition Activity ......................................... 2 Government Supervision and Regulation ........................................ 3 Competition .................................................................. 5 Employees .................................................................... 6 Business Segment Operations .................................................. 13-16 Net Interest Income .......................................................... 16-18 Securities ................................................................... 26, 56, 64-66 Loans and Leases ............................................................. 19, 26-27, 34-44, 57- 58, 67-68 Deposits ..................................................................... 27, 68 Short-Term Borrowings and Trading Account Liabilities ........................ 27-28, 69 Market Risk Management ....................................................... 29-33 Selected Quarterly Operating Results ......................................... 45 Item 2. Properties ................................................................... 6 Item 3. Legal Proceedings ............................................................ 6 Item 4. Submission of Matters to a Vote of Security Holders .......................... 7 Item 4A. Executive Officers of the Registrant ......................................... 7 PART II Item 5. Market for Registrant's Common Stock and Related Security Holder Matters ..... 8 Item 6. Selected Financial Data ...................................................... 9 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations ................................................................... 9 Item 7A. Quantitative and Qualitative Disclosures about Market Risk ................... 50 Item 8. Consolidated Financial Statements and Supplementary Data ..................... 50 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ................................................................... 96 PART III Item 10. Directors and Executive Officers of the Registrant ........................... 96 Item 11. Executive Compensation ....................................................... 96 Item 12. Security Ownership of Certain Beneficial Owners and Management ............... 96 Item 13. Certain Relationships and Related Transactions ............................... 96 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K .............. 97
1 PART I Item 1. BUSINESS General On September 25, 1998, NationsBank Corporation, a North Carolina corporation ("NationsBank"), was reincorporated in Delaware by forming a new, wholly owned Delaware subsidiary named NationsBank (DE) Corporation ("NationsBank (DE)"), and merging NationsBank with and into NationsBank (DE). As the surviving corporation in this merger, NationsBank (DE) was renamed "NationsBank Corporation." On September 30, 1998, the former BankAmerica Corporation, a Delaware corporation ("BankAmerica"), merged with and into NationsBank Corporation, with NationsBank Corporation as the surviving corporation in this merger. In connection with this merger, NationsBank Corporation changed its name to "BankAmerica Corporation" (the "Corporation"). As the successor issuer of NationsBank, the Corporation's predecessor companies were initially incorporated in 1968. The Corporation has announced that it will operate under the "Bank of America" name. The Corporation is a multi-bank holding company registered under the Bank Holding Company Act of 1956, as amended, with its principal assets being the stock of its subsidiaries. The Corporation and its subsidiaries are subject to supervision by various U.S. federal and state banking and other regulatory authorities. For additional information about the Corporation and its operations, see Table Two and the narrative comments under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations - Business Segment Operations." The principal executive offices of the Corporation are located in the Bank of America Corporate Center, Charlotte, North Carolina 28255. Primary Market Areas Through its banking subsidiaries (the "Banks") and various non-banking subsidiaries, the Corporation provides a diversified range of banking and non-banking financial services and products, primarily throughout the Mid-Atlantic (Maryland, Virginia and the District of Columbia), the Midwest (Illinois, Iowa, Kansas and Missouri), the Southeast (Florida, Georgia, North Carolina, South Carolina and Tennessee), the Southwest (Arizona, Arkansas, New Mexico, Oklahoma and Texas), the Northwest (Alaska, Oregon and Washington) and the West (California, Idaho and Nevada) regions of the United States and in selected international markets. The Corporation serves an aggregate of approximately 30 million households and two million businesses in these regions, and management believes that these are desirable regions in which to be located. Based on the most recent available data, personal income levels in the states in these regions as a whole rose 5.9 percent (annualized) in the first half of 1998. In addition, the population in these states as a whole rose an estimated 1.4 percent between 1997 and 1998. The number of housing permits authorized increased 12.8 percent between 1997 and 1998, ranging from an increase of 5.2 percent in the Midwest to an increase of 21.3 percent in the Southwest. Between 1997 and 1998, the levels of unemployment in these states as a whole fell by approximately .03 percentage points, for an unemployment rate in the Corporation's overall market area of 4.5 percent at year-end 1998. These states created more than 1.7 million new jobs in 1998, 2.5 percent above 1997, compared to 1.4 percent job growth in the other states. The Corporation has the leading bank deposit market share position in California, Florida, Georgia, Maryland, New Mexico, North Carolina, Texas and Washington. In addition, the Corporation ranks second in terms of bank deposit market share in Arizona, Arkansas, Kansas, Missouri, Nevada, Oregon, South Carolina, Virginia and the District of Columbia; third in Oklahoma; fifth in Illinois and Tennessee; sixth in Alaska and Idaho; and eighth in Iowa. The Corporation has announced its intention to exit the Alaska retail market. Acquisition and Disposition Activity As part of its operations, the Corporation regularly evaluates the potential acquisition of, and holds discussions with, various financial institutions and other businesses of a type eligible for bank holding company ownership or control. In addition, the Corporation regularly analyzes the values of, and submits bids for, the acquisition of customer-based funds and other liabilities and assets of such financial institutions and other businesses. The Corporation also regularly considers the potential disposition of certain of its assets, branches, subsidiaries 2 or lines of businesses. As a general rule, the Corporation publicly announces any material acquisitions or dispositions when a definitive agreement has been reached. For additional information regarding the Corporation's acquisition activity, see Note Two of the consolidated financial statements on page 61. Government Supervision and Regulation General As a registered bank holding company, the Corporation is subject to the supervision of, and to regular inspection by, the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"). The Banks are organized principally as national banking associations, which are subject to regulation, supervision and examination by the Office of the Comptroller of the Currency (the "Comptroller"). The Banks are also subject to regulation by the Federal Deposit Insurance Corporation (the "FDIC") and other federal and state regulatory agencies. In addition to banking laws, regulations and regulatory agencies, the Corporation and its subsidiaries and affiliates are subject to various other laws and regulations and supervision and examination by other regulatory agencies, all of which directly or indirectly affect the operations and management of the Corporation and its ability to make distributions. The following discussion summarizes certain aspects of those laws and regulations that affect the Corporation. The activities of the Corporation, and those of companies which it controls or in which it holds more than 5 percent of the voting stock, are limited to banking or managing or controlling banks, furnishing services to or performing services for its subsidiaries, or any other activity which the Federal Reserve Board determines to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. In making such determinations, the Federal Reserve Board is required to consider whether the performance of such activities by a bank holding company or its subsidiaries can reasonably be expected to produce benefits to the public such as greater convenience, increased competition or gains in efficiency that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interest or unsound banking practices. Generally, bank holding companies, such as the Corporation, are required to obtain prior approval of, or provide prior notice to, the Federal Reserve Board to engage in any new activity or to acquire more than 5 percent of any class of voting stock of any company. Bank holding companies are also required to obtain the prior approval of the Federal Reserve Board before acquiring more than 5 percent of any class of voting stock of any bank which is not already majority-owned by the bank holding company. Pursuant to the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the "Interstate Banking and Branching Act"), a bank holding company may acquire banks in states other than its home state without regard to the permissibility of such acquisitions under state law, but subject to any state requirement that the bank has been organized and operating for a minimum period of time, not to exceed five years, and the requirement that the bank holding company, prior to or following the proposed acquisition, controls no more than 10 percent of the total amount of deposits of insured depository institutions in the United States and no more than 30 percent of such deposits in that state (or such lesser or greater amount set by state law). Subject to certain restrictions, the Interstate Banking and Branching Act also authorizes banks to merge across state lines, thereby creating interstate branches. Furthermore, pursuant to the Interstate Banking and Branching Act, a bank may open new branches in a state in which it does not already have banking operations if such state enacts a law permitting such de novo branching. To the extent permitted under these laws, the Corporation plans to consolidate its banking subsidiaries into a single bank as soon as practicable (with the exception of its two limited purpose credit card banks which are headquartered in Arizona and Delaware, which the Corporation intends to merge into a single credit card bank). The Corporation currently operates two interstate banks (i.e., banks with branch offices in more than one state): NationsBank, N.A., headquartered in Charlotte, North Carolina, with branch offices primarily in Arkansas, Florida, Georgia, Illinois, Iowa, Kansas, Maryland, Missouri, New Mexico, North Carolina, Oklahoma, South Carolina, Virginia, Tennessee, Texas and the District of Columbia; and Bank of America NT&SA, headquartered in San Francisco, California, with branch offices primarily in Alaska, Arizona, California, Florida, Idaho, Illinois, Nevada, New Mexico, Oregon and Washington. Separate banks continue to operate in Arizona, California, Delaware and Texas. In addition, the Corporation has 3 a federal savings bank headquartered in Portland, Oregon with branch offices in a number of states. As previously described, the Corporation regularly evaluates merger and acquisition opportunities, and it anticipates that it will continue to evaluate such opportunities. Proposals to change the laws and regulations governing the banking industry are frequently introduced in Congress, in the state legislatures and before the various bank regulatory agencies. At the present time, Congress is considering legislation that would increase the permissible scope of securities and insurance activities in which a bank holding company or its affiliates may engage. The likelihood and timing of any such proposals or legislation and the impact they might have on the Corporation and its subsidiaries cannot be determined at this time. Capital and Operational Requirements The Federal Reserve Board, the Comptroller and the FDIC have issued substantially similar risk-based and leverage capital guidelines applicable to United States banking organizations. In addition, these regulatory agencies may from time to time require that a banking organization maintain capital above the minimum levels, whether because of its financial condition or actual or anticipated growth. The Federal Reserve Board risk-based guidelines define a three-tier capital framework. Tier 1 capital consists of common and qualifying preferred shareholders' equity, less certain intangibles and other adjustments. Tier 2 capital consists of preferred stock not qualifying as Tier 1 capital, subordinated and other qualifying debt, and the allowance for credit losses up to 1.25 percent of risk-weighted assets. Tier 3 capital includes subordinated debt that is unsecured, fully paid, has an original maturity of at least two years, is not redeemable before maturity without prior approval by the Federal Reserve and includes a lock-in clause precluding payment of either interest or principal if the payment would cause the issuing bank's risk-based capital ratio to fall or remain below the required minimum. The sum of Tier 1 and Tier 2 capital less investments in unconsolidated subsidiaries represents qualifying total capital, at least 50 percent of which must consist of Tier 1 capital. Risk-based capital ratios are calculated by dividing Tier 1 and total capital by risk-weighted assets. Assets and off-balance sheet exposures are assigned to one of four categories of risk-weights, based primarily on relative credit risk. The minimum Tier 1 capital ratio is 4 percent and the minimum total capital ratio is 8 percent. The Corporation's Tier 1 and total risk-based capital ratios under these guidelines at December 31, 1998 were 7.06 percent and 10.94 percent, respectively. At December 31, 1998, the Corporation had no subordinated debt that qualified as Tier 3 capital. The leverage ratio is determined by dividing Tier 1 capital by adjusted average total assets. Although the stated minimum ratio is 3 percent, most banking organizations are required to maintain ratios of at least 100 to 200 basis points above 3 percent. The Corporation's leverage ratio at December 31, 1998 was 6.22 percent. Management believes that the Corporation meets its leverage ratio requirement. The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), among other things, identifies five capital categories for insured depository institutions (well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized) and requires the respective Federal regulatory agencies to implement systems for "prompt corrective action" for insured depository institutions that do not meet minimum capital requirements within such categories. FDICIA imposes progressively more restrictive constraints on operations, management and capital distributions, depending on the category in which an institution is classified. Failure to meet the capital guidelines could also subject a banking institution to capital raising requirements. An "undercapitalized" bank must develop a capital restoration plan and its parent holding company must guarantee that bank's compliance with the plan. The liability of the parent holding company under any such guarantee is limited to the lesser of 5 percent of the bank's assets at the time it became "undercapitalized" or the amount needed to comply with the plan. Furthermore, in the event of the bankruptcy of the parent holding company, such guarantee would take priority over the parent's general unsecured creditors. In addition, FDICIA requires the various regulatory agencies to prescribe certain non-capital standards for safety and soundness relating generally to operations and management, asset quality and executive compensation and permits regulatory action against a financial institution that does not meet such standards. The various regulatory agencies have adopted substantially similar regulations that define the five capital categories identified by FDICIA, using the total risk-based capital, Tier 1 risk-based capital and leverage capital ratios as the relevant capital measures. Such regulations establish various degrees of corrective action to be taken when an institution is considered undercapitalized. Under the regulations, a "well capitalized" institution must have a Tier 1 capital ratio of at least 6 percent, a total capital ratio of at least 10 percent and a leverage 4 ratio of at least 5 percent and not be subject to a capital directive order. Under these guidelines, each of the Banks is considered well capitalized. Banking agencies have also adopted final regulations which mandate that regulators take into consideration (i) concentrations of credit risk; (ii) interest rate risk (when the interest rate sensitivity of an institution's assets does not match the sensitivity of its liabilities or its off-balance-sheet position); and (iii) risks from non-traditional activities, as well as an institution's ability to manage those risks, when determining the adequacy of an institution's capital. That evaluation will be made as a part of the institution's regular safety and soundness examination. In addition, the banking agencies have amended their regulatory capital guidelines to incorporate a measure for market risk. In accordance with the amended guidelines, the Corporation and any Bank with significant trading activity (as defined in the amendment) must incorporate a measure for market risk in their regulatory capital calculations effective for reporting periods after January 1, 1998. The revised guidelines did not have a material impact on the Corporation or the Banks' regulatory capital ratios or their well capitalized status. Distributions The Corporation's funds for cash distributions to its stockholders are derived from a variety of sources, including cash and temporary investments. The primary source of such funds, however, is dividends received from the Banks. Each of the Banks is subject to various regulatory policies and requirements relating to the payment of dividends, including requirements to maintain capital above regulatory minimums. The appropriate federal regulatory authority is authorized to determine under certain circumstances relating to the financial condition of the bank or bank holding company that the payment of dividends would be an unsafe or unsound practice and to prohibit payment thereof. In addition to the foregoing, the ability of the Corporation and the Banks to pay dividends may be affected by the various minimum capital requirements and the capital and non-capital standards established under FDICIA, as described above. The right of the Corporation, its stockholders and its creditors to participate in any distribution of the assets or earnings of its subsidiaries is further subject to the prior claims of creditors of the respective subsidiaries. Source of Strength According to Federal Reserve Board policy, bank holding companies are expected to act as a source of financial strength to each subsidiary bank and to commit resources to support each such subsidiary. This support may be required at times when a bank holding company may not be able to provide such support. Similarly, under the cross-guarantee provisions of the Federal Deposit Insurance Act, in the event of a loss suffered or anticipated by the FDIC - either as a result of default of a banking or thrift subsidiary of the Corporation or related to FDIC assistance provided to a subsidiary in danger of default - the other Banks may be assessed for the FDIC's loss, subject to certain exceptions. Competition The activities in which the Corporation and its four major business segments (Consumer Banking, Commercial Banking, Global Corporate and Investment Banking, and Principal Investing and Wealth Management) engage are highly competitive. Generally, the lines of activity and markets served involve competition with other banks, thrifts, credit unions and other non-bank financial institutions, such as investment banking firms, brokerage firms, investment companies and insurance companies, as well as other entities which offer financial services, located both domestically and internationally. The methods of competition center around various factors, such as customer services, interest rates on loans and deposits, lending limits and location of offices. The commercial banking business in the various local markets served by the Corporation's business segments is highly competitive. The four major business segments compete with other commercial banks, thrifts, finance companies and other businesses which provide similar services. The business segments actively compete in commercial lending activities with local, regional and international banks and non-bank financial organizations, some of which are larger than certain of the Corporation's non-banking subsidiaries and the Banks. In its consumer lending operations, the competitors of the business segments include other banks, thrifts, credit unions, regulated small loan companies and other non-bank organizations offering financial services. In the investment banking, investment advisory and brokerage business, the Corporation's non-banking subsidiaries compete with 5 other banking and investment banking firms, investment advisory firms, brokerage firms, investment companies and other organizations offering similar services. The Corporation's mortgage banking units compete with commercial banks, thrifts, government agencies, mortgage brokers and other non-bank organizations offering mortgage banking services. In the trust business, the Banks compete with other banks, investment counselors and insurance companies in national markets for institutional funds and corporate pension and profit sharing accounts. The Banks also compete with other banks, trust companies, insurance agents, thrifts, financial counselors and other fiduciaries for personal trust business. The Corporation and its four major business units also actively compete for funds. A primary source of funds for the Banks is deposits, and competition for deposits includes other deposit-taking organizations, such as commercial banks, thrifts, and credit unions, as well as money market mutual funds. The Corporation's ability to expand into additional states remains subject to various federal and state laws. See "Government Supervision and Regulation - General" for a more detailed discussion of interstate banking and branching legislation and certain state legislation. Employees As of December 31, 1998, there were 170,975 full-time equivalent employees within the Corporation and its subsidiaries. Of the foregoing employees, 90,029 were employed within Consumer Banking, 5,196 were employed within Commercial Banking, 11,758 were employed within Global Corporate and Investment Banking, and 7,109 were employed within Principal Investing and Wealth Management. The remainder were employed within the Corporation and its other subsidiaries. Approximately 5,000 non-officer employees in the State of Washington are covered by a collective bargaining agreement. These employees work for the Washington division of Bank of America NT&SA, which is doing business as Seafirst Bank. None of the Corporation's other domestic employees are covered by a collective bargaining agreement. Management considers its employee relations to be good. Item 2. PROPERTIES As of December 31, 1998, the principal offices of the Corporation, and its Consumer and Commercial Banking business segments, were located in the 60-story Bank of America Corporate Center in Charlotte, North Carolina, which is owned by a subsidiary of the Corporation. The Corporation occupies approximately 521,000 square feet and leases approximately 593,000 square feet to third parties at market rates, which represents substantially all of the space in this facility. As of December 31, 1998, the principal offices of Global Corporate and Investment Banking and Principal Investing and Wealth Management were located at 555 California Street in San Francisco, California. A subsidiary of the Corporation has a 50% ownership interest in this building through a joint venture partnership, and the Corporation leases approximately 479,000 square feet in this building from the partnership. The Corporation also leases or owns a significant amount of space worldwide, in addition to these facilities in Charlotte and San Francisco. As of December 31, 1998, the Corporation and its subsidiaries owned or leased approximately 11,500 locations in 47 states, the District of Columbia and 37 foreign countries. Item 3. LEGAL PROCEEDINGS In the ordinary course of business, the Corporation and its subsidiaries are routinely defendants in or parties to a number of pending and threatened legal actions and proceedings, including actions brought on behalf of various classes of claimants. In certain of these actions and proceedings, substantial money damages are asserted against the Corporation and its subsidiaries and certain of these actions and proceedings are based on alleged violations of consumer protection, securities, environmental, banking and other laws. The Corporation's predecessor, BankAmerica, and certain of its subsidiaries, including Bank of America NT&SA, were named in one such suit by the City of San Francisco and several related public entities, and by the State of California, in an action entitled State of California, etc ex rel Stull v. Bank of America NT&SA, et al. (No. 968-484). The case was instituted on April 1, 1995 in the Superior Court for the City and County of San Francisco. The City of San Francisco and related public entities intervened in the case on May 1, 1997, and the State of California took over prosecution of the case on May 5, 1997. The chief allegation of this suit is that Bank of America NT&SA and its predecessors retained unclaimed funds related to bonds and coupons that were not 6 presented by bondholders rather than returning them to certain bond issuers or escheating such funds to the State. The suit also alleges False Claims Act exposure for alleged fee overcharges and claims that Bank of America NT&SA and its predecessors improperly invested bond program funds. On November 12, 1998, the plaintiffs and the Corporation and its named subsidiaires settled this suit whereby the Corporation and its named subsidiaries agreed to pay $187.5 million to the plaintiffs. The settlement is subject to court approval. The Corporation and certain present and former officers have been named as defendants in approximately 24 uncertified class actions filed in federal court alleging, among other things, that the defendants failed to disclose material facts about BankAmerica's losses relating to D.E. Shaw & Co., L.P. until mid-October 1998, in violation of various provisions of the federal securities laws. The uncertified classes consist generally of persons who were entitled to vote on the merger of NationsBank and BankAmerica, or who purchased or acquired securities of the Corporation or its predecessors between August 4, 1998 and October 13, 1998. Similar actions are pending in California state court, alleging violations of the California Corporations Code and involving factual allegations essentially the same as the federal actions. In addition, certain cases filed in California state court have alleged that the proxy statement-prospectus of August 4, 1998, falsely stated that the merger would be one of equals, and allege a conspiracy on the part of certain executives to gain control over the newly merged entity. At least one such complaint seeks recovery under various state common law theories. The Corporation believes the actions lack merit and will defend them vigorously. The amount of any ultimate exposure cannot be determined with certainty at this time. Management believes that the actions and proceedings and the losses, if any, resulting from the final outcome thereof, will not be material in the aggregate to the Corporation's financial position or results of operations. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of stockholders during the quarter ended December 31, 1998. Item 4A. EXECUTIVE OFFICERS OF THE REGISTRANT Pursuant to the Instructions to Form 10-K and Item 401(b) of Regulation S-K, the name, age and position of each current executive officer and the principal accounting officer of the Corporation are listed below along with such officer's business experience during the past five years. Officers are appointed annually by the Board of Directors at the meeting of directors immediately following the annual meeting of stockholders. James H. Hance, Jr., age 54, Vice Chairman and Chief Financial Officer. Mr. Hance was named Chief Financial Officer in August 1988, and was named Vice Chairman in October 1993. He first became an officer in 1987. He also serves as Vice Chairman, Chief Financial Officer and a director of NationsBank, N.A. and Bank of America NT&SA. Kenneth D. Lewis, age 51, President. Mr. Lewis was named to his present position in January 1999. Prior to that time, he served as President, Consumer and Commercial Banking, from October 1998 to January 1999, and as President from October 1993 to October 1998. He first became an officer in 1971. Mr. Lewis also serves as President and a director of NationsBank, N.A. and as a director of Bank of America NT&SA. Hugh L. McColl, Jr., age 63, Chairman of the Board and Chief Executive Officer of the Corporation and the Banks. Mr. McColl has served as Chairman of the Board of the Corporation for at least five years except from January 7, 1997 until September 30, 1998. He first became an officer in 1962. He also serves as a director of the Corporation, NationsBank, N.A. and Bank of America NT&SA. Michael J. Murray, age 54, President, Global Corporate and Investment Banking. Mr. Murray first became an officer and was named to his present position in October 1998. Prior to that time, he served as President, Global Wholesale Bank of BankAmerica from 1997 to 1998, as Vice Chairman of BankAmerica from 1995 to 1997 and as Group Executive Vice President, U.S. Corporate Group of Bank of America NT&SA from 1994 to 1995. From 1993 to 1994, he served as Vice Chairman of Continental Bank Corporation. He also serves as President and a director of Bank of America NT&SA and as a director of NationsBank, N.A. Marc D. Oken, age 52, Executive Vice President and Principal Financial Executive. Mr. Oken was named to his present position in October 1998. From June 1989 to October 1998, he served as Chief Accounting Officer. He first became an officer in 1989. 7 F. William Vandiver, Jr., age 56, Corporate Risk Management Executive. Mr. Vandiver was named to his present position in October 1998. From June 1997 to October 1998, he served as Chairman, Corporate Risk Policy. Prior to that time, from January 1996 to June 1997, he served as President, Global Finance, and from January 1994 to January 1996 he served as President, Specialized Finance Group. He first became an officer in 1968. He also serves as Corporate Risk Management Executive and a director of NationsBank, N.A. and Bank of America NT&SA. PART II Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS The principal market on which the Common Stock is traded is the New York Stock Exchange. The Common Stock is also listed on the London Stock Exchange and the Pacific Stock Exchange, and certain shares are listed on the Tokyo Stock Exchange. The following table sets forth the high and low sales prices of the Common Stock on the New York Stock Exchange Composite Transactions List for the periods indicated:
Quarter High Low --------- ------------ ---------- 1997 first $65 $48 second 70 54 third 71 11/16 56 5/8 fourth 66 3/8 55 1998 first 75 1/8 56 1/4 second 85 72 1/16 third 88 7/16 47 7/8 fourth 66 5/8 44
As of December 31, 1998, there were 295,937 record holders of Common Stock. During 1997 and 1998, the Corporation paid dividends on the Common Stock on a quarterly basis. The following table sets forth dividends declared per share of Common Stock for the periods indicated:
Quarter Dividend --------- --------- 1997 first $.33 second .33 third .33 fourth .38 1998 first .38 second .38 third .38 fourth .45
For additional information regarding the Corporation's ability to pay dividends, see "Government Supervision and Regulation - Distributions" and Note Twelve of the consolidated financial statements on page 78. 8 Item 6. SELECTED FINANCIAL DATA See Table One for Selected Financial Data. Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS On September 25, 1998, BankAmerica Corporation (the Corporation) reincorporated in Delaware and on September 30, 1998, NationsBank Corporation (NationsBank) completed its merger with the former BankAmerica Corporation (BankAmerica) and changed its name to "BankAmerica Corporation". In addition, on January 9, 1998, the Corporation completed its merger with Barnett Banks, Inc. (Barnett). The BankAmerica and Barnett mergers were each accounted for as a pooling of interests and, accordingly, all financial information has been restated for all periods presented. This report contains certain forward-looking statements that are subject to risks and uncertainties and include information about possible or assumed future results of operations. Many possible events or factors could affect the future financial results and performance of the Corporation. This could cause results or performance to differ materially from those expressed in our forward-looking statements. Words such as "expects", "anticipates", "believes", "estimates", variations of such words and other similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in, or implied by, such forward-looking statements. Readers of this report should not rely solely on the forward-looking statements and should consider all uncertainties and risks discussed throughout this report. These statements are representative only on the date hereof, and the Corporation undertakes no obligation to update any forward-looking statements made. The possible events or factors include the following: the Corporation's loan growth is dependent on economic conditions as well as various discretionary factors, such as decisions to securitize, sell, or purchase certain loans or loan portfolios, syndications or participations of loans, retention of residential mortgage loans generated by the mortgage subsidiaries, the management of borrower, industry, product and geographic concentrations and the mix of the loan portfolio. The rate of charge-offs and provision expense can be affected by local, regional and international economic and market conditions, concentrations of borrowers, industries, products and geographic locations, the mix of the loan portfolio and management's judgments regarding the collectibility of loans. Liquidity requirements may change as a result of fluctuations in assets and liabilities and off-balance sheet exposures, which will impact the capital and debt financing needs of the Corporation and the mix of funding sources. Decisions to purchase, hold or sell securities are also dependent on liquidity requirements and market volatility, as well as, on- and off-balance sheet positions. Factors that may impact interest rate risk include local, regional and international economic conditions, levels, mix, maturities, yields or rates of assets and liabilities, utilization and effectiveness of interest rate contracts and the wholesale and retail funding sources of the Corporation. Factors that may cause actual noninterest expense to differ from estimates include uncertainties relating to the Corporation's efforts to prepare its information technology systems and non-information technology systems for the Year 2000 and the Euro conversion, as well as uncertainties relating to the ability of third parties with whom the Corporation has business relationships to address the Year 2000 issue and the Euro conversion issue in a timely and adequate manner. The Corporation is also exposed to the potential of losses arising from adverse changes in market rates and prices which can adversely impact the value of financial products, including securities, loans, deposits, debt and derivative financial instruments, such as futures, forwards, swaps, options and other financial instruments with similar characteristics. In addition, the banking industry in general is subject to various monetary and fiscal policies and regulations, which include those determined by the Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, state regulators and the Office of Thrift Supervision, which policies and regulations could affect the Corporation's results. Other factors that may cause actual results to differ from the forward-looking statements include competition with other local, regional and international banks, savings and loan associations, credit unions and other non-bank financial institutions, such as investment banking firms, investment advisory firms, brokerage firms, mutual funds and insurance companies, as well as other entities 9 which offer financial services, located both within and outside the United States; interest rate, market and monetary fluctuations; inflation; market volatility; general economic conditions and economic conditions in the geographic regions and industries in which the Corporation operates; introduction and acceptance of new banking-related products, services and enhancements; fee pricing strategies, mergers and acquisitions and their integration into the Corporation, and management's ability to manage these and other risks. 1998 Compared to 1997 Overview The Corporation is a multi-bank holding company headquartered in Charlotte, North Carolina, providing a diversified range of banking and certain non-banking financial services both domestically and internationally through four major Business Segments: Consumer Banking, Commercial Banking, Global Corporate and Investment Banking, and Principal Investing and Wealth Management. On December 31, 1998, the Corporation had $618 billion in assets, making it the largest banking company in the United States. On September 30, 1998, the Corporation completed its merger with BankAmerica, a multinational bank holding company headquartered in San Francisco, California. In addition, on January 9, 1998, the Corporation merged with Barnett, a multi-bank holding company headquartered in Jacksonville, Florida. The Corporation accounted for each transaction as a pooling of interests and, accordingly, all financial information has been restated for all periods presented. On October 1, 1997, the Corporation completed the acquisitions of Montgomery Securities, Inc. (NationsBanc Montgomery Securities) and Robertson, Stephens & Company Group, L.L.C. (Robertson Stephens). The Corporation accounted for both acquisitions as purchases. The Corporation sold the investment banking operations of Robertson Stephens on August 31, 1998 and sold the investment management operations on February 26, 1999. Significant changes in the Corporation's results of operations and financial position are described in the following sections. Refer to Table One and Table Twenty for annual and quarterly selected financial data, respectively. Key performance highlights for 1998 were: o Operating net income (net income excluding merger-related charges) totaled $6.49 billion, or $3.73 per common share, in 1998 compared to $6.81 billion, or $3.86 per common share in 1997. Diluted operating earnings per common share were $3.64 for 1998 compared to $3.76 for 1997. Including merger-related charges of $1.80 billion ($1.33 billion, net of tax) and $374 million ($264 million, net of tax) for 1998 and 1997, respectively, net income was $5.17 billion and $6.54 billion, respectively. Earnings per common share and diluted earnings per common share including merger-related charges were $2.97 and $2.90, respectively for 1998 and $3.71 and $3.61, respectively, for 1997. o Taxable-equivalent net interest income declined less than 1 percent to $18.46 billion in 1998 as an 8 percent increase in managed loans and an increase in core deposits were offset by the impact of spread compression, securitizations, divestitures and earning asset sales. Excluding the impact of securitizations, divestitures and earning asset sales, net interest income increased $526 million, or 3 percent over 1997. The net interest yield decreased to 3.69 percent in 1998 compared to 4.00 percent in 1997, primarily reflecting higher levels of investment securities, which have a lower yield than loans, and a decrease in spreads between loans and deposits. o The provision for credit losses covered net charge-offs and totaled $2.92 billion in 1998, compared to $1.90 billion in 1997. The increase was partially due to a $500 million provision related to international economic conditions and higher net commercial charge-offs. For additional discussion see "Recent International Developments" on page 42. Net charge-offs totaled $2.47 billion in 1998 compared to $1.85 billion in 1997, while net charge-offs as a percentage of average loans and leases were 0.71 percent in 1998 compared to 0.54 percent in 1997. Higher net charge-offs were primarily the result of a $372 million write-down of a credit agreement with DE Shaw Securities Group, Inc. (DE Shaw), a trading and investment firm. Nonperforming assets were $2.76 billion on December 31, 1998 compared to $2.42 billion on December 31, 1997, mainly the result of higher commercial nonperforming loans. o Noninterest income increased approximately 4 percent to $12.2 billion in 1998. This growth was attributable to higher levels of income from most categories, including investment banking income, brokerage income, credit card income, and other income, which included gains on securitizations, as well as the sale of a partial 10 ownership interest in a mortgage company and the sale of the manufactured housing lending business. Partially offsetting these increases were securities trading losses and a decrease in mortgage servicing income. Trading account profits and fees totaled $171 million in 1998 compared to $976 million in 1997. The decrease was primarily attributed to a write-down of Russian securities and losses in corporate bonds and commercial mortgage products as spreads widened during the third quarter of 1998. Mortgage servicing income for 1998 totaled $115 million compared to $401 million in 1997. The decrease was due to a $250 million write-down of mortgage servicing assets resulting from an increase in anticipated prepayment rates. o Merger-related charges totaled $1.8 billion and $374 million for the years ended December 31, 1998 and 1997, respectively. The total $1.8 billion charge for 1998 included $1.3 billion associated with the BankAmerica merger, as well as $900 million associated with the Barnett merger, which was offset by a $430 million gain resulting from the regulatory required divestitures of certain Barnett branches. See Note Two of the consolidated financial statements on page 61 for additional information. o Other noninterest expense increased 6 percent to $18.7 billion in 1998, mainly as a result of increases in personnel and data processing expenses associated with the purchases of Oxford Resources, Corp. (NationsBanc Auto Leasing, Inc.) NationsBanc Montgomery Securities and Robertson Stephens, which was sold in the third quarter of 1998, and costs of the BankAmerica and Barnett transition projects. o Operating cash basis ratios, which measure operating performance excluding merger-related charges, intangible assets and the related amortization expense, declined with cash basis diluted earnings per common share of $4.15 in 1998 compared to $4.24 in 1997. Return on average tangible common shareholders' equity, excluding merger-related charges, decreased to 25.24 percent compared to 27.77 percent in 1997. The cash basis efficiency ratio was 58.2 percent in 1998, an increase of 293 basis points from 55.27 in 1997 due to the increase in noninterest expense associated with the NationsBanc Montgomery Securities, Robertson Stephens and NationsBanc Auto Leasing, Inc. acquisitions in the fourth quarter of 1997. As of the end of the third quarter of 1998, a banking subsidiary of the Corporation charged off $372 million of a credit agreement to DE Shaw, to which the banking subsidiary had outstanding balances of approximately $1.4 billion prior to the charge-off. The outstanding credit agreement with DE Shaw was restructured to provide, among other things, for an accelerated schedule of repayments. Throughout the fourth quarter of 1998, the Corporation reduced its exposure to DE Shaw. During the fourth quarter of 1998, the banking subsidiary purchased approximately $20 billion of fixed income securities and related hedge positions from DE Shaw. Of the $20 billion of fixed income securities purchased, $13.6 billion was subsequently sold and $5.8 billion has been incorporated into the Corporation's trading and investment portfolio. In addition, the Corporation is carrying the original loan to DE Shaw as an investment on its books and marking it to market each quarter. During the fourth quarter of 1998, the Corporation marked down the investment by $158 million. In addition, DE Shaw made a regularly scheduled payment of $100 million. As a result of the write-down and repayment, the investment was $770 million at December 31, 1998. Losses associated with DE Shaw originated primarily as a result of global market turbulence and uncertainties during the third quarter of 1998. Uncertainties continue to exist in overseas economies and global markets, which may be volatile in 1999. Accordingly, the Corporation may experience weakness in 1999 relating to the impact of such conditions on the Corporation's credit and trading portfolios and weaknesses in income from operating units, such as investment banking, that may be adversely impacted by such conditions. The remainder of management's discussion and analysis of the consolidated financial condition and results of operations of the Corporation should be read in conjunction with the consolidated financial statements and related notes presented on pages 50 through 95. 11 Table One Five-Year Summary of Selected Financial Data (Dollars in Millions Except Per-Share Information)
1998 1997 -------------- -------------- Income statement Interest income ......................................................... $ 38,588 $ 37,333 Interest expense ........................................................ 20,290 18,901 Net interest income (taxable-equivalent) ................................ 18,461 18,589 Net interest income ..................................................... 18,298 18,432 Provision for credit losses ............................................. 2,920 1,904 Gains (losses) on sales of securities ................................... 1,017 271 Noninterest income ...................................................... 12,189 11,756 Merger-related charges, net ............................................. 1,795 374 Other noninterest expense ............................................... 18,741 17,625 Income before taxes ..................................................... 8,048 10,556 Income tax expense ...................................................... 2,883 4,014 Net income .............................................................. 5,165 6,542 Net income available to common shareholders ............................. 5,140 6,431 Net income (excluding merger-related charges) ........................... 6,490 6,806 Average common shares issued and outstanding (in thousands) ............. 1,732,057 1,733,194 Per common share Earnings ................................................................ $ 2.97 $ 3.71 Earnings (excluding merger-related charges) ............................. 3.73 3.86 Diluted earnings ........................................................ 2.90 3.61 Diluted earnings (excluding merger-related charges) ..................... 3.64 3.76 Cash dividends paid ..................................................... 1.59 1.37 Shareholders' equity (year-end) ......................................... 26.60 25.49 Balance sheet (year-end) Total loans and leases .................................................. 357,328 342,140 Total assets ............................................................ 617,679 570,983 Total deposits .......................................................... 357,260 346,297 Long-term debt .......................................................... 45,888 42,887 Common shareholders' equity ............................................. 45,866 43,907 Total shareholders' equity .............................................. 45,938 44,584 Performance ratios Return on average assets ................................................ .88% 1.20% Return on average assets (excluding merger-related charges) ............. 1.11 1.25 Return on average common shareholders' equity ........................... 11.56 15.26 Return on average common shareholders' equity (excluding merger-related charges) ..................................... 14.54 15.88 Efficiency ratio (excluding merger-related charges) ..................... 61.15 58.08 Total equity to total assets (year-end) ................................. 7.44 7.81 Total average equity to total average assets ............................ 7.67 8.02 Dividend payout ratio ................................................... 50.18 32.09 Risk-based capital ratios (year-end) (1) Tier 1 .................................................................. 7.06 6.50 Total ................................................................... 10.94 10.89 Leverage capital ratio .................................................. 6.22 5.57 Cash basis financial data (2) Earnings per common share ............................................... $ 3.49 $ 4.20 Earnings per common share (excluding merger-related charges) ............ 4.25 4.36 Diluted earnings per common share ....................................... 3.41 4.09 Diluted earnings per common share (excluding merger-related charges) ............................................................... 4.15 4.24 Return on average tangible assets ....................................... 1.07% 1.40% Return on average tangible assets (excluding merger-related charges)..... 1.30 1.45 Return on average tangible common shareholders' equity .................. 20.70 26.80 Return on average tangible common shareholders' equity (excluding merger-related charges) ..................................... 25.24 27.77 Efficiency ratio (excluding merger-related charges) ..................... 58.20 55.27 Tangible equity to tangible assets ...................................... 5.18 5.19 Market price per share of common stock Closing price ........................................................... $ 60 1/8 $ 60 13/16 High for the period ..................................................... 88 7/16 71 11/16 Low for the period ...................................................... 44 48 1996 1995 1994 -------------- -------------- ------------- Income statement Interest income ......................................................... $ 33,636 $ 32,158 $ 25,562 Interest expense ........................................................ 16,682 16,369 11,080 Net interest income (taxable-equivalent) ................................ 17,082 15,824 14,549 Net interest income ..................................................... 16,954 15,789 14,482 Provision for credit losses ............................................. 1,645 945 798 Gains (losses) on sales of securities ................................... 147 68 (48) Noninterest income ...................................................... 9,604 8,132 7,124 Merger-related charges, net ............................................. 398 -- -- Other noninterest expense ............................................... 15,351 14,667 13,750 Income before taxes ..................................................... 9,311 8,377 7,010 Income tax expense ...................................................... 3,498 3,230 2,656 Net income .............................................................. 5,813 5,147 4,354 Net income available to common shareholders ............................. 5,611 4,896 4,078 Net income (excluding merger-related charges) ........................... 6,058 5,147 4,354 Average common shares issued and outstanding (in thousands) ............. 1,638,382 1,613,404 1,590,925 Per common share Earnings ................................................................ $ 3.42 $ 3.03 $ 2.56 Earnings (excluding merger-related charges) ............................. 3.58 3.03 2.56 Diluted earnings ........................................................ 3.36 2.98 2.54 Diluted earnings (excluding merger-related charges) ..................... 3.51 2.98 2.54 Cash dividends paid ..................................................... 1.20 1.04 0.94 Shareholders' equity (year-end) ......................................... 22.10 20.89 18.31 Balance sheet (year-end) Total loans and leases .................................................. 317,709 302,804 273,615 Total assets ............................................................ 477,702 461,775 426,997 Total deposits .......................................................... 309,100 296,316 291,127 Long-term debt .......................................................... 40,041 34,349 24,748 Common shareholders' equity ............................................. 35,429 33,532 29,718 Total shareholders' equity .............................................. 37,793 36,295 33,036 Performance ratios Return on average assets ................................................ 1.20% 1.13% 1.07% Return on average assets (excluding merger-related charges) ............. 1.25 1.13 1.07 Return on average common shareholders' equity ........................... 16.32 15.52 14.46 Return on average common shareholders' equity (excluding merger-related charges) ..................................... 17.04 15.52 14.46 Efficiency ratio (excluding merger-related charges) ..................... 57.52 61.22 63.44 Total equity to total assets (year-end) ................................. 7.91 7.86 7.74 Total average equity to total average assets ............................ 7.61 7.51 7.68 Dividend payout ratio ................................................... 30.05 29.13 30.53 Risk-based capital ratios (year-end) (1) Tier 1 .................................................................. 7.76 7.24 7.43 Total ................................................................... 12.66 11.58 11.47 Leverage capital ratio .................................................. 7.09 6.27 6.18 Cash basis financial data (2) Earnings per common share ............................................... $ 3.76 $ 3.38 $ 2.90 Earnings per common share (excluding merger-related charges) ............ 3.91 3.38 2.90 Diluted earnings per common share ....................................... 3.69 3.32 2.87 Diluted earnings per common share (excluding merger-related charges) ............................................................... 3.84 3.32 2.87 Return on average tangible assets ....................................... 1.34% 1.27% 1.22% Return on average tangible assets (excluding merger-related charges)..... 1.39 1.27 1.22 Return on average tangible common shareholders' equity .................. 23.65 23.56 22.56 Return on average tangible common shareholders' equity (excluding merger-related charges) ..................................... 24.60 23.56 22.56 Efficiency ratio (excluding merger-related charges) ..................... 55.49 58.89 61.01 Tangible equity to tangible assets ...................................... 6.31 6.19 5.91 Market price per share of common stock Closing price ........................................................... $ 48 7/8 $ 34 13/16 $ 22 9/16 High for the period ..................................................... 52 5/8 37 3/8 28 11/16 Low for the period ...................................................... 32 3/16 22 5/16 21 11/16
(1) Ratios prior to 1998 are former NationsBank ratios and have not been restated to reflect the impact of the BankAmerica and Barnett mergers. (2) Cash basis calculations exclude intangible assets and the related amortization expense. 12 Business Segment Operations The Corporation provides a diversified range of banking and certain nonbanking financial services and products through its various subsidiaries. Management reports the results of the Corporation's operations through four business segments: Consumer Banking, Commercial Banking, Global Corporate and Investment Banking, and Principal Investing and Wealth Management. The business segments summarized in Table Two are primarily managed with a focus on various performance objectives including net income, return on average equity and operating efficiency. These performance objectives are also presented on a cash basis, which excludes the impact of goodwill and other intangible assets and related amortization expense. The net interest income of the business segments reflects the results of a funds transfer pricing process which derives net interest income by matching assets and liabilities with similar interest rate sensitivity and maturity characteristics. Equity capital is allocated to each business segment based on an assessment of its inherent risk. See Note Sixteen of the consolidated financial statements on page 90 for additional business segment information, including adjustments and reconciliations to consolidated amounts. Consumer Banking The Consumer Banking segment provides comprehensive retail banking services to individuals and small businesses through multiple delivery channels including approximately 4,700 banking centers and 14,000 automated teller machines (ATMs). These banking centers and ATMs are located principally throughout the Corporation's franchise and serve approximately 30 million households in 22 states and the District of Columbia. This segment also provides specialized services such as the origination and servicing of residential mortgage loans, issuance and servicing of credit cards, direct banking via telephone and personal computer, student lending and certain insurance services. The consumer finance component provides personal, mortgage, home equity and automobile loans to consumers, retail finance programs to dealers and lease financing to purchasers of new and used cars. Consumer Banking's earnings increased 14 percent to $4.0 billion in 1998. Taxable-equivalent net interest income decreased 3 percent to $12.0 billion in 1998, primarily reflecting the impact of securitizations, divestitures and loan sales, partially offset by reduced funding costs from deposit expense management. As the Corporation continues to securitize loans, its role becomes that of a servicer and the servicing income, as well as the gains on securitizations are reflected in noninterest income. The net interest yield increased 3 basis points in 1998, reflecting the impact of lower earning assets coupled with changes in spreads on loans and deposits. Excluding the impact of securitizations, acquisitions and divestitures, average total loans and leases increased approximately 6 percent over average levels in 1997. Average total deposits of $232.3 billion declined slightly from the 1997 level of $234.2 billion, primarily due to $3.5 billion in divestitures in 1998 and 1997, partially offset by core deposit growth. The provision for credit losses decreased $306 million to $1.3 billion in 1998 from $1.6 billion in 1997 primarily due to securitizations, loan sales and divestitures. Noninterest income in Consumer Banking rose 6 percent to $6.7 billion in 1998 due to increased credit card fee income, non-deposit service charges and fee income, and miscellaneous income primarily related to a $479 million gain on the sale of a manufactured housing unit and loan sales. These gains were partially offset by lower mortgage servicing income resulting from a write-down of mortgage servicing rights of approximately $250 million. Noninterest expense decreased 2 percent to $11.1 billion. This reflects the efficiencies obtained from the successful integration of the former Boatmen's Bancshares, Inc. (Boatmen's) and Barnett franchises and expense management efforts. The cash basis efficiency ratio was 56.3 percent, an improvement of approximately 140 basis points compared to 1997. The return on risk-adjusted tangible equity increased to 30 percent in 1998 compared to 26 percent in 1997. Consumer Banking's earnings in 1997 increased 21 percent to $3.5 billion compared to $2.9 billion for 1996. Taxable-equivalent net interest income in 1997 of $12.4 billion increased 8 percent from 1996. Noninterest income increased 26 percent in 1997 to $6.3 billion compared to $5.0 billion for 1996. The net interest yield decreased 13 basis points from 1996 to 4.73 percent. 13 Commercial Banking The Commercial Banking segment provides a wide range of commercial banking services for businesses with annual revenues of up to $500 million. Services provided include commercial lending, treasury and cash management services, asset-backed lending, leasing and factoring. Also included in this segment are the Corporation's commercial finance operations which provide: equipment loans and leases, loans for debt restructuring, mergers and working capital, real estate and health care financing and inventory financing to manufacturers, distributors and dealers. Commercial Banking's earnings rose 2 percent to $875 million in 1998. Taxable-equivalent net interest income decreased $42 million from 1997 primarily reflecting higher costs of funds partially offset by higher loan levels. Commercial Banking's average loan and lease portfolio during 1998 increased 8 percent to $51.1 billion compared to $47.3 billion in 1997. Noninterest income rose 23 percent to $699 million in 1998 primarily due to increased investment banking fees as well as deposit service charges. Noninterest expense in 1998 increased 10 percent to $1.3 billion, primarily due to increases in data processing and personnel expenses. The cash basis efficiency ratio increased approximately 310 basis points to 45.1 percent. The return on risk-adjusted tangible equity decreased to 25 percent from 29 percent. Commercial Banking's earnings in 1997 increased 18 percent to $861 million compared to $729 million for 1996. Taxable-equivalent net interest income in 1997 of $2.0 billion increased 14 percent from 1996. Noninterest income increased 18 percent in 1997 to $568 million compared to $480 million for 1996. The net interest yield decreased 9 basis points from 1996 to 3.79 percent. Global Corporate and Investment Banking The Global Corporate and Investment Banking segment provides a broad array of financial and investment banking products such as capital-raising products, trade finance, treasury management, investment banking, capital markets and financial advisory services to domestic and international corporations, financial institutions and government entities. Clients are supported through offices in 37 countries in four distinct geographic regions: U.S. and Canada; Asia; Europe, Middle East and Africa; and Latin America. Products and services provided include loan origination, cash management, foreign exchange, leasing, leveraged finance, project finance, real estate, senior bank debt, structured finance, and trade services. Through its Section 20 subsidiary, NationsBanc Montgomery Securities, the Global Corporate and Investment Banking segment is a primary dealer of U.S. Government Securities. This segment underwrites, distributes and makes markets in high-grade and high-yield debt securities, municipal bonds and equity securities. Asset-backed securitization, commercial paper, debt and equity securities research, loan syndications, mergers and acquisitions consulting and private placements are also provided through NationsBanc Montgomery Securities. Additionally, Global Corporate and Investment Banking is a market maker in risk management products which include swap agreements, option contracts, forward settlement contracts, financial futures, and other derivative products in certain interest rate, foreign exchange, commodity and equity markets. In support of these activities, Global Corporate and Investment Banking takes positions to support client demands and its own account. Global Corporate and Investment Banking's net income decreased to $244 million in 1998 compared to $1.6 billion in 1997. Taxable-equivalent net interest income increased 8 percent in 1998 to $3.7 billion compared to $3.4 billion in 1997, reflecting higher loan volumes and increased trading related activities. Excluding the impact of a $4.2 billion securitization completed in 1997, the Global Corporate and Investment Banking average loan and lease portfolio increased approximately 11 percent over the levels in 1997. The provision for credit losses increased from $342 million in 1997 to $1.6 billion in 1998 primarily due to international economic conditions and higher net commercial charge-offs. 14 Table Two Business Segment Summary For the Year Ended December 31 (Dollars in Millions)
Consumer Banking Commercial Banking ----------------------------------- -------------------------------- 1998 1997 1996 1998 1997 1996 ----------- ----------- ----------- ---------- ---------- ---------- Net income .................................... $ 3,999 $ 3,523 $ 2,918 $ 875 $ 861 $ 729 Cash basis earnings (1) ....................... 4,545 4,089 3,257 966 953 771 Net interest yield ............................ 4.76% 4.73% 4.86% 3.39% 3.79% 3.88% Average equity to average assets .............. 7.35 7.26 6.51 7.29 7.06 5.69 Return on risk-adjusted average equity ........ 20 17 17 19 21 26 Return on risk-adjusted tangible equity (1) ... 30 26 24 25 29 31 Efficiency ratio .............................. 59.5 60.9 60.6 48.8 45.9 45.7 Cash basis efficiency ratio (1) ............... 56.3 57.7 58.2 45.1 42.0 43.6 Average Total loans and leases ....................... $174,409 $183,627 $51,120 $47,319 Total deposits ............................... 232,324 234,226 18,081 16,906 Total assets ................................. 277,820 291,210 64,881 59,299 Year-end Total loans and leases ....................... 175,471 177,200 53,372 49,031 Total deposits ............................... 237,816 233,732 20,948 19,672 Total assets ................................. 269,458 285,686 67,366 65,243
Global Corporate & Principal Investing & Investment Banking Wealth Management ------------------------------------ -------------------------------- 1998 1997 1996 1998 1997 1996 ------------ ----------- ----------- ---------- ---------- ---------- Net income ...................................... $ 244 $ 1,632 $ 1,537 $ 497 $ 560 $ 520 Cash basis earnings (1) ......................... 383 1,725 1,593 517 580 542 Net interest yield .............................. 1.97% 2.01% 2.04% 2.81% 3.30% 3.39% Average equity to average assets ................ 5.65 5.30 4.76 12.73 13.01 14.63 Return on risk-adjusted average equity .......... 2 15 20 20 28 29 Return on risk-adjusted tangible equity (1) ..... 4 18 22 23 32 35 Efficiency ratio ................................ 71.3 54.8 52.1 66.9 61.4 58.6 Cash basis efficiency ratio (1) ................. 68.7 53.0 50.8 65.8 60.3 57.2 Average Total loans and leases ........................ $107,279 $ 99,191 $15,183 $12,001 Total deposits ................................ 63,174 59,746 11,865 10,883 Total assets .................................. 223,143 199,766 19,317 15,569 Year-end ........................................ Total loans and leases ........................ 111,550 101,870 17,853 13,123 Total deposits ................................ 68,915 60,477 12,621 11,573 Total assets .................................. 248,264 204,862 22,246 18,320
(1) Cash basis calculations exclude intangible assets and the related amortization expense. Noninterest income in 1998 was $2.8 billion, a decrease of 8 percent from 1997, reflecting lower trading income due to weaker global markets and lower miscellaneous income due to $158 million of losses associated with the investment in DE Shaw, as well as a $112 million write-down of other equity investments. Partially offsetting these decreases were higher investment banking fees and brokerage income due to the NationsBanc Montgomery Securities and Robertson Stephens acquisitions in the fourth quarter of 1997. Noninterest expense rose to $4.7 billion due primarily to higher personnel expenses associated with the NationsBanc Montgomery Securities and Robertson Stephens acquisitions. Expenses in most other categories also increased in 1998 due to the NationsBanc Montgomery Securities and Robertson Stephens acquisitions. The cash basis efficiency ratio increased to 68.7 percent primarily due to higher expense ratios at NationsBanc Montgomery Securities and Robertson Stephens. The return on risk-adjusted tangible equity decreased to 4 percent in 1998 from 18 percent in 1997 reflecting difficult international market conditions. 15 Global Corporate and Investment Banking earnings in 1997 increased 6 percent to $1.6 billion compared to $1.5 billion for 1996. Taxable-equivalent net interest income in 1997 of $3.4 billion increased 9 percent from 1996. Noninterest income increased 26 percent in 1997 to $3.1 billion compared to $2.5 billion for 1996. The net interest yield decreased 3 basis points from 1996 to 2.01 percent. Principal Investing and Wealth Management The Principal Investing and Wealth Management segment includes Wealth Management which provides asset management, banking and trust services for high net worth clients both in the U.S. and internationally through its Private Bank. In addition, this segment provides full service and discount brokerage, investment advisory and investment management, as well as advisory services for the Corporation's affiliated family of mutual funds. The Principal Investing area includes direct equity investments in businesses and investments in general partnership funds. Principal Investing and Wealth Management earned $497 million in 1998 compared to $560 million in 1997, a decrease of 11 percent. The results are due to strong growth in the segment's core business, offset by the sales of certain corporate and institutional trust businesses during the third quarter of 1997. Taxable-equivalent net interest income increased 8 percent in 1998 to $451 million compared to $418 million a year ago, reflecting income from increased loan levels. The average loan and lease portfolio in 1998 increased to $15.2 billion compared to $12.0 billion in 1997. Noninterest income remained essentially level with 1997 at $1.9 billion in 1998. Core revenue growth was offset by the sales of certain corporate and institutional businesses, which occurred in the third quarter of 1997. Noninterest expense increased 10 percent due primarily to increases in personnel expense, support costs and a bond litigation settlement during the fourth quarter of 1998. See Note Eleven of the consolidated financial statements on page 74 for additional information on litigation. The cash basis efficiency ratio increased approximately 550 basis points to 65.8 percent in 1998 compared to 60.3 percent in 1997. The return on risk-adjusted tangible equity decreased to 23 percent. Principal Investing and Wealth Management earnings in 1997 increased 8 percent to $560 million compared to $520 million for 1996. Taxable-equivalent net interest income in 1997 of $418 million increased 29 percent from 1996. Noninterest income increased 12 percent in 1997 to $1.9 billion compared to $1.7 billion for 1996. The net interest yield decreased 9 basis points from 1996 to 3.30 percent. Results of Operations Net Interest Income An analysis of the Corporation's taxable-equivalent net interest income and average balance sheet levels for the last three years and most recent five quarters is presented in Tables Three and Twenty-One, respectively. The changes in net interest income from year to year are analyzed in Table Four. Taxable-equivalent net interest income decreased approximately 1 percent to $18.5 billion in 1998 compared to $18.6 billion in 1997 due primarily to a reduction in the net difference between loan and deposit rates and the impact of securitizations, divestitures and asset sales. The decrease was partially offset by loan growth and increased core funding. As the Corporation continues to securitize loans, its role becomes that of a servicer and the servicing income, as well as the gains on securitizations are reflected in noninterest income. Average earning assets increased nearly $35 billion from 1997 to $499.7 billion in 1998, driven primarily by an increase in investment securities. These security additions were mainly funded with short-term borrowings, accounting for the majority of the increases in interest income and interest expense, respectively. Loan yields declined 33 basis points during 1998, reflecting lower market interest rates, the competitive market environment and a change in loan mix resulting from strong growth in both consumer and commercial products, offset by securitizations and divestitures, primarily in the consumer product lines. The net interest yield decreased 31 basis points to 3.69 percent in 1998 compared to 4.00 percent in 1997, primarily reflecting higher levels of investment securities, which have a lower yield than loans, and a reduction in the net difference between loan and deposit rates. Loan growth is dependent on economic conditions as well as various discretionary factors, such as decisions to securitize certain loan portfolios and the management of borrower, industry, product and geographic concentrations. 16 Table Three 12-Month Taxable-Equivalent Data (Dollars in Millions)
1998 1997 ------------------------------- ------------------------------- Average Average Balance Income Balance Income Sheet or Yields/ Sheet or Yields/ Amounts Expense Rates Amounts Expense Rates ----------- --------- --------- ----------- --------- --------- Earning assets Loans and leases (1) Commercial - domestic ........................................ $130,177 $ 9,988 7.67% $117,465 $ 9,386 7.99% Commercial - foreign ......................................... 31,015 2,246 7.24 28,295 1,995 7.05 Commercial real estate - domestic ............................ 28,418 2,503 8.81 29,468 2,748 9.33 Commercial real estate - foreign ............................. 330 33 10.05 156 30 19.24 -------- ------- ----- -------- ------- ----- Total commercial ............................................ 189,940 14,770 7.78 175,384 14,159 8.07 -------- ------- ----- -------- ------- ----- Residential mortgage ......................................... 70,842 4,880 6.89 80,593 5,683 7.05 Home equity lines ............................................ 16,129 1,741 10.79 14,760 1,813 12.29 Direct/Indirect consumer ..................................... 40,204 3,506 8.72 39,270 3,464 8.82 Consumer finance ............................................. 14,368 1,529 10.64 13,845 1,625 11.73 Bankcard ..................................................... 12,960 1,638 12.64 15,920 2,127 13.36 Foreign consumer ............................................. 3,397 357 10.51 3,379 301 8.90 -------- ------- ----- -------- ------- ----- Total consumer .............................................. 157,900 13,651 8.65 167,767 15,013 8.95 -------- ------- ----- -------- ------- ----- Total loans and leases ...................................... 347,840 28,421 8.17 343,151 29,172 8.50 -------- ------- ----- -------- ------- ----- Securities Held for investment .......................................... 4,113 282 6.88 5,402 389 7.19 Available for sale (2) ....................................... 62,571 4,286 6.85 42,867 2,959 6.90 -------- ------- ----- -------- ------- ----- Total securities ............................................ 66,684 4,568 6.85 48,269 3,348 6.94 -------- ------- ----- -------- ------- ----- Federal funds sold and securities purchased under agreements to resell ......................................... 27,288 1,828 6.70 23,437 1,516 6.47 Time deposits placed and other short-term investments ......... 7,649 514 6.72 8,379 541 6.46 Trading account securities .................................... 39,774 2,634 6.62 38,284 2,588 6.76 Other earning assets .......................................... 10,504 786 7.49 3,442 325 9.46 -------- ------- ----- -------- ------- ----- Total earning assets (3) .................................... 499,739 38,751 7.75 464,962 37,490 8.06 -------- ------- ----- -------- ------- ----- Cash and cash equivalents ...................................... 24,907 24,187 Other assets, less allowance for credit losses ................. 59,841 54,647 -------- -------- Total assets ................................................ $584,487 $543,796 ======== ======== Interest-bearing liabilities Domestic interest-bearing deposits Savings ...................................................... $ 22,692 421 1.86 $ 24,559 490 2.00 NOW and money market deposit accounts ........................ 96,541 2,536 2.63 95,204 2,529 2.66 Consumer CDs and IRAs ........................................ 74,655 3,915 5.24 77,479 4,101 5.29 Negotiated CDs, public funds and other time deposits ......... 7,604 414 5.44 6,412 360 5.62 -------- ------- ----- -------- ------- ----- Total domestic interest-bearing deposits .................... 201,492 7,286 3.62 203,654 7,480 3.67 -------- ------- ----- -------- ------- ----- Foreign interest-bearing deposits (4) Banks located in foreign countries ........................... 24,587 1,405 5.72 22,100 1,274 5.77 Governments and official institutions ........................ 10,517 590 5.61 10,801 591 5.47 Time, savings and other ...................................... 24,261 1,530 6.30 22,093 1,339 6.06 -------- ------- ----- -------- ------- ----- Total foreign interest-bearing deposits ..................... 59,365 3,525 5.94 54,994 3,204 5.83 -------- ------- ----- -------- ------- ----- Total interest-bearing deposits ............................. 260,857 10,811 4.14 258,648 10,684 4.13 -------- ------- ----- -------- ------- ----- Federal funds purchased and securities sold under agreements to repurchase and other short-term borrowings ................................................... 90,630 5,239 5.78 70,399 4,105 5.83 Trading account liabilities ................................... 17,472 895 5.12 15,285 975 6.38 Long-term debt (5) ............................................ 49,969 3,345 6.69 46,337 3,137 6.77 -------- ------- ----- -------- ------- ----- Total interest-bearing liabilities (6) ...................... 418,928 20,290 4.84 390,669 18,901 4.84 -------- ------- ----- -------- ------- ----- Noninterest-bearing sources Noninterest-bearing deposits .................................. 84,628 78,235 Other liabilities ............................................. 36,102 31,282 Shareholders' equity .......................................... 44,829 43,610 -------- -------- Total liabilities and shareholders' equity .................. $584,487 $543,796 ======== ======== Net interest spread ............................................ 2.91 3.22 Impact of noninterest-bearing sources .......................... .78 .78 ----- ----- Net interest income/yield on earning assets .................... $18,461 3.69% $18,589 4.00% ======= ===== ======= ===== 1996 -------------------------------- Average Balance Income Sheet or Yields/ Amounts Expense Rates ----------- --------- ---------- Earning assets Loans and leases (1) Commercial - domestic ........................................ $102,176 $ 7,963 7.79% Commercial - foreign ......................................... 24,357 1,768 7.25 Commercial real estate - domestic ............................ 26,563 2,434 9.16 Commercial real estate - foreign ............................. 365 20 5.50 -------- ------- ----- Total commercial ............................................ 153,461 12,185 7.94 -------- ------- ----- Residential mortgage ......................................... 81,375 6,234 7.66 Home equity lines ............................................ 11,694 1,012 8.66 Direct/Indirect consumer ..................................... 34,442 3,089 8.97 Consumer finance ............................................. 11,955 1,459 12.20 Bankcard ..................................................... 16,655 2,251 13.52 Foreign consumer ............................................. 2,749 284 10.36 -------- ------- ----- Total consumer .............................................. 158,870 14,329 9.02 -------- ------- ----- Total loans and leases ...................................... 312,331 26,514 8.49 -------- ------- ----- Securities Held for investment .......................................... 7,788 514 6.61 Available for sale (2) ....................................... 33,791 2,333 6.90 -------- ------- ----- Total securities ............................................ 41,579 2,847 6.85 -------- ------- ----- Federal funds sold and securities purchased under agreements to resell ......................................... 24,166 1,371 5.67 Time deposits placed and other short-term investments ......... 7,208 536 7.43 Trading account securities .................................... 31,753 2,232 7.03 Other earning assets .......................................... 2,068 264 12.77 -------- ------- ----- Total earning assets (3) .................................... 419,105 33,764 8.06 -------- ------- ----- Cash and cash equivalents ...................................... 22,800 Other assets, less allowance for credit losses ................. 42,285 -------- Total assets ................................................ $484,190 ======== Interest-bearing liabilities Domestic interest-bearing deposits Savings ...................................................... $ 25,063 519 2.07 NOW and money market deposit accounts ........................ 82,854 2,057 2.48 Consumer CDs and IRAs ........................................ 68,998 3,537 5.13 Negotiated CDs, public funds and other time deposits ......... 6,614 387 5.85 -------- ------- ----- Total domestic interest-bearing deposits .................... 183,529 6,500 3.54 -------- ------- ----- Foreign interest-bearing deposits (4) Banks located in foreign countries ........................... 24,043 1,361 5.66 Governments and official institutions ........................ 9,582 501 5.23 Time, savings and other ...................................... 19,158 1,238 6.46 -------- ------- ----- Total foreign interest-bearing deposits ..................... 52,783 3,100 5.87 -------- ------- ----- Total interest-bearing deposits ............................. 236,312 9,600 4.06 -------- ------- ----- Federal funds purchased and securities sold under agreements to repurchase and other short-term borrowings ................................................... 65,834 3,699 5.62 Trading account liabilities ................................... 13,643 880 6.45 Long-term debt (5) ............................................ 37,444 2,503 6.69 -------- ------- ----- Total interest-bearing liabilities (6) ...................... 353,233 16,682 4.72 -------- ------- ----- Noninterest-bearing sources Noninterest-bearing deposits .................................. 66,816 Other liabilities ............................................. 27,283 Shareholders' equity .......................................... 36,858 -------- Total liabilities and shareholders' equity .................. $484,190 ======== Net interest spread ............................................ 3.34 Impact of noninterest-bearing sources .......................... .74 ----- Net interest income/yield on earning assets .................... $17,082 4.08% ======= =====
(1) Nonperforming loans are included in the respective average loan balances. Income on such nonperforming loans is recognized on a cash basis. (2) The average balance sheet amounts and yields on securities available for sale are based on the average of historical amortized cost balances. (3) Interest income includes taxable-equivalent adjustments of $163, $157 and $128 in 1998, 1997 and 1996, respectively. Interest income also includes the impact of risk management interest rate contracts, which increased interest income on the underlying linked assets $174, $159, and $31 in 1998, 1997 and 1996, respectively. (4) Primarily consists of time deposits in denominations of $100,000 or more. (5) Long-term debt includes trust preferred securities. (6) Interest expense includes the impact of risk management interest rate contracts, which increased (decreased) interest expense on the underlying linked liabilities of $45, $(15) and $50 in 1998, 1997, and 1996, respectively. 17 Table Four Changes in Taxable-Equivalent Net Interest Income (Dollars in Millions) This table presents an analysis of the year-to-year changes in net interest income on a fully taxable-equivalent basis for the years shown. The changes for each category of income and expense are divided between the portion of change attributable to the variance in average levels or yields/rates for that category. The amount of change that cannot be separated is allocated to each variance proportionately.
From 1997 to 1998 ------------------------------------------------ Increase (Decrease) in Income/Expense Due to Change in --------------------- Percentage Average Yields/ Increase Levels Rates Total (Decrease) --------- ----------- ------------- ------------ Earning assets: Loans and leases Commercial - domestic ....................... $ 986 $ (384) $ 602 6.41% Commercial - foreign ........................ 196 55 251 12.58 Commercial real estate - domestic .......... (96) (149) (245) ( 8.92) Commercial real estate - foreign ........... 22 (19) 3 10.00 -------- Total commercial ........................... 1,145 (534) 611 4.32 -------- Residential mortgage ........................ (674) (129) (803) (14.13) Home equity lines ........................... 159 (231) (72) ( 3.97) Direct/Indirect consumer .................... 82 (40) 42 1.21 Consumer finance ............................ 60 (156) (96) ( 5.91) Bankcard .................................... (379) (110) (489) (22.99) Foreign consumer ............................ 2 54 56 18.60 -------- Total consumer ............................. (864) (498) (1,362) ( 9.07) -------- Total loans and leases .................... 395 (1,146) (751) ( 2.57) -------- Securities: Held for investment ......................... (89) (18) (107) (27.51) Available for sale .......................... 1,350 (23) 1,327 44.85 -------- Total securities ........................... 1,262 (42) 1,220 36.44 -------- Federal funds sold and securities purchased under agreements to resell ........ 256 56 312 20.58 Time deposits placed and other short-term investments ................................. (48) 21 (27) ( 4.99) Trading account securities ................... 99 (53) 46 1.78 Other earning assets ......................... 541 (80) 461 141.85 -------- Total interest income ...................... 2,733 (1,472) 1,261 3.36 -------- Interest-bearing liabilities: Domestic interest-bearing deposits: Savings ..................................... (36) (33) (69) (14.08) NOW and money market deposit accounts ................................... 35 (28) 7 .28 Consumer CDs and IRAs ....................... (148) (38) (186) ( 4.54) Negotiated CDs, public funds and other time deposits .............................. 65 (11) 54 15.00 -------- Total domestic interest-bearing deposits .................................. (79) (115) (194) ( 2.59) Foreign interest-bearing deposits: Banks located in foreign countries .......... 142 (11) 131 10.28 Governments and official institutions ....... (16) 15 (1) ( .17) Time, savings and other ..................... 135 56 191 14.26 ---------- Total foreign interest-bearing deposits..... 259 62 321 10.02 ---------- Total interest-bearing deposits ............ 91 36 127 1.19 ---------- Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings ................. 1,170 (36) 1,134 27.62 Trading account liabilities .................. 128 (208) (80) ( 8.21) Long-term debt ............................... 243 (35) 208 6.63 ---------- Total interest expense ..................... 1,369 20 1,389 7.35 ---------- Net interest income ........................... 1,560 (1,688) $ (128) ( .69) ========== From 1996 to 1997 ----------------------------------------- Increase (Decrease) in Income/Expense Due to Change in ------------------- Percentage Average Yields/ Increase Levels Rates Total (Decrease) --------- --------- --------- ----------- Earning assets: Loans and leases Commercial - domestic ....................... $1,217 $ 206 $1,423 17.87% Commercial - foreign ........................ 279 (52) 227 12.84 Commercial real estate - domestic .......... 270 44 314 12.90 Commercial real estate - foreign ........... (17) 27 10 50.00 ------ Total commercial ........................... 1,767 207 1,974 16.20 ------ Residential mortgage ........................ (59) (492) (551) ( 8.84) Home equity lines ........................... 308 493 801 79.15 Direct/Indirect consumer .................... 427 (52) 375 12.14 Consumer finance ............................ 224 (58) 166 11.38 Bankcard .................................... (98) (26) (124) ( 5.51) Foreign consumer ............................ 59 (42) 17 5.99 ------ Total consumer ............................. 797 (113) 684 4.77 ------ Total loans and leases .................... 2,620 38 2,658 10.02 ------ Securities: Held for investment ......................... (169) 44 (125) (24.32) Available for sale .......................... 626 -- 626 26.83 ------ Total securities ........................... 464 37 501 17.60 ------ Federal funds sold and securities purchased under agreements to resell ........ (42) 187 145 10.58 Time deposits placed and other short-term investments ................................. 81 (76) 5 .93 Trading account securities ................... 444 (88) 356 15.95 Other earning assets ......................... 143 (82) 61 23.11 ------ Total interest income ...................... 3,697 29 3,726 11.04 ------ Interest-bearing liabilities: Domestic interest-bearing deposits: Savings ..................................... (10) (19) (29) ( 5.59) NOW and money market deposit accounts ................................... 321 151 472 22.95 Consumer CDs and IRAs ....................... 446 118 564 15.95 Negotiated CDs, public funds and other time deposits .............................. (12) (15) (27) ( 6.98) ------ Total domestic interest-bearing deposits .................................. 733 247 980 15.08 Foreign interest-bearing deposits: Banks located in foreign countries .......... (112) 25 (87) ( 6.39) Governments and official institutions ....... 66 24 90 17.96 Time, savings and other ..................... 181 (80) 101 8.16 ------ Total foreign interest-bearing deposits..... 129 (25) 104 3.35 ------ Total interest-bearing deposits ............ 920 164 1,084 11.29 ------ Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings ................. 263 143 406 10.98 Trading account liabilities .................. 105 (10) 95 10.80 Long-term debt ............................... 602 32 634 25.33 ------ Total interest expense ..................... 1,803 416 2,219 13.30 ------ Net interest income ........................... 2,124 (617) $1,507 8.82 ======
18 Provision for Credit Losses The provision for credit losses was $2.9 billion in 1998 compared to $1.9 billion in 1997. The increase in the provision for credit losses was primarily due to the establishment of a $500 million provision related to international economic conditions and higher net commercial charge-offs. The provision for credit losses for 1998 and 1997 covered net charge-offs of $2.5 billion and $1.9 billion, respectively. Higher commercial net charge-offs in 1998 included a credit agreement with DE Shaw. Higher commercial net charge-offs were partially offset by lower net charge-offs in the consumer loan portfolio. For additional information on the allowance for credit losses, certain credit quality ratios and credit quality information on specific loan categories see the "Credit Risk Management and Credit Portfolio Review" section beginning on page 34. Gains on Sales of Securities Gains on sales of debt securities were $1.0 billion in 1998 compared to $271 million in 1997. Securities gains were higher in 1998 as a result of increased activity connected with the Corporation's overall risk management activity and favorable market conditions for certain debt instruments caused by turbulence in equity markets. Noninterest Income As presented in Table Five, noninterest income increased approximately 4 percent to $12.2 billion in 1998, primarily reflecting higher levels of income from investment banking, brokerage, and credit card activities, offset by declines in mortgage banking and trading income. Table Five Noninterest Income (Dollars in Millions)
Change ------------------- 1998 1997 Amount Percent --------- --------- -------- ---------- Service charges on deposit accounts ..................... $ 3,396 $ 3,373 $ 23 .7% Mortgage servicing and other mortgage-related income .... 115 401 (286) (71.3) Investment banking income ............................... 2,009 1,476 533 36.1 Trading account profits and fees ........................ 171 976 (805) (82.5) Brokerage income ........................................ 728 355 373 105.1 Other nondeposit-related service fees ................... 652 680 (28) ( 4.1) Asset management and fiduciary service fees ............. 973 990 (17) ( 1.7) Credit card income ...................................... 1,448 1,231 217 17.6 Other income ............................................ 2,697 2,274 423 18.6 ------- ------- ------ ----- $12,189 $11,756 $ 433 3.7% ======= ======= ====== =====
o Mortgage servicing and other mortgage-related income decreased to $115 million in 1998, primarily due to a $250 million write-down of mortgage servicing rights caused by an increase in anticipated prepayment rates. The average portfolio of loans serviced increased 9 percent from $204 billion in 1997 to $222 billion in 1998. Mortgage loan originations through the Corporation's mortgage units increased to $65.1 billion in 1998 compared to $35.7 billion in 1997, primarily due to a decline in interest rates. Origination volume in 1998 was composed of approximately $30.1 billion of retail loan volume and $35.0 billion of correspondent and wholesale loan volume. In conducting its mortgage production activities, the Corporation is exposed to interest rate risk for the period between loan commitment date and subsequent delivery date. To manage this risk, the Corporation enters into various financial instruments including forward delivery and option contracts. The notional amount of such contracts was approximately $9.8 billion on December 31, 1998 with associated net unrealized losses of $8.0 million. These contracts generally have an average expected maturity of less than 90 days. To manage risk associated with changes in prepayment rates and the impact on mortgage servicing rights, the Corporation uses various financial instruments including options and certain interest rate swaps. The notional amount 19 of such contracts on December 31, 1998 was $22.4 billion with an associated net unrealized gain of $190 million. As of December 31, 1998, the amount of net realized deferred gains associated with terminated derivative products related to the mortgage servicing portfolio was $266 million. For additional information on mortgage banking activities, see Note One of the consolidated financial statements on page 56. o Investment banking income increased 36 percent to $2.0 billion in 1998, mainly reflecting changes in the levels of syndication fees, securities underwriting activity and advisory fees, primarily due to the acquisitions of NationsBanc Montgomery Securities and Robertson Stephens in the fourth quarter of 1997. Securities underwriting fees increased $289 million to $558 million in 1998 as a result of the NationsBanc Montgomery Securities and Robertson Stephens acquisitions. Syndication fees increased 28 percent due to increased syndication activities in 1998. Advisory services fees increased $204 million to $384 million reflecting the impact of the NationsBanc Montgomery Securities and Robertson Stephens acquisitions. On August 31,1998, as a result of the BankAmerica merger, the Corporation sold the investment banking operations of Robertson Stephens. Investment banking income by major business activity follows:
1998 1997 (Dollars in Millions) --------- --------- Investment Banking Income Principal investing ............. $ 570 $ 581 Securities underwriting ......... 558 269 Syndications .................... 426 333 Advisory services ............... 384 180 Other ........................... 71 113 ------ ------ Total ........................... $2,009 $1,476 ====== ======
o Trading account profits and fees totaled $171 million in 1998 compared to $976 million in 1997. The decrease is primarily attributable to a write-down of Russian securities and losses in corporate bonds and commercial mortgage products as spreads widened in the third quarter. The fair values of the components of the Corporation's trading account assets and liabilities on December 31, 1998 and 1997 as well as their average fair values for 1998 and 1997 are disclosed in Note Four of the consolidated financial statements on page 66. Trading account profits and fees by major business activity follows:
1998 1997 (Dollars in Millions) --------- ------- Trading Account Profits and Fees Foreign exchange contracts ............ $ 531 $478 Interest rate contracts ............... 209 166 Securities trading .................... (610) 287 Other ................................. 41 45 ------ ---- Total ................................. $ 171 $976 ====== ====
o Brokerage income increased 105 percent to $728 million in 1998, due mainly to the acquisitions of NationsBanc Montgomery Securities and Robertson Stephens as well as continued internal growth. o Asset management and fiduciary service fees decreased $17 million in 1998, reflecting the impact of the third quarter 1997 sales of certain corporate and institutional trust businesses, which included businesses that provided administrative and record-keeping services for employee benefit plans. An analysis of asset management and fiduciary service fees by major business activity follows: 20
1998 1997 (Dollars in Millions) ----------- ----------- Asset Management and Fiduciary Service Fees Private bank .............................. $ 728 $ 690 Funds and institutional investment management 182 154 Retirement services, corporate trust and other 63 146 -------- -------- Total ................................... $ 973 $ 990 ======== ======== Market Value of Assets Assets under management ................... $233,500 $211,470 Assets under administration ............... 300,167 372,040
The Private Bank provides investment management, personal trust, tax and estate planning, customized lending and banking for high-net-worth clients and private businesses. Funds and Institutional Investment Management includes brokerage (full-service and discount services with access to a wide range of non-FDIC-insured investments, including stocks, bonds, fixed-income securities and mutual funds), mutual funds (investment advisor to over 50 funds including money market, fixed-income and equity funds), and institutional investment management (investment advisory and management services for institutional clients are offered by TradeStreet Investment Associates, Inc., Chicago Equity Partners, Sovran Capital Management Corporation and Boatmen's Capital Management, Inc.). Fees received by Retirement Services and Corporate Trust decreased in 1998 from 1997 as the result of the sale of certain businesses which provided administrative, fiduciary and record-keeping services for businesses and institutional customers. o Credit card income increased 18 percent to $1.4 billion in 1998 due primarily to higher transaction volume and exchange fees. Credit card income includes $178 million and $98 million from credit card securitizations in 1998 and 1997, respectively. o Other income totaled $2.7 billion in 1998, an increase of $423 million over 1997. The increase over 1997 was due primarily to the $479 million gain from the sale of the manufactured housing lending business and a $110 million gain on the sale of a partial ownership interest in a mortgage company, partially offset by write-downs of $158 million of losses associated with the investment in DE Shaw in the fourth quarter of 1998 and other equity investments of $162 million. Other income also includes certain prepayment fees and other fees, net rental income on automobile leases classified as operating leases, servicing and related fees from the consumer finance business, insurance commissions and earnings and bankers' acceptances and letters of credit fees. Other Noninterest Expense As presented in Table Six, the Corporation's other noninterest expense increased 6 percent in 1998 over 1997. Excluding acquisitions and related transition expenses, other noninterest expense increased 3 percent over 1997. Table Six Other Noninterest Expense (Dollars in Millions)
1998 1997 Change ------------------------ ------------------------ ----------------------- Amount Percent (1) Amount Percent (1) Amount Percent ---------- ------------- ---------- ------------- ------------ ---------- Personnel ................................... $ 9,412 30.7% $ 8,703 28.7% $ 709 8.1% Occupancy, net .............................. 1,643 5.4 1,576 5.2 67 4.3 Equipment ................................... 1,404 4.6 1,408 4.6 (4) ( .3) Marketing ................................... 581 1.9 655 2.2 (74) (11.3) Professional fees ........................... 843 2.8 763 2.5 80 10.5 Amortization of intangibles ................. 902 2.9 855 2.8 47 5.5 Data processing ............................. 765 2.5 626 2.1 139 22.2 Telecommunications .......................... 563 1.8 491 1.6 72 14.7 Other general operating ..................... 2,044 6.6 2,059 6.8 (15) ( .7) General administrative and miscellaneous..... 584 1.9 489 1.6 95 19.4 ------- ---- ------- ---- ------ ----- $18,741 61.1% $17,625 58.1% $1,116 6.3% ======= ==== ======= ==== ====== =====
(1) Percent of taxable-equivalent net interest and noninterest income. 21 A discussion of the significant components and changes in other noninterest expense in 1998 compared to 1997 follows: o Personnel expense increased 8 percent to $9.4 billion in 1998, primarily due to the acquisitions of NationsBanc Montgomery Securities, Robertson Stephens and NationsBanc Auto Leasing, Inc. Excluding these acquisitions, 1998 personnel expense increased by 3 percent over 1997. On December 31, 1998, the Corporation had approximately 171,000 full-time equivalent employees compared to approximately 181,000 full-time equivalent employees on December 31, 1997. o Marketing expense amounted to $581 million in 1998, a decrease of approximately 11 percent from 1997, reflecting a decline in advertising and promotional expenses. o Professional fees increased $80 million over 1997 to $843 million, primarily due to increases in outside legal fees. o Data processing expense increased to $765 million in 1998 compared to $626 million in 1997 due to increased processing costs associated with the NationsBanc Montgomery Securities, Robertson Stephens and NationsBanc Auto Leasing, Inc. acquisitions. o Telecommunications expense increased $72 million over 1997 to $563 million, mainly due to acquisition and transition efforts, expenses related to the implementation of Model Bank, a banking platform, and increased call volume. o General administrative and miscellaneous expense increased to $584 million compared to $489 million in 1997, primarily due to the addition of NationsBanc Montgomery Securities, Robertson Stephens and NationsBanc Auto Leasing, Inc. Year 2000 Project The following is a Year 2000 Readiness Disclosure. General Because computers frequently use only two digits to recognize years, on January 1, 2000, many computer systems, as well as equipment that uses embedded computer chips, may be unable to distinguish between 1900 and 2000. If not -- -- remediated, this problem could create system errors and failures resulting in the disruption of normal business operations. Since the Year 2000 is a leap year, there could also be business disruptions as a result of the inability of many computer systems to recognize February 29, 2000. In October 1995 and February 1996, respectively, NationsBank and BankAmerica established project teams to address these issues. Each of these teams remains in place and continues to work on solving problems related to the Year 2000. Although each of these Year 2000 teams proceeds according to its respective work plan, they are capitalizing on the best practices of both teams. Going forward, the Year 2000 efforts of both teams are being integrated. Personnel from the Corporation's business segments and project teams have identified and analyzed, and are correcting and testing, computer systems throughout the Corporation ("Systems"). Personnel have also taken inventory of equipment that uses embedded computer chips (i.e., "non-information technology systems" or "Infrastructure") and scheduled remediation or replacement of this Infrastructure, as necessary. Examples of Infrastructure include ATMs, building security systems, fire alarm systems, identification and access cards, date stamps and elevators. The NationsBank team tracks Systems and Infrastructure separately, whereas the BankAmerica team tracks Systems and Infrastructure collectively ("Projects"). For purposes of this section, the information provided for Systems and Projects is generally provided on a combined basis. State of Readiness The Corporation's Year 2000 efforts are generally divided into phases for analysis, remediation, testing and compliance. In the analysis phase, the Corporation identifies Systems/Projects and Infrastructure that have Year 2000 issues and determines the steps necessary to remediate these issues. In the remediation phase, the Corporation replaces, modifies or retires Systems/Projects or Infrastructure, as necessary. During the testing phase, the Corporation performs testing to determine whether the remediated Systems/Projects and Infrastructure 22 accurately process and identify dates. In the compliance phase, the Corporation internally certifies the Systems/Projects and Infrastructure that are Year 2000 ready and implements processes to enable these Systems/Projects and Infrastructure to continue to identify and process dates accurately through the Year 2000 and thereafter. As of December 31, 1998, the NationsBank team has identified over 1,500 Systems, and the BankAmerica team has identified approximately 2,900 Projects, for a total of approximately 4,400 Systems/Projects. In addition, the NationsBank team has identified over 17,000 Infrastructure items that may have Year 2000 implications. For Systems/Projects, as of December 31, 1998, the analysis and remediation phases were substantially complete, the testing phase was approximately 95% complete and the compliance phase was approximately 90% complete. For Infrastructure, as of December 31, 1998, the analysis phase was approximately 98% complete, the remediation phase was approximately 91% complete, the testing phase was approximately 89% complete and the compliance phase was approximately 84% complete. The Corporation expects to substantially complete all phases by June 30, 1999, in accordance with guidelines established by the Federal Financial Institutions Examination Council (FFIEC). The Corporation tracks Systems/Projects and Infrastructure for Year 2000-required changes based on a risk evaluation. Of the identified Systems/Projects and Infrastructure, approximately 1,900 Systems/Projects and 1,100 Infrastructure items have been designated "mission critical" (i.e., if not made Year 2000 ready, these Systems/Projects or Infrastructure items would substantially impact the normal conduct of business). For mission critical Systems/Projects, as of December 31, 1998, the analysis and remediation phases were substantially complete, the testing phase was approximately 96% complete and the compliance phase was approximately 90% complete. The Corporation will also perform "time machine testing" (i.e., emulate Year 2000 conditions in a dedicated environment) on selected mission critical Systems. For mission critical Infrastructure items, as of December 31, 1998, the analysis phase was approximately 98% complete, the remediation phase was approximately 77% complete, the testing phase was approximately 86% complete and the compliance phase was approximately 70% complete. Ultimately, the potential impact of Year 2000 issues will depend not only on the corrective measures the Corporation undertakes, but also on the way in which Year 2000 issues are addressed by governmental agencies, businesses and other entities which provide data to, or receive data from, the Corporation, or whose financial condition or operational capability is important to the Corporation as borrowers, vendors, customers, investment opportunities (either for the Corporation's accounts or for the accounts of others) or lenders. In addition, the Corporation's business may be affected by the corrective measures taken by the landlords and managers of buildings leased by the Corporation. Accordingly, the Corporation is communicating with certain of these parties to evaluate any potential impact on the Corporation. In particular, the Corporation is contacting its service providers and software vendors (collectively, "Vendors") and requesting information on their Year 2000 project plans. The Corporation has designated approximately 36% of these Vendors as "mission critical." As of December 31, 1998, the Corporation has received assurances that approximately 78% of its Vendors, and approximately 85% of its mission critical Vendors, are Year 2000 ready. At the end of 1998, any Vendor which had not provided appropriate documentation, had not responded timely to the Corporation's inquiries or did not expect to be Year 2000 ready until 1999 was placed in an "at risk" category. As of December 31, 1998, the Corporation has placed approximately 16% of its Vendors, and approximately 7% of its mission critical Vendors, in an "at risk" category. In accordance with its contingency plans, the Corporation will continue to focus on these "at risk" mission critical Vendors in order to mitigate any potential risk. The Corporation is also tracking the Year 2000 compliance efforts of certain domestic and foreign agencies involved with payment systems, such as clearing houses, security clearings and central banks. The Corporation has identified 29 of 195 agencies, or 15%, which have neither responded to the Corporation's inquiries or which were not Year 2000 ready as of December 31, 1998. Although work involved with the implementation of the Euro resulted in some delay with respect to the agencies' efforts in this area, the Corporation will continue to monitor those agencies of particular concern. In addition, the Corporation has completed Year 2000 risk assessments for the majority of its commercial credit customers. For any customers deemed higher risk, on a quarterly basis, the Corporation's Credit Review Committee reviews the results of customer assessments prepared by the customers' relationship managers. By July 1, 1999, the Corporation will reassess any customers deemed "medium risk." Weakness in a borrower's Year 23 2000 strategy is part of the overall risk assessment process. Risk ratings and exposure strategy are adjusted as required after consideration of all risk issues. Any impact on the allowance for credit losses is determined through the normal risk rating process. The Corporation is also assessing potential Year 2000 risks associated with its investment advisory and fiduciary activities. Each investment subsidiary has a defined investment process and is integrating the consideration of Year 2000 issues into that process. When making investment decisions or recommendations, the Corporation's investment research areas consider the Year 2000 issue as a factor in their analysis, and may take certain steps to investigate Year 2000 readiness, such as reviewing ratings, research reports and other publicly available information. In the fiduciary area, the Corporation is assessing Year 2000 risks for business, real estate, oil and gas, and mineral interests that are held in Trust. Following the merger with BankAmerica, the Corporation identified its significant depositors and assessed the Year 2000 readiness of these customers. The Corporation will continue to monitor these depositors for purposes of determining any potential liquidity risks to the Corporation. Costs The Corporation currently estimates the total cost of the Year 2000 project to be approximately $550 million. Of this amount, the Corporation has incurred cumulative Year 2000 costs of approximately $410 million through December 31, 1998. A significant portion of the foregoing cost is not expected to be incremental to the Corporation but instead will constitute a reallocation of existing internal systems technology resources and, accordingly, will be funded from normal operations. Contingency Plans The Corporation has existing business continuity plans that address its response to disruptions to business due to natural disasters, civil unrest, utility outages or other occurrences. The Corporation is developing business continuity plans specific to Year 2000 issues that are based on these existing plans. The Corporation has made substantial progress on an inventory and assessment of the existing business contingency plans. Supplements to the existing plans to address Year 2000 issues are being finalized and will include detailed plans to respond to these events. The Corporation substantially completed these supplemental business continuity plans in January 1999. During the remainder of 1999, the business continuity plans are being tested and validated with particular attention to event management and communication processes. Risks Although the Corporation's remediation efforts are directed at reducing its Year 2000 exposure, there can be no assurance that these efforts will fully mitigate the effect of Year 2000 issues and it is likely that one or more events may disrupt the Corporation's normal business operations. In the event the Corporation fails to identify or correct a material Year 2000 problem, there could be disruptions in normal business operations, which could have a material adverse effect on the Corporation's results of operations, liquidity or financial condition. In addition, there can be no assurance that significant foreign and domestic third parties will adequately address their Year 2000 issues. Further, there may be some such parties, such as governmental agencies, utilities, telecommunication companies, financial services vendors and other providers, where alternative arrangements or resources are not available. Also, risks associated with some foreign third parties may be greater since there is general concern that some entities operating outside the United States are not addressing Year 2000 issues on a timely basis. In addition to the foregoing, the Corporation is subject to credit risk to the extent borrowers fail to adequately address Year 2000 issues, to fiduciary risk to the extent fiduciary assets fail to adequately address Year 2000 issues, and to liquidity risk to the extent of deposit withdrawals and to the extent its lenders are unable to provide the Corporation with funds due to Year 2000 issues. Although it is not possible to quantify the potential impact of these risks at this time, in future years, there may be increases in problem loans, credit losses, losses in the fiduciary business and liquidity problems, as well as the risk of litigation and potential losses from litigation related to the foregoing. 24 Forward-looking statements contained in the foregoing "Year 2000 Project" section should be read in conjunction with the cautionary statements included in the introductory paragraphs under "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 9 and 10. Economic and Monetary Unit (EMU) in Europe On January 1, 1999, 11 member countries of the European Union launched a common legal currency called the Euro. EMU monetary policy, including the money supply and official interest rates for the Euro, is now under the direction of the European Central Bank. During the transition period, January 1, 1999 through January 1, 2002, the old national currencies will remain legal tender as denominations of the Euro. Beginning January 1, 2002, Euro denominated bills and coins will be issued for use in cash transactions, and by July 1, 2002, all legacy currencies will cease to be legal tender. EMU will impact the Corporation's payment and clearing systems. Management expects the elimination of national currencies in favor of the single Euro currency to reduce cross border barriers to business and reduce the previous competitive advantage of national firms. The Corporation believes that it is favorably positioned to benefit from these changes. In addition, management believes that the Euro conversion presents significant business opportunities for major pan-European providers of cash management services, such as the Corporation. The Corporation prepared actively for the Euro conversion, utilizing a dedicated EMU project team to ensure that the Corporation's technology and operations were appropriately modified by January 1, 1999. The project team also communicated extensively with the Corporation's clients and counterparties regarding the implications of EMU and the effect it would have on their business relationships and contracts with the Corporation. The Corporation completed the initial redenomination event on January 3, 1999. Most of the costs associated with the Euro conversion were incurred by the end of fiscal 1998, and these costs have not been material. Such costs have been and will continue to be expensed by the Corporation during the period in which they are incurred, and any ongoing costs are not currently anticipated to be material. The Corporation does not expect the formation of the EMU to have a material impact on its results of operations or financial condition. Income Taxes The Corporation's income tax expense for 1998 and 1997 was $2.9 billion and $4.0 billion, respectively. Excluding merger-related charges, the effective tax rates for 1998 and 1997 were 34 percent and 38 percent, respectively. The reduction in the effective tax rate is due primarily to the reorganization of certain subsidiaries of the Corporation in 1998. Note Fourteen of the consolidated financial statements on page 87 includes a reconciliation of federal income tax expense computed using the federal statutory rate of 35 percent to actual income tax expense. Balance Sheet Review and Liquidity Risk Management The Corporation utilizes an integrated approach in managing its balance sheet, which includes management of interest rate sensitivity, credit risk, liquidity risk and its capital position. The average balances discussed below can be derived from Table Three. The following discussion addresses changes in average balances in 1998 compared to 1997. Average customer-based funds increased $4.2 billion to $286.1 billion in 1998 compared to average levels for 1997. As a percentage of total sources, average customer-based funds decreased to 49 percent in 1998 from 52 percent in 1997. Average market-based funds increased $26.8 billion in 1998 to $167.5 billion and comprised a larger portion of total sources of funds at 29 percent in 1998 compared to 26 percent in 1997. In addition, 1998 levels of long-term debt increased by $3.6 billion over 1997, mainly the result of borrowings to fund business development opportunities and to replace debt maturities. Average loans and leases, the Corporation's primary use of funds, increased $4.7 billion to $347.8 billion during 1998. As a percentage of total uses of funds, average loans and leases decreased to 60 percent in 1998 25 from 63 percent in 1997. The increase in average loans and leases was due primarily to core loan growth, partially offset by the impact of $19.3 billion of securitizations in 1997, most of which occurred in the third quarter. The ratio of average loans and leases to customer-based funds was 122 percent for both 1998 and 1997. Average other assets and cash and cash equivalents increased $5.9 billion to $84.7 billion in 1998 due largely to an increase in derivative-dealer assets associated with interest rate fluctuations and goodwill associated mainly with the NationsBanc Montgomery Securities and NationsBanc Auto Leasing, Inc. acquisitions. The average securities portfolio in 1998 increased $18.4 billion over 1997 levels, amounting to 11 percent of total uses of funds in 1998 compared to 9 percent in 1997. See the following "Securities" section for additional information on the securities portfolio. Cash and cash equivalents were $28.3 billion on December 31, 1998, a decrease of $189 million from December 31, 1997. During 1998, net cash provided by operating activities was $10.9 billion, net cash used in investing activities was $47.2 billion and net cash provided by financing activities was $36.1 billion. For further information on cash flows, see the Consolidated Statement of Cash Flows on page 54 in the consolidated financial statements. Liquidity is a measure of the Corporation's ability to fulfill its cash requirements and is managed by the Corporation through its asset and liability management process. The Corporation monitors its assets and liabilities and modifies these positions as liquidity requirements change. This process, coupled with the Corporation's ability to raise capital and debt financing, is designed to cover the liquidity needs of the Corporation. Management believes that the Corporation's sources of liquidity are more than adequate to meet its cash requirements. The following discussion provides an overview of significant on- and off-balance sheet components. Securities The securities portfolio serves a primary role in the overall context of balance sheet management by the Corporation. The decision to purchase or sell securities is based upon the current assessment of economic and financial conditions, including the interest rate environment, liquidity requirements and on- and off-balance sheet positions. The securities portfolio on December 31, 1998 consisted of securities held for investment totaling $2.0 billion and securities available for sale totaling $78.6 billion compared to $4.8 billion and $62.2 billion, respectively, on December 31, 1997. The increase in available for sale securities reflects the management of the Corporation's interest rate sensitivity by adding fixed-income assets. On December 31, 1998 and 1997, the market value of the Corporation's securities held for investment reflected net unrealized losses of $144 million and net unrealized gains of $83 million, respectively. The valuation allowance for securities available for sale and marketable equity securities included in shareholders' equity was $292 million on December 31, 1998, reflecting pre-tax appreciation of $354 million on debt securities and $165 million on marketable equity securities. The valuation allowance increased shareholders' equity by $545 million on December 31, 1997. The decrease in the valuation allowance was primarily attributable to the realization of securities gains during 1998 and lower market interest rates at December 31, 1998. The estimated average duration of securities held for investment and securities available for sale portfolios were 5.59 and 4.14, respectively, on December 31, 1998 compared to 4.90 and 4.91, respectively, on December 31, 1997. Loans and Leases Total loans and leases increased approximately 4 percent to $357.3 billion on December 31, 1998 compared to $342.1 billion on December 31, 1997. As presented in Table Three, average total loans and leases increased 1 percent to $347.8 billion in 1998 compared to $343.2 billion in 1997 primarily due to core loan growth, partially offset by the impact of $11.6 billion of securitizations in 1998 and $19.3 billion of securitizations in 1997. Average commercial loans increased to $189.9 billion in 1998 compared to $175.4 billion in 1997, due largely to core loan growth, partially offset by the impact of $4.2 billion of securitizations in 1997. Average domestic commercial real estate loans decreased to $28.4 billion in 1998 due mainly to loan sales. 26 Average residential mortgage loans decreased 12 percent to $70.8 billion in 1998 compared to $80.6 billion in 1997, mainly the result of loan sales and the impact of $5.1 billion of securitizations in 1998 and $9.6 billion of securitizations in 1997. Average bankcard and other consumer loans, including direct and indirect consumer loans and home equity loans, decreased $116 million to $87.1 billion in 1998 due primarily to a decrease in bankcard loans, which included the impact of $2.0 billion of securitizations in 1998, partially offset by an increase in other consumer loans. A significant source of liquidity for the Corporation is the repayments and maturities of loans. Table Seven shows selected loan maturity data on December 31, 1998 and indicates that approximately 48 percent of the selected loans had maturities of one year or less. The securitization and sale of certain loans and the use of loans as collateral in asset-backed financing arrangements are also sources of liquidity. Table Seven Selected Loan Maturity Data December 31, 1998 (Dollars in Millions) This table presents the maturity distribution and interest sensitivity of selected loan categories (excluding residential mortgage, bankcard, other consumer loans and lease financing). Maturities are presented on a contractual basis.
Due after Due in 1 year 1 year through Due after or less 5 years 5 years Total ------------ ------------ ------------ ------------- Commercial - domestic ................................................... $ 65,256 $ 47,185 $ 16,195 $ 128,636 Commercial real estate - domestic ....................................... 3,409 6,990 9,405 19,804 Construction real estate - domestic ..................................... 3,866 2,864 378 7,108 Foreign ................................................................. 18,284 8,939 5,526 32,749 -------- -------- -------- --------- Total selected loans ................................................... $ 90,815 $ 65,978 $ 31,504 $ 188,297 ======== ======== ======== ========= Percent of total ........................................................ 48.2% 35.1% 16.7% 100% Cumulative percent of total ............................................. 48.2 83.3 100.0 Sensitivity of loans to changes in interest rates for loans due after one year Predetermined interest rates ........................................... $ 15,154 $ 12,489 $ 27,643 Floating or adjustable interest rates .................................. 50,824 19,015 69,839 -------- -------- --------- $ 65,978 $ 31,504 $ 97,482 ======== ======== =========
Deposits Table Three provides information on the average amounts of deposits and the rates paid by deposit category. Through the Corporation's diverse retail banking network, deposits remain a primary source of funds for the Corporation. Average deposits increased 3 percent in 1998 over 1997 to $345.5 billion. See Note Seven of the consolidated financial statements on page 68 for further details on deposits. Short-Term Borrowings and Trading Account Liabilities The Corporation uses short-term borrowings as a funding source and in its management of interest rate risk. Table Eight presents the categories of short-term borrowings. During 1998, total average short-term borrowings increased 29 percent to $90.6 billion and average trading account liabilities increased 14 percent from 1997 levels, to $17.5 billion in 1998. 27 Table Eight Short-Term Borrowings (Dollars in Millions)
1998 1997 1996 -------------------- --------------------- -------------------- Amount Rate Amount Rate Amount Rate --------- ---------- ---------- ---------- --------- ---------- Federal funds purchased On December 31 ............................. $ 7,316 5.25% $10,111 5.80% $ 6,187 6.06% Average during year ........................ 8,201 5.42 6,551 5.54 6,662 5.35 Maximum month-end balance during year ...... 11,187 -- 10,111 -- 9,974 -- Securities sold under agreements to repurchase On December 31 ............................. 60,227 5.08 51,303 5.83 24,279 5.58 Average during year ........................ 56,710 5.66 45,403 5.58 41,239 5.52 Maximum month-end balance during year ...... 71,595 -- 51,820 -- 43,120 -- Commercial paper On December 31 ............................. 6,749 5.19 5,925 5.65 5,849 5.52 Average during year ........................ 6,419 5.56 6,184 5.64 6,036 5.66 Maximum month-end balance during year ...... 7,913 -- 6,689 -- 7,028 -- Other short-term borrowings On December 31 ............................. 24,742 4.52 12,120 6.52 12,239 6.06 Average during year ........................ 19,300 6.35 12,261 7.02 11,897 6.09 Maximum month-end balance during year ...... 25,927 -- 13,974 -- 13,489 --
Long-Term Debt Long-term debt increased 7 percent from $42.9 billion at December 31, 1997 to $45.9 billion on December 31, 1998 mainly as a result of borrowings to fund business development opportunities and to replace maturing debt. During 1998, the Corporation issued $350 million of trust preferred securities and $12.5 billion in long-term senior and subordinated debt. See Notes Eight and Nine of the consolidated financial statements on pages 69 and 71 for further details on long-term debt and trust preferred securities. Other The Corporation has commercial paper back-up lines totaling $1.1 billion of which $669 million expires in October 1999 and $479 million expires in October 2002. In addition, the Corporation has a $1.6 billion line of credit which expires in May 2001. No borrowings have been made under these lines. The Corporation's financial position is reflected in the following debt ratings, which include upgrades as applicable from December 31, 1997 ratings:
Commercial Senior Subordinated Paper Debt Debt ------------ -------- ------------- Moody's Investors Service ......... P-1 Aa2 Aa3 Standard & Poor's Corporation ..... A-1 A+ A Duff and Phelps, Inc .............. D-1+ AA- A+ Fitch IBCA, Inc ................... F-1+ AA- A+ Thomson BankWatch ................. TBW-1 AA- A+
In managing liquidity, the Corporation takes into consideration the ability of its subsidiary banks to pay dividends to the parent company. See Note Twelve of the consolidated financial statements on page 78 for further details on dividend capabilities of its subsidiary banks. Capital Resources And Capital Management Shareholders' equity on December 31, 1998 was $45.9 billion compared to $44.6 billion on December 31, 1997. The increase was primarily due to net earnings (net income less dividends) of $2.6 billion coupled with the issuance of approximately 30.5 million shares of common stock under various employee plans. The increase was partially offset by the repurchase of 29.3 million shares of common stock for approximately $1.8 billion and a net decrease of $242 million in the market value of securities available for sale and marketable equity securities. 28 The Corporation's and its significant banking subsidiaries' regulatory capital ratios, along with a description of the components of risk-based capital, capital adequacy requirements and prompt corrective action provisions, are included in Note Twelve of the consolidated financial statements on page 78. Off-Balance Sheet Derivatives - Asset and Liability Management (ALM) Activities Interest rate contracts are used in the asset and liability management process. These contracts, which are generally non-leveraged generic interest rate and basis swaps, options and futures, allow the Corporation to effectively manage its interest rate risk position. Generic interest rate swaps involve the exchange of fixed-rate and variable-rate interest payments based on the contractual underlying notional amount. Basis swaps involve the exchange of interest payments based on the contractual underlying notional amounts, where both the pay rate and the receive rate are floating rates based on different indices. Option products primarily consist of caps and floors. Interest rate caps and floors are agreements where, for a fee, the purchaser obtains the right to receive interest payments when a variable interest rate moves above or below a specified cap or floor rate, respectively. Futures contracts used for ALM activities are primarily index futures providing for cash payments based upon the movements of a deposit rate index. The amount of net realized deferred gains associated with terminated ALM swaps were $294 million and $68 million on December 31, 1998 and December 31, 1997, respectively. The amount of net realized deferred losses associated with terminated ALM futures and forward rate contracts was $1 million on December 31, 1998, compared to a gain of $9 million on December 31, 1997. The amount of net realized deferred gains associated with terminated ALM options were $26 million and $13 million on December 31, 1998 and December 31, 1997, respectively. See Note Eleven of the consolidated financial statements on page 74 for information on the notional amounts and fair values of the Corporation's ALM interest rate contracts. In addition, the Corporation uses foreign currency contracts to manage the foreign exchange risk associated with foreign-denominated assets and liabilities, as well as the Corporation's equity investments in foreign subsidiaries. Foreign exchange contracts, which include spot, forward and futures contracts, represent agreements to exchange the currency of one country for the currency of another country at an agreed-upon price, on an agreed-upon settlement date. On December 31, 1998, these contracts had a notional value of $3.3 billion and a fair value of $72 million. The fair values of the ALM interest rate and foreign exchange portfolios should be viewed in the context of the overall balance sheet. The value of any single component of the balance sheet or off-balance sheet positions should not be viewed in isolation. For a discussion of the Corporation's management of risk associated with mortgage production and servicing activities, see the "Noninterest Income" section on page 19. Market Risk Management In the normal course of conducting its business activities, the Corporation is exposed to market risks which include both price and liquidity risk. Market risk is the potential of loss arising from adverse changes in market rates and prices, such as interest rates (interest rate risk), foreign currency exchange rates (foreign exchange risk), commodity prices (commodity risk) and prices of equity securities (equity risk). Financial products that expose the Corporation to market risk include securities, loans, deposits, debt, and derivative financial instruments such as futures, forwards, swaps, options, and other financial instruments with similar characteristics. Liquidity risk arises from the possibility that the Corporation may not be able to satisfy current or future financial commitments or that the Corporation may be more reliant on alternative funding sources such as long-term debt. Market risk is managed by the Corporation's Finance Committee, which formulates policy based on desirable levels of market risk. In setting desirable levels of market risk, the Finance Committee considers the impact on both earnings and capital of the current outlook in market rates, potential changes in market rates, world and regional economies, liquidity, business strategies and other factors. For a discussion of non-trading, on-balance sheet financial instruments see Table Nine in the following Market Risk Management section on page 31. For information on market risk associated with ALM activities, 29 see the following discussion on page 32 of the Market Risk Management section and the mortgage banking section of Noninterest Income on page 19. Market risk associated with the trading portfolio is discussed in the following Market Risk Management section on page 32. The composition of the trading portfolio and related fair values are included in Note Four of the consolidated financial statements on page 66. Prior to the BankAmerica merger, market risk exposure was managed by each of the previously separate companies. Separate risk management models and assumptions were used in accordance with each company's unique market risk profile. The market risk information presented in this section is as of, or for the year ended, December 31, 1998 and reflects the market risk profile of the merged company. Prior period amounts have not been presented as such amounts were based on the risk profiles of the previously separate entities and, accordingly, are not comparable to current period amounts. Non-Trading Portfolio The Corporation's ALM process is used to manage interest rate risk through the structuring of balance sheet and off-balance sheet portfolios and identifying and linking such off-balance sheet positions to specific assets and liabilities. Interest rate risk represents the only material market risk exposure to the Corporation's non-trading on-balance sheet financial instruments. To effectively measure and manage interest rate risk, the Corporation uses sophisticated computer simulations which determine the impact on net interest income of numerous interest rate scenarios, balance sheet trends and strategies. These simulations cover the following financial instruments: short-term financial instruments, securities, loans, deposits, borrowings and off-balance sheet financial instruments. These simulations incorporate assumptions about balance sheet dynamics, such as loan and deposit growth and pricing, changes in funding mix and asset and liability repricing and maturity characteristics. Simulations are run under various interest rate scenarios to determine the impact on net income and capital. From these scenarios, interest rate risk is quantified and appropriate strategies are developed and implemented. The overall interest rate risk position and strategies are reviewed on an ongoing basis by senior management. Additionally, duration and market value sensitivity measures are selectively utilized where they provide added value to the overall interest rate risk management process. On December 31, 1998, the interest rate risk position of the Corporation was relatively neutral as the impact of a gradual parallel 100 basis-point rise or fall in interest rates over the next 12 months was estimated to be less than one percent of net interest income. Table Nine below summarizes the expected maturities, unrealized gains and losses and weighted average effective yields and rates associated with the Corporation's significant non-trading on-balance sheet financial instruments. Cash and cash equivalents, time deposits placed and other short-term investments, federal funds sold and purchased, resale and repurchase agreements, commercial paper, other short-term borrowings and foreign deposits, which are similar in nature to other short-term borrowings, are excluded from Table Nine as their respective carrying values approximate fair values. These financial instruments generally expose the Corporation to insignificant market risk as they have either no stated maturities or an average maturity of less than 30 days and interest rates that approximate market rates. However, these financial instruments could expose the Corporation to interest rate risk by requiring more or less reliance on alternative funding sources, such as long-term debt. Loans held for sale are also excluded as their carrying values approximate their fair values, generally exposing the Corporation to insignificant market risk. For further information on the fair value of financial instruments see Notes Four and Fifteen of the consolidated financial statements on pages 66 and 88, respectively. 30 Table Nine Non-Trading On-Balance Sheet Financial Instruments December 31, 1998 (Dollars in Millions)
Unrealized Total Gain/(Loss) ------------- ------------- Assets (1) Loans (2)(3) Fixed rate Book value ............................. $ 116,292 $ 3,331 Weighted average effective yield ....... 8.23% Variable rate Book value ............................. $ 221,011 2,591 Weighted average effective yield ....... 6.51% Securities held for investment (2) Fixed rate Book value ............................. $ 1,858 (144) Weighted average effective yield ....... 6.64% Variable rate Book value ............................. $ 139 -- Weighted average effective yield ....... 6.33% Securities available for sale (2) Fixed rate Book value ............................. $ 73,595 237 Weighted average effective yield ....... 6.05% Variable rate Book value ............................. $ 4,641 117 Weighted average effective yield ....... 6.63% Liabilities (1) Total deposits (4)(5) Fixed rate Book value ............................. $ 212,586 (330) Weighted average effective rate ........ 2.02% Variable rate Book value ............................. $ 86,504 5 Weighted average effective rate ........ 2.96% Long-term debt (excluding obligations under capital leases) (6) Fixed rate Book value ............................. $ 24,761 (1,491) Weighted average effective rate ........ 7.42% Variable rate Book value ............................. $ 21,006 (66) Weighted average effective rate ........ 5.35% Trust preferred securities (6) Fixed rate Book value ............................. $ 3,811 (290) Weighted average effective rate ........ 8.03% Variable rate Book value ............................. $ 1,143 -- Weighted average effective rate ........ 5.98% Expected Maturity ---------------------------------------------------------------- After 1999 2000 2001 2002 2003 2003 ---------- ---------- ---------- ---------- --------- ---------- Assets (1) Loans (2)(3) Fixed rate Book value ............................. $38,511 $21,075 $14,656 $10,037 $ 6,994 $25,019 Weighted average effective yield ....... Variable rate Book value ............................. 90,003 35,016 26,197 25,458 14,637 29,700 Weighted average effective yield ....... Securities held for investment (2) Fixed rate Book value ............................. 808 147 124 71 119 589 Weighted average effective yield ....... Variable rate Book value ............................. 80 19 7 18 4 11 Weighted average effective yield ....... Securities available for sale (2) Fixed rate Book value ............................. 855 1,448 3,433 6,338 9,050 52,471 Weighted average effective yield ....... Variable rate Book value ............................. 66 260 333 3,221 66 695 Weighted average effective yield ....... Liabilities (1) Total deposits (4)(5) Fixed rate Book value ............................. 70,087 12,876 12,723 12,034 11,372 93,494 Weighted average effective rate ........ Variable rate Book value ............................. 19,864 14,087 11,557 9,709 8,191 23,096 Weighted average effective rate ........ Long-term debt (excluding obligations under capital leases) (6) Fixed rate Book value ............................. 1,618 2,069 4,691 3,122 2,937 10,324 Weighted average effective rate ........ Variable rate Book value ............................. 6,640 6,658 2,482 1,282 2,326 1,618 Weighted average effective rate ........ Trust preferred securities (6) Fixed rate Book value ............................. -- -- 900 -- 350 2,561 Weighted average effective rate ........ Variable rate Book value ............................. -- -- -- 400 -- 743 Weighted average effective rate ........
(1) Fixed and variable rate classifications are based on contractual rates and are not modified for the impact of asset and liability management contracts. (2) Expected maturities reflect the impact of prepayment assumptions. (3) Excludes leases. (4) When measuring and managing market risk associated with domestic deposits, the Corporation considers its long-term relationships with depositors. The unrealized loss on deposits in this table does not consider these long-term relationships, therefore only certificates of deposits reflect a change in value. (5) Excludes foreign time deposits. (6) Expected maturities of long-term debt and trust preferred securities reflect the Corporation's ability to redeem such debt prior to contractual maturities. 31 Risk management interest rate contracts are utilized in the ALM process. Such contracts, which are generally non-leveraged generic interest rate and basis swaps, futures, forwards, and options, allow the Corporation to effectively manage its interest rate risk position. As reflected in Table Ten, the notional amount of the Corporation's receive fixed and pay fixed interest rate swaps on December 31, 1998 was $60.5 billion, primarily converting variable-rate commercial loans to fixed rate, and $25.8 billion, respectively. The net receive fixed position on December 31, 1998 was $34.7 billion compared to $31.1 billion on December 31, 1997. In addition, the Corporation had $7.7 billion of basis swaps linked primarily to loans and long-term debt. Table Ten also summarizes the expected maturities, weighted average pay and receive rates and the unrealized gains and losses on December 31, 1998 of the Corporation's ALM interest rate swaps, as well as the expected maturities and unrealized gains and losses on December 31, 1998 of the Corporation's ALM basis swaps, forwards, futures, and options contracts. Unrealized gains and losses are based on the last repricing and will change in the future primarily based on movements in one-, three- and six-month LIBOR rates. The net unrealized gain on the ALM swap portfolio on December 31, 1998 was $942 million compared to a net unrealized loss of $18 million on December 31, 1997, primarily reflecting a decrease in interest rates. The net unrealized gain in the estimated value of the ALM interest rate contracts should be viewed in the context of the overall balance sheet. The value of any single component of the balance sheet or off-balance sheet positions should not be viewed in isolation. For a discussion of the Corporation's management of risk associated with mortgage production and servicing activities, see the "Noninterest Income" section on page 19. Table Ten Asset and Liability Management Interest Rate Contracts December 31, 1998 (Dollars in Millions, Average Maturity in Years)
Fair Value ----------- Total receive fixed swaps ............. $ 1,958 Notional value ...................... Weighted average receive rate ....... Total pay fixed swaps ................. (1,006) Notional value ...................... Weighted average pay rate ........... Basis swaps ........................... (10) --------- Notional value ...................... Total swaps ........................... 942 Futures and forward rate contracts..... 2 Notional amount ..................... Option products ....................... (46) --------- Notional amount ..................... Total interest rate contracts ......... $ 898 ========= Maturity --------------------------------------------------------------------------------------- After Total 1999 2000 2001 2002 2003 2003 ------------ ----------- ----------- ------------ ----------- ------------ ------------ Total receive fixed swaps ............. Notional value ...................... $ 60,450 $ 4,492 $ 8,220 $ 12,213 $ 2,599 $ 15,826 $ 17,100 Weighted average receive rate ....... 6.16% 6.16% 6.28% 6.31% 6.93% 5.59% 6.43% Total pay fixed swaps ................. Notional value ...................... $ 25,770 $ 6,062 $ 6,900 $ 4,356 $ 1,177 $ 2,481 $ 4,794 Weighted average pay rate ........... 6.73% 6.46% 6.89% 6.47% 7.31% 7.14% 6.76% Basis swaps ........................... Notional value ...................... $ 7,736 $ 1,685 $ 743 $ 625 $ 1,669 $ 3,014 $ -- Total swaps ........................... Futures and forward rate contracts..... Notional amount ..................... $ 6,348 $ 6,348 $ -- $ -- $ -- $ -- $ -- Option products ....................... Notional amount ..................... $ 26,836 $ 3,225 $ 543 $ 1,088 $ 938 $ 1,950 $ 19,092 Total interest rate contracts ......... Average Expected Maturity --------- Total receive fixed swaps ............. 4.55 Notional value ...................... Weighted average receive rate ....... Total pay fixed swaps ................. 3.18 Notional value ...................... Weighted average pay rate ........... Basis swaps ........................... 2.88 Notional value ...................... Total swaps ........................... Futures and forward rate contracts..... Notional amount ..................... Option products ....................... Notional amount ..................... Total interest rate contracts .........
Trading Portfolio The Corporation manages its exposure to market risk resulting from trading activities through a risk management function which is independent of the various business units. The Trading Risk Committee (TRC) establishes and monitors various limits on trading activities. These limits include product volume, gross and net positions, and value-at-risk (VAR) and profit and loss simulation limits. Product volume limits establish maximum aggregate amounts of specific types of derivatives, foreign exchange contracts, and securities that the Corporation may hold in its trading account at any point in time. Position limits restrict the gross and net amount of contracts that can be held in the trading account in any specific maturity grouping. VAR measures the potential loss in future earnings due to market rate movements within the trading portfolio using proprietary models that are based on statistical probability. VAR limits establish the maximum amount of potential loss, based upon sophisticated modeling techniques, that the Corporation is willing to assume at any point in time. Additionally, 32 the Corporation uses profit and loss simulations to measure the potential for loss in various segments of the trading portfolio resulting from specific and extremely adverse scenarios. These scenarios are projected without regard to the statistical probability of their occurrences. Loss simulation limits establish the maximum amount of projected loss computed by the simulation that the Corporation is willing to assume. The Corporation reduces the market risk to which it is exposed in the trading account by executing offsetting transactions with other counterparties. However, the Corporation may also retain, generally on a temporary basis, open or uncovered trading account positions in an effort to generate revenue by correctly anticipating future market conditions and customer demands or by taking advantage of price differentials among the various markets in which it operates. The day-to-day management of interest rate and foreign exchange risks takes place at a decentralized level within the Corporation's various trading centers. Limits established by the TRC are assigned to each trading center. In addition, documented trading policies and procedures define acceptable boundaries within which traders can execute transactions in their assigned markets. The Corporation uses a VAR methodology to measure the interest rate, foreign exchange, commodity and equity risks inherent in its trading activities. Under this methodology, management models historical data to statistically calculate, with 99 percent confidence, the potential loss in earnings the Corporation might experience if an adverse one-day shift in market prices was to occur. The Corporation performs the VAR calculation for each major trading portfolio segment on a daily basis. It then calculates the combined VAR across these portfolio segments using two different sets of assumptions. The first calculation assumes that each portfolio segment experiences adverse price movements at the same time (i.e., the price movements are perfectly correlated). The second calculation assumes that these adverse price movements within the major portfolio segments do not occur at the same time (i.e., they are uncorrelated). Trading Activities Market Risk (US Dollar Equivalents in Millions)
Year Ended December 31, 1998 ----------------------------------------- Average VAR High VAR (1) Low VAR (1) ------------- -------------- ------------ Based on perfect positive correlation: Interest rate ..................... $ 120.2 $ 163.8 $ 92.7 Foreign currency .................. 28.5 46.0 8.3 Commodities ....................... 3.6 6.9 1.4 Equity ............................ 2.0 5.2 0.5 Based on zero correlation: Interest rate ..................... 37.6 49.9 29.3 Foreign currency .................. 24.0 40.0 6.4 Commodities ....................... 2.7 5.3 1.1 Equity ............................ 1.7 5.2 0.5
(1) The high and low for the entire trading account may not equal the sum of the individual components as the highs or lows of the components occurred on different trading days. The table above sets forth the calculated VAR amounts for the year ended 1998. The amounts are calculated on a pre-tax basis. Although the Corporation's trading positions have remained generally consistent during 1998, VAR levels have been impacted by recent volatility in market conditions. VAR modeling on trading is subject to numerous limitations. In addition, the Corporation recognizes that there are numerous assumptions and estimates associated with modeling and actual results could differ from these assumptions and estimates. The Corporation mitigates these uncertainties through close monitoring and by examining and updating assumptions on an ongoing basis. The continual trading risk management process considers the impact of unanticipated risk exposure and updates assumptions to reduce loss exposure. 33 Credit Risk Management and Credit Portfolio Review In conducting business activities, the Corporation is exposed to the risk that borrowers or counterparties may default on their obligations to the Corporation. Credit risk arises through the extension of loans and leases, certain securities, letters of credit, financial guarantees and through counterparty exposure on trading and capital markets transactions. To manage this risk, the Credit Risk Management group establishes policies and procedures to manage both on- and off-balance sheet credit risk and communicates and monitors the application of these policies and procedures throughout the Corporation. The Corporation's overall objective in managing credit risk is to minimize the adverse impact of any single event or set of events. To achieve this objective, the Corporation strives to maintain a credit risk profile that is diverse in terms of product type, industry concentration, geographic distribution and borrower or counterparty concentration. The Credit Risk Management group works with lending officers, trading personnel and various other line personnel in areas that conduct activities involving credit risk and is involved in the implementation, refinement and monitoring of credit policies and procedures. The Corporation manages credit exposure to individual borrowers and counterparties on an aggregate basis including loans and leases, securities, letters of credit, bankers' acceptances, derivatives and unfunded commitments. The creditworthiness of a borrower or counterparty is determined by experienced personnel, and limits are established for the total credit exposure to any one borrower or counterparty. Credit limits are subject to varying levels of approval by senior line and credit risk management. For commercial lending, the originating credit officer assigns borrowers or counterparties an initial risk rating which is based primarily on the amount of inherent credit risk and reviewed for appropriateness by senior line and credit risk personnel. Credits are monitored by line and credit risk management personnel for deterioration in a borrower's or counterparty's financial condition which would impact the ability of the borrower or counterparty to perform under the contract. Risk ratings are adjusted as necessary. For consumer lending, credit scoring systems are utilized to provide standards for extension of credit. Consumer portfolio credit risk is monitored primarily using statistical models and actual payment experience to predict portfolio behavior. When required, the Corporation obtains collateral to support credit extensions and commitments. Generally, such collateral is in the form of real and personal property, cash on deposit or other highly liquid instruments. In certain circumstances, the Corporation obtains real property as security for some loans that are made on the general creditworthiness of the borrower and whose proceeds were not used for real estate-related purposes. The Corporation also manages exposure to a single borrower, industry, product-type or other concentration through syndications of credits, participations, loan sales and securitizations. Through Global Corporate and Investment Banking, the Corporation is a major participant in the syndications market. In a syndicated facility, each participating lender funds only its portion of the syndicated facility, therefore limiting its exposure to the borrower. The Corporation also identifies and reduces its exposure to the funded borrower, product or industry concentrations through loan sales. Generally, these sales are without recourse to the Corporation. In conducting derivatives activities in certain jurisdictions, the Corporation reduces credit risk to any one counterparty through the use of legally enforceable master netting agreements which allow the Corporation to settle positive and negative positions with the same counterparty on a net basis. For more information on the Corporation's off-balance sheet credit risk, see Note Eleven of the consolidated financial statements on page 74. An independent credit review group conducts ongoing reviews of credit activities and portfolios, reexamining on a regular basis risk assessments for credit exposures and overall compliance with policy. Loans and Leases Portfolio - The Corporation's credit exposure is focused in its loans and leases portfolio, which totaled $357.3 billion on December 31, 1998. Table Fifteen presents a distribution of loans and leases by category. 34 Allowance for Credit Losses - The Corporation performs periodic and systematic detailed reviews of its loan and lease portfolios to identify risks inherent in and to assess the overall collectibility of those portfolios. These detailed reviews, combined with historical loss experience, result in the identification and quantification of loss factors which are used in determining the amount of the allowance and related provision for credit losses. Consumer loans and leases, which includes residential mortgages, home equity lines, direct/indirect, consumer finance and foreign consumer loans, are generally evaluated as a group, based on loan type. Remaining loans and leases are evaluated individually due to a general lack of uniformity among individual loans within each loan type and assigned a risk rating. The loss factors are applied to each individual loan based on the particular item's risk ratings or to specific loan groups in order to provide a basis for establishing an adequate level of allowance for credit losses. Portions of the allowance for credit losses, as presented on Table Twelve, are allocated to cover the estimated losses inherent in each loan and lease category based on the results of the Corporation's detail review process. Further allocations are made based on specific existing economic conditions as well as performance trends within specific portfolio segments and individual concentrations of credit. The remaining unallocated portion of the allowance for credit losses is determined based on general economic, performance and credit concentration trends, including geographic concentrations. The nature of the process by which the Corporation determines the appropriate allowance for credit losses requires the exercise of considerable judgment. After review of all relevant matters effecting loan collectibility, management believes that the allowance for credit losses, see Note Twelve of the consolidated financial statements on page 78, is appropriate given its analysis of inherent credit losses on December 31, 1998. The Corporation's allowance for credit losses was $7.1 billion, or 1.99 percent of loans and leases on December 31, 1998, compared to $6.8 billion, or 1.98 percent, on December 31, 1997, with the increase attributable to the establishment of a $500 million reserve in the third quarter of 1998, related to deterioration in certain international economic conditions that arose in the third quarter of 1998. Table Eleven provides an analysis of the changes in the allowance for credit losses. Total net charge-offs increased $615 million in 1998 to $2.5 billion, or .71 percent of average loans and leases, compared to $1.9 billion, or .54 percent, in 1997. The increase was primarily caused by a $372 million write-down of a credit agreement with DE Shaw and higher foreign commercial net charge-offs. The increase was partially offset by lower consumer net charge-offs during 1998. 35 Table Eleven Allowance For Credit Losses (Dollars in Millions)
1998 1997 ------------ ------------- Beginning Balance .............................................. $ 6,778 $ 6,316 -------- --------- Loans and leases charged off Commercial - domestic ........................................ 714 328 Commercial - foreign ......................................... 262 54 Commercial real estate - domestic ............................ 21 59 Commercial real estate - foreign ............................. -- -- -------- --------- Total commercial ........................................... 997 441 Residential mortgage ......................................... 33 50 Home equity lines ............................................ 27 36 Direct/Indirect consumer ..................................... 562 582 Consumer finance ............................................. 561 426 Bankcard ..................................................... 857 1,043 Other consumer - domestic .................................... -- 12 Foreign consumer ............................................. 13 13 -------- --------- Total consumer ............................................. 2,053 2,162 -------- --------- Total loans and leases charged off ........................ 3,050 2,603 -------- --------- Recoveries of loans and leases previously charged off Commercial - domestic ........................................ 97 226 Commercial - foreign ......................................... 20 25 Commercial real estate - domestic ............................ 21 59 Commercial real estate - foreign ............................. -- -- -------- --------- Total commercial ........................................... 138 310 Residential mortgage ......................................... 4 5 Home equity lines ............................................ 10 9 Direct/Indirect consumer ..................................... 157 146 Consumer finance ............................................. 178 155 Bankcard ..................................................... 93 124 Other consumer - domestic .................................... -- -- Foreign consumer ............................................. 3 2 -------- --------- Total consumer ............................................. 445 441 -------- --------- Total recoveries of loans and leases previously charged off .............................................. 583 751 -------- --------- Net charge-offs .............................................. 2,467 1,852 -------- --------- Provision for credit losses ................................... 2,920 1,904 Other, net .................................................... (109) 410 -------- --------- Balance on December 31 ....................................... $ 7,122 $ 6,778 ======== ========= Loans and leases outstanding on December 31 ................... $357,328 $ 342,140 Allowance for credit losses as a percentage of loans and leases outstanding on December 31 ............................ 1.99% 1.98% Average loans and leases outstanding during the year .......... $347,840 $ 343,151 Net charge-offs as a percentage of average loans and leases outstanding during the year .................................. 0.71% 0.54% Ratio of the allowance for credit losses on December 31 to net charge-offs .............................................. 2.89 3.66 Allowance for credit losses as a percentage of nonperforming loans .......................................... 287.01% 321.03% 1996 1995 1994 ------------- ------------- ------------- Beginning Balance .............................................. $ 6,222 $ 6,377 $ 6,199 --------- --------- --------- Loans and leases charged off Commercial - domestic ........................................ 376 329 294 Commercial - foreign ......................................... 29 11 35 Commercial real estate - domestic ............................ 131 105 134 Commercial real estate - foreign ............................. -- 2 6 --------- --------- --------- Total commercial ........................................... 536 447 469 Residential mortgage ......................................... 61 60 60 Home equity lines ............................................ 47 47 44 Direct/Indirect consumer ..................................... 486 374 334 Consumer finance ............................................. 393 241 208 Bankcard ..................................................... 838 648 554 Other consumer - domestic .................................... 5 -- -- Foreign consumer ............................................. 3 2 1 --------- --------- --------- Total consumer ............................................. 1,833 1,372 1,201 --------- --------- --------- Total loans and leases charged off ........................ 2,369 1,819 1,670 --------- --------- --------- Recoveries of loans and leases previously charged off Commercial - domestic ........................................ 194 297 310 Commercial - foreign ......................................... 40 64 117 Commercial real estate - domestic ............................ 50 53 83 Commercial real estate - foreign ............................. 5 7 -- --------- --------- --------- Total commercial ........................................... 289 421 510 Residential mortgage ......................................... 4 3 6 Home equity lines ............................................ 7 7 8 Direct/Indirect consumer ..................................... 137 111 124 Consumer finance ............................................. 156 69 58 Bankcard ..................................................... 108 76 84 Other consumer - domestic .................................... -- -- -- Foreign consumer ............................................. 1 1 1 --------- --------- --------- Total consumer ............................................. 413 267 281 --------- --------- --------- Total recoveries of loans and leases previously charged off .............................................. 702 688 791 --------- --------- --------- Net charge-offs .............................................. 1,667 1,131 879 --------- --------- --------- Provision for credit losses ................................... 1,645 945 798 Other, net .................................................... 116 31 259 --------- --------- --------- Balance on December 31 ....................................... $ 6,316 $ 6,222 $ 6,377 ========= ========= ========= Loans and leases outstanding on December 31 ................... $ 317,709 $ 302,804 $ 273,615 Allowance for credit losses as a percentage of loans and leases outstanding on December 31 ............................ 1.99% 2.05% 2.33% Average loans and leases outstanding during the year .......... $ 312,331 $ 286,770 $ 251,489 Net charge-offs as a percentage of average loans and leases outstanding during the year .................................. 0.53% 0.39% 0.35% Ratio of the allowance for credit losses on December 31 to net charge-offs .............................................. 3.79 5.50 7.25 Allowance for credit losses as a percentage of nonperforming loans .......................................... 287.35% 224.86% 206.91%
36 Table Twelve Allocation of the Allowance for Credit Losses December 31 (Dollars in Millions)
1998 1997 1996 1995 1994 ------------------ ------------------ ------------------ ------------------ ------------------- Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent -------- --------- -------- --------- -------- --------- -------- --------- -------- ---------- Commercial - domestic..... $1,540 21.6% $1,580 23.4% $1,436 22.7% $1,306 21.1% $1,184 18.6% Commercial - foreign ..... 1,327 18.6 1,013 14.9 427 6.8 432 6.9 396 6.2 Commercial real estate - domestic ....... 925 13.0 847 12.5 764 12.1 992 15.9 1,218 19.1 ------ ----- ------ ----- ------ ----- ------ ----- ------ ----- Total commercial ........ 3,792 53.2 3,440 50.8 2,627 41.6 2,730 43.9 2,798 43.9 ------ ----- ------ ----- ------ ----- ------ ----- ------ ----- Residential mortgage ..... 137 1.9 181 2.7 214 3.4 202 3.2 159 2.5 Home equity lines ........ 46 .6 84 1.2 87 1.4 74 1.2 60 .9 Bankcard ................. 501 7.0 790 11.7 671 10.6 709 11.4 568 8.9 Direct/Indirect consumer ................ 527 7.5 608 9.0 618 9.8 604 9.7 462 7.3 Consumer finance ......... 658 9.2 785 11.6 645 10.2 460 7.4 413 6.5 Foreign consumer ......... 26 .4 23 .3 21 .3 17 .3 14 .2 ------ ----- ------ ----- ------ ----- ------ ----- ------ ----- Total consumer .......... 1,895 26.6 2,471 36.5 2,256 35.7 2,066 33.2 1,676 26.3 Unallocated .............. 1,435 20.2 867 12.7 1,433 22.7 1,426 22.9 1,903 29.8 ------ ----- ------ ----- ------ ----- ------ ----- ------ ----- $7,122 100.0% $6,778 100.0% $6,316 100.0% $6,222 100.0% $6,377 100.0% ====== ===== ====== ===== ====== ===== ====== ===== ====== =====
Nonperforming Assets - As presented in Table Thirteen, nonperforming assets were $2.8 billion, or .77 percent of net loans, leases and foreclosed properties on December 31, 1998, compared to $2.4 billion, or .71 percent, on December 31, 1997. Nonperforming loans were $2.5 billion at the end of 1998 compared to $2.1 billion at the end of 1997. The allowance coverage of nonperforming loans was 287 percent on December 31, 1998 compared to 321 percent at the end of 1997. Internal loan workout units are devoted to the management and/or collection of certain nonperforming assets as well as certain performing loans. Management believes concerted collection strategies and a proactive approach to managing overall credit risk have expedited the disposition, collection and renegotiation of nonperforming and other lower-quality assets. As part of this process, management routinely evaluates all reasonable alternatives, including the sale of assets individually or in groups, and selects the optimal strategy. At December 31, 1998 and 1997 residential mortgage loans comprised 26 percent and 31 percent, respectively, of total nonperforming assets. Due to the nature of the collateral securing residential mortgage loans and a history of low losses, the Corporation considers these loans to be low risk nonperforming assets. Foreclosed properties decreased to $282 million on December 31, 1998 compared to $309 million on December 31, 1997. 37 Table Thirteen Nonperforming Assets December 31 (Dollars in Millions)
1998 1997 1996 1995 1994 ----------- ----------- ----------- ----------- ----------- Nonperforming loans Commercial - domestic ....................... $ 812 $ 563 $ 713 $ 914 $ 966 Commercial - foreign ........................ 314 155 110 121 179 Commercial real estate - domestic ........... 299 342 491 1,027 1,304 Commercial real estate - foreign ............ 4 2 2 22 38 ------- ------- ------- ------- ------- Total commercial ........................... 1,429 1,062 1,316 2,084 2,487 ------- ------- ------- ------- ------- Residential mortgage ........................ 722 744 676 464 437 Home equity lines ........................... 50 52 36 42 28 Direct/Indirect consumer .................... 21 43 53 57 60 Consumer finance ............................ 246 210 116 118 69 Foreign consumer ............................ 14 -- 1 2 1 ------- ------- ------- ------- ------- Total consumer ............................. 1,053 1,049 882 683 595 ------- ------- ------- ------- ------- Total nonperforming loans .................. 2,482 2,111 2,198 2,767 3,082 Foreclosed properties ......................... 282 309 511 675 981 ------- ------- ------- ------- ------- Total nonperforming assets ................. $ 2,764 $ 2,420 $ 2,709 $ 3,442 $ 4,063 ======= ======= ======= ======= ======= Nonperforming assets as a percentage of Total assets ................................ .45% .42% .57% .75% .95% Loans, leases and foreclosed properties ..... .77 .71 .85 1.14 1.49
The loss of income associated with nonperforming loans on December 31 and the cost of carrying foreclosed properties were:
1998 1997 1996 1995 1994 --------- --------- --------- --------- ------- Income that would have been recorded in accordance with original terms ................................. $ 367 $ 349 $ 388 $ 457 $ 268 Less income actually recorded ........................ (130) (130) (130) (135) (98) ------ ------ ------ ------ ----- Loss of income ....................................... $ 237 $ 219 $ 258 $ 322 $ 170 ====== ====== ====== ====== ===== Cost of carrying foreclosed properties ............... $ 16 $ 26 $ 35 $ 51 $ 60 ====== ====== ====== ====== =====
On December 31, 1998, there were no material commitments to lend additional funds with respect to nonperforming loans. Loans Past Due 90 Days or More - Table Fourteen presents total loans past due 90 days or more and still accruing interest. On December 31, 1998, loans past due 90 days or more and still accruing interest were $611 million, or .17 percent of loans and leases, compared to $613 million, or .18 percent, on December 31, 1997. 38 Table Fourteen Loans Past Due 90 Days or More and Still Accruing Interest (Dollars in Millions)
December 31, 1998 December 31, 1997 ---------------------- --------------------- Amount Percent (1) Amount Percent (1) -------- ------------- -------- ------------ Commercial - domestic ..................... $135 .10% $ 52 .04% Commercial - foreign ...................... 23 .07 3 .01 Commercial real estate - domestic ......... 12 .04 17 .06 ---- ---- ---- ---- Total commercial ......................... 170 .09 72 .04 ---- ---- ---- ---- Residential mortgage ...................... 31 .04 87 .12 Home equity lines ......................... -- -- 3 .02 Direct/Indirect consumer .................. 174 .43 116 .29 Consumer finance .......................... 16 .10 34 .23 Bankcard .................................. 214 1.72 301 2.01 Foreign consumer .......................... 6 .17 -- -- ---- ---- ---- ---- Total consumer ........................... 441 .27 541 .34 ---- ---- ---- ---- Total .................................. $611 .17% $613 .18% ==== ==== ==== ====
(1) Represents amounts past due 90 days or more and still accruing interest as a percentage of net loans and leases for each respective category. Concentrations of Credit Risk - In an effort to minimize the adverse impact of any single event or set of occurrences, the Corporation strives to maintain a diverse credit portfolio as outlined in Tables Seventeen and Eighteen. Table Fifteen presents the distribution of loans and leases by category. Table Fifteen Distribution of Loans and Leases December 31 (Dollars in Millions)
1998 1997 --------------------- --------------------- Amount Percent Amount Percent ----------- --------- ----------- --------- Commercial - domestic ............. $137,422 38.5% $122,463 35.8% Commercial - foreign .............. 31,495 8.8 30,080 8.8 Commercial R/E - domestic ......... 26,912 7.5 28,567 8.3 Commercial R/E - foreign .......... 301 .1 324 .1 -------- ----- -------- ----- Total commercial ................. 196,130 54.9 181,434 53.0 -------- ----- -------- ----- Residential mortgage .............. 73,608 20.6 71,540 20.9 Home equity lines ................. 15,653 4.4 16,536 4.8 Direct/Indirect consumer .......... 40,510 11.3 40,058 11.7 Consumer finance .................. 15,400 4.3 14,566 4.3 Bankcard .......................... 12,425 3.5 14,908 4.4 Foreign consumer .................. 3,602 1.0 3,098 .9 -------- ----- -------- ----- Total consumer ................... 161,198 45.1 160,706 47.0 -------- ----- -------- ----- Total loans and leases .......... $357,328 100.0% $342,140 100.0% ======== ===== ======== ===== 1996 1995 1994 --------------------- -------------------- --------------------- Amount Percent Amount Percent Amount Percent ----------- --------- ---------- --------- ---------- ---------- Commercial - domestic ............. $105,737 33.3% $ 99,922 33.1% $ 91,740 33.5% Commercial - foreign .............. 26,781 8.4 23,395 7.7 20,180 7.4 Commercial R/E - domestic ......... 25,881 8.1 26,381 8.7 27,530 10.1 Commercial R/E - foreign .......... 239 .1 361 .1 394 .1 -------- ----- -------- ----- -------- ----- Total commercial ................. 158,638 49.9 150,059 49.6 139,844 51.1 -------- ----- -------- ----- -------- ----- Residential mortgage .............. 80,400 25.3 77,078 25.5 68,474 25.0 Home equity lines ................. 12,541 3.9 11,143 3.7 9,958 3.6 Direct/Indirect consumer .......... 33,352 10.6 34,071 11.1 31,924 11.8 Consumer finance .................. 13,081 4.1 10,375 3.4 6,948 2.5 Bankcard .......................... 16,561 5.2 17,455 5.8 14,148 5.2 Foreign consumer .................. 3,136 1.0 2,623 .9 2,319 .8 -------- ----- -------- ----- -------- ----- Total consumer ................... 159,071 50.1 152,745 50.4 133,771 48.9 -------- ----- -------- ----- -------- ----- Total loans and leases .......... $317,709 100.0% $302,804 100.0% $273,615 100.0% ======== ===== ======== ===== ======== =====
The following section discusses credit risk in the loan portfolio, including net charge-offs by loan categories as presented in Table Sixteen. 39 Table Sixteen Net Charge-offs in Dollars and as a Percentage of Average Loans Outstanding (Dollars in Millions)
1998 1997 ------------------- ------------------- Commercial - domestic ................ $ 617 .47% $ 102 .09% Commercial - foreign ................. 242 .78 29 .10 Commercial real estate - domestic..... -- -- -- -- Commercial real estate - foreign ..... -- -- -- -- ------ ---- ------ ---- Total commercial .................... 859 .45 131 .07 ------ ---- ------ ---- Residential mortgage ................. 29 .04 45 .06 Home equity lines .................... 17 .11 27 .18 Direct/Indirect consumer ............. 405 1.01 436 1.11 Consumer finance ..................... 383 2.67 271 1.96 Bankcard ............................. 764 6.03 919 5.90 Other consumer - domestic ............ -- -- 12 -- Foreign consumer ..................... 10 .31 11 .32 ------ ---- ------ ---- Total consumer ...................... 1,608 1.02 1,721 1.03 ------ ---- ------ ---- Total net charge-offs ............... $2,467 .71 $1,852 .54 ====== ==== ====== ==== Managed credit cards net charge-offs and ratios(1) ........... $1,284 6.27% $1,254 6.19% 1996 1995 1994 ---------------------- ---------------------- ------------------- Commercial - domestic ................ $ 182 .18% $ 32 .03% $ (16) n/m% Commercial - foreign ................. (11) n/m (53) n/m (82) n/m Commercial real estate - domestic..... 81 .31 52 .19 51 .20 Commercial real estate - foreign ..... (5) n/m (5) n/m 6 .40 -------- ---- -------- ---- ----- ----- Total commercial .................... 247 .16 26 .02 (41) n/m ------- ---- ------- ---- ----- ----- Residential mortgage ................. 57 .07 57 .08 54 .10 Home equity lines .................... 40 .34 40 .39 36 .26 Direct/Indirect consumer ............. 349 1.01 263 .79 210 .78 Consumer finance ..................... 237 1.98 172 1.98 150 1.23 Bankcard ............................. 730 4.47 572 3.88 470 3.79 Other consumer - domestic ............ 5 -- -- -- -- -- Foreign consumer ..................... 2 .10 1 .04 -- -- ------- ---- ------- ---- ----- ----- Total consumer ...................... 1,420 .89 1,105 .77 920 .75 ------- ---- ------- ---- ----- ----- Total net charge-offs ............... $1,667 .53 $1,131 .39 $ 879 .35 ======= ==== ======= ==== ===== ===== Managed credit cards net charge-offs and ratios(1) ........... $ 888 4.67% $ 651 4.10% $ 549 4.05%
n/m =not meaningful (1) Includes both on-balance sheet and securitized loans. Net charge-offs for each loan type are calculated as a percentage of average outstanding or managed loans for each loan category. Total net charge-offs are calculated based on total average outstanding loans and leases. Commercial Real Estate - Total commercial real estate - domestic loans, the portion of such loans which are nonperforming, and other real estate credit exposures are presented in Table Seventeen. The exposures presented represent credit extensions for real estate-related purposes to borrowers or counterparties who are primarily in the real estate development or investment business and for which the ultimate repayment of the credit is dependent on the sale, lease, rental or refinancing of the real estate. Total commercial real estate - domestic loans totaled $26.9 billion, or 8 percent of loans and leases, on December 31, 1998 compared to $28.6 billion, or 8 percent, at the end of 1997 with the decrease due to the Corporation's efforts to lower its exposure to this line of business. Commercial real estate - - domestic loans past due 90 days or more and still accruing interest were $12 million, or .04 percent of total domestic real estate loans, on December 31, 1998 compared to $17 million, or .06 percent, on December 31, 1997. The exposures included in Table Seventeen do not include credit extensions which were made on the general creditworthiness of the borrower for which real estate was obtained as security and for which the ultimate repayment of the credit is not dependent on the sale, lease, rental or refinancing of the real estate. Accordingly, the exposures presented do not include commercial loans secured by owner-occupied real estate, except where the borrower is a real estate developer. In addition to the amounts presented in the tables, on December 31, 1998, the Corporation had approximately $15.1 billion of commercial loans which were not real estate dependent but for which the Corporation had obtained real estate as secondary repayment security. Commercial - Commercial - domestic loan outstandings totaled $137.4 billion and $122.4 billion on December 31, 1998 and 1997, respectively, or 39 percent and 36 percent of loans and leases, respectively. This increase was due primarily to core loan growth. The Corporation had commercial - domestic loan net charge-offs in 1998 of $617 million, or .47 percent of average commercial - domestic loans, compared to $102 million, or .09 percent of average commercial - - domestic loans, in 1997. Excluding a $372 million charge-off for a credit to DE Shaw, a trading and investment firm, commercial - domestic loan net charge-offs were $245 million, or .19 percent of average commercial - domestic loans, in 1998. Commercial - domestic loans past due 90 days or more and still accruing interest were $135 million, or .10 percent of commercial - domestic loans, on December 31, 1998 compared to $52 million, or .04 percent, on December 31, 1997. Nonperforming commercial - domestic loans were $812 million, or .59 percent of commercial - domestic loans, on December 31, 1998, compared to $563 million, or .46 percent, on December 31, 1997. Table Eighteen presents significant industry commercial loans and lease financings. 40 Table Seventeen Real Estate Commercial Loans, Foreclosed Properties and Other Real Estate Credit Exposures December 31, 1998 (Dollars in Millions)
Loans Other ----------------------------- Foreclosed Credit Outstanding Nonperforming Properties (1) Exposures (2) ------------- --------------- --------------- -------------- By Geographic Region (3): California ........................ $ 6,714 $ 28 $ 59 $1,747 Southwest ......................... 3,795 25 12 627 Northwest ......................... 2,849 47 -- 611 Midwest ........................... 2,784 33 6 299 Midatlantic ....................... 2,620 39 9 397 Florida ........................... 1,740 64 13 437 Midsouth .......................... 1,307 14 3 277 Carolinas ......................... 1,185 23 8 1,395 Other states ...................... 3,918 26 31 472 Non-US ............................ 301 4 -- -- ------- ---- ---- ------ $27,213 $303 $141 $6,262 ======= ==== ==== ====== By Property Type: Apartments ........................ $ 5,063 $ 18 $ 2 $1,136 Office buildings .................. 4,890 29 11 478 Shopping centers/retail ........... 3,521 62 16 903 Industrial/warehouse .............. 2,640 28 5 335 Residential ....................... 2,596 22 5 355 Hotels/motels ..................... 1,542 19 8 311 Land and land development ......... 1,236 33 67 281 Multiple use ...................... 843 4 1 159 Unsecured ......................... 690 3 -- 62 Miscellaneous commercial .......... 649 14 12 111 Non-US ............................ 301 4 -- -- Resorts/golf courses .............. 134 2 -- 9 Other ............................. 3,108 65 14 2,122 ------- ---- ---- ------ $27,213 $303 $141 $6,262 ======= ==== ==== ======
(1) Foreclosed properties include commercial real estate loans only. (2) Other credit exposures include primarily letters of credit and loans held for sale. (3) Distribution based on geographic location of collateral. Commercial-foreign loan outstandings totaled $31.5 billion and $30.1 billion on December 31, 1998 and 1997, respectively, or 9 percent of loans and leases for each year. The Corporation had commercial-foreign loan net charge-offs in 1998 of $242 million, or .78 percent of average commercial-foreign loans, compared to $29 million, or .10 percent of the average commercial-foreign loans in 1997. The increase in commercial-foreign loan net charge-offs is attributed to charge-offs in Asia, Latin America, and Eastern Europe. Commercial-foreign loans past due 90 days or more and still accruing interest were $23 million, or .07 percent of commercial-foreign loans, on December 31, 1998 compared to $3 million, or .01 percent, on December 31, 1997. Nonperforming commercial-foreign loans were $314 million, or 1.00 percent of commercial-foreign loans, on December 31, 1998, compared to $155 million, or .52 percent, on December 31, 1997. For additional information see Recent International Developments on page 42. 41 Table Eighteen Significant Industry Loans and Leases(1) December 31, 1998 (Dollars in Millions)
Outstanding ------------ Oil and gas ........................ $10,203 Transportation ..................... 9,903 Media .............................. 8,484 Agribusiness ....................... 8,321 Equipment and general manufacturing 8,052 Health care ........................ 7,795 Retail ............................. 7,396 Business services .................. 6,967 Autos .............................. 6,943 Metals and mining .................. 5,260
(1) Includes only non-real estate commercial loans and leases. Consumer - On December 31, 1998 and 1997, total domestic consumer loan outstandings totaled $157.6 billion, or 44 percent of loans and leases and $157.6 billion or 46 percent of loans and leases, respectively. Total domestic consumer net charge-offs during 1998 decreased $112 million due mainly to lower bankcard net charge-offs, partially offset by higher consumer finance net charge-offs. Average residential mortgage loans decreased to $70.8 billion compared to $80.6 billion in 1997, reflecting loan sales and the impact of approximately $5.1 billion of mortgage loan securitizations in 1998 and $9.6 billion of mortgage loan securitizations in 1997. Average managed bankcard receivables (excluding private label bankcards) increased to $20.5 billion on December 31, 1998 compared to $20.2 billion at the end of 1997. This increase was partially offset by $2.0 billion of securitizations in 1998. Average other consumer loans increased to $70.7 billion in 1998 compared to $67.9 billion in 1997. The increase was net of the impact of approximately $3.4 billion of securitizations that occurred throughout 1997 and $4.5 billion of securitizations in 1998. Average managed other consumer loans increased to $80.5 billion on December 31, 1998 compared to $73.4 billion at the end of 1997. Total consumer loans past due 90 days or more and still accruing interest were $441 million, or .27 percent of total consumer loans, on December 31, 1998 compared to $541 million, or .34 percent, at the end of 1997. Total consumer nonperforming loans were $1.1 billion, or .65 percent of total consumer loans, on December 31, 1998 compared to $1.0 billion, or .65 percent, on December 31, 1997. Recent International Developments - During 1998, and continuing into 1999, a number of countries in Asia, Latin America and Eastern Europe experienced economic difficulties due to a combination of structural problems and negative market reaction that resulted from increased awareness of these problems. While each country's situation is unique, many share common factors: (1) government actions which restrain normal functioning of free markets in physical goods, capital and/or currencies; (2) perceived weaknesses of the banking systems; and (3) perceived overvaluation of local currencies. In addition, since these factors have resulted in capital movement out of the countries or in reduced capital inflows, many of these countries are experiencing liquidity problems in addition to the structural problems. Where appropriate, the Corporation has adjusted its activities (including its borrower selection) in light of the risks and opportunities discussed above, and has increased its foreign credit reserves related to those risks. The Corporation also has reduced its exposures in Asia, Latin America and Central and Eastern Europe during 1998. The Corporation will continue to monitor and adjust its foreign activities on a country by country basis depending on management's judgment of the likely developments in each country and will take action as deemed appropriate. For a more comprehensive discussion of the Corporation's risk management processes, refer to pages 29 to 35. 42 Exposure Exceeding One Percent of Total Assets(1,2)
Exposure Public Private Total as a Percentage (Dollars in Millions) December 31 Sector(2) Banks(2) Sector(2) Exposure of Total Assets - ----------------------- ------------- ----------- ---------- ----------- ---------- ---------------- Japan 1998 $2,452 $1,519 $1,090 $5,061 .82% 1997 2,485 1,555 2,930 6,970 1.13 1996 1,240 2,030 2,846 6,116 .99
(1) Exposure includes the following assets, primarily in U.S. dollars, with borrowers or customers in a foreign country: loans, accrued interest, acceptances, interest-bearing deposits in banks, trading account assets, securities available for sale and held for investment, other interest-earning investments, and other monetary assets. Amounts also include unrealized gains on off-balance-sheet instruments, unused commitments, standby letters of credit, commercial letters of credit, formal guarantees, and securities avilable for sale and held for investment. (2) Sector definitions are based on Federal Financial Institutions Examination Council instructions for preparing the Country Exposure Report. Regional Foreign Exposure - Through its credit and market risk management activities, the Corporation has been devoting special attention to those countries that have been negatively impacted by increasing global economic pressure. This includes special attention to those Asian countries that are currently experiencing currency and other economic problems, as well as Latin America and Eastern Europe which are also experiencing similar problems. In connection with its efforts to maintain a diversified portfolio, the Corporation limits its exposure to any one geographic region or country and monitors this exposure on a continuous basis. Table Nineteen sets forth selected regional exposure as of December 31, 1998. Exposure represents loans, securities, including restructured debt, and other monetary assets, and also includes local currency monetary assets that have been funded through local currency borrowings. 43 The following table is based on the Federal Financial Institutions Examination Council's instructions for periodic reporting of foreign exposures. The table has been expanded to include "Gross Local Currency Claims" as defined per the footnotes. As a result of this addition, the table may not be consistent with disclosures by others. Table Nineteen Regional Foreign Exposure (Dollars in Millions)
Increase Total Gross Other Total Total (Decrease) Cross- Local Cross- Exposure Exposure from Border Country Border December 31, December 31, December 31, Loans Claims (1) Claims (2) 1998 1997 1997 Region/Country -------- ------------ ------------ -------------- -------------- ------------- Asia China ........................ $ 117 $ 142 $ 190 $ 449 $ 765 $ (316) Hong Kong .................... 54 4,776 358 5,188 5,631 (443) India ........................ 453 1,937 128 2,518 2,499 19 Indonesia .................... 352 185 186 723 1,510 (787) Japan ........................ 198 1,826 3,037 5,061 6,970 (1,909) Korea (South) ................ 561 308 1,010 1,879 3,804 (1,925) Malaysia ..................... 4 670 54 728 1,254 (526) Pakistan ..................... 8 335 9 352 550 (198) Philippines .................. 257 155 171 583 763 (180) Singapore .................... 171 1,554 281 2,006 2,412 (406) Taiwan ....................... 370 1,787 133 2,290 2,438 (148) Thailand ..................... 96 735 119 950 1,957 (1,007) Other ........................ 7 130 16 153 106 47 ------ ------- ------- ------- ------- --------- 2,648 14,540 5,692 22,880 30,659 (7,779) ------ ------- ------- ------- ------- --------- Central and Eastern Europe Russian Federation ........... 43 -- 17 60 447 (387) Other ........................ 338 72 294 704 698 6 ------ ------- ------- ------- ------- --------- 381 72 311 764 1,145 (381) ------ ------- ------- ------- ------- --------- Latin America Argentina .................... 574 461 232 1,267 1,643 (376) Brazil ....................... 1,501 586 1,331 3,418 3,630 (212) Chile ........................ 741 770 140 1,651 1,680 (29) Colombia ..................... 510 90 198 798 785 13 Mexico ....................... 2,469 391 2,078 4,938 6,112 (1,174) Venezuela .................... 137 39 381 557 623 (66) Other ........................ 269 -- 161 430 443 (13) ------ ------- ------- ------- ------- --------- 6,201 2,337 4,521 13,059 14,916 (1,857) ------ ------- ------- ------- ------- --------- Total ....................... $9,230 $16,949 $10,524 $36,703 $46,720 $ (10,017) ====== ======= ======= ======= ======= =========
(1) Includes the following claims by the Corporation's foreign offices: trading account securities, derivative products, unused commitments, standby letters of credit, commercial letters of credit, formal guarantees, and securities available for sale and held for investment regardless of the currency. (2) Includes: accrued interest receivable, acceptances, interest-bearing deposits in banks, trading account securities, securities under agreement to resell, other interest-earning investments, other short-term monetary assets, unrealized gains on off-balance-sheet instruments, unused commitments, standby letters of credit, commercial letters of credit, formal guarantees, and securities available for sale and held for investment, including securities that are collateralized by U.S. Treasury securities as follows: Mexico - $1,037, Venezuela - $253, Philippines - $18, and Latin America Other - $85. Held for investment securities amounted to $960 with a fair value of $921. Prior period has been restated for comparison. 44 Table Twenty Selected Quarterly Operating Results (Dollars in Millions, Except Per-Share Information)
1998 Quarters --------------------------------------------------- Fourth Third Second First ------------ ------------ ------------ ------------ Interest income ...................................... $ 9,638 $ 9,608 $ 9,637 $ 9,705 Interest expense ..................................... 5,029 5,164 5,011 5,086 Net interest income (taxable-equivalent) ............. 4,650 4,484 4,668 4,659 Net interest income .................................. 4,609 4,444 4,626 4,619 Provision for credit losses .......................... 510 1,405 495 510 Gains on sales of securities ......................... 404 280 120 213 Noninterest income ................................... 2,655 2,405 3,636 3,493 Merger-related charges, net .......................... 600 725 (430) 900 Other noninterest expense ............................ 4,687 4,583 4,767 4,704 Income before taxes .................................. 1,871 416 3,550 2,211 Income tax expense ................................... 709 42 1,252 880 Net income ........................................... 1,162 374 2,298 1,331 Net income (excluding merger-related charges) ........ 1,603 893 2,021 1,973 Earnings per common share ............................ .67 .21 1.32 .77 Earnings per common share (excluding merger-related charges) ............................. .92 .51 1.16 1.14 Diluted earnings per common share .................... .66 .21 1.28 .75 Diluted earnings per common share (excluding merger-related charges) ............................. .91 .50 1.13 1.11 Dividends per common share ........................... .45 .38 .38 .38 Yield on average earning assets ...................... 7.44% 7.73% 7.89% 7.98% Rate on average interest-bearing liabilities ......... 4.60 4.94 4.90 4.93 Net interest spread .................................. 2.84 2.79 2.99 3.05 Net interest yield ................................... 3.58 3.60 3.80 3.83 Average total assets ................................. $606,541 $578,353 $ 573,975 $ 578,841 Average total deposits ............................... 351,766 347,783 342,369 339,867 Average total shareholders' equity ................... 45,051 45,756 44,857 43,628 Return on average assets ............................. .76 .26 1.61 .93 Return on average assets (excluding merger-related charges) ............................. 1.05 .61 1.41 1.38 Return on average common shareholders' equity (1) .......................................... 10.23 3.23 20.76 12.46 Return on average common shareholders' equity (excluding merger-related charges) (1) .............. 14.12 7.73 18.24 18.52 Cash basis financial data (2) Earnings per common share ........................... $ .80 $ .34 $ 1.45 $ .90 Earnings per common share (excluding merger-related charges) ............................ 1.05 .64 1.29 1.27 Diluted earnings per common share ................... .79 .34 1.41 .87 Diluted earnings per common share (excluding merger-related charges) ............................ 1.04 .63 1.25 1.24 Return on average tangible assets ................... .93% .42% 1.81% 1.12% Return on average tangible assets (excluding merger-related charges) ............................ 1.22 .79 1.61 1.59 Return on average tangible common shareholders' equity (1) ........................... 18.18 7.76 35.10 23.02 Return on average tangible common shareholders' equity (excluding merger-related charges) (1) ........................ 23.97 14.51 31.23 32.57 Tier 1 capital ratio (3) ............................. 7.06% 7.29% 7.32% 6.80% Total capital ratio (3) .............................. 10.94 11.25 11.77 11.19 Market price per share of common stock High for the period ................................. $ 66 5/8 $88 7/16 $ 85 $ 75 1/8 Low for the period .................................. 44 47 7/8 72 1/16 56 1/4 Closing price ....................................... 60 1/8 53 1/2 76 11/16 72 15/16 1997 Quarters -------------------------------------------------- Fourth Third Second First ------------ ------------ ------------ ----------- Interest income ...................................... $ 9,534 $ 9,443 $ 9,298 $ 9,058 Interest expense ..................................... 4,976 4,808 4,648 4,469 Net interest income (taxable-equivalent) ............. 4,598 4,676 4,689 4,626 Net interest income .................................. 4,558 4,635 4,650 4,589 Provision for credit losses .......................... 498 489 476 441 Gains on sales of securities ......................... 111 54 42 64 Noninterest income ................................... 3,225 3,078 2,796 2,657 Merger-related charges, net .......................... 302 72 -- -- Other noninterest expense ............................ 4,736 4,419 4,240 4,230 Income before taxes .................................. 2,358 2,787 2,772 2,639 Income tax expense ................................... 899 1,057 1,055 1,003 Net income ........................................... 1,459 1,730 1,718 1,635 Net income (excluding merger-related charges) ........ 1,679 1,774 1,718 1,635 Earnings per common share ............................ .84 .99 .97 .91 Earnings per common share (excluding merger-related charges) ............................. .96 1.02 .97 .91 Diluted earnings per common share .................... .81 .96 .94 .89 Diluted earnings per common share (excluding merger-related charges) ............................. .94 .99 .94 .89 Dividends per common share ........................... .38 .33 .33 .33 Yield on average earning assets ...................... 8.02% 8.11% 8.10% 8.02% Rate on average interest-bearing liabilities ......... 4.97 4.90 4.79 4.69 Net interest spread .................................. 3.05 3.21 3.31 3.33 Net interest yield ................................... 3.85 4.00 4.07 4.09 Average total assets ................................. $ 556,595 $ 543,030 $539,433 $535,905 Average total deposits ............................... 338,331 336,418 337,384 335,370 Average total shareholders' equity ................... 43,807 43,241 43,585 43,810 Return on average assets ............................. 1.04 1.26 1.28 1.24 Return on average assets (excluding merger-related charges) ............................. 1.20 1.30 1.28 1.24 Return on average common shareholders' equity (1) .......................................... 13.33 16.13 16.14 15.48 Return on average common shareholders' equity (excluding merger-related charges) (1) .............. 15.36 16.55 16.14 15.48 Cash basis financial data (2) Earnings per common share ........................... $ .97 $ 1.11 $ 1.09 $ 1.03 Earnings per common share (excluding merger-related charges) ............................ 1.09 1.14 1.09 1.03 Diluted earnings per common share ................... .94 1.08 1.06 1.00 Diluted earnings per common share (excluding merger-related charges) ............................ 1.06 1.11 1.06 1.00 Return on average tangible assets ................... 1.23% 1.46% 1.48% 1.43% Return on average tangible assets (excluding merger-related charges) ............................ 1.40 1.49 1.48 1.43 Return on average tangible common shareholders' equity (1) ........................... 24.38 28.08 28.40 26.38 Return on average tangible common shareholders' equity (excluding merger-related charges) (1) ........................ 27.59 28.73 28.40 26.38 Tier 1 capital ratio (3) ............................. 6.50% 7.00% 6.83% 7.06% Total capital ratio (3) .............................. 10.89 11.56 11.32 11.58 Market price per share of common stock High for the period ................................. $ 66 3/8 $71 11/16 $ 70 $ 65 Low for the period .................................. 55 56 5/8 54 48 Closing price ....................................... 60 13/16 61 7/8 64 9/16 55 1/2
(1) Average common shareholders' equity does not include the effect of market value adjustments to securities available for sale and marketable equity securities. (2) Cash basis calculations exclude intangible assets and the related amortization expense. (3) Ratios for the first and second quarters of 1998 are NationsBank ratios, and have not been restated to reflect the impact of the BankAmerica merger. Ratios for 1997 are NationsBank ratios, and have not been restated to reflect the BankAmerica and Barnett mergers. 45 Table Twenty-One Quarterly Taxable-Equivalent Data (Dollars in Millions)
Fourth Quarter 1998 ------------------------------- Average Balance Income Sheet or Yields/ Amounts Expense Rates ----------- --------- --------- Earning assets Loans and leases (1) Commercial - domestic .................................................... $136,629 $2,542 7.39% Commercial - foreign ..................................................... 32,893 569 6.86 Commercial real estate - domestic ........................................ 28,427 601 8.38 Commercial real estate - foreign ......................................... 319 8 9.39 -------- ------ ----- Total commercial ........................................................ 198,268 3,720 7.45 -------- ------ ----- Residential mortgage ..................................................... 73,033 1,336 7.30 Home equity lines ........................................................ 15,781 326 8.17 Direct/Indirect consumer ................................................. 40,557 876 8.57 Consumer finance ......................................................... 14,368 338 9.33 Bankcard ................................................................. 12,078 366 12.01 Foreign consumer ......................................................... 3,551 94 10.47 -------- ------ ----- Total consumer .......................................................... 159,368 3,336 8.32 -------- ------ ----- Total loans and leases ................................................. 357,636 7,056 7.84 -------- ------ ----- Securities Held for investment ...................................................... 2,948 44 6.09 Available for sale (2) ................................................... 69,354 1,162 6.68 -------- ------ ----- Total securities ........................................................ 72,302 1,206 6.66 -------- ------ ----- Federal funds sold and securities purchased under agreements to resell..... 29,564 486 6.53 Time deposits placed and other short-term investments ..................... 6,702 111 6.56 Trading account securities ................................................ 39,391 613 6.19 Other earning assets ...................................................... 11,471 207 7.19 -------- ------ ----- Total earning assets (3) ................................................ 517,066 9,679 7.44 -------- ------ ----- Cash and cash equivalents .................................................. 25,834 Other assets, less allowance for credit losses ............................. 63,641 -------- Total assets ............................................................ $606,541 ======== Interest-bearing liabilities Domestic interest-bearing deposits Savings .................................................................. $ 21,702 91 1.67 NOW and money market deposit accounts .................................... 97,589 622 2.53 Consumer CDs and IRAs .................................................... 74,923 956 5.06 Negotiated CDs, public funds and other time deposits ..................... 7,388 96 5.16 -------- ------ ----- Total domestic interest-bearing deposits ................................ 201,602 1,765 3.47 -------- ------ ----- Foreign interest-bearing deposits (4) Banks located in foreign countries ....................................... 24,938 325 5.17 Governments and official institutions .................................... 10,278 143 5.54 Time, savings, and other ................................................. 26,868 365 5.39 -------- ------ ----- Total foreign interest-bearing deposits ................................. 62,084 833 5.32 -------- ------ ----- Total interest-bearing deposits ......................................... 263,686 2,598 3.91 -------- ------ ----- Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings ............................... 104,416 1,422 5.40 Trading account liabilities ............................................... 14,194 165 4.62 Long-term debt (5) ........................................................ 51,779 844 6.52 -------- ------ ----- Total interest-bearing liabilities (6) .................................. 434,075 5,029 4.60 -------- ------ ----- Noninterest-bearing sources Noninterest-bearing deposits .............................................. 88,080 Other liabilities ......................................................... 39,335 Shareholders' equity ...................................................... 45,051 -------- Total liabilities and shareholders' equity .............................. $606,541 ======== Net interest spread ........................................................ 2.84 Impact of noninterest-bearing sources ...................................... .74 ----- Net interest income/yield on earning assets ................................ $4,650 3.58% ====== ===== Third Quarter 1998 -------------------------------- Average Balance Income Sheet or Yields/ Amounts Expense Rates ----------- --------- ---------- Earning assets Loans and leases (1) Commercial - domestic .................................................... $132,537 $2,538 7.59% Commercial - foreign ..................................................... 31,245 578 7.35 Commercial real estate - domestic ........................................ 28,027 610 8.64 Commercial real estate - foreign ......................................... 338 8 10.51 -------- ------ ----- Total commercial ........................................................ 192,147 3,734 7.71 -------- ------ ----- Residential mortgage ..................................................... 70,619 1,155 6.53 Home equity lines ........................................................ 16,024 485 12.03 Direct/Indirect consumer ................................................. 39,582 854 8.56 Consumer finance ......................................................... 14,197 385 10.76 Bankcard ................................................................. 12,751 399 12.43 Foreign consumer ......................................................... 3,465 93 10.57 -------- ------ ----- Total consumer .......................................................... 156,638 3,371 8.56 -------- ------ ----- Total loans and leases ................................................. 348,785 7,105 8.09 -------- ------ ----- Securities Held for investment ...................................................... 4,286 76 6.99 Available for sale (2) ................................................... 61,250 1,046 6.82 -------- ------ ----- Total securities ........................................................ 65,536 1,122 6.83 -------- ------ ----- Federal funds sold and securities purchased under agreements to resell..... 27,646 492 7.06 Time deposits placed and other short-term investments ..................... 7,483 138 7.31 Trading account securities ................................................ 35,487 587 6.59 Other earning assets ...................................................... 10,974 204 7.42 -------- ------ ----- Total earning assets (3) ................................................ 495,911 9,648 7.73 -------- ------ ----- Cash and cash equivalents .................................................. 24,160 Other assets, less allowance for credit losses ............................. 58,282 -------- Total assets ............................................................ $578,353 ======== Interest-bearing liabilities Domestic interest-bearing deposits Savings .................................................................. $ 22,775 107 1.87 NOW and money market deposit accounts .................................... 95,276 634 2.64 Consumer CDs and IRAs .................................................... 74,313 984 5.25 Negotiated CDs, public funds and other time deposits ..................... 8,696 120 5.45 -------- ------ ----- Total domestic interest-bearing deposits ................................ 201,060 1,845 3.64 -------- ------ ----- Foreign interest-bearing deposits (4) Banks located in foreign countries ....................................... 27,892 418 5.95 Governments and official institutions .................................... 11,084 156 5.59 Time, savings, and other ................................................. 24,086 411 6.77 -------- ------ ----- Total foreign interest-bearing deposits ................................. 63,062 985 6.20 -------- ------ ----- Total interest-bearing deposits ......................................... 264,122 2,830 4.25 -------- ------ ----- Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings ............................... 84,283 1,278 6.02 Trading account liabilities ............................................... 15,454 194 4.97 Long-term debt (5) ........................................................ 51,365 862 6.71 -------- ------ ----- Total interest-bearing liabilities (6) .................................. 415,224 5,164 4.94 -------- ------ ----- Noninterest-bearing sources Noninterest-bearing deposits .............................................. 83,661 Other liabilities ......................................................... 33,712 Shareholders' equity ...................................................... 45,756 -------- Total liabilities and shareholders' equity .............................. $578,353 ======== Net interest spread ........................................................ 2.79 Impact of noninterest-bearing sources ...................................... .81 ----- Net interest income/yield on earning assets ................................ $4,484 3.60% ====== =====
(1) Nonperforming loans are included in the respective average loan balances. Income on such nonperforming loans is recognized on a cash basis. (2) The average balance sheet amounts and yields on securities available for sale are based on the average of historical amortized cost balances. (3) Interest income includes taxable-equivalent adjustments of $41, $40, $42 and $40 in the fourth, third, second and first quarters of 1998 and $40 in the fourth quarter of 1997, respectively. Interest income also includes the impact of risk management interest rate contracts, which increased interest income on the underlying linked assets $70, $46, $29 and $29 in the fourth, third, second and first quarters of 1998 and $51 in the fourth quarter of 1997, respectively. (4) Primarily consists of time deposits in denominations of $100,000 or more. (5) Long-term debt includes trust preferred securities. (6) Interest expense includes the impact of risk management interest rate contracts, which decreased interest expense on the underlying linked liabilities of $27, $9, $4 and $5 in the fourth, third, second and first quarters of 1998 and $22 in the fourth quarter of 1997, respectively. 46
Second Quarter 1998 First Quarter 1998 Fourth Quarter 1997 - ----------------------------------- ----------------------------------- ------------------------------------ Average Average Average Balance Income Balance Income Balance Income Sheet or Yields/ Sheet or Yields/ Sheet or Yields/ Amounts Expense Rates Amount Expense Rates Amounts Expense Rates - ----------- --------- --------- ----------- --------- --------- ----------- --------- ---------- $127,788 $2,496 7.84% $123,586 $2,413 7.91% $118,234 $2,370 7.95% 30,046 556 7.41 29,840 543 7.37 29,291 519 7.04 28,228 644 9.15 29,000 648 9.06 29,020 666 9.11 334 9 9.82 327 8 10.48 0 0 0.00 -------- ------ ----- -------- ------ ----- -------- ------ ----- 186,396 3,705 7.97 182,753 3,612 8.01 176,545 3,555 8.01 -------- ------ ----- -------- ------ ----- -------- ------ ----- 69,337 1,171 6.76 70,350 1,218 6.95 73,138 1,290 7.05 16,271 473 11.64 16,448 457 11.28 16,308 479 11.65 40,404 895 8.90 40,280 880 8.85 39,562 874 8.78 14,249 387 10.88 14,662 419 11.60 14,163 408 11.42 12,780 409 12.83 14,259 464 13.19 14,762 491 13.17 3,350 87 10.53 3,218 83 10.46 3,403 83 9.68 -------- ------ ----- -------- ------ ----- -------- ------ ----- 156,391 3,422 8.77 159,217 3,521 8.94 161,336 3,625 8.91 -------- ------ ----- -------- ------ ----- -------- ------ ----- 342,787 7,127 8.34 341,970 7,133 8.44 337,881 7,180 8.44 -------- ------ ----- -------- ------ ----- -------- ------ ----- 4,525 79 7.03 4,713 83 7.09 4,853 86 7.00 58,527 1,017 6.95 61,074 1,061 6.98 55,871 962 6.87 -------- ------ ----- -------- ------ ----- -------- ------ ----- 63,052 1,096 6.96 65,787 1,144 6.99 60,724 1,048 6.88 -------- ------ ----- -------- ------ ----- -------- ------ ----- 25,275 433 6.86 26,632 417 6.35 24,884 414 6.59 7,916 129 6.54 8,517 136 6.48 8,037 142 7.02 42,421 693 6.56 41,868 740 7.14 38,253 691 7.18 10,494 201 7.68 9,047 175 7.76 4,542 99 8.68 -------- ------ ----- -------- ------ ----- -------- ------ ----- 491,945 9,679 7.89 493,821 9,745 7.98 474,321 9,574 8.02 -------- ------ ----- -------- ------ ----- -------- ------ ----- 25,071 24,558 24,203 56,959 60,462 58,071 -------- -------- -------- $573,975 $578,841 $556,595 ======== ======== ======== $ 23,208 112 1.93 $ 23,096 111 1.95 $ 23,596 118 1.98 96,605 638 2.65 96,696 642 2.70 95,570 648 2.69 74,002 983 5.29 75,393 992 5.33 76,939 1,036 5.35 8,388 117 5.63 5,917 81 5.53 6,285 89 5.65 -------- ------ ----- -------- ------ ----- -------- ------ ----- 202,203 1,850 3.66 201,102 1,826 3.68 202,390 1,891 3.71 -------- ------ ----- -------- ------ ----- -------- ------ ----- 22,393 326 5.84 23,067 336 5.91 22,523 347 6.11 10,629 150 5.64 10,067 141 5.69 9,759 140 5.70 22,592 364 6.49 23,467 390 6.70 22,706 351 6.11 -------- ------ ----- -------- ------ ----- -------- ------ ----- 55,614 840 6.07 56,601 867 6.20 54,988 838 6.04 -------- ------ ----- -------- ------ ----- -------- ------ ----- 257,817 2,690 4.18 257,703 2,693 4.24 257,378 2,729 4.21 -------- ------ ----- -------- ------ ----- -------- ------ ----- 82,385 1,229 5.98 91,358 1,310 5.82 76,245 1,164 6.06 19,817 262 5.30 20,516 274 5.43 17,128 278 6.44 49,254 830 6.74 47,416 809 6.83 46,908 805 6.86 -------- ------ ----- -------- ------ ----- -------- ------ ----- 409,273 5,011 4.90 416,993 5,086 4.93 397,659 4,976 4.97 -------- ------ ----- -------- ------ ----- -------- ------ ----- 84,552 82,164 80,953 35,293 36,056 34,176 44,857 43,628 43,807 -------- -------- -------- $573,975 $578,841 $556,595 ======== ======== ======== 2.99 3.05 3.05 .81 .78 .80 ------ ----- ------ ----- ------ ----- $4,668 3.80% $4,659 3.83% $4,598 3.85% ====== ===== ====== ===== ====== =====
47 1997 Compared to 1996 The following discussion and analysis provides a comparison of the Corporation's results of operations for the years ended December 31, 1997 and 1996. This discussion should be read in conjunction with the consolidated financial statements and related notes on pages 50 through 96. Overview The Corporation's continued earnings momentum was demonstrated through a 12-percent increase in operating net income to $6.81 billion in 1997 compared to $6.06 billion in 1996. Operating earnings per common share for 1997 increased 8 percent to $3.86 from $3.57 in 1996. Including merger-related charges of $374 million ($264 million, net of tax), net income increased 13 percent to $6.54 billion while earnings per common share rose 8 percent to $3.71 and diluted earnings per common share increased 7 percent to $3.61, respectively. Business Segment Operations Consumer Banking's 1997 earnings increased 21 percent to $3.5 billion. Return on risk-adjusted average equity remained constant at 17 percent in 1997. Revenue growth and expense control led to a 50-basis point improvement in the efficiency ratio in 1997 to 60.9 percent. Commercial Banking's 1997 earnings increased 18 percent to $861 million. Return on risk-adjusted average equity decreased to 21 percent in 1997. Revenue growth and expense control led to a 20-basis point improvement in the efficiency ratio in 1997 to 45.9 percent. Global Corporate and Investment Banking's earnings rose to $1.6 billion in 1997. Return on risk-adjusted average equity decreased to 15 percent in 1997. The efficiency ratio improved 270 basis points to 54.8 percent. Principal Investing and Wealth Management's earnings rose 8 percent to $560 million in 1997. Return on risk-adjusted average equity decreased to 28 percent in 1997. The efficiency ratio was 61.4 percent in 1997 compared to 58.6 percent in 1996. Net Interest Income Taxable-equivalent net interest income increased 9 percent to $18.6 billion in 1997 compared to $17.1 billion in 1996 due to acquisitions, higher spreads in the securities portfolio, core loan growth and increased noninterest-bearing deposits. The increase was partially offset by the impact of securitizations and a shift in funding to long-term debt. The net interest yield decreased 8 basis points to 4.00 percent in 1997 compared to 4.08 percent in 1996 caused by lower yields received on average earning assets, as well as a decrease in the spreads between loans and deposits. Provision for Credit Losses The provision for credit losses covered net charge-offs and was $1.9 billion in 1997 compared to $1.6 billion in the prior year, reflecting the continuation of a return to more normalized levels of credit losses following periods of unusually low credit losses. Net charge-offs increased $185 million to $1.9 billion in 1997 over 1996 primarily due to increases in consumer finance and bankcard net charge-offs. The allowance for credit losses was $6.8 billion, or 1.98 percent of loans and leases, on December 31, 1997 compared to $6.3 billion, or 1.99 percent, at the end of 1996. The allowance for credit losses was 321 percent of nonperforming loans on December 31, 1997 compared to 287 percent on December 31, 1996. Noninterest Income Noninterest income increased 22 percent to $11.8 billion in 1997, driven primarily by higher deposit account service charges and asset management and fiduciary service fees, as well as higher investment banking and credit card income. 48 Other Noninterest Expense Other noninterest expense increased 15 percent to $17.6 billion. The increase in other noninterest expense was primarily caused by 1997 acquisitions including Boatmen's, NationsBanc Auto Leasing, Inc., Robertson Stephens and NationsBanc Montgomery Securities. Income Taxes The Corporation's income tax expense for 1997 was $4.0 billion, for an effective tax rate of 38.0 percent of pre-tax income. Income tax expense for 1996 was $3.5 billion, for an effective tax rate of 37.6 percent of pre-tax income. 49 Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK See "Management's Discussion and Analysis of Results of Operations and Financial Condition - Market Risk Management" for Quantitative and Qualitative Disclosures about Market Risk. Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Report of Management The management of BankAmerica Corporation is responsible for the preparation, integrity and objectivity of the consolidated financial statements of the Corporation. The consolidated financial statements and notes have been prepared by the Corporation in accordance with generally accepted accounting principles and, in the judgment of management, present fairly the Corporation's financial position and results of operations. The financial information contained elsewhere in this report is consistent with that in the consolidated financial statements. The financial statements and other financial information in this report include amounts that are based on management's best estimates and judgments giving due consideration to materiality. The Corporation maintains a system of internal accounting controls to provide reasonable assurance that assets are safe-guarded and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of consolidated financial statements in accordance with generally accepted accounting principles. Management recognizes that even a highly effective internal control system has inherent risks, including the possibility of human error and the circumvention or overriding of controls, and that the effectiveness of an internal control system can change with circumstances. However, management believes that the internal control system provides reasonable assurance that errors or irregularities that could be material to the consolidated financial statements are prevented or would be detected on a timely basis and corrected through the normal course of business. As of December 31, 1998, management believes that the internal controls are in place and operating effectively. The Internal Audit Division of the Corporation reviews, evaluates, monitors and makes recommendations on both administrative and accounting control, which acts as an integral, but independent, part of the system of internal controls. The independent accountants were engaged to perform an independent audit of the consolidated financial statements. In determining the nature and extent of their auditing procedures, they have evaluated the Corporation's accounting policies and procedures and the effectiveness of the related internal control system. An independent audit provides an objective review of management's responsibility to report operating results and financial condition. Their report appears on page 51. The Board of Directors discharges its responsibility for the Corporation's consolidated financial statements through its Audit Committee. The Audit Committee meets periodically with the independent accountants, internal auditors and management. Both the independent accountants and internal auditors have direct access to the Audit Committee to discuss the scope and results of their work, the adequacy of internal accounting controls and the quality of financial reporting. /s/ Hugh L. McColl Jr. HUGH L. MCCOLL JR. Chief Executive Officer /s/ James H. Hance Jr. JAMES H. HANCE JR. Vice Chairman and Chief Financial Officer 50 Report Of Independent Accountants To the Board of Directors and Shareholders of BankAmerica Corporation In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of income, of changes in shareholders' equity and of cash flows present fairly, in all material respects, the financial position of BankAmerica Corporation and its subsidiaries at December 31, 1998 and 1997, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1998, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Corporation's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PricewaterhouseCoopers LLP /s/ PricewaterhouseCoopers LLP Charlotte, North Carolina January 15, 1999 51 BankAmerica Corporation and Subsidiaries Consolidated Statement of Income (Dollars in Millions, Except Per-Share Information)
Year Ended December 31 -------------------------------------- 1998 1997 1996 ------------ ------------ ------------ Interest income Interest and fees on loans and leases ...................................... $ 28,331 $ 29,085 $ 26,439 Interest and dividends on securities ....................................... 4,502 3,283 2,797 Federal funds sold and securities purchased under agreements to resell ..... 1,828 1,516 1,371 Trading account securities ................................................. 2,626 2,582 2,229 Other interest income ...................................................... 1,301 867 800 ---------- ---------- ---------- Total interest income ..................................................... 38,588 37,333 33,636 ---------- ---------- ---------- Interest expense Deposits ................................................................... 10,811 10,684 9,600 Borrowed funds ............................................................. 5,239 4,105 3,699 Trading account liabilities ................................................ 895 975 880 Long-term debt ............................................................. 3,345 3,137 2,503 ---------- ---------- ---------- Total interest expense .................................................... 20,290 18,901 16,682 ---------- ---------- ---------- Net interest income ......................................................... 18,298 18,432 16,954 Provision for credit losses ................................................. 2,920 1,904 1,645 ---------- ---------- ---------- Net credit income ........................................................... 15,378 16,528 15,309 Gains on sales of securities ................................................ 1,017 271 147 Noninterest income Service charges on deposit accounts ........................................ 3,396 3,373 2,822 Mortgage servicing and other mortgage-related income ....................... 115 401 340 Investment banking income .................................................. 2,009 1,476 1,028 Trading account profits and fees ........................................... 171 976 885 Brokerage income ........................................................... 728 355 259 Other nondeposit-related service fees ...................................... 652 680 520 Asset management and fiduciary service fees ................................ 973 990 744 Credit card income ......................................................... 1,448 1,231 899 Other income ............................................................... 2,697 2,274 2,107 ---------- ---------- ---------- Total noninterest income .................................................. 12,189 11,756 9,604 ---------- ---------- ---------- Merger-related charges, net ................................................. 1,795 374 398 Other noninterest expense Personnel .................................................................. 9,412 8,703 7,501 Occupancy, net ............................................................. 1,643 1,576 1,476 Equipment .................................................................. 1,404 1,408 1,229 Marketing .................................................................. 581 655 589 Professional fees .......................................................... 843 763 634 Amortization of intangibles ................................................ 902 855 544 Data processing ............................................................ 765 626 551 Telecommunications ......................................................... 563 491 413 Other general operating .................................................... 2,044 2,059 1,998 General administrative and miscellaneous ................................... 584 489 416 ---------- ---------- ---------- Total other noninterest expense ........................................... 18,741 17,625 15,351 ---------- ---------- ---------- Income before income taxes .................................................. 8,048 10,556 9,311 Income tax expense .......................................................... 2,883 4,014 3,498 ---------- ---------- ---------- Net income .................................................................. $ 5,165 $ 6,542 $ 5,813 ========== ========== ========== Net income available to common shareholders ................................. $ 5,140 $ 6,431 $ 5,611 ========== ========== ========== Per-share information (1) Earnings per common share .................................................. $ 2.97 $ 3.71 $ 3.42 ========== ========== ========== Diluted earnings per common share .......................................... $ 2.90 $ 3.61 $ 3.36 ========== ========== ========== Dividends per common share ................................................. $ 1.59 $ 1.37 $ 1.20 ========== ========== ========== Average common shares issued and outstanding (in thousands) (1) ............. 1,732,057 1,733,194 1,638,382 ========== ========== ==========
(1) Share and per-share data reflect a 2-for-1 stock split on February 27, 1997. See accompanying notes to consolidated financial statements. 52 BankAmerica Corporation and Subsidiaries Consolidated Balance Sheet (Dollars in Millions)
December 31 ------------------------- 1998 1997 ------------ ------------ Assets Cash and cash equivalents ............................................................... $ 28,277 $ 28,466 Time deposits placed and other short-term investments ................................... 6,750 8,363 Securities Held for investment, at cost (market value - $1,853 and $4,905)......................... 1,997 4,822 Available for sale ..................................................................... 78,590 62,209 -------- -------- Total securities ..................................................................... 80,587 67,031 -------- -------- Federal funds sold and securities purchased under agreements to resell .................. 27,146 20,200 Trading account assets .................................................................. 39,602 35,937 Derivative-dealer assets ................................................................ 16,400 14,824 Loans and leases ........................................................................ 357,328 342,140 Allowance for credit losses ............................................................. (7,122) (6,778) -------- -------- Loans and leases, net of allowance for credit losses ................................... 350,206 335,362 -------- -------- Premises and equipment, net ............................................................. 7,289 8,123 Customers' acceptance liability ......................................................... 2,671 4,891 Interest receivable ..................................................................... 3,734 3,584 Mortgage servicing rights ............................................................... 2,376 2,040 Goodwill ................................................................................ 12,695 13,551 Core deposits and other intangibles ..................................................... 2,013 2,203 Other assets ............................................................................ 37,933 26,408 -------- -------- Total assets ........................................................................... $617,679 $570,983 ======== ======== Liabilities Deposits in domestic offices Interest-bearing ....................................................................... $203,644 $202,082 Noninterest-bearing .................................................................... 92,623 85,815 Deposits in foreign offices Interest-bearing ....................................................................... 59,280 56,719 Noninterest-bearing .................................................................... 1,713 1,681 -------- -------- Total deposits ....................................................................... 357,260 346,297 -------- -------- Federal funds purchased and securities sold under agreements to repurchase .............. 67,543 61,414 Trading account liabilities ............................................................. 14,170 17,300 Derivative-dealer liabilities ........................................................... 16,835 13,639 Commercial paper ........................................................................ 6,749 5,925 Other short-term borrowings ............................................................. 24,742 12,120 Acceptances outstanding ................................................................. 2,671 4,893 Accrued expenses and other liabilities .................................................. 30,929 17,346 Trust preferred securities .............................................................. 4,954 4,578 Long-term debt .......................................................................... 45,888 42,887 -------- -------- Total liabilities ...................................................................... 571,741 526,399 -------- -------- Contingent liabilities and other financial commitments (Notes Eleven and Thirteen) Shareholders' Equity Preferred stock: authorized - 100,000,000 shares; issued and outstanding - 1,952,039 and 10,933,884 shares ...................................................................... 83 708 Common stock: authorized - 5,000,000,000 shares; issued and outstanding - 1,724,484,305 and 1,722,537,672 shares ............................................................... 14,837 15,140 Retained earnings ....................................................................... 30,998 28,438 Accumulated other comprehensive income .................................................. 152 407 Other ................................................................................... (132) (109) -------- -------- Total shareholders' equity ............................................................. 45,938 44,584 -------- -------- Total liabilities and shareholders' equity .......................................... $617,679 $570,983 ======== ========
See accompanying notes to consolidated financial statements. 53 BankAmerica Corporation and Subsidiaries Consolidated Statement of Cash Flows (Dollars in Millions)
Year Ended December 31 ----------------------------------- 1998 1997 1996 ----------- ----------- ----------- Operating Activities Net income ........................................................................... $ 5,165 $ 6,542 $ 5,813 Reconciliation of net income to net cash provided by operating activities Provision for credit losses ........................................................ 2,920 1,904 1,645 Gains on sales of securities ....................................................... (1,017) (271) (147) Merger-related charges, net ........................................................ 1,795 374 398 Depreciation and premises improvements amortization ................................ 1,096 1,108 983 Amortization of intangibles ........................................................ 902 855 544 Deferred income tax (benefit) expense .............................................. (100) 971 965 Net increase in trading instruments ................................................ (2,998) (3,271) (3,506) Net (increase) decrease in interest receivable ..................................... (157) (542) 604 Net increase (decrease) in interest payable ........................................ 94 179 (515) Other operating activities ......................................................... 3,191 (6,424) (2,904) --------- --------- --------- Net cash provided by operating activities ......................................... 10,891 1,425 3,880 --------- --------- --------- Investing Activities Proceeds from maturities of securities held for investment ........................... 1,162 1,898 3,440 Purchases of securities held for investment .......................................... (249) (570) (646) Proceeds from sales and maturities of securities available for sale .................. 81,254 44,268 40,767 Purchases of securities available for sale ........................................... (93,136) (56,825) (24,150) Net increase in federal funds sold and securities purchased under agreements to resell ............................................................................. (7,028) (3,531) (2,078) Net decrease (increase) in time deposits placed and other short-term investments ..... 1,612 (857) (512) Purchases and net originations of loans and leases ................................... (89,055) (39,394) (30,883) Proceeds from sales and securitizations of loans and leases .......................... 59,297 30,936 17,947 Purchases and originations of mortgage servicing rights .............................. (853) (419) (654) Net purchases of premises and equipment .............................................. (437) (888) (1,183) Proceeds from sales of foreclosed properties ......................................... 525 610 694 Sales and acquisitions of business activities, net of cash ........................... (335) 1,289 795 --------- --------- --------- Net cash (used in) provided by investing activities ............................... (47,243) (23,483) 3,537 --------- --------- --------- Financing Activities Net increase in deposits ............................................................. 16,476 4,774 267 Net increase (decrease) in federal funds purchased and securities sold under agreements to repurchase ........................................................... 6,137 26,680 (11,959) Net increase (decrease) in other short-term borrowings and commercial paper .......... 13,672 (1,440) 3,442 Proceeds from issuance of trust preferred securities ................................. 340 1,613 2,965 Proceeds from issuance of long-term debt ............................................. 12,166 7,823 11,199 Retirement of long-term debt ......................................................... (8,809) (6,740) (6,272) Proceeds from issuance of common stock ............................................... 1,367 1,892 573 Cash dividends paid .................................................................. (2,604) (2,175) (1,888) Common stock repurchased ............................................................. (1,751) (8,540) (3,193) Other financing activities ........................................................... (863) (2,036) (63) --------- --------- --------- Net cash provided by (used in) financing activities ............................... 36,131 21,851 (4,929) Effect of exchange rate changes on cash and cash equivalents ......................... 32 102 22 --------- --------- --------- Net (decrease) increase in cash and cash equivalents .................................. (189) (105) 2,510 Cash and cash equivalents on January 1 ................................................ 28,466 28,571 26,061 --------- --------- --------- Cash and cash equivalents on December 31 ............................................. $ 28,277 $ 28,466 $ 28,571 ========= ========= ========= Supplemental cash flow disclosures: Cash paid for interest ............................................................... $ 20,198 $ 18,585 $ 17,113 Cash paid for income taxes ........................................................... 2,695 1,760 2,456
Loans transferred to foreclosed properties amounted to $353, $431 and $569 in 1998, 1997 and 1996, respectively. Loans securitized and retained in the trading and available for sale securities portfolios amounted to $6,083, $7,842 and $4,558 in 1998, 1997 and 1996, respectively. The fair value of noncash assets acquired in acquisitions during 1998 was approximately $109, net of cash acquired. The fair values of noncash assets acquired and liabilities assumed in acquisitions during 1997 were approximately $52,226 and $43,024, respectively, net of cash acquired. See accompanying notes to consolidated financial statements. 54 BankAmerica Corporation and Subsidiaries Consolidated Statement of Changes in Shareholders' Equity (Dollars in Millions, Shares in Thousands)
Common Stock Preferred Stock Shares Amount ------------- ------------- ---------- Balance on December 31, 1995 ........... $ 2,826 1,605,450 $ 13,418 Net income ............................ Other comprehensive income, net of tax .............................. Comprehensive income .................. Cash dividends Common .............................. Preferred ........................... Common stock issued under dividend reinvestment and employee plans ...................... 18,463 536 Stock issued in acquisitions .......... 73 55,436 586 Common stock repurchased .............. (85,036) (3,193) Redemption of preferred stock ......... (381) Conversion of preferred stock ......... (98) 8,703 98 Other ................................. (7) (252) (26) ----------- --------- -------- Balance on December 31, 1996 ........... 2,413 1,602,764 11,419 ========== ========= ======== Net income ............................ Other comprehensive income, net of tax .............................. Comprehensive income .................. Cash dividends Common .............................. Preferred ........................... Common stock issued under dividend reinvestment and employee plans ...................... 47,431 1,888 Stock issued in acquisitions .......... 82 219,024 10,320 Common stock repurchased .............. (150,016) (8,540) Redemption of preferred stock ......... (1,701) Conversion of preferred stock ......... (86) 3,859 86 Other ................................. (524) (33) ----------- --------- -------- Balance on December 31, 1997 ........... 708 1,722,538 15,140 ========== ========= ======== Net income ............................ Other comprehensive income, net of tax .............................. Comprehensive income .................. Cash dividends Common .............................. Preferred ........................... Common stock issued under dividend reinvestment and employee plans ...................... 30,489 1,417 Stock issued in acquisitions .......... 385 15 Common stock repurchased .............. (29,349) (1,751) Redemption of preferred stock ......... (614) Conversion of preferred stock ......... (11) 444 11 Other ................................. (23) 5 ----------- --------- -------- Balance on December 31, 1998 ........... $ 83 1,724,484 $ 14,837 ========== ========= ======== Accumulated Total Other Share- Retained Comprehensive holders' Comprehensive Earnings Income(1) Other Equity Income ------------- --------------- ---------- ---------- -------------- Balance on December 31, 1995 ........... $19,953 $282 $ (184) $ 36,295 Net income ............................ 5,813 5,813 $5,813 Other comprehensive income, net of tax .............................. (262) (262) (262) ------ Comprehensive income .................. $5,551 ====== Cash dividends Common .............................. (1,686) (1,686) Preferred ........................... (202) (202) Common stock issued under dividend reinvestment and employee plans ...................... 37 573 Stock issued in acquisitions .......... 192 2 853 Common stock repurchased .............. (3,193) Redemption of preferred stock ......... (381) Conversion of preferred stock ......... Other ................................. 1 15 (17) ------- ---- ------ -------- Balance on December 31, 1996 ........... 24,071 20 (130) 37,793 ======= ==== ====== ======== Net income ............................ 6,542 6,542 $6,542 Other comprehensive income, net of tax .............................. 387 387 387 ------- Comprehensive income .................. $6,929 ======= Cash dividends Common .............................. (2,064) (2,064) Preferred ........................... (111) (111) Common stock issued under dividend reinvestment and employee plans ...................... 4 1,892 Stock issued in acquisitions .......... 10,402 Common stock repurchased .............. (8,540) Redemption of preferred stock ......... (1,701) Conversion of preferred stock ......... Other ................................. 17 (16) ------- ---- ------ -------- Balance on December 31, 1997 ........... 28,438 407 (109) 44,584 ======= ==== ====== ======== Net income ............................ 5,165 5,165 $5,165 Other comprehensive income, net of tax .............................. (255) (255) (255) ------- Comprehensive income .................. $4,910 ======= Cash dividends Common .............................. (2,579) (2,579) Preferred ........................... (25) (25) Common stock issued under dividend reinvestment and employee plans ...................... (50) 1,367 Stock issued in acquisitions .......... 15 Common stock repurchased .............. (1,751) Redemption of preferred stock ......... (614) Conversion of preferred stock ......... Other ................................. (1) 27 31 ---------- ---- ------ -------- Balance on December 31, 1998 ........... $30,998 $152 $ (132) $ 45,938 ========= ==== ====== ========
(1) Changes in Accumulated Other Comprehensive Income includes after tax net unrealized gains (losses) on securities of $(242), $419 and $(239) in 1998, 1997 and 1996 respectively. Changes in Accumulated Other Comprehensive Income also includes after tax net unrealized losses on foreign currency translation adjustments of $13, $32 and $23 in 1998, 1997 and 1996 respectively. See accompanying notes to consolidated financial statements. 55 BankAmerica Corporation and Subsidiaries Notes to Consolidated Financial Statements On September 30, 1998, BankAmerica Corporation (BankAmerica) merged with and into NationsBank Corporation (the Merger). The combined company was renamed BankAmerica Corporation (the Corporation). The transaction was accounted for as a pooling of interests. The consolidated financial statements have been restated to present the combined results of the Corporation as if the Merger had been in effect for all periods presented. On January 9, 1998, the Corporation completed its merger with Barnett Banks, Inc. (Barnett). The transaction was accounted for as a pooling of interests. The consolidated financial statements have been restated to present the combined results of the Corporation and Barnett as if the merger had been in effect for all periods presented. The Corporation is a Delaware corporation and a multi-bank holding company registered under the Bank Holding Company Act of 1956, as amended, with its principal assets being the stock of its subsidiaries. Through its banking subsidiaries and its nonbanking subsidiaries, the Corporation provides a diverse range of banking and nonbanking financial services and products throughout the U.S. and in selected international markets. Note One - Summary of Significant Accounting Policies Principles of Consolidation and Basis of Presentation The consolidated financial statements include the accounts of the Corporation and its majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Results of operations of companies purchased are included from the dates of acquisition. Certain prior period amounts have been reclassified to conform to current year classifications. Assets held in an agency or fiduciary capacity are not included in the consolidated financial statements. The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. Significant estimates made by management are discussed in these footnotes as applicable. On February 27, 1997, the Corporation completed a two-for-one split of its common stock. Accordingly, the consolidated financial statements for all years presented reflect the impact of the stock split. Cash and Cash Equivalents Cash on hand, cash items in the process of collection and amounts due from correspondent banks and the Federal Reserve Bank are included in cash and cash equivalents. Securities Debt securities are classified based on management's intention on the date of purchase. Debt securities which management has the intent and ability to hold to maturity are classified as held for investment and reported at amortized cost. Securities that are bought and held principally for the purpose of resale in the near term are classified as trading instruments and are stated at fair value. All other debt securities are classified as available for sale and carried at fair value with net unrealized gains and losses included in shareholders' equity on an after-tax basis. Interest and dividends on securities, including amortization of premiums and accretion of discounts, are included in interest income. Realized gains and losses from the sales of securities are determined using the specific identification method. Marketable equity securities, which are included in other assets, are carried at fair value with net unrealized gains and losses included in shareholders' equity, net of tax. Income on marketable equity securities is included in noninterest income. 56 Loans Held for Sale Loans held for sale include residential mortgage, commercial real estate and other loans and are carried at the lower of aggregate cost or market value. Loans originated with the intent to sell are included in other assets. Securities Purchased Under Agreements To Resell And Securities Sold Under Agreements To Repurchase Securities purchased under agreements to resell and securities sold under agreements to repurchase are treated as collateralized financing transactions and are recorded at the amounts at which the securities were acquired or sold plus accrued interest. The Corporation's policy is to obtain the use of securities purchased under agreements to resell. The market value of the underlying securities, which collateralize the related receivable on agreements to resell, is monitored, including accrued interest, and additional collateral is requested when deemed appropriate. Trading Instruments Instruments utilized in trading activities include securities stated at fair value. Fair value is generally based on quoted market prices. If quoted market prices are not available, fair values are estimated based on dealer quotes, pricing models or quoted prices for instruments with similar characteristics. Realized and unrealized gains and losses are recognized as trading account profits and fees. Derivative-Dealer Positions Derivative-dealer assets and liabilities represent unrealized gains and losses, respectively, on interest rate, foreign exchange, commodity and other derivative contract positions included in the Corporation's trading portfolio. Derivative-dealer positions are reflected at fair value with changes in fair value reflected in trading account profits and fees. Fair values are estimated based on dealer quotes, pricing models or quoted prices for instruments with similar characteristics. Loans and Leases Loans are reported at their outstanding principal balances net of any unearned income, charge-offs, unamortized deferred fees and costs on originated loans and premiums or discounts on purchased loans. Loan origination fees and certain direct origination costs are deferred and recognized as adjustments to income over the lives of the related loans. Unearned income, discounts and premiums are amortized to income using methods that approximate the interest method. The Corporation provides equipment financing to its customers through a variety of lease arrangements. Direct financing leases are carried at the aggregate of lease payments receivable plus estimated residual value of the leased property, less unearned income. Leveraged leases, which are a form of financing lease, are carried net of nonrecourse debt. Unearned income on leveraged and direct financing leases is amortized over the lease terms by methods that approximate the interest method. Allowance for Credit Losses The allowance for credit losses is primarily available to absorb losses inherent in the loan and lease portfolios. Credit exposures deemed to be uncollectible are charged against the allowance for credit losses. Recoveries of previously charged off amounts are credited to the allowance for credit losses. Individually identified impaired loans are measured based on the present value of payments expected to be received, observable market prices, or for loans that are solely dependent on the collateral for repayment, the estimated fair value of the collateral. If the recorded investment in the impaired loan exceeds the measure of estimated fair value, a valuation allowance is established as a component of the allowance for credit losses. The Corporation's process for determining appropriate allowance for credit losses includes management's judgment and use of estimates. The adequacy of the allowance for credit losses is reviewed regularly by management. This assessment is made in the context of historical losses as well as existing economic conditions and performance trends within specific portfolio segments and individual concentrations of credit. Additions to the allowance for credit losses are made by charges to the provision for credit losses. 57 Nonperforming Loans Commercial loans and leases that are past due 90 days or more as to principal or interest, or where reasonable doubt exists as to timely collection, including loans that are individually identified as being impaired, are generally classified as nonperforming loans unless well secured and in the process of collection. Loans are considered impaired when it is probable that all amounts, including principal and interest, will not be collected in accordance with contractual terms of the loan agreement. Loans whose contractual terms have been restructured in a manner which grants a concession to a borrower experiencing financial difficulties are classified as nonperforming until the loan is performing for an adequate period of time under the restructured agreement. Impaired loans are included in nonperforming loans. Generally, all other loans which are past due 90 days or more as to principal or interest are classified as nonperforming regardless of collateral or collection status. Interest accrued but not collected is reversed when a loan or lease is classified as nonperforming. Interest collections on nonperforming loans and leases for which the ultimate collectibility of principal is uncertain are applied as principal reductions. Otherwise, such collections are credited to income when received. Credit card loans that are 180 days past due are charged off and not classified as nonperforming. All other consumer loans and residential mortgages are generally charged off at 120 days past due or placed on nonperforming status upon repossession or the inception of foreclosure proceedings. Interest accrued but not collected is generally charged off along with the principal. Foreclosed Properties Assets are classified as foreclosed properties and included in other assets upon actual foreclosure or when physical possession of the collateral is taken regardless of whether foreclosure proceedings have taken place. Foreclosed properties are carried at the lower of the recorded amount of the loan or lease for which the property previously served as collateral, or the fair value of the property less estimated costs to sell. Prior to foreclosure, any write-downs, if necessary, are charged to the allowance for credit losses. Subsequent to foreclosure, gains or losses on the sale of and losses on the periodic revaluation of foreclosed properties are credited or charged to expense. Net costs of maintaining and operating foreclosed properties are expensed as incurred. Premises and Equipment Premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are recognized principally using the straight-line method over the estimated useful lives of the assets. Mortgage Servicing Rights The total cost of mortgage loans originated for sale or purchased is allocated between the cost of the loans and the mortgage servicing rights (MSR) based on the relative fair values of the loans and the MSR. MSR acquired separately are capitalized at cost. During 1998, the Corporation capitalized $853 million of MSR. The cost of the MSR is amortized in proportion to and over the estimated period of net servicing revenues. During 1998, amortization was $476 million. The fair value on December 31, 1998 of capitalized MSR was approximately $2.4 billion. Total loans serviced approximated $234.9 billion on December 31, 1998, including loans serviced on behalf of the Corporation's banking subsidiaries. The predominant characteristics used as the basis for stratifying MSR are loan type and interest rate. The MSR strata are evaluated for impairment by estimating their fair value based on anticipated future net cash flows, taking into consideration prepayment predictions. If the carrying value of the MSR, including the results of risk management activities, exceeds the estimated fair value, a valuation allowance is established. Changes to the valuation allowance are charged against or credited to mortgage servicing income and fees. The valuation allowance increased $170 million to $180 million on December 31, 1998. The valuation allowance on December 31, 1997 and 1996 and changes in the valuation allowance during 1997 and 1996 were insignificant. To manage risk associated with changes in prepayment rates, the Corporation uses various financial instruments including purchased options and swaps. The notional amounts of such contracts on December 31, 1998 was $22.4 billion and the related unrealized gains were $190 million. 58 Securitizations The Corporation securitizes, sells and services interests in home equity, installment, commercial and bankcard loans. When the Corporation sells assets in securitizations, it may retain interest only strips, one or more subordinated tranches and, in some cases, a cash reserve account, all of which are considered retained interests in the securitized assets. Gains upon sale of the assets depend, in part, on the Corporation's allocation of the previous carrying amount of the assets to the retained interests. Previous carrying amounts are allocated in proportion to the relative fair values of the assets sold and interests retained. To obtain fair values, quoted market prices are used, if available. Generally, quoted market prices for retained interests are not available, therefore the Corporation estimates fair values based upon the present value of the associated expected future cash flows. This may require management to estimate credit losses, prepayment speeds, forward yield curves, discount rates and other factors that impact the value of retained interests. After the securitization, any of these retained interests that can be contractually settled in such a way that the Corporation could not recover substantially all of its recorded investment are adjusted to fair value with the adjustment reflected as an unrealized gain or loss in shareholders' equity. If a decline in the fair value is determined to be unrecoverable, it is expensed. Goodwill and Other Intangibles Net assets of companies acquired in purchase transactions are recorded at fair value at the date of acquisition. Identified intangibles are amortized on an accelerated or straight-line basis over the period benefited. Goodwill is amortized on a straight-line basis over a period not to exceed 25 years. The recoverability of goodwill and other intangibles is evaluated if events or circumstances indicate a possible impairment. Such evaluation is based on various analyses, including undiscounted cash flow projections. Income Taxes There are two components of income tax provision: current and deferred. Current income tax expense approximates taxes to be paid or refunded for the applicable period. Balance sheet amounts of deferred taxes are recognized on the temporary differences between the bases of assets and liabilities as measured by tax laws and their bases as reported in the financial statements. Deferred tax expense or benefit is then recognized for the change in deferred tax liabilities or assets between periods. Recognition of deferred tax assets is based on management's belief that it is more likely than not that the tax benefit associated with certain temporary differences, tax operating loss carryforwards and tax credits will be realized. A valuation allowance is recorded for those deferred tax items for which it is more likely than not that realization will not occur. Retirement Benefits The Corporation has established qualified retirement plans covering full-time, salaried employees and certain part-time employees. Pension expense under these plans is charged to current operations and consists of several components of net pension cost based on various actuarial assumptions regarding future experience under the plans. In addition, the Corporation and its subsidiaries have established unfunded supplemental benefit plans providing any benefits that could not be paid from a qualified retirement plan because of Internal Revenue Code restrictions and supplemental executive retirement plans for selected officers of the Corporation and its subsidiaries. These plans are nonqualified and, therefore, in general, a participant's or beneficiary's claim to benefits is as a general creditor. The Corporation and its subsidiaries have established several unfunded postretirement medical benefit plans. Risk Management Instruments Risk management instruments are utilized to modify the interest rate characteristics of related assets or liabilities or hedge against fluctuations in interest rates, currency exchange rates or other such exposures as part of the Corporation's asset and liability management process. Instruments must be designated as hedges and must be effective throughout the hedge period. To qualify as hedges, risk management instruments must be 59 linked to specific assets or liabilities or pools of similar assets or liabilities. For risk management instruments that fail to qualify as hedges, the instruments are recorded at market value with changes in market value reflected in trading account profits and fees. Swaps, principally interest rate, used in the asset and liability management process are accounted for on the accrual basis with revenues or expenses recognized as adjustments to income or expense on the underlying linked assets or liabilities. Gains and losses associated with interest rate futures and forward contracts used as effective hedges of existing risk positions or anticipated transactions are deferred as an adjustment to the carrying value of the related asset or liability and recognized in income over the remaining term of the related asset or liability. Risk management instruments used to hedge or modify the interest rate characteristics of debt securities classified as available for sale are carried at fair value with unrealized gains or losses deferred as a component of shareholders' equity, net of tax. To manage interest rate risk, the Corporation also uses interest rate option products, primarily purchased caps and floors. Interest rate caps and floors are agreements where, for a fee, the purchaser obtains the right to receive interest payments when a variable interest rate moves above or below a specified cap or floor rate, respectively. Such instruments are primarily linked to long-term debt, short-term borrowings and pools of similar residential mortgages. The Corporation also purchases options to protect the value of certain assets, principally MSR, against changes in prepayment rates. Option premiums are amortized over the option life on a straight-line basis. Such contracts are designated as hedges, and gains or losses are recorded as adjustments to the carrying value of the MSR, which are then subjected to impairment valuations. The Corporation also utilizes forward delivery contracts and options to reduce the interest rate risk inherent in mortgage loans held for sale and the commitments made to borrowers for mortgage loans which have not been funded. These financial instruments are considered in the Corporation's lower of cost or market valuation of its mortgage loans held for sale. The Corporation has made investments in a number of operations in foreign countries. Certain assets and liabilities of these operations are often denominated in foreign currencies, which exposes the Corporation to foreign currency risks. To qualify for hedge accounting, a foreign exchange contract must reduce risk at the level of the specific transaction. Realized and unrealized gains and losses on instruments that hedge firm commitments are deferred and included in the measurement of the subsequent transaction; however, losses are deferred only to the extent of expected gains on the future commitment. Realized and unrealized gains and losses on instruments that hedge net foreign capital exposure are recorded in shareholders' equity as foreign currency translation adjustments and included in accumulated other comprehensive income. Risk management instruments generally are not terminated. When terminations do occur, gains or losses are recorded as adjustments to the carrying value of the underlying assets or liabilities and recognized as income or expense over either the remaining expected lives of such underlying assets or liabilities. In circumstances where the underlying assets or liabilities are sold, any remaining carrying value adjustments and the cumulative change in value of any open positions are recognized immediately as a component of the gain or loss on disposition of such underlying assets or liabilities. If a forecasted transaction to which a risk management instrument is linked fails to occur, any deferred gain or loss on the instrument is recognized immediately in income. Earnings Per Common Share Earnings per common share for all periods presented is computed by dividing net income, reduced by dividends on preferred stock, by the weighted average number of common shares issued and outstanding. Diluted earnings per common share is computed by dividing net income available to common shareholders, adjusted for the effect of assumed conversions, by the weighted average number of common shares issued and outstanding and dilutive potential common shares, which include convertible preferred stock and stock options. Dilutive potential common shares are calculated using the treasury stock method. Foreign Currency Translation Assets, liabilities and operations of foreign branches and subsidiaries are recorded based on the functional currency of each entity. For the majority of the foreign operations, the functional currency is the local currency, 60 in which case the assets, liabilities and operations are translated, for consolidation purposes, at current exchange rates from the local currency to the reporting currency, the U.S. dollar. The resulting gains or losses are reported as a component of accumulated other comprehensive income within shareholders' equity on a net-of-tax basis. When the foreign entity is not a free-standing operation or is in a hyperinflationary economy, the functional currency used to measure the financial statements of a foreign entity is the U.S. dollar. In these instances, the resulting gains and losses are included in income. Recently Issued Accounting Pronouncements In 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133). This standard requires the Corporation to recognize all derivatives as either assets or liabilities in its financial statements and measure such instruments at their fair values. Hedging activities must be redesignated and documented pursuant to the provisions of the statement. This statement becomes effective for all fiscal quarters of fiscal years beginning after June 15, 1999. At this time, the Corporation is still assessing the impact of SFAS 133 on its financial condition and results of operations. In 1998, Statement of Financial Accounting Standards No. 134, "Accounting for Mortgage-Backed Securities Retained after the Securitization of Mortgage Loans Held for Sale by a Mortgage Banking Enterprise" (SFAS 134), was issued. SFAS 134 provides guidance for mortgage banking entities on how to account for interests retained after securitizing mortgage loans previously held for sale. SFAS 134 is effective for fiscal quarters beginning after December 15, 1998 and was adopted by the Corporation on January 1, 1999. Note Two - Merger-Related Activity On September 30, 1998, the Corporation completed the Merger with BankAmerica, a multi-bank holding company headquartered in San Francisco, California. BankAmerica provided banking and various other financial services throughout the U.S. and in selected international markets to consumers and business customers, including corporations, governments and other institutions. As a result of the Merger, each outstanding share of BankAmerica common stock was converted into 1.1316 shares of the Corporation's common stock, resulting in the net issuance of approximately 779 million shares of the Corporation's common stock to the former BankAmerica shareholders. Each share of NationsBank common stock continued as one share in the Corporation's common stock. In addition, approximately 88 million options to purchase the Corporation's common stock were issued to convert stock options granted to certain BankAmerica employees. This transaction was accounted for as a pooling of interests. Under this method of accounting, the recorded assets, liabilities, shareholders' equity, income and expenses of NationsBank and BankAmerica have been combined and reflected at their historical amounts. NationsBank's total assets, total deposits and total shareholders' equity on the date of the Merger were approximately $331.9 billion, $166.8 billion and $27.7 billion, respectively. BankAmerica's total assets, total deposits and total shareholders' equity on the date of the Merger amounted to approximately $263.4 billion, $179.0 billion and $19.6 billion, respectively. In compliance with certain requirements of the Federal Reserve Board (FRB), the Department of Justice and certain New Mexico authorities in connection with the Merger, the Corporation entered into an agreement to divest certain branches of Bank of America National Trust and Savings Association (Bank of America NT&SA) with loans and deposits aggregating approximately $167 million and $500 million, respectively, in various markets in New Mexico. These transactions were completed in the fourth quarter of 1998. In connection with the Merger, the Corporation recorded $1,325 million of pre-tax, merger-related charges in 1998. Approximately $600 million ($441 million after-tax) and $725 million ($519 million after-tax) were recorded in the fourth and third quarters of 1998, respectively. The total pre-tax charge for 1998 consisted of approximately $740 million primarily in severance and change in control and other employee-related items, $150 million in conversion and related costs including occupancy and equipment expenses and customer communication, $300 million in exit and related costs and $135 million in other merger costs (including legal, investment banking and filing fees). The Corporation anticipates recording an additional pre-tax merger-related charge of approximately $400 million ($252 million after-tax) in 1999. 61 On January 9, 1998, the Corporation completed its merger with Barnett, a multi-bank holding company headquartered in Jacksonville, Florida (the Barnett merger). Barnett's total assets, total deposits and total shareholders' equity on the date of the merger were approximately $46.0 billion, $35.4 billion and $3.4 billion, respectively. As a result of the Barnett merger, each outstanding share of Barnett common stock was converted into 1.1875 shares of the Corporation's common stock, resulting in the net issuance of approximately 233 million common shares to the former Barnett shareholders. In addition, approximately 11 million options to purchase the Corporation's common stock were issued to convert stock options granted to certain Barnett employees. This transaction was also accounted for as a pooling of interests. In connection with the Barnett merger, the Corporation incurred a pre-tax merger-related charge during the first quarter of 1998 of approximately $900 million ($642 million after-tax), which consisted of approximately $375 million primarily in severance and change in control payments, $300 million of conversion and related costs and occupancy and equipment expenses (primarily lease exit costs and the elimination of duplicate facilities and other capitalized assets), $125 million in exit costs related to contract terminations and $100 million in other merger costs (including legal, investment banking and filing fees). In the second quarter of 1998, the Corporation recognized a $430 million gain resulting from the regulatory required divestitures of certain Barnett branches. The Corporation recorded a pre-tax charge of $280 million in 1996 as a result of decisions to close and/or sell certain of its business activities. The charge covered approximately $196 million for severance payments, $72 million for occupancy expense, primarily reflecting the planned closure of 120 branches, and $12 million for other costs. On October 1, 1997, the Corporation completed the acquisition of Montgomery Securities, Inc., an investment banking and institutional brokerage firm. The purchase price consisted of $840 million in cash and approximately 5.3 million unregistered shares of the Corporation's common stock for an aggregate amount of approximately $1.1 billion. The Corporation accounted for this acquisition as a purchase. On October 1, 1997, the Corporation also acquired Robertson, Stephens & Company Group, L.L.C. (Robertson Stephens), an investment banking and investment management firm. The acquisition was accounted for by the purchase method of accounting. The Corporation sold the investment banking operations of Robertson Stephens on August 31, 1998 and sold the investment management operations in 1999. As previously disclosed, NationsBank, BankAmerica and Barnett merged in separate transactions accounted for as pooling of interests. The following table summarizes the impact of the BankAmerica and Barnett mergers on the Corporation's net interest income, noninterest income and net income for periods prior to the respective mergers.
Net Interest Noninterest Net (Dollars in Millions) Income Income Income - ----------------------- -------------- ------------- --------- 1997 NationsBank ........... $ 7,898 $ 5,002 $3,077 BankAmerica ........... 8,669 6,012 3,210 Barnett ............... 1,840 971 255 ------- ------- ------ Total ................ $18,407 $11,985 $6,542 ======= ======= ====== 1996 NationsBank ........... $ 6,329 $ 3,646 $2,375 BankAmerica ........... 8,587 5,351 2,874 Barnett ............... 1,869 791 564 ------- ------- ------ Total ................ $16,785 $ 9,788 $5,813 ======= ======= ======
The amounts presented above represent results of operations of the previously separate companies and do not reflect reclassifications of certain revenue and expense items which were made to conform to the reporting policies of the Corporation. On January 7, 1997, the Corporation completed the acquisition of Boatmen's Bancshares, Inc. (Boatmen's), headquartered in St. Louis, Missouri, resulting in the issuance of approximately 195 million shares of the Corporation's common stock valued at $9.4 billion on the date of the acquisition and aggregate cash payments of 62 $371 million to Boatmen's shareholders. On the date of the acquisition, Boatmen's total assets and total deposits were approximately $41.2 billion and $32.0 billion, respectively. The Corporation accounted for this acquisition as a purchase. In 1996, the Corporation completed the initial public offering (IPO) of 16.1 million shares of Class A Common Stock of BA Merchant Services, Inc. (BAMS) (ticker symbol "BPI" on the New York Stock Exchange), a subsidiary of the Corporation. On December 22, 1998, the Corporation and BAMS announced the signing of a definitive merger agreement on which the Corporation agreed to buy BAMS outstanding shares of Class A common stock. At closing, each outstanding share of BAMS common stock other than the shares owned by the Corporation will be converted into the right to receive a cash payment equal to $20.50 per share without interest, or approximately $330 million. BAMS will then become a wholly owned subsidiary of Bank of America NT&SA. The transaction is expected to be completed during the second quarter of 1999. The following tables summarize the activity in the merger-related reserves recorded in connection with the BankAmerica and Barnett mergers during 1998: BankAmerica Merger Merger-Related Reserves
Non-Cash Balance on Amount Cash Payments Reductions Balance on January 1, Included in Applied to Applied to December 31, (Dollars in Millions) 1998 Expense Reserve Reserve 1998 - ---------------------------------------- ------------ ------------- --------------- ------------ ------------- Severance, change in control and other employee-related costs ..... $-- $ 740 $(155) $ (98) $487 Conversion and related costs ........... -- 150 (3) (4) 143 Exit and related costs ................. -- 300 (62) (44) 194 Other merger costs ..................... -- 135 (117) -- 18 --- ------ ------- ------- ---- $-- $1,325 $(337) $(146) $842 === ====== ======= ======= ====
Barnett Merger Merger-Related Reserves
Non-Cash Balance on Amount Cash Payments Reductions Balance on January 1, Included in Applied to Applied to December 31, (Dollars in Millions) 1998 Expense Reserve Reserve 1998 - ---------------------------------------- ------------ ------------- --------------- ------------ ------------- Severance, change in control and other employee-related costs ..... $-- $375 $ (318) $ (55) $ 2 Conversion and related costs ........... -- 300 (8) (192) 100 Exit and related costs ................. -- 125 (101) -- 24 Other merger costs ..................... -- 100 (99) -- 1 --- ---- ------ ------ ---- $-- $900 $ (526) $ (247) $127 === ==== ====== ====== ====
Total severance, change in control and other employee-related costs for both mergers included amounts related to job eliminations, primarily in areas of overlapping operations and duplicate functions. Through December 31, 1998, approximately 1,700 employees have entered the severance process as result of the Barnett merger. For the BankAmerica merger, 5,000 to 8,000 positions after attrition, are estimated to be eliminated and through December 31, 1998, approximately 1,800 associates have entered the severance process. The only significant portion of the Barnett merger-related charge remaining at December 31, 1998 relates to conversion and related costs, primarily abandoned owned and leased facilities and branch closure costs. Exit costs primarily relate to contract termination payments, business realignment and other related costs. Remaining exit and related costs balances included in the Barnett merger reserve on December 31, 1998 are expected to be used during the first half of 1999. Primarily all reserves established in 1996 associated with the Bank South acquisition and restructuring activities were fully utilized as of December 31, 1998. There were no additional provisions during 1998. 63 Note Three - Securities The amortized cost, gross unrealized gains and losses, and fair value of securities held for investment and securities available for sale on December 31 were (dollars in millions):
Gross Gross Amortized Unrealized Unrealized Fair Securities Held for Investment Cost Gains Losses Value - ----------------------------------------------- ------------ ------------- ------------- ----------- 1998 U.S. Treasury securities and agency debentures $ 478 $ 1 $ -- $ 479 Foreign sovereign securities .................. 914 1 168 747 Mortgage-backed securities..................... 203 -- -- 203 Other taxable securities ...................... 29 2 -- 31 ---------- ----------- ----------- -------- Total taxable ................................ 1,624 4 168 1,460 Tax-exempt securities ......................... 373 20 -- 393 ---------- ----------- ----------- -------- Total ........................................ $ 1,997 $ 24 $ 168 $ 1,853 ========== =========== =========== ======== 1997 U.S. Treasury securities and agency debentures $ 516 $ 1 $ 1 $ 516 Foreign sovereign securities .................. 1,448 61 39 1,470 Mortgage-backed securities .................... 2,408 43 3 2,448 Other taxable securities ...................... 56 9 4 61 ---------- ----------- ----------- -------- Total taxable ................................ 4,428 114 47 4,495 Tax-exempt securities ......................... 394 17 1 410 ---------- ----------- ----------- -------- Total ........................................ $ 4,822 $ 131 $ 48 $ 4,905 ========== =========== =========== ======== 1996 U.S. Treasury securities and agency debentures $ 880 $ -- $ 3 $ 877 Foreign sovereign securities .................. 1,525 15 285 1,255 Mortgage-backed securities..................... 3,264 34 19 3,279 Other taxable securities ...................... 64 25 -- 89 ---------- ----------- ----------- -------- Total taxable ................................ 5,733 74 307 5,500 Tax-exempt securities ......................... 516 18 4 530 ---------- ----------- ----------- -------- Total ........................................ $ 6,249 $ 92 $ 311 $ 6,030 ========== =========== =========== ======== Gross Gross Amortized Unrealized Unrealized Fair Securities Available for Sale Cost Gains Losses Value - ----------------------------------------------- ---------- ----------- ----------- -------- 1998 U.S. Treasury securities and agency debentures $ 17,355 $ 52 $ 157 $ 17,250 Foreign sovereign securities .................. 5,693 25 138 5,580 Mortgage-backed securities .................... 51,259 567 36 51,790 Other taxable securities ...................... 2,293 76 32 2,337 ---------- ----------- ----------- -------- Total taxable ................................ 76,600 720 363 76,957 Tax-exempt securities ......................... 1,636 68 71 1,633 ---------- ----------- ----------- -------- Total ........................................ $ 78,236 $ 788 $ 434 $ 78,590 ========== =========== =========== ======== 1997 U.S. Treasury securities and agency debentures $ 10,614 $ 268 $ 6 $ 10,876 Foreign sovereign securities .................. 10,797 43 96 10,744 Mortgage-backed securities .................... 36,256 363 30 36,589 Other taxable securities ...................... 2,271 13 3 2,281 ---------- ----------- ----------- -------- Total taxable ................................ 59,938 687 135 60,490 Tax-exempt securities ......................... 1,661 58 -- 1,719 ---------- ----------- ----------- -------- Total ........................................ $ 61,599 $ 745 $ 135 $ 62,209 ========== =========== =========== ======== 1996 U.S. Treasury securities and agency debentures $ 5,298 $ 61 $ 46 $ 5,313 Foreign sovereign securities .................. 4,129 52 153 4,028 Mortgage-backed securities .................... 17,256 95 88 17,263 Other taxable securities ...................... 2,150 8 10 2,148 ---------- ----------- ----------- -------- Total taxable ................................ 28,833 216 297 28,752 Tax-exempt securities ......................... 746 21 2 765 ---------- ----------- ----------- -------- Total ........................................ $ 29,579 $ 237 $ 299 $ 29,517 ========== =========== =========== ========
64 The expected maturity distribution and yields (computed on a taxable-equivalent basis) of the Corporation's securities portfolio on December 31, 1998 are summarized below. Actual maturities may differ from contractual maturities or maturities shown below since borrowers may have the right to prepay obligations with or without prepayment penalties.
Due after 1 Due after 5 Due in 1 year through 5 through 10 or less years years (Dollars in Millions) ------------------- -------------------- --------------------- Amount Yield Amount Yield Amount Yield -------- ---------- ---------- --------- ---------- ---------- Amortized cost of securities held for investment U.S. Treasury securities and agency debentures ................ $ 477 5.92% $ -- --% $ 1 4.53% Foreign sovereign securities ........... 205 6.88 334 6.96 313 6.89 Mortgage-backed securities ............. 149 6.08 51 6.77 3 6.82 Other taxable securities ............... 2 9.52 -- -- -- -- ----- ----- -------- ----- -------- ---- Total taxable ........................ 833 6.19 385 6.93 317 6.88 Tax-exempt securities .................. 55 7.95 123 7.75 100 6.80 ----- ----- -------- ----- -------- ---- Total ................................ $ 888 6.30% $ 508 7.13% $ 417 6.86% ===== ===== ======== ===== ======== ==== Fair value of securities held for investment ..................... $ 868 $ 445 $ 356 ===== ======== ======== Fair value of securities available for sale U.S. Treasury securities and agency debentures .................... $ 478 6.32% $ 7,193 4.87% $ 8,952 4.88% Foreign sovereign securities ........... 12 7.66 1,188 3.88 2,199 4.52 Mortgage-backed securities ............. 357 6.79 15,224 6.85 21,579 6.29 Other taxable securities ............... 43 9.55 675 11.38 902 6.24 ----- ----- -------- ----- -------- ---- Total taxable ........................ 890 6.68 24,280 6.25 33,632 5.80 Tax-exempt securities .................. 41 6.52 216 6.79 534 7.34 ----- ----- -------- ----- -------- ---- Total ................................ $ 931 6.68% $ 24,496 6.25% $ 34,166 5.82% ===== ===== ======== ===== ======== ==== Amortized cost of securities available for sale ...................... $ 921 $ 24,149 $ 34,458 ===== ======== ======== Due after 10 years Total (Dollars in Millions) --------------------- --------------------- Amount Yield Amount Yield ----------- --------- ---------- ---------- Amortized cost of securities held for investment U.S. Treasury securities and agency debentures ................ $ -- --% $ 478 5.91% Foreign sovereign securities ........... 62 6.93 914 6.91 Mortgage-backed securities ............. -- -- 203 6.27 Other taxable securities ............... 27 6.63 29 6.85 -------- ---- -------- ---- Total taxable ........................ 89 6.84 1,624 6.54 Tax-exempt securities .................. 95 5.71 373 7.00 -------- ---- -------- ---- Total ................................ $ 184 6.26% $ 1,997 6.62% ======== ==== ======== ==== Fair value of securities held for investment ..................... $ 184 $ 1,853 ======== ======== Fair value of securities available for sale U.S. Treasury securities and agency debentures .................... $ 627 6.37% $ 17,250 4.96% Foreign sovereign securities ........... 2,181 6.59 5,580 5.20 Mortgage-backed securities ............. 14,630 6.21 51,790 6.44 Other taxable securities ............... 717 5.77 2,337 7.65 -------- ---- -------- ---- Total taxable ........................ 18,155 6.24 76,957 6.05 Tax-exempt securities .................. 842 7.80 1,633 7.37 -------- ---- -------- ---- Total ................................ $ 18,997 6.32% $ 78,590 6.08% ======== ==== ======== ==== Amortized cost of securities available for sale ...................... $ 18,708 $ 78,236 ======== ========
The components of gains and losses on sales of securities for the years ended December 31 were (dollars in millions):
1998 1997 1996 ---------- ------ -------- Gross gains on sales of securities .......... $ 1,039 $289 $ 310 Gross losses on sales of securities ......... 22 18 163 ------- ---- ----- Net gains on sales of securities ............ $ 1,017 $271 $ 147 ======= ==== =====
During 1998, the Corporation sold $19.5 million of securities held for investment, resulting in net gains of approximately $2.0 million included above. The sale resulted from a realignment of the securities portfolio in connection with the Barnett merger. There were no sales of securities held for investment in 1997 or 1996. Excluding securities issued by the U.S. government and its agencies and corporations, there were no investments in securities from one issuer that exceeded 10 percent of consolidated shareholders' equity on December 31, 1998 or 1997. The income tax expense attributable to realized net gains on securities sales was $363 million, $101 million and $54 million in 1998, 1997 and 1996, respectively. Securities are pledged or assigned to secure borrowed funds, government and trust deposits and for other purposes. The carrying value of pledged securities was $65.6 billion and $57.3 billion on December 31, 1998 and 1997, respectively. On December 31, 1998, the valuation allowance for securities available for sale and marketable equity securities included in shareholders' equity was $292 million, primarily reflecting $354 million of pre-tax appreciation on securities available for sale and $165 million of pre-tax appreciation on marketable equity securities. 65 Note Four - Trading Account Assets and Liabilities The fair values of the components of trading account assets and liabilities on December 31 and the average fair values for the years ended December 31 were (dollars in millions):
Ending Balance Average Balance ---------------------- ---------------------- 1998 1997 1998 1997 ---------- ----------- ---------- ----------- Securities owned U.S. Treasury securities ......................................... $ 7,854 $ 10,537 $ 9,802 $ 12,625 Securities of other U.S. Government agencies and corporations .... 524 2,392 841 2,473 Certificates of deposit, bankers' acceptances and commercial paper .......................................................... 2,723 1,867 2,746 2,240 Corporate debt ................................................... 1,666 3,439 2,428 2,703 Foreign sovereign debt ........................................... 11,774 12,650 13,241 14,102 Mortgage-backed securities ....................................... 7,489 3,277 4,802 2,324 Other securities ................................................. 7,572 1,775 5,914 1,817 -------- -------- -------- -------- Total trading account assets ................................... $ 39,602 $ 35,937 $ 39,774 $ 38,284 ======== ======== ======== ======== Short sales U.S. Treasury securities ......................................... $ 8,534 $ 13,087 $ 8,538 $ 12,034 Corporate debt ................................................... 82 217 833 276 Foreign sovereign debt ........................................... 3,166 2,983 3,192 2,148 Other securities ................................................. 2,388 1,013 4,909 827 -------- -------- -------- -------- Total trading account liabilities .............................. $ 14,170 $ 17,300 $ 17,472 $ 15,285 ======== ======== ======== ========
The net change in the unrealized gain or loss on trading securities held on December 31, 1998 and 1997 was included in trading account profits and fees and amounted to a gain of $1,692 million for 1998 and a loss of $143 million for 1997. Foreign exchange contract and securities trading activities generated most of the Corporation's trading account profits and fees. See Note Eleven of the consolidated financial statements on page 74 for additional information on derivatives-dealer positions, including credit risk. The average fair values of derivative-dealer assets on December 31, 1998 and 1997 was $14.3 billion and $12.6 billion, respectively. The average fair values of derivative-dealer liabilities on December 31, 1998 and 1997 were $13.3 billion and $11.5 billion, respectively. The fair value of derivative-dealer assets at December 31, 1998 and 1997, was $16.4 billion and $14.8 billion, respectively. The fair value of derivative-dealer liabilities at December 31, 1998 and 1997 was $16.8 billion and $13.6 billion, respectively. 66 Note Five - Loans and Leases Loans and leases on December 31 were (dollars in millions):
1998 1997 --------------------- ----------------------- Amount Percent Amount Percent ----------- --------- ------------ ---------- Commercial - domestic ..................... $ 137,422 38.5 % $ 122,463 35.8% Commercial - foreign ...................... 31,495 8.8 30,080 8.8 Commercial real estate - domestic ......... 26,912 7.5 28,567 8.3 Commercial real estate - foreign .......... 301 .1 324 .1 --------- ---- --------- ----- Total commercial ......................... 196,130 54.9 181,434 53.0 --------- ---- --------- ----- Residential mortgage ...................... 73,608 20.6 71,540 20.9 Home equity lines ......................... 15,653 4.4 16,536 4.8 Direct/Indirect consumer .................. 40,510 11.3 40,058 11.7 Consumer finance .......................... 15,400 4.3 14,566 4.3 Bankcard .................................. 12,425 3.5 14,908 4.4 Foreign consumer .......................... 3,602 1.0 3,098 .9 --------- ---- --------- ----- Total consumer ........................... 161,198 45.1 160,706 47.0 --------- ---- --------- ----- Total loans and leases .................. $ 357,328 100.0 % $ 342,140 100.0% ========= ======= ========= =====
The following table presents the recorded investment in loans that were considered to be impaired on December 31 (1) (dollars in millions):
1998 1997 -------- ---------- Commercial - domestic .............. $ 796 $ 538 Commercial - foreign ............... 314 158 Commercial real estate-domestic .... 554 327 Commercial real estate-foreign ..... -- 1 ------ ------- Total commercial ................... $1,664 $ 1,024 ====== =======
(1) The Corporation's consumer loan portfolio generally consists of large groups of relatively smaller balance homogeneous loans that are collectively evaluated for impairment and, therefore, are not included in this table. The average recorded investment in certain impaired loans for the years ended December 31, 1998, 1997 and 1996 was approximately $1.6 billion, $1.4 billion and $1.8 billion, respectively. As of December 31, 1998 and 1997, the recorded investment on impaired loans requiring an allowance for credit losses was $876 million and $885 million, and the related allowance for credit losses was $326 million and $145 million, respectively. For the years ended December 31, 1998, 1997 and 1996, interest income recognized on impaired loans totaled $50 million, $80 million and $83 million, respectively, all of which was recognized on a cash basis. On December 31, 1998, 1997 and 1996, nonperforming loans, including certain loans which are considered impaired, totaled $2.5 billion, $2.1 billion and $2.2 billion, respectively. The net amount of interest recorded during each year on loans that were classified as nonperforming or restructured on December 31, 1998, 1997 and 1996 was $130 million in each of the three years. If these loans had been accruing interest at their originally contracted rates, related income would have been $367 million, $349 million and $388 million in 1998, 1997 and 1996, respectively. Foreclosed properties amounted to $282 million, $309 million and $511 million on December 31, 1998, 1997 and 1996, respectively. The cost of carrying foreclosed properties amounted to $16 million, $26 million and $35 million in 1998, 1997 and 1996, respectively. 67 Note Six - Allowance for Credit Losses The table below summarizes the changes in the allowance for credit losses on loans and leases (dollars in millions):
1998 1997 1996 ----------- ----------- ----------- Balance on January 1 ............................... $ 6,778 $ 6,316 $ 6,222 ------- ------- ------- Loans and leases charged off ....................... (3,050) (2,603) (2,369) Recoveries of loans and leases previously charged off 583 751 702 ------- ------- ------- Net charge-offs .................................. (2,467) (1,852) (1,667) Provision for credit losses ........................ 2,920 1,904 1,645 Other, net ......................................... (109) 410 116 ---------- ------- ------- Balance on December 31 ........................... $ 7,122 $ 6,778 $ 6,316 ======= ======= =======
Note Seven - Deposits On December 31, 1998, the Corporation had domestic certificates of deposit of $100 thousand or greater totaling $27.3 billion, with $14.0 billion maturing within three months, $5.9 billion maturing within three to six months, $4.9 billion maturing within six to twelve months and $2.5 billion maturing after twelve months. Additionally, on December 31, 1998, the Corporation had other domestic time deposits of $100 thousand or greater totaling $887 million, with $208 million maturing within three months, $96 million maturing within three to six months, $164 million maturing within six to twelve months and $419 million maturing after twelve months. Foreign office certificates of deposit and other time deposits of $100 thousand or greater totaled $40.8 billion and $48.7 billion on December 31, 1998 and 1997, respectively. At December 31, 1998, the scheduled maturities for time deposits were as follows (dollars in millons): Due in 1999 ............... $ 126,193 Due in 2000 ............... 7,972 Due in 2001 ............... 2,124 Due in 2002 ............... 1,423 Due in 2003 ............... 750 Thereafter ................ 952 --------- Total ..................... $ 139,414 =========
68 Note Eight - Short-Term Borrowings and Long-Term Debt The contractual maturities of long-term debt on December 31 were:
1998 ------------------------------------------------- Various Various Fixed-Rate Floating-Rate 1997 Debt Debt Amount Amount (Dollars in Millions) Obligations (1) Obligations (1) Outstanding Outstanding - ------------------------------------------------ ----------------- ----------------- ------------- ------------ Parent company Senior debt Due in 1998 ................................. $ -- $ -- $ -- $ 2,792 Due in 1999 ................................. 341 2,287 2,628 2,381 Due in 2000 ................................. 488 1,725 2,213 3,186 Due in 2001 ................................. 671 3,330 4,001 3,252 Due in 2002 ................................. 130 2,155 2,285 2,290 Due in 2003 ................................. 499 2,079 2,578 1,245 Thereafter .................................. 357 3,708 4,065 1,715 -------- -------- ------- -------- 2,486 15,284 17,770 16,861 -------- -------- ------- -------- Subordinated debt Due in 1998 ................................. -- -- -- 52 Due in 1999 ................................. 361 319 680 683 Due in 2000 ................................. 411 -- 411 417 Due in 2001 ................................. 1,312 30 1,342 1,355 Due in 2002 ................................. 2,199 26 2,225 2,213 Due in 2003 ................................. 1,711 323 2,034 1,974 Thereafter .................................. 5,984 3,265 9,249 7,776 -------- -------- ------- -------- 11,978 3,963 15,941 14,470 -------- -------- ------- -------- Total parent company long-term debt ......... 14,464 19,247 33,711 31,331 -------- -------- ------- -------- Banking and nonbanking subsidiaries Senior debt Due in 1998 ................................. -- -- -- 3,902 Due in 1999 ................................. 221 3,790 4,011 1,512 Due in 2000 ................................. 3 4,555 4,558 3,365 Due in 2001 ................................. 34 1,263 1,297 455 Due in 2002 ................................. 109 284 393 443 Due in 2003 ................................. 441 261 702 252 Thereafter .................................. 87 90 177 120 -------- -------- ------- -------- 895 10,243 11,138 10,049 -------- -------- ------- -------- Subordinated debt Due in 1998 ................................. -- -- -- 10 Due in 1999 ................................. -- -- -- 11 Due in 2000 ................................. -- -- -- 12 Due in 2001 ................................. 227 -- 227 308 Due in 2002 ................................. -- -- -- -- Due in 2003 ................................. 104 -- 104 100 Thereafter .................................. 300 8 308 308 -------- -------- ------- -------- 631 8 639 749 -------- -------- ------- -------- Total banking and nonbanking subsidiaries long-term debt ................ 1,526 10,251 11,777 10,798 -------- -------- ------- -------- Total parent, banking and nonbanking subsidiaries long-term-debt ................ $ 15,990 $ 29,498 45,488 42,129 Notes payable to finance the purchase of leased vehicles ...................................... 279 625 Obligations under capital leases ............... 121 133 ------- -------- Total long-term debt ........................ $45,888 $ 42,887 ======= ========
(1) Fixed rate and floating rate classifications of long-term debt include the effect of interest rate swap contracts. 69 The majority of the floating rates are based on three- and six-month London InterBank Offer Rates (LIBOR). At December 31, 1998, the interest rates on floating-rate long-term debt, as classified in the table on the preceding page, ranged from 4.75 percent to 7.07 percent. These obligations were denominated primarily in U.S. dollars. The interest rate on fixed-rate long-term debt, as classified in the table on the preceding page, ranged from 4.50 percent to 12.50 percent at December 31, 1998. At December 31, 1998, the Corporation had commercial paper back-up lines of credit totaling $1.1 billion, of which $669 million expires in October 1999 and $479 million expires in October 2002. In addition, the Corporation had a $1.6 billion line of credit which expires in May 2001. At December 31, 1998, there were no amounts outstanding under these credit facilities. These lines were supported by fees paid to unaffiliated banks. As of December 31, 1998, the Corporation has the authority to issue approximately $9.4 billion of corporate debt and other securities under its existing shelf registration statements. Under a joint Euro medium-term note program, the Corporation and NationsBank, N.A. may offer an aggregate of $8.5 billion of senior or, in the case of the Corporation, subordinated notes exclusively to non-United States residents. The notes bear interest at fixed or floating rates and may be denominated in U.S. dollars or foreign currencies. The Corporation uses foreign currency contracts to convert certain foreign-denominated debt into U.S. dollars. On December 31, 1998, $3.7 billion of notes were outstanding under this program. BankAmerica's Euro medium-term note program was cancelled in September 1998. As of December 31, 1998, the Corporation and NationsBank, N.A. had the authority to issue approximately $2.8 billion and $2.0 billion, respectively, of debt securities under this program. On December 31, 1998, $3.5 billion of notes were outstanding under the former BankAmerica program. NationsBank, N.A. maintains a program to offer up to $25 billion of bank notes from time to time with fixed or floating rates and maturities ranging from 7 days or more from date of issue. Prior to the Merger, Bank of America NT&SA maintained a program to offer up to $12 billion of bank notes from time to time with fixed or floating rates and maturities ranging from 30 days to 15 years. On December 31, 1998 and 1997, there were short-term bank notes outstanding under these programs of $14.7 billion and $4.6 billion, respectively. On December 31, 1998 and 1997 the Corporation's long-term debt included $7.9 billion and $5.1 billion, respectively, of these notes. Through a limited purpose subsidiary, the Corporation had $2.5 billion of mortgage-backed bonds outstanding on December 31, 1998. These bonds are collateralized by $3.7 billion of mortgage loans. As part of its interest rate risk management activities, the Corporation enters into interest rate contracts for certain long-term debt issuances. Through the use of interest rate swaps, $8.8 billion of fixed-rate debt with rates ranging from 5.30 percent to 8.57 percent have been effectively converted to floating rates primarily at spreads to LIBOR. Through the use of interest rate options, the Corporation has the right to purchase interest rate caps and floors to hedge its risk on floating-rate debt against a rise in interest rates. At December 31, 1998, the interest rate options had a notional amount of approximately $3.4 billion. In addition, the Corporation has entered into other interest rate contracts, primarily futures, with notional amounts of approximately $802 million at December 31, 1998 to reduce its interest rate risk by shortening the repricing profile on floating-rate debt that reprices within one year. On December 31, 1998, including the effects of interest rate contracts for certain long-term debt issuances, the weighted average effective interest rates for total long-term debt, total fixed-rate debt and total floating-rate debt (based on the rates in effect on December 31, 1998) were 6.11 percent, 7.73 percent and 5.24 percent, respectively. These obligations were denominated primarily in U.S. dollars. 70 As described below, certain debt obligations outstanding on December 31, 1998 may be redeemed prior to maturity at the option of the Corporation:
Amount Outstanding Year Redeemable Year of Maturities (in millions) - ------------------------ -------------------- -------------- Currently redeemable 2002 $ 21 1999 2001 -- 2010 919 2000 -- 2001 2001 -- 2028 2,542 2002 -- 2008 2005 -- 2028 853
Note Nine - Trust Preferred Securities Trust preferred securities are Corporation obligated mandatorily redeemable preferred securities of subsidiary trusts holding solely junior subordinated deferrable interest notes of the Corporation. Since October 1996, the Corporation formed thirteen wholly owned grantor trusts to issue trust preferred securities and to invest the proceeds of such trust preferred securities into notes of the Corporation. Certain of the trust preferred securities were issued at a discount. Such trust preferred securities may be redeemed prior to maturity at the option of the Corporation. The sole assets of each of the grantor trusts are the Junior Subordinated Deferrable Interest Notes of the Corporation (the Notes) held by such grantor trusts. Each issue of the Notes has an interest rate equal to the corresponding trust preferred securities distribution rate. The Corporation has the right to defer payment of interest on the Notes at any time or from time to time for a period not exceeding five years provided that no extension period may extend beyond the stated maturity of the relevant Notes. During any such extension period, distributions on the trust preferred securities will also be deferred and the Corporation's ability to pay dividends on its common and preferred stock will be restricted. The trust preferred securities are subject to mandatory redemption upon repayment of the related Notes at their stated maturity dates or their earlier redemption at a redemption price equal to their liquidation amount plus accrued distributions to the date fixed for redemption and the premium if any, paid by the Corporation upon concurrent repayment of the related Notes. Payment of periodic cash distributions and payment upon liquidation or redemption with respect to trust preferred securities are guaranteed by the Corporation to the extent of funds held by the grantor trusts (the Preferred Securities Guarantee). The Preferred Securities Guarantee, when taken together with the Corporation's other obligations including its obligations under the Notes, will constitute a full and unconditional guarantee, on a subordinated basis, by the Corporation of payments due on the trust preferred securities. The Corporation is required by the FRB to maintain certain levels of capital for bank regulatory purposes. The FRB has determined that certain cumulative preferred securities having the characteristics of trust preferred securities qualify as minority interest, which is included in Tier 1 capital for bank holding companies. Such Tier 1 capital treatment provides the Corporation with a more cost-effective means of obtaining capital for bank regulatory purposes than if the Corporation were to issue preferred stock. The table on the next page is a summary of the outstanding trust preferred securities and the Notes at December 31: 71
Aggregate Principal Amount of Trust Preferred Securities Aggregate --------------------- Principal Amount of (Dollars in Millions) Issued 1998 1997 the Notes - ----------------------------- ----------- ---------- ---------- ----------- NationsBank Capital Trust I ............ Dec. 1996 $ 600 $ 600 $ 619 Capital Trust II ........... Dec. 1996 365 365 376 Capital Trust III .......... Feb. 1997 500 500 516 Capital Trust IV ........... Apr. 1997 500 500 516 BankAmerica Institutional Capital A .... Nov. 1996 450 450 464 Institutional Capital B .... Nov. 1996 300 300 309 Capital I .................. Dec. 1996 300 300 309 Capital II ................. Dec. 1996 450 450 464 Capital III ................ Jan. 1997 400 400 412 Capital IV ................. Feb. 1998 350 -- 361 Barnett Capital I .................. Nov. 1996 300 300 309 Capital II ................. Dec. 1996 200 200 206 Capital III ................ Jan. 1997 250 250 258 ------- Total ...................... $4,965m $4,615m $ 5,119 ======= ======= ======= Per Annum Stated Interest Interest Maturity of Rate of Payment Redemption (Dollars in Millions) the Notes the Notes Dates Period - ----------------------------- ------------- ------------- -------------- ------------ NationsBank Capital Trust I ............ Dec. 2026 7.84% 3/31, 6/30, On or after 9/30, 12/31 12/31/01 a Capital Trust II ........... Dec. 2026 7.83 6/15, 12/15 On or after 12/15/06 bd Capital Trust III .......... Jan. 2027 3-mo. LIBOR 1/15, 4/15, On or after +55 bps 7/15, 10/15 1/15/07 b Capital Trust IV ........... Apr. 2027 8.25 4/15, 10/15 On or after 4/15/07 bf BankAmerica Institutional Capital A..... Dec. 2026 8.07 6/30, 12/31 On or after 12/31/06cg Institutional Capital B..... Dec. 2026 7.70 6/30, 12/31 On or after 12/31/06 ch Capital I .................. Dec. 2026 i 7.75 3/31, 6/30, On or after 9/30, 12/31 12/20/01 e Capital II ................. Dec. 2026 8.00 6/15, 12/15 On or after 12/15/06 cj Capital III ................ Jan. 2027 3-mo. LIBOR 1/15, 4/15, On or after +57 bps 7/15, 10/15 1/15/02 c Capital IV ................. Mar. 2028 7.00 3/31, 6/30, On or after 9/30, 12/31 2/24/03 c Barnett Capital I .................. Dec. 2026 8.06 6/1, 12/1 On or after 12/1/06 bk Capital II ................. Dec. 2026 7.95 6/1, 12/1 On or after 12/1/06 bl Capital III ................ Feb. 2027 3-mo. LIBOR 2/1, 5/1, On or after +62.5 bps 8/1, 11/1 2/1/07 b Total ......................
a The Corporation may redeem the Notes prior to the indicated redemption period upon the occurrence of certain events relating to tax treatment of the related trust or the Notes, at a redemption price at least equal to the principal amount of the Notes. b The Corporation may redeem the Notes prior to the indicated redemption period upon the occurrence of certain events relating to tax treatment of the related trust or the Notes or relating to capital treatment of the trust preferred securities or relating to a change in the treatment of the related trust under the Investment Company Act of 1940, as amended, at a redemption price at least equal to the principal amount of the Notes. c The Corporation may redeem the Notes prior to the indicated redemption period upon the occurrence of certain events relating to tax treatment of the related trust or the Notes or relating to capital treatment of the trust preferred securities at a redemption price at least equal to the principal amount of the Notes. d The Notes may be redeemed on or after December 15, 2006 and prior to December 15, 2007 at 103.915% of the principal amount, and thereafter at prices declining to 100% on December 15, 2016 and thereafter. e The Corporation may redeem the Notes (i) during the indicated redemption period or (ii) upon the occurrence of certain events relating to tax treatment of the trust or the Notes or relating to capital treatment of the trust preferred securities, prior to the indicated redemption period, in each case, at a redemption price of 100% of the principal amount. f The Notes may be redeemed on or after April 15, 2007 and prior to April 14, 2008 at 103.85% of the principal amount, and thereafter at prices declining to 100% on April 15, 2017 and thereafter. g The Notes may be redeemed on or after December 31, 2006 and prior to December 31, 2007 at 104.0350% of the principal amount, and thereafter at prices declining to 100% on December 31, 2016 and thereafter. h The Notes may be redeemed on or after December 31, 2006 and prior to December 31, 2007 at 103.7785% of the principal amount, and thereafter at prices declining to 100% on December 31, 2016 and thereafter. i At the option of the Corporation, the stated maturity may be shortened to a date not earlier than December 20, 2001 or extended to a date not later than December 31, 2045, in each case if certain conditions are met. j The Notes may be redeemed on or after December 15, 2006 and prior to December 15, 2007 at 103.9690% of the principal amount, and thereafter at prices declining to 100% on December 15, 2016 and thereafter. k The Notes may be redeemed on or after December 1, 2006 and prior to December 1, 2007 at 104.030% of the principal amount, and thereafter at prices declining to 100% on December 1, 2016 and thereafter. l The Notes may be redeemed on or after December 1, 2006 and prior to December 1, 2007 at 103.975% of the principal amount, and thereafter at prices declining to 100% on December 1, 2016 and thereafter. m Excludes $11 and $37 of deferred issuance costs and unamortized discount at December 31, 1998 and 1997, respectively. 72 Note Ten - Shareholders' Equity and Earnings Per Common Share On June 29, 1998, the Corporation redeemed all of BankAmerica's remaining outstanding nonconvertible preferred shares. The Corporation's Preferred Stock on December 31, 1997, included BankAmerica's outstanding preferred stock of $614 million. These preferred shares were nonvoting except in certain limited circumstances. The shares were redeemable at the option of BankAmerica during the redemption period and at the redemption price per share plus accrued and unpaid dividends to the redemption date. During 1997 and 1996, BankAmerica redeemed a portion of its preferred shares for an aggregate of $1,628 million and $381 million, respectively. In April 1988, BankAmerica declared a dividend of one preferred share purchase right (a Right) for each outstanding share of BankAmerica's common stock pursuant to the Rights Agreement dated April 11, 1988 between BankAmerica and Manufacturers Hanover Trust Company of California, as rights agent (the Rights Agreement). Each Right entitled the holder, upon the occurrence of certain events, to buy from BankAmerica, until the earlier of April 22, 1998 or the redemption of the Rights, one two-hundredth of a share of Cumulative Participating Preferred Stock, Series E, at an exercise price of $25.00 per Right (subject to adjustment). On April 22, 1998, the Rights Agreement expired in accordance with its terms. As of December 31, 1998, the Corporation had issued 1.9 million shares of employee stock ownership plan (ESOP) Convertible Preferred Stock, Series C (ESOP Preferred Stock). The ESOP Preferred Stock has a stated and liquidation value of $42.50 per share, provides for an annual cumulative dividend of $3.30 per share and each share is convertible into 1.68 shares of the Corporation's common stock. ESOP Preferred Stock in the amounts of $11 million, $86 million and $98 million was converted into the Corporation's common stock in 1998, 1997 and 1996, respectively. In November 1989, Barnett incorporated ESOP provisions into its existing 401(k) employee benefit plan (Barnett ESOP). The Barnett ESOP acquired $141 million of common stock using the proceeds of a loan from the Corporation. The terms of the loan include equal monthly payments of principal and interest through September 2015. Interest is at 9.75 percent and prepayments of principal are allowed. The loan is generally being repaid from contributions to the plan by the Corporation and dividends on unallocated shares held by the Barnett ESOP. Shares held by the Barnett ESOP are allocated to plan participants as the loan is repaid. As of December 31, 1998, 3.5 million shares of unallocated common stock remained in the Barnett ESOP. During 1998, 1997 and 1996, the Barnett ESOP released and allocated common stock amounting to $6 million, $8 million and $13 million, respectively. As consideration in the merger of NationsBank, N.A. (South) and NationsBank, N.A. during 1997, NationsBank, N.A. exchanged approximately $73 million for preferred stock issued by NationsBank, N.A. (South) in the 1996 acquisition of Citizens Federal Bank, a federal savings bank. Such preferred stock consisted of approximately 0.5 million shares of NationsBank, N.A. (South) 8.50% Series H Noncumulative Preferred Stock and approximately 2.4 million shares of NationsBank, N.A. (South) 8.75% Series 1993A Noncumulative Preferred Stock. During 1998 and 1997, the Corporation repurchased approximately 29 million and approximately 150 million shares of common stock, respectively, under various stock repurchase programs authorized by the Board of Directors. On September 24, 1998, the Board of Directors of the Corporation approved the purchase of up to 20 million shares of the Corporation's common stock in the open market or through private transactions. During the fourth quarter of 1998 all shares authorized under this resolution were repurchased. Other shareholders' equity consisted of restricted stock award plan deferred compensation of $74 million and $23 million, as well as a loan to the ESOP trust of $58 million and $86 million at December 31, 1998 and 1997, respectively. 73 The calculation of earnings per common share and diluted earnings per common share is presented below (dollars in millions, except per-share data, shares in thousands):
1998 1997 1996 ------------- ------------- ------------- Earnings per common share computation Net income ...................................................... $ 5,165 $ 6,542 $ 5,813 Total preferred stock dividends ................................. (25) (111) (202) ---------- ---------- ---------- Income available to common shareholders ......................... $ 5,140 $ 6,431 $ 5,611 ---------- ---------- ---------- Average common shares issued and outstanding .................... 1,732,057 1,733,194 1,638,382 ---------- ---------- ---------- Earnings per common share ....................................... $ 2.97 $ 3.71 $ 3.42 ========== ========== ========== Diluted earnings per common share computation Income available to common shareholders ......................... $ 5,140 $ 6,431 $ 5,611 Total preferred stock dividends ................................. 25 111 202 Preferred stock dividends on nonconvertible stock ............... (19) (104) (193) ---------- ---------- ---------- Effect of assumed conversions ................................... 6 7 9 ---------- ---------- ---------- Income available to common shareholders and assumed conversions ................................................... $ 5,146 $ 6,438 $ 5,620 ---------- ---------- ---------- Average common shares issued and outstanding .................... 1,732,057 1,733,194 1,638,382 Incremental shares from assumed conversions: Convertible preferred stock ................................... 3,290 3,736 6,158 Stock options ................................................. 40,413 45,242 26,086 ---------- ---------- ---------- Dilutive potential common shares ................................ 43,703 48,978 32,244 ---------- ---------- ---------- Total dilutive average common shares issued and outstanding ..... 1,775,760 1,782,172 1,670,626 ---------- ---------- ---------- Diluted earnings per common share ............................... $ 2.90 $ 3.61 $ 3.36 ========== ========== ==========
Note Eleven - Commitments, Contingencies and Off-Balance Sheet Financial Instruments In the normal course of business, the Corporation enters into a number of off-balance sheet commitments. These commitments expose the Corporation to varying degrees of credit and market risk and are subject to the same credit and risk limitation reviews as those recorded on the balance sheet. Credit Extension Commitments The Corporation enters into commitments to extend credit, standby letters of credit and commercial letters of credit to meet the financing needs of its customers. The commitments shown below have been reduced by amounts collateralized by cash and amounts participated to other financial institutions. The following summarizes outstanding commitments to extend credit on December 31 (dollars in millions):
1998 1997 ---------- ---------- Credit card commitments ................................... $ 67,018 $ 69,297 Other loan commitments .................................... 234,453 226,773 Standby letters of credit and financial guarantees ........ 33,311 31,315 Commercial letters of credit .............................. 3,035 3,748
Commitments to extend credit are legally binding, generally have specified rates and maturities and are for specified purposes. The Corporation manages the credit risk on these commitments by subjecting these commitments to normal credit approval and monitoring processes and protecting against deterioration in the borrowers' ability to pay through adverse-change clauses which require borrowers to maintain various credit and liquidity measures. As of December 31, 1998 and 1997, there were no unfunded commitments to any industry or country greater than 10 percent of total unfunded commitments to lend. Credit card lines are unsecured commitments which are reviewed at least annually by management. Upon evaluation of the customers' creditworthiness, the Corporation has the right to terminate or change the terms of the credit card lines. Of the December 31, 1998 other loan commitments, $107.4 billion is scheduled to expire in less than one year, $105.8 billion in one to five years and $21.3 billion after five years. 74 Standby letters of credit (SBLC) and financial guarantees are issued to support the debt obligations of customers. If a SBLC or financial guarantee is drawn upon, the Corporation looks to its customer for payment. SBLCs and financial guarantees are subject to the same approval and collateral policies as other extensions of credit. Of the December 31, 1998 SBLCs and financial guarantees, $20.9 billion is scheduled to expire in less than one year, $10.8 billion in one to five years and $1.6 billion after five years. Commercial letters of credit, issued primarily to facilitate customer trade finance activities, are collateralized by the underlying goods being shipped by the customer and are generally short-term. For each of these types of instruments, the Corporation's maximum exposure to credit loss is represented by the contractual amount of these instruments. Many of the commitments are collateralized or are expected to expire without being drawn upon; therefore, the total commitment amounts do not necessarily represent risk of loss or future cash requirements. Derivatives Derivatives utilized by the Corporation include interest rate swaps, financial futures and forward settlement contracts and option contracts. A swap agreement is a contract between two parties to exchange cash flows based on specified underlying notional amounts and indices. Financial futures and forward settlement contracts are agreements to buy or sell a quantity of a financial instrument, currency or commodity at a predetermined future date and rate or price. An option contract is an agreement that conveys to the purchaser the right, but not the obligation, to buy or sell a quantity of a financial instrument, index, currency or commodity at a predetermined rate or price at a time or during a period in the future. These option agreements can be transacted on organized exchanges or directly between parties. Asset and Liability Management Activities Risk management interest rate contracts are used in the asset and liability management process. Such contracts, which are generally non-leveraged generic interest rate and basis swaps, options and futures, allow the Corporation to effectively manage its interest rate risk position. Generic interest rate swaps involve the exchange of fixed-rate and variable-rate interest payments based on the contractual underlying notional amount. Basis swaps involve the exchange of interest payments based on the contractual underlying notional amounts, where both the pay rate and the receive rate are floating rates based on different indices. Interest rate caps and floors are agreements where, for a fee, the purchaser obtains the right to receive interest payments when a variable interest rate moves above or below a specified cap or floor rate, respectively. The following table outlines the notional and fair values of the Corporation's ALM contracts on December 31 (dollars in millions):
1998 1997 ---------------------- ---------------------- Notional Fair Notional Fair Amount Value Amount Value ---------- ----------- ---------- ----------- Interest Rate Contracts Receive fixed swaps ...................... $60,450 $ 1,958 $56,127 $ 877 Pay fixed swaps .......................... 25,770 (1,006) 25,041 (888) ------- -------- ------- ----- Net receive fixed ...................... 34,680 952 31,086 (11) Basis swaps .............................. 7,736 (10) 2,583 (7) ------- -------- ------- -------- Total net swap position ................ 42,416 942 33,669 (18) Futures and forward rate contracts ....... 6,348 2 89,650 (16) Option products .......................... 26,836 (46) 24,113 (60) ------- -------- ------- ------- Total interest rate contracts (1) ...... $ 898 $ (94) ======== =======
(1) Not meaningful to sum notional amounts of different off-balance sheet products. 75 In addition to the contracts in the preceding table, the Corporation uses foreign currency contracts to manage the foreign exchange risk associated with certain foreign-denominated liabilities. Foreign exchange contracts, which include spot, forward and futures contracts, represent agreements to exchange the currency of one country for the currency of another country at an agreed-upon price, on an agreed-upon settlement date. Foreign exchange option contracts are similar to interest rate option contracts except that they are based on currencies rather than interest rates. Exposure to loss on these contracts will increase or decrease over their respective lives as currency exchange and interest rates fluctuate. The Corporation's credit risk exposure for exchange-traded instruments is minimal as these instruments conform to standard terms and are subject to policies set by the exchange involved, including counterparty approval, margin requirements and security deposit requirements. Credit Risk Associated with Derivative Activities Credit risk associated with derivatives is measured as the net replacement cost should the counterparties with contracts in a gain position to the Corporation completely fail to perform under the terms of those contracts and any collateral underlying the contracts proves to be of no value. In managing derivatives credit risk, both the current exposure, which is the replacement cost of contracts on the measurement date, as well as an estimate of the potential change in value of contracts over their remaining lives are considered. In managing credit risk associated with its derivatives activities, the Corporation deals primarily with U.S. and foreign commercial banks, broker-dealers and corporates. During 1998, there were $40 million in credit losses associated with derivative contracts. On December 31, 1998, there were no nonperforming derivatives positions that were material to the Corporation. To minimize credit risk, the Corporation enters into legally enforceable master netting agreements, which reduce risk by permitting the close out and netting of transactions with the same counterparty upon the occurrence of certain events. A portion of the derivative-dealer activity involves exchange-traded instruments. Because exchange-traded instruments conform to standard terms and are subject to policies set by the exchange involved, including counterparty approval, margin requirements and security deposit requirements, the credit risk is minimal. The following table presents the notional or contract amounts on December 31, 1998 and 1997 and the current credit risk amounts (the net replacement cost of contracts in a gain position on December 31, 1998 and 1997) of the Corporation's derivative-dealer positions which are primarily executed in the over-the-counter market for trading purposes. The notional or contract amounts indicate the total volume of transactions and significantly exceed the amount of the Corporation's credit or market risk associated with these instruments. The credit risk amounts presented in the following table do not consider the value of any collateral, but generally take into consideration the effects of legally enforceable master netting agreements. 76 Derivative - Dealer Positions (Dollars in Millions)
December 31, 1998 December 31, 1997 ------------------------ --------------------- Contract/ Credit Contract/ Credit Notional Risk (1) Notional Risk (1) ------------- ---------- ----------- --------- Interest Rate Contracts Swaps ...................................... $1,539,862 $ 5,470 $868,708 $ 3,759 Futures and forwards ....................... 808,284 290 470,640 120 Written options ............................ 494,608 -- 476,152 -- Purchased options .......................... 615,492 2,125 449,383 1,078 Foreign Exchange Contracts Swaps ...................................... 37,357 1,403 31,028 1,577 Spot, futures and forwards ................. 623,977 5,136 628,265 7,214 Written options ............................ 56,287 -- 80,438 -- Purchased options .......................... 53,426 703 75,998 970 Commodity and Other Contracts Swaps ...................................... 5,685 370 2,713 80 Futures and forwards ....................... 5,292 -- 3,147 -- Written options ............................ 22,382 -- 14,159 -- Purchased options .......................... 22,134 989 13,954 403 ------- ------- Total before cross product netting ....... 16,486 15,201 ------- ------- Cross product netting .................... 1,274 749 ------- ------- Net replacement cost ..................... $15,212 $14,452 ======= =======
(1) Represents the net replacement cost the Corporation could incur should counterparties with contracts in a gain position to the Corporation completely fail to perform under the terms of those contracts. Amounts include accrued interest. The table above includes both long and short derivative-dealer positions. The fair value of dealer positions on December 31, 1998 and 1997, as well as their average fair values for 1998 and 1997 are disclosed in Note Four of the consolidated financial statements on page 66. The Corporation uses credit derivatives to diversify credit risk and lower its risk portfolio by transferring the exposure of an underlying asset to another counterparty. Credit default swaps are a type of credit derivatives which provide protection against credit losses associated with specific events on an underlying asset. As of December 31, 1998, the Corporation had a notional value of $16.9 billion in credit derivatives, primarily credit default swaps. When Issued Securities When issued securities are commitments to purchase or sell securities during the time period between the announcement of a securities offering and the issuance of those securities. On December 31, 1998, the Corporation had commitments to purchase and sell when issued securities of $1.3 billion and $2.4 billion, respectively. On December 31, 1997, the Corporation had commitments to purchase and sell when issued securities of $8.8 billion and $8.2 billion, respectively. Litigation In the ordinary course of business, the Corporation and its subsidiaries are routinely defendants in or parties to a number of pending and threatened legal actions and proceedings, including actions brought on behalf of various classes of claimants. In certain of these actions and proceedings, substantial money damages are asserted against the Corporation and its subsidiaries and certain of these actions and proceedings are based on alleged violations of consumer protection, securities, environmental, banking and other laws. The Corporation's predecessor, BankAmerica, and certain of its subsidiaries, including Bank of America NT&SA, were named in one such suit by the City of San Francisco and several related public entities, and by the State of California, in an action entitled State of California, etc ex rel Stull v. Bank of America NT&SA, et al. (No. 968-484). The case was instituted on April 1, 1995 in the Superior Court for the City and County of San Francisco. The City of San Francisco and related public entities intervened in the case on May 1, 1997, and the 77 State of California took over prosecution of the case on May 5, 1997. The chief allegation of this suit is that Bank of America NT&SA and its predecessors retained unclaimed funds related to bonds and coupons that were not presented by bondholders rather than returning them to certain bond issuers or escheating such funds to the State. The suit also alleges False Claims Act exposure for alleged fee overcharges and claims that Bank of America NT&SA and its predecessors improperly invested bond program funds. On November 12, 1998, the plaintiffs and the Corporation and its named subsidiaries settled this suit whereby the Corporation and its named subsidiaries agreed to pay $187.5 million to the plaintiffs. The settlement is subject to court approval. The Corporation and certain present and former officers have been named as defendants in approximately 24 uncertified class actions filed in federal court alleging, among other things, that the defendants failed to disclose material facts about BankAmerica's losses relating to D.E. Shaw & Co., L. P. until mid-October 1998, in violation of various provisions of the federal securities laws. The uncertified classes consist generally of persons who were entitled to vote on the merger of NationsBank and BankAmerica, or who purchased or acquired securities of the Corporation or its predecessors between August 4, 1998 and October 13, 1998. Similar actions are pending in California state court, alleging violations of the California Corporations Code and involving factual allegations essentially the same as the federal actions. In addition, certain cases filed in California state court have alleged that the proxy statement-prospectus of August 4, 1998, falsely stated that the Merger would be one of equals and allege a conspiracy on the part of certain executives to gain control over the newly merged entity. At least one such complaint seeks recovery under various state common law theories. The Corporation believes the actions lack merit and will defend them vigorously. The amount of any ultimate exposure cannot be determined with certainty at this time. Management believes that the actions and proceedings and the losses, if any, resulting from the final outcome thereof, will not be material in the aggregate to the Corporation's financial position or results of operations. Note Twelve - Regulatory Requirements and Restrictions The Corporation's banking subsidiaries are required to maintain average reserve balances with the FRB based on a percentage of certain deposits. Average reserve balances held with the FRB to meet these requirements amounted to $288 million and $403 million for 1998 and 1997, respectively. The primary source of funds for cash distributions by the Corporation to its shareholders is dividends received from its banking subsidiaries. The subsidiary national banks can initiate aggregate dividend payments in 1999, without prior regulatory approval, of $2.2 billion plus an additional amount equal to their net profits for 1999, as defined by statute, up to the date of any such dividend declaration. The amount of dividends that each subsidiary bank may declare in a calendar year without approval by the Office of the Comptroller of the Currency (OCC) is the bank's net profits for that year combined with its net retained profits, as defined, for the preceding two years. One of the Corporation's subsidiaries, Bank of America, FSB, is subject to regulatory restrictions by the Office of Thrift Supervision (OTS) on its payment of dividends. Under these restrictions, Bank of America, FSB, can initiate dividend payments in 1999 without prior regulatory approval of $675 million. Regulations also restrict banking subsidiaries in lending funds to affiliates. On December 31, 1998, the total amount which could be loaned to the Corporation by its banking subsidiaries was approximately $5.6 billion. On December 31, 1998, no loans to the Corporation from its banking subsidiaries were outstanding. The FRB, the OCC, the Federal Deposit Insurance Corporation and the OTS (collectively, the Agencies) have issued regulatory capital guidelines for U.S. banking organizations. Failure to meet the capital requirements can initiate certain mandatory and discretionary actions by regulators that could have a material effect on the Corporation's financial statements. As of December 31, 1998 and 1997, the Corporation and each of its banking subsidiaries were well capitalized under this regulatory framework. There have been no conditions or events since December 31, 1998 that management believes have changed either the Corporation's or its banking subsidiaries' capital classifications. The regulatory capital guidelines measure capital in relation to the credit risk of both on- and off-balance sheet items using various risk weights. Under the regulatory capital guidelines, Total Capital consists of three 78 tiers of capital. Tier 1 Capital includes common shareholders' equity and qualifying preferred stock, less goodwill and other adjustments. Tier 2 Capital consists of preferred stock not qualifying as Tier 1 Capital, mandatory convertible debt, limited amounts of subordinated debt, other qualifying term debt and the allowance for credit losses up to 1.25 percent of risk-weighted assets. Tier 3 capital includes subordinated debt that is unsecured, fully paid, has an original maturity of at least two years, is not redeemable before maturity without prior approval by the Federal Reserve and includes a lock-in clause precluding payment of either interest or principal if the payment would cause the issuing bank's risk-based capital ratio to fall or remain below the required minimum. At December 31, 1998, the Corporation had no subordinated debt that qualified as Tier 3 capital. In accordance with the FRB's amendment to its capital adequacy guidelines effective for periods beginning after December 31, 1997, the Corporation is now required to include its broker/dealer subsidiaries, NationsBanc Montgomery Securities and Robertson Stephens, when calculating regulatory capital ratios. Previously, the Corporation had been required to exclude the equity, assets and off-balance sheet exposures of its broker/dealer subsidiary. To meet minimum adequately capitalized regulatory requirements, an institution must maintain a Tier 1 Capital ratio of four percent and a Total Capital ratio of eight percent. A well-capitalized institution must maintain a Tier 1 Capital ratio of six percent and a Total Capital ratio of ten percent. The risk-based capital rules have been further supplemented by a leverage ratio, defined as Tier 1 capital divided by average total assets, after certain adjustments. The leverage ratio guidelines establish a minimum of 100 to 200 basis points above three percent. Banking organizations must maintain a leverage capital ratio of at least five percent to be classified as well capitalized. On September 12, 1996, the Agencies amended their regulatory capital guidelines to incorporate a measure for market risk. In accordance with the amended guidelines, the Corporation and any of its banking subsidiaries with significant trading activity, as defined in the amendment, must incorporate a measure for market risk in their regulatory capital calculations effective for reporting periods after January 1, 1998. The revised guidelines have not had a material impact on the Corporation or its subsidiaries' regulatory capital ratios or their well-capitalized status. The following table presents the actual capital ratios and amounts and minimum required capital amounts for the Corporation, NationsBank, N.A. and Bank of America NT&SA on December 31:
1998 1997 ----------------------------------- ----------------------------------- Actual Actual --------------------- Minimum --------------------- Minimum Ratio Amount Required (1) Ratio Amount Required (1) ---------- ---------- ------------- ---------- ---------- ------------- (Dollars in Millions) Tier 1 Capital BankAmerica Corporation ......... 7.06% $36,849 $20,866 6.50% $13,593 $ 8,371 NationsBank, N.A. ............... 7.72 19,317 10,007 7.58 10,537 5,557 Bank of America NT&SA ........... 7.03 15,511 8,832 7.49 15,660 8,361 Total Capital BankAmerica Corporation ......... 10.94 57,055 41,733 10.89 22,787 16,742 NationsBank, N.A. ............... 10.27 25,691 20,014 10.98 15,256 11,113 Bank of America NT&SA ........... 10.80 23,837 17,664 11.28 23,576 16,722 Leverage Capital BankAmerica Corporation ......... 6.22 36,849 17,773 5.57 13,593 7,321 NationsBank, N.A. ............... 6.55 19,317 8,854 5.68 10,537 5,568 Bank of America NT&SA ........... 6.15 15,511 7,568 6.93 15,660 6,779
(1) Dollar amount required to meet the Agencies guidelines for adequately capitalized institutions. 79 During 1998, several subsidiaries including NationsBank of Texas, N.A., NationsBank of Tennessee, N.A. and Barnett Banks, N.A., as well as various other subsidiaries were merged with and into NationsBank, N.A. During 1997, several subsidiaries including NationsBank, N.A. (South) and various subsidiaries acquired in the purchase of Boatmen's were merged with and into NationsBank, N.A. The Corporation's and NationsBank, N.A.'s ratios and amounts for 1997 have not been restated to reflect the impact of mergers. BankAmerica, Barnett and their significant banking subsidiaries were considered "well capitalized" on December 31, 1997 under the regulatory framework. Note Thirteen - Employee Benefit Plans Pension and Postretirement Plans The Corporation sponsors noncontributory trusteed pension plans that cover substantially all officers and employees. The plans provide defined benefits based on an employee's compensation, age and years of service. It is the policy of the Corporation to fund not less than the minimum funding amount required by ERISA. Individually, BankAmerica, Barnett Banks and NationsBank each sponsored defined benefit pension plans prior to each of the respective mergers of these banks. The BankAmerica plan was a cash balance design plan, providing participants with an age, service and wage based crediting rate applied at each pay period and a defined earnings rate on all participant account balances in the plan. The NationsBank plan was amended to a cash balance plan effective July 1, 1998 and provides a similar crediting rate for all participants. The NationsBank plan allows participants to select from various earnings measures, which are based on the returns of certain funds managed by subsidiaries of the Corporation. The participant selected earnings measures determine the earnings rate on the individual participant account balances in the plan. In addition, a one time opportunity to transfer certain assets from the company's savings plan to the cash balance plan was extended to NationsBank plan participants. Assets with an approximate fair value of $1,423 million were transferred by plan participants. The Barnett plan will be amended to merge into the NationsBank plan in 1999, providing the cash balance plan design feature to those participants. The opportunity to transfer certain savings plan assets to the cash balance plan will be extended to Barnett participants in 1999. The BankAmerica and NationsBank plans were merged effective December 31, 1998. However, the participants in each plan will retain the cash balance plan design followed by their predecessor plans until the plan is amended in 2000. In addition to retirement pension benefits, substantially all employees may become eligible for postretirement health care and life insurance benefits. 80 The following tables summarize the balances and changes in fair value of plan assets and benefit obligations as of and for the years ended December 31, 1998 and 1997:
Postretirement Pension Plan Health & Life Plan ----------------------- ------------------------- 1998 1997 1998 1997 ------------ ---------- ------------ ------------ (Dollars in Millions) Change in Fair Value of Plan Assets (Primarily Listed Stocks, Fixed Income and Real Estate) Fair value on January 1 ......................................... $5,725 $4,927 $ 164 $ 137 Actual return on plan assets .................................... 890 770 24 23 Company contributions ........................................... -- -- 65 68 Plan participant contributions .................................. -- -- 28 17 Acquisition/transfer ............................................ 1,429 364 -- -- Benefits paid ................................................... (384) (336) (94) (81) ------ ------ ----- ----- Fair value on December 31 .................................... $7,660 $5,725 $ 187 $ 164 ====== ====== ===== ===== (Dollars in Millions) Change in Benefit Obligation Benefit obligation on January 1 ................................. $4,692 $4,092 $ 930 $ 800 Service cost .................................................... 144 122 10 9 Interest cost ................................................... 371 320 61 62 Plan participant contributions .................................. -- -- 28 17 Plan amendments ................................................. 95 (125) 16 17 Actuarial loss (gain) ........................................... (66) 354 (67) 48 Acquisition/transfer ............................................ 1,539 265 -- 58 Effect of curtailments .......................................... (14) -- (2) -- Benefits paid ................................................... (384) (336) (94) (81) ------ ------ ------- ----- Benefit obligation on December 31 ............................ $6,377 $4,692 $ 882 $ 930 ====== ====== ======= ===== (Dollars in Millions) Funded Status Overfunded (unfunded) status on December 31 ..................... $1,283 $1,033 $(695) $(766) Unrecognized net actuarial loss (gain) .......................... (132) 303 (96) (29) Unrecognized prior service cost (benefit) ....................... 108 (101) 13 (3) Unrecognized transition obligation (asset) ...................... (9) (12) 473 507 -------- ------ ------- ------- Prepaid (accrued) benefit cost ............................... $1,250 $1,223 $(305) $(291) ======= ====== ======= =======
The following are the weighted average discount rate, expected return on plan assets and rate of increase in future compensation assumptions used in determining the actuarial present value of the benefit obligation.
Pension Plan Retiree Health & Life Plan --------------------------- ----------------------------- 1998 1997 1998 1997 ---------- ---------------- ---------- ------------------ Weighted Average Assumptions on December 31 Discount rate ................................. 7.00% 6.50 to 7.50% 7.00% 6.50 to 7.50% Expected return on plan assets ................ 10.00% 8.25 to 10.00% 10.00% 8.25 to 10.00% Rate of compensation increase ................. 4.00% 4.00 to 6.50% 4.00% 4.00%
81 Net periodic pension benefit cost (income) for the years ended December 31, included the following components:
1998 1997 1996 (Dollars in Millions) ----------- ----------- ----------- Components of Net Periodic Pension Benefit Cost (Income) Service cost .............................................. $ 144 $ 122 $ 119 Interest cost ............................................. 371 320 278 Expected return on plan assets ............................ (552) (434) (372) Amortization of transition asset .......................... (3) (3) (3) Amortization of prior service cost ........................ (2) (10) (2) Recognized net actuarial loss ............................. 16 16 25 Recognized gain due to settlements and curtailments ....... (2) -- -- -------- ------- ------- Net periodic pension benefit cost (income) .............. $ (28) $ 11 $ 45 ======= ======= =======
In addition to the trusteed pension plan, the Corporation sponsors a number of unfunded executive pension plans. The total benefit obligation for these plans as of December 31, 1998 and 1997 was $386 million and $342 million respectively. The net periodic pension expense for these plans in 1998 and 1997 totaled $49 million and $46 million, respectively. For the years ended December 31, net periodic postretirement benefit expense included the following components:
1998 1997 1996 (Dollars in Millions) ----------- ---------- ---------- Components of Net Periodic Postretirement Benefit Cost Service cost ............................................. $ 10 $ 9 $ 10 Interest cost ............................................ 61 62 57 Expected return on plan assets ........................... (14) (12) (13) Amortization of transition obligation .................... 34 34 34 Amortization of prior service cost ....................... (1) (2) (2) Recognized net actuarial loss (gain) ..................... (10) (4) 2 Recognized gain due to settlements and curtailments ...... (2) -- -- ------- ------ ------ Net periodic postretirement benefit cost ................ $ 78 $ 87 $ 88 ====== ====== ======
Net periodic postretirement health and life expense was determined using the "projected unit credit" actuarial method. Gains and losses for all benefits except postretirement health care are recognized in accordance with the minimum amortization provisions of the applicable accounting standards. For the postretirement health care plans, 50 percent of the unrecognized gain or loss at the beginning of the fiscal year (or at subsequent remeasurement) is recognized on a level basis during the year. Assumed health care cost trend rates affect the postretirement benefit obligation and benefit cost reported for the health care plan. The assumed health care cost trend rates for the next year used to measure the expected cost of benefits covered for the postretirement health and life plans was 6 percent for pre-65 benefits and 4.5 percent for post 65 benefits. A one percentage point increase in assumed health care cost trend rates would have increased the service and interest costs and the benefit obligation by $6 million and $57 million, respectively. A one-percentage point decrease in assumed health care cost trends would have lowered the service and interest costs and the benefit obligation by $5 million and $49 million, respectively. Defined Contribution Plans The Corporation maintains several defined contribution savings and profit sharing plans, two of which feature leveraged ESOP provisions. See Note Ten of the consolidated financial statements on page 73 for additional information on the two ESOP provisions. ESOP Plans The Corporation contributed approximately $47 million, $45 million and $39 million for 1998, 1997 and 1996, respectively, in cash which was utilized primarily to purchase the Corporation's common stock under the terms of these plans. The Corporation also contributed approximately $16 million, $23 million and $25 million 82 in common stock for 1998, 1997 and 1996, respectively, under the terms of the Barnett ESOP. On December 31, 1998, an aggregate of 22,997,096 shares of the Corporation's common stock and 1,937,730 shares of ESOP preferred stock were held by the Corporation's various savings and profit sharing plans. During 1998, the Corporation offered the plan participants a one-time opportunity to transfer certain assets from the savings and profit sharing plan to the cash balance retirement plan. Assets with an approximate fair value of $1,423 million were transferred. Under the terms of the ESOP Preferred Stock provision, payments to the plan for dividends on the ESOP Preferred Stock were $6 million, $7 million and $7 million for 1998, 1997 and 1996, respectively. Interest incurred to service the debt of the ESOP Preferred Stock amounted to $1 million, $2 million and $3 million for 1998, 1997 and 1996, respectively. The Corporation and the Barnett ESOP were combined effective January 1, 1999. BankAmerica Plans The Corporation maintains certain nonqualified defined contribution retirement plans for certain employees of the former BankAmerica Corporation. In addition, certain non-U.S. employees within the Corporation are covered under defined contribution pension plans that are separately administered in accordance with local laws. Aggregate contributions for all former BankAmerica related defined contribution plans were $175 million, $169 million and $175 million in 1998, 1997 and 1996, respectively. Certain employer and employee contributions to the plans are used to purchase the Corporation's common stock at prices that approximate market values. Contributions, including dividends, to the plans were used to purchase 697,741 shares for $44 million in 1998, 598,958 shares for $34 million in 1997 and 861,254 shares for $30 million in 1996. Sales by the plans of the Corporation's common stock were 571,058 for $46 million in 1998, 528,829 shares for $32 million in 1997 and 657,625 shares for $26 million in 1996. The plans held 33,186,515 shares, 34,252,005 shares and 35,460,291 shares of the Corporation's common stock at December 31, 1998, 1997 and 1996, respectively. Stock Option and Award Plans At December 31, 1998, the Corporation had certain stock-based compensation plans (the Plans) which are described below. The Corporation applies the provisions of Accounting Principles Board Opinion No. 25 in accounting for its stock option and award plans and has elected to provide SFAS 123 disclosures as if the Corporation had adopted the fair-value based method of measuring outstanding employee stock options in 1998, 1997 and 1996 as indicated below:
As Reported Pro Forma ----------------------------------- ----------------------------------- 1998 1997 1996 1998 1997 1996 (Dollars in Millions, Except Per-Share Data) ----------- ----------- ----------- ----------- ----------- ----------- Net income .................................... $ 5,165 $ 6,542 $ 5,813 $ 4,838 $ 6,254 $ 5,688 Net income available to common shareholders ... 5,140 6,431 5,611 4,819 6,143 5,487 Earnings per share ............................ 2.97 3.71 3.42 2.78 3.54 3.35 Diluted earnings per share .................... 2.90 3.61 3.36 2.71 3.46 3.29
In determining the pro forma disclosures above, the fair value of options granted was estimated on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes model was developed to estimate the fair value of traded options, which have different characteristics than employee stock options, and changes to the subjective assumptions used in the model can result in materially different fair value estimates. The weighted average grant-date fair values of the options granted during 1998, 1997 and 1996 were based on the following assumptions: 83
Risk-Free Dividend Interest Rates Yield -------------------------------- -------------------------------- 1998 1997 1996 1998 1997 1996 ---------- ---------- ---------- ---------- ---------- ---------- 1996 Associates Stock Option Award Plan ......................... N/A 6.31% 6.44% N/A 3.50% 3.55% Long-Term Incentive Plan ........... N/A 6.33 5.37 N/A 3.50 3.29 Key Employee Stock Option Plan ..... 5.64% 6.29 5.52 3.50% 3.50 3.55 BankAmerica Management Stock Plan .............................. 5.48 6.23 5.95 2.62 2.96 3.23 BankAmerica PEP Plan ............... N/A 6.23 N/A N/A 2.96 N/A BankAmerica Take Ownership! Plan .............................. 5.58 6.23 5.95 1.83 2.96 3.23 Barnett 1997 Associates Stock Option Award Plan ................. N/A 5.60 N/A N/A 3.50 N/A Expected Lives (Years) Volatility -------------------- --------------------------------- 1998 1997 1996 1998 1997 1996 ------ ------ ------ ----------- ---------- ---------- 1996 Associates Stock Option Award Plan ......................... N/A 3 4 N/A 21.4% 20.8% Long-Term Incentive Plan ........... N/A 6 5 N/A 34.3 36.3 Key Employee Stock Option Plan ..... 7 7 7 22.94% 27.8 24.6 BankAmerica Management Stock Plan .............................. 4 4 5 28.40 24.5 N/A BankAmerica PEP Plan ............... N/A 7 N/A N/A 24.5 N/A BankAmerica Take Ownership! Plan .............................. 1 3 3 28.80 24.5 20.8 Barnett 1997 Associates Stock Option Award Plan ................. N/A 1 N/A N/A 24.7 N/A
Compensation expense under the fair-value based method is recognized over the vesting period of the related stock options. Accordingly, the pro forma results of applying SFAS 123 in 1998, 1997 and 1996 may not be indicative of future amounts. 1996 Associates Stock Option Award Plan: Under the 1996 Associates Stock Option Award Plan (ASOP), as amended, the Corporation has granted to certain full- and part-time employees options to purchase an aggregate of approximately 47 million shares of the Corporation's common stock. All options granted under the ASOP are vested and expire on June 29, 2001. No further awards may be granted under this plan. Key Employee Stock Plan: The Key Employee Stock Plan (KEYSOP), as amended and restated, provides for different types of awards including stock options, restricted stock and performance shares. Under the KEYSOP, ten-year options to purchase approximately 27.2 million shares of common stock have been granted through December 31, 1998 to certain employees at the closing market price on the respective grant dates. Options granted under the KEYSOP generally vest in three or four equal annual installments. Additionally, 2.2 million shares of restricted stock were granted during 1998. These shares generally vest in two or three equal annual installments beginning one year from the grant date. On January 4, 1999, ten-year options to purchase approximately 8.5 million shares of common stock at $60.50 per share were granted to certain employees. On February 1, 1999, ten-year options to purchase approximately 2 million shares of common stock at $65.25 per share were granted to certain employees. For both grants, options vest in three equal annual installments beginning one year from the grant date. Additionally, on January 4, 1999, approximately 5.6 million shares of restricted stock were granted to certain former BankAmerica executives in connection with their employment with the Corporation and approximately 3.9 million shares of restricted stock were granted to certain former NationsBank executives. These shares of restricted stock generally vest in two or three equal annual installments beginning one year from the grant date. Take Ownership!: On September 23, 1998, the Board of Directors of the Corporation approved the Take Ownership! The BankAmerica Global Associate Stock Option Program (Take Ownership!) which covers all employees below a specified executive grade level. Under the plan, eligible employees will be eligible to receive an award of a predetermined number of stock options entitling them to purchase shares of the Corporation's common stock at the fair market value on the grant date. Options will be granted on the first business day of 1999, 2000 and 2001 and will vest 25% on the first anniversary date of grant, 25% on the second anniversary date of grant and 50% on the third anniversary date of grant. These options have a term of five years after the grant date. On January 4, 1999, options to purchase approximately 53.1 million shares of common stock at $60.50 per share were granted under the plan. BankAmerica Stock Plans: In connection with the Merger, outstanding BankAmerica stock options were converted into options to purchase the Corporation's common stock based on the exchange ratio. BankAmerica offered stock awards under 84 three plans: 1992 Management Stock Plan (the management stock plan), Performance Equity Program (PEP) and Take Ownership!. BankAmerica offered stock awards to certain key employees through options or restricted stock under the management stock plan. Options awarded under the management stock plan generally vest in three equal annual installments beginning one year from the grant date and have a term of ten years after the date of grant. On August 3, 1998, ten-year options to purchase approximately 5.6 million shares of common stock at $79.31 per share were granted to certain employees. Additionally, on August 3, 1998, BankAmerica granted approximately 1.5 million shares of restricted stock to certain employees. These shares of restricted stock generally vest in four equal annual installments beginning the second year from the grant date. Options awarded before August 5, 1991 to principal officers of BankAmerica are subject to certain restrictions and also constitute stock appreciation rights (SARs) equal to the number of shares covered by the options. These SARs are exercisable for the difference between the option price and the current market price of the stock at the time of exercise. The difference can be received in cash or in shares. SARs, which are included in options for purposes of this disclosure, are exercisable under the same terms as the related stock options. Effective May 22, 1997, BankAmerica adopted PEP under which BankAmerica offers shares of the Corporation's common stock to certain key employees. Two types of awards can be made under PEP: market price options and premium price options. The market price options vest in three equal annual installments beginning one year from the grant date and generally have a term of ten years after the date the options are granted. The premium price options generally vest and become exercisable not earlier than three years and not later than ten years after the date the options are granted. Furthermore, the premium price options only become exercisable when the Corporation's common stock price increases significantly to specified threshold levels within given time frames. Limited SARs may be awarded in conjunction with premium price options and become exercisable upon a change in control. In connection with the BankAmerica Merger, all options and SARs issued under PEP to persons who were employees as of the Merger date vested. Effective October 1, 1996, BankAmerica adopted The BankAmerica Global Stock Option Program which covered substantially all of its employees. Options awarded under this plan vest in three equal annual installments beginning one year from the grant date and have a term of five years after the date of grant. On May 19, 1998 options to purchase approximately 12.0 million shares of common stock at $73.29 per share were granted under this plan. On September 30, 1998, as a result of the Merger, substantially all of BankAmerica's stock options and restricted stock granted prior to March 27, 1998 vested. Options and restricted stock granted subsequent to March 27, 1998 retain their original vesting terms. No further awards may be granted under the BankAmerica stock plans. Other Plans: In connection with the Barnett merger on January 9, 1998, outstanding Barnett stock options were converted into options to purchase the Corporation's common stock based on the exchange ratio. Barnett has long-term incentive plans that provide stock based awards, including stock options and time-based and performance- based restricted stock to certain officers. All options are granted at current market value for a term of ten years and, subject to limited exceptions, are not exercisable before the third anniversary of the date of grant. Time-based awards provide that restrictions lapse beginning on the third anniversary of the date of the grant. Performance-based awards require that specific performance criteria be met in order for restrictions to lapse. On December 19, 1997, as a result of the shareholder approval of the Barnett merger, all outstanding stock options and restricted stock vested in accordance with change-in-control provisions. Additional stock options assumed in connection with various acquisitions remain outstanding and are included in the tables below. No further awards may be granted under these plans. 85 The following tables present the status of all plans on December 31, 1998, 1997 and 1996, and changes during the years then ended:
1998 1997 1996 --------------------------- --------------------------- -------------------------- Weighted- Weighted- Weighted- Average Average Average Exercise Exercise Exercise (Option) (Option) (Option) Employee Stock Options Shares Price Shares Price Shares Price - -------------------------------- --------------- ----------- --------------- ----------- --------------- ---------- Outstanding on January 1 ....... 136,409,218 $ 44.08 106,432,319 $ 30.79 64,125,702 $ 21.84 Shares due to acquisitions ..... -- -- 6,688,329 21.99 1,098,580 17.26 Granted ........................ 25,744,102 72.10 76,963,367 58.42 62,227,398 39.92 Exercised ...................... (28,295,737) 33.62 (44,990,054) 33.34 (15,643,484) 17.12 Forfeited ...................... (7,392,082) 63.04 (8,684,743) 45.23 (5,375,877) 36.83 ------------ -------------- -------------- Outstanding on December 31 ..... 126,465,501 51.01 136,409,218 44.18 106,432,319 32.30 ============ =========== ============ Options exercisable on December 31 ................... 99,530,313 46.02 63,927,295 30.90 31,983,859 19.14 ============ =========== ============ Weighted-average fair value of options granted during the year .......................... $ 15.52 $ 9.35 $ 7.41 ======== ======== ========
1998 1997 1996 --------------------------- -------------------------- ------------------------- Weighted- Weighted- Weighted- Average Average Average Restricted Stock Awards Grant Grant Grant (include KEYSOP) Shares Price Shares Price Shares Price - -------------------------------- --------------- ----------- -------------- ----------- -------------- ---------- Outstanding unvested grants on January 1 ................. 5,180,012 $ 38.94 6,459,158 $ 24.68 8,087,399 $ 21.45 Granted ....................... 3,852,739 65.79 2,120,681 57.76 1,302,525 36.55 Vested ........................ (4,896,614) 41.07 (3,112,871) 22.76 (2,570,226) 20.84 Canceled ...................... (354,983) 56.94 (286,956) 32.43 (360,540) 22.51 ---------- ------------- -------- Outstanding unvested grants on December 31 ............... 3,781,154 $ 61.85 5,180,012 $ 38.94 6,459,158 $ 24.68 ========== ======== ========== ======== ========== ========
The following table summarizes information about stock options outstanding on December 31, 1998:
Options Outstanding Options Exercisable ------------------------------------------------------ ---------------------------------- Number Weighted-Average Number Range of Outstanding Remaining Weighted-Average Exercisable Weighted-Average Exercise Prices at December 31 Contractual Life Exercise Price at December 31 Exercise Price - ----------------- ---------------- ------------------ ------------------ ---------------- ----------------- $0.00 - $30.00 26,148,328 4.9 years $ 21.35 26,144,828 $ 21.35 $30.01 - $46.50 29,064,517 4.6 years 39.43 27,929,365 39.62 $46.51 - $65.50 44,844,862 5.7 years 59.38 36,907,316 59.24 $65.51 - $99.00 26,407,794 7.1 years 78.87 8,548,804 85.25 ---------- -------- ---------- -------- Total 126,465,501 5.6 years $ 51.01 99,530,313 $ 46.02 =========== ======== ========== ========
86 Note Fourteen - Income Taxes The components of income tax expense for the years ended December 31 were as follows:
1998 1997 1996 (Dollars in Millions) ------------ ------------ --------- Current portion - expense Federal ........................... $2,464 $2,267 $2,015 State ............................. 177 239 239 Foreign ........................... 342 537 279 ------ ------ ------ 2,983 3,043 2,533 ------ ------ ------ Deferred portion - (benefit) expense Federal ........................... (133) 840 834 State ............................. 40 132 127 Foreign ........................... (7) (1) 4 ------ ------ ------ (100) 971 965 ------ ------ ------ Total income tax expense ......... $2,883 $4,014 $3,498 ====== ====== ======
The preceding table does not reflect the tax effects of unrealized gains and losses on securities available for sale and marketable securities that are included in shareholders' equity and certain tax benefits associated with the Corporation's employee stock plans. As a result of these tax effects, shareholders' equity increased by $400 million, $161 million and $273 million in 1998, 1997 and 1996, respectively. The Corporation's current income tax expense approximates the amounts payable for those years. Deferred income tax expense represents the change in the deferred tax asset or liability and is discussed further below. A reconciliation of the expected federal income tax expense using the federal statutory rate of 35 percent to the actual income tax expense for each of the years ended December 31 was as follows:
1998 1997 1996 (Dollars in Millions) ---------- ---------- ---------- Expected federal tax expense ........................ $ 2,817 $ 3,695 $ 3,259 Increase (decrease) in taxes resulting from Tax-exempt income ................................. (81) (83) (68) State tax expense, net of federal benefit ......... 155 287 282 Goodwill amortization ............................. 238 228 97 Reorganization of certain subsidiaries ............ (323) -- -- Other ............................................. 77 (113) (72) ------- ------- ------- Total income tax expense ......................... $ 2,883 $ 4,014 $ 3,498 ======= ======= =======
87 Significant components of the Corporation's deferred tax (liabilities) assets on December 31 were as follows:
1998 1997 (Dollars in Millions) ------------ ------------ Deferred tax liabilities Securities available for sale ......................... $ (227) $ (314) Equipment lease financing ............................. (4,565) (3,633) Depreciation .......................................... (340) (379) Intangibles ........................................... (628) (741) Employee retirement benefits .......................... (437) (189) Loan fees and expenses ................................ (111) -- Deferred gains and losses ............................. (217) (167) Securities valuation .................................. -- (292) Other ................................................. (584) (646) -------- -------- Gross deferred tax liabilities ....................... (7,109) (6,361) -------- -------- Deferred tax assets Employee benefits ..................................... 578 242 Net operating loss carryforwards ...................... 159 140 Allowance for credit losses ........................... 2,916 2,671 Foreclosed properties ................................. 70 30 Loan fees and expenses ................................ -- 12 General business credit carryforwards ................. 19 20 Accrued expenses ...................................... 729 286 Other ................................................. 529 620 -------- -------- Gross deferred tax assets ............................ 5,000 4,021 Valuation allowance .................................. (134) (87) -------- -------- Gross deferred tax assets, net of valuation allowance 4,866 3,934 -------- -------- Net deferred tax liabilities ....................... $ (2,243) $ (2,427) ======== ========
The Corporation's deferred tax assets on December 31, 1998 included a valuation allowance of $134 million primarily representing net operating loss carryforwards for which it is more likely than not that realization will not occur. The net change in the valuation allowance for deferred tax assets was an increase in net operating loss carryovers of foreign subsidiaries where realization is not expected to occur. In the future, the recognition of deferred tax assets subject to the valuation allowance may result in a reduction to goodwill of up to $16 million. At December 31, 1998, federal income taxes had not been provided on $380 million of undistributed earnings of foreign subsidiaries earned prior to 1987 and during 1998 that have been reinvested for an indefinite period of time. If the undistributed earnings were distributed, credits for foreign taxes paid on such earnings and for the related foreign withholding taxes payable upon remittance would be available to offset $90 million of the $170 million resulting tax expense. Note Fifteen - Fair Values of Financial Instruments Statement of Financial Accounting Standards No. 107, "Disclosures About Fair Value of Financial Instruments" (SFAS 107), requires the disclosure of the estimated fair values of financial instruments. The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Quoted market prices, if available, are utilized as estimates of the fair values of financial instruments. Since no quoted market prices exist for a significant part of the Corporation's financial instruments, the fair values of such instruments have been derived based on management's assumptions, the estimated amount and timing of future cash flows and estimated discount rates. The estimation methods for individual classifications of financial instruments are described more fully below. Different assumptions could significantly affect these estimates. Accordingly, the net realizable values could be materially different from the estimates presented below. In addition, the estimates are only indicative of the value of individual financial instruments and should not be considered an indication of the fair value of the combined Corporation. 88 The provisions of SFAS 107 do not require the disclosure of nonfinancial instruments, including intangible assets such as goodwill, franchise, credit card and trust relationships and MSR. In addition, the disclosure of fair value amounts does not include lease financing and factored accounts receivable. Short-Term Financial Instruments The carrying values of short-term financial instruments, including cash and cash equivalents, federal funds sold and purchased, resale and repurchase agreements, and commercial paper and short-term borrowings, approximate the fair values of these instruments. These financial instruments generally expose the Corporation to limited credit risk and have no stated maturities, or have an average maturity of less than 30 days and carry interest rates which approximate market. Financial Instruments Traded in the Secondary Market Securities held for investment, securities available for sale, trading account instruments, long-term debt and trust preferred securities traded actively in the secondary market have been valued using quoted market prices. The fair value of securities and trading account instruments is reported in Notes Three and Four of the consolidated financial statements on pages 64 and 66. Loans Fair values were estimated for groups of similar loans based upon type of loan, credit quality and maturity. The fair value of loans was determined by discounting estimated cash flows using interest rates approximating the Corporation's December 31 origination rates for similar loans. Where quoted market prices were available, primarily for certain residential mortgage loans, such market prices were utilized as estimates for fair values. Contractual cash flows for residential mortgage loans were adjusted for estimated prepayments using published industry data. Where credit deterioration has occurred, estimated cash flows for fixed- and variable-rate loans have been reduced to incorporate estimated losses. The fair values of domestic commercial loans that do not reprice or mature within relatively short time frames were estimated using discounted cash flow models. The discount rates were based on current market interest rates for similar types of loans, remaining maturities and credit ratings. For domestic commercial loans that reprice within relatively short time frames, the carrying values were assumed to approximate their fair values. Substantially all of the foreign loans reprice within relatively short time frames. Accordingly, for the majority of foreign loans, the carrying values were assumed to approximate their fair values. For purposes of these fair value estimates, the fair values of nonaccrual loans were computed by deducting an estimated market discount from their carrying values to reflect the uncertainty of future cash flows. The fair values of commitments to extend credit were not significant at either December 31, 1998 or 1997. Deposits The fair value for deposits with stated maturities was calculated by discounting contractual cash flows using current market rates for instruments with similar maturities. For deposits with no stated maturities, the carrying amount was considered to approximate fair value and does not take into account the Corporation's long-term relationships with depositors. The book and fair values of financial instruments for which book and fair value differed on December 31 were:
1998 1997 ----------------------- ----------------------- Book Fair Book Fair Value Value Value Value (Dollars in Millions) ----------- ----------- ----------- ----------- Financial assets Loans ...................................................... $337,303 $342,936 $328,314 $331,366 Financial liabilities Deposits ................................................... 357,260 357,915 346,297 346,001 Trust preferred securities ................................. 4,954 5,244 4,578 4,783 Long-term debt (excluding obligations under capital leases). 45,767 47,135 42,754 43,419
For all other financial instruments, book value approximates fair value. 89 Off-Balance Sheet Financial Instruments See Note Four of the consolidated financial statements on page 66 for information on the Corporation's average fair values of derivative-dealer assets and liabilities. The fair value of the Corporation's ALM contracts is presented in the Derivatives section of Note Eleven of the consolidated financial statements on page 74 and the MSR section of Note One of the consolidated financial statements on page 56. Note Sixteen - Business Segment Information On January 1, 1998, the Corporation adopted SFAS 131, "Disclosures about Segments of an Enterprise and Related Information". Certain noncash disclosure requirements, such as equity in the net income of investments accounted for by the equity method and stock-based compensation expense, were not presented due to their immateriality. Management reports the results of operations of the Corporation through four business segments: Consumer Banking, which provides comprehensive retail banking services to individuals and small businesses through multiple delivery channels; Commercial Banking, which provides a wide range of commercial banking services for businesses with annual revenues of up to $500 million; Global Corporate and Investment Banking, which provides a broad array of financial and investment banking products such as capital-raising products, trade finance, treasury management, capital markets and financial advisory services to domestic and international corporations, financial institutions and government entities; and Principal Investing and Wealth Management, which includes direct equity investments in businesses and investments in general partnership funds and the Private Bank which provides asset management, banking and trust services for high net worth clients both in the U.S. and internationally. 90 The following table includes revenues, net income and total assets for the years ended December 31, 1998, 1997 and 1996 and as of December 31, 1998 and 1997 for each business segment (dollars in millions): Business Segments
Total Corporation Consumer Banking (2) ----------------------------------- ----------------------------------- 1998 1997 1996 1998 1997 1996 ----------- ----------- ----------- ----------- ----------- ----------- Net interest income (1) ......... $ 18,461 $ 18,589 $ 17,082 $ 12,043 $ 12,445 $ 11,564 Noninterest income .............. 12,189 11,756 9,604 6,656 6,270 4,995 --------- --------- -------- --------- --------- -------- Total revenue .................. 30,650 30,345 26,686 18,699 18,715 16,559 Provision for credit losses ......................... 2,920 1,904 1,645 1,252 1,558 1,605 Gains on sales of securities ..................... 1,017 271 147 10 36 28 Amortization of intangibles .................... 902 855 544 607 612 393 Depreciation expense ............ 1,096 1,107 989 670 676 652 Merger-related charges, net ............................ 1,795 374 398 -- -- 122 Other noninterest expense ........................ 16,743 15,663 13,818 9,856 10,116 8,997 --------- --------- -------- --------- --------- -------- Income before income taxes ........................ 8,211 10,713 9,439 6,324 5,789 4,818 Income tax expense .............. 3,046 4,171 3,626 2,325 2,266 1,900 --------- --------- -------- --------- --------- -------- Net income ..................... $ 5,165 $ 6,542 $ 5,813 $ 3,999 $ 3,523 $ 2,918 ========= ========= ======== ========= ========= ======== Period-end total assets ......... $ 617,679 $ 570,983 $ 269,458 $ 285,686 ========= ========= ========= ========= Commercial Banking (2) -------------------------------- 1998 1997 1996 ---------- ---------- ---------- Net interest income (1) ......... $ 2,006 $ 2,048 $ 1,792 Noninterest income .............. 699 568 480 -------- -------- ------- Total revenue .................. 2,705 2,616 2,272 Provision for credit losses ......................... 76 (3) 48 Gains on sales of securities ..................... 4 -- 3 Amortization of intangibles .................... 99 100 47 Depreciation expense ............ 70 75 54 Merger-related charges, net ............................ -- -- 7 Other noninterest expense ........................ 1,150 1,025 944 -------- --------- ------- Income before income taxes ........................ 1,314 1,419 1,175 Income tax expense .............. 439 558 446 -------- --------- ------- Net income ..................... $ 875 $ 861 $ 729 ======== ========= ======= Period-end total assets ......... $ 67,366 $ 65,243 ======== =========
Global Corporate and Principal Investing and Investment Banking (2) Wealth Management (2) ------------------------------- -------------------------------- 1998 1997 1996 1998 1997 1996 ---------- ---------- --------- ---------- ---------- ---------- Net interest income (1) ......... $ 3,716 $ 3,425 $3,137 $ 451 $ 418 $ 325 Noninterest income .............. 2,849 3,083 2,455 1,928 1,935 1,728 -------- -------- ------- ------- ------- -------- Total revenue ................. 6,565 6,508 5,592 2,379 2,353 2,053 Provision for credit losses ........................ 1,566 342 (24) 26 7 16 Gains (losses) on sales of securities ................. (5) 10 -- -- 6 -- Amortization of intangibles ................... 169 119 75 27 24 29 Depreciation expense ............ 291 303 208 65 53 75 Merger-related charges, net ........................... -- -- 147 -- -- 4 Other noninterest expense ....................... 4,219 3,145 2,779 1,500 1,367 1,103 -------- -------- -------- ------- ------- -------- Income before income taxes ........................ 315 2,609 2,407 761 908 826 Income tax expense (benefit) ..................... 71 977 870 264 348 306 -------- -------- -------- ------- ------- -------- Net income .................... $ 244 $ 1,632 $ 1,537 $ 497 $ 560 $ 520 ======== ======== ======== ======= ======= ======== Period-end total assets ......... $248,264 $204,862 $22,246 $18,320 ======== ======== ======= ======= Corporate Other ----------------------------------- 1998 1997 1996 ---------- ------------ ----------- Net interest income (1) ......... $ 245 $ 253 $ 264 Noninterest income .............. 57 (100) (54) ------- ---------- -------- Total revenue ................. 302 153 210 Provision for credit losses ........................ -- -- -- Gains (losses) on sales of securities ................. 1,008 219 116 Amortization of intangibles ................... -- -- -- Depreciation expense ............ -- -- -- Merger-related charges, net ........................... 1,795 374 118 Other noninterest expense ....................... 18 10 (5) ------- ---------- ---------- Income before income taxes ........................ (503) (12) 213 Income tax expense (benefit) ..................... (53) 22 104 --------- ---------- --------- Net income .................... $ (450) $ (34) $ 109 ========= ========== ========= Period-end total assets ......... $ 10,345 $(3,128) ========= ==========
(1) Net interest income is presented on a taxable-equivalent basis. (2) There were no material intersegment revenues between the four business segments. 91 Following is a reconciliation of the business segments' revenue, net income and total assets to the consolidated totals for the years ended December 31, 1998, 1997 and 1996 and as of December 31, 1998 and 1997 (dollars in millions):
1998 1997 1996 ------------ ------------- ----------- Segments' revenue ..................................... $ 30,348 $ 30,192 $ 26,476 Adjustments: Earnings associated with unassigned capital ......... 245 253 264 Gains (losses) on sales of subsidiary companies ..... 57 -- -- Other ............................................... -- (100) (54) --------- --------- -------- Consolidated revenue ............................... $ 30,650 $ 30,345 $ 26,686 ========= ========= ======== Segments' net income .................................. $ 5,615 $ 6,576 $ 5,704 Adjustments, net of tax: Earnings associated with unassigned capital ......... 157 158 168 Gains on sales of subsidiary companies .............. 37 -- -- Gains on sales of securities ........................ 649 140 75 Merger-related charges, net ......................... (1,325) (264) (246) Other ............................................... 32 (68) 112 ---------- ----------- --------- Consolidated net income ............................ $ 5,165 $ 6,542 $ 5,813 ========== =========== ========= Segments' total assets ................................ $ 607,333 $ 574,111 Adjustments: Investment securities ............................... 63,301 54,181 Elimination of excess earning asset allocations ..... (43,462) (50,460) Other, net .......................................... (9,493) (6,849) ----------- ----------- Consolidated total assets .......................... $ 617,679 $ 570,983 ========== ===========
The adjustments presented in the table above represent consolidated income, expense and asset balances not specifically allocated to individual business segments. In addition, reconciling items also include the effect of earnings allocations not assigned to specific business segments, as well as the related earning asset balances. 92 Note Seventeen - BankAmerica Corporation (Parent Company) The following tables present consolidated Parent Company financial information: Condensed Consolidated Statement of Income (Dollars in Millions)
Year Ended December 31 ------------------------------- 1998 1997 1996 --------- ---------- ---------- Income Dividends from consolidated Subsidiary banks ................................... $4,795 $ 5,730 $ 4,274 Other subsidiaries ................................. 202 728 670 Interest from consolidated subsidiaries .............. 1,911 1,690 1,540 Other income ......................................... 709 647 753 ------ ------- ------- 7,617 8,795 7,237 ------ ------- ------- Expenses Interest on borrowed funds ........................... 2,805 2,529 2,146 Noninterest expense .................................. 835 632 625 ------ ------- ------- 3,640 3,161 2,771 ------ ------- ------- Earnings Income before equity in undistributed earnings of consolidated subsidiaries and income taxes ......... 3,977 5,634 4,466 ------ ------- ------- Equity in undistributed earnings of consolidated Subsidiary banks ................................... 553 471 1,087 Other subsidiaries ................................. 174 106 92 ------ ------- ------- 727 577 1,179 ------ ------- ------- Income before income taxes 4,704 6,211 5,645 Income tax benefit .................................... (461) (331) (168) ------ ------- ------- Net income ............................................ $5,165 $ 6,542 $ 5,813 ====== ======= ======= Net income available to common shareholders ........... $5,140 $ 6,431 $ 5,611 ====== ======= =======
Condensed Consolidated Balance Sheet (Dollars in Millions)
December 31 -------------------- 1998 1997 --------- ---------- Assets Cash held at subsidiary banks ........................ $ 3,069 $ 2,518 Temporary investments ................................ 1,525 1,208 Receivables from consolidated Subsidiary banks ................................... 10,456 11,309 Other subsidiaries ................................. 15,178 13,933 Investment in consolidated Subsidiary banks ................................... 54,127 49,445 Other subsidiaries ................................. 5,108 4,243 Other assets ......................................... 4,190 3,117 ------- -------- Total assets ....................................... $93,653 $ 85,773 ======= ======== Liabilities and Shareholders' Equity Commercial paper and other notes payable ............. $ 5,289 $ 3,563 Accrued expenses and other liabilities ............... 2,711 2,200 Payables to consolidated subsidiaries ................ 6,004 4,095 Long-term debt ....................................... 33,711 31,331 Shareholders' equity ................................. 45,938 44,584 ------- -------- Total liabilities and shareholders' equity ......... $93,653 $ 85,773 ======= ========
93 Condensed Consolidated Statement of Cash Flows (Dollars in Millions)
Year Ended December 31 ------------------------------------- 1998 1997 1996 ----------- ------------ ------------ Operating Activities Net income .................................................................. $ 5,165 $ 6,542 $ 5,813 Reconciliation of net income to net cash provided by operating activities Equity in undistributed earnings of consolidated subsidiaries .............. (653) (610) (1,232) Other operating activities ................................................. (486) 247 563 -------- -------- -------- Net cash provided by operating activities ................................. 4,026 6,179 5,144 Investing Activities Net decrease (increase) in temporary investments ............................ 632 4,037 (3,754) Net increase in receivables from consolidated subsidiaries .................. (1,002) (2,814) (613) Additional capital investment in subsidiaries ............................... (1,391) 60 (98) Acquisitions of subsidiaries, net of cash ................................... (822) (194) (726) Other investing activities .................................................. (747) 191 353 -------- -------- -------- Net cash (used in) provided by investing activities ....................... (3,330) 1,280 (4,838) -------- -------- -------- Financing Activities Net increase (decrease) in commercial paper and other notes payable ......... 1,726 (400) 616 Proceeds from issuance of long-term debt .................................... 7,283 4,887 8,804 Retirement of long-term debt ................................................ (4,533) (4,055) (4,423) Proceeds from issuance of common stock ...................................... 1,367 1,892 573 Common stock repurchased .................................................... (1,751) (8,540) (3,193) Cash dividends paid ......................................................... (2,604) (2,175) (1,888) Other financing activities .................................................. (1,633) (1,519) 955 -------- ---------- -------- Net cash (used in) provided by financing activities ....................... (145) (9,910) 1,444 -------- ---------- -------- Net increase (decrease) in cash held at subsidiary banks ...................... 551 (2,451) 1,750 Cash held at subsidiary banks on January 1 .................................... 2,518 4,969 3,219 -------- -------- -------- Cash held at subsidiary banks on December 31 .............................. $ 3,069 $ 2,518 $ 4,969 ======== ======== ========
94 Note Eighteen - Performance by Geographic Area Since the Corporation's operations are highly integrated, certain asset, liability, income and expense amounts must be allocated to arrive at total assets and total revenues by geographic area. The Corporation identifies its geographic performance based upon the business unit in which the assets are recorded and where the income is earned and the expenses are incurred. In certain circumstances, units may transact business with customers who are out of their immediate geographic area. For example, a U.S. domiciled unit may have made a loan to a borrower who resides in Latin America. In this instance, the loan and related income would be included in domestic activities. Translation losses, for those units in hyperinflationary economies, net of hedging, totaled $12 million, $27 million, and $23 million in 1998, 1997 and 1996, respectively. These amounts, which are reported in other noninterest income, are included in the table below:
Total (Dollars in Millions) Year Total Assets (1) Revenues (2) - -------------------------------------- ------ ------------------ ------------- Domestic (3) 1998 $ 554,282 $29,605 1997 $ 513,163 $28,494 1996 $ 424,537 $24,804 --------- ------- Asia 1998 21,302 723 1997 25,411 885 1996 22,472 985 Europe, Middle East and Africa 1998 31,128 (75) 1997 26,037 454 1996 26,282 501 Latin America and the Caribbean 1998 10,967 234 1997 6,372 355 1996 4,411 268 --------- ------- Total Foreign 1998 63,397 882 1997 57,820 1,694 1996 53,165 1,754 --------- ------- Total Consolidated 1998 $ 617,679 $30,487 1997 $ 570,983 $30,188 1996 $ 477,702 $26,558
(1) Total assets includes long-lived assets, primarily all of which were located in the U.S. (2) Total revenues includes net interest income plus noninterest income. There were no material intercompany revenues between geographic regions for any of the periods presented. (3) Includes the Corporation's Canadian operations, which had total assets of $1,365, $2,466 and $1,525 and total revenues of $48, $52 and $63 as of and for the years ended December 31, 1998, 1997 and 1996, respectively. 95 Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There were no changes in or disagreements with accountants on accounting and financial disclosure. PART III Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information set forth under the caption "Election of Directors" on pages 2 through 6 of the definitive 1999 Proxy Statement of the registrant furnished to stockholders in connection with its Annual Meeting to be held on April 28, 1999 (the "1999 Proxy Statement") with respect to the name of each nominee or director, that person's age, positions and offices with the registrant, business experience, directorships in other public companies, service on the registrant's Board and certain family relationships, and information set forth under the caption "Section 16(a) Beneficial Ownership Reporting Compliance" on page 9 of the 1999 Proxy Statement with respect to Section 16 matters, is hereby incorporated by reference. In addition, information set forth under the caption "Special Compensation Arrangements - Employment Agreement with Mr. Rice" and "Employment Agreements with Messrs. Lewis, Hance and Murray" on page 15 of the 1999 Proxy Statement is hereby incorporated by reference. Additional information required by Item 10 with respect to executive officers is set forth in Part I, Item 4A hereof. Item 11. EXECUTIVE COMPENSATION Information with respect to current remuneration of executive officers, certain proposed remuneration to them, their options and certain indebtedness and other transactions set forth in the 1999 Proxy Statement (i) under the caption "Board of Directors' Compensation" on page 10 thereof, (ii) under the caption "Executive Compensation" on pages 11 through 13 thereof, (iii) under the caption "Retirement Plans" on pages 13 and 14 thereof, (iv) under the caption "Deferred Compensation Plan" on page 14 thereof, (v) under the caption "Special Compensation Arrangements" on pages 14 and 15 thereof, (vi) under the caption "Compensation Committee Interlocks and Insider Participation" on pages 18 and 19 thereof, and (vii) under the caption "Certain Transactions" on page 19 thereof, is, to the extent such information is required by Item 402 of Regulation S-K, hereby incorporated by reference. Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The security ownership information required by Item 403 of Regulation S-K relating to persons who beneficially own 5 percent or more of the outstanding shares of Common Stock, ESOP Preferred Stock or 7% Cumulative Redeemable Preferred Stock, Series B, as well as security ownership information relating to directors, nominees and named executive officers individually and directors and executive officers as a group, is hereby incorporated by reference to the ownership information set forth under the caption "Security Ownership of Certain Beneficial Owners and Management" on pages 7 through 9 of the 1999 Proxy Statement. Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Information with respect to relationships and related transactions between the registrant and any director, nominee for director, executive officer, security holder owning 5 percent or more of the registrant's voting securities or any member of the immediate family of any of the above, as set forth in the 1999 Proxy Statement under the caption "Compensation Committee Interlocks and Insider Participation" on pages 18 and 19 and under the caption "Certain Transactions" on page 19 thereof, is, to the extent such information is required by Item 404 of Regulation S-K, hereby incorporated by reference. 96 PART IV Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K a. The following documents are filed as part of this report:
Page ----- (1) Financial Statements: Report of Independent Accountants .......................................................... 51 Consolidated Statement of Income for the years ended December 31, 1998, 1997 and 1996 ...... 52 Consolidated Balance Sheet at December 31, 1998 and 1997 ................................... 53 Consolidated Statement of Cash Flows for the years ended December 31, 1998, 1997 and 1996 ..................................................................................... 54 Consolidated Statement of Changes in Shareholders' Equity for the years ended December 31, 1998, 1997 and 1996 ......................................................... 55 Notes To Consolidated Financial Statements ................................................. 56 (2) All schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.
b. The following reports on Form 8-K have been filed by the registrant during the quarter ended December 31, 1998: Current Report on Form 8-K dated September 24, 1998 and filed October 9, 1998, Items 2, 5 and 7. Current Report on Form 8-K dated October 14, 1998 and filed October 19, 1998, Items 5 and 7. Current Report on Form 8-K dated September 30, 1998 and filed November 16, 1998, Items 5 and 7. The following supplemental consolidated financial information of the registrant was filed as part of this Current Report on Form 8-K: Supplemental Consolidated Statement of Income for the years ended December 31, 1997, 1996 and 1995; Supplemental Consolidated Balance Sheet as of December 31, 1997 and 1996; Supplemental Consolidated Statements of Cash Flows for the years ended December 31, 1997, 1996 and 1995; and Supplemental Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 1997, 1996 and 1995. Current Report on Form 8-K dated November 16, 1998 and filed November 18, 1998, Items 5 and 7. Current Report on Form 8-K dated and filed December 16, 1998, Items 5 and 7. c. The exhibits filed as part of this report and exhibits incorporated herein by reference to other documents are listed in the Index to Exhibits to this Annual Report on Form 10-K (pages E-1 through E-6, including executive compensation plans and arrangements which are identified separately by asterisk). With the exception of the information herein expressly incorporated by reference, the 1999 Proxy Statement is not to be deemed filed as part of this Annual Report on Form 10-K. 97 SIGNATURES Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BANKAMERICA CORPORATION Date: March 22, 1999 By: */s/ HUGH L. MCCOLL, JR. ------------------------------------------ Hugh L. McColl, Jr. Chairman of the Board and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date - --------------------------------------- ----------------------------------- --------------- */s/ HUGH L. MCCOLL, JR. Chairman of the Board, Chief March 22, 1999 ---------------------------------- Executive Officer and Director Hugh L. McColl, Jr. (Principal Executive Officer) */s/ JAMES H. HANCE, JR. Vice Chairman and Chief Financial March 22, 1999 ---------------------------------- Officer (Principal Financial James H. Hance, Jr. Officer) */s/ MARC D. OKEN Executive Vice President and March 22, 1999 ---------------------------------- Principal Financial Executive Marc D. Oken (Principal Accounting Officer) */s/ CHARLES W. COKER Director March 22, 1999 ---------------------------------- Charles W. Coker */s/ TIMM F. CRULL Director March 22, 1999 ---------------------------------- Timm F. Crull */s/ ALAN T. DICKSON Director March 22, 1999 ---------------------------------- Alan T. Dickson */s/ KATHLEEN F. FELDSTEIN Director March 22, 1999 ---------------------------------- Kathleen F. Feldstein */s/ PAUL FULTON Director March 22, 1999 ---------------------------------- Paul Fulton */s/ DONALD E. GUINN Director March 22, 1999 ---------------------------------- Donald E. Guinn */s/ C. RAY HOLMAN Director March 22, 1999 ---------------------------------- C. Ray Holman */s/ W. W. JOHNSON Director March 22, 1999 ---------------------------------- W. W. Johnson
98
Signature Title Date - -------------------------------------------- ---------- --------------- */s/ WALTER E. MASSEY Director March 22, 1999 ---------------------------------- Walter E. Massey */s/ RICHARD M. ROSENBERG Director March 22, 1999 ---------------------------------- Richard M. Rosenberg */s/ O. TEMPLE SLOAN, JR. Director March 22, 1999 ---------------------------------- O. Temple Sloan, Jr. */s/ MEREDITH R. SPANGLER Director March 22, 1999 ---------------------------------- Meredith R. Spangler */s/ A. MICHAEL SPENCE Director March 22, 1999 ---------------------------------- A. Michael Spence */s/ RONALD TOWNSEND Director March 22, 1999 ---------------------------------- Ronald Townsend */s/ SOLOMON D. TRUJILLO Director March 22, 1999 ---------------------------------- Solomon D. Trujillo */s/ JACKIE M. WARD Director March 22, 1999 ---------------------------------- Jackie M. Ward */s/ VIRGIL R. WILLIAMS Director March 22, 1999 ---------------------------------- Virgil R. Williams */s/ SHIRLEY YOUNG Director March 22, 1999 ---------------------------------- Shirley Young *By:/s/ CHARLES M. BERGER ---------------------------------- Charles M. Berger, Attorney-in-Fact
99 (THIS PAGE INTENTIONALLY LEFT BLANK) INDEX TO EXHIBITS
Exhibit No. Description - ------------- -------------------------------------------------------------------------------- 3(a) Amended and Restated Certificate of Incorporation of registrant, as in effect on the date hereof, incorporated by reference to Exhibit 3.1 of registrant's Current Report on Form 8-K filed September 28, 1998. (b) Amended and Restated Bylaws of registrant, as in effect on the date hereof, incorporated by reference to Exhibit 3.2 of registrant's Current Report on Form 8-K filed September 28, 1998. 4(a) Specimen certificate of registrant's Common Stock. (b) Specimen certificate of registrant's ESOP Convertible Preferred Stock, Series C, incorporated by reference to Exhibit 4(c) of registrant's Annual Report on Form 10-K dated March 25, 1992. (c) Specimen certificate of registrant's 7% Cumulative Redeemable Preferred Stock, Series B. (d) Specimen certificate of registrant's $2.50 Cumulative Convertible Preferred Stock, Series BB. (e) Indenture dated as of August 1, 1982 between registrant and Morgan Guaranty Trust Company of New York, pursuant to which registrant issued its 7 3/4% Debentures, due 2002, incorporated by reference to Exhibit 4.2 of registrant's Registration No. 2-78530; and First Supplemental Indenture thereto dated as of September 18, 1998. (f) Indenture dated as of September 1, 1989 between registrant and The Bank of New York, pursuant to which registrant issued its 9 3/8% Subordinated Notes, due 2009; its 10.20% Subordinated Notes, due 2015; its 9 1/8% Subordinated Notes, due 2001; and its 8 1/8% Subordinated Notes, due 2002, incorporated by reference to Exhibit 4.1 of registrant's Registration No. 33-30717; and First Supplemental Indenture thereto dated as of August 28, 1998. (g) Indenture dated as of January 1, 1992 between registrant and BankAmerica Trust Company of New York, incorporated by reference to Exhibit 4.1 of registrant's Registration No. 33-54784; and First Supplemental Indenture thereto dated as of July 1, 1993 between registrant and BankAmerica National Trust Company (formerly BankAmerica Trust Company of New York), pursuant to which registrant issued its Senior Medium-Term Notes, Series A, B and C; and its 5 3/8% Senior Notes, due 2000, incorporated by reference to Exhibit 4.1 of registrant's Current Report on Form 8-K dated July 6, 1993; and Second Supplemental Indenture thereto dated as of September 18, 1998. (h) Indenture dated as of November 1, 1992 between registrant and The Bank of New York, pursuant to which registrant issued its 6 7/8% Subordinated Notes, due 2005, incorporated by reference to Exhibit 4.1 of registrant's Amendment to Application or Report on Form 8 dated March 1, 1993. (i) First Supplemental Indenture dated as of July 1, 1993 to the Indenture dated as of November 1, 1992 between registrant and The Bank of New York, pursuant to which registrant issued its Subordinated Medium-Term Notes, Series A and B; its 6 1/2% Subordinated Notes, due 2003; and its 7 3/4% Subordinated Notes, due 2004, incorporated by reference to Exhibit 4.4 of registrant's Current Report on Form 8-K dated July 6, 1993; and Second Supplemental Indenture thereto dated as of August 28, 1998. (j) Indenture dated as of January 1, 1995 between registrant and BankAmerica National Trust Company, pursuant to which registrant issued its 7% Senior Notes, due 2003; its 7% Senior Notes, due 2001; its 5 3/4% Senior Notes, due 2001; its 6 3/8% Senior Notes, due 2005; its 6 1/8% Senior Notes, due 2004; and its Senior Medium-Term Notes, Series D, E, F, G and H, incorporated by reference to Exhibit 4.1 of registrant's Registration No. 33-57533; and First Supplemental Indenture thereto dated as of September 18, 1998, incorporated by reference to Exhibit 4.3 of registrant's Current Report on Form 8-K filed November 18, 1998.
E-1
Exhibit No. Description - ------------- -------------------------------------------------------------------------------- (k) Indenture dated as of January 1, 1995 between registrant and The Bank of New York, pursuant to which registrant issued its 7 5/8% Subordinated Notes, due 2005; its 7 3/4% Subordinated Notes, due 2015; its 7 1/4% Subordinated Notes, due 2025; its 6 1/2% Subordinated Notes, due 2006; its 7.80% Subordinated Notes, due 2016; its 6 3/8% Subordinated Notes, due 2008; its 6.80% Subordinated Notes, due 2028; its 6.60% Subordinated Notes, due 2010; and its Subordinated Medium-Term Notes, Series D, E, F, G and H, incorporated by reference to Exhibit 4.8 of registrant's Registration No. 33-57533; and First Supplemental Indenture thereto dated as of August 28, 1998, incorporated by reference to Exhibit 4.8 of registrant's Current Report on Form 8-K filed November 18, 1998. (l) Fiscal and Paying Agency Agreement dated as of July 5, 1995, between registrant and The Chase Manhattan Bank, N.A. (London Branch), pursuant to which registrant issued its Floating Rate Senior Notes, due 2000, incorporated by reference to Exhibit 4(l) of registrant's Annual Report on Form 10-K dated March 29, 1996 (the "1995 Form 10-K"). (m) Amended and Restated Agency Agreement dated as of November 16, 1998 between registrant and The Chase Manhattan Bank (London Branch), pursuant to which registrant issued its Senior Euro Medium-Term Notes. (n) Issuing and Paying Agency Agreement dated as of May 19, 1998 between NationsBank, N.A., as Issuer, and Bankers Trust Company, as Issuing and Paying Agent. (o) Indenture dated as of November 27, 1996 between registrant and The Bank of New York, incorporated by reference to Exhibit 4.10 of registrant's Registration No. 333-15375. (p) First Supplemental Indenture dated as of December 4, 1996 to the Indenture dated as of November 27, 1996 between registrant and The Bank of New York pursuant to which registrant issued its 7.84% Junior Subordinated Deferrable Interest Notes due 2026, incorporated by reference to Exhibit 4.3 of registrant's Current Report on Form 8-K dated November 27, 1996. (q) Second Supplemental Indenture dated as of December 17, 1996 to the Indenture dated as of November 27, 1996 between the registrant and The Bank of New York pursuant to which registrant issued its 7.83% Junior Subordinated Deferrable Interest Notes due 2026, incorporated by reference to Exhibit 4.3 of registrant's Current Report on Form 8-K dated December 10, 1996. (r) Third Supplemental Indenture dated as of February 3, 1997 to the Indenture dated as of November 27, 1996 between registrant and The Bank of New York pursuant to which registrant issued its Floating Rate Junior Subordinated Deferrable Interest Notes due 2027, incorporated by reference to Exhibit 4.3 of registrant's Current Report on Form 8-K dated January 22, 1997. (s) Fourth Supplemental Indenture dated as of April 22, 1997 to the Indenture dated as of November 27, 1996 between registrant and The Bank of New York pursuant to which registrant issued its 8 1/4% Junior Subordinated Deferrable Interest Notes, due 2027, incorporated by reference to Exhibit 4.3 of registrant's Current Report on Form 8-K dated April 15, 1997. (t) Fifth Supplemental Indenture dated as of August 28, 1998 to the Indenture dated as of November 27, 1996 between registrant and The Bank of New York. (u) Indenture dated as of November 27, 1996, between Barnett Banks, Inc. and The First National Bank of Chicago, as Trustee, and First Supplemental Indenture dated as of January 9, 1998, among registrant, NB Holdings Corporation, Barnett Banks, Inc. and The First National Bank of Chicago, as Trustee, pursuant to which registrant (as successor to Barnett Banks, Inc.) issued its 8.06% Junior Subordinated Debentures, due 2026, incorporated by reference to Exhibit 4(u) of registrant's Annual Report on Form 10-K dated March 13, 1998 (the "1997 Form 10-K").
E-2
Exhibit No. Description - ------------- ------------------------------------------------------------------------------ (v) Indenture dated as of September 1, 1990 between the former BankAmerica Corporation and Chase Manhattan Bank and Trust Company, N. A. (formerly Manufacturers Hanover Trust Company of California), pursuant to which registrant (as successor to the former BankAmerica Corporation) issued its Subordinated Medium Term Notes, Series E; its 9.375% Subordinated Notes due 2001; its 10.00% Subordinated Notes due 2003; its 9.625% Subordinated Notes due 2001; its 9.50% Subordinated Notes due 2001; and its 9.20% Subordinated Notes due 2003; and First Supplemental Indenture thereto dated as of September 15, 1998. (w) Indenture dated as of November 1, 1991 between the former BankAmerica Corporation and Chase Manhattan Bank and Trust Company, N. A. (formerly Manufacturers Hanover Trust Company of California), pursuant to which registrant (as successor to the former BankAmerica Corporation) issued its 8.125% Subordinated Notes due 2002; its 7.75% Subordinated Notes due 2002; its 8.375% Subordinated Notes due 2002; its 7.50% Subordinated Notes due 2002; its 7.20% Subordinated Notes due 2002; its 7.875% Subordinated Notes due 2002; its 6.85% Subordinated Notes due 2003; its 6.875% Subordinated Notes due 2003; its Floating Subordinated Notes due 2003; its 7.20% Subordinated Notes due 2006; its 7.625% Subordinated Notes due 2004; its 8.125% Subordinated Notes due 2004; its 8.95% Subordinated Notes due 2004; its 6.75% Subordinated Notes due 2005; its 6.20% Subordinated Notes due 2006; its 7.125% Subordinated Notes due 2006; its 6.625% Subordinated Notes due 2007; its 6.625% Subordinated Notes due 2007; its 7.125% Subordinated Notes due 2009; its 7.125% Subordinated Notes due 2011; and its 6.25% Subordinated Notes due 2008; First Supplemental Indenture thereto dated as of September 8, 1992; and Second Supplemental Indenture thereto dated as of September 15, 1998. (x) Indenture dated as of November 1, 1991 between the former BankAmerica Corporation and U.S. Bank Trust, N. A. (successor to Bankers Trust Company of California, National Association, and First Trust of California, National Association), pursuant to which registrant (as successor to the former BankAmerica Corporation) issued its Floating Rate Note due 1999; its 6.65% Note due 2001; its 6.625% Note due 2001; and its Senior Medium-Term Notes, Series H and I; First Supplemental Indenture thereto dated as of August 1, 1994; and Second Supplemental Indenture thereto dated as of September 30, 1998. (y) Second Amended and Restated Agency Agreement dated as of November 15, 1996 between the former BankAmerica Corporation and First Trust of New York, National Association, pursuant to which registrant (as successor to the former BankAmerica Corporation) issued its Senior and Subordinated Euro Medium-Term Notes; and Amendment thereto dated as of September 30, 1998. (z) Junior Subordinated Indenture dated as of November 27, 1996 between the former BankAmerica Corporation and Bankers Trust Company, pursuant to which registrant (as successor to the former BankAmerica Corporation) issued its 8.07% Series A Preferred Securities due 2026; and its 7.70% Series B Preferred Securities due 2026; and First Supplemental Indenture thereto dated as of September 15, 1998. (aa) Junior Subordinated Indenture dated as of December 20, 1996 between the former BankAmerica Corporation and Bankers Trust Company, pursuant to which registrant (as successor to the former BankAmerica Corporation) issued its 7.75% Trust Originated Preferred Securities, Series 1 due 2026; its 8.00% Cumulative Semi-Annual Income Preferred Securities, Series 2 due 2026; its Floating Rate Capital Securities, Series 3 due 2027; and its 7.00% Trust Originated Preferred Securities, Series 4 due 2028; and First Supplemental Indenture thereto dated as of September 15, 1998.
E-3
Exhibit No. Description - ------------- --------------------------------------------------------------------------------- The registrant has other long-term debt agreements, but these are not material in amount. Copies of these agreements will be furnished to the Commission on request. 10(a) NationsBank Corporation and Designated Subsidiaries Directors' Retirement * Plan, incorporated by reference to Exhibit 10(f) of registrant's Annual Report on Form 10-K dated March 27, 1991; Amendment thereto dated as of September 28, 1994, incorporated by reference to Exhibit 10(i) of registrant's Annual Report on Form 10-K dated March 30, 1995; and Amendment thereto dated as of April 24, 1996, incorporated by reference to Exhibit 10(g) of registrant's Annual Report on Form 10-K dated March 28, 1997 (the "1996 Form 10-K"). (b) NationsBank Corporation and Designated Subsidiaries Supplemental * Executive Retirement Plan, incorporated by reference to Exhibit 10(j) of registrant's Annual Report on Form 10-K dated March 30, 1995; Amendment thereto dated as of June 28, 1989, incorporated by reference to Exhibit 10(g) of registrant's Annual Report on Form 10-K dated March 28, 1990; Amendment thereto dated as of June 27, 1990, incorporated by reference to Exhibit 10(g) of registrant's Annual Report on Form 10-K dated March 27, 1991; Amendment thereto dated as of July 21, 1991, incorporated by reference to Exhibit 10(bb) of registrant's Annual Report on Form 10-K dated March 25, 1992; Amendments thereto dated as of December 3, 1992 and December 15, 1992, both of which are incorporated by reference to Exhibit 10(l) of registrant's Annual Report on Form 10-K dated March 24, 1993; Amendment thereto dated as of September 28, 1994, incorporated by reference to Exhibit 10(j) of registrant's Annual Report on Form 10-K dated March 30, 1995; Amendments thereto dated March 27, 1996 and June 25, 1997, incorporated by reference to Exhibit 10(c) of the 1997 Form 10-K; and Amendments thereto dated April 10, 1998, June 24, 1998 and October 1, 1998. (c) NationsBank Corporation and Designated Subsidiaries Deferred * Compensation Plan for Key Employees, incorporated by reference to Exhibit 10(k) of registrant's Annual Report on Form 10-K dated March 30, 1995; Amendment thereto dated as of June 28, 1989, incorporated by reference to Exhibit 10(h) of registrant's Annual Report on Form 10-K dated March 28, 1990; Amendment thereto dated as of June 27, 1990, incorporated by reference to Exhibit 10(h) of registrant's Annual Report on Form 10-K dated March 27, 1991; Amendment thereto dated as of July 21, 1991, incorporated by reference to Exhibit 10(bb) of registrant's Annual Report on Form 10-K dated March 25, 1992; Amendment thereto dated as of December 3, 1992, incorporated by reference to Exhibit 10(m) of registrant's Annual Report on Form 10-K dated March 24, 1993; and Amendments thereto dated April 10, 1998 and October 1, 1998 (filed as Exhibit 10(b) hereto). (d) NationsBank Corporation and Designated Subsidiaries Supplemental * Retirement Plan, incorporated by reference to Exhibit 10(o) of registrant's Annual Report on Form 10-K dated March 30, 1994; Amendment thereto dated as of June 28, 1989, incorporated by reference to Exhibit 10(k) of registrant's Annual Report on Form 10-K dated March 28, 1990; Amendment thereto dated as of June 27, 1990, incorporated by reference to Exhibit 10(k) of registrant's Annual Report on Form 10-K dated March 27, 1991; Amendment thereto dated as of July 21, 1991, incorporated by reference to Exhibit 10(bb) of registrant's Annual Report on Form 10-K dated March 25, 1992; Amendments thereto dated as of December 3, 1992 and December 4, 1992, both of which are incorporated by reference to Exhibit 10(p) of registrant's Annual Report on Form 10-K dated March 24, 1993; Amendment thereto dated as of July 5, 1995, incorporated by reference to Exhibit 10(l) of the 1995 Form 10-K; and Amendments thereto dated April 10, 1998 and October 1, 1998 (filed as Exhibit 10(b) hereto). (e) Split Dollar Agreement dated as of February 1, 1990 between registrant and * Hugh L. McColl III, as Trustee for the benefit of Hugh L. McColl, Jr. and Jane S. McColl, incorporated by reference to Exhibit 10(s) of registrant's Annual Report on Form 10-K dated March 27, 1991.
E-4
Exhibit No. Description - ------------- ------------------------------------------------------------------------------- (f) NationsBank Corporation Benefit Security Trust dated as of June 27, 1990, * incorporated by reference to Exhibit 10(t) of registrant's Annual Report on Form 10-K dated March 27, 1991; First Supplement thereto dated as of November 30, 1992, incorporated by reference to Exhibit 10(v) of registrant's Annual Report on Form 10-K dated March 24, 1993; and Trustee Removal/ Appointment Agreement dated as of December 19, 1995, incorporated by reference to Exhibit 10(o) of the 1995 Form 10-K. (g) The NationsBank 401(k) Restoration Plan, as amended and restated effective * April 1, 1998 and as further amended and restated effective July 1, 1998. (h) Bank of America Executive Incentive Compensation Plan, as amended and * restated effective April 1, 1998. (i) Bank of America Director Deferral Plan, as amended and restated effective * January 27, 1999. (j) NationsBank Corporation Directors' Stock Plan, incorporated by reference to * Exhibit 99.1 of registrant's Registration No. 333-02875. (k) Amendment to Restricted Stock Award Plan Agreements with Hugh L. McColl, * Jr. dated December 20, 1996, incorporated by reference to Exhibit 10(x) of the 1996 10-K. (l) Agreement and Plan of Merger, by and between Barnett Banks, Inc. and registrant, dated as of August 29, 1997, incorporated by reference to Exhibit 2.1 of registrant's Registration No. 333-40515; and Amendment thereto, dated as of November 18, 1997, incorporated by reference to Exhibit 2.2 of registrant's Registration No. 333-40515. (m) Employment Agreement by and between registrant and Charles E. Rice dated * October 10, 1997, incorporated by reference to Exhibit 10.1 of registrant's Registration No. 333-40515. (n) Barnett Banks, Inc. 1989 Long Term Incentive Plan, incorporated by reference * to Exhibit 99.2 of Post-Effective Amendment No. 1 to registrant's Registration No. 333-40515. (o) Barnett Banks, Inc. Management Deferral Plan, as amended through January * 1, 1996. (p) Barnett Banks, Inc. Trust Owned Life Insurance Trust for Management and * Directors Deferral Plans, as adopted effective January 1, 1997. (q) Barnett Banks, Inc. Trust Under Executive Benefit Plan, dated as of December 5, 1996. (r) Trust Agreement dated December 31, 1998 between BankAmerica Corporation * and NationsBank, N.A. (s) Bank of America Corporation Key Employee Stock Plan, as amended and * restated effective September 24, 1998, incorporated by reference to Exhibit 10(a) of registrant's Quarterly Report on Form 10-Q dated November 16, 1998 (the "Third Quarter 1998 Form 10-Q"). (t) BankAmerica Corporation and Bank of America National Trust and Savings * Association Deferred Compensation Plan for Directors, as amended and restated, incorporated by reference to Exhibit 10(b) of the Third Quarter 1998 Form 10-Q. (u) BankAmerica Deferred Compensation Plan as amended and restated, * incorporated by reference to Exhibit 10(c) of the Third Quarter 1998 Form 10-Q. (v) BankAmerica Corporation Senior Management Incentive Plan, as amended, * incorporated by reference to Exhibit 10(d) of the Third Quarter 1998 Form 10-Q. (w) BankAmerica Supplemental Retirement Plan, as amended and restated, * incorporated by reference to Exhibit 10(e) of the Third Quarter 1998 Form 10-Q. (x) BankAmerica Corporation Performance Equity Program, incorporated by * reference to Exhibit 99.1 of Post-Effective Amendment No. 3 to registrant's Registration No. 333-60553. (y) BankAmerica Corporation 1992 Management Stock Plan, incorporated by * reference to Exhibit 99.2 of Post-Effective Amendment No. 3 to registrant's Registration No. 333-60553.
E-5
Exhibit No. Description - ------------- ------------------------------------------------------------------------------- (z) BankAmerica Corporation 1987 Management Stock Plan, incorporated by * reference to Exhibit 99.3 of Post-Effective Amendment No. 3 to registrant's Registration No. 333-60553. (aa) Continental Bank Corporation 1991 Equity Performance Incentive Plan, * incorporated by reference to Exhibit 99.5 of Post-Effective Amendment No. 3 to registrant's Registration No. 333-60553. (bb) Continental Bank Corporation 1982 Performance Restricted Stock and Stock * Option Plan, incorporated by reference to Exhibit 99.1 of Post-Effective Amendment No. 4 to registrant's Registration No. 333-60553. (cc) Split Dollar Life Insurance Agreement dated as of October 15, 1998 between * the registrant and NationsBank, N. A., as Trustee under that certain Irrevocable Trust Agreement dated October 2, 1998, by and between Hugh L. McColl, Jr., as Grantor, and NationsBank, N. A., as Trustee. (dd) Split Dollar Life Insurance Agreement dated as of October 16, 1998 between * the registrant and NationsBank, N. A., as Trustee under that certain Irrevocable Trust Agreement No. 2 dated October 1, 1998, by and between James H. Hance, Jr., as Grantor, and NationsBank, N. A., as Trustee. (ee) Split Dollar Life Insurance Agreement dated as of September 28, 1998 between * the registrant and J. Steele Alphin, as Trustee under that certain Irrevocable Trust Agreement dated June 23, 1998, by and between Kenneth D. Lewis, as Grantor, and J. Steele Alphin, as Trustee. (ff) Employment Agreement dated as of April 10, 1998 between the registrant and * James H. Hance, Jr., incorporated by reference to Exhibit 10.4 of registrant's Registration No. 333-60553. (gg) Employment Agreement dated as of April 10, 1998 between the registrant and * Kenneth D. Lewis, incorporated by reference to Exhibit 10.5 of registrant's Registration No. 333-60553. (hh) Employment Agreement dated as of April 10, 1998 between the registrant and * Michael J. Murray, incorporated by reference to Exhibit 10.2 of registrant's Registration No. 333-60553. (ii) Agreement and Plan of Reorganization by and between registrant and the former BankAmerica Corporation, dated as of April 10, 1998, incorporated by reference to Exhibit 2.1 of registrant's Registration No. 333-60553. (jj) Plan of Reincorporation Merger by and between registrant and NationsBank (DE) Corporation, dated as of August 3, 1998, incorporated by reference to Exhibit 2.2 of registrant's Registration No. 333-60553. 11 Earnings per share computation. 12 (a) Ratio of Earnings to Fixed Charges. (b) Ratio of Earnings to Fixed Charges and Preferred Dividends. 21 List of Subsidiaries. 23 Consent of PricewaterhouseCoopers LLP. 24 (a) Power of Attorney. (b) Corporate Resolution. 27 Financial Data Schedule.
- --------- * Denotes executive compensation plan or arrangement. E-6 (THIS PAGE INTENTIONALLY LEFT BLANK) (THIS PAGE INTENTIONALLY LEFT BLANK) EX-4 2 EXHIBIT 4A EXHIBIT 4A [FACE OF SPECIMEN CERTIFICATE] COMMON STOCK COMMON STOCK NUMBER SHARES BA PAR VALUE $.01 PER SHARE PAR VALUE $.01 PER SHARE THIS CERTIFICATE IS TRANSFERABLE IN NEW YORK, N.Y. AND RIDGEFIELD PARK, N.J. CUSIP 06605F 10 2 BANKAMERICA CORPORATION INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE THIS CERTIFIES THAT SEE REVERSE FOR CERTAIN DEFINITIONS IS THE OWNER OF FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF BankAmerica Corporation transferable in person or by duly authorized attorney upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are subject to the provisions of the Certificate of Incorporation, all amendments thereto, and the By-Laws of the Corporation, and to the rights, preferences and voting powers of the Preferred Stock of the Corporation now or hereafter outstanding; the terms of all such provisions, rights, preferences and voting powers being incorporated herein by reference. This certificate is not valid until countersigned by the Transfer Agent and registered by the Registrar. Witness the facsimile seal and the facsimile signatures of the duly authorized officers of the Corporation. Dated: COUNTERSIGNED AND REGISTERED: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. TRANSFER AGENT BY AND REGISTRAR AUTHORIZED OFFICER SECRETARY CHIEF EXECUTIVE OFFICER [CORPORATE SEAL] [REVERSE OF SPECIMEN CERTIFICATE] BankAmerica Corporation BANKAMERICA CORPORATION'S AUTHORIZED CAPITAL STOCK INCLUDES PREFERRED STOCKS WHICH, WHEN ISSUED, SHALL HAVE CERTAIN PREFERENCES OR SPECIAL RIGHTS IN THE PAYMENT OF DIVIDENDS, IN VOTING, UPON LIQUIDATION, OR OTHERWISE. THE CORPORATION WILL, UPON REQUEST, FURNISH TO ANY SHAREHOLDER WITHOUT CHARGE INFORMATION IN WRITING AS TO THE NUMBER OF SUCH SHARES OF EACH CLASS OR SERIES OF SUCH PREFFERED STOCKS AUTHORIZED AND OUTSTANDING AND A COPY OF THE PORTIONS OF THE CERTIFICATE OF INCORPORATION OR RESOLUTIONS CONTAINING THE DESIGNATIONS, PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS OF ALL SHARES AND ANY CLASS OR SERIES THEREOF. ANY SUCH REQUEST IS TO BE ADDRESSED TO THE TRANSFER AGENT NAMED ON THE FACE OF THIS CERTIFICATE. --------------------- KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN OR DESTROYED, THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE OF A REPLACEMENT CERTIFICATE. --------------------- The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM -as tenants in common UNIF GIFT MIN ACT-______CUSTODIAN_______ (Cust) (Minor) TEN ENT - as tenants by the entireties under Uniform Gifts to Minors JT TEN - as joint tenants, with right of Act_________________________ survivorship and not as tenants (State) in common
Additional abbreviations may also be used though not in the above list. For value received, _______________________ hereby sell, assign and transfer unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE - -------------------------------------------------------------------------------- (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ______________________________________________________________________ shares of the capital stock represented by the within Certificate, and do hereby irrevocably constitute and appoint _______________________________________________________ Attorney to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises. Dated _______________________________ Signature _________________________________________ NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED: _______________________________________________________ THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
EX-4 3 EXHIBIT 4C EXHIBIT 4C [FACE OF SPECIMEN CERTIFICATE] 7% CUMULATIVE REDEEMABLE 7% CUMULATIVE REDEEMABLE PREFERRED STOCK, SERIES B PREFERRED STOCK, SERIES B NUMBER SHARES PB NationsBank Corporation SEE REVERSE SIDE FOR CERTAIN DEFINITIONS CUSIP 06605F 20 1 INCORPORATED UNDER THE LAWS OF THE STATE OF NORTH CAROLINA THIS CERTIFIES THAT IS THE OWNER OF FULLY PAID AND NON-ASSESSABLE SHARES OF THE STATED VALUE OF ONE HUNDRED DOLLARS EACH OF THE 7% CUMULATIVE REDEEMABLE PREFERRED STOCK, SERIES B OF NationsBank Corporation transferable only on the Books of the Corporation in conformity with the Bylaws in person or by Attorney on the surrender of this certificate. This certificate is not valid until countersigned by the Transfer Agent. Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated: NAME CHANGED TO BANKAMERICA CORPORATION STATE OF INCORPORATION CHANGED TO DELAWARE SECRETARY CHIEF EXECUTIVE OFFICER [CORPORATE SEAL] COUNTERSIGNED: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. TRANSFER AGENT BY AUTHORIZED SIGNATURE [REVERSE OF SPECIMEN CERTIFICATE] NationsBank Corporation NATIONSBANK CORPORATION'S AUTHORIZED CAPITAL STOCK INCLUDES COMMON STOCK AND ADDITIONAL SERIES OF PREFERRED STOCK WHICH, WHEN ISSUED, MAY HAVE CERTAIN PREFERENCES OR SPECIAL RIGHTS IN THE PAYMENT OF DIVIDENDS, IN VOTING, UPON LIQUIDATION, OR OTHERWISE. THE CORPORATION WILL, UPON REQUEST, FURNISH TO ANY SHAREHOLDER WITHOUT CHARGE INFORMATION IN WRITING AS TO EACH CLASS OR SERIES OF SUCH COMMON AND PREFERRED STOCK AUTHORIZED AND OUTSTANDING AND A COPY OF THE PORTIONS OF THE RESTATED ARTICLES OF INCORPORATION OR RESOLUTIONS CONTAINING THE DESIGNATIONS, RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS OF ALL SHARES AND ANY CLASS OR SERIES THEREOF. ANY SUCH REQUEST IS TO BE ADDRESSED TO THE TRANSFER AGENT NAMED ON THE FACE OF THIS CERTIFICATE. ----------------------- KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN OR DESTROYED, THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE OF A REPLACEMENT CERTIFICATE. ----------------------- The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM -as tenants in common UNIF GIFT MIN ACT-______CUSTODIAN________ (Cust) (Minor) TEN ENT - as tenants by the entireties under Uniform Gifts to Minors JT TEN - as joint tenants, with right of Act________________________ survivorship and not as tenants (State) in common
Additional abbreviations may also be used though not in the above list. For value received, ____________________________ hereby sell, assign and transfer unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE - -------------------------------------------------------------------------------- (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ______________________________________________________________________ shares of the capital stock represented by the within Certificate, and do hereby irrevocably constitute and appoint _______________________________________________________ Attorney to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises. Dated ___________________________ Signature __________________________________________ NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED: _______________________________________________________ THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
EX-4 4 EXHIBIT 4D EXHIBIT 4d [FACE OF SPECIMEN CERTIFICATE] $2.50 CUMULATIVE CONVERTIBLE $2.50 CUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES BB PREFERRED STOCK, SERIES BB NUMBER SHARES PBB NationsBank Corporation SEE REVERSE SIDE FOR CERTAIN DEFINITIONS CUSIP 06605F 30 0 INCORPORATED UNDER THE LAWS OF THE STATE OF NORTH CAROLINA THIS CERTIFIES THAT IS THE OWNER OF FULLY PAID AND NON-ASSESSABLE SHARES OF $2.50 CUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES BB OF NationsBank Corporation transferable on the books of the Corporation by the holder hereof in person or by duly authorized attorney upon surrender of this Certificate properly endorsed. This Certificate is not valid until countersigned by the Transfer Agent and registered by the Registrar. NAME CHANGED TO BANKAMERICA CORPORATION STATE OF INCORPORATION CHANGED TO DELAWARE Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated: SECRETARY CHIEF EXECUTIVE OFFICER [CORPORATE SEAL] COUNTERSIGNED AND REGISTERED: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. TRANSFER AGENT AND REGISTRAR BY: AUTHORIZED SIGNATURE [REVERSE OF SPECIMEN CERTIFICATE] NationsBank Corporation NATIONSBANK CORPORATION'S AUTHORIZED CAPITAL STOCK INCLUDES COMMON STOCK AND ADDITIONAL SERIES OF PREFERRED STOCK WHICH, WHEN ISSUED, MAY HAVE CERTAIN PREFERENCES OR SPECIAL RIGHTS IN THE PAYMENT OF DIVIDENDS, IN VOTING, UPON LIQUIDATION, OR OTHERWISE. THE CORPORATION WILL, UPON REQUEST, FURNISH TO ANY SHAREHOLDER WITHOUT CHARGE INFORMATION IN WRITING AS TO EACH CLASS OR SERIES OF SUCH COMMON AND PREFERRED STOCK AUTHORIZED AND OUTSTANDING AND A COPY OF THE PORTIONS OF THE AMENDED AND RESTATED ARTICLES OF INCORPORATION OR RESOLUTIONS CONTAINING THE DESIGNATIONS, RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS OF ALL SHARES AND ANY CLASS OR SERIES THEREOF. ANY SUCH REQUEST IS TO BE ADDRESSED TO THE TRANSFER AGENT NAMED ON THE FACE OF THIS CERTIFICATE. ------------------- KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN OR DESTROYED, THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE OF A REPLACEMENT CERTIFICATE. -------------------- The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM -as tenants in common UNIF GIFT MIN ACT-____CUSTODIAN___ (Cust) (Minor) TEN ENT - as tenants by the entireties under Uniform Gifts to Minors JT TEN - as joint tenants, with right of Act___________________________ survivorship and not as tenants (State) in common Additional abbreviations may also be used though not in the above list. For value received, _____________________ hereby sell, assign and transfer unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
- -------------------------------------------------------------------------------- (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- shares of the capital stock represented by the within Certificate, and do hereby irrevocably constitute and appoint ______________________________________________________ Attorney to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises. Dated ______________________ Signature _____________________________________________________________________ NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. SIGNATURE GUARANTEE: ___________________________________________________________ THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO RULE 17Ad-15 UNDER THE SECURITIES EXCHANGE ACT OF 1934. EX-4 5 EXHIBIT 4E ----------------------------------------------------- NationsBank Corporation NationsBank (DE) Corporation ----------------------------------------------------- FIRST SUPPLEMENTAL INDENTURE Dated as of September 18, 1998 Supplementing the Indenture, dated as of August 1, 1982, between NationsBank Corporation (formerly known as NCNB Corporation) and Morgan Guaranty Trust Company of New York, as Trustee ----------------------------------------------------- U.S. Bank Trust National Association, as successor to Morgan Guaranty Trust Company of New York, Trustee ----------------------------------------------------- FIRST SUPPLEMENTAL INDENTURE, dated as of September 18, 1998 (the "First Supplemental Indenture"), among NationsBank Corporation, a North Carolina Corporation (formerly known as NCNB Corporation) ("NationsBank"), NationsBank (DE) Corporation, a Delaware corporation ("NationsBank (DE)") and a direct wholly owned subsidiary of NationsBank, and U.S. Bank Trust National Association, a national banking association, successor to Morgan Guaranty Trust Company of New York, as Trustee (the "Trustee") under the Indenture referred to herein; WHEREAS, NationsBank and the Trustee heretofore executed and delivered an Indenture, dated as of August 1, 1982 (the "Indenture"); and WHEREAS, pursuant to the Indenture, NationsBank issued and the Trustee authenticated and delivered one or more series of NationsBank's Notes (the "Securities"); and WHEREAS, NationsBank and BankAmerica Corporation, a Delaware corporation ("BankAmerica"), have entered into the Agreement and Plan of Reorganization, dated as of April 10, 1998, pursuant to which (i) NationsBank will merge (the "Reincorporation Merger") with and into NationsBank (DE), in accordance with the terms and conditions of the Plan of Reincorporation Merger by and between NationsBank and NationsBank (DE), dated as of August 3, 1998, with NationsBank (DE) as the surviving corporation in the Reincorporation Merger, and (ii) BankAmerica will thereafter merge (the "Merger," and together with the Reincorporation Merger, the "Reorganization") with and into NationsBank (DE), with NationsBank (DE) as the surviving corporation in the Merger; and WHEREAS, the Reorganization is expected to be consummated on September 30, 1998; and WHEREAS, Section 10.01 of the Indenture provides that in the case of the Reorganization, NationsBank (DE) shall expressly assume by supplemental indenture all the obligations under the Securities and the Indenture on the part of NationsBank to be performed or observed; and WHEREAS, Section 9.01(1) of the Indenture provides that NationsBank and the Trustee may amend the Indenture and the Securities without notice to or consent of any holders of the Securities in order to comply with Article Ten of the Indenture; and WHEREAS, this First Supplemental Indenture has been duly authorized by all necessary corporate action on the part of each of NationsBank (DE) and NationsBank. -2- NOW, THEREFORE, NationsBank (DE), NationsBank and the Trustee agree as follows for the equal and ratable benefit of the holders of the Securities: ARTICLE I ASSUMPTION BY SUCCESSOR CORPORATION SECTION 1.1. Assumption of the Securities. NationsBank (DE) hereby expressly assumes the due and punctual payment of the principal of (and premium, if any, on) and any interest on all the Securities, according to their tenor, and the due and punctual performance and observance of all of the covenants and conditions of the Indenture to be performed by NationsBank. SECTION 1.2. Trustee's Acceptance. The Trustee hereby accepts this First Supplemental Indenture and agrees to perform the same under the terms and conditions set forth in the Indenture. ARTICLE II MISCELLANEOUS SECTION 2.1. Effect of Supplemental Indenture. Upon the later to occur of (i) the execution and delivery of this First Supplemental Indenture by NationsBank (DE), NationsBank and the Trustee and (ii) the consummation of the Reincorporation Merger, the Indenture shall be supplemented in accordance herewith, and this First Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Securities heretofore or hereafter authenticated and delivered under the Indenture shall be bound thereby. SECTION 2.2. Indenture Remains in Full Force and Effect. Except as supplemented hereby, all provisions in the Indenture shall remain in full force and effect. SECTION 2.3. Indenture and Supplemental Indenture Construed Together. This First Supplemental Indenture is an indenture supplemental to and in implementation of the Indenture, and the Indenture and this First Supplemental Indenture shall henceforth be read and construed together. SECTION 2.4. Confirmation and Preservation of Indenture. The Indenture as supplemented by this First Supplemental Indenture is in all respects confirmed and preserved. SECTION 2.5. Conflict with Trust Indenture Act. If any provision of this First Supplemental Indenture limits, qualifies or conflicts with any -3- provision of the Trust Indenture Act ("TIA") that is required under the TIA to be part of and govern any provision of this First Supplemental Indenture, the provision of the TIA shall control. If any provision of this First Supplemental Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the provision of the TIA shall be deemed to apply to the Indenture as so modified or to be excluded by this First Supplemental Indenture, as the case may be. SECTION 2.6. Severability. In case any provision in this First Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 2.7. Terms Defined in the Indenture. All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Indenture. SECTION 2.8. Headings. The Article and Section headings of this First Supplemental Indenture have been inserted for convenience of reference only, are not to be considered part of this Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof. SECTION 2.9. Benefits of First Supplemental Indenture, etc. Nothing in this First Supplemental Indenture or the Securities, express or implied, shall give to any Person, other than the parties hereto and thereto and their successors hereunder and thereunder and the holders of the Securities, any benefit of any legal or equitable right, remedy or claim under the Indenture, this First Supplemental Indenture or the Securities. SECTION 2.10. Successors. All agreements of NationsBank (DE) in this First Supplemental Indenture shall bind its successors. All agreements of the Trustee in this First Supplemental Indenture shall bind its successors. SECTION 2.11. Trustee Not Responsible for Recitals. The recitals contained herein shall be taken as the statements of NationsBank and NationsBank (DE), and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to, and shall not be responsible for, the validity or sufficiency of this First Supplemental Indenture. SECTION 2.12. Certain Duties and Responsibilities of the Trustees. In entering into this First Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture relating to -4- the conduct or affecting the liability or affording protection to the Trustee, whether or not elsewhere herein so provided. SECTION 2.13. Governing Law. This First Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby. SECTION 2.14. Counterpart originals. The parties may sign any number of copies of this First Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. -5- IN WITNESS WHEREOF, the parties have caused this First Supplemental Indenture to be duly executed as of the date first written above. NationsBank (DE) Corporation By: /s/ John E. Mack ------------------------------------------- Name: John E. Mack Title: Senior Vice President NationsBank Corporation (formerly known as NCNB Corporation) By: /s/ John E. Mack ------------------------------------------- Name: John E. Mack Title: Senior Vice President U.S. Bank Trust National Association, as Trustee By: /s/ Catherine F. Donohue ------------------------------------------- Name: Catherine F. Donohue Title: Vice President -6- EX-4 6 EXHIBIT 4F ---------------------------------------- NationsBank Corporation NationsBank (DE) Corporation ---------------------------------------- FIRST SUPPLEMENTAL INDENTURE Dated as of August 28, 1998 Supplementing the Indenture, dated as of September 1, 1989, between NationsBank Corporation (formerly known as NCNB Corporation) and The Bank of New York, as Trustee ---------------------------------------- The Bank of New York, Trustee ---------------------------------------- FIRST SUPPLEMENTAL INDENTURE, dated as of August 28, 1998 (the "First Supplemental Indenture"), among NationsBank Corporation, a North Carolina Corporation (formerly known as NCNB Corporation) ("NationsBank"), NationsBank (DE) Corporation, a Delaware corporation ("NationsBank (DE)") and a direct wholly owned subsidiary of NationsBank, and The Bank of New York, a New York banking corporation, as Trustee (the "Trustee") under the Indenture referred to herein; WHEREAS, NationsBank and the Trustee heretofore executed and delivered an Indenture, dated as of September 1, 1989 (the "Indenture"); and WHEREAS, pursuant to the Indenture, NationsBank issued and the Trustee authenticated and delivered one or more series of NationsBank's Notes (the "Securities"); and WHEREAS, NationsBank and BankAmerica Corporation, a Delaware corporation ("BankAmerica"), have entered into the Agreement and Plan of Reorganization, dated as of April 10, 1998, pursuant to which (i) NationsBank will merge (the "Reincorporation Merger") with and into NationsBank (DE), in accordance with the terms and conditions of the Plan of Reincorporation Merger by and between NationsBank and NationsBank (DE), dated as of August 3, 1998, with NationsBank (DE) as the surviving corporation in the Reincorporation Merger, and (ii) BankAmerica will thereafter merge (the "Merger," and together with the Reincorporation Merger, the "Reorganization") with and into NationsBank (DE), with NationsBank (DE) as the surviving corporation in the Merger; and WHEREAS, the Reorganization is expected to be consummated on September 30, 1998; and WHEREAS, Section 11.01 of the Indenture provides that in the case of the Reorganization, NationsBank (DE) shall expressly assume by supplemental indenture all the obligations under the Securities and the Indenture on the part of NationsBank to be performed or observed; and WHEREAS, Section 10.01(a) of the Indenture provides that NationsBank and the Trustee may amend the Indenture and the Securities without notice to or consent of any holders of the Securities in order to comply with Article Eleven of the Indenture; and WHEREAS, this First Supplemental Indenture has been duly authorized by all necessary corporate action on the part of each of NationsBank (DE) and NationsBank. -2- NOW, THEREFORE, NationsBank (DE), NationsBank and the Trustee agree as follows for the equal and ratable benefit of the holders of the Securities: ARTICLE I ASSUMPTION BY SUCCESSOR CORPORATION SECTION 1.1. Assumption of the Securities. NationsBank (DE) hereby expressly assumes the due and punctual payment of the principal of (and premium, if any, on) and any interest on all the Securities, according to their tenor, and the due and punctual performance and observance of all of the covenants and conditions of the Indenture to be performed by NationsBank. SECTION 1.2. Trustee's Acceptance. The Trustee hereby accepts this First Supplemental Indenture and agrees to perform the same under the terms and conditions set forth in the Indenture. ARTICLE II MISCELLANEOUS SECTION 2.1. Effect of Supplemental Indenture. Upon the later to occur of (i) the execution and delivery of this First Supplemental Indenture by NationsBank (DE), NationsBank and the Trustee and (ii) the consummation of the Reincorporation Merger, the Indenture shall be supplemented in accordance herewith, and this First Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Securities heretofore or hereafter authenticated and delivered under the Indenture shall be bound thereby. SECTION 2.2. Indenture Remains in Full Force and Effect. Except as supplemented hereby, all provisions in the Indenture shall remain in full force and effect. SECTION 2.3. Indenture and Supplemental Indenture Construed Together. This First Supplemental Indenture is an indenture supplemental to and in implementation of the Indenture, and the Indenture and this First Supplemental Indenture shall henceforth be read and construed together. SECTION 2.4. Confirmation and Preservation of Indenture. The Indenture as supplemented by this First Supplemental Indenture is in all respects confirmed and preserved. SECTION 2.5. Conflict with Trust Indenture Act. If any provision of this First Supplemental Indenture limits, qualifies or conflicts with any -3- provision of the Trust Indenture Act ("TIA") that is required under the TIA to be part of and govern any provision of this First Supplemental Indenture, the provision of the TIA shall control. If any provision of this First Supplemental Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the provision of the TIA shall be deemed to apply to the Indenture as so modified or to be excluded by this First Supplemental Indenture, as the case may be. SECTION 2.6. Severability. In case any provision in this First Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 2.7. Terms Defined in the Indenture. All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Indenture. SECTION 2.8. Headings. The Article and Section headings of this First Supplemental Indenture have been inserted for convenience of reference only, are not to be considered part of this Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof. SECTION 2.9. Benefits of First Supplemental Indenture, etc. Nothing in this First Supplemental Indenture or the Securities, express or implied, shall give to any Person, other than the parties hereto and thereto and their successors hereunder and thereunder and the holders of the Securities, any benefit of any legal or equitable right, remedy or claim under the Indenture, this First Supplemental Indenture or the Securities. SECTION 2.10. Successors. All agreements of NationsBank (DE) in this First Supplemental Indenture shall bind its successors. All agreements of the Trustee in this First Supplemental Indenture shall bind its successors. SECTION 2.11. Trustee Not Responsible for Recitals. The recitals contained herein shall be taken as the statements of NationsBank and NationsBank (DE), and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to, and shall not be responsible for, the validity or sufficiency of this First Supplemental Indenture. SECTION 2.12. Certain Duties and Responsibilities of the Trustees. In entering into this First Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture relating to -4- the conduct or affecting the liability or affording protection to the Trustee, whether or not elsewhere herein so provided. SECTION 2.13. Governing Law. This First Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby. SECTION 2.14. Counterpart originals. The parties may sign any number of copies of this First Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. -5- IN WITNESS WHEREOF, the parties have caused this First Supplemental Indenture to be duly executed as of the date first written above. NationsBank (DE) Corporation By: /s/ John E. Mack ----------------------------- Name: John E. Mack Title: Senior Vice President NationsBank Corporation (formerly known as NCNB Corporation) By: /s/ John E. Mack ----------------------------- Name: John E. Mack Title: Senior Vice President The Bank of New York, as Trustee By: /s/ Sandra Carreker ----------------------------- Name: Sandra Carreker Title: Agent -6- EX-4 7 EXHIBIT 4G ----------------------------------------------------- NationsBank Corporation NationsBank (DE) Corporation ----------------------------------------------------- SECOND SUPPLEMENTAL INDENTURE Dated as of September 18, 1998 Supplementing the Indenture, dated as of January 1, 1992, between NationsBank Corporation and BankAmerica Trust Company of New York, as Trustee ----------------------------------------------------- U.S. Bank Trust National Association, as successor to BankAmerica Trust Company of New York, Trustee ----------------------------------------------------- SECOND SUPPLEMENTAL INDENTURE, dated as of September 18, 1998 (the "Second Supplemental Indenture"), among NationsBank Corporation, a North Carolina Corporation ("NationsBank"), NationsBank (DE) Corporation, a Delaware corporation ("NationsBank (DE)") and a direct wholly owned subsidiary of NationsBank, and U.S. Bank Trust National Association, a national banking association, successor to BankAmerica Trust Company of New York, as Trustee (the "Trustee") under the Indenture referred to herein; WHEREAS, NationsBank and the Trustee heretofore executed and delivered an Indenture, dated as of January 1, 1992 which instrument was supplemented by a First Supplemental Indenture dated as of July 1, 1993 (collectively, the "Indenture"); and WHEREAS, pursuant to the Indenture, NationsBank issued and the Trustee authenticated and delivered one or more series of NationsBank's Notes (the "Securities"); and WHEREAS, NationsBank and BankAmerica Corporation, a Delaware corporation ("BankAmerica"), have entered into the Agreement and Plan of Reorganization, dated as of April 10, 1998, pursuant to which (i) NationsBank will merge (the "Reincorporation Merger") with and into NationsBank (DE), in accordance with the terms and conditions of the Plan of Reincorporation Merger by and between NationsBank and NationsBank (DE), dated as of August 3, 1998, with NationsBank (DE) as the surviving corporation in the Reincorporation Merger, and (ii) BankAmerica will thereafter merge (the "Merger," and together with the Reincorporation Merger, the "Reorganization") with and into NationsBank (DE), with NationsBank (DE) as the surviving corporation in the Merger; and WHEREAS, the Reorganization is expected to be consummated on September 30, 1998; and WHEREAS, Section 11.01 of the Indenture provides that in the case of the Reorganization, NationsBank (DE) shall expressly assume by supplemental indenture all the obligations under the Securities and the Indenture on the part of NationsBank to be performed or observed; and WHEREAS, Section 10.01(a) of the Indenture provides that NationsBank and the Trustee may amend the Indenture and the Securities without notice to or consent of any holders of the Securities in order to comply with Article Eleven of the Indenture; and WHEREAS, this Second Supplemental Indenture has been duly authorized by all necessary corporate action on the part of each of NationsBank (DE) and NationsBank. -2- NOW, THEREFORE, NationsBank (DE), NationsBank and the Trustee agree as follows for the equal and ratable benefit of the holders of the Securities: ARTICLE I ASSUMPTION BY SUCCESSOR CORPORATION SECTION 1.1. Assumption of the Securities. NationsBank (DE) hereby expressly assumes the due and punctual payment of the principal of (and premium, if any, on) and any interest on all the Securities, according to their tenor, and the due and punctual performance and observance of all of the covenants and conditions of the Indenture to be performed by NationsBank. SECTION 1.2. Trustee's Acceptance. The Trustee hereby accepts this Second Supplemental Indenture and agrees to perform the same under the terms and conditions set forth in the Indenture. ARTICLE II MISCELLANEOUS SECTION 2.1. Effect of Supplemental Indenture. Upon the later to occur of (i) the execution and delivery of this Second Supplemental Indenture by NationsBank (DE), NationsBank and the Trustee and (ii) the consummation of the Reincorporation Merger, the Indenture shall be supplemented in accordance herewith, and this Second Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Securities heretofore or hereafter authenticated and delivered under the Indenture shall be bound thereby. SECTION 2.2. Indenture Remains in Full Force and Effect. Except as supplemented hereby, all provisions in the Indenture shall remain in full force and effect. SECTION 2.3. Indenture and Supplemental Indenture Construed Together. This Second Supplemental Indenture is an indenture supplemental to and in implementation of the Indenture, and the Indenture and this Second Supplemental Indenture shall henceforth be read and construed together. -3- SECTION 2.4. Confirmation and Preservation of Indenture. The Indenture as supplemented by this Second Supplemental Indenture is in all respects confirmed and preserved. SECTION 2.5. Conflict with Trust Indenture Act. If any provision of this Second Supplemental Indenture limits, qualifies or conflicts with any provision of the Trust Indenture Act ("TIA") that is required under the TIA to be part of and govern any provision of this Second Supplemental Indenture, the provision of the TIA shall control. If any provision of this Second Supplemental Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the provision of the TIA shall be deemed to apply to the Indenture as so modified or to be excluded by this Second Supplemental Indenture, as the case may be. SECTION 2.6. Severability. In case any provision in this Second Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 2.7. Terms Defined in the Indenture. All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Indenture. SECTION 2.8. Headings. The Article and Section headings of this Second Supplemental Indenture have been inserted for convenience of reference only, are not to be considered part of this Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof. SECTION 2.9. Benefits of Second Supplemental Indenture, etc. Nothing in this Second Supplemental Indenture or the Securities, express or implied, shall give to any Person, other than the parties hereto and thereto and their successors hereunder and thereunder and the holders of the Securities, any benefit of any legal or equitable right, remedy or claim under the Indenture, this Second Supplemental Indenture or the Securities. SECTION 2.10. Successors. All agreements of NationsBank (DE) in this Second Supplemental Indenture shall bind its successors. All agreements of the Trustee in this Second Supplemental Indenture shall bind its successors. SECTION 2.11. Trustee Not Responsible for Recitals. The recitals contained herein shall be taken as the statements of NationsBank and NationsBank (DE), and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to, and shall not be -4- responsible for, the validity or sufficiency of this Second Supplemental Indenture. SECTION 2.12. Certain Duties and Responsibilities of the Trustees. In entering into this Second Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture relating to the conduct or affecting the liability or affording protection to the Trustee, whether or not elsewhere herein so provided. SECTION 2.13. Governing Law. This Second Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby. SECTION 2.14. Counterpart originals. The parties may sign any number of copies of this Second Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. -5- IN WITNESS WHEREOF, the parties have caused this Second Supplemental Indenture to be duly executed as of the date second written above. NationsBank (DE) Corporation By: /s/ John E. Mack ------------------------------------------ Name: John E. Mack Title: Senior Vice President NationsBank Corporation By: /s/ John E. Mack ------------------------------------------ Name: John E. Mack Title: Senior Vice President U.S. Bank Trust National Association, as Trustee By: /s/ Catherine F. Donohue ------------------------------------------ Name: Catherine F. Donohue Title: Vice President -6- EX-4 8 EXHIBIT 4I ---------------------------------- NationsBank Corporation NationsBank (DE) Corporation ---------------------------------- SECOND SUPPLEMENTAL INDENTURE Dated as of August 28, 1998 Supplementing the Indenture, dated as of November 1, 1992, between NationsBank Corporation and The Bank of New York, as Trustee ---------------------------------- The Bank of New York, Trustee ---------------------------------- SECOND SUPPLEMENTAL INDENTURE, dated as of August 28, 1998 (the "Second Supplemental Indenture"), among NationsBank Corporation, a North Carolina Corporation ("NationsBank"), NationsBank (DE) Corporation, a Delaware corporation ("NationsBank (DE)") and a direct wholly owned subsidiary of NationsBank, and The Bank of New York, a New York banking corporation, as Trustee (the "Trustee") under the Indenture referred to herein; WHEREAS, NationsBank and the Trustee heretofore executed and delivered an Indenture, dated as of November 1, 1992 which instrument was supplemented by a First Supplemental Indenture dated as of July 1, 1993 (collectively, the "Indenture"); and WHEREAS, pursuant to the Indenture, NationsBank issued and the Trustee authenticated and delivered one or more series of NationsBank's Notes (the "Securities"); and WHEREAS, NationsBank and BankAmerica Corporation, a Delaware corporation ("BankAmerica"), have entered into the Agreement and Plan of Reorganization, dated as of April 10, 1998, pursuant to which (i) NationsBank will merge (the "Reincorporation Merger") with and into NationsBank (DE), in accordance with the terms and conditions of the Plan of Reincorporation Merger by and between NationsBank and NationsBank (DE), dated as of August 3, 1998, with NationsBank (DE) as the surviving corporation in the Reincorporation Merger, and (ii) BankAmerica will thereafter merge (the "Merger," and together with the Reincorporation Merger, the "Reorganization") with and into NationsBank (DE), with NationsBank (DE) as the surviving corporation in the Merger; and WHEREAS, the Reorganization is expected to be consummated on September 30, 1998; and WHEREAS, Section 11.01 of the Indenture provides that in the case of the Reorganization, NationsBank (DE) shall expressly assume by supplemental indenture all the obligations under the Securities and the Indenture on the part of NationsBank to be performed or observed; and WHEREAS, Section 10.01(a) of the Indenture provides that NationsBank and the Trustee may amend the Indenture and the Securities without notice to or consent of any holders of the Securities in order to comply with Article Eleven of the Indenture; and WHEREAS, this Second Supplemental Indenture has been duly authorized by all necessary corporate action on the part of each of NationsBank (DE) and NationsBank. -2- NOW, THEREFORE, NationsBank (DE), NationsBank and the Trustee agree as follows for the equal and ratable benefit of the holders of the Securities: ARTICLE I ASSUMPTION BY SUCCESSOR CORPORATION SECTION 1.1. Assumption of the Securities. NationsBank (DE) hereby expressly assumes the due and punctual payment of the principal of (and premium, if any, on) and any interest on all the Securities, according to their tenor, and the due and punctual performance and observance of all of the covenants and conditions of the Indenture to be performed by NationsBank. SECTION 1.2. Trustee's Acceptance. The Trustee hereby accepts this Second Supplemental Indenture and agrees to perform the same under the terms and conditions set forth in the Indenture. ARTICLE II MISCELLANEOUS SECTION 2.1. Effect of Supplemental Indenture. Upon the later to occur of (i) the execution and delivery of this Second Supplemental Indenture by NationsBank (DE), NationsBank and the Trustee and (ii) the consummation of the Reincorporation Merger, the Indenture shall be supplemented in accordance herewith, and this Second Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Securities heretofore or hereafter authenticated and delivered under the Indenture shall be bound thereby. SECTION 2.2. Indenture Remains in Full Force and Effect. Except as supplemented hereby, all provisions in the Indenture shall remain in full force and effect. SECTION 2.3. Indenture and Supplemental Indenture Construed Together. This Second Supplemental Indenture is an indenture supplemental to and in implementation of the Indenture, and the Indenture and this Second Supplemental Indenture shall henceforth be read and construed together. SECTION 2.4. Confirmation and Preservation of Indenture. The Indenture as supplemented by this Second Supplemental Indenture is in all respects confirmed and preserved. -3- SECTION 2.5. Conflict with Trust Indenture Act. If any provision of this Second Supplemental Indenture limits, qualifies or conflicts with any provision of the Trust Indenture Act ("TIA") that is required under the TIA to be part of and govern any provision of this Second Supplemental Indenture, the provision of the TIA shall control. If any provision of this Second Supplemental Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the provision of the TIA shall be deemed to apply to the Indenture as so modified or to be excluded by this Second Supplemental Indenture, as the case may be. SECTION 2.6. Severability. In case any provision in this Second Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 2.7. Terms Defined in the Indenture. All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Indenture. SECTION 2.8. Headings. The Article and Section headings of this Second Supplemental Indenture have been inserted for convenience of reference only, are not to be considered part of this Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof. SECTION 2.9. Benefits of Second Supplemental Indenture, etc. Nothing in this Second Supplemental Indenture or the Securities, express or implied, shall give to any Person, other than the parties hereto and thereto and their successors hereunder and thereunder and the holders of the Securities, any benefit of any legal or equitable right, remedy or claim under the Indenture, this Second Supplemental Indenture or the Securities. SECTION 2.10. Successors. All agreements of NationsBank (DE) in this Second Supplemental Indenture shall bind its successors. All agreements of the Trustee in this Second Supplemental Indenture shall bind its successors. SECTION 2.11. Trustee Not Responsible for Recitals. The recitals contained herein shall be taken as the statements of NationsBank and NationsBank (DE), and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to, and shall not be responsible for, the validity or sufficiency of this Second Supplemental Indenture. SECTION 2.12. Certain Duties and Responsibilities of the Trustees. In entering into this Second Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture relating to the conduct or affecting the liability or affording protection to the Trustee, whether or not elsewhere herein so provided. SECTION 2.13. Governing Law. This Second Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby. SECTION 2.14. Counterpart originals. The parties may sign any number of copies of this Second Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. -4- IN WITNESS WHEREOF, the parties have caused this Second Supplemental Indenture to be duly executed as of the date second written above. NationsBank (DE) Corporation By: /s/ John E. Mack ----------------------------- Name: John E. Mack Title: Senior Vice President NationsBank Corporation By: /s/ John E. Mack ----------------------------- Name: John E. Mack Title: Senior Vice President The Bank of New York, as Trustee By: /s/ Heidi Van Horn-Bash ----------------------------- Name: Heidi Van Horn-Bash Title: Agent -5- EX-4 9 EXHIBIT 4M - -------------------------------------------------------------------------------- AMENDED AND RESTATED AGENCY AGREEMENT relating to BANKAMERICA CORPORATION and NATIONSBANK, N.A. U.S. $8,500,000,000 Euro Medium-Term Note Program among BANKAMERICA CORPORATION and NATIONSBANK, N.A. as Issuers and THE CHASE MANHATTAN BANK, London Branch as Issuing and Principal Paying Agent and CHASE MANHATTAN BANK LUXEMBOURG S.A. as Paying Agent Dated as of November 16, 1998 - -------------------------------------------------------------------------------- INDEX Clause Page - ------ ---- 1. Definitions and Interpretation............................................1 2. Appointments of Agent, Paying Agents and Calculation Agents...............2 3. Issue of Temporary Global Notes...........................................4 4. Determination of Exchange Date, Issue of Permanent Global Notes or Definitive Notes and Determination of Restricted Period...............4 5. Issue of Definitive Notes.................................................6 6. Terms of Issue............................................................6 7. Payments..................................................................7 8. Determinations and Notifications in Respect of Notes and Interest Determination....................................................8 9. Notice of any Withholding or Deduction...................................11 10. Duties of the Agent in Connection with Early Redemption..................11 11. Receipt and Publication of Notices; Receipt of Certificates..............12 12. Cancellation of Notes, Receipts, Coupons and Talons......................12 13. Issue of Replacement Notes, Receipts, Coupons and Talons.................13 14. Copies of Documents Available for Inspection.............................14 15. Meetings of Noteholders..................................................15 16. Repayment by the Agent...................................................15 17. Conditions of Appointment................................................15 18. Communication Between the Parties........................................16 19. Changes in Agent and Paying Agents.......................................16 20. Merger and Consolidation.................................................18 21. Notification of Changes to Paying Agents.................................18 22. Change of Specified Office...............................................18 23. Notices..................................................................18 24. Taxes and Stamp Duties...................................................19 25. Commissions, Fees and Expenses...........................................20 26. Indemnity................................................................20 27. Reporting................................................................20 28. Governing Law............................................................21 29. Amendments...............................................................21 30. Descriptive Headings.....................................................22 Schedule 1 - Form of Temporary Global Note Schedule 2 - Form of Permanent Global Note Schedule 3 - Form of Definitive Note, Coupon, Receipt and Talon Schedule 4 - Terms and Conditions Schedule 5 - Form of Certificate to be Presented by Euroclear or Cedel Bank Schedule 6 - Form of Certificate of Beneficial Owner Schedule 7 - Provision for Meetings of Noteholders Schedule 8 - Form of Put Notice Schedule 9 - Form of Calculation Agency Agreement i THIS AMENDED AND RESTATED AGREEMENT dated as of November 16, 1998 among: (i) BankAmerica Corporation, a Delaware corporation, and the successor in interest to NationsBank Corporation (the "Corporation") and NationsBank, N.A. (the "Bank"; the Bank and the Corporation are each an "Issuer" and collectively, "Issuers"); (ii) The Chase Manhattan Bank, London Branch (the "Agent" and the "Issuing and Principal Paying Agent"); and (iii) Chase Manhattan Bank Luxembourg S.A. (the "Paying Agent"). WHEREAS, the Corporation, the Agent and the Paying Agent wish to update the arrangements originally agreed among them pursuant to that certain Agency Agreement dated November 8, 1995, as amended and restated to the date hereof, including the amendment and restatement dated May 12, 1998 which added the Bank as an additional Issuer of euro medium-term notes (the "Original Agency Agreement"). WHEREAS, the Issuers propose to issue up to U.S. $6,500,000,000 with respect to the Corporation and $2,000,000,000 with respect to the Bank (or its equivalent in other currencies) in aggregate principal amount of Euro Medium-Term Notes (the "Notes") outstanding at any one time as provided in an Amended and Restated Program Agreement of even date among the Issuers, the Arrangers and the Dealers named therein (the "Program Agreement") and as described in an Offering Circular of even date (the "Offering Circular"); WHEREAS, Notes will be issued in the denominations specified in the relevant Pricing Supplement issued in connection with each Series and each Tranche of Notes; WHEREAS, beneficial interests in each Tranche of Notes will initially be represented by a Temporary Global Note, exchangeable, as provided in such Temporary Global Note, for beneficial interests in a Permanent Global Note and, only under limited circumstances, beneficial interests in a Global Note may be exchangeable for Definitive Notes, in each case in accordance with the terms of the Global Notes; and NOW, THEREFORE, it is agreed as follows: 1. Definitions and Interpretation (1) Terms and expressions defined in the Program Agreement or the Notes or used in the applicable Pricing Supplement shall have the same meanings in this Agreement, except where the context requires otherwise. (2) Without prejudice to the foregoing in this Agreement: "outstanding" means, in relation to the Notes, all the Notes issued other than (a) those which have been redeemed in accordance with the Terms and Conditions, (b) those in respect of which the date for redemption in accordance with the Terms and Conditions has occurred and the redemption moneys (including all interest accrued on such Notes to the date for such redemption and any interest or other amounts payable under the Terms and Conditions after such date) have been duly paid to the Agent as provided in this Agreement and remain available for payment against presentation and surrender of Notes and/or Receipts and/or Coupons, as the case may be, (c) those which have become void under Condition 7, (d) those which have been purchased and canceled as provided in Condition 5 (or as provided in the Global Notes), (e) those mutilated or defaced Notes which have been surrendered in exchange for replacement Notes pursuant to Condition 9, (f) (for purposes only of determining how many Notes are outstanding and without prejudice to their status for any other purpose) those Notes alleged to have been lost, stolen or destroyed and in respect of which replacement Notes have been issued pursuant to Condition 9, (g) any Temporary Global Note to the extent that it shall have been exchanged for a 1 Permanent Global Note, in each case pursuant to their respective provisions; provided that for the purposes of (i) ascertaining the right to attend and vote at any meeting of the Noteholders and (ii) the determination of how many Notes are outstanding for the purposes of Schedule 7, those Notes which are beneficially held by, or are held on behalf of, an Issuer or any of its affiliates shall (unless and until ceasing to be so held) be deemed not to remain outstanding; "Paying Agents" means the Issuing and Principal Paying Agent and the Paying Agent referred to above and such other Paying Agent or Agents as may be appointed from time to time hereunder; and (3) The term "Notes" as used in this Agreement shall include the Permanent Global Note, the Definitive Notes and the Coupons and, as the case may be, the Temporary Global Note. The term "Global Note" as used in this Agreement shall include both the Temporary Global Note and the Permanent Global Note, each of which is a "Global Note." The term "Noteholders" as used in this Agreement shall mean the several persons who are for the time being the holders of the Notes, which expression shall, while the Notes are represented by a Global Note, mean (other than with respect to the payment of principal and interest on the Notes, the right to which shall be vested as against the relevant Issuer solely in the bearer of such Global Note in accordance with and subject to its terms) the persons for the time being shown in the records of Euroclear (as defined below) or Cedel Bank (as defined below)(other than Cedel Bank, if Cedel Bank shall be an accountholder of Euroclear, and Euroclear, if Euroclear shall be an accountholder of Cedel Bank) as the Noteholders of particular principal amounts of Notes (in which regard any certificate or other document issued by Euroclear or Cedel Bank as to the principal amount of Notes standing to the credit of the account of any person shall be conclusive and binding for all purposes). (4) For purposes of this Agreement, the Notes of each Series shall form a separate series of Notes and the provisions of this Agreement shall apply mutatis mutandis separately and independently to the Notes of each Series and in such provisions the expressions "Notes", "Noteholders", "Receipts", "Receiptholders", "Coupons", "Couponholders", "Talons" and "Talonholders" shall be construed accordingly. (5) All references in this Agreement to principal and/or interest or both in respect of the Notes or to any moneys payable by an Issuer under this Agreement shall have the meaning set out in Condition 4. (6) All references in this Agreement to the "relevant currency" shall be construed as references to the currency in which the relevant Notes and/or Coupons are denominated (or payable in the case of Dual Currency Notes). (7) In this Agreement, Clause headings are inserted for convenience and ease of reference only and shall not affect the interpretation of this Agreement. All references in this Agreement to the provisions of any statute shall be deemed to be references to that statute as from time to time modified, extended, amended or re-enacted or to any statutory instrument, order or regulation made thereunder or under such re-enactment. (8) All references in this Agreement to an agreement, instrument or other document (including, without limitation, this Agreement, the Program Agreement, the Notes and any Terms and Conditions appertaining thereto) shall be construed as a reference to that agreement, instrument or document as the same may be amended, modified, varied or supplemented from time to time. (9) Any references herein to Euroclear and/or Cedel Bank shall, whenever the context permits, be deemed to include a reference to any additional or alternative clearance system approved by the Issuers and the Agent. 2. Appointments of Agent, Paying Agents and Calculation Agents (1) The Issuers hereby appoint The Chase Manhattan Bank, London Branch, as Agent, and The Chase Manhattan Bank, London Branch, hereby accepts such appointment as Agent of the Issuers, upon the terms and subject to the conditions set out below, for the purposes of: 2 (a) completing, authenticating and delivering Global Notes and (if required) authenticating and delivering Definitive Notes; (b) exchanging Temporary Global Notes for Permanent Global Notes or Definitive Notes, as the case may be, in accordance with the terms of such Temporary Global Notes; (c) under limited circumstances, exchanging Permanent Global Notes for Definitive Notes in accordance with the terms of such Permanent Global Notes; (d) paying sums due on Global Notes and Definitive Notes, Receipts and Coupons; (e) determining the end of the Restricted Period applicable to each Tranche; (f) unless otherwise specified in the applicable Pricing Supplement, determining the interest and/or other amounts payable in respect of the Notes in accordance with the Terms and Conditions; (g) arranging on behalf of the Issuers for notices to be communicated to the Noteholders; (h) preparing and sending monthly reports to the Ministry of Finance of Japan (the "MoF"), the German Central Bank and the Bank of England and, subject to confirmation from the relevant Issuer for the need for such further reporting, ensuring that all necessary action is taken to comply with any reporting requirements of any competent authority of any relevant currency as may be in force from time to time with respect to the Notes to be issued under the Program; (i) subject to the Procedures Memorandum, submitting to the Stock Exchange such number of copies of each Pricing Supplement which relates to Notes which are to be listed as it may reasonably require; (j) receiving notice from Euroclear and/or Cedel Bank relating to the certificates of non-U.S. beneficial ownership of the Notes; and (k) performing all other obligations and duties imposed upon it by the Terms and Conditions and this Agreement. (2) The relevant Issuer may, in its discretion, appoint one or more agents outside the United States and its possessions (each a "Paying Agent") for the payment (subject to applicable laws and regulations) of the principal of and any interest and Additional Amounts, if any, (as defined in Section 6 of the Terms and Conditions) on the Notes. Each Issuer hereby appoints Chase Manhattan Bank Luxembourg S.A., at its office in Luxembourg at 5 rue Plaetis, L-2338 Luxembourg-Grund, as its Paying Agent in Luxembourg. Each Paying Agent shall have the powers and authority granted to and conferred upon it herein and in the Notes, and such further powers and authority, acceptable to it, to act on behalf of the relevant Issuer as such Issuer may hereafter grant to or confer upon it in writing. As used herein, "paying agencies" shall mean paying agencies maintained by a Paying Agent on behalf of an Issuer as provided elsewhere herein. (3) The Issuers will appoint an agent to make certain calculations with respect to the Notes (the "Calculation Agent") pursuant to the Terms and Conditions. 3 3. Issue of Temporary Global Notes (1) Subject to sub-clause (2), following receipt of a notification from an Issuer in respect of an issue of Notes (such notification being by receipt of a confirmation (a "Confirmation"), substantially in the applicable form set out in the Procedures Memorandum) the Agent will take the steps required of the Agent in the Procedures Memorandum. For this purpose the Agent is hereby authorized on behalf of such Issuer: (a) to prepare a Temporary Global Note in accordance with such Confirmation by attaching a copy of the applicable Pricing Supplement to a copy of the relevant master Temporary Global Note; (b) to authenticate (or cause to be authenticated) such Temporary Global Note; (c) to deliver such Temporary Global Note to the specified common depositary of Euroclear and/or Cedel Bank in accordance with the Confirmation against receipt from the common depositary of confirmation that such common depositary is holding the Temporary Global Note in safe custody for the account of Euroclear and/or Cedel Bank and to instruct Euroclear or Cedel Bank or both of them (as the case may be) unless otherwise agreed in writing between the Agent and the relevant Issuer (i) in the case of an issue of Notes on a non-syndicated basis, to credit the Notes represented by such Temporary Global Note to the Agent's distribution account, and (ii) in the case of Notes issued on a syndicated basis, to hold the Notes represented by such Temporary Global Note to the relevant Issuer's order; and (d) to ensure that the Notes of each Tranche are assigned a Common Code and ISIN by Euroclear and Cedel Bank which are different from the Common Code and ISIN assigned to Notes of any other Tranche of the same Series until 40 days after the completion of the distribution of the Notes of such Tranche as notified by the Agent to the relevant Dealer. (2) The Agent shall only be required to perform its obligations under sub-clause (1) if it holds: (a) master Temporary Global Notes, duly executed by a person or persons authorized to execute the same on behalf of the relevant Issuer, which may be used by the Agent for the purpose of preparing Temporary Global Notes in accordance with paragraph (a) of that sub-clause; and (b) master Permanent Global Notes, duly executed by a person or persons authorized to execute the same on behalf of the relevant Issuer, which may be used by the Agent for the purpose of preparing Permanent Global Notes in accordance with Clause 4 below. (3) The Agent will provide Euroclear and/or Cedel Bank with the notifications, instructions or other information to be given by the Agent to Euroclear and/or Cedel Bank in accordance with the standard procedures of Euroclear and/or Cedel Bank. 4. Determination of Exchange Date, Issue of Permanent Global Notes or Definitive Notes and Determination of Restricted Period (1) (a) The Agent shall determine the Exchange Date for each Temporary Global Note in accordance with the terms thereof. Forthwith upon determining the Exchange Date in respect of any Tranche the Agent shall notify such determination to the relevant Issuer, the relevant Dealer, Euroclear and Cedel Bank. (b) The Agent shall deliver, upon notice from Euroclear or Cedel Bank, a Permanent Global Note or Definitive Notes, as the case may be, in accordance with the terms of 4 the Temporary Global Note. Upon any such exchange of a portion of a Temporary Global Note for an interest in a Permanent Global Note the Agent is hereby authorized on behalf of the relevant Issuer: (i) for the first Tranche of any Series of Notes, to prepare and complete a Permanent Global Note in accordance with the terms of the Temporary Global Note applicable to such Tranche by attaching a copy of the applicable Pricing Supplement to a copy of the relevant master Permanent Global Note; (ii) for the first Tranche of any Series of Notes, to authenticate such Permanent Global Note; (iii) for the first Tranche of any Series of Notes, to deliver such Permanent Global Note to the common depositary which is holding the Temporary Global Note applicable to such Tranche for the time being on behalf of Euroclear and/or Cedel Bank either in exchange for such Temporary Global Note or, in the case of a partial exchange, on entering details of such partial exchange of the Temporary Global Note in the relevant spaces in Schedule 2 of both the Temporary Global Note and the Permanent Global Note, and in either case against receipt from the common depositary of confirmation that such common depositary is holding the Permanent Global Note in safe custody for the account of Euroclear and/or Cedel Bank; and (iv) in any other case, to attach a copy of the applicable Pricing Supplement to the Permanent Global Note applicable to the relevant Series and enter details of any exchange in whole or part as aforesaid. (2) (a) For a Tranche in respect of which there is only one Dealer, the Agent will determine the end of the Restricted Period in respect of such Tranche as being the fortieth day following the date certified by the relevant Dealer to the Agent as being the date as of which distribution of the Notes of that Tranche was completed. (b) For a Tranche in respect of which there is more than one Dealer but is not issued on a syndicated basis, the Agent will determine the end of the Restricted Period in respect of such Tranche as being the 40th day following the latest of the dates certified by all the relevant Dealers to the Agent as being the respective dates as of which distribution of the Notes of that Tranche purchased by each such dealer was completed. (c) For a Tranche issued on a syndicated basis, the Agent will determine the end of the Restricted Period in respect of such Tranche as being the 40th day following the date certified by the Lead Manager to the Agent as being the date as of which distribution of the Notes of that Tranche was completed. (d) Forthwith upon determining the end of the Restricted Period in respect of any Tranche, the Agent shall notify such determination to the relevant Issuer and the relevant Dealer or the Lead Manager in the case of a syndicated issue. 5. Issue of Definitive Notes (1) Interests in a Global Note will be exchangeable for Definitive Notes with Coupons attached only if: (i) an Event of Default (as defined in the Terms and Conditions) occurs and is continuing, or (ii) the relevant Issuer is notified that either Euroclear or Cedel Bank has been closed for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) after the original issuance of the Notes or has announced an intention permanently to cease business or has in fact done so and no alternative clearance system approved by the Noteholders is available, or (iii) the relevant Issuer, after notice to the Agent, determines 5 to issue Notes in definitive form. Upon the occurrence of these events, the Agent shall deliver the relevant Definitive Note(s) in accordance with the terms of the relevant Global Note. For this purpose the Agent is hereby authorized on behalf of the relevant Issuer: (a) to authenticate such Definitive Note(s) in accordance with the provisions of this Agreement; and (b) to deliver such Definitive Note(s) to or to the order of Euroclear and/or Cedel Bank in exchange for such Global Note. The Agent shall notify the relevant Issuer forthwith upon receipt of a request for issue of (a) Definitive Note(s) in accordance with the provisions of a Global Note and this Agreement (and the aggregate principal amount of such Temporary Global Note or Permanent Global Note, as the case may be, to be exchanged in connection therewith). (2) The relevant Issuer undertakes to deliver to the Agent sufficient numbers of executed Definitive Notes with, if applicable, Receipts, Coupons and Talons attached to enable the Agent to comply with its obligations under this Clause 5. 6. Terms of Issue (1) The Agent shall cause all Temporary Global Notes, Permanent Global Notes and Definitive Notes delivered to and held by it under this Agreement to be maintained in safe custody and shall ensure that such Notes are issued only in accordance with the provisions of this Agreement and the relevant Global Note and Terms and Conditions. (2) Subject to the procedures set out in the Procedures Memorandum, for the purposes of Clause 3(1) the Agent is entitled to treat a telephone, telex or facsimile communication from a person purporting to be (and who the Agent believes in good faith to be) the authorized representative of the relevant Issuer named in the lists referred to in, or notified pursuant to, Clause 17(7) as sufficient instructions and authority of such Issuer for the Agent to act in accordance with Clause 3(l). (3) In the event that a person who has signed on behalf of the relevant Issuer any Note not yet issued but held by the Agent in accordance with Clause 3(1) ceases to be authorized as described in Clause 17(7), the Agent shall (unless such Issuer gives notice to the Agent that Notes signed by that person do not constitute valid and binding obligations of such Issuer or otherwise until replacements have been provided to the Agent) continue to have authority to issue any such Notes, and the relevant Issuer hereby warrants to the Agent that such Notes shall, unless notified as aforesaid, be valid and binding obligations of such Issuer. Promptly upon such person ceasing to be authorized, the relevant Issuer shall provide the Agent with replacement Notes and upon receipt of such replacement Notes the Agent shall cancel and destroy the Notes held by it which are signed by such person and shall provide to the relevant Issuer a confirmation of destruction in respect thereof specifying the Notes so canceled and destroyed. (4) If the Agent pays an amount (the "Advance") to an Issuer on the basis that a payment (the "Payment") has been, or will be, received from a Dealer and if the Payment is not received by the Agent on the date the Agent pays such Issuer, the Agent shall notify such Issuer by tested telex or facsimile that the Payment has not been received and such Issuer shall repay to the Agent the Advance and shall pay interest on the Advance (or the unreimbursed portion thereof) from (and including) the date such Advance is made to (but excluding) the earlier of repayment of the Advance and receipt by the Agent of the Payment (at a rate quoted at that time by the Agent as its cost of funding the Advance). (5) Except in the case of issues where the Agent does not act as receiving bank for the relevant Issuer in respect of the purchase price of the Notes being issued, if on the relevant Issue Date a Dealer 6 does not pay the full purchase price due from it in respect of any Note (the "Defaulted Note") and, as a result, the Defaulted Note remains in the Agent's distribution account with Euroclear and/or Cedel Bank) after such Issue Date, the Agent will continue to hold the Defaulted Note to the order of the relevant Issuer. The Agent shall notify the relevant Issuer forthwith of the failure of the Dealer to pay the full purchase price due from it in respect of any Defaulted Note and, subsequently, shall notify such Issuer forthwith upon receipt from the Dealer of the full purchase price in respect of such Defaulted Note. 7. Payments (1) The Agent shall advise the relevant Issuer, no later than ten Business Days (as defined below) immediately preceding the date on which any payment is to be made to the Agent pursuant to this sub-clause (1) of the payment amount, value date and payment instructions and the relevant Issuer will before 10:00 a.m. New York time on each date on which any payment in respect of any Notes issued by it becomes due, transfer to an account specified by the Agent such amount in the relevant currency as shall be sufficient for the purposes of such payment in funds settled through such payment system as the Agent and the relevant Issuer may agree. (2) The relevant Issuer will ensure that no later than 4:00 p.m. (London time) on the second Business Day (as defined below) immediately preceding the date on which any payment is to be made to the Agent pursuant to sub-clause (1), the Agent shall receive from the paying bank of the relevant Issuer an irrevocable confirmation in the form of a SWIFT message or tested telex that such payment shall be made. For the purposes of this Clause 7 "Business Day" means a day which is both: (a) a day (other than a Saturday or a Sunday) on which commercial banks and foreign exchange markets settle payments in London and in Charlotte, North Carolina; and (b) in relation to a payment to be made in a Specified Currency, a day on which commercial banks and foreign exchange markets settle payments in the principal financial center of the country of the relevant Specified Currency (if other than London). (3) The Agent shall ensure that payments of both principal and interest in respect of any Temporary Global Note will be made only to the extent that certification of non-U.S. beneficial ownership as required by U.S. securities laws and U.S. Treasury regulations (in the form set out in the Temporary Global Note) has been received from Euroclear and/or Cedel Bank in accordance with the terms thereof. (4) Subject to the receipt by the Agent of the payment confirmation as provided in sub-clause (2) above, the Agent or the relevant Paying Agent shall pay or cause to be paid all amounts due in respect of the Notes on behalf of the relevant Issuer in the manner provided in the Terms and Conditions. If any payment provided for in sub-clause (l) is made late but otherwise in accordance with the provisions of this Agreement, the Agent and each Paying Agent shall nevertheless make payments in respect of the Notes as aforesaid following receipt by it of such payment. (5) If for any reason the Agent considers in its sole discretion that the amounts to be received by the Agent pursuant to sub-clause (1) will be, or the amounts actually received by it pursuant thereto are, insufficient to satisfy all claims in respect of all payments then falling due in respect of the Notes, neither the Agent nor any Paying Agent shall be obliged to pay any such claims until the Agent has received the full amount of all such payments. Should the Agent or any Paying Agent elect not to make payment of amounts falling due in respect of the Notes as aforesaid, it shall advise the relevant Issuer of any such decision as soon as practicable by telephone with confirmation by telefax. (6) Without prejudice to sub-clauses (4) and (5), if the Agent pays any amounts to the holders of Notes, Receipts or Coupons or to any Paying Agent at a time when it has not received payment in full in respect of the relevant Notes in accordance with sub-clause (1) (the excess of the amounts so paid over the amounts so received being the "Shortfall"), the relevant Issuer will, in addition to paying amounts due under 7 sub-clause (l), pay to the Agent on demand interest (at a rate which represents the Agent's cost of funding the Shortfall) on the Shortfall (or the unreimbursed portion thereof) until the receipt in full by the Agent of the Shortfall. (7) The Agent shall on demand promptly reimburse each Paying Agent for payments in respect of Notes properly made by such Paying Agent in accordance with this Agreement and the Terms and Conditions unless the Agent has notified the Paying Agent, prior to the opening of business in the location of the office of the Paying Agent through which payment in respect of the Notes can be made prior to the day on which such Agent has to give payment instructions in respect of the due date of a payment in respect of the Notes, that the Agent does not expect to receive sufficient funds to make payment of all amounts falling due in respect of such Notes. (8) If the Agent pays out on or after the due date therefor, or becomes liable to pay out, funds on the assumption that the corresponding payment by the relevant Issuer has been or will be made and such payment has in fact not been so made by such Issuer, then such Issuer shall on demand reimburse the Agent for the relevant amount, and pay interest to the Agent on such amount from the date on which it is paid out to the date of reimbursement at a rate per annum equal to the cost to the Agent of funding the amount paid out, as certified by the Agent and expressed as a rate per annum. For the avoidance of doubt, the provisions of the Terms and Conditions as to subordination shall not apply to the relevant Issuer's obligations under this sub-clause 8. (9) While any Notes are represented by a Global Note or Global Notes, all payments due in respect of such Notes shall be made to, or to the order of, the holder of the Global Note or Global Notes, subject to and in accordance with the provisions of the Global Note or Global Notes. On the occasion of any such payment the Paying Agent to which any Global Note was presented for the purpose of making such payment shall cause the appropriate Schedule to the relevant Global Note to be annotated so as to evidence the amounts and dates of such payments of principal and/or interest as applicable. (10) If the amount of principal and/or interest then due for payment is not paid in full (otherwise than by reason of a deduction required by law to be made therefrom), the Paying Agent to which a Note is presented for the purpose of making such payment shall make a record of such shortfall on the Note and such record shall, in the absence of manifest error, be prima facie evidence that the payment in question has not to that extent been made. 8. Determinations and Notifications in Respect of Notes and Interest Determination (a) Determinations and Notifications (1) The Agent shall make all such determinations and calculations (howsoever described) as it is required to do under the Terms and Conditions, all subject to and in accordance with the Terms and Conditions, provided that certain calculations with respect to the Notes, and associated publication or notification, shall be made by the Calculation Agent in accordance with the Terms and Conditions. (2) The Agent or the Calculation Agent, as the case may be, shall not be responsible to the relevant Issuer or to any third party (except in the event of negligence, default or bad faith of the Agent or the Calculation Agent) as a result of the Agent or the Calculation Agent having acted in good faith on any quotation given by any Reference Bank which subsequently may be found to be incorrect. (3) The Agent or the Calculation Agent, as the case may be, shall promptly notify (and confirm in writing to) the relevant Issuer, the other Paying Agents and (in respect of a Series of Notes listed on a Stock Exchange) the relevant Stock Exchange of, inter alia, each Rate of Interest, Interest Amount and Interest Payment Date and all other amounts, rates and dates which it is obliged to determine or calculate under the Terms and Conditions as soon as practicable after the determination thereof (and in any event no later than the tenth 8 Business Day as defined in Clause 7(2) immediately preceding the date on which payment is to be made to the Agent pursuant to Clause 7(l)) and of any subsequent amendment thereto pursuant to the Terms and Conditions. (4) The Agent or the Calculation Agent, as the case may be, shall use its best efforts to cause each Rate of Interest, Interest Amount and Interest Payment Date and all other amounts, rates and dates which it is obliged to determine or calculate under the Terms and Conditions to be published as required in accordance with the Terms and Conditions as soon as possible after their determination or calculation. (5) If the Agent or the Calculation Agent, as the case may be, does not at any material time for any reason determine and/or calculate and/or publish the Rate of Interest, Interest Amount and/or Interest Payment Date in respect of any Interest Period or any other amount, rate or date as provided in this Clause 8, it shall forthwith notify the relevant Issuer and the Paying Agents of such fact. (6) Determinations with regard to Notes (including, without limitation, Indexed Notes and Dual Currency Notes) shall be made by the Calculation Agent specified in the applicable Pricing Supplement in the manner specified in the applicable Pricing Supplement. Unless otherwise agreed between the relevant Issuer and the relevant Dealer, such determinations shall be made on the basis of a Calculation Agency Agreement substantially in the form of Schedule 9 to this Agreement. (7) For the purposes of monitoring the aggregate principal amount of Notes issued under the Program, the Agent shall determine the U.S. dollar equivalent of the principal amount of each issue of Notes denominated in another currency, each issue of Dual Currency Notes, each Issue of Partly Paid Notes and each issue of Indexed Notes as follows: (A) the U.S. dollar equivalent of Notes denominated in a currency other than U.S. Dollars shall be determined as of the Agreement Date for such Notes on the basis of the spot rate for the sale of the U.S. dollar against the purchase of the relevant currency quoted by a foreign exchange dealer selected by the relevant Issuer on the relevant day of calculation; (B) the U.S. dollar equivalent of Dual Currency Notes and Indexed Notes shall be calculated in the manner specified above by reference to the original nominal amount of such Notes; and (C) the U.S. dollar equivalent of Zero Coupon Notes and other Notes issued at a discount shall be calculated in the manner specified above by reference to the net proceeds received by the relevant Issuer for the relevant issue; and (D) the U.S. Dollar equivalent of Partly Paid Notes shall be determined in the manner specified above by reference to the original principal amount of such Notes regardless of the amount paid on the Notes. (b) Interest Determination, Screen Rate Determination including Fallback Provisions (1) Where screen rate determination ("Screen Rate Determination") is specified in the applicable Pricing Supplement as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Period will, subject as provided below, be either: (A) the offered quotation (if there is only one quotation on the relevant screen page (the "Relevant Screen Page")); or (B) the arithmetic mean (rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards) of the offered quotations, 9 (expressed as a percentage rate per annum), for the reference rate ("Reference Rate") which appears or appear, as the case may be, on the Relevant Screen Page at approximately 11:00 a.m. (London time) on the interest determination date ("Interest Determination Date") in question plus or minus (as indicated in the applicable Pricing Supplement) the Margin (if any), all as determined by the Calculation Agent. If five or more such offered quotations are available on the Relevant Screen Page, the highest (or, if there is more than one such highest quotation, one only of such quotations) and the lowest (or, if there is more than one such lowest quotation, one only of such quotations) shall be disregarded by the Calculation Agent for the purpose of determining the arithmetic mean (rounded as provided above) of such offered quotations. (2) If the Relevant Screen Page is not available or if, in the case of sub-clause(b)(1)(A) above, no such offered quotation appears or, in the case of sub-clause (b)(1)(B) above, fewer than three such offered quotations appear, in each case as at the time specified in the preceding paragraph, the Calculation Agent shall at its sole discretion request the principal London office of each of the Reference Banks (defined below) to provide the Calculation Agent with its offered quotation (expressed as a percentage rate per annum) for deposits in the Specified Currency for the relevant Interest Period to leading banks in the London inter-bank market at approximately 11:00 a.m. (London time) on the Interest Determination Date in question. If two or more of the Reference Banks provide the Calculation Agent with such offered quotations, the Rate of Interest for such Interest Period shall be the arithmetic mean (rounded if necessary to the fifth decimal place with 0.000005 being rounded upwards) of such offered quotations plus or minus (as appropriate) the Margin (if any), all as determined by the Calculation Agent. (3) If on any Interest Determination Date one only or none of the Reference Banks provides the Calculation Agent with such offered quotations as provided in the preceding paragraph, the Rate of Interest for the relevant Interest Period shall be the rate per annum which the Calculation Agent determines as being the arithmetic mean (rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards) of the rates, as communicated to (and at the request of) the Calculation Agent by the Reference Banks or any two or more of them, at which such banks offered, at approximately 11:00 a.m. (London time) on the relevant Interest Determination Date, deposits in the Specified Currency for the relevant Interest Period by leading banks in the London inter-bank market plus or minus (as appropriate) the Margin (if any). If fewer than two of the Reference Banks provide the Calculation Agent with such offered quotations, the Rate of Interest shall be the offered quotation for deposits in the Specified Currency for the relevant Interest Period, or the arithmetic mean (rounded as provided above) of the offered quotations for deposits in the Specified Currency for the relevant Interest Period, at which, at approximately 11:00 a.m. (London time) on the relevant Interest Determination Date, any one or more banks informs the Calculation Agent it is quoting to leading banks in the London inter-bank market plus or minus (as appropriate) the Margin (if any), provided that, if the Rate of Interest cannot be determined in accordance with the foregoing provisions of this paragraph, the Rate of Interest shall be determined as at the last preceding Interest Determination Date (though substituting, where a different Margin is to be applied to the relevant Interest Period from that which applied to the last preceding Interest Period, the Margin relating to the relevant Interest Period, in place of the Margin relating to that last preceding Interest Period). (4) If the Reference Rate from time to time in respect of Floating Rate Notes is specified in the applicable Pricing Supplement as being other than the London inter-bank offered rate, the Rate of Interest in respect of such Notes will be determined as provided in the applicable Pricing Supplement. In this Clause 8, the expression "Reference Banks" means, in the case of sub-clause (b)(1)(A) above, those banks whose offered rates were used to determine such quotation when such quotation last appeared on the Relevant Screen Page and in the case of sub-clause (b)(1)(B) above, those banks whose offered quotations last appeared on the Relevant Screen Page when no fewer than three such offered quotations appeared. 9. Notice of any Withholding or Deduction If the relevant Issuer is, in respect of any payment, compelled to withhold or deduct any amount for or on account of taxes, duties, assessments or governmental charges as specifically contemplated under the Terms and Conditions, the relevant Issuer shall give notice thereof to the Agent as soon as it becomes aware of the 10 requirement to make such withholding or deduction and shall give to the Agent such information as it shall require to enable it to comply with such requirement. 10. Duties of the Agent in Connection with Early Redemption (1) If the relevant Issuer decides to redeem any outstanding Notes (in whole or in part) for the time being outstanding prior to their Maturity Date or the Interest Payment Date falling in the Redemption Month (as the case may be) in accordance with the Terms and Conditions, such Issuer shall give notice of such decision to the Agent not less than seven London Business Days before the date on which such Issuer will give notice to the Noteholders in accordance with the Terms and Conditions of such redemption in order to enable the Agent to undertake its obligations herein and in the Terms and Conditions. (2) If only some of the Notes of like tenor and of the same Series are to be redeemed on such date, the Agent shall make the required drawing in accordance with the Terms and Conditions but shall give the relevant Issuer reasonable notice of the time and place proposed for such drawing. Where partial redemptions are to be effected when there are Definitive Notes outstanding, the Issuing and Principal Paying Agent will select by lot the Notes to be redeemed from the outstanding Notes in compliance with all applicable laws and stock exchange requirements and deemed by the Agent to be appropriate and fair; and where partial redemptions are to be effected when there are no Definitive Notes outstanding, the rights of Noteholders will be governed by the standard provisions of Euroclear and Cedel Bank. Notice of any partial redemption and, when there are Definitive Notes outstanding, of the serial numbers of the Notes so drawn, will be given by the Agent to the Noteholders in accordance with the terms of the Notes and this Agreement. (3) The Agent shall publish the notice on behalf of and at the expense of the relevant Issuer required in connection with any such redemption and shall at the same time also publish a separate list of the serial numbers of any Notes previously drawn and not presented for redemption. Such notice shall specify the date fixed for redemption, the redemption amount, the manner in which redemption will be effected and, in the case of a partial redemption, the serial numbers of the Notes to be redeemed. Such notice will be published in accordance with the Terms and Conditions. The Agent will also notify the other Paying Agents of any date fixed for redemption of any Notes. (4) Immediately prior to the date on which any notice of redemption is to be given to the Noteholders, the relevant Issuer shall deliver to the Agent a certificate stating that such Issuer is entitled to effect such redemption and setting forth in reasonable detail a statement of facts showing that all conditions precedent to such redemption have occurred or been satisfied and shall comply with all notice requirements provided for in the Terms and Conditions. (5) Each Paying Agent will keep a stock of notices (each a "Put Notice") in the form set out in Schedule 8 and will make such notices available on demand to holders of Notes, the Terms and Conditions of which provide for redemption at the option of Noteholders. Upon receipt of any Note deposited in the exercise of such option in accordance with the Terms and Conditions, the Paying Agent with which such Note is deposited shall hold such Note (together with any Coupons, if any, relating to it and deposited with it) on behalf of the depositing Noteholder (but shall not, save as provided below, release it) until the due date for redemption of the relevant Note consequent upon the exercise of such option, when, subject as provided below, it shall present such Note (and any such Coupons, if any) to itself for payment of the amount due thereon together with any interest due on such date in accordance with the Terms and Conditions and shall pay such moneys in accordance with the directions of the Noteholder contained in the Put Notice. If, prior to such due date for its redemption, such Note becomes immediately due and payable or if upon due presentation payment of such redemption moneys is improperly withheld or refused, the Paying Agent concerned shall post such Note (together with any such Coupons, if any) by uninsured post to, and at the risk of, the relevant Noteholder unless the Noteholder has otherwise requested and paid the costs of such insurance to the relevant Paying Agent at the time of depositing the Notes at such address as may have been given by the Noteholder in the Put Notice. At the end of each period for the exercise of such option, each Paying Agent shall promptly notify the Agent of the principal amount of the 11 Notes in respect of which such option has been exercised with it together with their serial numbers and the Agent shall promptly notify such details to the relevant Issuer. 11. Receipt and Publication of Notices; Receipt of Certificates (1) Upon the receipt by the Agent of a demand or notice from any Noteholder in accordance with the Terms and Conditions the Agent shall forward a copy thereof to the relevant Issuer. (2) On behalf of and at the request and expense of the relevant Issuer, the Agent shall cause to be published all notices required to be given by such Issuer to the Noteholders in accordance with the Terms and Conditions. (3) The Agent shall have no responsibility to obtain the certificate of the relevant Issuer delivered by such Issuer to the Agent pursuant to Condition 8 if such a certificate is required to be issued, nor shall the Agent have any responsibility to notify the relevant Issuer that the Agent has not obtained such a certificate from such Issuer if such a certificate is required to be issued. 12. Cancellation of Notes, Receipts, Coupons and Talons (1) All Notes which are redeemed, all Receipts or Coupons which are paid and all Talons which are exchanged shall be delivered outside the United States to the Agent, and shall be canceled by the Agent. In addition, all Notes which are purchased by or on behalf of the relevant Issuer or any of its subsidiaries and are surrendered to the Agent for cancellation, together (in the case of Notes in definitive form) with all unmatured Receipts, Coupons or Talons (if any) attached thereto or surrendered therewith, shall be canceled by the Agent. (2) The relevant Issuer shall have the right to request that the Agent provide, without limitation, the following information: (a) the aggregate principal amount of Notes which have been redeemed and the aggregate amount paid in respect thereof; (b) the number of Notes canceled together (in the case of Definitive Notes, if any) with details of all unmatured Receipts, Coupons or Talons (if any) attached thereto or delivered therewith; (c) the aggregate amount paid in respect of interest on the Notes; (d) the total number by maturity date of Receipts, Coupons and Talons so canceled; and (e) (in the case of Definitive Notes, if any) the serial numbers of such Notes, shall be given to the relevant Issuer by the Agent as soon as reasonably practicable and in any event within three months after the date of such repayment or, as the case may be, payment or exchange. (3) The Agent shall destroy all canceled Notes, Receipts, Coupons and Talons. (4) The Agent shall keep a full and complete record of all Notes, Receipts, Coupons and Talons (other than serial numbers of Coupons, except those which have been replaced pursuant to Condition 9) and of all replacement Notes, Receipts, Coupons or Talons issued in substitution for mutilated, defaced, destroyed, lost or stolen Notes, Receipts, Coupons or Talons. The Agent shall at all reasonable times make such record available to the relevant Issuer and any persons authorized by it for inspection and for the taking of copies thereof or extracts therefrom. 12 (5) All records and certificates made or given pursuant to this Clause 12 and Clause 13 shall make a distinction between Notes, Receipts, Coupons and Talons of each Series. 13. Issue of Replacement Notes, Receipts, Coupons and Talons (1) The Issuers will cause a sufficient quantity of additional forms of Notes, Receipts, Coupons and Talons to be available, upon request to the Agent in Luxembourg (in such capacity, the "Replacement Agent") at its specified office for the purpose of issuing replacement Notes, Receipts, Coupons and Talons as provided below. (2) The Replacement Agent will, subject to and in accordance with the Terms and Conditions and the following provisions of this Clause 13, authenticate and cause to be delivered any replacement Notes, Receipts, Coupons and Talons which the relevant Issuer may determine to issue in place of Notes, Receipts, Coupons and Talons which have been lost, stolen, mutilated, defaced or destroyed. (3) In the case of a mutilated or defaced Note, the Replacement Agent shall ensure that (unless otherwise covered by such indemnity as the relevant Issuer may reasonably require) any replacement Note will only have attached to it Receipts, Coupons and Talons corresponding to those (if any) attached to the mutilated or defaced Note which is presented for replacement. (4) The Replacement Agent shall not issue any replacement Note, Receipt, Coupon or Talon unless and until the applicant therefor shall have: (a) paid such reasonable costs and expenses as may be incurred in connection therewith, including any tax or other governmental charge that may be imposed in relation thereto; (b) furnished it with such evidence and indemnity as the relevant Issuer may reasonably require; and (c) in the case of any mutilated or defaced Note, Receipt, Coupon or Talon, surrendered it to the Replacement Agent. (5) The Replacement Agent shall cancel any mutilated or defaced Notes, Receipts, Coupons and Talons in respect of which replacement Notes, Receipts, Coupons and Talons have been issued pursuant to this Clause 13 and shall furnish the relevant Issuer with a certificate stating the serial numbers of the Notes, Receipts, Coupons and Talons so canceled and, unless otherwise instructed by such Issuer in writing, shall destroy such canceled Notes, Receipts, Coupons and Talons and furnish such Issuer with a destruction certificate stating the serial number of the Notes (in the case of Definitive Notes) and the number by maturity date of Receipts, Coupons and Talons so destroyed. (6) The Replacement Agent shall, on issuing any replacement Note, Receipt, Coupon or Talon, forthwith inform the relevant Issuer, the Agent and the other Paying Agents of the serial number of such replacement Note, Receipt, Coupon or Talon issued and (if known) of the serial number of the Note, Receipt, Coupon or Talon in place of which such replacement Note, Receipt, Coupon or Talon has been issued. Whenever replacement Receipts, Coupons or Talons are issued pursuant to the provisions of this Clause 13, the Replacement Agent shall also notify the Agent and the other Paying Agents of the maturity dates of the lost, stolen, mutilated, defaced or destroyed Receipts, Coupons or Talons and of the replacement Receipts, Coupons or Talons issued. (7) The Agent shall keep a full and complete record of all replacement Notes, Receipts, Coupons and Talons issued and shall make such record available at all reasonable times to the relevant Issuer and any persons authorized by it for inspection and for the taking of copies thereof or extracts therefrom. 13 (8) Whenever any Note, Receipt, Coupon or Talon for which a replacement Note, Receipt, Coupon or Talon has been issued and in respect of which the serial number is known is presented to the Agent or any of the Paying Agents for payment, the Agent or, as the case may be, the relevant Paying Agent shall immediately send notice thereof to the relevant Issuer and the other Paying Agents and shall not make payment in respect thereto, until instructed by such Issuer. 14. Copies of Documents Available for Inspection The Agent and the Paying Agents shall hold available for inspection copies of: (i) the organizational documents of the Issuers; (ii) the latest available audited consolidated financial statements of BankAmerica Corporation and its consolidated subsidiaries, including the Bank, beginning with such financial statements for the fiscal years ended December 31, 1995, December 31, 1996 and December 31, 1997 and the publicly available portions of the Call Reports with respect to the Bank; (iii) the Program Agreement and this Agreement; (iv) the Offering Circular; and (v) any future offering circulars, information memoranda and supplements (except that a Pricing Supplement relating to any unlisted Note will only be available for inspection by a holder of such Note and such holder must produce evidence satisfactory to the Paying Agent as to ownership) to the Offering Circular and any other documents incorporated therein by reference and in the case of a syndicated issue of listed Notes, the syndication agreement (or equivalent document). For this purpose, the Issuers shall furnish the Agent and the Paying Agents with sufficient copies of each of such documents. 15. Meetings of Noteholders (1) The provisions of Schedule 7 hereto shall apply to meetings of the Noteholders and shall have effect in the same manner as if set out in this Agreement. (2) Without prejudice to sub-clause (l), each of the Agent and the Paying Agents on the request of any Noteholder shall issue voting certificates and block voting instructions in accordance with Schedule 7 and shall forthwith give notice to the relevant Issuer in writing of any revocation or amendment of a block voting instruction. Each of the Agent and the Paying Agents will keep a full and complete record of all voting certificates and block voting instructions issued by it and will, not less than 24 hours before the time appointed for holding a meeting or adjourned meeting, deposit at such place as the Agent shall designate or approve, full particulars of all voting certificates and block voting instructions issued by it in respect of such meeting or adjourned meeting. 16. Repayment by the Agent Upon the relevant Issuer being discharged from its obligation to make payments in respect of any Notes pursuant to the relevant Terms and Conditions, and provided that there is no outstanding, bona fide and proper claim in respect of any such payments, the Agent shall forthwith on written demand pay to the relevant Issuer sums equivalent to any amounts paid to it by such Issuer for the purposes of such payments. 17. Conditions of Appointment 14 (1) The Agent shall be entitled to deal with money paid to it by an Issuer for the purpose of this Agreement in the same manner as other money paid to a banker by its customers except: (a) that it shall not exercise any right of set-off, lien or similar claim in respect thereof; (b) as provided in sub-clause (2) below; and (c) that it shall not be liable to account to the relevant Issuer for any interest thereon. (2) In acting hereunder and in connection with the Notes, the Agent and the Paying Agents shall act solely as agents of the Issuers and will not thereby assume any obligations towards or relationship of agency or trust for or with any of the owners or holders of the Notes, Receipts, Coupons or Talons. (3) The Agent and the Paying Agents hereby undertake to the Issuers to perform such obligations and duties, and shall be obliged to perform such duties and only such duties as are herein, in the Terms and Conditions and in the Procedures Memorandum specifically set forth and no implied duties or obligations shall be read into this Agreement or the Notes against the Agent and the Paying Agents, other than the duty to act honestly and in good faith. (4) The Agent may consult with legal and other professional advisers and the opinion of such advisers shall be full and complete protection in respect of any action taken, omitted or suffered hereunder in good faith and in accordance with the opinion of such advisers. (5) Each of the Agent and the Paying Agents shall be protected and shall incur no liability for or in respect of any action taken, omitted or suffered in reliance upon any instruction, request or order from the relevant Issuer or any notice, resolution, direction, consent, certificate, affidavit, statement, cable, telex or other paper or document which it reasonably believes to be genuine and to have been delivered, signed or sent by the proper party or parties or upon written instructions from the relevant Issuer. (6) Any of the Agent and the Paying Agents and their officers, directors and employees may become the owner of, or acquire any interest in any Notes, Receipts, Coupons or Talons with the same rights that it or he would have if the Agent or the relevant Paying Agent, as the case may be, concerned were not appointed hereunder, and may engage or be interested in any financial or other transactions with the relevant Issuer and may act on, or as depositary, trustee or agent for, any committee or body of Noteholders or Couponholders or in connection with any other obligations of the relevant Issuer as freely as if the Agent or the relevant Paying Agent, as the case may be, were not appointed hereunder. (7) The relevant Issuer shall provide the Agent with a certified copy of the list of persons authorized to execute documents and take action on its behalf in connection with this Agreement and shall notify the Agent immediately in writing if any of such persons ceases to be so authorized or if any additional person becomes so authorized together, in the case of an additional authorized person, with evidence satisfactory to the Agent that such person has been so authorized, provided, however, that the Agent shall not incur any liability for any losses, claims or damages resulting from the relevant Issuer's failure to provide such notification to the Agent. 18. Communication Between the Parties A copy of all communications relating to the subject matter of this Agreement between any Issuer and the Noteholders, Receiptholders or Couponholders and any of the Paying Agents shall be sent to the Agent by the relevant Paying Agent. 19. Changes in Agent and Paying Agents 15 (1) The Issuers agree that, for so long as any Note is outstanding, or until moneys for the payment of all amounts in respect of all outstanding Notes have been made available to the Agent or have been returned to the relevant Issuer as provided herein: (a) so long as any Notes are listed on any Stock Exchange, there will at all times be a Paying Agent with a specified office in such place as may be required by the rules and regulations of the relevant Stock Exchange; and (b) there will at all times be a Paying Agent with a specified office in a city in continental Europe; and (c) there will at all times be an Agent. In addition, the Issuers shall appoint a Paying Agent having a specified office in New York City in the circumstances described in the final paragraph of Condition 4(b). Any variation, termination, appointment or change shall only take effect (other than in the case of insolvency (as provided in sub-clause (5)), when it shall be of immediate effect) after not less than 30 nor more than 45 days' prior notice thereof shall have been given to the Noteholders in accordance with the Terms and Conditions. (2) The Agent may (subject as provided in sub-clause (4)) at any time resign as Agent by giving at least 90 days' written notice to the Issuers of such intention on its part, specifying the date on which its desired resignation shall become effective, provided that such date shall never be less than three months after the receipt of such notice by the Issuers unless the Issuers agree to accept less notice. (3) The Agent may (subject as provided in sub-clause (4)) be removed at any time on at least 45 days' notice by the filing with it of an instrument in writing signed on behalf of each Issuer specifying such removal and the date when it shall become effective. (4) Any resignation under sub-clause (2) or removal under sub-clause (3) shall only take effect upon the appointment by the Issuers as hereinafter provided, of a successor Agent and (other than in cases of insolvency of the Agent) on the expiration of the notice to be given under Clause 21. The Issuers agree with the Agent that if, by the day falling ten days before the expiration of any notice under sub-clause (2), the Issuers have not appointed a successor Agent, then the Agent shall be entitled, on behalf of the Issuers, to appoint as a successor Agent in its place a reputable financial institution of good standing as it may reasonably determine to be capable of performing the duties of the Agent hereunder. (5) In case at any time the Agent resigns, or is removed, or becomes incapable of acting or is adjudged bankrupt or insolvent, or files a voluntary petition in bankruptcy or makes an assignment for the benefit of its creditors or consents to the appointment of an administrator, liquidator or administrative or other receiver of all or a substantial part of its property, or admits in writing its inability to pay or meet its debts as they mature or suspends payment thereof, or if any order of any court is entered approving any petition filed by or against it under the provisions of any applicable bankruptcy or insolvency law or if a receiver of it or of all or a substantial part of its property is appointed or any officer takes charge or control of it or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, a successor Agent, which shall be a reputable financial institution of good standing, may be appointed by the Issuers by an instrument in writing filed with the successor Agent. Upon the appointment as aforesaid of a successor Agent and acceptance by the latter of such appointment and (other than in case of insolvency of the Agent) upon expiry of the notice to be given under Clause 21 the Agent so superseded shall cease to be the Agent hereunder. (6) Subject to sub-clause (l): (A) the Issuers may, after prior consultation (other than in the case of insolvency of any Paying Agent) with the Agent, terminate the appointment of any of the Paying Agents at any time; and/or 16 (B) the Issuers may in respect of the Program or the relevant Issuer may in respect of any Series of Notes, if so required by the relevant Stock Exchange or regulatory body, appoint one or more further Paying Agents by giving to the Agent, and to the relevant Paying Agent, at least 45 days' notice in writing to that effect. (7) Subject to sub-clause (l), all or any of the Paying Agents may resign their respective appointments hereunder at any time by giving the Issuers and the Agent at least 45 days' written notice to that effect. (8) Upon its resignation or removal becoming effective the Agent or the relevant Paying Agent: (a) shall, in the case of the Agent, forthwith transfer all moneys held by it hereunder and the records referred to in Clause 12(4) to the successor Agent hereunder; and (b) shall be entitled to the payment by the Issuers of its commissions, fees and expenses for the services theretofore rendered hereunder in accordance with the terms of Clause 25. (9) Upon its appointment becoming effective, a successor Agent and any new Paying Agent shall, without further act, deed or conveyance, become vested with all the authority, rights, powers, trusts, immunities, duties and obligations of its predecessor or, as the case may be, a Paying Agent with like effect as if originally named as Agent or (as the case may be) a Paying Agent hereunder. 20. Merger and Consolidation Any corporation into which the Agent or any Paying Agent may be merged or converted, or any corporation with which the Agent or any of the Paying Agents may be consolidated or any corporation resulting from any merger, conversion or consolidation to which the Agent or any of the Paying Agents shall be a party, or any corporation to which the Agent or any of the Paying Agents shall sell or otherwise transfer all or substantially all the assets of the Agent or any Paying Agent shall, on the date when such merger, conversion, consolidation or transfer becomes effective and to the extent permitted by any applicable laws, become the successor Agent or, as the case may be, Paying Agent under this Agreement without the execution or filing of any paper or any further act on the part of the parties hereto, unless otherwise required by the Issuers, and after the said effective date all references in this Agreement to the Agent or, as the case may be, such Paying Agent shall be deemed to be references to such corporation. Written notice of any such merger, conversion, consolidation or transfer shall forthwith be given to the Issuers by the relevant Agent or Paying Agent. 21. Notification of Changes to Paying Agents Following receipt of notice of resignation from the Agent or any Paying Agent and forthwith upon appointing a successor Agent or, as the case may be, further or other Paying Agents or on giving notice to terminate the appointment of any Agent or, as the case may be, Paying Agent, the Agent (on behalf of and at the expense of the Issuers) shall give or cause to be given not more than 60 days' nor less than 30 days' notice thereof to the Noteholders in accordance with the Terms and Conditions. 22. Change of Specified Office If the Agent or any Paying Agent determines to change its specified office it shall give to the Issuers and (if applicable) the Agent written notice of such determination giving the address of the new specified office which shall be in the same city and stating the date on which such change is to take effect, which shall not be less than 45 days thereafter. The Agent (on behalf and at the expense of the Issuers) shall within 15 days of receipt of such notice (unless the appointment of the Agent or the relevant Paying Agent, as the case may be, is to 17 terminate pursuant to Clause 19 on or prior to the date of such change) give or cause to be given not more than 45 days' nor less than 30 days' notice thereof to the Noteholders in accordance with the Terms and Conditions. 23. Notices All notices hereunder shall be deemed to have been given when deposited in the mail as first class mail, registered or certified, return receipt requested, postage prepaid, addressed to any party hereto as follows: Address ------- The Corporation: BankAmerica Corporation 100 North Tryon Street NC 1007-23-1 Charlotte, North Carolina 28255-0065 Attn: John E. Mack Senior Vice President Telecopy: (704)386-0270 with a copy to: BankAmerica Corporation 100 North Tryon Street Legal Department NC 1007-20-1 Charlotte, North Carolina 28255-0065 Attn: Paul J. Polking, Esq. General Counsel Telecopy: (704)386-6453 The Bank: NationsBank, N.A. 100 North Tryon Street Charlotte, North Carolina 28255 Attn: James T. Houghton Senior Vice President Telecopy: (704) 386-9946 The Agent: The Chase Manhattan Bank, London Branch Trinity Tower 9 Thomas More Street London E1 9YT United Kingdom Attn: Manager, Corporate Trust Operations Telecopy: 44-1202-347438 The Paying Agent: Chase Manhattan Bank Luxembourg S.A. 5 rue Plaetis L-2338 Luxembourg - Grund Attn: Manager, Corporate Trust Operations Telecopy: 352-462685-380 or at any other address of which any of the foregoing shall have notified the others in writing. 18 (a) if delivered in person to the relevant address specified in the signature pages hereof and if so delivered, shall be deemed to have been delivered at the time of receipt; or (b) if sent by facsimile or telex to the relevant number specified on the signature pages hereof and, if so sent, shall be deemed to have been delivered immediately after transmission provided such transmission is confirmed by the answerback of the recipient (in the case of telex) or when an acknowledgment of receipt is received (in the case of facsimile). Where a communication is received after business hours it shall be deemed to be received and become effective on the next business day. Every communication shall be irrevocable save in respect of any manifest error therein. 24. Taxes and Stamp Duties The Issuers agree to pay any and all stamp and other documentary taxes or duties which may be payable in connection with the execution, delivery, performance and enforcement of this Agreement. 25. Commissions, Fees and Expenses (1) The Issuers undertake to pay in respect of the services of the Agent and the Paying Agents under this Agreement such fees and expenses as may be agreed between them from time to time, the initial such fees being set out in a letter of even date herewith from the Agent to, and countersigned by, the Issuers. (2) The Issuers will promptly pay on demand all out-of-pocket expenses (including legal, advertising, facsimile, telex and postage expenses) properly incurred by the Agent and the Paying Agents in connection with their services hereunder, including without limitation the expenses contemplated in Clause 24. 26. Indemnity (1) The relevant Issuer (or Issuers, as the case may be) undertake to indemnify and hold harmless each of the Agent and the Paying Agents against all losses, liabilities, costs (including, without limitation, legal fees and expenses), expenses, claims, actions or demands which the Agent or any Paying Agent, as the case may be, may reasonably incur or which may be made against the Agent or any Paying Agent, as a result of or in connection with the appointment or the exercise of or performance of the powers, discretions, authorities and duties of the Agent or any Paying Agent under this Agreement except such as may result from its own gross negligence, bad faith or failure to comply with its obligations hereunder or that of its officers, employees or agents. (2) Each of the Agent and the Paying Agents shall severally indemnify and hold harmless the relevant Issuer (or Issuers, as the case may be) against any loss, liability, costs (including, without limitation, legal fees and expenses), expense, claim, action or demand which it may reasonably incur or which may be made against it as a result of such Agent's or Paying Agent's own negligence, bad faith or material failure to comply with its obligations under this Agreement or that of its officers, employees or agents. (3) If, under any applicable law and whether pursuant to a judgment being made or registered or in the liquidation, insolvency or analogous process of any party hereto or for any other reason, any payment under or in connection with this Agreement is made or fails to be satisfied in a currency (the "Other Currency") other than that in which the relevant payment is expressed to be due (the "Required Currency") under this Agreement, then, to the extent that the payment (when converted into the Required Currency at the rate of exchange on the date of payment or, if it is not practicable for the payee to purchase the Required Currency with the Other Currency on the date of payment, at the rate of exchange as soon thereafter as it is practicable for it to do so or, in the case of a liquidation, insolvency or analogous process, at the rate of exchange on the latest date permitted by applicable law for the determination of liabilities in such liquidation, insolvency or analogous process) actually received by the payee falls short of the amount due under the terms of this Agreement, the payor 19 shall, as a separate and independent obligation, indemnify and hold harmless the payee against the amount of such shortfall. For the purpose of this Clause 26, "rate of exchange" means the rate at which the payee is able on the relevant date to purchase the Required Currency with the Other Currency and shall take into account any premium and other costs of exchange. 27. Reporting (1) The Agent shall upon receipt of a written request therefor from an Issuer and after the payment of any further remuneration agreed between such Issuers and the Agent (on behalf of such Issuers and on the basis of the information and documentation the Agent had in its possession) use all reasonable efforts to submit such reports or information as may be required from time to time by any applicable law, regulation or guideline promulgated by (i) any relevant United States governmental regulatory authority in respect of the issue and purchase of Notes or (ii) any other relevant governmental regulatory authority in respect of the issue and purchase of Notes denominated in the applicable currency of such governmental regulatory authority. (2) The Agent will notify the MoF of such details relating to Yen Notes and provide such other information about the Program to the MoF as may be required. (3) The Agent will notify the German Bundesbank at the end of each month about the amounts, dates of issue and other terms of all DM-denominated Notes issued during the month in question and provide such other information about the Program to the German Bundesbank as may be required. (4) The Agent will notify the Bank of England of such details relating to Sterling Notes and provide such other information about the Program to the Bank of England as may be required. 28. Governing Law (1) This Agreement, the Notes, and any Receipts, Coupons or Talons appertaining thereto shall be governed by and construed in accordance with the laws of the State of New York, United States of America, without regard to principles of conflicts of laws. (2) The Issuers and the Agent each hereby irrevocably submit to the non-exclusive jurisdiction of any United States Federal court sitting in New York City, the Borough of Manhattan over any suit, action or proceeding arising out of or related to this Agreement, any Note, Receipt, Coupon or Talon, as the case may be (together, the "Proceedings"). The Issuers and the Agent each irrevocably waive, to the fullest extent permitted by law, any objection which it may have to the laying of the venue of the Proceedings brought in such a court and any claim that the Proceedings have been brought in an inconvenient forum. The Issuers and the Agent each agree that final judgment in the Proceedings brought in such a court shall be conclusive and binding upon the Issuers or the Agent, as the case may be, and may be enforced in any court of the jurisdiction to which the relevant Issuer (or Issuers, as the case may be) or the Agent is subject by a suit upon such judgment, provided that the service of process is effected upon such Issuers and the Agent in the manner specified in subsection (C) below or as otherwise permitted by law. (3) As long as any of the Notes, Receipts, Coupons or Talons remains outstanding, the relevant Issuer shall at all times either maintain an office or have an authorized agent in New York City upon whom process may be served in the Proceedings. Service of process upon either it at its offices or upon such agent with written notice of such service mailed or delivered to the relevant Issuer shall, to the fullest extent permitted by law, be deemed in every respect effective service of process upon such Issuer in the Proceedings. Each Issuer hereby appoints CT Corporation System located at 1633 Broadway, New York, New York 10019 as its agent for such purposes, and covenants and agrees that service of process in the Proceedings may be made upon it at its office or at the specified offices of such agent (or such other addresses or at the offices of any other authorized agents which the relevant Issuer may designate by written notice to the Agent) and prior to any termination of such agencies for any reason, it will so appoint a successor thereto as agent hereunder. 20 29. Amendments Without the consent of the Noteholders, Receiptholders or Couponholders, the Agent and the Issuers may agree to modifications of or amendments to this Agreement, the Notes, the Receipts or the Coupons for any of the following purposes: (i) to evidence the succession of another corporation to an Issuer and the assumption by any such successor of the covenants of such Issuer in this Agreement, the Notes, Receipts or Coupons; (ii) to add to the covenants of an Issuer for the benefit of the Noteholders, the Receiptholders or the Couponholders, or to surrender any right or power herein conferred upon such Issuer; (iii) to relax or eliminate the restrictions on payment of principal and interest in respect of the Notes, Receipts or Coupons in the United States, provided that such payment is permitted by United States tax laws and regulations then in effect and provided that no adverse tax consequences would result to the Noteholders, the Receiptholders or the Couponholders; (iv) to cure any ambiguity, to correct or supplement any defective provision herein or any provision which may be inconsistent with any other provision herein; (v) to make any other provisions with respect to matters or questions arising under the Notes, the Receipts, the Coupons or this Agreement, provided such action pursuant to this sub-clause (v) shall not adversely affect the interests of the Noteholders, the Receiptholders or the Couponholders; and (vi) permit further issuances of Notes in accordance with the terms of the Program Agreement. Any such modification or amendment shall be binding on the Noteholders, the Receiptholders and the Couponholders and any such modification or amendment shall be notified to the Noteholders, the Receiptholders or the Couponholders in accordance with Condition 12 as soon as practicable thereafter. 30. Descriptive Headings The descriptive headings in this Agreement are for convenience of reference only and shall not define or limit the provisions hereof. 31. Counterparts This Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument. Any party may enter into this Agreement by signing such a counterpart. 21 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their respective corporate names by their respective officers thereunder duly authorized as of the date and year first above written. BANKAMERICA CORPORATION as Issuer By /s/ John E. Mack ------------------------------------ Name: Title: NATIONSBANK, N.A. as Issuer By /s/ James T. Houghton ------------------------------------ Name: Title: THE CHASE MANHATTAN BANK, LONDON BRANCH as Agent and Principal Paying Agent By /s/ Cris Green ------------------------------------ Name: Title: CHASE MANHATTAN BANK LUXEMBOURG S.A. as Paying Agent By /s/ Chris Green ------------------------------------ Name: Title: 22 EX-4 10 EXHIBIT 4N ================================================================================ ================================================================================ ISSUING AND PAYING AGENCY AGREEMENT between NATIONSBANK, N.A., as Issuer and BANKERS TRUST COMPANY, as Issuing and Paying Agent, Dated as of May 19, 1998 --------------------------- SHORT-TERM AND MEDIUM-TERM NOTES Due 7 Days or More From Date of Issue ================================================================================ ================================================================================
Table of Contents Page ---- SECTION 1. Definitions......................................................................1 SECTION 2. Appointment of Agents............................................................6 (a) Issuing and Paying Agent..................................................6 (b) Selling Agents............................................................7 (c) Registrar.................................................................7 (d) Transfer Agents...........................................................7 (e) Calculation Agents........................................................8 SECTION 3. The Notes........................................................................8 (a) Note Form; Signature......................................................8 (b) Denominations............................................................10 (c) Completion of Notes......................................................11 (d) Date.....................................................................11 (e) Certificate of Authentication............................................11 (f) Original Issue Discount Notes............................................11 (g) Custody of Notes.........................................................11 (h) Certificated Notes.......................................................11 SECTION 4. Authorized Representatives......................................................11 SECTION 5. Completion, Authentication and Delivery of Notes................................12 SECTION 6. Procedure Upon Sale of the Notes................................................15 SECTION 7. Payment of Interest; Actions on Days Other than Business Days...................15 SECTION 8. Payment of Principal............................................................16 SECTION 9. Designation of Accounts to Receive Payment......................................16 SECTION 10. Information Regarding Amounts Due...............................................17 SECTION 11. Specified Currency Notes........................................................17 i SECTION 12. Deposit of Funds................................................................17 SECTION 13. Optional Redemption.............................................................17 (a) Optional Redemption......................................................17 (b) Optional Repayment.......................................................18 (c) Optional Extension of Maturity...........................................18 (d) Optional Renewal.........................................................19 SECTION 14. Events of Default...............................................................20 SECTION 15. Registration; Transfer..........................................................21 SECTION 16. Persons Deemed Owners...........................................................22 SECTION 17. Mutilated, Lost, Stolen or Destroyed Notes......................................22 SECTION 18. Return of Unclaimed Funds.......................................................23 SECTION 19. Amendment or Supplement.........................................................23 SECTION 20. Resignation or Removal of Agents; Appointment of Successors to Agents...........24 (a) Resignation or Removal of Agent..........................................24 (b) Appointment of Successor to Agent........................................25 (c) Successor of Agent.......................................................25 (d) Merger, Etc. of Agent....................................................26 (e) Change in Duties of an Agent.............................................26 (f) Additional Agents........................................................26 SECTION 21. Reliance on Instructions........................................................26 SECTION 22. Cancellation of Unissued Notes..................................................26 SECTION 23. Representation and Warranties of the Issuer; Instructions by Certificate.......26 SECTION 24. Fees............................................................................27 SECTION 25. Notices.........................................................................27 SECTION 26. Information Furnished by the Issuing and Paying Agent...........................28 ii SECTION 27. Liability.......................................................................29 SECTION 28. Additional Responsibilities; Attorneys Fees.....................................29 SECTION 29. Transfer of Notes and Moneys....................................................29 SECTION 30. Indemnity.......................................................................30 SECTION 31. Limitation of Liability; Reliance on Opinions and Certificates..................31 SECTION 32. Benefit of Agreement............................................................31 SECTION 33. Governing Law...................................................................32 SECTION 34. Headings and Table of Contents..................................................32 SECTION 35. Counterparts....................................................................32 SECTION 36. Termination of Prior Issuing and Paying Agent Agreements........................32 EXHIBIT A Forms of DTC Letters of Representations.........................................34 EXHIBIT B Administrative Procedures.......................................................35 EXHIBIT C Form of Face of Fixed Rate Note.................................................36 EXHIBIT D Form of Face of Floating Rate Note..............................................37 EXHIBIT E Form of Legend for Original Issue Discount Notes................................38 EXHIBIT F NationsBank, N.A. Authorized Representatives....................................39 EXHIBIT G Form of Issuing and Paying Agent's Officer's Certificate Referencing Authorized Representatives......................................................40
iii NATIONSBANK, N.A. SHORT-TERM AND MEDIUM-TERM NOTES ISSUING AND PAYING AGENCY AGREEMENT ISSUING AND PAYING AGENCY AGREEMENT dated as of May 19, 1998, between NATIONSBANK, N.A., a national banking association organized under the laws of the United States, as Issuer, and BANKERS TRUST COMPANY, a New York banking corporation, as Issuing and Paying Agent. SECTION 1. Definitions. Except as otherwise expressly provided herein or in the applicable Note or unless the context otherwise requires: (1) the words and phrases with initial capitals used herein have the meanings specified in this Section; and (2) the words "herein," "hereof" and "hereunder" and other words of similar impact refer to this Issuing and Paying Agency Agreement as a whole and not to any particular section or other subdivision. Capitalized terms used herein but not otherwise defined herein shall have the same meaning and intention specified therefor in the applicable Note. ADDITIONAL RESPONSIBILITIES - Has the meaning given such term in Section 28. ADMINISTRATIVE PROCEDURES - The Administrative Procedures applicable to the Notes, as set forth in Exhibit B hereto. AGENT OR AGENTS - Any of the Issuing and Paying Agent, any paying agent or the Registrar, as the context indicates. AGREEMENT - This Issuing and Paying Agency Agreement, including the exhibits hereto, as amended or supplemented from time to time. AMORTIZING NOTE - Any Note the terms of which provide for the payment of Principal thereof and interest thereon on each Interest Payment Date and the Stated Maturity thereof. AUTHORIZED DENOMINATION - Has the meaning given such term in Section 3 (b) AUTHORIZED REPRESENTATIVE - With respect to the Issuer, any duly authorized representative of the Issuer as set forth in Exhibit F hereto, and any other representative of the Issuer as to which the Issuer may hereafter certify in writing to the Issuing and Paying Agent. BUSINESS DAY - Unless otherwise specified in a Pricing Supplement relating to a particular Note, with respect to any Note issued by the Issuer, any day that is not a Saturday or Sunday and that is not a day on which banking institutions in The City of New York, New York or Charlotte, North Carolina (or, if the Issuing and Paying Agent is other than Bankers Trust Company, the city in which such successor Issuing and Paying Agent's principal office is located) are generally authorized or obligated by law to close. With respect to LIBOR Notes (as described herein), "Business Day" means London Business Day. If a particular Note is denominated in or indexed to a Specified Currency other than U.S. dollars or the European Currency Unit ("ECU"), "Business Day" means any day that is not a Saturday or Sunday and that is not a day on which banking institutions in The City of New York or Charlotte, North Carolina and the principal financial center of the country issuing the Specified Currency are generally authorized or obligated by law or regulation to close and is a day on which banking institutions in such principal financial center are carrying out transactions in such Specified Currency and, if such Note is denominated in or indexed to ECU, each day which is not a day that banking institutions in the country of Luxembourg are authorized or required by law or regulation to close and which is an ECU clearing day, as determined by the ECU Banking Association in Paris, France. CALCULATION AGENT - With respect to Notes issued by the Issuer, such person appointed by the Issuer to calculate the interest rates applicable to Floating Rate Notes or certain other Notes, and for certain related matters, as more fully described in Section 2 (e). CERTIFICATE OF AUTHENTICATION - Has the meaning given such term in Section 3 (e). CERTIFICATED NOTES - Any Notes issued in fully registered, certificated form. COMPONENTS - Has the meaning given such term in Section 11(d). DEPOSITARY - With respect to Notes issued in the form of one or more Global Notes, the Person designated as Depositary by the Issuer thereof pursuant hereto, which Depositary at all times shall be a trust company validly existing and in good standing (at the time of its appointment) under the laws of the United States or any state thereof and shall be a clearing agency duly registered under the Securities Exchange Act. DISTRIBUTION AGREEMENT - The Distribution Agreement, dated as of May 15, 1998, among the Issuer, NationsBanc Montgomery Securities LLC, Credit Suisse First Boston Corporation, Lehman Brothers Inc. (including its affiliate Lehman Commercial Paper Inc.), Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated and Salomon Brothers Inc, as amended and supplemented from time to time. DTC - The Depository Trust Company or its successors and assigns. EVENT OF DEFAULT - Has the meaning given such term in Section 14. EXTENSION NOTICE - The notice to be provided to Holders of Notes the Stated Maturity of which is extended by the Issuer as provided in Section 13(c) hereof. EXTENSION PERIOD(S) - The period or periods, by which the Issuer may extend the Stated Maturity of Notes which provide for such extension, as described more fully in Section 13(c) hereof. 2 FINAL MATURITY DATE - The latest date designated on the face of a Note which provides for the maturity thereof. FIXED RATE NOTES - Any Notes bearing interest at fixed rates and substantially in the form of Exhibit C hereto. FLOATING RATE NOTES - Any Notes bearing interest at a variable rate or rates determined by reference to an interest rate formula, which may be adjusted by adding or subtracting a number of basis points or "spread" specified by the Issuer on the related Floating Rate Note as being applicable to such Floating Rate Note and/or by multiplying a percentage or "spread multiplier" specified by the Issuer thereof on the related Floating Rate Note as being applicable to such Floating Rate Note and substantially in the form of Exhibit D. GLOBAL NOTE - A Note, in the form provided by Section 3(a), issued to the Depositary or its nominee, and registered in the Register in the name of the Depositary or its nominee. HOLDER - Means the person in whose name a Note is registered in the Register. INITIAL MATURITY DATE - Has the meaning given such term in Section 13(d). INITIAL REDEMPTION DATE - With respect to a Note that is subject to an Optional Redemption, the date specified as the Initial Redemption Date on such Note and after which, but prior to the Stated Maturity, an Optional Redemption of such Note may occur as specified in such Note. INITIAL RENEWAL DATE - Has the meaning given such term in Section 13(d). INTEREST PAYMENT DATE - A date for payment of interest on a Note, as provided in the Note. ISSUER - NationsBank, N.A., a national banking association, and its successors and assigns is referred to herein as the "Issuer". ISSUING AND PAYING AGENT - Bankers Trust Company, or any successor Issuing and Paying Agent appointed in accordance with this Agreement under Section 20 that has accepted such appointment hereunder. LETTERS OF REPRESENTATIONS - The letters from the Issuing and Paying Agent and Bank, as appropriate, to be furnished to DTC in accordance with Section 2(a) hereof, substantially in the forms set forth in Exhibit A hereto. LONDON BUSINESS DAY - Any day on which dealings in deposits in U.S. dollars are transacted in the London inter-bank market. 3 NEW MATURITY DATE - Has the meaning given such term in Section 13(d). NOTE OR NOTES - Any of the Issuer's Short-Term Notes or Medium-Term Notes issued, authenticated and delivered under this Agreement. OFFERING CIRCULAR - The Offering Circular of the Issuer relating to the Notes dated May 15, 1998 as the same may be amended or supplemented from time to time. OFFICER'S CERTIFICATE - With respect to the Issuer, a certificate (i) signed by the Chairman of the Board, the President, or any Executive Vice President or Senior Vice President of the Issuer or such other persons as the Issuer designates in an Officer's Certificate signed by the President or any Vice President, and (ii) delivered to the Issuing and Paying Agent. OPTIONAL REDEMPTION - A redemption of a Note on or after the date designated on such Note as the Initial Redemption Date at the option of the Issuer as set forth in such Note at a Redemption Price as set forth in such Note. ORIGINAL ISSUE DATE - As to any Note, the date on which such Note was issued and the purchase price therefore was paid by the related Holder. ORIGINAL ISSUE DISCOUNT NOTE - Any Note issued at an issue price representing more than a de minimis discount from the principal amount payable at its Stated Maturity for federal income tax purposes. ORIGINAL STATED MATURITY - Has the meaning given such term in Section 13(c). OUTSTANDING - For purposes of the provisions of this Agreement and the Notes, any Note authenticated and delivered pursuant to this Agreement shall, as of any date of determination, be deemed to be "Outstanding," except: (i) Notes theretofore cancelled or delivered to the Issuing and Paying Agent for cancellation; (ii) Notes that have become due and payable on their Principal Payment Date and with respect to which monies sufficient to pay the Principal or Redemption Price thereof, as the case may be, and interest thereon shall have been made available to the Issuing and Paying Agent; or (iii) Notes in lieu of or in substitution for which other Notes shall have been authenticated and delivered pursuant to this Agreement. PAYMENT DATE - A date for payment of Principal of and interest on an Amortizing Note as provided in the Note. PERSON - Any legal person, including any individual, corporation, limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency, instrumentality or political subdivision thereof. PREDECESSOR NOTES - With respect to any particular Note, every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purpose of 4 this definition, any Note authenticated and delivered under Section 17 or the terms of a Note in lieu of or in exchange for a mutilated, lost, destroyed, or stolen Note shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Note, and any Note issued upon registration of transfer of or in exchange for any other Note shall be deemed to evidence all or a portion of the same debt evidenced by such other Note. PREPAYMENT OPTION DATES - If specified on the applicable Note, a date or dates for prepayment of a Note prior to the Stated Maturity thereof at the option of the Holder. PREPAYMENT OPTION PRICE - The amount prepayable to a Holder on a Prepayment Option Date together with any accrued interest to the Prepayment Option Date, as and if specified above on the applicable Note. PRICING SUPPLEMENT - A supplement to the Offering Circular for a particular Note or Notes. PRINCIPAL - The amount of a Note due and payable on the Stated Maturity therefor or, in the case of an Amortizing Note, the "Amortized Face Amount" (as specified in the Note). PRINCIPAL OFFICE - Subject to the right of each to change its office, by advance written notice to the Issuer, such term means, (1) for the Issuing and Paying Agent, its principal corporate trust office at Four Albany Street, 4th floor, New York, New York 10006, Attention: Corporate Trust and Agency Group; and (2) for any successor or additional Agents, their offices specified in writing to the Issuer and the Issuing and Paying Agent. PRINCIPAL PAYMENT DATE - The date provided on the face of the Note on which the Principal, or Redemption Price of the Note, as the case may be, becomes due and payable. REDEMPTION PRICE - With respect to any Note subject to an Optional Redemption, the amount specified in such Note as payable, when such Note is redeemed on or after the Initial Redemption Date, pursuant to the related Note. REGISTER - The register for the registration and transfer of the Notes maintained by the Issuing and Paying Agent pursuant to Section 15 hereof. REGISTRAR - Bankers Trust Company, or any successor or successors as Registrar, appointed in accordance with Section 20 hereof, who shall perform the duties provided under Section 2(c) hereof. REGULAR RECORD DATE - With respect to any Note, unless otherwise specified in such Note, the Regular Record Date with respect to any Interest Payment Date or Payment Date shall be the date that is the fifteenth calendar day (whether or not a Business Day) prior to the applicable Interest Payment Date or Payment Date, as the case may be. 5 RENEWABLE NOTE - A Note the maturity of which may be renewed at the option of the Holder in accordance with the terms thereof. RENEWAL DATE - Has the meaning given such term in Section 13 (d). SECURITIES EXCHANGE ACT - The Securities Exchange Act of 1934, as amended. SELLING AGENT - Any party, other than the Issuer, to the Distribution Agreement, including any party added to such agreement after its initial date of execution. The initial Selling Agents are: NationsBanc Montgomery Securities LLC, Credit Suisse First Boston Corporation, Lehman Brothers Inc. (including its affiliate, Lehman Commercial Paper Inc.), Merrill Lynch & Co., Merrill, Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co., Incorporated and Salomon Brothers Inc. SPECIAL ELECTION INTERVAL - A period during which, if so specified on the applicable Renewable Note, on the Interest Payment Date occurring in the last month of each such Special Election Interval after an Initial Renewal Date, the term of the Note may be extended to the Interest Payment Date occurring in the last month in a period equal to twice the Special Election Interval after the applicable Renewal Date, if the Holder of such Note elects to extend the term of the Note or any portion thereof as provided in such Note. SPECIAL ELECTION PERIOD - A period, if specified on the applicable Note, during which the Holder of such Note may elect to renew the term of the Note, or if provided in the applicable Note, any portion thereof, by delivering a notice to such effect to the Issuing and Paying Agent. SPECIFIED CURRENCY - The currency in which such Note is denominated if such currency is denominated in a composite currency, currency unit or a currency other than U.S. dollars. SPECIFIED CURRENCY NOTE - A Note, which pursuant to the terms specified thereon, is denominated in a Specified Currency. STATED MATURITY - As to any Note or any installment of Principal thereof or interest thereon, the date specified therein as the fixed date on which the Principal of such Note or such installment of Principal and interest is due and payable. TRANSFER AGENT - With respect to any Note issued by the Issuer, any Person appointed by the Issuer to exchange or transfer Notes issued by the Issuer. SECTION 2. Appointment of Agents. (a) Issuing and Paying Agent. The Issuer hereby appoints Bankers Trust Company, as Issuing and Paying Agent of the Issuer in respect to the Notes upon the terms and subject to the conditions herein set forth, and Bankers Trust Company hereby accepts such appointment. The Issuing and Paying Agent shall have the powers and 6 authority granted to and conferred upon it in the Notes and this Agreement and such further powers and authority to act on behalf of the Issuer as may be agreed upon by the Issuer and the Issuing and Paying Agent from time to time. All of the terms and provisions with respect to such powers and authority contained in the Notes are subject to and governed by the terms and provisions hereof. The Issuer, further appoints and authorizes Bankers Trust Company, as Issuing and Paying Agent, to act as its Issuing and Paying Agent in executing the Letters of Representations to be delivered to the Depositary, in substantially the forms set forth in Exhibit A hereto. The Issuing and Paying Agent shall at all times be a bank or trust company organized under the laws of the United States or any jurisdiction in the United States and authorized and empowered under such laws to fulfill and perform all the duties and obligations of the Issuing and Paying Agent hereunder. The Issuing and Paying Agent hereby represents that it is a corporation meeting the foregoing requirements and that it shall promptly notify the Issuer of any occurrence or event that renders it unable to continue to make the aforesaid representation. (b) Selling Agents. The Issuer has appointed NationsBanc Montgomery Securities LLC, Credit Suisse First Boston Corporation, Lehman Brothers Inc. (Including its affiliate Lehman Commercial Paper Inc.), Merrill Lynch & Co., Merrill, Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co., Incorporated and Salomon Brothers Inc, as Selling Agents for the Notes by and under the terms of the Distribution Agreement, under which the Issuer may, from time to time, appoint other Selling Agents. (c) Registrar. The Issuer hereby appoints Bankers Trust Company as Registrar of the Issuer in respect of the Notes upon the terms and subject to the conditions herein set forth, and Bankers Trust Company hereby accepts such appointment. The Registrar will keep the Register and otherwise act as Registrar in accordance with the terms of this Agreement. The Registrar will keep a record of all Notes, at its Principal Office or at such other location as it may choose and as to which it will give advance notice to the Issuer. The Registrar will include in such record a notation as to whether such Notes have been paid or cancelled or, in the case of mutilated, destroyed, stolen or lost Notes, whether such Notes have been replaced. In the case of the replacement of any of the Notes, the Registrar will keep a record of the Notes so replaced and the Notes issued in replacement thereof. (d) Transfer Agents. The Issuer (at its sole cost and expense) may appoint from time to time one or more Transfer Agents for one or more of the Notes. The Issuer shall solicit written acceptance of the appointment from any entity so appointed as 7 Transfer Agent. Such written acceptance shall be in a form satisfactory to the Issuing and Paying Agent and state that by the Transfer Agent's acceptance of such appointment, it agrees to act as a Transfer Agent pursuant to the terms and conditions of this Agreement. The Issuer hereby appoints Bankers Trust Company as the initial Transfer Agent for the Notes, and Bankers Trust Company hereby accepts such appointment. (e) Calculation Agents. The Issuing and Paying Agent is hereby designated as calculation agent (in such capacity, the "Calculation Agent") for the purpose of calculating the rate of interest on the Floating Rate Notes all in accordance with the terms of the Floating Rate Notes. The duties and responsibilities of the Calculation Agent shall be as specified herein, in the Administrative Procedures attached as Exhibit B hereto, and in the applicable Note. As promptly as practicable after each Interest Determination Date for a Floating Rate Note, the Calculation Agent will notify the Issuer thereof of the interest rate which will become effective on the next interest Reset Date (as defined in such Floating Rate Note). Upon the request of the Holder of a Floating Rate Note, the Calculation Agent will provide to such Holder the interest rate then in effect and, if determined, the interest rate which will become effective on the next Interest Reset Date with respect to such Floating Rate Note. The Issuer (at its sole cost and expense) may appoint from time to time one or more Calculation Agents for one or more of the Notes. The Issuer shall solicit written acceptance of the appointment from any entity so appointed as Calculation Agent. Such written acceptance shall be in a form satisfactory to the Issuing and Paying Agent and state that by the Calculation Agent's acceptance of such appointment, it agrees to act as a Calculation Agent pursuant to the terms and conditions of this Agreement. The Issuer hereby appoints Bankers Trust Company as the initial Calculation Agent for the Notes, and Bankers Trust Company hereby accepts such appointment. SECTION 3. The Notes. (a) Note Form; Signature. Except as otherwise provided in Section 3(h) hereof, each Note issued by the Issuer with the same original issue date and otherwise having identical terms shall be represented by a single note certificate (each a "Global Note"). Fixed Rate Notes will be substantially in the form of Exhibit C hereto, and Floating Rate Notes will be substantially in the form of Exhibit D hereto, provided that any Specified Currency Notes will be substantially in either such form with such changes as may be agreed upon by the Issuer and the Issuing and Paying Agent as provided in Section 11 hereof. The Notes may contain such insertions, omissions, substitutions, and other variations as the Issuer determines to be required or permitted by this Agreement and may have such letters, numbers, or other marks of identification and such legend or legends or endorsements placed thereon as any officer of the Issuer executing such Notes may determine to be necessary or appropriate, as evidenced by such officer's execution of 8 such Notes by manual or facsimile signature, including, without limitation, any legends or endorsements that may be required to comply with any law or with any rules or regulations pursuant thereto, or with any rules of any securities exchange on which the Notes may be listed or to conform to general usage. Any Global Note issued hereunder shall, in addition to the provisions contained in Exhibits C or D, hereto, as the case may be, bear a legend in substantially the following form: "This Note is a Global Note within the meaning of the Issuing and Paying Agency Agreement hereinafter referred to and is registered in the name of a Depositary or a nominee of a Depositary. This Note is exchangeable for Notes registered in the name of a person other than the Depositary or its nominee only in the limited circumstances described in the Issuing and Paying Agency Agreement and may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary." Furthermore, each Global Note issued hereunder to DTC or its nominee shall bear a legend in substantially the following form: "Unless this Note is presented by an authorized representative of The Depository Trust Company to the issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of CEDE & CO. or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, CEDE & CO., has an interest herein." The Issuer will from time to time and upon request furnish the Issuing and Paying Agent with an adequate supply of Certificated Notes, without coupons, serially numbered, which will have the Principal amount, date of issue, Stated Maturity Initial Redemption Date, if any, rate of interest (in the case of Fixed Rate Notes) or base rate, initial interest rate, spread and/or spread multiplier, if any, interest reset dates, index maturity and maximum and minimum interest rates, if any (in the case of Floating Rate Notes), and, in each case, the name and address of the Holder, and other applicable terms which may be specified with respect to such Notes in accordance with the Administrative Procedures left blank. Each Floating Rate Note will bear interest at a rate determined by reference to a base rate, which may be adjusted by a spread or multiplied by a spread multiplier. Each Floating Rate Note 9 will designate an applicable base rate. Such base rate shall be calculated by reference to an interest rate formula described in such Note. The interest rates borne by any particular Notes may vary as against the rates borne by any other Notes. Any such variations in interest rates with respect to particular Notes shall not affect the rates of interest borne by any other Notes issued hereunder. Each Note will be signed manually or by facsimile by an Authorized Representative included in Group I on Exhibit F hereto. The Notes will have a Stated Maturity of not less than (7) seven days from date of issue and will be issued in the respective orders of the serial numbers imprinted thereon. The Issuing and Paying Agent hereby agrees to hold such blank Notes in safekeeping in accordance with its customary practices and procedures. Notwithstanding the foregoing, any Global Note issued by the Issuer shall be exchangeable pursuant to this Section for Notes registered in the name of Persons other than the Depositary for such Note or its nominee only if (i) such Depositary notifies the Issuing and Paying Agent that it is unwilling or unable to continue as Depositary for such Global Note or if at any time such Depositary ceases to be a clearing agency registered under the Securities Exchange Act and in either such case a successor Depositary is not appointed by the Issuer within ninety (90) days, or (ii) the Issuer thereof executes and delivers to the Issuing and Paying Agent a written notification that such Global Note shall be so exchangeable or (iii) an Event of Default occurs with respect to such Global Note. Any Global Note that is exchangeable pursuant to the preceding sentence shall be exchangeable for Certificated Notes registered in such names as such Depositary shall direct. Notwithstanding any other provision in this Agreement, a Global Note may not be transferred except as a whole by the Depositary with respect to such Global Note to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary. As of the date hereof, the Issuer has authorized the issuance and sale of up to not more than $25,000,000,000 aggregate principal amount of Notes with maturities of 7 days or more. Subject to the last sentence of this paragraph, the maximum aggregate principal amount of Notes outstanding at any one time is limited to $25,000,000,000. In addition, subject to the last sentence of this paragraph, the aggregate principal amount of Notes having maturities of more than 270 days which may be issued throughout the term of the Issuing and Paying Agency Agreement is limited to $25,000,000,000. Notwithstanding the foregoing, if the Issuer authorizes the issuance of additional Notes and, to the extent necessary, registers such Notes with the Office of the Comptroller of the Currency (the "OCC") such additional Notes may be sold to or through the Agents pursuant to the terms of this Agreement, all as though the issuance of such Notes were authorized as of the date hereof. (b) Denominations. Unless otherwise indicated in the applicable Notes and the applicable Pricing Supplement except as provided in Section 3(h) and to the extent that the Issuer elects to issue Notes in definitive form, the Notes shall be issuable only in book-entry form, without coupons, in minimum denominations of $250,000 and integral multiples of $1,000 in excess thereof. 10 (c) Completion of Notes. Upon receipt of the information set forth in Section 5 (a), the Issuing and Paying Agent shall complete and authenticate each Note. (d) Date. The Issuing and Paying Agent will date each Note the date of its authentication. (e) Certificate of Authentication. Only Notes that bear thereon a certificate of authentication substantially in a form set forth below (a "Certificate of Authentication"), executed by the Issuing and Paying Agent by its manual signature, will be valid: Certificate of Authentication This is one of the Notes referred to in the within-mentioned Issuing and Paying Agency Agreement. Dated:________ BANKERS TRUST COMPANY as Issuing and Paying Agent By: _____________________________ Authorized Signatory (f) Original Issue Discount Notes. Each Original Issue Discount Note shall contain on its face a legend substantially in the form of Exhibit E hereto. (g) Custody of Notes. The Issuing and Paying Agent shall maintain in safe custody all blank Notes that the Issuer delivers to it and that it holds hereunder and shall complete and issue such Notes only in the terms hereof. (h) Certificated Notes. If at any time the Depositary notifies the Issuer or the Issuing and Paying Agent that it is unwilling or unable to continue to act as depositary for any of the Global Notes, or if at any time such Depositary ceases to be a clearing agency registered under the Securities Exchange Act and in either such case a successor Depositary is not appointed by the Issuer within ninety (90) days, the Issuer will execute and the Issuing and Paying Agent will, upon the receipt of procedures for certificated securities in form and substance satisfactory to the Issuer and the Issuing and Paying Agent and upon receipt of instructions in writing from the Issuer, authenticate and deliver to the Holder or the Holder's designee Notes of like tenor and terms in definitive form in an aggregate principal amount equal to the Global Notes then outstanding in exchange for such Global Notes. SECTION 4. Authorized Representatives. The Issuer hereby certifies that each person named in Exhibit F hereto and designated as affiliated with the Issuer is a duly Authorized Representative of the Issuer and that the signature set forth opposite such representative's name is 11 his or her true and genuine signature. The Issuing and Paying Agent shall be entitled to rely on the information set forth in Exhibit F for purposes of determining an Authorized Representative until such time as the Issuing and Paying Agent receives a subsequent certificate from the Issuer deleting or amending any of the information set forth therein. The Issuing and Paying Agent shall not have any responsibility to the Issuer to determine whether any signature on a Note purporting to be that of an Authorized Representative in Group I of Exhibit F with respect to the Issuer is genuine, so long as such signature resembles the specimen signature set forth in Group I of Exhibit F or in a subsequent certificate delivered to the Issuing and Paying Agent by the Issuer. Any Note bearing the signature of a person who is an Authorized Representative in Group I of Exhibit F with respect to the Issuer on the date he or she signs such Note shall be a binding obligation of the Issuer upon the completion and authentication thereof by the Issuing and Paying Agent, notwithstanding that such person shall have ceased to be an Authorized Representative on the date such Note is completed, authenticated or delivered by the Issuing and Paying Agent. SECTION 5. Completion, Authentication and Delivery of Notes. (a) The Issuing and Paying Agent may rely on such instructions if they are received by one of the duly Authorized Representatives of the Issuing and Paying Agent named in Exhibit G hereto or their successors, which may be named by the Issuing and Paying Agent (of which the Issuer shall be notified in writing), from time to time through the use of a facsimile transmission (confirmed by guaranteed delivery of overnight courier) from any person purporting to be any of the individuals included in Group II on Exhibit F hereto. Such instructions shall include the following (each term as used or defined in the related form of Note attached): 1. Principal Amount of the Note, CUSIP Number and, if applicable, the Specified Currency. 2. (a) Fixed Rate Notes: (i) Interest Rate, (ii) Interest Payment Dates, and (iii) Regular Record Dates. (b) Floating Rate Notes: (i) Base Rate or Rates, (ii) Initial Interest Rate, (iii) Spread and/or Spread Multiplier, if any, 12 (iv) Interest Reset Date or Dates, (v) Interest Reset Period, (vi) Interest Payment Dates, (vii) Regular Record Dates, (viii) Index Maturity, (ix) Maximum and Minimum Interest Rates, if any, and (x) Calculation Agent, if other than the Issuing and Paying Agent. 3. Price to public, if any, of the Note (or whether the Note is being offered at varying prices relating to prevailing market prices at time of resale as determined by the Selling Agent). 4. Trade date. 5. Original Issue Date. 6. Stated Maturity. 7. Redemption provisions, if any, including Initial Redemption Date, Initial Redemption Percentage, Annual Redemption Reduction Percentage, whether partial redemption is permitted and method of determining Notes to be redeemed. 8. Prepayment Option Date(s) and Prepayment Option Price(s). 9. Extension provisions, if any, including length of Extension Period(s), number of Extension Periods and Final Maturity Date. 10. Renewal terms, if any, including Special Election Interval and Special Election Period. 11. Net proceeds to the Issuer. 12. The Selling Agent's commission or underwriting discount and the Selling Agent's participant account at the Depositary for settlement. 13 13. Whether such Notes are being sold to the Selling Agent as principal or to an investor or other purchaser through the Selling Agent acting as agent for the Issuer, or through the Issuer itself. 14. Whether such Note is being issued as an Original Issue Discount Note and the terms thereof. 15. Such other information specified with respect to the Notes (whether by addendum, text to be included under "Other Provisions" on the face of such Note, or otherwise), including, with respect to any Specified Currency Note, provisions regarding the calculation of any interest or principal payments under such Note. (b) Upon receipt of the information set forth in subsection (a) above, the Issuing and Paying Agent will confirm by facsimile to the Issuer the principal amount of the Notes of the Issuer issued as of such date hereunder after giving effect to such transaction and to all other transactions of which the Issuer has given instructions to the Issuing and Paying Agent but which have not yet been settled. For purposes of monitoring the aggregate principal amount of Notes issued and/or outstanding at any time hereunder, the Issuing and Paying Agent shall determine the U.S. Dollar equivalent of the principal amount of each Original Issue Discount Note or series of Original Issue Discount Notes and each Specified Currency Note or series of Specified Currency Notes as follows: (i) the U.S. Dollar equivalent of Specified Currency Notes shall be determined by the Issuing and Paying Agent as of 2:30 P.M., London time, on the Original Issue Date for such Notes by reference to the spot rate for U.S. Dollars against the Specified Currency provided to the Issuing and Paying Agent by the Issuer or, if such spot rate is not so provided on a timely basis, by reference to the Issuing and Paying Agent's middle market spot rate for U.S. Dollars against the Specified Currency on the London Business Day immediately preceding the date on which the Issuing and Paying Agent receives the Issuer's instruction to issue the Notes. (ii) the principal amount of Original Issue Discount Notes and any other Notes issued at a discount shall be deemed to be (x) the principal amount received by the Issuer for the relevant issue or (y) in the case of a Specified Currency Note, the U.S. Dollar equivalent, determined in the manner specified in clause (i) above, of the principal amount received by the Issuer for the relevant issue. The Issuing and Paying Agent shall promptly notify the Issuer of each determination made as aforesaid. 14 (c) Upon receipt of such instructions, if such Notes are to be issued as one or more Global Notes, the Issuing and Paying Agent shall communicate to the Depositary and the Selling Agent through DTC's Participant Terminal System, a pending deposit message specifying the settlement information required in the Administrative Procedures. (d) Instructions regarding the completion of a Note must be received by the Issuing and Paying Agent not later than the time and date specified in the Administrative Procedures. SECTION 6. Procedure Upon Sale of the Notes. The Issuing and Paying Agent will upon reasonable written request, promptly deliver copies of such Global Notes (with any additional terms provided by the Issuer included thereon) to the appropriate Selling Agents in accordance with Section 5(c) hereof. SECTION 7. Payment of Interest; Actions on Days Other than Business Days. (a) Subject to the receipt of funds as provided in Section 12 hereof, interest payments will be made on the Notes on each Interest Payment Date and on the Stated Maturity thereof (or the date of Optional Redemption, if any) pursuant to the terms stated thereon. All such interest payments (other than interest due on the Stated Maturity, or on the date of Optional Redemption, if a Note is redeemed prior to its Stated Maturity) will be paid to the Holder of such Note at the close of business on the applicable Regular Record Date. Notwithstanding the foregoing, if a Note is dated between the Regular Record Date next preceding an Interest Payment Date and such Interest Payment Date, the first payment of interest on such Note will be made on the next succeeding Interest Payment Date following the next succeeding Regular Record Date, to the Holder on the Regular Record Date immediately succeeding such first Interest Payment Date, unless otherwise specified in the applicable Pricing Supplement. Interest will begin to accrue on the issue date and not from the previous Interest Payment Date. Unless otherwise specified on the face of the Note and in an applicable Pricing Supplement, interest on Fixed Rate Notes (including payments for partial periods) will be calculated on the basis of a 360-day year consisting of twelve 30-day months; provided, however, that if the term of such Fixed Rate Note is for a period from 7 days through and including one year, then interest payable on such Fixed Rate Note, if any, on each Interest Payment Date and on the Stated Maturity will be calculated on the basis of the actual number of calendar days from and including the last Interest Payment Date to which interest has been paid to, but excluding, such Interest Payment Date or Stated Maturity, as the case may be, divided by 360. Unless otherwise specified on the face of the Note and in an applicable Pricing Supplement, in the case of Floating Rate Notes, interest will be calculated and paid on the basis of the actual number of days since the preceding Interest Payment Date (or, if none, since the Original Issue Date) divided by 360 or, if the base rate is the Treasury Rate or CMT Rate, as defined in the applicable Note, by the actual number of days since the preceding Interest Payment Date (or, if none, since the Original Issue Date) . All interest on Certificated Notes (other than interest payable at Stated Maturity or upon any Optional 15 Redemption) will be paid by check of the Issuing and Paying Agent mailed by such Issuing and Paying Agent to the Holder as such Holders address is shown in the Register referred to in Section 15 on the applicable Regular Record Date, or to such other address in the United States as such Holder shall designate to the Issuing and Paying Agent in writing not later than the relevant Regular Record Date; provided, however, that a Holder of one million dollars ($1,000,000) or more in aggregate Principal amount of Certificated Notes (all of which have identical terms and tenor) shall be entitled to receive payments of interest (other than interest payable at maturity or upon redemption) by wire transfer of immediately available funds upon written request to the Issuing and Paying Agent not later than fifteen (15) calendar days prior to the applicable Payment Date. All interest payments on any Global Note (other than Interest due on the Stated Maturity or the Optional Redemption Date, if any) shall be paid by the transfer of immediately available funds to the Depositary. The Issuing and Paying Agent will withhold taxes, if any, on interest to the extent that it has been instructed in writing by the Issuer of the related Note that any taxes should be withheld. (b) Actions Due on Saturdays, Sundays and Holidays. If any date on which a payment, notice or other action required by this Agreement, the Administrative Procedures or the Note falls on any day other than a Business Day, then that action or payment need not be taken or made on such date, but may be taken or made on the next succeeding Business Day on which the Issuing and Paying Agent is open for business with the same force and effect as if made on such date. SECTION 8. Payment of Principal. Upon the Stated Maturity (or date of Optional Redemption, if any) of any Note, or on each Interest Payment Date and the Stated Maturity, in the case of an Amortizing Note, and upon presentation and surrender of any Note on or after the Stated Maturity (or the date of Optional Redemption, if any), the Issuing and Paying Agent shall pay, subject to the receipt of funds as provided in Section 12 hereof, the Principal amount of the Note together with accrued interest due on the Stated Maturity (or the date of Optional Redemption, if any), either (i) by separate wire transfer of immediately available funds to such account at a bank in The City of New York (or other bank consented to by the Issuer of the related Note) as the Holder of such Note shall have designated in writing to the Issuing and Paying Agent at least 15 days prior to such Principal Payment Date and if such Note is a Global Note, to the Depositary, or (ii) by check of the Issuing and Paying Agent payable to the, order of the Holder of the Note or its properly designated assignee or custodian. Upon payment in full, the Issuing and Paying Agent will cancel the Note and remit it directly to the Issuer thereof. SECTION 9. Designation of Accounts to Receive Payment. In the event that Notes are issued in certificated form, a bank account to receive payments due under a certificated Note may be designated to the Issuing and Paying Agent to receive payments of interest and Principal under Sections 7 and 8 hereof either (i) by an Authorized Representative of the Issuer included in Group II of Exhibit F hereto in the authentication instructions given by it to the Issuing and Paying Agent under Section 5(a) hereof in respect of particular Notes, or (ii) in the event that the authentication instructions make no designation, or that the Holder wishes to change a designation previously 16 made, by written notice from the Holder to the Issuing and Paying Agent. Such written notice must be provided to the Issuing and Paying Agent not later than fifteen (15) days prior to any Interest Payment Date, Principal Payment, or Payment Date, as the case may be. SECTION 10. Information Regarding Amounts Due. The Issuing and Paying Agent shall provide to the Issuer, at least five (5) Business Days before each Interest Payment Date, a list of interest payments to be made on the following Interest Payment Date for each Note and in total. The Issuing and Paying Agent will provide to the Issuer by the fifteenth day of each month a list of the Principal and interest to be paid on Notes maturing in the next succeeding month. SECTION 11. Specified Currency Notes. Prior to the issuance of any Specified Currency Note, the Issuer thereof shall provide to the Issuing and Paying Agent a form of such Note, which form shall be in substantially the form of Exhibit C or D hereto unless otherwise provided in the applicable Pricing Supplement, with such changes and additions as may be reasonably satisfactory to the Issuing and Paying Agent. SECTION 12. Deposit of Funds. The Issuer shall, prior to 11:00 a.m., New York City time, on each Interest Payment Date pay to the Issuing and Paying Agent an amount in immediately available funds sufficient to pay all interest due on Notes issued by the Issuer on such Interest Payment Date and shall, prior to 11:00 a.m., New York City time, on the Stated Maturity (or any date of Optional Redemption, if any) of any Note issued by the Issuer, pay to the Issuing and Paying Agent an amount in immediately available funds sufficient to pay the Principal of any such Note, and interest accrued to the Stated Maturity (or the date of Optional Redemption, as the case may be). SECTION 13. Optional Redemption. (a) Optional Redemption. In accordance with and subject to the terms and conditions provided in the applicable Note and Pricing Supplement, the Issuer may at its option redeem a Note issued by it in whole or from time to time in part (subject to the requirement that the principal amount of such Note after such redemption, if such Note is redeemed in part, (unless otherwise specified in a Pricing Supplement) be not less than $250,000 or any integral multiple of $1,000 in excess thereof, such minimum denomination, the "Authorized Denomination") on or after the date designated in such Note as the Initial Redemption Date at the applicable Redemption Price, in each case, with accrued and unpaid interest to the date of redemption. Unless otherwise specified in an applicable Pricing Supplement and in the Note, the Issuer may exercise such option by giving to the Holder thereof a notice of such redemption at least thirty (30) but not more than sixty (60) days prior to the date of redemption. The Issuer shall notify the Issuing and Paying Agent of its election to redeem any Note at least forty-five (45) days prior to the date of redemption (unless a shorter period is satisfactory to the Issuing and Paying Agent). In the event of redemption of the Note in part only, a new Note or Notes of like tenor and terms for the unredeemed portion thereof shall be issued in the name of the Holder thereof upon the cancellation thereof in accordance with the terms of this 17 Agreement. Unless otherwise provided in the applicable Note, if less than all of the Notes with like tenor and terms to such Note are to be redeemed, the Notes to be redeemed shall be selected by the Issuing and Paying Agent by pro rata, by lot or by such method as shall be agreed upon by the Issuing and Paying Agent and the Issuer as being fair and appropriate. (b) Optional Repayment. In accordance with and subject to the terms and conditions provided in the applicable Note and Pricing Supplement, such Note will be repayable prior to its Stated Maturity at the option of the Holder on the Prepayment Option Dates and at the Prepayment Option Prices provided in the applicable Note together with accrued interest to such date. Unless otherwise provided in the applicable Note and Pricing Supplement, in order for the Note to be repaid, the Issuer (or the Issuing and Paying Agent, on behalf of the Issuer) must receive, at least thirty (30) but not more than forty-five (45) days prior to an Prepayment Option Date, the Note and the form, entitled "Option to Elect Repayment" included with such Note at the time of its issue, duly completed. Exercise of this repayment option shall be irrevocable, except as otherwise provided under Section 13 (c) below. If so provided in the applicable Note, the repayment option may be exercised by the Holder of such Note for less than the aggregate principal amount of the Note then outstanding provided that the principal amount of the Note remaining outstanding after repayment is in an Authorized Denomination. Upon such partial repayment the Note shall be cancelled and a new Note or Notes of like tenor and terms for the remaining principal amount thereof shall be issued in the name of the Holder. (c) Optional Extension of Maturity. If so specified in the applicable Note and Pricing Supplement, the Stated Maturity of such Note may be extended at the option of the Issuer, in the manner set forth below (unless otherwise provided on the face thereof), for that number of periods each of such length as provided in the applicable Note (each an "Extension Period") up to but not beyond the Final Maturity Date set forth in such Note. Unless otherwise specified in the Applicable Note and Pricing Supplement, the Issuer may exercise such option by notifying the Issuing and Paying Agent of such exercise at least fifty (50) but no more than sixty (60) days prior to the Stated Maturity in effect prior to such exercise (the "Original Stated Maturity") . If the Issuer exercises such option, the Issuing and Paying Agent will mail (by first class mail, postage prepaid) to the Holder of the Note no later than forty (40) days prior to the Original Stated Maturity a notice (the "Extension Notice") relating to such Extension Period, setting forth (i) the election of the Issuer to extend the Original Stated Maturity, (ii) the new Stated Maturity (which shall then be considered the Stated Maturity for all purposes of the Note) , (iii) spread or spread multiplier applicable to the Extension Period, and (iv) the provisions, if any, for redemption during such Extension Period. Upon the Issuing and Paying Agent's transmittal of the Extension Notice, the Original Stated Maturity of the Note shall be extended automatically, and, except as modified by the Extension Notice and as described in the next paragraph, such Note will have the same terms as prior to the transmittal of such Extension Notice. 18 Notwithstanding the foregoing unless otherwise provided in the Note and applicable Pricing Supplement, not later than twenty (20) days prior to the Original Stated Maturity of such Note the Issuer may, at its option, in the case of a Fixed Rate Note, revoke the interest rate provided for in the Extension Notice for the Extension Period and establish an interest rate that is higher than the interest rate provided for in the Extension Notice for the Extension Period, or in the case of a Floating Rate Note, revoke the spread or spread multiplier provided for in the Extension Notice for the Extension Period by causing the Issuing and Paying Agent to transmit notice of such higher interest rate, or higher spread or spread multiplier, as the case may be, to the Holder of such Note. Such notice shall be irrevocable. All Notes with respect to which the Stated Maturity is extended and with respect to which the Holders of such Notes have not tendered such Notes for repayment (or have validly revoked any such tender) pursuant to the succeeding paragraph will bear such higher interest rate, or higher spread or spread multiplier, as the case may be, for the Extension Period. If the Issuer elects to extend the Stated Maturity of the Note, the Holder thereof will have the option to elect repayment of the Note by the Issuer thereof on the Original Stated Maturity at a price equal to the aggregate principal amount thereof outstanding plus interest accrued to such date. In order to obtain such repayment, the Holder thereof must follow the procedures set forth in Section 13(b) for optional repayment except that the period for delivery of the Note or notification to the Issuing and Paying Agent shall be at least twenty-five (25) but not more than thirty-five (35) days prior to the Original Stated Maturity and except that, if the Holder thereof has tendered the Note for repayment pursuant to an Extension Notice, such Holder may, by written notice to the Issuing and Paying Agent, revoke such tender for repayment until the close of business on the tenth day prior to the Original Stated Maturity. (d) Optional Renewal. If so provided in the applicable Note and Pricing Supplement, such Note may be renewed by the Holder of the Note on an Interest Payment Date (provided in the applicable Note) occurring in or prior to the twelfth month following the Original Issue Date (the "Initial Maturity Date") in accordance with the procedures described below Unless a Special Election Interval is provided in the applicable Note, on the Interest Payment Date occurring in the sixth month prior to the Initial Maturity Date (as provided in the applicable Note) of a Renewable Note (the "Initial Renewal Date") and on the Interest Payment Date occurring in each sixth month (or in the last month of each Special Election Interval) after such Initial Renewal Date (each, together with the Initial Renewal Date, a "Renewal Date"), the term of the Note may be extended to the Interest Payment Date occurring in the twelfth month (or, if a Special Election Interval is specified the last month in a period equal to twice the Special Election Interval) after such Renewal Date, if the Holder of such Note elects to extend the term of the Note or any portion thereof as provided below. If the Holder of the Note does not elect to extend the term of any portion of the principal amount of such Note during the specified period prior to any Renewal Date, such portion will become due and payable on 19 the Interest Payment Date occurring in the sixth month (or the last month in the Special Election Interval) after such Renewal Date (the "New Maturity Date"). A Holder of such Note may elect to renew the term of the Note, or if provided in the applicable Note and Pricing Supplement, any portion constituting an Authorized Denomination thereof, by delivering a notice to such effect to the Issuing and Paying Agent not less than fifteen (15) nor more than thirty (30) days prior to such Renewal Date (unless a different Special Election Period is provided in the applicable Note). Such election will be irrevocable and will be binding upon each subsequent Holder of the Note. An election to renew the term of such Note may be exercised with respect to less than the entire principal amount of the Note only if notice is provided as provided in the applicable Note and only in such principal amount, or any integral multiple in excess thereof, as specified in such notice. Notwithstanding the foregoing, the term of such Note may not be extended beyond the maturity provided in the applicable Note. If the Holder of such Note does not elect to renew the term of the Note, the Note must be presented to the Issuing and Paying Agent (or any duly appointed paying agent) and, if the Note is issued in definitive form, as soon as practicable following receipt of the Note, the Issuing and Paying Agent (or any duly appointed paying agent) shall issue in exchange herefor in the name of the Holder (i) a Note, in a principal amount equal to the principal amount of such Note for which no election to renew the term thereof was exercised, with terms identical to those specified on the Note (except that such Note shall have a fixed, nonrenewable maturity on the New Maturity Date) and (ii) if an election to renew is made with respect to less than the full principal amount of the Note, a replacement Note, in a principal amount equal to the principal amount of such exchanged Note for which the election to renew was made, with terms identical to such exchanged Note. SECTION 14. Events of Default. Unless otherwise specified in the applicable Note and Pricing Supplement, the following will constitute "Events of Default" and the only Events of Default with respect to each Note: (a) default in the payment of any interest upon such Note when due, which continues for thirty (30) days; (b) default in the payment of any principal of or premium, if any, upon such Note when due; (c) default in the performance of any covenant or agreement of the Issuer thereof contained in such Note which, unless otherwise specified therein, continues for 90 days; (d) the appointment of a conservator, receiver, liquidator or similar official for the Issuer thereof or for all or substantially all of its property, or the taking by the Issuer of any action to seek relief under any applicable insolvency or reorganization law. If an Event of Default with respect to a Global Note shall occur, the Issuer thereof shall promptly issue Certificated Notes in exchange for such Global Note and the remedies provided in such Global Note for any such Event of Default will be exercisable only after such exchange has occurred, and only by the Holders of such Certificated Notes. The Holder of each such 20 Certificated Note will itself be solely and entirely responsible for the exercise of any remedies provided therein. If an Event of Default with respect to a Certificated Note shall occur and be continuing with respect thereto, the Holder thereof may: (i) by written notice to the Issuing and Paying Agent declare the entire outstanding principal amount thereof, together with any unpaid interest and premium accrued thereon, to be immediately due and payable; (ii) institute a judicial proceeding of the enforcement of the terms thereof including the collection of all sums due and unpaid thereunder, prosecute such proceeding to judgment or final decree, and enforce the same against the Issuer thereof and collect monies adjudged or decreed to be payable in the manner provided by law out of the property of the Issuer thereof; and (iii) take such other action at law or in equity as may appear necessary or desirable to collect and enforce such Certificated Note; provided, however, that in the event that such Note is an Original Issue Discount Note, unless otherwise specified in such Note, the amount of principal that becomes due and payable upon such declaration shall be equal to the Amortized Face Amount as defined therein, and provided further, that the Holder of a Certificated Note may waive any Event of Default that occurs with respect thereto. SECTION 15. Registration; Transfer. (a) The Registrar shall maintain a Register in which it shall register the names, addresses and taxpayer identification numbers of the Holders of the Notes and shall register the transfer of Notes. (b) Upon surrender for registration of transfer of any Note to the Registrar or any Transfer Agent, the Issuer shall execute, and the Issuing and Paying Agent shall complete, authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes, of any Authorized Denominations and having identical terms and provisions and for a like aggregate principal amount. (c) At the option of the Holder of a certificated Note, certificated Notes may be exchanged for other certificated Notes of any Authorized Denominations and having identical terms and provisions and for a like aggregate principal amount, upon surrender of the Notes to be exchanged at the Registrar or any Transfer Agent. Whenever any certificated Notes are so surrendered for exchange, the Issuer thereof shall execute, and the Issuing and Paying Agent shall complete, authenticate and deliver, the certificated Notes which the Holder of the certificated Note making the exchange is entitled to receive. Each new Note issued upon presentment of any Note for registration of transfer or exchange shall be issued as of the date of its authentication. Except as provided herein or in the applicable Pricing Supplement and Note, owners of beneficial interests in a Global Note representing Book Entry Notes registered in their names, will not receive or be entitled to receive physical delivery of Certificated Notes and will not be considered the owners or Holders thereof under this Agreement. (d) Notwithstanding the foregoing neither the Registrar or any Transfer Agent shall register the transfer of or exchange (i) any Note that has been called for redemption 21 in whole or in part, except the unredeemed portion of Notes being redeemed in part, (ii) any Note during the period beginning at the opening of business 15 days before the mailing of a notice of such redemption and ending at the close of business on the date of such mailing, or (iii) any Global Note in violation of the legend contained on the face of such Global Note. (e) All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits as the Notes surrendered upon such registration of transfer or exchange. (f) Every Note presented or surrendered for registration of transfer or for exchange shall be duly endorsed, or be accompanied by a written instrument of transfer with such evidence of due authorization and guaranty of signature as may reasonably be required by the Registrar or any Transfer Agent, as applicable, in form satisfactory to either of them, duly executed by the Holder thereof or his attorney duly authorized in writing. (g) No service charge shall be made to a Holder of Notes for any transfer or exchange of Notes, but the Issuer may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. SECTION 16. Persons Deemed Owners. Prior to due presentment of a Note for registration of transfer, the Issuer, the Issuing and Paying Agent and any agent of the Issuer or the Issuing and Paying Agent may treat the Holder as the owner of such Note for the purpose of receiving payment of Principal of, interest and premium, if any, on such Note and for all other purposes whatsoever, whether or not such Note be overdue, and neither the Issuer, the Issuing and Paying Agent nor any agent of the Issuer or the Issuing and Paying Agent shall be affected by notice to the contrary. SECTION 17. Mutilated, Lost, Stolen or Destroyed Notes. In case any Note shall become mutilated, destroyed, lost or stolen, and upon the satisfaction by the applicant of the requirements of this Section 17 for a substituted Note, the Issuer shall execute, and upon its written request the Issuing and Paying Agent shall authenticate and deliver, a new Note having identical terms and provisions and having a number not contemporaneously outstanding, in exchange and substitution for the mutilated Note or in lieu of any substitution for the Note destroyed, lost or stolen. In the case of loss, theft or destruction, the applicant for a substituted Note shall furnish to the Issuer and to the Issuing and Paying Agent such security or indemnity as may be required by them to save each of them harmless. Such applicant shall also furnish to the Issuer and to the Issuing and Paying Agent evidence to their satisfaction of the destruction, loss or theft of such Note and of the ownership thereof. In the case of mutilation, the applicant for a substituted Note shall surrender such mutilated Note to the Issuer or to the Issuing and Paying Agent for cancellation thereof. The Issuing and Paying Agent may authenticate any such substituted Note and deliver the same upon the written request or authorization of any Authorized Representative. Upon the issuance of any substituted Note, the Issuer may require the payment of a sum sufficient to cover any expense connected therewith. In case any Note which has matured 22 or is about to mature shall become mutilated or be destroyed, lost or stolen, the Issuer may, instead of issuing a substituted Note, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated Note) if the applicant for such payment shall furnish the Issuer and the Issuing and Paying Agent with such security or indemnity as may be required by them to save each of them harmless, and, in the case of destruction, loss or theft, evidence to the satisfaction of the Issuer of the destruction, loss or theft of such Note and of the ownership thereof. All applications under this Section shall be processed by the Issuing and Paying Agent. SECTION 18. Return of Unclaimed Funds. Any money deposited with the Issuing and Paying Agent and remaining unclaimed for two (2) years after the date upon which the last payment of principal of or interest on any Note to which such deposit relates shall have become due and payable, shall be repaid to the Issuer of such Note by the Issuing and Paying Agent on written demand, and the Holder of any Note to which such deposit related entitled to receive payment shall thereafter look only to the Issuer for the payment thereof and all liability of the Issuing and Paying Agent with respect to such money shall thereupon cease. SECTION 19. Amendment or Supplement. The Issuer and the Issuing and Paying Agent may modify, amend or supplement this Agreement without the consent of any Holder. In addition, the Issuer may modify, amend or supplement the terms and conditions of the Notes, without the consent of any Holder thereof: (i) to evidence succession of another party to the Issuer, and such party's assumption of the Issuer's obligations under the Notes, upon the occurrence of a merger or consolidation, or transfer, sale or lease of assets as described below; (ii) to add additional covenants, restrictions or conditions for the protection of the Holder thereof; (iii) to cure ambiguities in the Notes, or correct defects or inconsistencies in the provisions thereof; (iv) to reflect the replacement of the Issuing and Paying Agent, or the assumption, by the Issuer or a substitute Issuing and Paying Agent of some or all of the Issuing and Paying Agent's or Calculation Agent's responsibilities under this Agreement; (v) to evidence the replacement or change of address of the Depositary; (vi) in the case of any extendible, redeemable, prepayable, amortizing or indexed amortizing Note, to reduce the principal amount thereof to reflect the payment, prepayment and/or redemption of a portion of the outstanding principal amount thereof; (vii) in the case of any extendible, renewable or indexed amortizing Note, to reflect any change in the maturity date thereof in accordance with the terms thereof; or (viii) to reflect the issuance in exchange therefor, in accordance with the terms thereof, of one or more Certificated Notes. However, the Notes may not be modified or amended without the express written consent of the registered Holder to: (i) change the Stated Maturity, except in the case of an extendible, renewable or indexed amortizing note as provided therein; (ii) extend the time of payment for the premium, if any, or interest on the Note, except in the case of an extendible, renewable or indexed amortizing note as provided therein; (iii) change the coin or currency in which the principal of, premium, if any, or interest on the Note is payable; (iv) reduce the principal amount thereof or the interest rate thereon, except in the case of an extendible, prepayable, redeemable, amortizing or indexed Note as provided therein; (v) change the method of payment to other than wire transfer in immediately available funds; (vi) impair the right of the Holder thereof to institute suit for the enforcement of payments of principal of, premium, if any, or interest or other amounts on the Note; (vii) change any Note's definition of "Event of Default" or otherwise eliminate or impair 23 any remedy available thereunder upon the occurrence of any Event of Default (as defined in such Note) ; or (viii) modify the provisions therein governing the amendment thereof. Notes authenticated and delivered after the execution of any agreement modifying, amending or supplementing this Agreement or the Notes may bear a notation in form approved by the Issuer as to any matter provided for in such modification, amendment or supplement to this Agreement or the Notes. New Notes so modified as to conform, in the opinion of the Issuer, to any provisions contained in any such modification, amendment or supplement may be prepared by the Issuer, authenticated by the Issuing and Paying Agent (or any Authenticating Agent) and delivered in exchange for Outstanding Notes. The Issuer may not consolidate or merge with or into any other person, or convey, transfer or lease its properties and assets substantially as an entirety to any person, unless (i) the surviving entity in such consolidation or merger, or the person that acquires by conveyance or transfer, or that leases, the properties and assets of the Issuer substantially as an entirety, shall be a bank, corporation or partnership organized and validly existing under the laws of the United States, any State thereof or the District of Columbia, and shall expressly assume the due and punctual payment of the principal of, premium, if any, and interest on the Notes issued by the Issuer, and the performance or observance of every provision of the Notes on the part of the Issuer to be performed or observed; and (ii) immediately after giving effect to such transaction, no Event of Default with respect to the Issuer, and no event which, after notice or the lapse of time or both, would become an Event of Default with respect to the Issuer, shall have happened and be continuing. If this Agreement is amended or modified pursuant to an agreement by the parties hereto pursuant to this Section 19, the Issuing and Paying Agent may require, and shall be fully protected in relying upon, an opinion of counsel, which opinion may be rendered by counsel to the Issuer, stating that the execution of such amendment or modification is authorized or permitted by this Agreement, and that such amendment or modification constitutes the legal, valid and binding obligation of the Issuer enforceable in accordance with its terms and subject to customary exceptions. SECTION 20. Resignation or Removal of Agents; Appointment of Successors to Agents. (a) Resignation or Removal of Agent. Any Agent may at any time resign as such by giving written notice to the Issuer and, except in the case of the resignation of the Issuing and Paying Agent, to the Issuing and Paying Agent of such intention on its part, specifying the date on which its desired resignation shall become effective; provided that such date shall not be less than thirty (30) days after the date on which such notice is given unless the Issuer agrees to accept less notice. 24 The Issuer may remove any Agent with respect to Notes issued by the Issuer at any time by filing with it an instrument in writing signed by or on behalf of the Issuer and specifying such removal and the date when it shall become effective. The resignation or removal of an Agent with respect to Notes issued by the Issuer shall become effective on the date set forth in the notice thereof and shall only be effective with respect to the Issuer and Notes issued by the Issuer, except that any resignation or removal of the Issuing and Paying Agent or the Registrar shall take effect upon the Issuer's, appointment, as hereinafter provided, of a successor Issuing and Paying Agent or Registrar, as the case may be, and such Agent's acceptance of such appointment; provided, that if the Issuer has not appointed a replacement Agent within 30 days after any such removal or replacement, the affected Agent (at the expense of the Issuer) may petition any court of competent jurisdiction for the appointment of a successor Agent. (b) Appointment of Successor to Agent. In case at any time the Issuing and Paying Agent or the Registrar becomes incapable of acting, or is adjudged bankrupt or insolvent, or files a petition for corporate reorganization under any applicable federal, state, or foreign bankruptcy, insolvency, or similar law or makes an assignment for the benefit of its creditors, or consents to the appointment of a receiver, custodian, or other similar official of all or substantially all of its property, or admits in writing its inability to pay or meet its debts as they mature, or if a receiver, custodian, or other similar official of it or of all or substantially all of its property is appointed, or if an order of any court is entered for relief against it under the provisions of any applicable federal, state or foreign bankruptcy, insolvency or similar law, or if any public officer takes charge or control of any such Agent, or of its property or affairs, for the purpose of rehabilitation, conservation or liquidation, such Agent shall promptly notify the Issuer and the Issuing and Paying Agent, in writing, of the occurrence of such event. Either (i) following receipt of notice of resignation from, (ii) upon the Issuer's removal of, or (iii) following the Issuer's receipt of the notice referred to in the first paragraph of this Section 20(b) from, the Issuing and Paying Agent or the Registrar, the Issuer shall appoint a successor to such Agent by an instrument in writing filed with the Issuing and Paying Agent (or its successor). Upon the appointment as aforesaid of a successor Issuing and Paying Agent or Registrar and acceptance by such successor of such appointment, the Issuing and Paying Agent or Registrar hereunder so superseded shall cease to be such Issuing and Paying Agent or Registrar hereunder. (c) Successor of Agent. Any successor Issuing and Paying Agent or Registrar appointed hereunder shall execute, acknowledge, and deliver to its predecessor and to the Issuer an instrument accepting such appointment hereunder, and thereupon such successor Issuing and Paying Agent or Registrar without any further act, deed or conveyance, shall become vested with all the authority, rights, powers, trusts, immunities, duties, and obligations of such predecessor, with like effect as if originally named as such Issuing and Paying Agent or Registrar hereunder. Such predecessor, upon payment of any amount 25 then payable to it pursuant to Section 24, shall thereupon become obligated to transfer, deliver and pay over, and such successor Issuing and Paying Agent or Registrar shall be entitled to receive, all money, securities and other property on deposit with or held by such predecessor as such Issuing and Paying Agent or Registrar hereunder. (d) Merger, Etc. of Agent. Any corporation into which any Agent hereunder may be merged, or converted, or any corporation with which any Agent may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which any Agent shall be a party, or a corporation to which any Agent shall sell or otherwise transfer all or substantially all of the assets and business of such Agent shall be the successor to such Agent under this Agreement (provided that it shall be qualified as aforesaid) without the execution or filing of any paper or any further act on the part of any of the parties hereto. Each Agent will advise the Issuer promptly after any public announcement of a proposal by such Agent to enter into any such transaction. (e) Change in Duties of an Agent. The Issuer may vary the appointment of any Agent other than the Issuing and Paying Agent. (f) Additional Agents. The Issuer may from time to time appoint a paying agent for one or more Notes. In the event that (i) the Issuing and Paying Agent shall be removed or resign and any successor thereto shall not be located in The City of New York or (ii) the Issuing and Paying Agent shall cease to maintain an office in The City of New York at which amounts due on the Notes are payable, then in either such case the Issuer, with respect to Notes issued by it, shall appoint a paying agent with an office in The City of New York at which such Notes may be paid. SECTION 21. Reliance on Instructions. The Issuing and Paying Agent shall incur no liability to the Issuer in acting hereunder upon instructions contemplated hereby which the Issuing and Paying Agent believed in good faith to have been properly given. In the event a discrepancy exists between the instructions as originally received by the Issuing and Paying Agent and any subsequent written confirmation thereof, such original instructions will be deemed controlling provided the Issuing and Paying Agent gives notice to the Issuer of such discrepancy promptly upon receipt of such written confirmation. SECTION 22. Cancellation of Unissued Notes. Promptly upon the written request of the Issuer, the Issuing and Paying Agent shall cancel and return to the Issuer all unissued Notes of the Issuer in its possession. SECTION 23. Representation and Warranties of the Issuer; Instructions by Certificate. (a) Each instruction given to the Issuing and Paying Agent in accordance with Section 5 hereof shall constitute a representation and warranty to the Issuing and Paying Agent by the Issuer that the issuance and delivery of the Notes is in accordance with the terms and conditions described in the Offering Circular and the applicable Pricing 26 Supplement, have been duly and validly authorized by the Issuer and, when completed, authenticated and delivered pursuant hereto, the Notes will constitute the valid and legally binding obligations of the Issuer enforceable against the Issuer in accordance with its terms. (b) Any instruction given by the Issuer to the Issuing and Paying Agent under this Agreement shall be in the form of an Officer's Certificate. For the purposes of this Agreement, "Officer's Certificate" means a certificate signed by an Authorized Representative and delivered to the Issuing and Paying Agent. SECTION 24. Fees. For their services under this Agreement, the Agents, including the Issuing and Paying Agent, shall be entitled to compensation, as shall be mutually agreed upon in writing between each such Agent and the Issuer from time to time and the Issuer agrees to reimburse the Issuing and Paying Agent for all reasonable out of pocket disbursements and advances made or incurred by the Issuing and Paying Agent incurred without negligence or willful misconduct. SECTION 25. Notices. (a) All communications by or on behalf of the Issuer relating to the completion, delivery or payment of the Notes are to be directed to the Corporate Trust Agency Group of the Issuing and Paying Agent, Four Albany Street, 4th floor, New York, New York 10006, Attention: Corporate Trust and Agency Group (or such other department or division as the Issuing and Paying Agent shall specify in writing to the Issuer). The Issuer will send all Notes to be completed and delivered by the Issuing and Paying Agent to such Corporate Trust and Agency Group (or such other department or division as the Issuing and Paying Agent shall specify in writing to the Issuer). The Issuing and Paying Agent will, upon written request, advise the Issuer from time to time of the individuals generally responsible for the administration of this Agreement. (b) Notices and other communications hereunder shall (except to the extent otherwise expressly provided) be in writing and shall be addressed as follows, or to such other address as the party receiving such notice shall have previously specified: If to the Issuer: NationsBank, N.A. NationsBank Corporate Center 100 North Tryon Street 6th Floor, NC1-007-06-07 Charlotte, North Carolina 28255 Telephone: (704) 388-2375 Telecopier:(704) 386-9946 Attention: James T. Houghton 27 With copies to: NationsBank Corporation NationsBank Corporate Center Legal Department, 20th Floor, NC1-007-20-01 Charlotte, North Carolina 28255 Telephone: (704) 386-9036 Telecopier: (704) 386-6453 Attention: Jacqueline Jarvis Jones and Smith Helms Mulliss & Moore, L.L.P. 201 North Tryon Street Charlotte, North Carolina 28202 Telephone: (704) 343-2229 Telecopier: (704) 334-8467 Attention: Robert M. Donlon If to the Issuing and Paying Agent: Bankers Trust Company Four Albany Street, 4th floor, New York, New York 10006 Telephone: (212) 250-6161 Telecopier:(212) 250-6961/6392 Attention: Corporate Trust and Agency Group with a copy to: Kramer, Levin, Naftalis & Frankel 919 Third Avenue New York, New York 10022 Telephone: (212) 715-9392 Telecopies: (212) 715-8000 Attention: Michele D. Ross, Esq. SECTION 26. Information Furnished by the Issuing and Paying Agent. Upon the reasonable request of the Issuer and from time to time, the Issuing and Paying Agent shall promptly provide the Issuer with information with respect to Notes issued by it hereunder to the extent such information is reasonably available. 28 SECTION 27. Liability. Neither the Issuing and Paying Agent nor its officers or employees shall be liable to the Issuer for any act or omission hereunder except in the case of negligence or willful misconduct. The duties and obligations of the Issuing and Paying Agent, its officers and employees shall be determined by the express provisions of this Agreement and they shall not be liable except for the negligent performance of such duties and obligations as are specifically set forth herein and no implied covenants shall be read into this Agreement against them. Neither the Issuing and Paying Agent nor its officers shall be required to ascertain whether any issuance or sale of Notes (or any amendment or termination of this Agreement) is in compliance with any other agreement to which the Issuer is a party (whether or not any of the Agents is also a party to such other agreement). SECTION 28. Additional Responsibilities; Attorneys Fees. (a) If the Issuer shall ask the Issuing and Paying Agent to perform any duties not specifically set forth in the Agreement as duties of the Issuing and Paying Agent (the "Additional Responsibilities") and the Issuing and Paying Agent chooses to perform such Additional Responsibilities, the Issuing and Paying Agent shall be held to the same standard of care and shall be entitled to all the protective provisions (including, but not limited to, indemnification) set forth herein. (b) In the event the Issuer shall default under any of the provisions or obligations of this Agreement, the Notes or any amendment, supplement or modification related hereto, affecting the rights or duties of the Issuing and Paying Agent, and the Issuing and Paying Agent shall employ attorneys or incur other expenses for the enforcement of performance or observance of any such obligation or agreement, the Issuer agrees that, in the absence of negligence or willful misconduct on the part of the Issuing and Paying Agent, it will on demand therefore pay to the Issuing and Paying Agent the reasonable fees of such attorneys and such other expenses incurred by the Issuing and Paying Agent. SECTION 29. Transfer of Notes and Moneys. (a) The Issuing and Paying Agent shall hold all Certificated Notes delivered to it for payment solely for the benefit of the respective Holders of the Notes which shall have so delivered such Notes until moneys representing the payment for such Notes shall have been delivered to or for the account of or to the order of such Holders. (b) The Issuing and Paying Agent shall hold all moneys delivered to it pursuant to this Agreement for the payment of Certificated Notes in trust solely for the benefit of the person or entity which shall have so delivered such moneys until such Notes shall have been delivered to or for the account of such person or entity, but such moneys need not be segregated from other funds except to the extent required by law. 29 (c) The Issuing and Paying Agent shall only make such payments called for under this Agreement from funds transferred to it for payment pursuant to this Agreement which funds are immediately available and on deposit in an appropriate account maintained by the Issuing and Paying Agent in The City of New York. (d) Under no circumstances shall the Issuing and Paying Agent be obligated to expend any of its own funds in connection with the performance of its duties hereunder. (e) The Issuing and Paying Agent may become a purchaser, holder, transferor or otherwise own, hold or transfer any Notes and may commence or join in any action which a Holder is entitled to take without any conflict with its responsibilities pursuant to this Agreement. (f) The Issuing and Paying Agent shall not be required to invest any moneys delivered to it. (g) The Issuing and Paying Agent shall have no liability for interest on any moneys received from the Issuer hereunder. (h) The Issuing and Paying Agent shall not be responsible for the correctness of any recital in the Notes or in any offering materials and makes no representations as to the validity of the Notes and shall incur no responsibility in respect thereto. (i) The Issuing and Paying Agent shall be protected in acting upon any notice, order, requisition, request, consent, certificate, order, opinion (including an opinion of counsel), affidavit, letter, telegram or other paper or document in good faith deemed by it to be genuine and correct and to have been signed or sent by the proper person or persons. (j) Any action taken by the Issuing and Paying Agent pursuant to this Agreement upon the request or authority or consent of any person who at the time of making such request or giving such authority or consent is the Holder of any Note shall be conclusive and binding upon all future holders of the same Note and Notes issued in exchange therefor or in place thereof. (k) In paying Notes hereunder, the Issuing and Paying Agent shall be acting as a conduit and shall not be paying Notes for its own account, and in the absence of written notice from the Issuer to the contrary and in the absence of gross negligence or wilful misconduct of the Issuing and Paying Agent, the Issuing and Paying Agent shall be entitled to assume that any Global Note presented to it, or deemed presented to it, for payment, is entitled to be so paid. SECTION 30. Indemnity. The Issuer covenants and agrees to indemnify the Issuing and Paying Agent (including its directors, officers, attorneys, employees and agents) for, and to 30 hold it harmless against, any loss, liability or expense (including reasonable attorneys fees and disbursements) incurred without negligence or willful misconduct on its part, arising out of or in connection with this Agreement or the Administrative Procedures and/or the performance of the Issuing and Paying Agent's duties hereunder and the Administrative Procedures, including the reasonable costs and expenses of defending it against any claim of liability in the premises. The Issuing and Paying Agent may refuse to perform any duty or exercise any right or power unless it receives indemnity satisfactory to it against any related loss, liability or expense. These indemnification obligations shall survive the termination of this Agreement including any termination under state or federal banking law or other insolvency law, to the extent enforceable under applicable law, and shall survive the resignation or removal of the Issuing and Paying Agent while remaining applicable to any action taken or omitted by the Issuing and Paying Agent while acting pursuant to this Agreement. SECTION 31. Limitation of Liability; Reliance on Opinions and Certificates. (a) THE ISSUING AND PAYING AGENT'S DUTIES ARE MINISTERIAL IN NATURE AND IN NO EVENT SHALL THE ISSUING AND PAYING AGENT BE LIABLE, DIRECTLY OR INDIRECTLY, TO ANY PERSON OR ENTITY FOR ANY (a) LOSS, LIABILITY, DAMAGES OR EXPENSES (OTHER THAN, IN THE CASE OF THE ISSUER ONLY, THOSE WHICH RESULT DIRECTLY FROM THE ISSUING AND PAYING AGENT'S NEGLIGENCE OR WILLFUL MISCONDUCT) OR (b) SPECIAL, INCIDENTAL, INDIRECT, PUNITIVE OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION, LOST PROFITS) , EVEN IF THE ISSUING AND PAYING AGENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THIS LIMITATION OF LIABILITY WILL APPLY REGARDLESS OF THE FORM OF ACTION, INCLUDING WITHOUT LIMITATION FOR BREACH OF THIS CONTRACT OR TORT (INCLUDING NEGLIGENCE). (b) The Issuing and Paying Agent shall be entitled to consult with counsel of its choosing and shall have no liability to the Issuer in respect of an action taken or omitted by the Issuing and Paying Agent in good faith in reliance on an opinion of counsel or an Officer's Certificate, including in-house counsel. (c) Notwithstanding anything to the contrary herein, the Issuing and Paying Agent shall not be responsible for any misconduct or negligence on the part of any agent, correspondent, attorney or receiver appointed with due care by it hereunder. SECTION 32. Benefit of Agreement. This Agreement is solely for the benefit of the parties hereto and the Holders and their successors and assigns and no other person shall acquire or have any rights under or by virtue hereof. 31 SECTION 33. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to agreements to be entered into and to be performed in such State. SECTION 34. Headings and Table of Contents. The table of contents and the section and subsection headings herein are for convenience only and shall not affect the construction hereof. SECTION 35. Counterparts. This Agreement may be signed in separate counterparts, each of which shall be deemed to be an original and all of which together shall constitute but one and the same instrument. SECTION 36. Termination of Prior Issuing and Paying Agent Agreements. The Issuer and Bankers Trust Company agree that on the day on which no notes issued by the Issuer and authenticated and delivered under the Issuing and Paying Agent Agreement with an April 30, 1993 Effective Date entered into between Bankers Trust Company and the Issuer remain outstanding, such agreement shall terminate (other than the provisions contained therein which by their terms survive termination). [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 32 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on their behalf by their officers duly authorized thereunto, as of the day and year first above written. NATIONSBANK, N.A., as Issuer By: /s/ PAGE P.C. STEPHENS _____________________________________ Name: Page P.C. Stephens Title: Senior Vice President BANKERS TRUST COMPANY, as Issuing and Paying Agent By: /s/ SANDRA J. SHAFFER _____________________________________ Name: Sandra J. Shaffer Title: Assistant Vice President 33 EXHIBIT A --------- Forms of DTC Letters of Representations 34 EXHIBIT B --------- Administrative Procedures 35 EXHIBIT C --------- Form of Face of Fixed Rate Note 36 EXHIBIT D --------- Form of Face of Floating Rate Note 37 EXHIBIT E --------- Form of Legend for Original Issue Discount Notes THIS NOTE IS AN "ORIGINAL ISSUE DISCOUNT NOTE." FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, STATED AS A PERCENTAGE OF ITS (ORIGINAL) PRINCIPAL AMOUNT IS ____ THE ISSUE DATE IS ___________________ AND THE YIELD TO MATURITY ON THE ISSUE DATE IS ________% PER ANNUM, COMPOUNDED [SEMI-ANNUALLY]. (THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ALLOCABLE TO THE SHORT INITIAL ACCRUAL PERIOD IS ______% OF ITS [ORIGINAL] PRINCIPAL AMOUNT AND THE AMOUNT ALLOCABLE TO THE SHORT FINAL ACCRUAL PERIOD IS ____% OF ITS [ORIGINAL] PRINCIPAL AMOUNT, EACH DETERMINED ON THE BASIS OF A METHOD TAKING INTO ACCOUNT DAILY COMPOUNDING.]* *1. Include the word "ORIGINAL" each place it appears in brackets only in the case of Amortizing Notes. 2. Omit the last sentence in the case of Notes that are issued and mature exactly on regularly scheduled interest payment dates. 38 EXHIBIT F --------- NationsBank, N.A. Authorized Representatives Group I Name Title Signature ------- ---- ----- --------- Group II Name Title Signature -------- ---- ----- --------- 39 EXHIBIT G --------- See Tab 15 Form of Issuing and Paying Agent's Officer's Certificate Referencing Authorized Representatives 40 EX-4 11 EXHIBIT 4T ---------------------------------- NationsBank Corporation NationsBank (DE) Corporation ---------------------------------- FIFTH SUPPLEMENTAL INDENTURE Dated as of August 28, 1998 Supplementing the Indenture, dated as of November 27, 1996, between NationsBank Corporation and The Bank of New York, as Trustee ---------------------------------- The Bank of New York, Trustee ---------------------------------- FIFTH SUPPLEMENTAL INDENTURE, dated as of August 28, 1998 (the "Fifth Supplemental Indenture"), among NationsBank Corporation, a North Carolina Corporation ("NationsBank"), NationsBank (DE) Corporation, a Delaware corporation ("NationsBank (DE)") and a direct wholly owned subsidiary of NationsBank, and The Bank of New York, a New York banking corporation, as Trustee (the "Trustee") under the Indenture referred to herein; WHEREAS, NationsBank and the Trustee heretofore executed and delivered an Indenture, dated as of November 27, 1996 (the "Indenture"); and WHEREAS, pursuant to the Indenture, NationsBank issued and the Trustee authenticated and delivered one or more series of NationsBank's unsecured junior subordinated debt securities (the "Securities"); and WHEREAS, NationsBank and BankAmerica Corporation, a Delaware corporation ("BankAmerica"), have entered into the Agreement and Plan of Reorganization, dated as of April 10, 1998, pursuant to which (i) NationsBank will merge (the "Reincorporation Merger") with and into NationsBank (DE), in accordance with the terms and conditions of the Plan of Reincorporation Merger by and between NationsBank and NationsBank (DE), dated as of August 3, 1998, with NationsBank (DE) as the surviving corporation in the Reincorporation Merger, and (ii) BankAmerica will thereafter merge (the "Merger," and together with the Reincorporation Merger, the "Reorganization") with and into NationsBank (DE), with NationsBank (DE) as the surviving corporation in the Merger; and WHEREAS, the Reorganization is expected to be consummated on September 30, 1998; and WHEREAS, Section 10.01 of the Indenture provides that in the case of the Reorganization, NationsBank (DE) shall expressly assume by supplemental indenture all the obligations under the Securities and the Indenture on the part of NationsBank to be performed or observed; and WHEREAS, Section 9.01(a) of the Indenture provides that NationsBank and the Trustee may amend the Indenture and the Securities without notice to or consent of any holders of the Securities in order to comply with Article Ten of the Indenture; and WHEREAS, this Fifth Supplemental Indenture has been duly authorized by all necessary corporate action on the part of each of NationsBank (DE) and NationsBank. -2- NOW, THEREFORE, NationsBank (DE), NationsBank and the Trustee agree as follows for the equal and ratable benefit of the holders of the Securities: ARTICLE I ASSUMPTION BY SUCCESSOR CORPORATION SECTION 1.1. Assumption of the Securities. NationsBank (DE) hereby expressly assumes the due and punctual payment of the principal of, premium, if any, and interest on all of the Securities of all series in accordance with the terms of each series, according to their tenor and the due and punctual performance and observance of all the covenants and conditions of the Indenture to be performed by NationsBank. SECTION 1.2. Trustee's Acceptance. The Trustee hereby accepts this Fifth Supplemental Indenture and agrees to perform the same under the terms and conditions set forth in the Indenture. ARTICLE II MISCELLANEOUS SECTION 2.1. Effect of Supplemental Indenture. Upon the later to occur of (i) the execution and delivery of this Fifth Supplemental Indenture by NationsBank (DE), NationsBank and the Trustee and (ii) the consummation of the Reincorporation Merger, the Indenture shall be supplemented in accordance herewith, and this Fifth Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Securities heretofore or hereafter authenticated and delivered under the Indenture shall be bound thereby. SECTION 2.2. Indenture Remains in Full Force and Effect. Except as supplemented hereby, all provisions in the Indenture shall remain in full force and effect. SECTION 2.3. Indenture and Supplemental Indenture Construed Together. This Fifth Supplemental Indenture is an indenture supplemental to and in implementation of the Indenture, and the Indenture and this Fifth Supplemental Indenture shall henceforth be read and construed together. SECTION 2.4. Confirmation and Preservation of Indenture. The Indenture as supplemented by this Fifth Supplemental Indenture is in all respects confirmed and preserved. SECTION 2.5. Conflict with Trust Indenture Act. If any provision of this Fifth Supplemental Indenture limits, qualifies or conflicts with any -3- provision of the Trust Indenture Act ("TIA") that is required under the TIA to be part of and govern any provision of this Fifth Supplemental Indenture, the provision of the TIA shall control. If any provision of this Fifth Supplemental Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the provision of the TIA shall be deemed to apply to the Indenture as so modified or to be excluded by this Fifth Supplemental Indenture, as the case may be. SECTION 2.6. Severability. In case any provision in this Fifth Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 2.7. Terms Defined in the Indenture. All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Indenture. SECTION 2.8. Headings. The Article and Section headings of this Fifth Supplemental Indenture have been inserted for convenience of reference only, are not to be considered part of this Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof. SECTION 2.9. Benefits of Fifth Supplemental Indenture, etc. Nothing in this Fifth Supplemental Indenture or the Securities, express or implied, shall give to any Person, other than the parties hereto and thereto and their successors hereunder and thereunder and the holders of the Securities, any benefit of any legal or equitable right, remedy or claim under the Indenture, this Fifth Supplemental Indenture or the Securities. SECTION 2.10. Successors. All agreements of NationsBank (DE) in this Fifth Supplemental Indenture shall bind its successors. All agreements of the Trustee in this Fifth Supplemental Indenture shall bind its successors. SECTION 2.11. Trustee Not Responsible for Recitals. The recitals contained herein shall be taken as the statements of NationsBank and NationsBank (DE), and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to, and shall not be responsible for, the validity or sufficiency of this Fifth Supplemental Indenture. SECTION 2.12. Certain Duties and Responsibilities of the Trustees. In entering into this Fifth Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture relating to -4- the conduct or affecting the liability or affording protection to the Trustee, whether or not elsewhere herein so provided. SECTION 2.13. Governing Law. This Fifth Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby. SECTION 2.14. Counterpart originals. The parties may sign any number of copies of this Fifth Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. -5- IN WITNESS WHEREOF, the parties have caused this Fifth Supplemental Indenture to be duly executed as of the date first written above. NationsBank (DE) Corporation By: /s/ John E. Mack --------------------------------- Name: John E. Mack Title: Senior Vice President NationsBank Corporation By: /s/ John E. Mack --------------------------------- Name: John E. Mack Title: Senior Vice President The Bank of New York, as Trustee By: /s/ Sandra Carreker --------------------------------- Name: Sandra Carreker Title: Agent -6- EX-4 12 EXHIBIT 4(V) [CONFORMED COPY] ================================================================================ BANKAMERICA CORPORATION TO MANUFACTURERS HANOVER TRUST COMPANY OF CALIFORNIA, Trustee ---------- Indenture Dated as of September 1, 1990 ---------- Subordinated Debt Securities ================================================================================ BANKAMERICA CORPORATION Reconciliation and tie between Trust Indenture Act of 1939 and Indenture dated as of September 1, 1990 Trust Indenture Act Section Indenture Section ss. 3l0(a)(1) ................................................. 609 (a)(2) ................................................. 609 (a)(3) ................................................. Not Applicable (a)(4) ................................................. Not Applicable (a)(5) ................................................. 609 (b) .................................................... 608 610 (c) .................................................... Not Applicable ss. 311(a) .................................................... 613(a) (b) .................................................... 613(b) (b)(2) ................................................. 703(a)(2) 703(b) ss. 312(a) .................................................... 701 702(a) (b) .................................................... 702(b) (c) .................................................... 702(c) ss. 313(a) .................................................... 703(a) (b) .................................................... 703(b) (c) .................................................... 703(c) (d) .................................................... 703(d) ss. 314(a) .................................................... 704 (b) .................................................... Not Applicable (c)(l) ................................................. 102 (c)(2) ................................................. 102 (c)(3) ................................................. Not Applicable (d) .................................................... Not Applicable (e) .................................................... 102 ss. 315(a) .................................................... 601(a) 601(c) (b) .................................................... 602 703(a)(6) (c) .................................................... 601(b) (d) .................................................... 601(c) (d)(1) ................................................. 601(a) (d)(2) ................................................. 601(c)(2) (d)(3) ................................................. 601(c)(3) (e) .................................................... 514 ss. 316(a) .................................................... 101 (a)(1)(A) .............................................. 502 512 (a)(1)(B) .............................................. 513 (a)(2) ................................................. Not Applicable (b) .................................................... 508 (c) .................................................... 104(h) ss. 317(a)(1) ................................................. 503 (a)(2) ................................................. 504 (b) .................................................... 1003 ss. 318(a) .................................................... 107 - ---------- Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture.
TABLE OF CONTENTS Page ---- PARTIES ........................................................................................................................ 1 RECITALS ....................................................................................................................... 1 ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 101. Definitions: ..................................................................................................... 1 Act .............................................................................................................. 1 Affiliate; control; controlling; controlled ...................................................................... 1 Authorized Newspaper ............................................................................................. 1 Bank ............................................................................................................. 2 Bearer Security .................................................................................................. 2 Board of Directors ............................................................................................... 2 Board Resolution ................................................................................................. 2 Business Day ..................................................................................................... 2 Capital Exchange Agent ........................................................................................... 2 Capital Exchange Date ............................................................................................ 2 Capital Exchange Price ........................................................................................... 2 Capital Securities ............................................................................................... 2 Capital Security Election Form ................................................................................... 2 CEDEL; CEDEL S.A. ................................................................................................ 2 Closing Price .................................................................................................... 2 Commission ....................................................................................................... 2 Common Stock ..................................................................................................... 2 Company .......................................................................................................... 3 Company Request; Company Order ................................................................................... 3 Controlled Subsidiary ............................................................................................ 3 Conversion Price ................................................................................................. 3 Convertible Securities ........................................................................................... 3 Corporate Trust Office ........................................................................................... 3 Corporation ...................................................................................................... 3 Coupon ........................................................................................................... 3 Debt Securities .................................................................................................. 3 Defaulted Interest ............................................................................................... 3 Depositary ....................................................................................................... 3 Designated Currency .............................................................................................. 3 Dollar ........................................................................................................... 3 ECU .............................................................................................................. 3 Eligible Instruments ............................................................................................. 3 Euro-clear ....................................................................................................... 3 European Communities ............................................................................................. 3 Event of Default ................................................................................................. 3 Exchange Rate .................................................................................................... 3 Exchange Rate Agent .............................................................................................. 3 Exchange Rate Officer's Certificate .............................................................................. 4 Foreign Currency ................................................................................................. 4 Global Exchange Agent ............................................................................................ 4 Global Exchange Date ............................................................................................. 4 Global Security .................................................................................................. 4 Holder ........................................................................................................... 4
- ---------- Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture.
ii Page ---- Indenture ........................................................................................................ 4 Interest ......................................................................................................... 4 Interest Payment Date ............................................................................................ 4 Market Value ..................................................................................................... 4 Maturity ......................................................................................................... 4 Officers' Certificate ............................................................................................ 4 Opinion of Counsel ............................................................................................... 4 Optional Securities Fund ......................................................................................... 4 Original Issue Discount Security ................................................................................. 4 Outstanding ...................................................................................................... 5 Paying Agent ..................................................................................................... 5 Perpetual Preferred Stock ........................................................................................ 5 Person ........................................................................................................... 5 Place of Capital Exchange ........................................................................................ 5 Place of Payment ................................................................................................. 5 Predecessor Security ............................................................................................. 5 Primary Federal Regulator ........................................................................................ 5 Redemption Date .................................................................................................. 5 Redemption Price ................................................................................................. 5 Registered Security .............................................................................................. 6 Regular Record Date .............................................................................................. 6 Remarketing Entity ............................................................................................... 6 Repayment Date ................................................................................................... 6 Repayment Price .................................................................................................. 6 Responsible Officer .............................................................................................. 6 Rights ........................................................................................................... 6 Secondary Offering ............................................................................................... 6 Securities Fund .................................................................................................. 6 Security Register; Security Registrar ............................................................................ 6 Senior Debt ...................................................................................................... 6 Special Record Date .............................................................................................. 6 Stated Maturity .................................................................................................. 6 Trust indenture Act .............................................................................................. 6 Trustee .......................................................................................................... 6 United States .................................................................................................... 6 United States Alien .............................................................................................. 6 U.S. Government Obligations ...................................................................................... 7 Voting Stock ..................................................................................................... 7 SECTION 102. Compliance Certificates and Opinions ............................................................................. 7 SECTION 103. Form of Documents Delivered to Trustee ........................................................................... 7 SECTION 104. Acts of Holders .................................................................................................. 8 SECTIoN 105. Notices; etc.; to Trustee and Company ............................................................................ 9 SECTION 106. Notice to Holders; Waiver ........................................................................................ 9 SECTION 107. Conflict with Trust Indenture Act ................................................................................ 10 SECTION 108. Effect of Headings and Table of Contents ......................................................................... 10 SECTION 109. Successors and Assigns ........................................................................................... 10 SECTION 110. Separability Clause .............................................................................................. 10 SECTION 111. Benefits of Indenture ............................................................................................ 10
iii Page ---- SECTION 112. Governing Law .................................................................................................... 10 SECTION 113. Legal Holidays ................................................................................................... 10 SECTION 114. Counterparts ..................................................................................................... 10 ARTICLE TWO DEBT SECURITY FORMS SECTION 201. Forms Generally .................................................................................................. 11 SECTION 202. Form of Trustee's Certificate of Authentication .................................................................. 11 SECTION 203. Debt Securities in Global Form ................................................................................... 11 ARTICLE THREE THE DEBT SECURITIES SECTION 301. Amount Unlimited; Issuable in Series ............................................................................. 12 SECTION 302. Denominations .................................................................................................... 14 SEcTION 303. Execution, Authentication, Delivery and Dating ................................................................... 14 SECTION 304. Temporary Debt Securities ........................................................................................ 16 SECTION 305. Registration, Registration of Transfer and Exchange .............................................................. 18 SECTIoN 306. Mutilated, Destroyed, Lost and Stolen Debt Securities ............................................................ 20 SECTION 307. Payment of Interest; Interest Rights Preserved ................................................................... 21 SECTION 308. Persons Deemed Owners ............................................................................................ 22 SECTION 309. Cancellation ..................................................................................................... 23 SECTION 310. Computation of Interest .......................................................................................... 23 SECTION 311. Certification by a Person Entitled to Delivery of a Bearer Security .............................................. 23 SECTION 312. Judgments ........................................................................................................ 23 ARTICLE FOUR SATISFACTION AND DISCHARGE SECTION 401. Satisfaction and Discharge of Indenture .......................................................................... 24 SECTION 402. Application of Trust Money and Eligible Instruments .............................................................. 25 ARTICLE FIVE REMEDIES SECTION 501. Events of Default ................................................................................................ 25 SECTION 502. Acceleration of Maturity; Rescission and Annulment ............................................................... 25 SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee .................................................. 26 SECTION 504. Trustee May File Proofs of Claim ................................................................................. 27 SECTION 505. Trustee May Enforce Claims without Possession of Debt Securities or Coupons ...................................... 27 SECTION 506. Application of Money Collected, .................................................................................. 28 SECTION 507. Limitation on Suits .............................................................................................. 28 SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest and to Exchange Debt Securities for Capital Securities .................................................................. 28 SECTION 509. Restoration of Rights and Remedies ............................................................................... 29 SECTION 510. Rights and Remedies Cumulative ................................................................................... 29 SECTION 511. Delay or Omission Not Waiver ..................................................................................... 29 SECTION 512. Control by Holders of Debt Securities ............................................................................ 29 SECTIoN 513. Waiver of Past Defaults .......................................................................................... 29 SECTION 514. Undertaking for Costs ............................................................................................ 30 SECTION 515. Waiver of Stay or Extension Laws ................................................................................. 30
iv Page ---- ARTICLE SIX THE TRUSTEE SECTION 601. Certain Duties and Responsibilities .............................................................................. 30 SECTION 602. Notice of Defaults ............................................................................................... 31 SECTION 603. Certain Rights of Trustee ........................................................................................ 31 SECTION 604. Not Responsible for Recitals or Issuance of Debt Securities ...................................................... 32 SECTION 605. May Hold Debt Securities or Coupons .............................................................................. 32 SECTION 606. Money Held in Trust .............................................................................................. 32 SECTION 607. Compensation and Reimbursement ................................................................................... 32 SECTION 608. Disqualification; Conflicting Interests .......................................................................... 33 (a) Elimination of Conflicting Interest or Resignation ........................................................ 33 (b) Notice of Failure to Eliminate Conflicting interest or Resign ............................................. 33 (c) "Conflicting Interest" Defined ............................................................................ 33 (d) Definitions of Certain Terms Used in this Section ......................................................... 35 (e) Calculation of Percentages of Securities .................................................................. 36 (f) Amendments to Trust Indenture Act ......................................................................... 36 SECTION 609. Corporate Trustee Required; Eligibility .......................................................................... 37 SECTION 610. Resignation and Removal; Appointment of Successor ................................................................ 37 SECTION 611. Acceptance of Appointment by Successor ........................................................................... 38 SECTION 612. Merger, Conversion; Consolidation or Succession to Business ...................................................... 39 SECTION 613. Preferential Collection of Claims Against Company ................................................................ 39 (a) Segregation and Apportionment of Certain Collections by Trustee; Certain Exceptions ...................................................................................... 39 (b) Certain Creditor Relationships Excluded from Segregation and Apportionment ........................................................................................... 41 (c) Definitions of Certain Terms Used in this Section ......................................................... 41 SECTION 614. Authenticating Agent ............................................................................................. 41 ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 701. Company to Furnish Trustee Names and Addresses of Holders ........................................................ 43 SECTION 702. Preservation of Information; Communications to Holders ........................................................... 43 SECTION 703. Reports by Trustee ............................................................................................... 44 SECTION 704. Reports by Company ............................................................................................... 45 ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 801. Company May Consolidate, etc.; Only on Certain Terms ............................................................. 45 SECTION 802. Successor Corporation Substituted ................................................................................ 46 ARTICLE NINE SUPPLEMENTAL INDENTURES SECTION 901. Supplemental Indentures without Consent of Holders ............................................................... 46 SECTION 902. Supplemental Indentures with Consent of Holders .................................................................. 47 SECTION 903. Execution of Supplemental Indentures ............................................................................. 48 SECTION 904. Effect of Supplemental Indentures ................................................................................ 48 SECTION 905. Conformity with Trust Indenture Act .............................................................................. 48 SECTION 906. Reference in Debt Securities to Supplemental Indentures .......................................................... 48
v Page ---- ARTICLE TEN COVENANTS SECTION 1001. Payment of Principal, Premium and Interest ....................................................................... 49 SECTION 1002. Maintenance of Office or Agency .................................................................................. 49 SECTION 1003. Money for Debt Securities Payments to Be Held in Trust ........................................................... 50 SECTION 1004. Officers' Certificate as to Default .............................................................................. 51 SECTION 1005. Limitation on Disposition of Voting Stock of, and Merger and Sale of Assets by, the Bank ......................... 51 SECTION 1006. Payment of Additional Amounts .................................................................................... 51 SECTION 1007. Waiver of Certain Covenants ...................................................................................... 52 ARTICLE ELEVEN REDEMPTION OF DEBT SECURITIES SECTION 1101. Applicability of Article ......................................................................................... 52 SECTION 1102. Election to Redeem; Notice to Trustee ............................................................................ 52 SECTION 1103. Selection by Trustee of Debt Securities to Be Redeemed ........................................................... 52 SECTION 1104. Notice of Redemption ............................................................................................. 53 SECTION 1105. Deposit of Redemption Price ...................................................................................... 53 SECTION 1106. Debt Securities Payable on Redemption Date ....................................................................... 53 SECTION 1107. Debt Securities Redeemed in Part ................................................................................. 54 ARTICLE TWELVE SINKING FUNDS SECTION 1201. Applicability of Article ......................................................................................... 54 SECTION 1202. Satisfaction of Sinking Fund Payments with Debt Securities ....................................................... 54 SECTION 1203. Redemption of Debt Securities for Sinking Fund ................................................................... 55 ARTICLE THIRTEEN REPAYMENT AT THE OPTION OF HOLDERS SECTION 1301. Applicability of Article ......................................................................................... 55 SECTION 1302. Repayment of Debt Securities ..................................................................................... 55 SECTION 1303. Exercise of Option: Notice ....................................................................................... 55 SECTION 1304. Election of Repayment by Remarketing Entities .................................................................... 56 SECTION 1305. Debt Securities Payable on the Repayment Date .................................................................... 56 ARTICLE FOURTEEN EXCHANGE OF CAPITAL SECURITIES FOR DEBT SECURITIES SECTION 1401. Applicability of Article ......................................................................................... 56 SECTION 1402. Exchange of Capital Securities for Debt Securities at Stated Maturity ............................................ 57 SECTION 1403. Right of Early Exchange of Capital Securities for Debt Securities ................................................ 57 SECTION 1404. Notices of Exchange .............................................................................................. 58 SECTION 1405. Rights and Duties of Holders of Debt Securities to be Exchanged for Capital Securities ........................... 59 SECTION 1406. Election to Exchange ............................................................................................. 60 SECTION 1407. Deposit of Capital Exchange Price ................................................................................ 60 SECTION 1408. Debt Securities Due on Capital Exchange Date; Debt Securities Exchanged in Part .................................. 60 SECTION 1409. Form of Capital Security Election Form ........................................................................... 61 SECTION 1410. Fractional Capital Securities .................................................................................... 62 SECTION 1411. Company to Obtain Governmental and Regulatory Approvals .......................................................... 62 SECTION 1412. Taxes on Exchange ................................................................................................ 62 SECTION 1413. Covenants as to Capital Securities and Secondary Offering ........................................................ 62 SECTION 1414. Provision in Case of Consolidation, Merger or Transfer of Assets ................................................. 62 SECTION 1415. Responsibility of Trustee ........................................................................................ 63
vi Page ---- SECTION 1416. Revocation of Obligation to Exchange Capital Securities for Debt Securities ...................................... 63 SECTION 1417. Optional Securities Funds ........................................................................................ 63 ARTICLE FIFTEEN SECURITIES FUNDS SECTION 1501. Creation of Securities Funds ..................................................................................... 64 SECTION 1502. Designations of Securities Funds ................................................................................. 64 SECTION 1503. Covenant of the Company to Obtain Securities Funds ............................................................... 65 ARTICLE SIXTEEN MEETINGS OF HOLDERS OF DEBT SECURITIES SECTION 1601. Purposes for Which Meetings May Be Called ........................................................................ 65 SECTION 1602. Call, Notice and Place of Meetings ............................................................................... 65 SECTION 1603. Persons Entitled to Vote at Meetings ............................................................................. 66 SECTION 1604. Quorum; Action ................................................................................................... 66 SECTION 1605. Determination of Voting Rights; Conduct and Adjournment of Meetings .............................................. 66 SECTION 1606. Counting Votes and Recording Action of Meetings .................................................................. 67 ARTICLE SEVENTEEN DEFEASANCE SECTION 1701. Termination of Company's Obligations ............................................................................. 67 SECTION 1702. Repayment to Company ............................................................................................. 68 SECTION 1703. Indemnity for Eligible Instruments ............................................................................... 68 ARTICLE EIGHTEEN SUBORDINATION OF DEBT SECURITIES SECTION 1801. Debt Securities Subordinate to Senior Debt ....................................................................... 68 SECTION 1802. Trustee and Holders of Debt Securities May Rely on Certificate of Liquidating Agent: Trustee May Require Further Evidence as to Ownership of Senior Debt: Trustee Not Fiduciary to Holders of Senior Debt ............................................................................ 70 SECTION 1803. Payment Permitted If No Default .................................................................................. 71 SECTION 1804. Trustee Not Charged With Knowledge of Prohibition ................................................................ 71 SECTION 1805. Trustee to Effectuate Subordination .............................................................................. 71 SECTION 1806. Rights of Trustee as Holder of Senior Debt ....................................................................... 71 SECTION 1807. Article Applicable to Paying Agents .............................................................................. 71 SECTION 1808. Subordination Rights Not Impaired by Acts or Omissions of the Company or Holders of Senior Debt .................................................................................................... 71 ARTICLE NINETEEN CONVERSION OF CONVERTIBLE SECURITIES SECTION 1901. Applicability of Article ......................................................................................... 72 SECTION 1902. Right to Convert ................................................................................................. 72 SECTION 1903. Exercise of Conversion Privilege; Delivery of Common Stock on Conversion: No Adjustment for Interest or Dividends ........................................................................ 72 SECTION 1904. Cash Payments in Lieu of Fractional Shares ....................................................................... 73 SECTION 1905. Conversion Price ................................................................................................. 73 SECTION 1906. Adjustment to Conversion Price ................................................................................... 73 SECTION 1907. Effect of Reclassification. Consolidation, Merger or Sale ........................................................ 76 SECTION 1908. Taxes on Shares Issued ........................................................................................... 76 SECTION 1909. Shares to be Fully Paid; Compliance with Governmental Requirements; Listing of Common Stock .......................................................................................................... 77
vii
Page ---- SECTION 1910. Responsibility of Trustee ........................................................................................ 77 SECTION 1911. Notice to Holders Prior to Certain Actions ....................................................................... 77 SECTION 1912. Covenant to Reserve Shares ....................................................................................... 78 TESTIMONIUM .................................................................................................................... 79 SIGNATURES AND SEALS ........................................................................................................... 79 ACKNOWLEDGEMENTS ............................................................................................................... 80 EXHIBIT A ...................................................................................................................... A-1 EXHIBIT B ...................................................................................................................... B-1
INDENTURE dated as of September 1. 1990, between BANKAMERICA CORPORATION, a Delaware corporation (hereinafter called the "Company"), having its principal place of business at Bank of America Center, 555 California Street, San Francisco, California 94104 and Manufacturers Hanover Trust Company of California, a California corporation (hereinafter called the "Trustee"), having its Corporate Trust Office at 50 California Street, San Francisco, California 94111. RECITALS OF THE COMPANY The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its subordinated debentures, notes, bonds or other evidences of indebtedness (herein called the "Debt Securities"), to be issued in one or more series. All things necessary have been done to make this Indenture a valid agreement of the Company, in accordance with its terms. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Debt Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Debt Securities or of any series thereof, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 101. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and, except as otherwise herein expressly provided, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted at the date of such computation; and (4) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. Certain terms, used principally in Article Six, are defined in that Article. "Act" when used with respect to any Holder has the meaning specified in Section 104. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Authorized Newspaper" means a newspaper in an official language of the country of publication or in the English language customarily published on each Business Day, whether or not published on Saturdays, Sundays or holidays, and of general circulation in the place in connection with which the term is used or in the financial community of such place. Where successive publications are required to be made in Authorized Newspapers, the 2 successive publications may be made in the same or in different newspapers in the same city meeting the foregoing requirements and in each case on any Business Day. "Bank" means Bank of America National Trust and Savings Association, a national banking association, and any successors to any substantial part of the present business thereof. "Bearer Security" means any Debt Security in the form of bearer securities established pursuant to Section 201 which is payable to bearer. "Board of Directors" means either the board of directors of the Company, or the executive or any other committee of that board duly authorized to act in respect hereof. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day", when used with respect to any Place of Payment or Place of Capital Exchange, means any day which is not a Saturday or Sunday and which is not a legal holiday or a day on which banking institutions or trust companies in that Place of Payment or Place of Capital Exchange are authorized or obligated by law or executive order to close. "Capital Exchange Agent" means the Person or Persons appointed by the Company to give notices and to exchange Debt Securities of any series for Capital Securities as specified in Article Fourteen. "Capital Exchange Date", when used with respect to the Debt Securities of any series, means any date on which such Debt Securities are to be exchanged for Capital Securities pursuant to this Indenture. "Capital Exchange Price", when used with respect to any Debt Security of any series to be exchanged for Capital Securities, means the amount of Capital Securities for which such Debt Security is to be exchanged pursuant to this Indenture or the aggregate sale price of such Capital Securities in the Secondary Offering for such Debt Security, as the case may be. "Capital Securities" means any securities issued by the Company which consist of any of the following: (i) Common Stock, (ii) Perpetual Preferred Stock or (iii) securities which at the date of issuance may be issued in exchange for, or the proceeds from the sale of which may be designated as Securities Funds or Optional Securities Funds for the payment of the principal of, "mandatory convertible securities" under applicable regulations of the Primary Federal Regulator. Capital Securities may have such terms, rights and preferences as may be determined by the Company. "Capital Security Election Form" means a form substantially in the form included in Section 1409. "CEDEL" or "CEDEL S.A." means Centrale de Livraison de Valeurs Mobilieres S.A. "Closing Price" has the meaning specified in Section 1906(d). "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, or if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. "Common Stock" means when used with reference to the capital stock of the Company, the class of stock which, at the date of execution of this Indenture [ILLEGIBLE] designated as common stock of the Company and stock of any class or classes into which such common stock or such other class may thereafter be changed or reclassified. In case by reason of the operation of Article Nineteen the Convertible Securities shall be convertible into any other shares or other securities or property of the Company or any other corporation, any reference in this Indenture to the conversion of Convertible Securities pursuant to Article Nineteen shall be deemed to refer to and include conversion of Convertible Securities into such other shares or other securities or property. 3 "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor corporation shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor corporation. "Company Request" and "Company Order" mean, respectively, a written request or order signed in the name of the Company by the Chairman of the Board, the Chairman of the Executive Committee of the Board, a Vice Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, a Vice Chairman or a Vice President (any reference to a Vice President of the Company herein shall be deemed to include any Vice President of the Company whether or not designated by a number or word or words added before or after the title "Vice President"), and by the Treasurer, an Assistant Treasurer, Secretary or an Assistant Secretary of the Company, and delivered to the Trustee. "Controlled Subsidiary" means any corporation more than 80% of the outstanding shares of Voting Stock, except for directors' qualifying shares, of which shall at the time be owned directly by the Company. "Conversion Price" has the meaning specified in Section 1904. "Convertible Securities" means any series of Debt Securities that are designated as such pursuant to Section 301. "Corporate Trust Office" means the principal corporate trust office of the Trustee at which at any particular time its corporate trust business shall be administered. The term "corporation" includes corporations, associations, companies and business trusts. The term "coupon" means any interest coupon appertaining to a Bearer Security. "Debt Securities" has the meaning stated in the first recital of this Indenture and more particularly means any Debt Securities authenticated and delivered under this Indenture. "Defaulted Interest" has the meaning specified in Section 307. "Depositary" means, with respect to the Debt Securities of any series issuable or issued in the form of a Global Security, the Person designated as Depositary by the Company pursuant to Section 301 until a successor Depositary shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Depositary" shall mean or include each Person who is then a Depositary hereunder, and if at any time there is more than one such Person, "Depositary" as used with respect to the Debt Securities of any such series shall mean the Depositary with respect to the Debt Securities of that series. "Designated Currency" has the meaning specified in Section 312. "Dollar" or "$" means the coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts. "ECU" means the European Currency Unit as defined and revised from time to time by the Council of the European Communities. "Eligible Instruments" means monetary assets, money market instruments and securities that are payable in U.S. Dollars only and essentially risk free as to collection of principal and interest, including U.S. Government Obligations. "Euro-clear" means Morgan Guaranty Trust Company of New York, Brussels Office, as operator of the Euro-clear System. "European Communities" means the European Economic Community, the European Coal and Steel Community and the European Atomic Energy Community. "Event of Default" has the meaning specified in Section 501. "Exchange Rate" shall have the meaning specified as contemplated in Section 301. "Exchange Rate Agent" shall have the meaning specified as contemplated in Section 301. 4 "Exchange Rate Officer's Certificate", with respect to any date for the payment of principal of (and premium, if any) and interest on any series of Debt Securities, means a certificate setting forth the applicable Exchange Rate and the amounts payable in Dollars and Foreign Currencies in respect of the principal of (and premium, if any) and interest on Debt Securities denominated in ECU, and other composite currency or Foreign Currency, and signed by the Chairman of the Board, the Chairman of the Executive Committee of the Board, a Vice Chairman of the Board, the President, the Treasurer or any Assistant Treasurer of the Company or the Exchange Rate Agent appointed pursuant to Section 301 and delivered to the Trustee. "Foreign Currency" means a currency issued by the government of any country other than the United States of America. "Global Exchange Agent" has the meaning specified in Section 304. "Global Exchange Date" has the meaning specified in Section 304. "Global Security" means a Debt Security issued to evidence all or a part of a series of Debt Securities in accordance with Section 303. "Holder", with respect to a Registered Security, means a Person in whose name such Registered Security is registered in the Security Register and, with respect to a Bearer Security or a coupon, means the bearer thereof. "Indenture" means this instrument as originally executed or as it may from time to time be supplemented, amended or restated by or pursuant to one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and, unless the context otherwise requires, shall include the terms of a particular series of Debt Securities established as contemplated by Section 301. The term "interest", when used with respect to an Original Issue Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity. "Interest Payment Date", with respect to any Debt Security, means the Stated Maturity of an instalment of interest on such Debt Security. "Market Value" of any Capital Securities issued on any Capital Exchange Date for Debt Securities of any series shall be the sale price of such Capital Securities which are sold in the Secondary Offering for the Debt Securities of such series. In the event no such Secondary Offering takes place, the Market Value of such Capital Securities shall be the fair value of such Capital Securities on such Capital Exchange Date for Debt Securities of such series as determined by three independent nationally recognized investment banking firms selected by the Company. "Maturity", when used with respect to any Debt Security, means the date on which the principal of such Debt Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or exchange, repayment at the option of the Holder or otherwise. "Officers' Certificate" means a certificate signed by the Chairman of the Board, the Chairman of the Executive Committee of the Board, a Vice Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, a Vice Chairman or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, and delivered to the Trustee. "Opinion of Counsel" means a written opinion of counsel, who may (except as otherwise expressly provided in this Indenture) be counsel for the Company, or who may be other counsel acceptable to the Trustee, which is delivered to the Trustee. "Optional Securities Fund" means a fund pursuant to which the proceeds of sales of Capital Securities may be designated on the books of the Company for the amount of any of the principal of any Debt Security pursuant to Section 1417 of this Indenture. "Original Issue Discount Security" means a Debt Security which provides for an amount less than the principal amount thereof to be due and payable upon declaration of acceleration of the Maturity thereof pursuant to Section 502. 5 "Outstanding" when used with respect to Debt Securities means, as of the date of determination, all Debt Securities theretofore authenticated and delivered under this Indenture, except: (i) Debt Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (ii) Debt Securities or portions thereof for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Debt Securities and any coupons appertaining thereto; provided, however, that if such Debt Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and (iii) Debt Securities in exchange for or in lieu of which other Debt Securities have been authenticated and delivered, or which have been paid, pursuant to this Indenture; provided, however, that in determining whether the Holders of the requisite principal amount of Debt Securities Outstanding have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Debt Securities owned by the Company or any other obligor upon the Debt Securities or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon such request, demand, authorization, direction, notice, consent or waiver, only Debt Securities which the Trustee knows to be so owned shall be so disregarded. Debt Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Debt Securities and that the pledgee is not the Company or any other obligor upon the Debt Securities or any Affiliate of the Company or of such other obligor. "Paying Agent" means any Person authorized by the Company to pay the principal of (and premium, if any) or interest on any Debt Securities on behalf of the Company. "Perpetual Preferred Stock" means any stock of any class of the Company which has a preference over Common Stock in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which is not mandatorily redeemable or repayable, or redeemable or repayable at the option of the Holder, otherwise than in shares of Common Stock or Perpetual Preferred Stock of another class or series or with the proceeds of the sale of Common Stock or Perpetual Preferred Stock. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Place of Capital Exchange", when used with respect to Debt Securities of any series, means any place where the Debt Securities of such series are exchangeable for Capital Securities as specified pursuant to Section 301. "Place of Payment", when used with respect to the Debt Securities of any series means any place where the principal of (and premium, if any) and interest on the Debt Securities of that series are payable as specified as contemplated by Section 301. "Predecessor Security" of any particular Debt Security means every previous Debt Security evidencing all or a portion of the same debt as that evidenced by such particular Debt Security; and, for the purposes of this definition, any Debt Security authenticated and delivered under Section 306 in lieu of a lost, destroyed or stolen Debt Security shall be deemed to evidence the same debt as the lost, destroyed or stolen Debt Security. "Primary Federal Regulator" means the primary United States federal regulator of the Company (which at the date of this Indenture is the Board of Governors of the Federal Reserve System), or any successor body or institution. "Redemption Date", when used with respect to any Debt Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price", when used with respect to any Debt Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. 6 "Registered Security" means any Debt Security in the form of Registered Securities established pursuant to Section 201 which is registered in the Security Register. "Regular Record Date" for the interest payable on any Interest Payment Date on the Registered Securities of any series means the date specified for that purpose as contemplated by Section 301. "Remarketing Entity", when used with respect to Debt Securities of any series which are repayable at the option of the Holders thereof before their Stated Maturity, means any person designated by the Company to purchase any such Debt Securities. "Repayment Date", when used with respect to any Debt Security to be repaid upon exercise of option for repayment by the Holder, means the date fixed for such repayment pursuant to this Indenture. "Repayment Price", when used with respect to any Debt Security to be repaid upon exercise of option for repayment by the Holder, means the price at which it is to be repaid pursuant to this Indenture. "Responsible Officer" when used with respect to the Trustee, means any officer within the Corporate Trust Department (or any successor group) of the Trustee, including any vice president, assistant vice president, trust officer, assistant secretary or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred at the Trustee's Corporate Trust Office because of his knowledge of and familiarity with the particular subject. "Rights" has the meaning specified in Section 1906(c). "Secondary Offering", when used with respect to the Debt Securities of any series, means the offering and sale by the Company of Capital Securities for the account of Holders of Debt Securities of such series who elect to receive cash and not Capital Securities on the Capital Exchange Date for such series. "Securities Fund" means a fund pursuant to which the proceeds of sales of Capital Securities are designated on the books of the Company for the payment of any principal of any Debt Security pursuant to the provisions of Section 1501. "Security Register" and "Security Registrar" have the respective meanings specified in Section 305. "Senior Debt" means any obligation of the Company to its creditors whether now outstanding or subsequently incurred other than (i) any obligation as to which, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such obligation is not Senior Debt and (ii) obligations evidenced by the Debt Securities. "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 307. "Stated Maturity", when used with respect to any Debt Security or any instalment of interest thereon, means the date specified in such Debt Security or a coupon representing such instalment of interest as the fixed date on which the principal of such Debt Security or such instalment of interest is due and payable. "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed, except as provided in Section 905. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person who is then a Trustee hereunder, and if at any time there is more than one such Person. "Trustee" as used with respect to the Debt Securities of any series shall mean the Trustee with respect to Debt Securities of that series. "United States" means the United States of America (including the District of Columbia) and its possessions. "United States Alien" means any Person who, for United States Federal income tax purposes, is a foreign corporation, a non-resident alien individual, a non-resident alien fiduciary of a foreign estate or trust, or a foreign 7 partnership one or more of the members of which is, for United States Federal income tax purposes, a foreign corporation, a non-resident alien individual or a non-resident alien fiduciary of a foreign estate or trust. "U.S. Government Obligations" means direct obligations of the United States for the payment of which its full faith and credit is pledged, or obligations of a person controlled or supervised by and acting as an agency or instrumentality of the United States the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States. "Voting Stock", as applied to the stock (or the equivalent thereof) of any corporation, means stock (or the equivalent thereof) of any class or classes, however designated, having ordinary voting power for the election of a majority of the directors of such corporation, other than stock (or such equivalent) having such power only by reason of the happening of a contingency. SECTION 102. Compliance Certificates and Opinions. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture (other than the delivery of any Debt Security to the Trustee for authentication pursuant to Section 303), the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than certificates provided pursuant to Section 704(4)) shall include (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. SECTION 103. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based is erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters is erroneous. 8 Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION 104. Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing. If Debt Securities of a series are issuable in whole or in part as Bearer Securities, any request, demand, authorization, direction, notice, consent, waiver or other action provided by this indenture to be given or taken by Holders may, alternatively, be embodied in and evidenced by the record of Holders of Debt Securities voting in favor thereof, either in person or by proxies duly appointed in writing, at any meeting of Holders of Debt Securities duly called and held in accordance with the provisions of Article Sixteen, or a combination of such instruments and any such record. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee, and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this indenture and (subject to Section 601) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. The record of any meeting of Holders of Debt Securities shall be proved in the manner provided in Section 1606. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved in any manner which the Trustee deems sufficient. (c) The ownership of Registered Securities shall be proved by the Security Register. (d) The principal amount and serial numbers of Bearer Securities held by any Person, and the date of holding the same, may be proved by the production of such Bearer Securities or by a certificate executed, as depositary, by any trust company, bank, banker or other depositary, wherever situated, if such certificate shall be deemed sufficient by the Trustee, showing that at the date therein mentioned such Person had on deposit with such depositary, or exhibited to it, the Bearer Securities in the amount and with the serial numbers therein described; or such facts may be proved by the certificate or affidavit of the Person holding such Bearer Securities, if such certificate or affidavit is deemed sufficient by the Trustee. The Trustee and the Company may assume that such ownership of any Bearer Security continues until (1) another certificate or affidavit bearing a later date issued in respect of the same Bearer Security is produced, or (2) such Bearer Security is produced to the Trustee by some other Person, or (3) such Bearer Security is surrendered in exchange for a Registered Security, or (4) such Bearer Security is no longer Outstanding. (e) The fact and date of execution of any such instrument or writing, the authority of the Person executing the same and the principal amount and serial numbers of Bearer Securities held by the Person so executing such instrument or writing and the date of holding the same may also be proved in any other manner which the Trustee deems sufficient; and the Trustee may in any instance require further proof with respect to any of the matters referred to in this Section. (f) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Debt Security shall bind every future holder of the same Debt Security and the Holder of every Debt Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, suffered or omitted by the Trustee or the Company's reliance thereon, whether or not notation of such action is made upon such Debt Security. (g) For purposes of determining the principal amount of Outstanding Debt Securities of any series the Holders of which are required, requested or permitted to give, request, demand, authorization, direction, notice, consent, waiver or take any other Act under this indenture, each Original Issue Discount Security shall be deemed to have the principal amount determined by the Trustee [ILLEGIBLE] could be declared to be due and payable pursuant to the terms of such Original Issue Discount Security as of the date there is delivered to the Trustee and, where it is hereby expressly required, to the Company, such Act by Holders of the required aggregate principal amount of the 9 Outstanding Debt Securities of such series and (ii) each Debt Security denominated in a Foreign Currency or composite currency shall be deemed to have the principal amount determined by the Exchange Rate Agent by converting the principal amount of such Debt Security in the currency in which such Debt Security is denominated into Dollars at the Exchange Rate as of the date such Act is delivered to the Trustee and, where it is hereby expressly required, to the Company by Holders of the required aggregate principal amount of the Outstanding Debt Securities of such series (or, if there is no such rate on such date, such rate on the date determined as specified as contemplated in Section 301). (h) The Company may set a record date for purposes of determining the identity of Holders of Debt Securities of any series entitled to vote or consent to any action by vote or consent authorized or permitted by Section 512 or Section 513. Such record date shall be the later of 30 days prior to the first solicitation of such consent or the date of the most recent list of Holders of such Debt Securities furnished to the Trustee pursuant to Section 701 prior to such solicitation. SECTION 105. Notices, etc. to Trustee and Company. Any request, demand, authorization, direction, notice, consent waiver or other Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided), if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, Attention: Corporate Trust Department, or (2) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to the attention of its Secretary at the address of its principal office specified in the first paragraph of this instrument or at any other address previously furnished in writing to the Trustee by the Company. SECTION 106. Notice to Holders; Waiver Except as otherwise expressly provided herein, where this Indenture provides for notice to Holders of any event, (1) such notice shall be sufficiently given to Holders of Registered Securities if in writing and mailed, first-class postage prepaid, to each Holder of a Registered Security affected by such event, at his address as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice: and (2) such notice shall be sufficiently given to Holders of Bearer Securities by publication thereof in an Authorized Newspaper in The City of New York and, if the Debt Securities of such series are then listed on The International Stock Exchange of the United Kingdom and the Republic of Ireland and such stock exchange shall so require, in London, and, if the Debt Securities of such series are then listed on the Luxembourg Stock Exchange and such stock exchange shall so require, in Luxembourg and, if the Debt Securities of such series are then listed on any other stock exchange outside the United States and such stock exchange shall so require, in any other required city outside the United States or, if not practicable, in Europe on a Business Day at least twice, the first such publication to be not earlier than the earliest date and not later than the latest date prescribed for the giving of such notice. In case, by reason of the suspension of or irregularities in regular mail service or for any other reason, it shall be impossible or impracticable to mail notice of any event to Holders when said notice is required to be given pursuant to any provision of this Indenture or of the Debt Securities, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. In any case where notice to Holders of Registered Securities is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder of a Registered Security shall affect the sufficiency of such notice with respect to other Holders of Registered Securities or the sufficiency of any notice by publication to Holders of Bearer Securities given as provided above. In case, by reason of the suspension of publication of any Authorized Newspaper, or by reason of any other cause, it shall be impossible or impracticable to make publication of any notice to Holders of Bearer Securities as provided above, then such method of publication or notification as shall be made with the approval of the Trustee shall constitute a sufficient publication of such notice. Neither failure to give notice by publication to Holders of 10 Bearer Securities as provided above, nor any defect in any notice so published, shall affect the sufficiency of any notice mailed to Holders of Registered Securities as provided above. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. Any request, demand, authorization, direction, notice, consent, election, waiver or other Act required or permitted under this Indenture shall be in the English language, except that any published notice may be in an official language of the country of publication. SECTION 107. Conflict with Trust Indenture Act If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control. SECTION 108. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 109. Successors and Assigns. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether expressed or not. SECTION 110. Separability Clause. In case any provision in this Indenture or in the Debt Securities or coupons shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 111. Benefits of indenture. Nothing in this Indenture or in the Debt Securities or coupons, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any Paying Agent and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 112. Governing Law. This indenture and the Debt Securities and coupons shall be governed by and construed in accordance with the laws of the State of California. SECTION 113. Legal Holidays. In any case where any Interest Payment Date, Redemption Date, Repayment Date, Capital Exchange Date or Stated Maturity of any Debt Security shall not be a Business Day at any Place of Payment or Place of Capital Exchange, then (notwithstanding any other provision of this Indenture or of the Debt Securities or coupons) payment of interest or principal (and premium, if any) or exchange of Debt Securities for Capital Securities or cash need not be made at such Place of Payment or Place of Capital Exchange on such date, but may be made on the next succeeding Business Day at such Place of Payment or Place of Capital Exchange with the same force and effect as if made on the Interest Payment Date, Redemption Date, Repayment Date, Capital Exchange Date or Stated Maturity, and no interest shall accrue for the period from and after such interest Payment Date, Redemption Date, Repayment Date, Capital Exchange Date or Stated Maturity, as the case may be. SECTION 114. Counterparts. This Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Indenture. 11 ARTICLE TWO DEBT SECURITY FORMS SECTION 201. Forms Generally. The Registered Securities, if any, and the Bearer Securities and related coupons, if any, of each series shall be in substantially the form (including temporary or permanent global form) as shall be established in or pursuant to a Board Resolution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon, as may be required to comply with the rules of any securities exchange, or as may, consistently herewith, be determined by the officers executing such Debt Securities or coupons, as evidenced by their signatures on the Debt Securities or coupons. If the form of Debt Securities of any series or coupons (including any such Global Security) is established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 303 or the authentication and delivery of such Debt Securities or coupons. Unless otherwise specified as contemplated by Section 301, Debt Securities in bearer form shall have coupons attached. The definitive Debt Securities and coupons, if any, shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Debt Securities, as evidenced by the execution of such Debt Securities and coupons. SECTION 202. Form of Trustee's Certificate of Authentication. This is one of the Debt Securities of the series designated herein, described in the within-mentioned Indenture. MANUFACTURERS HANOVER TRUST COMPANY OF CALIFORNIA as Trustee By ___________________________________ Authorized Officer SECTION 203. Debt Securities in Global Form. If Debt Securities of a series are issuable in whole or in part in global form, as specified as contemplated by Section 301, then, notwithstanding clause (12) of Section 301 and the provisions of Section 302, such Global Security shall represent such of the outstanding Debt Securities of such series as shall be specified therein and may provide that it shall represent the aggregate amount of Outstanding Debt Securities from time to time endorsed thereon and that the aggregate amount of Outstanding Debt Securities represented thereby may from time to time be reduced to reflect exchanges. Any endorsement of a Global Security to reflect the amount, or any increase or decrease in the amount, of Outstanding Debt Securities represented thereby shall be made in such manner and upon instructions given by such Person or Persons as shall be specified therein or in the Company Order to be delivered to the Trustee pursuant to Section 303 or Section 304. The provisions of the last sentence of Section 303(g) shall apply to any Debt Securities represented by a Debt Security in global form if such Debt Security was never issued and sold by the Company and the Company delivers to the Trustee the Debt Security in global form together with written instructions (which need not comply with Section 102 and need not be accompanied by an Opinion of Counsel) with regard to the reduction in the principal amount of Debt Securities represented thereby, together with the written statement contemplated by the last sentence of Section 303(g). Global Securities may be issued in either registered or bearer form and in either temporary or permanent form. 12 ARTICLE THREE THE DEBT SECURITIES SECTION 301. Amount Unlimited: Issuable in Series. The aggregate principal amount of Debt Securities which may be authenticated and delivered under this Indenture is unlimited. The Debt Securities may be issued in one or more series. There shall be established in or pursuant to a Board Resolution, and set forth in an Officers' Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Debt Securities of any series: (1) the title of the Debt Securities of the series (which shall distinguish the Debt Securities of the series from all other Debt Securities); (2) the limit if any, upon the aggregate principal amount of the Debt Securities of the series which may be authenticated and delivered under this Indenture (except for Debt Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Debt Securities of the series pursuant to Section 304, 305, 306, 906, 1107, 1303, 1408 or 1903 and except for any Debt Securities which, pursuant to Section 303, are deemed never to have been authenticated and delivered hereunder); (3) the date or dates on which the principal and premium, if any, of the Debt Securities of the series are payable; (4) the rate or rates, if any, at which the Debt Securities of the series shall bear interest, or the method or methods by which such rate or rates may be determined, the date or dates from which such interest shall accrue, the Interest Payment Dates on which such interest shall be payable, the Regular Record Date for the interest payable on any Registered Security on any Interest Payment Date and the circumstances, if any, in which the Company may defer interest payments; (5) the place or places where, subject to the provisions of Section 1002, the principal of (and premium, if any) and interest on Debt Securities of the series shall be payable, any Registered Securities of the series may be surrendered for registration of transfer, Debt Securities of the series may be surrendered for exchange and notices and demands to or upon the Company in respect of the Debt Securities of the series and this Indenture may be served and where notices to Holders pursuant to Section 106 will be published; (6) if applicable, the period or periods within which or the date or dates on which, if any, the price or prices at which and the terms and conditions upon which Debt Securities of the series may be redeemed, in whole or in part, at the option of the Company; (7) if applicable, the place or places at which, the period or periods within which, the price or prices at which and the terms and conditions upon which Debt Securities shall be exchangeable for Capital Securities of the Company, which terms and conditions shall not be inconsistent with Article Fourteen; (8) any covenant or option of the Company to create a Securities Fund for the repayment of the Debt Securities and the terms and conditions of such Securities Fund, which terms and conditions shall not be inconsistent with Article Fifteen; (9) the obligation, if any, of the Company to redeem, repay or purchase Debt Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the period or periods within which, the price or prices at which and the terms and conditions upon which Debt Securities of the series shall be redeemed, repaid or repurchased, in whole or in part, pursuant to such obligation: (10) whether Debt Securities of the series are to be issuable as Registered Securities, Bearer Securities or both, whether Debt Securities of the series are to be issuable with or without coupons or both and, in the case of Bearer Securities, the date as of which such Bearer Securities shall be dated if other than the date of original issuance of the first Debt Security of such series of like tenor and term to be issued; (11) whether the Debt Securities of the series shall be issued in whole or in part in the form of a Global Security or Securities and, in such case, the Depositary and Global Exchange Agent for such Global Security 13 or Securities, whether such global form shall be permanent or temporary and, if applicable, the Global Exchange Date; (12) if Debt Securities of the series are to be issuable initially in the form of a temporary Global Security, the circumstances under which the temporary Global Security can be exchanged for definitive Debt Securities and whether the definitive Debt Securities will be Registered and/or Bearer Securities and will be in global form and whether interest in respect of any portion of such Global Security payable in respect of an Interest Payment Date prior to the Global Exchange Date shall be paid to any clearing organization with respect to a portion of such Global Security held for its account and, in such event, the terms and conditions (including any certification requirements) upon which any such interest payment received by a clearing organization will be credited to the Persons entitled to interest payable on such Interest Payment Date if other than as provided in this Article Three; (13) whether, and under what conditions, additional amounts will be payable to Holders of Debt Securities of the series pursuant to Section 1006; (14) the denominations in which Registered Securities of the series shall be issuable, if other than denominations of $1,000 and any integral multiple thereof, and the denominations in which Bearer Securities of such series, if any, shall be issuable if other than the denomination of $5,000; (15) if other than the principal amount thereof, the portion of the principal amount of Debt Securities of the series which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 502; (16) the currency or currencies of denomination of the Debt Securities of any series, which may be in Dollars, any Foreign Currency or any composite currency, including but not limited to the ECU, and, if any such currency of denomination is a composite currency other than the ECU, the agency or organization, if any, responsible for overseeing such composite currency; (17) the currency or currencies in which payment of the principal of (and premium, if any) and interest on the Debt Securities will be made, the currency or currencies, if any, in which payment of the principal of (and premium, if any) or the interest on Registered Securities, at the election of each of the Holders thereof, may also be payable and the periods within which and the terms and conditions upon which such election is to be made and the Exchange Rate and Exchange Rate Agent; (18) if the amount of payments of principal of (and premium, if any) or interest on the Debt Securities of the series may be determined with reference to an index based on a currency or currencies other than that in which the Debt Securities are denominated or designated to be payable, the manner in which such amounts shall be determined; (19) if payments of principal of (and premium, if any) or interest on the Debt Securities of the series are to be made in a Foreign Currency other than the currency in which such Debt Securities are denominated, the manner in which the Exchange Rate with respect to such payments shall be determined or if the Exchange Rate is to be determined otherwise than as provided in Section 101; (20) any Events of Default with respect to Debt Securities of such series, if not set forth herein; (21) the terms and conditions, if any, pursuant to which the Company's obligations under this Indenture may be terminated through the deposit of money or Eligible Instruments as provided in Article Seventeen; (22) the Person or Persons who shall be Security Registrar for the Debt Securities of such series if other than the Trustee, and the place or places where the Security Register for such series shall be maintained and the Person or Persons who will be the initial Paying Agent or Agents, if other than the Trustee; (23) whether the Debt Securities of the series are Convertible Securities and the terms related thereto including the Conversion Price and the date on which the right to convert expires; and (24) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture). 14 All Debt Securities of any one series and the coupons appertaining to Bearer Securities of such series, if any, shall be substantially identical except, in the case of Registered Securities, as to denomination and except as may otherwise be provided in or pursuant to such Board Resolution and set forth in such Officers' Certificate or in any such indenture supplement hereto. Debt Securities of any particular series may be issued at various times, with different dates on which the principal or any instalment of principal is payable, with different rates of interest, if any, or different methods by which rates of interest may be determined, with different dates on which such interest may be payable with different Redemption or Repayment Dates and may be denominated in different currencies or payable in different currencies. If any of the terms of a series of Debt Securities are established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers' Certificate setting forth the terms of the series. SECTION 302. Denominations. Debt Securities of each series shall be issuable in such form and denominations as shall be specified in the form of Debt Security for such series approved or established pursuant to Section 201 or in the Officers' Certificate delivered pursuant to Section 301. In the absence of any specification with respect to the Debt Securities of any series, the Registered Securities of such series, if any, shall be issuable in denominations of $1,000 and any integral multiple thereof and the Bearer Securities of such series, if any, shall be issuable in the denomination of $5,000. SECTION 303. Execution, Authentication, Delivery and Dating. (a) The Debt Securities shall be executed on behalf of the Company by its Chairman of the Board, the Chairman of the Executive Committee of the Board, a Vice Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, a Vice Chairman or a Vice President, and by its Treasurer or one of its Assistant Treasurers or its Secretary or one of its Assistant Secretaries under its corporate seal reproduced thereon. The signature of any of these officers on the Debt Securities may be manual or facsimile. Coupons shall bear the facsimile signature of the Treasurer or any Assistant Treasurer of the Company. Debt Securities and coupons bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Debt Securities or coupons of any series or did not hold such offices at the date of such Debt Securities or coupons. (b) At any time and from time to time after the execution and delivery of this Indenture, Debt Securities of any series may be executed by the Company and delivered to the Trustee for authentication, and, except as otherwise provided in this Article Three, shall thereupon be authenticated and delivered by the Trustee upon Company Order, without any further action by the Company; provided, however, that, in connection with its original issuance, a Bearer Security may be delivered only outside the United States and, except in the case of a temporary Global Security, only if the Company or its agent shall have received the certification required pursuant to Sections 304(b) (iii) and (iv), unless such certification shall have been provided earlier pursuant to Section 304(b) (v) hereof, and only if the Company has no reason to know that such certification is false. To the extent authorized in or pursuant to a Board Resolution and set forth in an Officers' Certificate, or established in one or more indentures supplemental hereto, such written Company Order may be given by any one officer of the Company, may be electronically transmitted, and may provide instructions as to registration of holders, principal amounts, rates of interest, maturity dates and other matters contemplated by such Board Resolution and Officers' Certificate or supplemental indenture to be so instructed in respect thereof. Before authorizing and delivering the first Debt Securities of any series (and upon request of the Trustee thereafter), the Company shall deliver to the Trustee (i) the certificates called for under Sections 201 and 301 hereof and (ii) an Opinion of Counsel described in the next sentence. In authenticating such Debt Securities, and accepting the additional responsibilities under this Indenture in relation to any Debt Securities, the Trustee shall be entitled to receive, prior to the initial authentication of such Debt Securities, and (subject to Section 601) shall be fully protected in relying upon: 15 (i) a Board Resolution relating thereto and, if applicable, an appropriate record of any action taken pursuant to such resolution certified by the Secretary or an Assistant Secretary of the Company; (ii) an executed supplemental indenture, if any, relating thereto; (iii) an Officers' Certificate setting forth the form and terms of the Debt Securities of such series and coupons, if any, pursuant to Sections 201 and 301 and stating that all conditions precedent provided for in this Indenture relating to the issuance of such Debt Securities have been complied with, that no Event of Default with respect to any series of Debt Securities has occurred and is continuing and that the issuance of such Debt Securities is not and will not result in an Event of Default or an event or condition which, upon the giving of notice (or the acquisition of knowledge) or the lapse of time or both, would become an Event of Default; and (iv) an Opinion of Counsel stating (A) that the form of such Debt Securities and coupons, if any, has been established in or pursuant to a Board Resolution or by a supplemental indenture as permitted by Section 201 in conformity with the provisions of this Indenture; (B) that the terms of such Debt Securities and coupons, if any, have been established in or pursuant to a Board Resolution or by a supplemental indenture as permitted by Section 301 in conformity with the provisions of this Indenture; (C) that such Debt Securities and coupons, if any, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and binding obligations of the Company, enforceable in accordance with their terms, subject, as to enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors' rights generally and the application of general principles of equity, except that where the Debt Securities of any series are to be exchanged for Capital Securities or paid from the Securities Fund, the issuance of Capital Securities will require further action by the Board of Directors; (D) that the Company has the corporate power to issue such Debt Securities and coupons, if any, and has duly taken all necessary corporate action with respect to such issuance; (E) that the issuance of such Debt Securities and coupons, if any, will not contravene the charter or by-laws of the Company or result in any violation of any of the terms or provisions of any law or regulation or of any indenture, mortgage or other agreement known to such counsel by which the Company or any of its subsidiaries is bound; (F) that all laws and requirements in respect of the execution and delivery by the Company of such Debt Securities and coupons, if any, have been complied with and that authentication and delivery of such Debt Securities by the Trustee will not violate the terms of the Indenture; and (G) such other matters as the Trustee may reasonably request. (c) If the Company shall establish pursuant to Section 301 that the Debt Securities of a series are to be issued in whole or in part in the form of one or more Global Securities, then the Company shall execute and the Trustee shall, in accordance with this Section and the Company Order with respect to such series, authenticate and deliver one or more Global Securities in permanent or temporary form that (i) shall represent and shall be denominated in an aggregate amount equal to the aggregate principal amount of the Outstanding Debt Securities of such series to be represented by one or more Global Securities, (ii) shall be registered in the name of the Depositary for such Global Security or Securities or the nominee of such Depositary and (iii) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary's instruction. (d) The Trustee shall have the right to decline to authenticate and deliver any Debt Securities under this Section 303 if (i) the Trustee, being advised by counsel, determines that such action may not lawfully be taken or (ii) the Trustee in good faith by a committee of Responsible Officers shall determine that such action would be unjustly prejudicial to Holders of Outstanding Debt Securities or (iii) the issuance of such Debt Securities will 16 adversely affect the Trustee's own rights, duties or immunities under the Debt Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee. (e) If all the Debt Securities of any series are not to be issued at one time, it shall not be necessary to deliver an Opinion of Counsel at the time of issuance of each Debt Security, but such Opinion of Counsel, with appropriate modifications, may instead be delivered at or prior to the time of the first issuance of Debt Securities of such series. (f) Each Registered Security shall be dated the date of its authentication. Each Bearer Security shall be dated as of the date specified as contemplated by Section 301. (g) No Debt Security or coupon attached thereto shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Debt Security a certificate of authentication substantially in the form provided for herein executed by the Trustee, and such certificate upon any Debt Security shall be conclusive evidence, and the only evidence, that such Debt Security has been duly authenticated and delivered hereunder. Except as permitted by Section 306, the Trustee shall not authenticate and deliver any Bearer Security unless all appurtenant coupons for interest then matured have been detached and cancelled. Notwithstanding the foregoing, if any Debt Security or portion thereof shall have been duly authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Debt Security to the Trustee for cancellation as provided in Section 309 together with a written statement (which need not comply with Section 102 and need not be accompanied by an Opinion of Counsel) stating that such Debt Security or portion thereof has never been issued and sold by the Company, for all purposes of this indenture such Debt Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture. (h) Each Depositary designated pursuant to Section 301 for a Global Security in registered form must, at the time of its designation and at all times while it serves as Depositary, be a clearing agency registered under the Securities Exchange Act of 1934 and any other applicable statute or regulation. SECTION 304. Temporary Debt Securities. (a) Pending the preparation of definitive Debt Securities of any series, the Company may execute, and upon receipt of documents required by Sections 301 and 303, together with a Company Order, the Trustee shall authenticate and deliver, temporary Debt Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor and terms of the definitive Debt Securities in lieu of which they are issued in registered form or, if authorized, in bearer form with one or more coupons or without coupons, and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Debt Securities may determine, as evidenced by their signatures on such Debt Securities. In the case of Debt Securities of any series issuable as Bearer Securities, such temporary Debt Securities may be in global form, representing all or any part of the Outstanding Debt Securities of such series. (b) Unless otherwise provided pursuant to Section 301: (i) Except in the case of temporary Debt Securities in global form, if temporary Debt Securities of any series are issued, the Company will cause definitive Debt Securities of such series to be prepared without unreasonable delay. After the preparation of definitive Debt Securities of such series, the related temporary Debt Securities shall be exchangeable for such definitive Debt Securities upon surrender of the temporary Debt Securities of such series at the office or agency of the Company in a Place of Payment for such series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Debt Securities of any series (accompanied, if applicable, by all unmatured coupons and all matured coupons in default appertaining thereto), the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Debt Securities of the same series of like tenor and terms and of authorized denominations; provided, however, that no Bearer Security shall be delivered in exchange for a Registered Security; and provided, further, that a Bearer Security shall be delivered in exchange for a Bearer Security only in compliance with the conditions set forth in Section 305. (ii) If Debt Securities of any series are issued in temporary global form, any such temporary Global Security shall, unless otherwise provided pursuant to Section 301, be delivered to the Depositary for the benefit 17 of Euro-clear and CEDEL S.A. for credit to the respective accounts of the beneficial owners of such Debt Securities (or to such other accounts as they may direct). (iii) Without unnecessary delay but in any event not later than the date specified in, or determined pursuant to the terms of, any such temporary Global Security (the "Global Exchange Date"), the Company shall deliver definitive Debt Securities to the Trustee or the agent appointed by the Company pursuant to Section 301 to effect the exchange of the temporary Global Security for definitive Debt Securities (the "Global Exchange Agent"), in an aggregate principal amount equal to the principal amount of such temporary Global Security, executed by the Company. On or after the Global Exchange Date, such temporary Global Security shall be surrendered by the Depositary to the Global Exchange Agent, to be exchanged in whole or from time to time in part for definitive Debt Securities without charge and the Trustee or the Global Exchange Agent, if authorized by the Trustee pursuant to Section 614, shall authenticate and deliver, in exchange for each portion of such temporary Global Security, an equal aggregate principal amount of definitive Debt Securities of the same series of authorized denominations and of like tenor and terms as the portion of such temporary Global Security to be exchanged. Upon any exchange of a part of such temporary Global Security for definitive Debt Securities, the portion of the principal amount and any interest thereon so exchanged shall be endorsed by the Global Exchange Agent on a schedule to such temporary Global Security, whereupon the principal amount and interest payable with respect to such temporary Global Security shall be reduced for all purposes by the amount so exchanged and endorsed. The definitive Debt Securities to be delivered in exchange for any such temporary Global Security shall be in bearer form, registered form, global registered form or global bearer form, or any combination thereof, as specified as contemplated by Section 301, and, if any combination thereof is so specified, as requested by the beneficial owner thereof; provided, however, that, in the case of the exchange of the temporary Global Security for definitive Bearer Securities (including a definitive Global Bearer Security), unless otherwise specified in such temporary Global Security, upon such presentation by the Depositary, such temporary Global Security shall be accompanied by a certificate signed by Euro-clear as to the portion of such temporary Global Security held for its account then to be exchanged and a certificate signed by CEDEL S.A. as to the portion of such temporary Global Security held for its account then to be exchanged, each in the form set forth in Exhibit B to this Indenture, unless such certificate(s) shall have been provided earlier pursuant to Section 304(b) (v) hereof; and provided, further, that definitive Bearer Securities (including a definitive global Bearer Security) shall be delivered in exchange for a portion of a temporary Global Security only in compliance with the requirements of Section 303. (iv) The interest of a beneficial owner of Debt Securities of a series in a temporary Global Security shall be exchanged for definitive Debt Securities of the same series and of like tenor and terms following the Global Exchange Date when the account holder instructs Euro-clear or CEDEL S.A., as the case may be, to request such exchange on his behalf and in the case of the exchange of the temporary Global Security for definitive Bearer Securities (including a definitive Global Bearer Security), unless such certificate has been earlier provided pursuant to Section 304(b) (v) hereof, the accountholder delivers to Euro-clear or CEDEL S.A., as the case may be, a certificate in the form set forth in Exhibit A- 1 and, if applicable, A-2 to this Indenture, dated no earlier than 15 days prior to the Global Exchange Date, copies of which certificate shall be available from the offices of Euro-clear and CEDEL S.A., the Global Exchange Agent, any authenticating agent appointed for such series of Debt Securities and each Paying Agent. Unless otherwise specified in such temporary Global Security, any such exchange shall be made free of charge to the beneficial owners of such temporary Global Security, except that a Person receiving definitive Debt Securities must bear the cost of insurance, postage, transportation and the like in the event that such Person does not take delivery of such definitive Debt Securities in person at the offices of Euro-clear and CEDEL S.A. Definitive Debt Securities in bearer form to be delivered in exchange for any portion of a temporary Global Security shall be delivered only outside the United States. (v) Until exchanged in full as hereinabove provided, the temporary Debt Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Debt Securities of the same series and of like tenor and terms authenticated and delivered hereunder, except that, unless otherwise specified as contemplated by Section 301. interest payable on a temporary Global Security on an Interest Payment Date for Debt Securities of such series occurring prior to the applicable Global Exchange Date shall be payable to Euro-clear and CEDEL S.A. on such Interest Payment Date only if there has been delivery by Euro-clear and CEDEL 18 S.A. to the Global Exchange Agent of a certificate or certificates in the form set forth in Exhibit B to this Indenture dated no earlier than the first Interest Payment Date, for credit without further interest on or after such Interest Payment Date to the respective accounts of the Persons who are the beneficial owners of such temporary Global Security on such Interest Payment Date and who have each delivered to Euro-clear or CEDEL S.A., as the case may be, a certificate in the form set forth in Exhibit A- I and, if applicable, A-2 to this Indenture dated no earlier than the first Interest Payment Date. Any interest so received by Euro-clear and CEDEL S.A. and not paid as herein provided prior to the Global Exchange Date shall be returned to the Global Exchange Agent which, upon expiration of two years after such Interest Payment Date shall repay such interest to the Company in accordance with Section 1003. SECTION 305. Registration, Registration of Transfer and Exchange. The Company shall cause to be kept at one of the offices or agencies to be maintained by the Company in accordance with the provisions of this Section 305 and Section 1002, with respect to the Debt Securities of each series which are Registered Securities, a register (herein sometimes referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Registered Securities and of transfers of Registered Securities. Pursuant to Section 301, the Company shall appoint, with respect to Debt Securities of each series which are Registered Securities, a "Security Registrar" for the purpose of registering such Debt Securities and transfers and exchanges of such Debt Securities as herein provided. Upon surrender for registration of transfer of any Registered Security of any series at the office or agency of the Company maintained for such purpose, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Registered Securities of the same series of any authorized denomination or denominations, of like tenor and terms and aggregate principal amount. At the option of the Holder, Registered Securities of any series may be exchanged for other Registered Securities of the same series of any authorized denomination or denominations, of like tenor and terms and aggregate principal amount, upon surrender of the Registered Securities to be exchanged at such office or agency. Bearer Securities may not be delivered in exchange for Registered Securities. At the option of the Holder, Registered Securities or Bearer Securities of any series may be issued in exchange for Bearer Securities (except as otherwise specified as contemplated by Section 301 with respect to a Bearer Security in global form) of the same series, of any authorized denominations and of like tenor and terms and aggregate principal amount, upon surrender of the Bearer Securities to be exchanged at any such office or agency, with all unmatured coupons and all matured coupons in default thereto appertaining. If the Holder of a Bearer Security is unable to produce any such unmatured coupon or coupons or matured coupon or coupons in default, such exchange may be effected if the Bearer Securities are accompanied by payment in funds acceptable to the Company and the Trustee in an amount equal to the face amount of such missing coupon or coupons, or the surrender of such missing coupon or coupons may be waived by the Company and the Trustee if there be furnished to them such security or indemnity as they may require to save each of them and any Paying Agent harmless. If thereafter the Holder of such Security shall surrender to any Paying Agent any such missing coupon in respect of which such a payment shall have been made, such Holder shall be entitled to receive the amount of such payment; provided, however, that, except as otherwise provided in Section 1002, interest represented by coupons shall be payable only upon presentation and surrender of those coupons at an office or agency located outside the United States. Notwithstanding the foregoing, in case a Bearer Security of any series is surrendered at any such office or agency in exchange for a Registered Security of the same series and like tenor and terms after the close of business at such office or agency on (i) any Regular Record Date and before the opening of business at such office or agency on the relevant Interest Payment Date, or (ii) any Special Record Date and before the opening of business at such office or agency on the related date for payment of Defaulted Interest, such Bearer Security shall be surrendered without the coupon relating to such Interest Payment Date or proposed date of payment, as the case may be. Whenever any Debt Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Debt Securities, which the Holder making the exchange is entitled to receive. If at any time the Depositary for the Debt Securities of a series notifies the Company that it is unwilling or unable to continue as Depositary for the Debt Securities of such series or if at any time the Depositary for the Debt 19 Securities of such series shall no longer be eligible under Section 303(h), the Company shall appoint a successor Depositary with respect to the Debt Securities of such series. If a successor Depositary for the Debt Securities of such series is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligibility, the Company's election pursuant to Section 301 (11) shall no longer be effective with respect to the Debt Securities of such series and the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of definitive Debt Securities of such series, will authenticate and deliver, Debt Securities of such series in definitive form in an aggregate principal amount equal to the principal amount of the Global Security or Securities representing such series in exchange for such Global Security or Securities. The Company may at any time and in its sole discretion determine that the Debt Securities of any series issued in the form of one or more Global Securities shall no longer be represented by such Global Security or Securities. In such event the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of definitive Debt Securities of such series, will authenticate and deliver, Debt Securities of such series in definitive form and in an aggregate principal amount equal to the principal amount of the Global Security or Securities representing such series in exchange for such Global Security or Securities. If specified by the Company pursuant to Section 301 with respect to a series of Debt Securities, the Depositary for such series of Debt Securities may surrender a Global Security for such series of Debt Securities in exchange in whole or in part for Debt Securities of such series of like tenor and terms and in definitive form on such terms as are acceptable to the Company and such Depositary. Thereupon, the Company shall execute, and the Trustee shall authenticate and deliver, without service charge, (a) to each Person specified by such Depositary a new Debt Security or Securities of the same series, of like tenor and terms and of any authorized denomination as requested by such Person in aggregate principal amount equal to and in exchange for such Person's beneficial interest in the Global Security; and (b) to such Depositary a new Global Security of like tenor and terms and in a denomination equal to the difference, if any, between the principal amount of the surrendered Global Security and the aggregate principal amount of Debt Securities delivered to Holders thereof. In any exchange provided for in any of the preceding three paragraphs, the Company will execute and the Trustee will authenticate and deliver Debt Securities (a) in definitive registered form in authorized denominations, if the Debt Securities of such series are issuable as Registered Securities, (b) in definitive bearer form in authorized denominations, with coupons attached, if the Debt Securities of such series are issuable as Bearer Securities or (c) as either Registered or Bearer Securities, if the Debt Securities of such series are issuable in either form; provided, however, that no definitive Bearer Security shall be delivered in exchange for a temporary Global Security unless the Company or its agent shall have received from the person entitled to receive the definitive Bearer Security a certificate substantially in the form set forth in Exhibit A-1 and, if applicable, A-2 hereto; and provided further that delivery of a Bearer Security shall occur only outside the United States; and provided further that no definitive Bearer Security will be issued if the Company has reason to know that any such certificate is false. Upon the exchange of a Global Security for Debt Securities in definitive form, such Global Security shall be cancelled by the Trustee. Registered Securities issued in exchange for a Global Security pursuant to this Section shall be registered in such names and in such authorized denominations as the Depositary for such Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Registered Securities to the persons in whose names such Debt Securities are so registered. The Trustee shall deliver Bearer Securities issued in exchange for a Global Security pursuant to this Section to the persons, and in such authorized denominations, as the Depositary for such Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee; provided, however, that no definitive Bearer Security shall be delivered in exchange for a temporary Global Security unless the Company or its agent shall have received from the person entitled to receive the definitive Bearer Security a certificate substantially in the form set forth in Exhibit A- 1 and, if applicable, A-2 hereto; and provided further that delivery of a Bearer Security shall occur only outside the United States; and provided further that no definitive Bearer Security will be issued if the Company has reason to know that any such certificate is false. 20 All Debt Securities issued upon any registration of transfer or exchange of Debt Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Debt Securities surrendered upon such registration of transfer or exchange. Every Registered Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company, the Security Registrar or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company, the Security Registrar and the Trustee duly executed, by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange of Debt Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer, registration of transfer or exchange of Debt Securities, other than exchanges expressly provided in this indenture to be made at the Company's own expense or without expense or without charge to the Holders. The Company shall not be required (i) to issue, register the transfer of or exchange Debt Securities of any particular series to be redeemed or exchanged for Capital Securities for a period of fifteen days preceding the first publication of the relevant notice of redemption or, if Registered Securities are outstanding and there is no publication, the mailing of the relevant notice of redemption, or (ii) to register the transfer of or exchange any Registered Security so selected for redemption or exchange in whole or in part, except the unredeemed or unexchanged portion of such Registered Security being redeemed or exchanged in part, or (iii) to exchange any Bearer Security so selected for redemption or exchange except that such a Bearer Security may be exchanged for a Registered Security of like tenor and terms of that series, provided that such Registered Security shall be surrendered for redemption or exchange. Notwithstanding anything herein to the contrary, the exchange of Bearer Securities into Registered Securities shall be subject to applicable laws and regulations in effect at the time of exchange; neither the Company, the Trustee nor the Security Registrar shall exchange any Bearer Securities into Registered Securities if it has received an Opinion of Counsel that as a result of such exchanges the Company would suffer adverse consequences under the United States federal income tax laws and regulations then in effect and the Company has delivered to the Trustee a Company Order directing the Trustee not to make such exchanges thereafter unless and until the Trustee receives a subsequent Company Order to the contrary. The Company shall deliver copies of such Company Orders to the Security Registrar. SECTION 306. Mutilated, Destroyed, Lost and Stolen Debt Securities. If (i) any mutilated Debt Security or a Bearer Security with a mutilated coupon appertaining to it is surrendered to a Paying Agent outside the United States designated by the Company, or, in the case of any Registered Security, to the Trustee, or (ii) the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Debt Security or coupon, and there is delivered to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company and the Trustee that such Debt Security or coupon has been acquired by a bona fide purchaser, the Company shall execute and upon its written record the Trustee shall authenticate and deliver, in exchange for any such mutilated Debt Security or Bearer Security with a mutilated coupon appertaining to it or to which a destroyed, lost or stolen coupon appertains (with all appurtenant coupons not destroyed, lost or stolen) or in lieu of any such destroyed, lost or stolen Debt Security, a new Debt Security of like tenor and terms and principal amount, bearing a number not contemporaneously outstanding, with coupons corresponding to the coupons, if any, appertaining to such destroyed, lost or stolen Security or to the [ILLEGIBLE] to which such destroyed, lost or stolen coupon appertains; provided, however, that any such new Bearer Security will be delivered only in compliance with the conditions set forth in Section 305. In case any such mutilated, destroyed, lost or stolen Debt Security or coupon has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Debt Security, pay such Debt Security or coupon; provided, however, that payment of principal of (and premium, if any) and any interest on Bearer Securities shall, except as otherwise provided in Section 1002, be payable only at an office or agency located outside the United States; and provided, further, that, with respect to any such coupons, interest represented thereby (but 21 not any additional amounts payable as provided in Section 1006), shall be payable only upon presentation and surrender of the coupons appertaining thereto. Upon the issuance of any new Debt Security or coupon under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee and printing expenses) connected therewith. Every new Debt Security of any series, with its coupons, if any, issued pursuant to this Section in lieu of any destroyed, lost or stolen Debt Security, or in exchange for a Bearer Security to which a destroyed, lost or stolen coupon appertains, shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Debt Security and its coupons, if any, or the destroyed, lost or stolen coupon shall be at any time enforceable by anyone, and any such new Debt Security and coupons, if any, shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Debt Securities of that series and their coupons, if any, duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Debt Securities or coupons. SECTION 307. Payment of Interest; Interest Rights Preserved. Interest on any Registered Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Registered Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest. In case a Bearer Security of any series is surrendered in exchange for a Registered Security of such series after the close of business (at an office or agency in a Place of Payment for such series) on any Regular Record Date and before the opening of business (at such office or agency) on the next succeeding Interest Payment Date, such Bearer Security shall be surrendered without the coupon relating to such Interest Payment Date and interest will not be payable on such Interest Payment Date in respect of the Registered Security issued in exchange for such Bearer Security, but will be payable only to the Holder of such coupon when due in accordance with the provisions of this Indenture. At the option of the Company, payment of interest on any Registered Security may be made by check in the currency designated for such payment pursuant to the terms of such Registered Security mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or by wire transfer to an account in such currency designated by such Person in writing not less than ten days prior to the date of such payment. Any interest on any Registered Security of any series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the registered Holder on the relevant Regular Record Date by virtue of his having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Registered Securities of such series (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Registered Security of such series and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money and/or, to the extent such Debt Securities are denominated and payable in Dollars only, Eligible Instruments the payments of principal and interest on which when due (and without reinvestment and providing no tax liability will be imposed upon the Trustee or the Holder of such Registered Securities) will provide money in such amounts as will (together with any money irrevocably deposited in trust with the Trustee, without investment) be equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment such money and/or Eligible Instruments when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed 22 payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date. Unless the Trustee is acting as the Security Registrar, promptly after such Special Record Date, the Company shall furnish the Trustee with a list, or shall make arrangements satisfactory to the Trustee with respect thereto, of the names and addresses of, and principal amounts of Registered Securities of such series held by, the Holders appearing on the Security Register at the close of business on such Special Record Date. In the name and at the expense of the Company, the Trustee shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder of Registered Securities of such series at his address as it appears in the Security Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names the Registered Securities of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following Clause (2). In case a Bearer Security of any series is surrendered at the office or agency in a Place of Payment for such series in exchange for a Registered Security of such series after the close of business at such office or agency on any Special Record Date and before the opening of business at such office or agency on the related proposed date for payment of Defaulted Interest, such Bearer Security shall be surrendered without the coupon relating to such proposed date of payment and Defaulted Interest will not be payable on such proposed date of payment in respect of the Registered Security issued in exchange for such Bearer Security, but will be payable only to the Holder of such coupon when due in accordance with the provisions of this Indenture. (2) The Company may make payment of any Defaulted Interest on the Registered Securities of any series in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Registered Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Debt Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Debt Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Debt Security. Subject to the limitations set forth in Section 1002, the Holder of any coupon appertaining to a Bearer Security shall be entitled to receive the interest payable on such coupon upon presentation and surrender of such coupon on or after the Interest Payment Date of such coupon at an office or agency maintained for such purpose pursuant to Section 1002. If any Registered Security is exchanged for Capital Securities after any record date and on or prior to the next succeeding Interest Payment Date (other than any Debt Security whose Maturity is prior to such Interest Payment Date), interest whose Stated Maturity is on such Interest Payment Date shall be paid by the Company on such Interest Payment Date notwithstanding such exchange, and such interest (whether or not punctually paid or duly provided for) shall be paid to the Person in whose name that Debt Security is registered at the close of business on such record date. If any Bearer Security is exchanged for Capital Securities after any record date and on or prior to the next succeeding Interest Payment Date (other than any Debt Security whose Maturity is prior to such Interest Payment Date), interest whose Stated Maturity is on such Interest Payment Date shall be payable on such Interest Payment Date notwithstanding such exchange, and such interest, whether or not punctually paid or duly provided for) shall be paid by the Company pursuant to such procedure as may be satisfactory to the Trustee. SECTION 308. Persons Deemed Owners. Prior to due presentment of a Registered Security [MISSING] registration of transfer, the Company, the Trustee and any agent of the Company or of the Trustee [ILLEGIBLE] the Person in whose name such Registered Security is registered as the owner of such Registered Securities [MISSING] the purpose of receiving payment of principal of (and premium, if any) and (subject to Section 307) [ILLEGIBLE] on such Registered Security and for all other purposes 23 whatsoever, whether or not such Registered Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. The Company, the Trustee and any agent of the Company or the Trustee may treat the bearer of any Bearer Security and the bearer of any coupon as the absolute owner of such Bearer Security or coupon for the purpose of receiving payment thereof or on account thereof and for all other purposes whatsoever, whether or not such Bearer Security or coupon be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. None of the Company, the Trustee, any Paying Agent or the Security Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. SECTION 309. Cancellation. Unless otherwise provided with respect to a series of Debt Securities, all Debt Securities and coupons surrendered for payment, redemption, repayment, transfer, exchange or credit against any sinking fund payment pursuant to this Indenture, shall, if surrendered to the Company or any agent of the Company, be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Debt Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Debt Securities so delivered shall be promptly cancelled by the Trustee. No Debt Securities shall be authenticated in lieu of or in exchange for any Debt Securities cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Debt Securities and coupons held by the Trustee shall be destroyed and certification of their destruction delivered to the Company unless by a Company Order the Company shall direct that the cancelled Debt Securities or coupons be returned to it. SECTION 310. Computation of Interest. Except as otherwise specified as contemplated by Section 301 for Debt Securities of any series, interest on the Debt Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months. SECTION 311. Certification by a Person Entitled to Delivery of a Bearer Security. Whenever any provision of this Indenture or a Debt Security contemplates that certification be given by a Person entitled to delivery of a Bearer Security, such certification shall be provided substantially in the form of Exhibit A-1 and, if applicable, A-2 hereto, with only such changes as shall be approved by the Company and consented to by the Trustee whose consent shall not unreasonably be withheld. SECTION 312. Judgments. The Company may provide, pursuant to Section 301, for the Debt Securities of any series that, to the fullest extent possible under applicable law and except as may otherwise be specified as contemplated in Section 301, (a) the obligation, if any, of the Company to pay the principal of (and premium, if any) and interest on the Debt Securities of any series and any appurtenant coupons in a Foreign Currency, composite currency or Dollars (the "Designated Currency") as may be specified pursuant to Section 301 is of the essence and agrees that judgments in respect of such Debt Securities shall be given in the Designated Currency: (b) the obligation of the Company to make payments in the Designated Currency of the principal of (and premium, if any) and interest on such Debt Securities and any appurtenant coupons shall, notwithstanding any payment in any other currency (whether pursuant to a judgment or otherwise), be discharged only to the extent of the amount in the Designated Currency that the Holder receiving such payment may, in accordance with normal banking procedures, purchase with the sum paid in such other currency (after any premium and cost of exchange) in the country of issue of the Designated Currency in the case of Foreign Currency or Dollars or in the international banking community in the case of a composite currency on the Business Day immediately following the day on which such Holder receives such payment (c) if the amount in the Designated Currency that may be so purchased for any reason falls short of the amount originally due, the Company shall pay such additional amounts as may be necessary to compensate for such shortfall; and (d) any obligation of the Company not discharged by such payment shall be due as a separate and independent obligation and, until discharged as provided herein, shall continue in full force and effect. 24 ARTICLE FOUR SATISFACTION AND DISCHARGE SECTION 401. Satisfaction and Discharge of Indenture. This Indenture shall upon Company Request cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Debt Securities herein expressly provided for and rights to receive payments of principal and interest thereon and any right to receive additional amounts, as provided in Section 1006) and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture when (1) either (A) all Debt Securities theretofore authenticated and delivered and all coupons appertaining thereto (other than (i) coupons appertaining to Bearer Securities surrendered in exchange for Registered Securities and maturing after such exchange, surrender of which is not required or has been waived as provided in Section 305, (ii) Debt Securities and coupons which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306, (iii) coupons appertaining to Bearer Securities called for redemption or surrendered for repayment and maturing after the relevant Redemption Date or Repayment Date, as appropriate, surrender of which has been waived as provided in Section 1106 or 1303 and (iv) Debt Securities and coupons for whose payment money and/or Eligible Instruments have theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 1003) have been delivered to the Trustee cancelled or for cancellation; or (B) all such Debt Securities not theretofore delivered to the Trustee for cancellation (i) have become due and payable, or (ii) will become due and payable at their Stated Maturity within one year, or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of (i), (ii) or (iii) above, has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose money and/or, to the extent such Debt Securities are denominated and payable in Dollars only, Eligible Instruments the payments of principal and interest on which when due (and without reinvestment and providing no tax liability will be imposed upon the Trustee or the Holders of Debt Securities) will provide money in such amounts as will (together with any money irrevocably deposited in trust with the Trustee, without investment) be sufficient to pay and discharge the entire indebtedness on such Debt Securities and coupons of such series for principal (and premium, if any) and interest, and any mandatory sinking fund, repayment or analogous payments thereon, on the scheduled due dates therefor to the date of such deposit (in the case of Debt Securities and coupons which have become due and payable) or to the Stated Maturity or Redemption Date, if any, and all Repayment Dates (in the case of Debt Securities repayable at the option of the Holders thereof); provided, however, that in the event a petition for relief under the Bankruptcy Reform Act of 1978 or a successor statute is filed with respect to the Company within 91 days after the deposit, the obligations of the Company under the Indenture with respect to the Debt Securities of such series shall not be deemed terminated or discharged, and in such event the Trustee shall be required to return the deposited money and Eligible Instruments to the Company; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. 25 Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Sections 607 and, if money or Eligible Instruments shall have been deposited with the Trustee pursuant to Subclause (B) of Clause (1) of this Section, the obligations of the Trustee under Section 402 and the last paragraph of Section 1003 shall survive. SECTION 402. Application of Trust Money and Eligible Instruments. Subject to the provisions of the last paragraph of Section 1003, all money and Eligible Instruments deposited with the Trustee pursuant to Section 401 shall be held in trust and such money and the principal and interest received on such Eligible Instruments shall be applied by it, in accordance with the provisions of the Debt Securities, the coupons and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money or Eligible Instruments have been deposited with the Trustee. ARTICLE FIVE REMEDIES SECTION 501. Events of Default. "Event of Default", wherever used herein with respect to Debt Securities of any series, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law, pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) the entry of a decree or order for relief in respect of the Company or the Bank by a court having jurisdiction in the premises in an involuntary case under the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or other similar law, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Company or the Bank or of any substantial part of the property of either, or ordering the winding up or liquidation of the affairs of either, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; or (2) the commencement by the Company or the Bank of a voluntary case under the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or other similar law, or the consent by the Company or the Bank to the entry of a decree or order for relief in an involuntary case under any such law or to the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator or other similar official of either of the foregoing or of any substantial part of the property of either, or the making by the Company or the Bank of an assignment for the benefit of creditors, or the admission by the Company or the Bank in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company or the Bank in furtherance of any such action; or (3) any other Event of Default provided with respect to Debt Securities of such series. SECTION 502. Acceleration of Maturity; Rescission and Annulment. If an Event of Default with respect to Debt Securities of any series at the time Outstanding occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in principal amount of Outstanding Debt Securities of such series may declare the principal amount (or, if the Debt Securities of such series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) of and all accrued but unpaid interest on all the Debt Securities of such series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified amount) shall become immediately due and payable. Upon payment of such amount, all obligations of the Company in respect of the payment of principal of the Debt Securities of such series shall terminate. 26 At any time after such a declaration of acceleration with respect to Debt Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Debt Securities of such series, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if (1) the Company has paid or deposited with the Trustee a sum sufficient to pay (A) all overdue instalments of interest on all Debt Securities of such series and any related coupons, (B) the principal of (and premium, if any, on) any Debt Securities of such series which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in such Debt Securities, (C) to the extent that payment of such interest is lawful, interest upon overdue instalments of interest on each Debt Security and any related coupons at the rate or rates prescribed therefor in such Debt Securities, and (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) all Events of Default with respect to Debt Securities of such series have been cured or waived as provided in Section 513. No such rescission shall affect any subsequent default or impair any right consequent thereon. SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if: (1) default is made in the payment of any instalment of interest on any Debt Security or any related coupon when such interest becomes due and payable and such default continues for a period of 30 days, or (2) default is made in the payment of the principal of (or premium, if any, on) any Debt Security at the Maturity thereof, or (3) defaults in the deposit of any sinking fund payment, when and as due by the terms of a Debt Security of such series, or (4) defaults in any required designation of funds as Securities Funds, or (5) defaults in the performance, or breach of any covenant or warranty of the Company in this Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with or which has been expressly included in this Indenture solely for the benefit of series of Debt Securities other than such series), and such default or breach continues for a period of 30 days after there has been given, by registered or certified mail to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Debt Securities of such series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder, the Company will, upon demand of the Trustee, [ILLEGIBLE] for the benefit of the Holders of such Debt Securities and coupons, the amount then due and payable on such Debt Securities and coupons for any overdue principal (and premium, if any) and interest, sinking fund installment and interest, including the delivery of any Capital Securities then required to be delivered, and, to the extent that payment of such interest shall be legally enforceable, interest upon the overdue principal (and premium, if any) [ILLEGIBLE] upon overdue instalments of interest, at the rate or rates prescribed therefor in such Debt Securities; and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. 27 If the Company fails to pay such amounts (including the delivery of any Capital Securities then required to be delivered) forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid and the delivery of any Capital Securities required to be delivered and not so delivered, or, in the case of the failure to deliver Capital Securities, money equal to the principal amount of the Debt Securities for which the Capital Securities were to be exchanged, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon such Debt Securities and coupons and collect the moneys (or money equal to the principal amount of any Debt Securities for which Capital Securities were to be exchanged) adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Debt Securities and coupons, wherever situated. If an Event of Default or a default specified in this Section with respect to Debt Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Debt Securities of such series and any related coupons by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. SECTION 504. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceedings, or any voluntary or involuntary case under the Federal bankruptcy laws as now or hereafter constituted, relative to the Company or any other obligor upon the Debt Securities of a particular series or any related coupons or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of such Debt Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (1) to file and prove a claim for the whole amount of principal (and premium, if any) and interest owing and unpaid in respect of the Debt Securities of such series and any appurtenant coupons and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and (2) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same: and any receiver, assignee, trustee, custodian, liquidator, sequestrator or other similar official in any such proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 607. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Debt Securities or coupons or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 505. Trustee May Enforce Claims without Possession of Debt Securities or Coupons. All rights of action and claims under this Indenture or the Debt Securities or coupons may be prosecuted and enforced by the Trustee without the possession of any of the Debt Securities or coupons or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name, as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Debt Securities and coupons in respect of which such judgment has been recovered. 28 SECTION 506. Application of Money Collected, Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal (and premium, if any) or interest, upon presentation of the Debt Securities or coupons, or both, as the case may be, and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee under Section 607; SECOND: To the payment of amounts then due and unpaid to the holders of Senior Debt, to the extent required by Article Eighteen; THIRD: To the payment of the amounts then due and unpaid for principal of (and premium, if any) and interest on the Debt Securities and any coupons, in respect of which or for the benefit of which such money has been collected ratably, without preference or priority of any kind, according to the amounts due and payable on such Debt Securities and any coupons for principal (and premium, if any) and interest, respectively, The Holders of each series of Debt Securities denominated in ECU, any other composite currency or a Foreign Currency and any matured coupons relating thereto shall be entitled to receive a ratable portion of the amount determined by the Exchange Rate Agent by converting the principal amount Outstanding of such series of Debt Securities and matured but unpaid interest on such series of Debt Securities in the currency in which such series of Debt Securities is denominated into Dollars at the Exchange Rate as of the date of declaration of acceleration of the Maturity of the Debt Securities; and FOURTH: The balance, if any, to the Person or Persons entitled thereto. SECTION 507. Limitation on Suits. No Holder of any Debt Security of any series or any related coupons shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Debt Securities of such series; (2) the Holders of not less than 25% in principal amount of the Outstanding Debt Securities of such series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Debt Securities of such series; it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all of such Holders. SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest and to Exchange Debt Securities for Capital Securities. Notwithstanding any other provision in this Indenture, the Holder of any Debt Security or coupon shall have the right which is absolute and unconditional to receive payment of the principal of (and premium, if any) and (subject to Section 307) interest on such Debt Security or payment of such coupon on the respective Stated Maturity or Maturities expressed in such Debt Security or coupon (or, in the case of redemption or repayment, on 29 the Redemption Date or the Repayment Date, as the case may be), to have the Debt Securities exchanged for Capital Securities pursuant to Article Fourteen, if applicable, and to institute suit for the enforcement of any such payment or exchange, and such right shall not be impaired without the consent of such Holder, subject, however, to the provisions of Article Eighteen. SECTION 509. Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case the Company, the Trustee and the Holders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. SECTION 510. Rights and Remedies Cumulative. Except as otherwise provided in Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 511. Delay or Omission Not Waiver No delay or omission of the Trustee or of any Holder of any Debt Security or coupon to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. SECTION 512. Control by Holders of Debt Securities. The Holders of a majority in principal amount of the Outstanding Debt Securities of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to the Debt Securities of such series, provided, that (1) such direction shall not be in conflict with any rule of law or with this Indenture; (2) subject to the provisions of Section 601, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall, by a Responsible Officer or Responsible Officers of the Trustee, determine that the proceeding so directed would be unjustly prejudicial to the Holders of Debt Securities of such series not joining in any such direction; and (3) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. SECTION 513. Waiver of Past Defaults. The Holders of not less than a majority in principal amount of the Outstanding Debt Securities of any series may on behalf of the Holders of all the Debt Securities of any such series and any related coupons waive any past default hereunder with respect to such series and its consequences, except a default (1) in the payment of the principal of (or premium, if any) or interest on any Debt Security of such series, or (2) in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Debt Security of such series or coupon affected. 30 Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION 514. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Debt Security or coupon by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of the Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Debt Securities of any series, or to any suit instituted by any Holder for the enforcement of the payment of the principal of (or premium, if any) or interest on any Debt Security or the payment of any coupon on or after the respective Stated Maturity or Maturities expressed in such Debt Security or coupon (or, in the case of redemption or repayment, on or after the Redemption Date or Repayment Date, as the case may be) or for the enforcement of the right to exchange any Debt Securities for Capital Securities as provided in Article Fourteen. SECTION 515. Waiver of Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law whenever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE SIX THE TRUSTEE SECTION 601. Certain Duties and Responsibilities. (a) With respect to Debt Securities of any series, except during the continuance of an Event of Default with respect to the Debt Securities of such series, (1) the Trustee undertakes to perform such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. (b) In case an Event of Default with respect to Debt Securities of any series has occurred and is continuing, the Trustee shall, with respect to the Debt Securities of such series or any coupons, as the case may be, exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that (1) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section; 31 (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) the Trustee shall not be liable with respect to any action taken, suffered or omitted to be taken by it with respect to Debt Securities of any series in good faith in accordance with the direction of the Holders of a majority in principal amount of the Outstanding Debt Securities of such series relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Debt Securities of such series. (d) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (e) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. SECTION 602. Notice of Defaults. Within 90 days after the occurrence of any default hereunder with respect to Debt Securities of any series the Trustee shall transmit by mail to all Holders of Debt Securities of such series, entitled to receive reports pursuant to Section 703(c), notice of such default hereunder known to the Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of (or premium, if any) or interest on any Debt Security of such series or any related coupons or in the payment of any sinking fund instalment with respect to Debt Securities of such series or in the exchange of Capital Securities for Debt Securities of such series, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interest of the Holders of Debt Securities of such series; and provided, further, that in the case of any default of the character specified in Section 501(3) with respect to Debt Securities of such series no such notice to Holders shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default with respect to Debt Securities of such series. SECTION 603. Certain Rights of Trustee. Except as otherwise provided in Section 601: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, coupon or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors shall be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders of Debt Securities of such series or any related coupons pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or 32 indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, coupon, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney, other than any such books or records containing information as to the affairs of the customers of the Company or any of its subsidiaries; provided that the Trustee may examine such books and records relating to customers to the extent that such books and records contain information as to any payments made to such customers in their capacity as Holders of Debt Securities; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder, no Exchange Rate Agent, Global Exchange Agent, Capital Exchange Agent, Depositary or Paying Agent shall be deemed an agent of the Trustee and the Trustee shall not be responsible for any act or omission by any of them. SECTION 604. Not Responsible for Recitals or Issuance of Debt Securities. The recitals contained herein and in the Debt Securities, except the Trustee's certificates of authentication, and in any coupons, and the information in any registration statement, including all attachments thereto, except information provided by the Trustee therein, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Debt Securities of any series or any coupons or any Capital Securities. The Trustee shall not be accountable for the use or application by the Company of any Debt Securities or the proceeds thereof. The Trustee shall not be responsible for and makes no representations to the Company's ability or authority to issue Bearer Securities or the lawfulness thereof. SECTION 605. May Hold Debt Securities or Coupons. The Trustee, any Paying Agent, the Security Registrar or any other agent of the Company or the Trustee, in its individual or any other capacity, may become the owner or pledgee of Debt Securities and coupons, and, subject to Sections 608 and 613, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Paying Agent, Security Registrar or such agent. SECTION 606. Money Held in Trust. Money held by the Trustee or any Paying Agent in trust hereunder need not be segregated from other funds except to the extent required by law. Neither the Trustee nor any Paying Agent shall be under any liability for interest on any money received by it hereunder except as otherwise agreed with the Company. SECTION 607. Compensation and Reimbursement. The Company agrees (1) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be [ILLEGIBLE] by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and 33 (3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust or performance of its duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. As security for the performance of the obligations of the Company under this Section the Trustee shall have a claim prior to the Debt Securities and any coupons upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of principal of (and premium, if any) or interest on particular Debt Securities or any coupons. The claims of the Trustee under this Section shall not be subject to the provisions of Article Eighteen. SECTION 608. Disqualification; Conflicting Interests. (a) If the Trustee has or shall acquire any conflicting interest, as defined in this Section with respect to the Debt Securities of any series then, within 90 days after ascertaining that it has such conflicting interest, and if the default (as defined in this Section) to which such conflicting interest relates has not been cured or duly waived or otherwise eliminated before the end of such 90-day period, the Trustee shall either eliminate such conflicting interest or, except as otherwise provided below in this Section, resign with respect to the Debt Securities of such series in the manner and with the effect hereinafter specified in this Article and the Company shall take prompt steps to have a successor appointed in the manner provided herein. (b) (1) In the event that the Trustee shall fail to comply with the provisions of Subsection (a) of this Section with respect to the Debt Securities of any series, the Trustee shall, within 10 days after the expiration of such 90-day period, transmit, in the manner and to the extent provided in Section 703(c), to all Holders of Debt Securities of such series notice of such failure. (2) Subject to the provisions of Section 514, unless the Trustee's duty to resign is stayed as provided in Subsection (f) of this Section, any Holder who has been a bona fide Holder of Debt Securities of any series referred to in Subsection (a) of this Section for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of such Trustee, and the appointment of a successor, if such Trustee fails, after written request thereof by such Holder to comply with the provisions of Subsection (a) of this Section. (c) For the purposes of this Section, the Trustee shall be deemed to have a conflicting interest with respect to the Debt Securities of any series, if a default (under the terms of this Indenture), but exclusive of any period of grace or requirement of notice, has occurred with respect to such Debt Securities and (1) the Trustee is trustee under this Indenture with respect to the Outstanding Debt Securities of any series other than that series or is trustee under another indenture under which any other securities, or certificates of interest or participation in any other securities, of the Company are outstanding, unless such other indenture is a collateral trust indenture under which the only collateral consists of Debt Securities issued under this Indenture, provided that there shall be excluded from the operation of this paragraph this Indenture with respect to the Debt Securities of any series other than that series, the indenture between the Company and the Trustee dated as of June 15, 1984, as supplemented and amended from time to time, under which the Company's Floating Rate Subordinated Capital Notes due August 1, 1996, Floating Rate Subordinated Capital Notes due July, 1996, Subordinated Auction Rate Capital Notes due May 1999, Floating Rate Subordinated Capital Notes Due October, 1999, 9.75% Subordinated Notes due July 1, 2000 and 9.70% Subordinated Notes due August 1, 2000 were issued, and any other indenture or indentures hereafter qualified under the Trust Indenture Act under which other securities, or certificates of interest or participation in other securities, of the Company are outstanding, and (i) this Indenture and such other indenture or indentures (and all series of securities issuable thereunder) are wholly unsecured and rank equally, unless the Commission shall have found and declared by order pursuant to Section 305(b) or Section 307(c) of the Trust Indenture Act that differences exist between the provisions of this Indenture with respect to the Debt Securities of such series and one or more other series or the provisions of such other indenture or indentures which are so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to 34 disqualify the Trustee from acting as such under this Indenture with respect to the Debt Securities of such series and such other series or under such other indenture or indentures, or (ii) the Company shall have sustained the burden of proving, on application to the Commission and after opportunity for hearing thereon, that trusteeship under this Indenture with respect to the Debt Securities of such series and such other series or such other indenture or indentures is not so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to disqualify the Trustee from acting as such under this Indenture with respect to the Debt Securities of such series and such other series or under such other indenture or indentures; (2) the Trustee or any of its directors or executive officers is an underwriter for the Company; (3) the Trustee directly or indirectly controls or is directly or indirectly controlled by or is under direct or indirect common control with an underwriter for the Company; (4) the Trustee or any of its directors or executive officers is a director, officer, partner, employee, appointee or representative of the Company, or of an underwriter (other than the Trustee itself) for the Company who is currently engaged in the business of underwriting, except that (i) one individual may be a director or an executive officer, or both, of the Trustee and a director or an executive officer, or both of the Company but may not be at the same time an executive officer of both the Trustee and the Company; (ii) if and so long as the number of directors of the Trustee in office is more than nine, one additional individual may be a director or an executive officer, or both, of the Trustee and a director of the Company; and (iii) the Trustee may be designated by the Company or by any underwriter for the Company to act in the capacity of transfer agent, registrar, custodian, paying agent, fiscal agent, escrow agent, or depositary, or in any other similar capacity, or, subject to the provisions of paragraph (1) of this Subsection, to act as trustee, whether under an indenture or otherwise; (5) 10% or more of the voting securities of the Trustee is beneficially owned either by the Company or by any director, partner, or executive officer thereof, or 20% or more of such voting securities is beneficially owned, collectively, by any two or more of such persons; or 10% or more of the voting securities of the Trustee is beneficially owned either by an underwriter for the Company or by any director, partner or executive officer thereof, or is beneficially owned, collectively, by any two or more such persons; (6) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this Subsection defined), (i) 5% or more of the voting securities, or 10% or more of any other class of security, of the Company not including the Debt Securities issued under this Indenture and securities issued under any other indenture under which the Trustee is also trustee, or (ii) 10% or more of any class of security of an underwriter for the Company; (7) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this Subsection defined), 5% or more of the voting securities of any person who, to the knowledge of the Trustee, owns 10% or more of the voting securities of, or controls directly or indirectly or is under direct or indirect common control with, the Company; (8) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this Subsection defined), 10% or more of any class of security of any person who, to the knowledge of the Trustee, owns 50% or more of the voting securities of the Company; (9) the Trustee owns, on the date a default under this Indenture (but exclusive of any period of grace or requirement of notice) has occurred upon the Debt Securities of any series or any anniversary of such default while such default upon such Debt Securities remains outstanding, in the capacity of executor, administrator, testamentary or inter vivos trustee, guardian, committee or conservator, or in any other similar capacity, an aggregate of 25% or more of the voting securities, or of any class of security, of any person, the beneficial ownership of a specified percentage of which would have constituted a conflicting interest under paragraph (6), (7) or (8) of this Subsection. As to any such securities of which the Trustee acquired ownership through becoming executor, administrator, or testamentary trustee of an estate which included them, the provisions of the preceding sentence shall not apply, for a period of two years from the date of such acquisition, to the extent 35 that such securities included in such estate do not exceed 25% of such voting securities or 25% of any such class of security. Promptly after the dates of any such Event of Default upon the Debt Securities of any series and annually in each succeeding year that such Event of Default upon such Debt Securities continues, the Trustee shall make a check of its holdings of such securities in any of the above-mentioned capacities as of such dates. If the Company fails to make payments in full of the principal of (or premium, if any), or interest on, any of the Debt Securities or coupons when and as the same becomes due and payable, and such failure continues for 30 days thereafter, the Trustee shall make a prompt check of its holdings of such securities in any of the above-mentioned capacities as of the date of the expiration of such 30-day period, and after such date, notwithstanding the foregoing provisions of this paragraph, all such securities so held by the Trustee, with sole or joint control over such securities vested in it, shall, but only so long as such failure shall continue, be considered as though beneficially owned by the Trustee for the purposes of paragraphs (6), (7) and (8) of this Subsection; or (10) except under the circumstances described in paragraphs (1), (3), (4), (5) or (6) of Section 613(b), the Trustee shall be or shall become a creditor of the Company. For purposes of paragraph (1) of this Subsection, and of Sections 512 and 513, the term "series" means a series, class or group of securities issuable under an indenture or this Indenture pursuant to whose terms holders of one such series may vote to direct the trustee, or otherwise take action pursuant to a vote of such holders, separately from holders of another such series; provided, that "series" shall not include any series of securities issuable under an indenture (including any series of Debt Securities issuable under this Indenture) if all such series rank equally and are wholly unsecured. The specifications of percentages on paragraphs (5) to (9), inclusive, of this Subsection shall not be construed as indicating that the ownership of such percentages of the securities of a person is or is not necessary or sufficient to constitute direct or indirect control for the purpose of paragraph (3) or (7) of this Subsection. For the purposes of paragraphs (6), (7), (8) and (9) of this Subsection only, (i) the terms "security" and "securities" shall include only such securities as are generally known as corporate securities, but shall not include any note or other evidence of indebtedness issued to evidence an obligation to repay moneys lent to a person by one or more banks, trust companies or banking firms, or any certificate of interest or participation in any such note or evidence of indebtedness; (ii) an obligation shall be deemed to be "in default" when a default in payment of principal shall have continued for 30 days or more and shall not have been cured; and (iii) the Trustee shall not be deemed to be the owner or holder of (A) any security which it holds as collateral security, as trustee or otherwise, for an obligation which is not in default as defined in Clause (ii) above, or (B) any security which it holds as collateral security under this Indenture, irrespective of any default hereunder, or (C) any security which it holds as agent for collection, or as custodian, escrow agent or depositary, or in any similar representative capacity. (d) For the purposes of this Section: (1) The term "underwriter" when used with reference to the Company means every person who, within one year prior to the time as of which the determination is made, has purchased from the Company with a view to, or has offered or sold for the Company in connection with, the distribution of any security of the Company outstanding at such time, or has participated or has had a direct or indirect participation in any such undertaking, or has participated or has had a participation in the direct or indirect underwriting of any such undertaking, but such term shall not include a person whose interest was limited to a commission from an underwriter or dealer not in excess of the usual and customary distributors' or sellers' commission. (2) The term "director" means any director of a corporation, or any individual performing similar functions with respect to any organization whether incorporated or unincorporated. (3) The term "person" means an individual, a corporation, a partnership, an association, a joint-stock company, a trust, an unincorporated organization, or a government or political subdivision thereof. As used in this paragraph, the term "trust" shall include only a trust where the interest or interests of the beneficiary or beneficiaries are evidenced by a security. (4) The term "voting security" means any security presently entitling the owner or holder thereof to vote in the direction or management of the affairs of a person, or any security issued under or pursuant to any trust, 36 agreement or arrangement whereby a trustee or trustees or agent or agents for the owner or holder of such security are presently entitled to vote in the direction of management of the affairs of a person. (5) The term "Company" means any obligor upon the Debt Securities of any series or any related coupons. (6) The term "executive officer" means the president, every vice president, every trust officer, the cashier, the secretary, and the treasurer of a corporation, and any individual customarily performing similar functions with respect to any organization, whether incorporated or unincorporated, but shall not include the chairman of the board of directors. (e) The percentages of voting securities and other securities specified in this Section shall be calculated in accordance with the following provisions: (1) A specified percentage of the voting securities of the Trustee, the Company or any other person referred to in this Section (each of whom is referred to as a "person" in this paragraph) means such amount of the outstanding voting securities of such person as entitles the holder or holders thereof to cast such specified percentage of the aggregate votes which the holders of all the outstanding voting securities of such person are entitled to cast in the direction or management of the affairs of such person. (2) A specified percentage of a class of securities of a person means such percentage of the aggregate amount of securities of the class outstanding. (3) The term "amount", when used in regard to securities, means the principal amount if relating to evidences of indebtedness, the number of shares if relating to capital shares, and the number of units if relating to any other kind of security. (4) The term "outstanding" means issued and not held by or for the account of the issuer. The following securities shall not be deemed outstanding within the meaning of this definition: (i) securities of an issuer held in a sinking fund relating to securities of the issuer of the same class; (ii) securities of an issuer held in a sinking fund relating to another class of securities of the issuer, if the obligation evidenced by such other class of securities is not in default as to principal or interest or otherwise; (iii) securities pledged by the issuer thereof as security for an obligation of the issuer not in default as to principal or interest or otherwise; and (iv) securities held in escrow if placed in escrow by the issuer thereof; provided, however, that any voting securities of an issuer shall be deemed outstanding if any person other than the issuer is entitled to exercise the voting rights thereof. (5) A security shall be deemed to be of the same class as another security if both securities confer upon the holder or holders thereof substantially the same rights and privileges; provided, however, that in the case of secured evidences of indebtedness, all of which are issued under a single indenture, differences in the interest rates or maturity dates of various series thereof shall not be deemed sufficient to constitute such series different classes and provided, further, that, in the case of unsecured evidences of indebtedness, differences in the interest rates or maturity dates thereof shall not be deemed sufficient to constitute them securities of different classes, whether or not they are issued under a single indenture. (f) Except in the case of a default in the payment of the principal of or interest on any Debt Securities of any series, or in the payment of any sinking or purchase fund installment, the Trustee shall not be required to resign as provided by this Section if the Trustee shall have sustained the burden of proving, on application to the Commission and after opportunity for hearing thereon, that (i) the Event of Default under this Indenture may be cured or waived during a reasonable period and under the procedures described in such application, and (ii) a stay of the Trustee's duty to resign will not be inconsistent with the interests of Holders of such Debt Securities. The filing of such an application shall automatically stay the performance of the duty to resign until the Commission orders otherwise. 37 (g) If Section 310(b) of the Trust Indenture Act is amended at any time after the date of this Indenture to change the circumstances under which a Trustee shall be deemed to have a conflicting interest with respect to the Debt Securities of any series or to change any of the definitions in connection therewith, this Section 608 shall be automatically amended to incorporate such changes, unless such changes would cause any Trustee then acting as Trustee hereunder with respect to any Outstanding Debt Securities to be deemed to have a conflicting interest, in which case such changes shall be incorporated herein only to the extent that such changes (i) would not cause the Trustee to be deemed to have a conflicting interest or (ii) are required by law. SECTION 609. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $5,000,000, and subject to supervision or examination by Federal or State authority; provided, however, that if Section 310(a) of the Trust Indenture Act or the rules and regulations of the Commission under the Trust Indenture Act at any time permit a corporation organized and doing business under the laws of any other jurisdiction to serve as trustee of an indenture qualified under the Trust Indenture Act, this Section 609 shall be automatically amended to permit a corporation organized and doing business under the laws of any such other jurisdiction to serve as Trustee hereunder. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. Neither the Company nor any person directly or indirectly controlling, controlled by or under common control with the Company may serve as Trustee. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. SECTION 610. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 611. (b) The Trustee may resign at any time with respect to the Debt Securities of one or more series by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Debt Securities of such series. (c) The Trustee may be removed at any time with respect to the Debt Securities of any series by Act of the Holders of a majority in principal amount of the Outstanding Debt Securities of such series, delivered to the Trustee and to the Company. (d) If at any time; (1) the Trustee shall fail to comply with Section 608(a) with respect to the Debt Securities of any series after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Debt Security of such series for at least six months, unless the Trustee's duty to resign has been stayed as provided in Section 608(f) or (2) the Trustee shall cease to be eligible under Section 609 with respect to any series of Debt Securities and shall fail to resign after written request therefor by the Company or by any such Holder, or (3) the Trustee shall become incapable of acting with respect to any series of Debt Securities or a decree or order for relief by a court having jurisdiction in the premises shall have been entered in respect of the Trustee in an involuntary case under the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or similar law; or a decree or order by a court having jurisdiction in the premises shall have been entered for the appointment of a receiver, custodian, liquidator, assignee, trustee, sequestrator or other similar official of the Trustee or of its property or affairs, or any public 38 officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation, winding up or liquidation, or (4) the Trustee shall commence a voluntary case under the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or similar law or shall consent to the appointment of or taking possession by a receiver, custodian, liquidator, assignee, trustee, sequestrator or other similar official of the Trustee or its property or affairs, or shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due, or shall take corporate action in furtherance of any such action, then, in any such case, (i) the Company by a Board Resolution may remove the Trustee with respect to such series or (ii) subject to Section 514, any Holder who has been a bona fide Holder of a Debt Security of any series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee for the Debt Securities of such series and the appointment of a successor Trustee. (e) If the Trustee shall resign, be removed or become incapable of acting with respect to any series of Debt Securities, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Debt Securities or one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Debt Securities of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Debt Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Debt Securities of any particular series) and shall comply with the applicable requirements of Section 611. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Debt Securities of any series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Debt Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee with respect to the Debt Securities of such series and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Debt Securities of any series shall have been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of a Debt Security of such series for at least six months may, subject to Section 514, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Debt Securities of such series. (f) The Company shall give notice of each resignation and each removal of the Trustee with respect to the Debt Securities of any series and each appointment of a successor Trustee with respect to the Debt Securities of any series by mailing written notice of such event by first-class mail, postage prepaid, to the Holders of Registered Securities, if any, of such series as their names and addresses appear in the Security Register and, if Debt Securities of such series are issuable as Bearer Securities, by publishing notice of such event once in an Authorized Newspaper in each Place of Payment located outside the United States. Each notice shall include the name of the successor Trustee with respect to the Debt Securities of such series and the address of its Corporate Trust Office. SECTION 611. Acceptance of Appointment by Successor. (a) In the case of an appointment hereunder of a successor Trustee with respect to all Debt Securities, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee, and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. 39 (b) In case of the appointment hereunder of a successor Trustee with respect to the Debt Securities of one or more (but not all) series, the Company, the retiring Trustee upon payment of its charges and each successor Trustee with respect to the Debt Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Debt Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Debt Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Debt Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture, the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Debt Securities of that or those series to which the appointment of such successor Trustee relates; but, on the request of the Company or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Debt Securities of that or those series to which the appointment of such successor Trustee relates. (c) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (a) or (b) of this Section, as the case may be. (d) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. SECTION 612. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the executing or filing of any paper or any further act on the part of any of the parties hereto. In case any Debt Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Debt Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Debt Securities. In case any Debt Securities shall not have been authenticated by such predecessor Trustee, any such successor Trustee may authenticate and deliver such Debt Securities, in either its own name or that of its predecessor Trustee, with the full force and effect which this Indenture provides for the certificate of authentication of the Trustee. SECTION 613. Preferential Collection of Claims Against Company. (a) Subject to Subsection (b) of this Section, if the Trustee shall be or shall become a creditor, directly or indirectly, secured or unsecured, of the Company within three months prior to a default, as defined in Subsection (c) of this Section, or subsequent to such a default, then, unless and until such default shall be cured, the Trustee shall set apart and hold in a special account for the benefit of the Trustee individually, the Holders of the Debt Securities and coupons and the holders of other indenture securities (as defined in Subsection (c) of this Section): (1) an amount equal to any and all reductions in the amount due and owing upon any claim as such creditor in respect of principal or interest, effected after the beginning of such three-month period and valid as against the Company and its other creditors, except any such reduction resulting from the receipt or disposition of any property described in paragraph (2) of this Subsection, or from the exercise of any right of set-off which the Trustee could have exercised if a voluntary or involuntary case had been commenced in respect of the 40 Company under the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or other similar law upon the date of such default; and (2) all property received by the Trustee in respect of any claim as such creditor, either as security therefor, or in satisfaction or composition thereof, or otherwise, after the beginning of such three-month period, or an amount equal to the proceeds of any such property, if disposed of, subject, however, to the rights, if any, of the Company and its other creditors in such property or such proceeds. Nothing herein contained, however, shall affect the right of the Trustee: (A) to retain for its own account (i) payments made on account of any such claim by any Person (other than the Company) who is liable thereon, and (ii) the proceeds of the bona fide sale of any such claim by the Trustee to a third Person, and (iii) distributions made in cash, securities or other property in respect of claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or other similar law; (B) to realize, for its own account, upon any property held by it as security for any such claim, if such property was so held prior to the beginning of such three-month period; (C) to realize, for its own account, but only to the extent of the claim hereinafter mentioned, upon any property held by it as security for any such claim, if such claim was created after the beginning of such three-month period and such property was received as security therefor simultaneously with the creation thereof, and if the Trustee shall sustain the burden of proving that at the time such property was so received the Trustee had no reasonable cause to believe that a default as defined in Subsection (c) of this Section would occur within three months; or (D) to receive payment on any claim referred to in paragraph (B) or (C), against the release of any property held as security for such claim as provided in paragraph (B) or (C), as the case may be, to the extent of the fair value of such property. For the purposes of paragraphs (B), (C) and (D), property substituted after the beginning of such three-month period for property held as security at the time of such substitution shall, to the extent of the fair value of the property released, have the same status as the property released, and, to the extent that any claim referred to in any of such paragraphs is created in renewal of or in substitution for or for the purpose of repaying or refunding any pre-existing claim of the Trustee as such creditor, such claim shall have the same status as such pre-existing claim. If the Trustee shall be required to account, the funds and property held in such special account and the proceeds thereof shall be apportioned among the Trustee, the Holders and the holders of other indenture securities in such manner that the Trustee, the Holders and the holders of other indenture securities realize, as a result of payments from such special account and payments of dividends on claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or other similar law, the same percentage of their respective claims, figured before crediting to the claim of the Trustee anything on account of the receipt by it from the Company of the funds and property in such special account and before crediting to the respective claims of the Trustee and the Holders and the holders of other indenture securities dividends on claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or other similar law, but after crediting thereon receipts on account of the indebtedness represented by their respective claims from all sources other than from such dividends and from the funds and property so held in such special account. As used in this paragraph, with respect to any claim, the term "dividends" shall include any distribution with respect to such claim, in bankruptcy or receivership or proceedings for reorganization pursuant to the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or other similar law, whether such distribution is made in cash, securities, or other property, but shall not include any such distribution with respect to the secured portion, if any, of such claim. The court in which such bankruptcy, receivership or proceedings for reorganization is pending shall have jurisdiction (i) to apportion among the Trustee and the Holders and the holders of other indenture securities, in accordance with the provisions of this paragraph, 41 the funds and property held in such special account and proceeds thereof, or (ii) in lieu of such appointment, in whole or in part, to give to the provisions of this paragraph due consideration in determining the fairness of the distributions to be made to the Trustee and the Holders and the holders of other indenture securities with respect to their respective claims, in which event it shall not be necessary to liquidate or to appraise the value of any securities or other property held in such special account or as security for any such claim, or to make a specific allocation of such distributions as between the secured and unsecured portions of such claims, or otherwise to apply the provisions of this paragraph as a mathematical formula. Any Trustee which has resigned or been removed after the beginning of such three-month period shall be subject to the provisions of this Subsection as though such resignation or removal had not occurred. If any Trustee has resigned or been removed prior to the beginning of such three-month period, it shall be subject to the provisions of this Subsection if and only if the following conditions exist: (i) the receipt of property or reduction of claim, which would have given rise to the obligation to account, if such Trustee had continued as Trustee, occurred after the beginning of such three-month period; and (ii) such receipt of property or reduction of claim occurred within three months after such resignation or removal. (b) There shall be excluded from the operation of Subsection (a) of this Section a creditor relationship arising from (1) the ownership or acquisition of securities issued under any indenture, or any security or securities having a maturity of one year or more at the time of acquisition by the Trustee; (2) advances authorized by a receivership or bankruptcy court of competent jurisdiction or by this Indenture, for the purpose of preserving any property which shall at any time be subject to the lien of this Indenture or of discharging tax liens or other prior liens or encumbrances thereon, if notice of such advances and of the circumstances surrounding the making thereof is given to the Holders at the time and in the manner provided in this Indenture; (3) disbursements made in the ordinary course of business in the capacity of trustee under an indenture, transfer agent, registrar, custodian, paying agent, fiscal agent or depositary, or other similar capacity; (4) an indebtedness created as a result of services rendered or premises rented; or an indebtedness created as a result of goods or securities sold in a cash transaction as defined in Subsection (c) of this Section; (5) the ownership of stock or of other securities of a corporation organized under the provisions of Section 25(a) of the Federal Reserve Act, as amended, which is directly or indirectly a creditor of the Company; or (6) the acquisition, ownership, acceptance or negotiation of any drafts, bills of exchange, acceptances or obligations which fall within the classification of self-liquidating paper as defined in Subsection (c) of this Section. (c) For the purposes of this Section only: (1) The term "default" means any failure to make payment in full of the principal of or interest on any of the Debt Securities or upon the other indenture securities when and as such principal or interest becomes due and payable. (2) The term "other indenture securities" means securities upon which the Company is an obligor outstanding under any other indenture (i) under which the Trustee is also trustee, (ii) which contains provisions substantially similar to the provisions of this Section, and (iii) under which a default exists at the time of the apportionment of the funds and property held in such special account. (3) The term "cash transaction" means any transaction in which full payment for goods or securities sold is made seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks and payable upon demand. (4) The term "self-liquidating paper" means any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Company for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds 42 arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Company arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation. (5) The term "Company" means any obligor upon the Debt Securities. SECTION 614. Authenticating Agent. The Trustee shall upon Company request appoint one or more authenticating agents (including, without limitation, the Company or any Affiliate thereof) with respect to one or more series of Debt Securities which shall be authorized on behalf of the Trustee in authenticating Debt Securities of such series in connection with the issue, delivery, registration of transfer, exchange, partial redemption or repayment of such Debt Securities. Wherever reference is made in this Indenture to the authentication of Debt Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication on behalf of the Trustee by an authenticating agent and a certificate of authentication executed on behalf of the Trustee by an authenticating agent. Each authenticating agent must be acceptable to the Company and must be a corporation organized and doing business under the laws of the United States of America or of any State, having a principal office in the State of California or the Borough of Manhattan, The City of New York, having a combined capital surplus of at least $1,000,000, authorized under such laws to do a trust business and subject to supervision or examination by Federal or State authorities or the equivalent foreign authority in the case of an authenticating agent who is not organized and doing business under the laws of the United States of America or of any State thereof or the District of Columbia. Any corporation succeeding to the corporate agency business of an authenticating agent shall continue to be an authenticating agent without the execution or filing of any paper or any further act on the part of the Trustee or such authenticating agent. An authenticating agent may at any time resign with respect to one or more series of Debt Securities by giving written notice of resignation to the Trustee and to the Company. The Trustee may at any time terminate the agency of an authenticating agent with respect to one or more series of Debt Securities by giving written notice of termination to such authenticating agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time an authenticating agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee promptly may appoint a successor authenticating agent. Any successor authenticating agent upon acceptance of its appointment hereunder shall become vested with all rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an authenticating agent herein. No successor authenticating agent shall be appointed unless eligible under the provisions of this Section. The Company agrees to pay to each authenticating agent from time to time reasonable compensation for its services under this Section, subject to the provisions of Section 607. The provisions of Sections 104, 111, 306, 309, 603, 604 and 605 shall be applicable to any authenticating agent. Pursuant to each appointment made under this Section, the Debt Securities of each series covered by such appointment may have endorsed thereon, in lieu of the Trustee's certificate of authentication, an alternate certificate of authentication in substantially the following form: This is one of the Debt Securities, of the series designated herein, described in the within-mentioned Indenture. MANUFACTURERS HANOVER TRUST COMPANY OF CALIFORNIA By ---------------------------------------- As Authenticating Agent for the Trustee, or By By ---------------------------------- ---------------------------------------- Authorized Officer Authorized Officer 43 ARTICLE SEVEN HOLDERS' LIST AND REFORM BY TRUSTEE AND COMPANY SECTION 701. Company to Furnish Trustee Names and Addresses of Holders. The Company will furnish or cause to be furnished to the Trustee with respect to Debt Securities of each series for which it acts as Trustee: (1) semi-annually, not more than 15 days after the Regular Record Date in respect of the Debt Securities of such series or on June 30 and December 31 of each year with respect to each series of Debt Securities for which there are no Regular Record Dates, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of Registered Securities as of such Regular Record Date or June 15 or December 15, as the case may be, and (2) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; provided, however, that if and so long as the Trustee shall be the Security Registrar, no such list need be furnished. SECTION 702. Preservation of Information; Communications to Holders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders of Registered Securities contained in the most recent list furnished to the Trustee as provided in Section 701 and the names and addresses of Holders of Registered Securities received by the Trustee in its capacity as Paying Agent or Security Registrar, if so acting. The Trustee may destroy any list furnished to it as provided in Section 701 upon receipt of a new list so furnished. The Trustee shall preserve for at least two years the names and addresses of Holders of Bearer Securities filed with the Trustee pursuant to Section 703(c). (b) If three or more Holders of Debt Securities of any series (hereinafter referred to as "applicants") apply in writing to the Trustee, and furnish to the Trustee proof that each such applicant has owned a Debt Security for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other Holders of Debt Securities of such series (in which case the applicants must hold Debt Securities of such series) or with all Holders of Debt Securities with respect to their rights under this Indenture or under the Debt Securities and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall, within five Business Days after the receipt of such application, at its election, either (i) afford such applicants access to the information preserved at the time by the Trustee in accordance with Section 702(a), or (ii) inform such applicants as to the approximate number of Holders of Debt Securities of such series or of all Debt Securities, as the case may be, whose names and addresses appear in the information preserved at the time by the Trustee in accordance with Section 702(a), and as to the approximate cost of mailing to such Holders the form of proxy or other communication, if any, specified in such application. If the Trustee shall elect not to afford such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each Holder whose name and address appear in the information preserved at the time by the Trustee in accordance with Section 702(a), a copy of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender, the Trustee shall mail to such applicants and file with the Commission, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interests of the Holders or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, the Trustee shall 44 mail copies of such material to all such Holders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application. (c) Every Holder of Debt Securities or coupons, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with Section 702(b), regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 702(b). SECTION 703. Reports by Trustee. (a) Within 60 days after May 15 of each year commencing with the year 1991, the Trustee shall transmit by mail to all Holders of Debt Securities of any series with respect to which it acts as Trustee, as provided in Subsection (c) of this Section, a brief report dated as of such May 15 with respect to any of the following events which may have occurred within the previous twelve months (but if no such event has occurred within such period, no report need be transmitted): (1) any change to its eligibility under Section 609 and its qualifications under Section 608; (2) the creation of or any material change to a relationship specified in paragraphs (1) through (10) of Section 608(c); (3) the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) which remain unpaid on the date of such report, and for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Debt Securities of such series or any related coupons, on any property or funds held or collected by it as Trustee, except that the Trustee shall not be required (but may elect) to report such advances if such advances so remaining unpaid aggregate not more than 1/2 of 1% of the principal amount of the Outstanding Debt Securities of such series on the date of such report; (4) the amount, interest rate and maturity date of all other indebtedness owing by the Company (or any other obligor on the Debt Securities of such series) to the Trustee in its individual capacity, on the date of such report, with a brief description of any property held as collateral security therefor, except an indebtedness based upon a creditor relationship arising in any manner described in Section 613(b) (2), (3), (4) or (6); (5) any change to the property and funds, if any, physically in the possession of the Trustee as such on the date of such report; (6) any additional issue of Debt Securities which the Trustee has not previously reported; and (7) any action taken by the Trustee in the performance of its duties hereunder which it has not previously reported and which in its opinion materially affects the Debt Securities, except action in respect of a default, notice of which has been or is to be withheld by the Trustee in accordance with Section 602; provided, however, that if the Trust Indenture Act is amended subsequent to the date hereof to eliminate the requirement of the Trustee's brief report, the report required by this Section need not be transmitted to any Holders. (b) The Trustee shall transmit by mail to all Holders of Debt Securities of any series for which it acts as the Trustee, as provided in Subsection (c) of this Section, a brief report with respect to the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) since the date of the last report transmitted pursuant to Subsection (a) of this Section (or if no such report has yet been so transmitted, since the date of execution of this instrument) for the reimbursement of which it claims or may claim a right or charge, prior to that of the Debt Securities of such series, on property or funds held or collected by it as Trustee, and which it has not previously reported pursuant to this Subsection, except that the Trustee for each series shall not be required (but may elect) to report such advances if such advances remaining unpaid at any time aggregate 10% or less of the principal amount of the Debt Securities of such series Outstanding at such time, such report to be transmitted within 90 days after such time. 45 (c) Reports pursuant to this Section shall be transmitted by mail (1) to all Holders of Registered Securities, as the names and addresses of such Holders appear in the Security Register; (2) to such Holders of Bearer Securities as have, within the two years preceding such transmission, filed their names and addresses with the Trustee for that purpose; and (3) except in the case of reports pursuant to Subsection (b) of this Section, to each Holder of a Debt Security whose name and address is preserved at the time by the Trustee, as provided in Section 702(a). (d) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which any Debt Securities of such series are listed, with the Commission and also with the Company. The Company will notify the Trustee when any series of Debt Securities are listed on any stock exchange. SECTION 704. Reports by Company. The Company will: (1) file with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934; or, if the Company is not required to file information, documents or reports pursuant to either of said Sections, then it will file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Securities Exchange Act of 1934 in respect of a security listed and registered on a National Securities Exchange as may be prescribed from time to time in such rules and regulations: (2) file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; (3) transmit by mail to all Holders of Debt Securities, in the manner and to the extent provided in Section 703(c) with respect to reports pursuant to Section 703(a), within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant to paragraphs (1) and (2) of this Section as may be required by rules and regulations prescribed from time to time by the Commission; and (4) furnish to the Trustee, not less often than annually, a brief certificate from the principal executive officer, principal financial officer or principal accounting officer as to his or her knowledge of the Company's compliance with all conditions and covenants under the Indenture. For purposes of this paragraph, such compliance shall be determined without regard to any period of grace or requirement of notice provided under the Indenture. ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 801. Company May Consolidate, etc., Only on Certain Terms. The Company shall not consolidate with or merge into any other corporation or convey, transfer or lease its properties and assets substantially as an entirety to any Person, unless: (1) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company 46 substantially as an entirety shall be a corporation organized and existing under the laws of the United States of America, any political subdivision thereof or any State thereof and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of (and premium, if any) and interest (including all additional amounts, if any, payable pursuant to Section 1006) on all the Debt Securities and any related coupons and the performance of every covenant of this Indenture on the part of the Company to be performed or observed; (2) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time, or both, would become an Event of Default, shall have happened and be continuing; (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each stating that such consolidation, merger, conveyance, transfer or lease and, such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been met. SECTION 802. Successor Corporation Substituted. Upon any consolidation with or merger into any other corporation, or any conveyance, transfer or lease of the properties and assets of the Company substantially as an entirety in accordance with Section 801, the successor corporation formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor had been named as the Company herein, and thereafter, except in the case of a lease, the Company (which term for this purpose shall mean the Person named as the "Company" in the first paragraph of this instrument or any successor corporation which shall theretofore have become such in the manner presented in this Article) shall be relieved of all obligations and covenants under this Indenture and the Debt Securities and coupons. ARTICLE NINE SUPPLEMENTAL INDENTURES SECTION 901. Supplemental Indentures without Consent of Holders. Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another corporation to the Company, and the assumption by such successor of the covenants of the Company herein and in the Debt Securities contained; or (2) to add to the covenants of the Company, for the benefit of the Holders of all or any series of Debt Securities or coupons (and if such covenants are to be for the benefit of less than all series of Debt Securities, or coupons stating that such covenants are expressly being included solely for the benefit of such series), to convey, transfer, assign, mortgage or pledge any property to or with the Trustee, or to surrender any right or power herein conferred upon the Company; or (3) to add to any additional Events of Default (and if such Events of Default are to be applicable to less than all series of Debt Securities, stating that such Events of Default are expressly being included solely to be applicable to such series); or (4) to add to, change or eliminate any of the provisions of this Indenture to provide that Bearer Securities may be registrable as to principal, to change or eliminate any restrictions on the payment of principal (or premium, if any) on Registered Securities [ILLEGIBLE] principal (or premium, if any) or any interest on Bearer Securities, to permit Bearer Securities to be [ILLEGIBLE] in exchange for Registered Securities, to permit Bearer Securities to be issued in exchange for Bearer Securities of other authorized denominations or to permit or facilitate the issuance of Debt Securities in [ILLEGIBLE] form, provided any such action shall not adversely affect the interests of the Holders of Debt Securities of any series or any related coupons in any material respect; or 47 (5) to change or eliminate any of the provisions of this Indenture, provided that any such change or elimination (a) shall become effective only when there is no Debt Security Outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision or (b) shall not apply to any Debt Security Outstanding; or (6) to establish the form or terms of Debt Securities of any series as permitted by Sections 201 and 301; or (7) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Debt Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 611(b); (8) to evidence any changes to Section 608, 609 or 703(a) permitted by the terms thereof; (9) to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture which shall not be inconsistent with any provision of this Indenture, provided such other provisions shall not adversely affect the interests of the Holders of Debt Securities of any series or any related coupons in any material respect; or (10) to add to or change or eliminate any provision of this Indenture as shall be necessary or desirable in accordance with any amendments to the Trust Indenture Act, provided such action shall not adversely affect the interest of Holders of the Debt Securities of any series or any appurtenant coupons in any material respect. SECTION 902. Supplemental Indentures with Consent of Holders. With the consent of the Holders of not less than 66-2/3% in principal amount of the Outstanding Debt Securities of each series affected by such supplemental indenture, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders under this Indenture of such Debt Securities of such series and any related coupons; provided, however, that an indenture supplemental hereto which changes the required ownership set forth in the definition of Controlled Subsidiary in Section 101 hereof from 80% to a majority but does not change any other provision of this Indenture or modify in any other manner the rights of the Holders of all the Debt Securities under this Indenture may be entered into with the consent of the Holders of at least a majority in principal amount of the Outstanding Debt Securities of each series; and provided, further, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Debt Security or coupon affected thereby, (1) change the Stated Maturity of the principal or any instalment of principal of, or any instalment of interest on any Debt Security, or reduce the principal amount thereof or the interest thereon or any premium payable upon redemption or repayment thereof, or change any obligation of the Company to pay additional amounts pursuant to Section 1006 (except as contemplated by Section 801(1) and permitted by Section 901(1)), or reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502, or change any Place of Payment, or the coin or currency in which any Debt Security or the interest thereon or any coupon is payable, or impair any right to the delivery of Capital Securities in exchange for Debt Securities provided for in this Indenture or the right to institute suit for the enforcement of any such payment or delivery on or after the Stated Maturity thereof (or, in the case of redemption, repayment or exchange, on or after the Redemption Date, Repayment Date or Capital Exchange Date, as the case may be); or (2) reduce the percentage in principal amount of the Outstanding Debt Securities of any series, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or reduce the requirements of Section 1404 for quorum or voting; or 48 (3) modify any of the provisions of this Section, Section 513 or Section 1007, except to increase any such percentage or to provide that certain other provisions of this indenture cannot be modified or waived without the consent of the Holder of each Outstanding Debt Security affected thereby; provided, however, that this clause shall not be deemed to require the consent of any Holder with respect to changes in the references to "the Trustee" and concomitant changes in this Section and Section 1007, or the deletion of this proviso, in accordance with the requirements of Section 611(b) and 901(7); or (4) adversely affect the right to repayment, if any, of Debt Securities of any series at the option of the Holders thereof; or (5) impair the right of any Holder of Debt Securities of any series to receive Capital Securities on any Capital Exchange Date for Debt Securities of such series with a Market Value equal to the principal amount of such Holder's Debt Securities of such series or in an amount sufficient to provide proceeds upon sale by the Company in the Secondary Offering equal to the principal amount of such Holder's Debt Securities of such series; or (6) impair the right of any Holder of Convertible Securities of any series to convert such Debt Securities pursuant to Article Nineteen; and provided, further, that no change shall be made in the provisions of Article Eighteen that will affect adversely the holders of Senior Debt without the consent of the holders of all Senior Debt Outstanding. A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Debt Securities, or which modifies the rights of the Holders of Debt Securities of such with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Debt Securities of any other series. It shall not be necessary for any Act of Holders of the Debt Securities under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. SECTION 903. Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive. and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. SECTION 904. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a pan of this Indenture for all purposes; and every Holder of Debt Securities theretofore or thereafter authenticated and delivered hereunder and of any coupons appertaining thereto shall be bound thereby. SECTION 905. Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. SECTION 906. Reference in Debt Securities to Supplemental Indentures. Debt Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Debt Securities of any series and any appurtenant coupons so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any such supplemental indenture may be prepared and executed by the Company and authenticated 49 and delivered by the Trustee in exchange for Outstanding Debt Securities of such series and any appurtenant coupons. ARTICLE TEN COVENANTS SECTION 1001. Payment of Principal, Premium and Interest. The Company covenants and agrees for the benefit of each series of Debt Securities and any appurtenant coupons that it will duly and punctually pay the principal of (and premium, if any) and interest on the Debt Securities and any appurtenant coupons in accordance with the terms, of the Debt Securities, any appurtenant coupons and this Indenture. Any interest due on Bearer Securities on or before Maturity, other than additional amounts, if any, payable as provided in Section 1006 in respect of principal of (or premium, if any, on) such a Debt Security, shall be payable only upon presentation and surrender of the several coupons for such interest instalments as are evidenced thereby as they severally mature. For all purposes of this Indenture, the exchange of Capital Securities for Debt Securities of any series pursuant to the Indenture shall constitute full payment of principal of the Debt Securities of such series being exchanged on any Capital Exchange Date for Debt Securities of such series, without prejudice to any Holders rights pursuant to Section 1413. SECTION 1002. Maintenance of Office or Agency. The Company will maintain in each Place of Payment for any series of Debt Securities an office or agency where Debt Securities (but, except as otherwise provided below, unless such Place of Payment is located outside the United States, not Bearer Securities) may be presented or surrendered for payment, where Debt Securities may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Debt Securities and this Indenture may be served. If Debt Securities of a series are issuable as Bearer Securities, the Company will maintain, subject to any laws or regulations applicable thereto, an office or agency in a Place of Payment for such series which is located outside the United States where Debt Securities of such series and the related coupons may be presented and surrendered for payment (including payment of any additional amounts payable on Debt Securities of such series pursuant to Section 1006); provided, however, that if the Debt Securities of such series are listed on The Stock Exchange of the United Kingdom and the Republic of Ireland or the Luxembourg Stock Exchange or any other stock exchange located outside the United States and such stock exchange shall so require, the Company will maintain a Paying Agent in London or Luxembourg or any other required city located outside the United States, as the case may be, so long as the Debt Securities of such series are listed on such exchange. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of any such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee its agent to receive all presentations, surrenders, notices and demands, except that Bearer Securities of that series and the related coupons may be presented and surrendered for payment (including payment of any additional amounts payable on Bearer Securities of that series pursuant to Section 1006) at the place specified for the purpose pursuant to Section 301(5). No payment of principal of, premium or interest on Bearer Securities shall be made at any office or agency of the Company in the United States or by check mailed to any address in the United States or by transfer to an account maintained with a bank located in the United States; provided, however, payment of principal of and any premium and interest in Dollars (including additional amounts payable in respect thereof) on any Bearer Security may be made at an office or agency of, and designated by, the Company located in the United States if (but only if) payment of the full amount of such principal, premium, interest or additional amounts in Dollars at all offices outside the United States maintained for the purpose by the Company in accordance with this Indenture is illegal or effectively precluded by exchange controls or other similar restrictions and the Trustee receives an Opinion of Counsel that such payment within the United States is legal. Unless otherwise provided as contemplated by Section 301 with respect to any series of Debt Securities, at the option of the Holder of any Bearer Security or related coupon, payment may be made by check in the currency designated for such payment pursuant to the terms of the 50 Debt Security presented or mailed to an address outside the United States or by transfer to an account in such currency maintained by the payee with a bank located outside the United States. The Company may also from time to time designate one or more other offices or agencies (in or outside of such Place of Payment) where the Debt Securities of one or more series and any appurtenant coupons (subject to the preceding paragraph) may be presented or surrendered for any or all such purposes, and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in each Place of Payment for any series of Debt Securities, for such purposes. The Company will give prompt written notice to the Trustee of any such designation and any change in the location of any such other office or agency. SECTION 1003. Money for Debt Securities Payments to Be Held in Trust. If the Company shall at any time act as its own Paying Agent with respect to any series of Debt Securities, it will, on or before each due date of the principal of (and premium, if any) or interest on any of the Debt Securities of such series and any appurtenant coupons, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents with respect to any series of Debt Securities, it will, prior to each due date of the principal (and premium, if any) or interest on any Debt Securities of such series and any appurtenant coupons, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. The Company will cause each Paying Agent with respect to any series of Debt Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will (1) hold all sums held by it for the payment of the principal of (and premium, if any) or interest on Debt Securities of such series and any appurtenant coupons in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (2) give the Trustee notice of any default by the Company (or any other obligor upon the Debt Securities of such series or any appurtenant coupons) in the making of any payment of principal (and premium, if any) or interest on the Debt Securities of such series or any appurtenant coupons; and (3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. The Company may at any time, for the purpose of terminating its obligations under this Indenture with respect to Debt Securities of any series or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any principal and interest received on the Eligible Instruments deposited with the Trustee or any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any) or interest on any Debt Security of any series or any appurtenant coupons or any money on deposit with the Trustee or any Paying Agent representing amounts deducted from the Redemption Price or Repayment Price with respect to unmatured coupons not presented upon redemption or exercise of the Holder's option for repayment pursuant to Section 1106 or 1303 and remaining unclaimed for two years after such principal (and premium, if any) or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Debt Security or any coupon appertaining thereto shall thereafter, as an unsecured general creditor, look only to the Company for 51 payment thereof, and all liability of the Trustee or such paying Agent with respect to such trust money (including the principal and interest received on Eligible Instruments deposited with the Trustee), and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in an Authorized Newspaper of general circulation in each of the City and County of San Francisco and the Borough of Manhattan, The City of New York, and each Place of Payment or mailed to each such Holder, or both, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 1004. Officers' Certificate as to Default. The Company will deliver to the Trustee, on or before a date not more than four months after the end of each fiscal year of the Company (which on the date hereof is the calendar year) ending after the date hereof, an Officers' Certificate, stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions of this Indenture, and, if the Company shall be in default, specifying all such defaults and the nature thereof of which they may have knowledge. SECTION 1005. Limitation on Disposition of Voting Stock of, and Merger and Sale of Assets by, the Bank. The Company will not: (1) sell, transfer or otherwise dispose of any shares of Voting Stock of the Bank or permit the Bank to issue, sell, or otherwise dispose of any shares of its Voting Stock, unless, after giving effect to any such transaction, the Bank remains a Controlled Subsidiary; or (2) permit the Bank to (a) merge or consolidate, unless the surviving corporation is a Controlled Subsidiary; or (b) convey or transfer its properties and assets substantially as an entirety to any Person, except to a Controlled Subsidiary. SECTION 1006. Payment of Additional Amounts. If the Debt Securities of a series provide for the payment of additional amounts, the Company will pay to the Holder of any Debt Security of any series or any coupon appertaining thereto additional amounts upon the terms and subject to the conditions provided therein. Whenever in this Indenture there is mentioned, in any context, the payment of the principal of (or premium, if any) or interest on, or in respect of, any Debt Security of any series or any related coupon or the net proceeds received on the sale or exchange of any Debt Security of any series, such mention shall be deemed to include mention of the payment of additional amounts provided for in the terms of such Debt Securities and this Section to the extent that, in such context, additional amounts are, were or would be payable in respect thereof pursuant to the provisions of this Section and express mention of the payment of additional amounts (if applicable) in any provisions hereof shall not be construed as excluding additional amounts in those provisions hereof where such express mention is not made. If the Debt Securities of a series provide for the payment of additional amounts, at least 10 days prior to the first Interest Payment Date with respect to that series of Debt Securities (or if the Debt Securities of that series will not bear interest prior to Maturity, the first day on which a payment of principal (and premium, if any) is made), and at least 10 days prior to each date of payment of principal (and premium, if any) or interest if there has been any change with respect to the matters set forth in the below-mentioned Officers' Certificate, the Company will furnish the Trustee and the Company's principal Paying Agent or Paying Agents, if other than the Trustee, with an Officers' Certificate instructing the Trustee and such Paying Agent or Paying Agents whether such payment of principal of (and premium, if any) or interest on the Debt Securities of that series shall be made to Holders of Debt Securities of that series or the related coupons who are United States Aliens without withholding for or on account of any tax, assessment or other governmental charge described in the Debt Securities of that series. If any such withholding shall be required, then such Officers' Certificate shall specify by country the amount, if any, required to be withheld on such payments to such Holders of Debt Securities or coupons and the Company will pay to the 52 Trustee or such Paying Agent the additional amounts, if any, required by the terms of such Debt Securities and the first paragraph of this Section. The Company covenants to indemnify the Trustee and any Paying Agent for, and to hold them harmless against, any loss, liability or expense reasonably incurred without negligence or bad faith on their part arising out of or in connection with actions taken or omitted by any of them in reliance on any Officers' Certificate furnished pursuant to this Section. SECTION 1007. Waiver of Certain Covenants. The Company may omit in any particular instance to comply with any covenant or condition set forth in Section 1005, with respect to the Debt Securities of any series if, before the time for such compliance the Holders of at least 66-2/3% in principal amount of the Debt Securities of such series at the time Outstanding shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such covenant or condition shall remain in full force and effect. ARTICLE ELEVEN REDEMPTION OF DEBT SECURITIES SECTION 1101. Applicability of Article. Debt Securities of any series which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise specified as contemplated by Section 301 for Debt Securities of any series) in accordance with this Article. SECTION 1102. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Debt Securities shall be evidenced by an Officers' Certificate authorized by or pursuant to a Board Resolution. In case of any redemption at the election of the Company of less than all of the Debt Securities of any series, the Company shall, at least 45 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount and the tenor and terms of the Debt Securities of any series to be redeemed. In the case of any redemption of Debt Securities prior to the expiration of any restriction on such redemption provided in the terms of such Debt Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers' Certificate evidencing compliance with such restriction. SECTION 1103. Selection by Trustee of Debt Securities to Be Redeemed. Except as otherwise specified as contemplated by Section 301 for Debt Securities of any series, if less than all the Debt Securities of any series with like tenor and terms are to be redeemed, the particular Debt Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Debt Securities of such series with like tenor and terms not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to the minimum authorized denomination for Debt Securities of such series or any integral multiple thereof which is also an authorized denomination) of the principal amount of Registered Securities or Bearer Securities (if issued in more than one authorized denomination) of such series of a denomination larger than the minimum authorized denomination for Debt Securities of such series. The Trustee shall promptly notify the Company in writing of the Debt Securities selected for redemption and, in the case of any Debt Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Debt Securities shall relate, in the case of any Debt Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Debt Security which has been or is to be redeemed. 53 SECTION 1104. Notice of Redemption. Notice of redemption shall be given in the manner provided in Section 106 not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Debt Securities to be redeemed. All notices of redemption shall state: (1) the Redemption Date, (2) the Redemption Price, (3) if less than all Outstanding Debt Securities of any series are to be redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the particular Debt Securities to be redeemed, (4) that on the Redemption Date the Redemption Price will become due and payable upon each such Debt Security to be redeemed, and that interest thereon shall cease to accrue on and after said date, (5) the Place or Places of Payment where such Debt Securities, together in the case of Bearer Securities with all coupons, if any, appertaining thereto maturing after the Redemption Date, are to be surrendered for payment of the Redemption Price, (6) that Bearer Securities may be surrendered for payment only at such place or places which are outside the United States, except as otherwise provided in Section 1002, (7) that the redemption is for a sinking fund, if such is the case, and (8) the CUSIP number, if any. A notice of redemption published as contemplated by Section 106 need not identify particular Registered Securities to be redeemed. Notice of redemption of Debt Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. SECTION 1105. Deposit of Redemption Price. On or prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money and/or, to the extent such Debt Securities are denominated and payable in Dollars only, Eligible Instruments the payments of principal and interest on which when due (and without reinvestment and providing no tax liability will be imposed upon the Trustee or the Holders of the Debt Securities to be redeemed) will provide money in such amounts as will (together with any money irrevocably deposited in trust with the Trustee, without investment) be sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the Debt Securities or portions thereof which are to be redeemed on that date; provided, however, that deposits with respect to Bearer Securities shall be made with a Paying Agent or Paying Agents located outside the United States except as otherwise provided in Section 1002, unless otherwise specified as contemplated by Section 301. SECTION 1106. Debt Securities Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Debt Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Debt Securities shall cease to bear interest and the coupons for such interest appertaining to any Bearer Securities so to be redeemed, except to the extent provided below, shall be void. Upon surrender of any such Debt Security for redemption in accordance with said notice, such Debt Security shall be paid by the Company at the Redemption Price, together with accrued interest to the Redemption Price; provided, however, that instalments of interest on Bearer Securities whose Stated Maturity is on or prior to the Redemption Date shall be payable only upon presentation and surrender of coupons for such interest (at an office or agency located outside the United States except as otherwise provided in Section 1002), and provided further, that instalments of interest on Registered Securities whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such 54 Debt Securities, or one or more Predecessor Securities, registered as such on the relevant Record Dates according to their terms and the provisions of Section 307. If any Bearer Security surrendered for redemption shall not be accompanied by all appurtenant coupons maturing after the Redemption Date, such Bearer Security may be paid after deducting from the Redemption Price an amount equal to the face amount of all such missing coupons, or the surrender of such missing coupon or coupons may be waived by the Company and the Trustee if there be furnished to them such security or indemnity as they may require to save each of them and any Paying Agent harmless. If thereafter the Holder of such Bearer Security shall surrender to the Trustee or any Paying Agent any such missing coupon in respect of which a deduction shall have been made from the Redemption Price, such Holder shall be entitled to receive the amount so deducted without interest thereon; provided, however, that interest represented by coupons shall be payable only upon presentation and surrender of those coupons at an office or agency located outside of the United States except as otherwise provided in Section 1002. If any Debt Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Debt Security. SECTION 1107. Debt Securities Redeemed in Part. Any Registered Security which is to be redeemed only in part shall be surrendered at a Place of Payment therefor (with, if the Company, the Security Registrar or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company, the Security Registrar and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Debt Security without service charge, a new Registered Security or Registered Securities of the same series and of like tenor and terms, of any authorized denominations as requested by such Holder in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Debt Security so surrendered. ARTICLE TWELVE SINKING FUNDS SECTION 1201. Applicability of Article. The provisions of this Article shall be applicable to any sinking fund for the retirement of Debt Securities of a series except as otherwise specified as contemplated by Section 301 for Debt Securities of such series. The minimum amount of any sinking fund payment provided for by the terms of Debt Securities of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the term of Debt Securities of any series is herein referred to as an "optional sinking fund payment". If provided for by the terms of Debt Securities of any series, the amount of any sinking fund payment may be subject to reduction as provided in Section 1202. Each sinking fund payment shall be applied to the redemption of Debt Securities of any series as provided for by the terms of Debt Securities of such series. SECTION 1202. Satisfaction of Sinking Fund Payments with Debt Securities. The Company (1) may deliver Outstanding Debt Securities of a series (other than any previously called for redemption), together in the case of any Bearer Securities of such series with all unmatured coupons appertaining thereto, and (2) may apply as a credit Debt Securities of a series which have been redeemed either at the election of the Company pursuant to the terms of such Debt Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Debt Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to the Debt Securities of such series required to be made pursuant to the terms of such Debt Securities as provided for by the terms of such series; provided that such Debt Securities have not been previously so credited. Such Debt Securities shall be received and credited for such purpose by the Trustee at the Redemption Price specified in such Debt Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly. If as a result of the delivery or credit of Debt 55 Securities in lieu of cash payments pursuant to this Section 1202, the principal amount of Debt Securities to be redeemed in order to exhaust the aforesaid cash payment shall be less than $100,000, the Trustee need not call Debt Securities for redemption, except upon Company Request, and such cash payment shall be held by the Trustee or a Paying Agent and applied to the next succeeding sinking fund payment, provided, however, that the Trustee or such Paying Agent shall at the request of the Company from time to time pay over and deliver to the Company any cash payment so being held by the Trustee or such Paying Agent upon delivery by the Company to the Trustee of Debt Securities purchased by the Company having an unpaid principal amount equal to the cash payment requested to be released to the Company. SECTION 1203. Redemption of Debt Securities for Sinking Fund. Not less than 60 days prior to each sinking fund payment date for any series of Debt Securities (unless a shorter period shall be satisfactory to the Trustee), the Company will deliver to the Trustee an Officers' Certificate specifying the amount of the next ensuing sinking fund payment for that series pursuant to the terms of that series, the portion thereof, if any, which is to be satisfied by payment of cash, the portion thereof, if any, which is to be satisfied by crediting Debt Securities of that series pursuant to Section 1202 and the basis for any such credit and, prior to or concurrently with the delivery of such Officers' Certificate, will also deliver to the Trustee any Debt Securities to be so credited and not theretofore delivered to the Trustee. Not less than 30 days (unless a shorter period shall be satisfactory to the Trustee) before each such sinking fund payment date the Trustee shall select the Debt Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 1103 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 1104. Such notice having been duly given, the redemption of such Debt Securities shall be made upon the terms and in the manner stated in Sections 1105, 1106 and 1107. ARTICLE THIRTEEN REPAYMENT AT THE OPTION OF HOLDERS SECTION 1301. Applicability of Article. Debt Securities of any series which are repayable at the option of the Holders thereof before their Stated Maturity shall be repaid in accordance with their terms and (except as otherwise specified pursuant to Section 301 for Debt Securities of such series) in accordance with this Article. SECTION 1302. Repayment of Debt Securities. Each Debt Security which is subject to repayment in whole or in part at the option of the Holder thereof on a Repayment Date shall be repaid at the applicable Repayment Price together with interest accrued to such Repayment Date as specified pursuant to Section 301. SECTION 1303. Exercise of Option; Notice. Each Holder desiring to exercise his option for repayment shall, as conditions to such repayment, surrender the Debt Security to be repaid in whole or in part together with written notice of the exercise of such option at any office or agency of the Company in a Place of Payment, not less than 30 nor more than 45 days prior to the Repayment Date; provided, however, that surrender of Bearer Securities together with written notice of exercise of such option shall be made at an office or agency located outside the United States except as otherwise provided in Section 1002. Such notice, which shall be irrevocable, shall specify the principal amount of such Debt Security to be repaid, which shall be equal to the minimum authorized denomination for such Debt Security or an integral multiple thereof, and shall identify the Debt Security to be repaid and, in the case of a partial repayment of the Debt Security, shall specify the denomination or denominations of the Debt Security or Debt Securities of the same series to be issued to the Holder for the portion of the principal of the Debt Security surrendered which is not to be repaid. If any Bearer Security surrendered for repayment shall not be accompanied by all unmatured coupons and all matured coupons in default, such Bearer Security may be paid after deducting from the Repayment Price an amount equal to the face amount of all such missing coupons, or the surrender of such missing coupon or coupons may be waived by the Company and the Trustee if there be furnished to them such security or indemnity as they may require to save each of them and any Paying Agent harmless. If thereafter the Holder of such Bearer Security shall surrender to the Trustee or any Paying Agent any such missing coupon in respect of which a deduction shall 56 have been made from the Repayment Price, such Holder shall be entitled to receive the amount so deducted without interest thereon; provided, however, that interest represented by coupons shall be payable only at an office or agency located outside the United States except as Otherwise provided in Section 1002. The Company shall execute and the Trustee shall authenticate and deliver without service charge to the Holder of any Registered Security so surrendered a new Registered Security or Securities of the same series, of any authorized denomination specified in the foregoing notice, in an aggregate principal amount equal to any portion of the principal of the Registered Security so surrendered which is not to be repaid. The Company shall execute and the Trustee shall authenticate and deliver without service charge to the Holder of any Bearer Security so surrendered a new Registered Security or Securities or new Bearer Security or Securities (and all appurtenant unmatured coupons and matured coupons in default) or any combination thereof of the same series of any authorized denomination or denominations specified in the foregoing notice, in an aggregate principal amount equal to any portion of the principal of the Debt Security so surrendered which is not to be paid; provided, however, that the issuance of a Registered Security therefor shall be subject to applicable laws and regulations, including provisions of the United States federal income tax laws and regulations in effect at the time of the exchange; neither the Company, the Trustee nor the Security Registrar shall issue Registered Securities for Bearer Securities if it has received an Opinion of Counsel that as a result of such issuance the Company would suffer adverse consequences under the United States federal income tax laws then in effect and the Company has delivered to the Trustee a Company Order directing the Trustee not to make such issuances thereafter unless and until the Trustee receives a subsequent Company Order to the contrary. The Company shall deliver copies of such Company Order to the Security Registrar. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the repayment of Debt Securities shall relate, in the case of any Debt Security repaid or to be repaid only in part, to the portion of the principal of such Debt Security which has been or is to be repaid. SECTION 1304. Election of Repayment by Remarketing Entities. The Company may elect, with respect to Debt Securities of any series which are repayable at the option of the Holders thereof before their Stated Maturity, at any time prior to any Repayment Date to designate one or more Remarketing Entities to purchase, at a price equal to the Repayment Price, Debt Securities of such series from the Holders thereof who give notice and surrender their Debt Securities in accordance with Section 1303. SECTION 1305. Securities Payable on the Repayment Date. Notice of exercise of the option of repayment having been given and the Debt Securities so to be repaid having been surrendered as aforesaid, such Debt Securities shall, unless purchased in accordance with Section 1304, on the Repayment Date become due and payable at the price therein specified and from and after the Repayment Date such Debt Securities shall cease to bear interest and shall be paid on the Repayment Date, and the coupons for such interest appertaining to Bearer Securities so to be redeemed, except to the extent provided above, shall be void, unless the Company shall default in the payment of such price, in which case the Company shall continue to be obligated for the principal amount of such Debt Securities and shall be obligated to pay interest on such principal amount at the rate borne by such Debt Securities from time to time until payment in full of such principal amount. ARTICLE FOURTEEN EXCHANGE OF CAPITAL SECURITIES FOR DEBT SECURITIES SECTION 1401. Applicability of Article. If an Officers' Certificate or supplemental indenture pursuant to Section 301 provides for the exchange of Capital Securities for Debt Securities of any series at the election of the Company or otherwise, Debt Securities of such series shall be exchanged for Capital Securities in accordance with their terms and (except as otherwise specified in such Officers' Certificate or supplemental indenture) in accordance with this Article. 57 SECTION 1402. Exchange of Capital Securities for Debt Securities at Stated Maturity. At the Stated Maturity of Debt Securities of any series which may be exchanged, subject to prepayment prior to such Stated Maturity on the Capital Exchange Date selected by the Company for Debt Securities of such series, as described below, early exchange pursuant to Section 1403 or payment in cash pursuant to Section 502, 1416 or 1417, the Company shall exchange Capital Securities with a Market Value equal to the principal amount of the Outstanding Debt Securities of such series for the Debt Securities of such series in whole. The Company shall give notice in the manner provided in Section 106 to Holders of the Debt Securities of any series to be exchanged, the Trustee and the Capital Exchange Agent as to the type of Capital Securities to be exchanged for the Debt Securities of such series on the Capital Exchange Date for Debt Securities of such series. Such notice shall include a form of Capital Security Election Form substantially as set forth in Section 1409, shall make the statements and contain the information included in Section 1404(a), and shall be given no less than 90 days prior to the Stated Maturity of such Debt Securities. Notice of such Capital Exchange Date, together with the amount of Capital Securities being exchanged for each $1,000 principal amount of Debt Securities of such series, or the minimum denomination of the Debt Securities of such series, if larger, shall also be given by the Company in the manner required by Section 1404(b) not less than three Business Days prior to such Capital Exchange Date. The Capital Exchange Date for any prepayment of Debt Securities of each series may be selected by the Company to be any date between a date 60 days prior to the Stated Maturity of such Debt Securities and such Stated Maturity. inclusive, and to be the date of the closing of the Secondary Offering for Debt Securities of such series. In the event the Company fails to effect such Secondary Offering, the Capital Exchange Date will be the Stated Maturity of the Debt Securities of such series. Notice of each such Capital Exchange Date, together with the amount of Capital Securities being exchanged for each $1,000 principal amount of Debt Securities of such series, or the minimum denomination of the Debt Securities of such series, if larger, shall also be given by the Company in the manner required by Section 1404(b) not less than three Business Days prior to such Capital Exchange Date. The Company will effect each Secondary Offering such that the closing of the Secondary Offering will occur on the Capital Exchange Date. SECTION 1403. Right of Early Exchange of Capital Securities for Debt Securities. The Debt Securities of any series to be exchanged may be exchanged at the election of the Company, as a whole or from time to time in part, prior to the Stated Maturity thereof for Capital Securities with a Market Value equal to the principal amount of such Debt Securities on any early Capital Exchange Date, together with accrued interest to such Capital Exchange Date. The Company shall give notice in the manner provided in Section 106 to Holders of the Debt Securities of any series to be exchanged, the Trustee and the Capital Exchange Agent not less than 90 days nor more than 120 days prior to any early Capital Exchange Date for Debt Securities of such series, which notice shall include a form of Capital Security Election Form substantially as set forth in Section 1409 and make the statements and contain the information included in Section 1404(a). Notice of each such early Capital Exchange Date, together with the amount of Capital Securities being exchanged for each $1,000 principal amount of Debt Securities of such series, or the minimum denomination of such series, if larger, shall also be given by the Company in the manner required by Section 1404(b) not less than three Business Days prior to such early Capital Exchange Date. The Company may at its option accelerate any such Capital Exchange Date within the 60-day period prior to such Capital Exchange Date by giving notice of such accelerated Capital Exchange Date, together with the amount of Capital Securities being exchanged for each $1,000 principal amount of Debt Securities of such series, or the minimum denomination of such series, if larger, in the manner required by Section 1404(b) not less than three Business Days prior to such accelerated Capital Exchange Date. The Company will effect each Secondary Offering such that the closing of such Secondary Offering will occur on the Capital Exchange Date. 58 SECTION 1404. Notices of Exchange. (a) All notices of exchange subject to this paragraph shall state: (1) the type of Capital Securities to be exchanged for the Debt Securities of such series on the Capital Exchange Date for Debt Securities of such series; (2) the proposed Capital Exchange Date; (3) that each Holder of Debt Securities of such series being exchanged will receive on such Capital Exchange Date accrued and unpaid interest in cash and may elect to receive on such Capital Exchange Date Capital Securities with a Market Value equal to the principal amount of the Debt Securities of such series owned by such Holder and that, in the absence of any such election by the Holder, such Holder will be deemed to have received on such Capital Exchange Date Capital Securities having such Market Value and to have elected to have such Capital Securities sold for such Holder by the Company in the related Secondary Offering for cash proceeds to such Holder on such Capital Exchange Date equal to the aggregate principal amount of all Debt Securities of such series being exchanged owned by such Holder; (4) that on such Capital Exchange Date the Capital Exchange Price will become due and payable upon each such Debt Security to be exchanged and that interest thereon will cease to accrue on and after said date; (5) if less than all the Outstanding Debt Securities of any series are to be exchanged, the identification (and, in the case of partial exchange, the principal amount) of the particular Debt Securities to be exchanged; (6) that each Holder for whom Capital Securities are being offered in the Secondary Offering shall be deemed to have appointed the Company its attorney-in-fact to execute any and all documents and agreements the Company deems necessary or appropriate to effect such Secondary Offering; (7) that the Company will assume, unless advised to the contrary in writing within 30 days after the date of the notice of exchange, that the Capital Securities are to be offered for the account of the Holder, that such Holder has not held any position, office or other material relationship with the Company within three years preceding the Secondary Offering, that the Holder owns no other Capital Securities, and that after completion of the Secondary Offering the Holder will own less than one percent of the class of such Capital Securities. If any of these assumptions is not correct, the Holder shall promptly so advise the Company; (8) the place or places where such Debt Securities are to be surrendered for payment or exchange for Capital Securities; (9) that Bearer Securities may be surrendered for payment or exchange only at such place or places which are outside the United States, except as otherwise provided in Section 1002; and (10) the CUSIP number, if any. (b) Each notice of exchange subject to this paragraph shall be given in the manner provided in Section 106 to each Holder of Debt Securities to be exchanged, and the Company shall forthwith give such notice by telephone to the Trustee and the Capital Exchange Agent, promptly confirmed in writing. (c) (1) Except as may otherwise be specified pursuant to Section 301 for Debt Securities of any series, if less than all the Debt Securities of any series are to be exchanged, the Company shall at least 135 days prior to the related Capital Exchange Date (unless a shorter period shall be satisfactory to the Trustee) notify the Trustee of such Capital Exchange Date and of the principal amount of Debt Securities of such series to be exchanged and the particular Debt Securities to be exchanged shall be selected not more than 135 days prior to the related Capital Exchange Date by the Trustee, from the Outstanding Debt Securities of such series not previously exchanged, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for exchange of portions (equal to the minimum authorized denomination for Debt Securities of such series or any integral multiple thereof) of the principal amount of Registered or Bearer Securities of such series of a denomination larger than the minimum authorized denomination for Debt Securities of such series. In any case where Debt Securities of such series are registered in the same name, the Trustee in its discretion may treat the aggregate principal amount so registered as if it were represented by one Debt Security of such series. 59 (2) The Trustee shall promptly notify the Company in writing of the Debt Securities selected for exchange and, in the case of any Registered Securities selected for partial exchange, the principal amount thereof to be exchanged. (3) For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the exchange of Debt Securities shall relate, in the case of any Debt Securities exchanged or to be exchanged only in part, to the portion of the principal amount of such Debt Security which has been or is to be exchanged. Section 1405. Rights and Duties of Holders of Debt Securities to be Exchanged for Capital Securities. (a) Subject to Section 503, and without prejudice to the rights pursuant to Section 1413 of Holders of Debt Securities of any series to be exchanged, no Holder of Debt Securities of such series shall be entitled to receive any cash from the Company on any Capital Exchange Date or at the Stated Maturity of any Debt Security of such series except from the proceeds of the sale of such Holder's Capital Securities in the related Secondary Offering and except as provided herein with respect to fractional Capital Securities, amounts equal to expenses of the sale in the related Secondary Offering of such Capital Securities, accrued and unpaid interest and acceleration upon an Event of Default. In the event that the Company does not effect such Secondary Offering, such Holder will receive Capital Securities with a Market Value equal to the principal amount of Debt Securities of such series owned by such Holder which are subject to such exchange and not cash other than in lieu of any fractional Capital Securities and for accrued and unpaid interest, without prejudice to such Holder's rights pursuant to Section 1413. (b) Each Holder for whom Capital Securities are being offered in the Secondary Offering shall be deemed to have appointed the Company its attorney-in-fact to execute any and all documents and agreements the Company deems necessary or appropriate to effect such Secondary Offering. (c) Unless advised to the contrary in writing within 30 days following the date of the notice described in Section 1404(a) by any Holder for whom Capital Securities are being offered in the Secondary Offering, the Company shall assume for the purposes of any Secondary Offering that the Capital Securities are to be offered for the account of such Holder, that such Holder has not held any position, office or other material relationship with the Company within three years preceding the Secondary Offering, that such Holder owns no other Capital Securities and that after completion of the Secondary Offering such Holder will own less than one percent of the class of such Capital Securities. (d) Each Holder for whom Capital Securities are being offered in the Secondary Offering agrees to indemnify and hold harmless the Company, any other Holder, and any underwriter, agent or other similar person from and against any and all losses, claims, damages and liabilities resulting from or based upon any untrue statement or alleged untrue statement of any material fact contained in any notice of exchange, any offering memorandum or selling document or registration statement relating to the Secondary Offering, any preliminary prospectus or prospectus contained therein, or any amendment thereof or supplement thereto, or resulting from or based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, which untrue statement, alleged untrue statement, omission or alleged omission is made therein (i) in reliance upon and in conformity with any written information furnished to the Company by or on behalf of any such Holder specifically for use in connection with the preparation thereof or (ii) because of such Holder's failure to advise the Company in writing that any of the assumptions described in Section 1404(a) (7) is incorrect. (e) In order for any Holder who has duly returned a Capital Security Election Form to receive Capital Securities on any Capital Exchange Date for any Debt Security of any series, (1) the Holder of any Registered Security to be exchanged shall surrender such Debt Security (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder of any Registered Security or his attorney duly authorized in writing), to the Capital Exchange Agent on the Capital Exchange Date, and (2) the Holder of any Bearer Security to be exchanged shall surrender such Debt Security and all unmatured coupons and all matured coupons in default with the Capital Security Election Form at a place outside the United States designated pursuant to Section 1404(a)(8) except as otherwise provided in Section 1002. If the Holder of a Bearer Debt Security is unable to produce any such Debt Security or coupons, the surrender of the Debt Security or coupon may be waived by the Company and the Trustee. 60 who may require the Holder to furnish such security or indemnity as they may require to hold each of them and any Paying Agent harmless in respect of the Debt Security or coupon. Except as provided in Section 307, no payment or adjustment shall be made upon any exchange on account of any interest accrued on any Debt Securities surrendered for exchange or on account of any dividends or interest on the Capital Securities issued upon exchange. (f) Debt Securities of any series to be exchanged shall be deemed to have been exchanged on the Capital Exchange Date therefor in accordance with the foregoing provisions, and at such time the rights of the Holders of such Debt Securities as Holders shall cease (subject to the provisions of Section 307 and without prejudice to the rights of Holders of Debt Securities of such series pursuant to Section 1413), and the Person or Persons entitled to receive the Capital Securities issuable upon such exchange shall be treated for all purposes as the record holder or holders of such Capital Securities at such time. Section 1406. Election to Exchange. The election of the Company to exchange Capital Securities for Debt Securities pursuant to Section 1403 shall be evidenced by a Board Resolution. Section 1407. Deposit of Capital Exchange Price. On any Capital Exchange Date for Debt Securities of any series which may be exchanged, the Company shall deposit with the Trustee or with a Capital Exchange Agent in the City and County of San Francisco or the Borough of Manhattan. The City of New York (or, if the Company is acting as Capital Exchange Agent, segregate and hold in trust as provided in Section 1003) Capital Securities and an amount of money which together are sufficient to pay the Capital Exchange Price of, and (except if such Capital Exchange Date shall be an Interest Payment Date) accrued interest on, all the Debt Securities of such series or portions thereof which are to be exchanged on that date; provided, however, that deposits with respect to Bearer Securities shall be made with a Capital Exchange Agent or Capital Exchange Agents, located outside the United States except as otherwise provided in Section 1002, unless otherwise specified as contemplated by Section 301. SECTION 1408. Debt Securities Due on Capital Exchange Date; Debt Securities Exchanged in Part. Notice of exchange having been given as aforesaid, the Debt Securities of any series so to be exchanged shall, on the Capital Exchange Date for such Debt Securities, become due and payable at the Capital Exchange Price therein specified, and from and after such date (unless the Company shall default in the payment of the Capital Exchange Price and accrued interest) Debt Securities of such series to be exchanged shall cease to bear interest and the coupons for such interest appertaining to any Bearer Securities so to be exchanged, except to the extent provided below, shall be void. Upon surrender of any Debt Security of such series for exchange in accordance with said notice, such Debt Security shall be paid by the Company at the Capital Exchange Price, together with accrued interest to the Capital Exchange Date; provided, however, that if such Capital Exchange Date is an Interest Payment Date, the interest payable on such date shall be paid to the Holder of Debt Securities of such series according to the terms of the Debt Securities of such series and the provisions of Section 307; and provided further, that exchanges of Bearer Securities shall be made only and installments of interest on Bearer Securities whose Stated Maturity is on or prior to the Capital Exchange Date shall be payable only at an office or agency located outside the United States except as otherwise provided in Section 1002 and, unless otherwise specified as contemplated by Section 301, only upon presentation and surrender of those Bearer Securities and coupons. If any Bearer Security surrendered for exchange shall not be accompanied by all unmatured coupons and all matured coupons in default such Bearer Security may be paid after deducting from the Capital Exchange Price an amount equal to the face amount of all missing coupons, or the surrender of such missing coupons may be waived by the Company and the Trustee if there be furnished to them such security or indemnity as they may require to save each of them and any Capital Exchange Agent harmless. If thereafter the Holder of such Bearer Security shall surrender to the Trustee or Capital Exchange Agent any such missing coupon in respect of which a deduction shall have been made from the Capital Exchange Price, then Holder shall be entitled to receive the amount so deducted; provided, however, that interest on Bearer Securities shall be payable only at an office or agency located outside of the United States except as otherwise provided in Section 1002. 61 If any Debt Security of any series called for exchange shall not be so paid or exchanged upon surrender thereof for exchange, the principal shall, until paid, bear interest from such Capital Exchange Date at the rate or rates prescribed therefor in such Debt Security; provided, however, that in the case of Bearer Securities, any such principal and interest thereon shall be paid at an office or agency located outside the United States except as otherwise provided in Section 1002. Any Registered Security which is to be exchanged only in part shall be surrendered as provided herein (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder or his attorney duly authorized in writing) and the Company shall execute, the Trustee shall authenticate and there shall be delivered to the Holder of such Debt Security without service charge a new Registered Security or Securities of the same series, of any authorized denomination as requested by such Holder in aggregate principal amount equal to and in exchange for the unexchanged portion of principal of the Debt Security so surrendered. Any Bearer Security which is to be exchanged only in part shall be surrendered as provided herein and the Company shall execute, the Trustee shall authenticate and there shall be delivered to the Holder of such Debt Security without service charge a new Registered Security or Securities or new Bearer Security or Securities (and all appurtenant unmatured coupons and coupons in default) or any combination thereof of the same series, of any authorized denomination or denominations as requested by such Holder in aggregate principal amount equal to and in exchange for the unexchanged portion of principal of the Debt Security so surrendered; provided, however, the issuance of a Registered Security therefor shall be subject to applicable laws and regulations, including provisions of the United States federal income tax laws and regulations in effect at the time of the exchange; neither the Company, the Trustee nor the Security Registrar shall issue Registered Securities in exchange for Bearer Securities if it has received an Opinion of Counsel that as a result of such exchanges the Company would suffer adverse consequences under the United States federal income tax laws then in effect and the Company has delivered to the Trustee a Company Order directing the Trustee not to make such exchanges thereafter unless and until the Company delivers to the Trustee a subsequent Company Order to the contrary. The Company shall deliver copies of such Company Orders to the Security Registrar. Section 1409. Form of Capital Security Election Form. The form of Capital Security Election Form shall be substantially as follows with such additions, deletions or changes thereto as may be approved by the Company: CAPITAL SECURITY ELECTION FORM To: [Insert Names and Addresses of Capital Exchange Agents] The undersigned Holder of [insert title of Debt Security] ("Debt Securities") of BankAmerica Corporation hereby elects to receive on the Capital Exchange Date determined pursuant to the Indenture dated as of September 1, 1990 ("Indenture"), between BankAmerica Corporation and Manufacturers Hanover Trust Company of California, as Trustee, and referred to in the notice of exchange published or delivered to the undersigned with this Capital Security Election Form, Capital Securities (as defined in the Indenture) of BankAmerica Corporation with a Market Value (as defined in the Indenture) equal to the principal amount of the Debt Securities being exchanged owned by the undersigned Holder and, in the case of Bearer Securities, delivered herewith together with all coupons appertaining thereto. Unless this Capital Security Election Form together with, in the case of Bearer Securities, such Bearer Securities and coupons, is received by any Capital Exchange Agent named above at an address shown above on or prior to ________________ the Holder will be deemed to have elected to participate in the sale of the Holder's Capital Securities in the Secondary Offering and will receive cash on the Capital Exchange Date in an amount equal to the principal amount of all Debt Securities being exchanged owned by the Holder. All terms used herein and not otherwise defined herein shall have the meanings specified in the Indenture. Date _________________ __________________________________ Name of Holder 62 Section 1410. Fractional Capital Securities. No fractional Capital Securities shall be issued upon exchange for any Debt Securities. If more than one Debt Security of any series shall be surrendered for exchange at one time by the same Holder, the amount of all Capital Securities which shall be issuable upon exchange thereof shall be computed on the basis of the aggregate principal amount of Debt Securities of such series so surrendered. In lieu of issuing any fractional Capital Security, the Company shall pay a cash adjustment in respect of such fraction in an amount equal to the same fraction of the Market Value of the Capital Security. Section 1411. Company to Obtain Governmental and Regulatory Approvals. The Company covenants that if any Capital Securities required to be exchanged for Debt Securities hereunder require registration with or approval of any governmental authority under any federal or state law, or any national securities exchange, before such Capital Securities may be issued the Company will in good faith and as expeditiously as possible endeavor to cause such Capital Securities to be duly registered or approved, as the case may be; provided, however, that nothing in this Section shall be deemed to affect in any way the obligation of the Company to exchange Capital Securities for Debt Securities as provided in this Article. SECTION 1412. Taxes on Exchange. The Company will pay any and all transfer, stamp or similar taxes that may be payable in respect of the issue or delivery of Capital Securities in exchange for Debt Securities pursuant hereto. Section 1413. Covenants as to Capital Securities and Secondary Offering. (a) The Company covenants that it will issue, or cause to be issued, Capital Securities of the type, in the amounts and at the times required by this Indenture. (b) The Company covenants that all Capital Securities which may be issued in exchange for Debt Securities will upon issuance be duly and validly issued and, if applicable, fully paid and nonassessable. (c) The Company unconditionally undertakes to sell Capital Securities in each Secondary Offering (and to bear all expenses of each Secondary Offering, including underwriting discounts and commissions) at the times and in the manner required by this Indenture unless all Holders have duly elected to receive Capital Securities on the related Capital Exchange Date. (d) The Company agrees to indemnify and hold harmless in connection with any Secondary Offering any Holder for the account of whom Capital Securities are being offered and sold from and against any and all losses, claims, damages and liabilities resulting from or based upon any untrue statement or alleged untrue statement of any material fact contained in any notice of exchange, any offering memorandum or selling document or registration statement relating to the Secondary Offering, any preliminary prospectus or prospectus contained therein, or any amendment thereof or supplement thereto, or resulting from or based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading. or resulting from the Company's failure to comply with Section 1411; provided, however, the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement, alleged untrue statement, omission or alleged omission made therein (i) in reliance upon and in conformity with written information furnished to the Company by or on behalf of any such Holder specifically for use in connection with the preparation; thereof or (ii) because of such Holder's failure to advise the Company in writing that any of the assumptions described in Section 1404(a)(7) is incorrect. In connection with any Secondary Offering, the Company agrees to [illegible] appropriate indemnification of any Holder for the account of whom Capital Securities are being offered and [illegible] [illegible] Secondary Offering from any underwriter, agent or other similar person. SECTION 1414. Provision in Case of Consolidation. Merger or Transfer of Assets. In case of any consolidation of the Company [illegible] merger of the Company into, any other corporation (other than a consolidation or merger in which the Company is the continuing corporation), or in case of any conveyance or transfer of the properties and assets of the Company substantially as an entirety, the corporation formed by such consolidation or the corporation into which the Company shall have been merged or the corporation which shall 63 have acquired such assets of the Company, as the case may be, shall execute and deliver to the Trustee a supplemental indenture providing that the Holder of each Debt Security then Outstanding shall have the right thereafter to receive securities of such successor on the Capital Exchange Date for such Debt Security with a Market Value equal to the principal amount of such Debt Security. The above provisions of this Section shall similarly apply to successive consolidations, mergers, conveyances or transfers. SECTION 1415. Responsibility of Trustee. The Trustee shall not at any time be under any duty or responsibility to any Holder of Debt Securities of any series to be exchanged to determine the Market Value of any Capital Securities delivered in exchange for Debt Securities of such series and may rely on and shall be entitled to receive prior to any Capital Exchange Date for Debt Securities of such series an Officers' Certificate of the Company as to the Market Value of the Capital Securities being exchanged for the Debt Securities of such series and the amount of Capital Securities being exchanged for each $1,000 principal amount of Debt Securities of such series or the minimum denomination of such series, if larger, and that such Capital Securities qualify as Capital Securities under the definition thereof contained herein. The Trustee shall not be accountable with respect to the validity or value (or the kind or amount) of any Capital Securities which may at any time be issued or delivered in exchange for any Debt Security; and the Trustee does not make any representation with respect thereto. The Trustee shall not be responsible for any failure of the Company to issue, transfer or deliver any Capital Securities or Capital Security certificates or other securities or property upon the surrender of any Debt Security for the purpose of exchange or to comply with any of the covenants of the Company contained in this Article. Section 1416. Revocation of Obligation to Exchange Capital Securities for Debt Securities. The Company's obligation to exchange Capital Securities for Debt Securities of any series as provided in Section 1402 is absolute and unconditional; provided, however that such obligation may be revoked at the option of the Company at any time on not less than 60 days' prior notice given in the manner provided in Section 106 to the Holders of Debt Securities of such series, the Trustee and the Capital Exchange Agent, if the Company shall determine that under then regulations of the Company's Primary Federal Regulator either the Debt Securities are no longer includable as capital or it is no longer necessary for the Company to be obligated to exchange Capital Securities for Debt Securities in order for the Debt Securities to maintain the same capital treatment as they are then receiving under such regulations or if approval of the Primary Federal Regulator is obtained for such revocation. In the event such obligation is revoked (a) the Company will pay the Debt Securities of such series in cash at 100% of the principal amount thereof on the Stated Maturity thereof, and (b) the Company may, at any time on or after a date selected by the Company, on not less than 60 days' prior notice, redeem the Debt Securities of such series, in whole or in part, for cash at 100% of the principal amount thereof, plus accrued interest to the Redemption Date. SECTION 1417. Optional Securities Funds. (a) (1) With respect to Debt Securities of any series for which an Officers' Certificate or supplemental indenture pursuant to Section 301 provides that the Debt Securities of such series are exchangeable for Capital Securities, the Company may elect to establish a fund (referred to herein as the "Optional Securities Funds") to which funds may at any time be designated by the Company as provided in Section 1502 as if such Optional Securities Funds were Securities Funds (as defined in Article Fifteen) to be used to pay the principal of the Debt Securities of such series. (2) Notwithstanding any provisions to the contrary contained in this Indenture or in the Debt Securities of any series, neither funds designated as Optional Securities Funds nor any other property from time to time held as Optional Securities Funds shall be deemed to be for any purpose property of the Holders or trust funds for the benefit of the Holders, and the Optional Securities Funds shall not constitute security for the payment of the Debt Securities. 64 (b) In lieu of, or in addition to, any exchange of Capital Securities for Debt Securities of any series which may be made in accordance with the provisions of Sections 1402 and 1403, the Company may elect to redeem the Debt Securities of such series in accordance with the provisions of Section 1106 and the terms of the Debt Securities of each series, in whole or in part, by paying the principal of such Debt Securities with funds designated as Optional Securities Funds at a price equal to the percentage of the principal amount established in the terms of the Debt Securities of such series on the Redemption Date of the Debt Securities to be so redeemed, and (except if such Redemption Date shall be an Interest Payment Date) by paying accrued interest on such Debt Securities. If such Redemption Date is an Interest Payment Date, the interest payable on such date shall be paid to the Holder of Debt Securities of such series according to the terms of the Debt Securities of such series and the provisions of Section 307. (c) The Company shall give notice of such proposed redemption in the manner provided in Section 106 to the Holders of the Debt Securities of such series within the time prescribed for the giving of the initial notice in Section 1402 or 1403, depending upon the Redemption Date selected by the Company. Such notice shall state the Redemption Date and the place or places where the Debt Securities of the series to be paid are to be surrendered for payment, provided, however, if such redemption is of less than all of the Debt Securities of such series and is to be made on a Capital Exchange Date specified in accordance with Section 1402 or 1403, then such notice may be incorporated into any initial notice of such Capital Exchange Date and provided that no notice of any redemption may be given unless there are sufficient Optional Securities Funds to pay the principal amount of the Debt Securities to be redeemed. (d) If less than all the Debt Securities of any series are to be so redeemed, then Sections 1404(c) and 1408 shall apply to the redemption in the same manner as if such Debt Securities were to be exchanged for Capital Securities. (e) Funds designated as Optional Securities Funds shall be released from such designation under the circumstances described in Section 1503. ARTICLE FIFTEEN SECURITIES FUNDS SECTION 1501. Creation of Securities Funds. A fund (the "Securities Funds") will be established when specified in an Officers' Certificate or supplemental indenture pursuant to Section 301 for the Debt Securities of any series pursuant to which funds may be designated by the Company as provided in Section 1502, to be used to pay the principal of the Debt Securities of that series. Notwithstanding any provision to the contrary contained in this Indenture or in the Debt Securities of any series, neither funds designated as Securities Funds nor any other property from time to time held as Securities Funds shall be deemed to be for any purpose property of the Holders or trust funds for the benefit of the Holders, and the Securities Funds shall not constitute security for the payment of the Debt Securities. SECTION 1502. Designations of Securities Funds. The Securities Funds will consist of amounts equal to (i) the net proceeds of the sale of Capital Securities for cash from time to time after the date of initial issuance of the Debt Securities of any series for which funds may be designated by the Company as provided in this Section, and (ii) the market value, as determined by the Company, of Capital Securities sold from time to time after the date of initial issuance of the Debt Securities of such series in exchange for other property, less the expenses to effect any such exchanges, and (iii) other funds which the regulations of the Primary Federal Regulator then permit for the payment of principal of "mandatory convertible securities (equity commitment notes)" as defined in such regulations; provided that (x) the Company has designated such amounts as Securities Funds on its books and records in the manner required by the Primary Federal Regulator, and (y) there shall be deducted from the Securities Funds an amount equal to the amount of any funds used to redeem or repay the Debt Securities of such series for which Securities Funds are required to be designated or any similar securities. 65 SECTION 1503. Covenant of the Company to Obtain Securities Funds. Notwithstanding anything else contained herein, the Company hereby covenants and agrees that with regard to the Debt Securities of any series which by its terms requires the designation of Securities Funds (i) by the Interest Payment Date which occurs on or next preceding the date when one-third of the period from the date of issuance of the Debt Securities of such series to their Stated Maturity has elapsed, it will have obtained Securities Funds in an amount that will equal at least one-third of the original aggregate principal amount of the Debt Securities of such series (or such lesser amount as the Primary Federal Regulator may permit from time to time) and will have prepared and delivered to the Trustee an Officer's Certificate to the foregoing effect, (ii) by the Interest Payment Date which occurs on or next preceding the date when two-thirds of the period from the date of issuance of the Debt Securities of such series to their Stated Maturity has elapsed, it will have obtained Securities Funds in an amount that will equal at least two-thirds of the original aggregate principal amount of the Debt Securities of such series (or such lesser amount as the Primary Federal Regulator may permit from time to time) and will have prepared and delivered to the Trustee an Officers' Certificate to the foregoing effect, and (iii) by 60 days prior to the Stated Maturity of the Debt Securities of such series, it will have obtained Securities Funds in an amount that will equal not less than the original aggregate principal amount of the Debt Securities of such series (or such lesser amount as the Primary Federal Regulator may permit from time to time) and will have prepared and delivered to the Trustee an Officers' Certificate to the foregoing effect; provided, however, that such covenant and agreement of the Company shall be cancelled, and amounts theretofore designated as Securities Funds will be released from such designation in the event and to the extent that the Company shall determine that under then regulations of the Company's Primary Federal Regulator either the Debt Securities are no longer includable as capital or it is no longer necessary for the Company to be obligated to pay the principal of the Debt Securities out of Securities Funds in order for the Debt Securities to maintain the same capital treatment as they are then receiving under such regulations, in the event and to the extent that approval of the Primary Federal Regulator is obtained for such cancellation and release or in the event and to the extent that the Company shall have exchanged or redeemed such Debt Securities pursuant to the terms of such Debt Securities of such series from a source other than amounts designated as Securities Funds. ARTICLE SIXTEEN MEETINGS OF HOLDERS OF DEBT SECURITIES SECTION 1601. Purposes for Which Meetings May Be Called. If Debt Securities of a series are issuable in whole or in part as Bearer Securities, a meeting of Holders of Debt Securities of such series may be called at any time and from time to time pursuant to this Article to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other Act provided by this Indenture to be made, given or taken by Holders of Debt Securities of such series. SECTION 1602. Call, Notice and Place of Meetings. (a) The Trustee may at any time call a meeting of Holders of Debt Securities of any series issuable as Bearer Securities for any purpose specified in Section 1601, to be held at such time and at such place in the City of San Francisco, Borough of Manhattan, The City of New York, or in London as the Trustee shall determine. Notice of every meeting of Holders of Debt Securities of any series, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be given, in the manner provided in Section 106, not less than 21 nor more than 180 days prior to the date fixed for the meeting. (b) In case at any time the Company, pursuant to a Board Resolution, or the Holders of at least 10% in principal amount of the Outstanding Debt Securities of any series shall have requested the Trustee to call a meeting of the Holders of Debt Securities of such series for any purpose specified in Section 1601, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have made the first publication of the notice of such meeting within 21 days after receipt of such request or shall not thereafter proceed to cause the meeting to be held as provided herein, then the Company or the Holders of Debt Securities of such series in the amount above specified, as the case may be, may determine the time and the place in the City of 66 San Francisco, Borough of Manhattan, The City of New York, or in London for such meeting and may call such meeting for such purposes by giving notice thereof as provided in subsection (a) of this Section. SECTION 1603. Persons Entitled to Vote at Meetings. To be entitled to vote at any meeting of Holders of Debt Securities of any series, a Person shall be (1) a Holder of one or more Outstanding Debt Securities of such series, or (2) a Person appointed by an instrument in writing as proxy for Holder or Holders of one or more Outstanding Debt Securities of such series by such Holder or Holders. The only Persons who shall be entitled to be present or to speak at any meeting of Holders of Debt Securities of any series shall be the Persons entitled to vote at such meeting and their counsel, any representatives of the Trustee and its counsel and any representatives of the Company and its counsel. SECTION 1604. Quorum; Action. The Persons entitled to vote a majority in principal amount of the Outstanding Debt Securities of a series shall constitute a quorum for a meeting of Holders of Debt Securities of such series; provided, however, that if any action is to be taken at such meeting with respect to a consent or waiver which this Indenture expressly provides may be given by the Holders of not less than 66 2/3% in principal amount of the Outstanding Debt Securities of a series, the Persons entitled to vote 66 2/3% in principal amount of the Outstanding Debt Securities of such series shall constitute a quorum. In the absence of a quorum within 30 minutes of the time appointed for any such meeting, the meeting shall, if convened at the request of Holders of Debt Securities of such series, be dissolved. In the absence of a quorum in any other case the meeting may be adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such adjourned meeting. Notice of the reconvening of any adjourned meeting shall be given as provided in Section 1602(a), except that such notice need be given only once not less than five days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage, as provided above, of the principal amount of the Outstanding Debt Securities of such series which shall constitute a quorum. Except as limited by the proviso to Section 902, any resolution presented to a meeting or adjourned meeting duly reconvened at which a quorum is present as aforesaid may be adopted only by the affirmative vote of the Holders of a majority in principal amount of the Outstanding Debt Securities of that series: provided, however, that, except as limited by the proviso to Section 902, any resolution with respect to any consent or waiver which this Indenture expressly provides may be given by the Holders of not less than 66 2/3% in principal amount of the Outstanding Debt Securities of a series may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid only by the affirmative vote of the Holders of 66 2/3% in principal amount of the Outstanding Debt Securities of that series; and provided, further, that, except as limited by the proviso to Section 902, any resolution with respect to any request, demand, authorization, direction, notice, consent, waiver or other Act which this Indenture expressly provides may be made, given or taken by the Holders of a specified percentage, which is less than a majority, in principal amount of the Outstanding Debt Securities of a series may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid by the affirmative vote of the Holders of such specified percentage in principal amount of the Outstanding Debt Securities of that series. Any resolution passed or decision taken at any meeting of Holders of Debt Securities of any series duly held in accordance with this Section shall be binding on all the Holders of Debt Securities of such series and the related coupons, whether or not present or represented at the meeting. SECTION 1605. Determination of Voting Rights; Conduct and Adjournment of Meetings. (a) Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders of Debt Securities of such series in regard to proof of the holding of Debt Securities of such series and of the appointment of proxies and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. Except as otherwise permitted or required by any such regulations, the holding of Debt Securities shall be proved in the 67 manner specified in Section 104 and the appointment of any proxy shall be proved in the manner specified in Section 104 or, in the case of Bearer Securities, by having the signature of the person executing the proxy witnessed or guaranteed by any trust company, bank or banker authorized by Section 104 to certify to the holding of Bearer Securities. Such regulations may provide that written instruments appointing proxies, regular on their face, may be presumed valid and genuine without the proof specified in Section 104 or other proof. (b) The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Holders of Debt Securities as provided in Section 1602(b), in which case the Company or the Holders of Debt Securities of the series calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Persons entitled to vote a majority in principal amount of the Outstanding Debt Securities of such series represented at the meeting. (c) At any meeting each Holder of a Debt Security of such series or proxy shall be entitled to one vote for each $1,000 principal amount (or the equivalent in ECU, any other composite currency or a Foreign Currency) of Debt Securities of such series held or represented by him; provided, however, that no vote shall be cast or counted at any meeting in respect of any Debt Security challenged as not Outstanding and ruled by the chairman of the meeting not to be Outstanding. The chairman of the meeting shall have no right to vote, except as a Holder of a Debt Security of such series or proxy. (d) Any meeting of Holders of Debt Securities of any series duly called pursuant to Section 1602 at which a quorum is present may be adjourned from time to time by Persons entitled to vote a majority in principal amount of the Outstanding Debt Securities of such series represented at the meeting; and the meeting may be held as so adjourned without further notice. SECTION 1606. Counting Votes and Recording Action of Meetings. The vote upon any resolution submitted to any meeting of Holders of Debt Securities of any series shall be by written ballots on which shall be subscribed the signatures of the Holders of Debt Securities of such series or of their representatives by proxy and the principal amounts and serial numbers of the Outstanding Debt Securities of such series held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in triplicate of all votes cast at the meeting. A record, at least in triplicate, of the proceedings of each meeting of Holders of Debt Securities of any series shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was given as provided in Section 1602 and, if applicable, Section 1604. Each copy shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one such copy shall be delivered to the Company, and another to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated. ARTICLE SEVENTEEN DEFEASANCE SECTION 1701. Termination of Company's Obligations. With respect to any series of Debt Securities, if the Company deposits irrevocably in trust with the Trustee money and/or, to the extent such Debt Securities are denominated and payable in Dollars only, Eligible Instruments the payments of principal and interest on which when due (and without reinvestment and providing no tax liability will be imposed upon the Trustee or the Holders of such Debt Securities) will provide money in such amounts as will (together with any money irrevocably deposited in trust with the Trustee, without investment) be sufficient to pay principal (and premium, if any) and interest when due on the Debt Securities of such series and any coupons appertaining thereto and any mandatory sinking fund, repayment or analogous payments thereon on the scheduled due dates therefor at the Stated Maturity thereof, the Company's obligations under Section 1005 shall 68 terminate with respect to the Debt Securities of the series for which such deposit was made; provided, however, that (i) no Event of Default with respect to the Debt Securities of such series under Section 501(1) or 501(2) or event that with notice or lapse of time or both would constitute such an Event of Default shall have occurred and be continuing on such date and (ii) such termination shall not relieve the Company of its obligations under the Debt Securities of such series and this Indenture to pay when due the principal of (and premium, if any) and interest and additional amounts on such Debt Securities and any coupons appertaining thereto if such Debt Securities or coupons are not paid (or payment is not provided for) when due from the money and Eligible Instruments (and the proceeds thereof) so deposited. It shall be a condition to the deposit of cash and/or Eligible Instruments and the termination of the Company's obligations with respect to the Debt Securities of any series under Section 1005 pursuant to the provisions of this Section that the Company deliver to the Trustee (i) an opinion of nationally recognized independent tax counsel to the effect that: (a) Holders of Debt Securities of such series and any coupons appertaining thereto will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and termination and (b) such Holders (and future Holders) will be subject to tax in the same amount, manner and timing as if such deposit and termination has not occurred and (ii) an Officers' Certificate to the effect that under the laws in effect on the date such money and/or Eligible Instruments are deposited with the Trustee, the amount thereof will be sufficient, after payment of all Federal, state and local taxes in respect thereof payable by the Trustee, to pay principal (and premium, if any) and interest when due on the Debt Securities of such series and any coupons appertaining thereto. It shall be an additional condition to the deposit of cash and/or Eligible Instruments and the termination of the Company's obligations under Section 1005 pursuant to the provisions of this Section, with respect to the Debt Securities of any series then listed on the New York Stock Exchange, that the Company deliver an Opinion of Counsel that the Debt Securities of such series will not be delisted from the New York Stock Exchange as a result of such deposit and termination. After a deposit as provided herein, the Trustee shall, upon Company Request, acknowledge in writing the discharge of the Company's obligations with respect to the Debt Securities of such series under Section 1005 pursuant to the provisions of this Section. SECTION 1702. Repayment to Company. The Trustee and any Paying Agent shall promptly pay to the Company upon Company Request any money or Eligible Instruments not required for the payment of the principal of (and premium, if any) and interest on the Debt Securities of any series and any related coupons for which money or Eligible Instruments have been deposited pursuant to Section 1701 held by them at any time. The Trustee and any Paying Agent shall pay to the Company upon Company Request any money held by them for the payment of principal (and premium, if any) and interest that remains unclaimed for two years after the Maturity of the Debt Securities for which a deposit has been made pursuant to Section 1301. After such payment to the Company, the Holders of the Debt Securities of such series and any related coupons shall thereafter, as unsecured general creditors, look only to the Company for the payment thereof. SECTION 1703. Indemnity for Eligible Instruments. The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the deposited Eligible Instruments or the principal or interest received on such Eligible Instruments. ARTICLE EIGHTEEN SUBORDINATION OF DEBT SECURITIES SECTION 1801. Debt Securities Subordinate to Senior Debt. The Company covenants and agrees that anything in this Indenture or the Debt Securities of any series to the contrary notwithstanding, the indebtedness evidenced by the Debt Securities of each series and any coupons 69 appurtenant thereto is subordinate and junior in right of payment to all Senior Debt to the extent provided herein, and each Holder of Debt Securities of each series and coupons appurtenant thereto, by his acceptance thereof, likewise covenants and agrees to the subordination herein provided and shall be bound by the provisions hereof. Senior Debt shall continue to be Senior Debt and entitled to the benefits of these subordination provisions irrespective of any amendment, modification or waiver of any term of the Senior Debt or extension or renewal of the Senior Debt. In the event that the Company shall default in the payment of any principal of (or premium, if any) or interest on any Senior Debt when the same become due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, upon written notice of such default to the Company by the Holders of Senior Debt or any trustee therefor, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made on account of the principal of (or premium, if any) or interest on any of the Debt Securities, or in respect of any redemption, repayment, retirement, purchase or other acquisition of any of the Debt Securities. In the event of (a) any insolvency, bankruptcy, receivership, liquidation, reorganization, readjustment, composition or other similar proceeding relating to the Company, its creditors or its property, (b) any proceeding for the liquidation, dissolution or other winding up of the Company, voluntary or involuntary, whether or not involving insolvency or bankruptcy proceedings, (c) any assignment by the Company for the benefit of creditors, or (d) any other marshalling of the assets of the Company, all Senior Debt (including any interest thereon accruing after the commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made to any Holder of any of the Debt Securities or coupons appurtenant thereto on account thereof. Any payment or distribution, whether in cash, securities or other property (other than securities of the Company or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Debt Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Debt Securities of any series or coupons appurtenant thereto shall be paid or delivered directly to the Holders of Senior Debt in accordance with the priorities then existing among such Holders until all Senior Debt (including any interest thereon accruing after the commencement of any such proceedings) shall have been paid in full. In the event of any such proceeding, after payment in full of all sums owing with respect to Senior Debt, the Holders of the Debt Securities and coupons appurtenant thereto, together with the Holders of any obligations of the Company ranking on a parity with the Debt Securities, shall be entitled to be paid from the remaining assets of the Company the amounts at the time due and owing on account of unpaid principal of (and premium, if any) and interest on the Debt Securities and such other obligations before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any capital stock or any obligations of the Company ranking junior to the Debt Securities and such other obligations. In the event that, notwithstanding the foregoing, any payment or distribution of any character or any security, whether in cash, securities or other property (other than securities of the Company or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Debt Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), shall be received by the Trustee or any Holder in contravention of any of the terms hereof such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to, the holders of the Senior Debt at the time outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Debt remaining unpaid, to the extent necessary to pay all such Senior Debt in full. In the event of the failure of the Trustee or any Holder to 70 endorse or assign any such payment, distribution or security, each holder of Senior Debt is hereby irrevocably authorized to endorse or assign the same. No present or future holder of any Senior Debt shall be prejudiced in the right to enforce subordination of the indebtedness evidenced by the Debt Securities by any act or failure to act on the part of the Company. Nothing contained herein shall impair, as between the Company and the Holders of Debt Securities of each series, the obligation of the Company to pay to such Holders the principal of (and premium, if any) and interest on such Debt Securities and coupons appurtenant thereto or prevent the Trustee or the Holder from exercising all rights, powers and remedies otherwise permitted by applicable law or hereunder upon a default or Event of Default hereunder, all subject to the rights of the holders of the Senior Debt to receive cash, securities or other property otherwise payable or deliverable to the Holders. Senior Debt shall not be deemed to have been paid in full unless the holders thereof shall have received cash, securities or other property equal to the amount of such Senior Debt then outstanding. Upon the payment in full of all Senior Debt, the Holders of Debt Securities of each series and coupons appurtenant thereto, if any, shall be subrogated to all rights of any holders of Senior Debt to receive any further payments or distributions applicable to the Senior Debt until the indebtedness evidenced by the Debt Securities of such series and coupons appertaining thereto, if any, shall have been paid in full, and such payments or distributions received by such Holders, by reason of such subrogation, of cash, securities or other property which otherwise would be paid or distributed to the holders of Senior Debt, shall, as between the Company and its creditors other than the holders of Senior Debt, on the one hand, and such Holders, on the other hand, be deemed to be a payment by the Company on account of Senior Debt, and not on account of the Debt Securities of such series. The Trustee and Holders will take such action (including, without limitation, the delivery of this Indenture to an agent for the holders of Senior Debt or consent to the filing of a financing statement with respect thereto) as may, in the opinion of counsel designated by the holders of a majority in principal amount of the Senior Debt at the time outstanding, be necessary or appropriate to assure the effectiveness of the subordination effected by these provisions. The provisions of this Section 1801 shall not impair any rights, interests, remedies or powers of any secured creditor of the Company in respect of any security interest the creation of which is not prohibited by the provisions of this Indenture. The securing of any obligations of the Company, otherwise ranking on a parity with the Debt Securities or ranking junior to the Debt Securities, shall not be deemed to prevent such obligations from constituting, respectively, obligations ranking on a parity with the Debt Securities or ranking junior to the Debt Securities. SECTION 1802. Trustee and Holders of Debt Securities May Rely on Certificate of Liquidating Agent; Trustee May Require Further Evidence as to Ownership of Senior Debt. Trustee Not Fiduciary to Holders of Senior Debt. Upon any payment or distribution of assets of the Company referred to in this Article Eighteen, the Trustee and the Holders shall be entitled to rely upon an order or decree made by any court of competent jurisdiction in which such dissolution or winding up or liquidation or reorganization or arrangement proceedings are pending or upon a certificate of the trustee in bankruptcy, receiver, assignee for the benefit of creditors or other Person making such payment or distribution, delivered to the Trustee or to the Holders, for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Debt and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Eighteen. In the absence of any such bankruptcy trustee, receiver, assignee or other Person, the Trustee shall be entitled to rely upon a written notice by a Person representing himself to be a holder of Senior Debt (or a trustee or representative on behalf of such holder) as evidence that such Person is a holder of such Senior Debt (or is such a trustee or representative). In the event that the Trustee determines, in good faith, that further evidence is required with respect to the right of any Person as a holder of Senior Debt to participate in any payments or distributions pursuant to this Article Eighteen, the Trustee may request such person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt held by such Person, as to the extent to which such Person is entitled to participate in such payment or distribution, and as to other facts pertinent to the rights of such Person under this Article Eighteen, and if such evidence is not furnished, the Trustee may offer any payment to such Person pending judicial determination as to the right of such Person to 71 receive payment. The Trustee, however, shall not be deemed to owe any fiduciary duty to the holders of Senior Debt. SECTION 1803. Payment Permitted If No Default Nothing contained in this Article Eighteen or elsewhere in this Indenture, or in any of the Debt Securities, shall prevent (a) the Company any time, except during the pendency of any dissolution, winding up, liquidation or reorganization proceedings referred to in, or under the conditions described in, Section 1801, from making payments of the principal of (or premium, if any) or interest on the Debt Securities or (b) the application by the Trustee or any Paying Agent of any moneys deposited with it hereunder to payments of the principal of or interest on the Debt Securities, if, at the time of such deposit, the Trustee or such Paying Agent, as the case may be, did not have the written notice provided for in Section 1804 of any event prohibiting the making of such deposit, or if, at the time of such deposit (whether or not in trust) by the Company with the Trustee or any Paying Agent (other than the Company) such payment would not have been prohibited by the provisions of this Article, and the Trustee or any Paying Agent shall not be affected by any notice to the contrary received by it on or after such date. SECTION 1804. Trustee Not Charged with Knowledge of Prohibition. Anything in this Article Eighteen or elsewhere in this Indenture contained to the contrary notwithstanding, the Trustee shall not at any time be charged with knowledge of the existence of any facts which would prohibit the making of any payment of money to or by the Trustee and shall be entitled conclusively to assume that no such facts exist and that no event specified in Section 1801 has happened, until the Trustee shall have received an Officers' Certificate to that effect or notice in writing to that effect signed by or on behalf of the holder or holders, or their representatives, of Senior Debt who shall have been certified by the Company or otherwise established to the reasonable satisfaction of the Trustee to be such holder or holders or representatives or from any trustee under any indenture pursuant to which such Senior Debt shall be outstanding. The Company shall give prompt written notice to the Trustee and to the Paying Agent of any facts which would prohibit the payment of money to or by the Trustee or any Paying Agent. SECTION 1805. Trustee to Effectuate Subordination. Each Holder of Debt Securities or coupons by his acceptance thereof authorizes and directs the Trustee in his behalf to take such action as may be necessary or appropriate to effectuate the subordination as between such Holder and holders of Senior Debt as provided in this Article and appoints the Trustee its attorney-in-fact for any and all such purposes. SECTION 1806. Rights of Trustee as Holder of Senior Debt. The Trustee shall be entitled to all the rights set forth in this Article with respect to any Senior Debt which may at the time be held by it, to the same extent as any other holder of Senior Debt; provided that nothing in this Article shall deprive the Trustee of any rights as such holder and provided further that nothing in this Article shall apply to claims of, or payments to, the Trustee under or pursuant to Section 607. SECTION 1807. Article Applicable to Paying Agents. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article shall in such case (unless the context shall otherwise require) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if the Paying Agent were named in this Article in addition to or in place of the Trustee; provided, however, that Sections 1804 and 1806 shall not apply to the Company or any Affiliate of the Company if the Company or such Affiliate acts as Paying Agent. SECTION 1808. Subordination Rights Not Impaired by Acts or Omissions of the Company or Holders of Senior Debt. No right of any present or future holders of any Senior Debt to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof which any such holder may have or 72 be otherwise charged with. The holders of Senior Debt may, at any time or from time to time and in their absolute discretion, change the manner, place or terms of payment, change or extend the time of payment of, or renew or alter, any such Senior Debt, or amend or supplement any instrument pursuant to which any such Senior Debt is issued or by which it may be secured, or release any security therefor, or exercise or refrain from exercising any other of their rights unders the Senior Debt including, without limitation, the waiver of default thereunder, all without notice to or assent from the Holders of the Debt Securities or the Trustee and without affecting the obligations of the Company, the Trustee or the Holders of the Debt Securities under this Article. ARTICLE NINETEEN CONVERSION OF CONVERTIBLE SECURITIES SECTION 1901. Applicability of Article. If an Officers' Certificate or supplemental indenture pursuant to Section 301 provides that the Debt Securities of a series shall be Convertible Securities, such series shall be convertible in accordance with their terms and (except as otherwise specified in such Officers' Certificate or supplemental indenture) in accordance with this Article. SECTION 1902. Right to Convert. Subject to and upon compliance with the provisions of this Article, the Holder of any Convertible Security shall have the right, at his option, at any time prior to the close of business on the date set forth in the Officers' Certificate delivered pursuant to Section 301 hereof (or if such Convertible Security is called for redemption or submitted for repayment, then in respect of such Convertible Security to and including but not after the close of business on the Redemption or Repayment Date, as the case may be, unless the Company shall default in the payment due) to convert the principal amount of any such Convertible Security, or, in the case of any Convertible Security of a denomination greater than $1,000, any portion of such principal which is $1,000 or an integral multiple thereof, into that number of fully paid and nonassessable shares of Common Stock (as such shares shall then be constituted) obtained by dividing the principal amount of the Convertible Security or portion thereof surrendered for conversion by the Conversion Price, by surrender of the Convertible Security so to be converted in whole or in part in the manner provided in Section 1903. Such conversion shall be effected by the Company. SECTION 1903. Exercise of Conversion Privilege; Delivery of Common Stock on Conversion: No Adjustment for Interest or Dividends. In order to exercise the conversion privilege, the Holder of any Convertible Security to be converted in whole or in part shall surrender such Convertible Security at an office or agency maintained by the Company pursuant to Section 1002, accompanied by the funds, if any, required by the last paragraph of this Section, and shall give written notice of conversion in the form provided on the Convertible Securities to the Company at such office or agency that the Holder elects to convert such Convertible Security or the portion thereof specified in said notice. Such notice shall also state the name or names (with address) in which the certificate or certificates for shares of Common Stock which shall be deliverable on such conversion shall be registered, and shall be accompanied by transfer taxes, if required pursuant to Section 1908. Each Convertible Security surrendered for conversion shall, unless the shares deliverable on conversion are to be registered in the same name as the registration of such Convertible Security, be duly endorsed by, or be accompanied by instruments of transfer in form satisfactory to the Company duly executed by, the Holder or his duly authorized attorney. As promptly as practicable after the surrender of such Convertible Security and the receipt of such notice and funds, if any, as aforesaid, the Company shall deliver at such office or agency to such Holder, or on his written order, a certificate or certificates for the number of full shares deliverable upon the conversion of such Convertible Security or portion thereof in accordance with the provisions of this Article and a check or cash in respect of any fractional interest in respect of a share of Common Stock arising upon such conversion as provided in Section 1904. In case any Convertible Security of a denomination greater than $1,000 shall be surrendered for partial conversion and subject to Section 302, the Company shall execute and the Trustee shall authenticate and deliver to or upon the written order of the Holder of the Convertible Security so surrendered, without charge to him, a new Convertible 73 Security or Convertible Securities in authorized denominations in an aggregate principal amount equal to the unconverted portion of the surrendered Convertible Security. Each conversion shall be deemed to have been effected on the date on which such Convertible Security shall have been surrendered (accompanied by the funds, if any, required by the last paragraph of this Section) and such notice shall have been received by the Company, as aforesaid, and the person in whose name any certificate or certificates for shares of Common Stock shall be registrable upon such conversion shall be deemed to have become on said date the holder of record of the shares represented thereby; provided however, that any such surrender on any date when the stock transfer books of the Company shall be closed shall constitute the person in whose name the certificates are to be registered as the record holder thereof for all purposes on the next succeeding day on which stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date upon which such Convertible Security shall have been surrendered. Any Convertible Security or portion thereof surrendered for conversion during the period from the close of business on the Regular Record Date for any Interest Payment Date to the opening of business on such Interest Payment Date shall (unless such Convertible Security or portion thereof being converted shall have been called for redemption or submitted for repayment on a date in such period) be accompanied by payment, in legal tender or other funds acceptable to the Company, of an amount equal to the interest otherwise payable on such Interest Payment Date on the principal amount being converted; provided, however, that no such payment need be made if there shall exist at the time of conversion a default in the payment of interest on the Convertible Securities. An amount equal to such payment shall be paid by the Company on such Interest Payment Date to the Holder of such Convertible Security on such Regular Record Date, provided, however, that if the Company shall default in the payment of interest on such Interest Payment Date, such amount shall be paid to the person who made such required payment. Except as provided above in this Section, no adjustment shall be made for interest accrued on any Convertible Security converted or for dividends on any shares issued upon the conversion of such Convertible Security as provided in this Article. SECTION 1904. Cash Payments in Lieu of Fractional Shares. No fractional shares of Common Stock or scrip representing fractional shares shall be delivered upon conversion of Convertible Securities. If more than one Convertible Security shall be surrendered for conversion at one time by the same Holder, the number of full shares which shall be deliverable upon conversion shall be computed on the basis of the aggregate principal amount of the Convertible Securities (or specified portions thereof to the extent permitted hereby) so surrendered. If any fractional share of stock would be deliverable upon the conversion of any Convertible Security or Convertible Securities, the Company shall make an adjustment therefor in cash at the current market value thereof. The market value of a share of Common Stock shall be the Closing Price on the Business Day immediately preceding the day on which the Convertible Securities (or specified portions thereof) are deemed to have been converted. SECTION 1905. Conversion Price. The Conversion Price shall be as specified in the form of Convertible Security hereinabove set forth, subject to adjustment as provided in this Article. SECTION 1906. Adjustment to Conversion Price. The Conversion Price shall be adjusted from time to time as follows: (a) In case the Company shall (i) pay a dividend or make a distribution on the Common Stock in shares of its capital stock (whether shares of Common Stock or of capital stock of any other class), (ii) subdivide or reclassify its outstanding Common Stock into a greater number of securities (including Common Stock), or (iii) combine or reclassify its outstanding Common Stock into a smaller number of securities (including Common Stock), the Conversion Price in effect immediately prior thereto shall be adjusted so that the Holder of any Convertible Security thereafter surrendered for conversion shall be entitled to receive the number of shares of capital stock of the Company which he would have owned or have been entitled to receive after the happening of any of the events described above had such Convertible Security been converted immediately prior to the happening of such event. An adjustment made pursuant to this subsection (a) shall become 74 effective immediately after the record date in the case of a dividend and shall become effective immediately after the effective date in the case of a subdivision or combination. If, as a result of an adjustment made pursuant to this subsection (a), the Holder of any Convertible Security thereafter surrendered for conversion shall become entitled to receive shares of two or more classes of capital stock of the Company, the Board of Directors of the Company (whose determination shall be conclusive and shall be described in a written statement filed with the Trustee and any conversion agent) shall determine the allocation of the adjusted Conversion Price between or among shares of such classes of capital stock. In the event that at any time, as a result of an adjustment made pursuant to this subsection (a) of this Section 1906, the Holder of any Convertible Security thereafter converted shall become entitled to receive any shares or other securities of the Company other than shares of Common Stock, thereafter the number of such other shares so received upon conversion of any Convertible Security shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the shares of Common Stock contained in this Section 1906, and other provisions of this Article Nineteen with respect to the shares of Common Stock shall apply on like terms to any such other shares or other securities. (b) In case the Company shall fix a record date for the issuance of rights or warrants to all holders of its Common Stock (or securities convertible into Common Stock) entitling them (for a period expiring within 45 days after such record date) to subscribe for or purchase Common Stock at a price per share (or a conversion price per share) less than the current market price per share of Common Stock (as defined in subsection (d) below) at such record date, the Conversion Price in effect immediately prior thereto shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to such record date by a fraction of which the numerator shall be the number of shares of Common Stock outstanding on such record date plus the number of shares which the aggregate offering price of the total number of shares so offered (or the aggregate initial conversion price of the convertible securities so offered) would purchase at such current market price, and of which the denominator shall be the number of shares of Common Stock outstanding on such record date plus the number of additional shares of Common Stock offered for subscription or purchase (or into which the convertible securities so offered are initially convertible). Such adjustment shall be made successively whenever such a record date is fixed, and shall become effective immediately after such record date. In determining whether any rights or warrants entitle the holders to subscribe for or purchase shares of Common Stock at less than such current market price, and in determining the aggregate offering price of such shares, there shall be taken into account any consideration received by the Company for such rights or warrants, the value of such consideration, if other than cash, to be determined by the Board of Directors of the Company. Common Stock owned by or held for the account of the Company or any majority owned subsidiary shall not be deemed outstanding for the purpose of any adjustment required under this subsection (b). (c) In case the Company shall fix a record date for making a distribution to all holders of its Common Stock evidences of its indebtedness or assets (excluding regular quarterly or other periodic or recurring cash dividends or distributions and cash dividends or distributions paid from retained earnings of the Company or dividends or distributions referred to in subsection (a) above) or rights or warrants to subscribe or purchase (excluding those referred to in subsection ((b) above), then in each such case the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to such record date by a fraction of which the numerator shall be the current market price per share (as defined in subsection (d) below) of the Common Stock on such record date less the then fair market value (as determined by the Board of Directors of the Company whose determination shall be conclusive, and described in a certificate filed with the Trustee) of the portion of the assets or evidences of indebtedness so distributed or of such rights or warrants applicable to one share of Common Stock, and the denominator shall be the current market price per share (as defined in subsection (d) below) of the Common Stock. Such adjustment shall be made successively whenever such a record date is fixed and shall become effective immediately after such record date notwithstanding the foregoing, in the event that the Company shall distribute any rights or warrants to acquire capital stock ("Rights") pursuant to this subparagraph (c), the distribution of separate certificates representing such Rights subsequent to their initial distribution (whether or not such distribution shall have occurred prior to the date of the issuance of such Subordinated 75 Capital Securities) shall be deemed to be the distribution of such Rights for purposes of this subsection (b); provided that the Company may, in lieu of making any adjustment pursuant to this subsection (b) upon a distribution of separate certificates representing such Rights, make proper provision so that each Holder of such Convertible Security who converts such Convertible Security (or any portion thereof) (i) before the record date for such distribution of separate certificates shall be entitled to receive upon such conversion shares of Common Stock issued with Rights and (ii) after such record date and prior to the expiration, redemption or termination of such Rights shall be entitled to receive upon such conversion, in addition to the shares of Common Stock issuable upon such conversion, the same number of such Rights as would a holder of the number of shares of Common Stock that such Convertible Security so converted would have entitled the holder thereof to purchase in accordance with the terms and provisions of and applicable to the rights if such Convertible Security were converted immediately prior to the record date for such distribution. Common Stock owned by or held for the account of the Company or any majority owned subsidiary shall not be deemed outstanding for the purpose of any adjustment required under this subsection (c). (d) For the purpose of any computation under subsection (b) and (c) above, the current market price per share of Common Stock at any date shall be deemed to be the average of the daily Closing Prices for the thirty consecutive days (which are not legal holidays as defined in Section 113) commencing forty-five days (which are not legal holidays as defined in Section 113) before the day in question. The Closing Price for any day shall be (i) if the Common Stock is listed or admitted for trading on any national securities exchange, the last sale price (regular way), or the average of the closing bid and ask prices if no sale occurred, of Common Stock on the principal securities exchange on which the Common Stock is listed, (ii) if not listed as described in (i), the mean between the closing high bid and low asked quotations of Common Stock in the National Association of Securities Dealers, Inc., Automated Quotation System, or any similar system or automated dissemination of quotations of securities prices then in common use, if so quoted, or (iii) if not quoted as described in clause (ii), the mean between the high bid and low asked quotations for Common Stock as reported by the National Quotation Bureau Incorporated if at least two securities dealers have inserted both bid and asked quotations for Common Stock on at least 5 of the 10 preceding days. If none of the conditions set forth above is met, the Closing Price of Common Stock on any day or the average of such Closing Prices for any period shall be the fair market value of Common Stock as determined by a member firm of the New York Stock Exchange, Inc. selected by the Company. (e)(i) Nothing contained herein shall be construed to require an adjustment in the Conversion Price as a result of the issuance of Common Stock pursuant to, or the granting or exercise of any rights under, the Company's Shareholder Investment Plan or any successor plans providing for the purchase of shares of Common Stock by the Company's shareholders or employes at a price not less than 90% of the "average market price" during the "pricing period" as such terms, or equivalent terms, are defined in, and as calculated pursuant to, such plans from time to time. (ii) In addition, no adjustment in the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1% in such price; provided, however, that any adjustments which by reason of this subsection (e)(ii) are not required to be made shall be carried forward and taken into account in any subsequent adjustment, further provided, however, that any adjustments which by reason of this subsection (e)(ii) are not otherwise required to be made shall be made no later than 3 years after the date on which occurs an event that requires an adjustment to be made or carried forward. (iii) All calculations under this Article Nineteen shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be. Anything in this Section 1906 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Conversion Price, in addition to those required by this Section 1906, as it in its discretion shall determine to be advisable in order that any stock dividends, subdivision of shares, distribution of rights to purchase stock or securities, or distribution of securities convertible into or exchangeable for stock hereafter made by the Company to its shareholders shall not be taxable. (f) Whenever the Conversion Price is adjusted, as herein provided, the Company shall promptly file with the Trustee and any conversion agent other than the Trustee an Officers' Certificate setting forth the 76 Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. Promptly after delivery of such certificate, the Company shall prepare a notice of such adjustment of the Conversion Price setting forth the adjusted Conversion Price and the date on which such adjustment becomes effective and shall mail such notice of such adjustment of the Conversion Price to the Holder of each Convertible Security at his last address appearing on the Security Register provided for in Section 305 of this Indenture. (g) In any case in which this Section 1906 provides that an adjustment shall become effective immediately after a record date for an event, the Company may defer until the occurrence of such event (i) delivering to the Holder of any Convertible Security converted after such record date and before the occurrence of such event the additional shares of Common Stock deliverable upon such conversion by reason of the adjustment required by such event over and above the Common Stock deliverable upon such conversion before giving effect to such adjustment and (ii) paying to such Holder any amount in cash in lieu of any fraction pursuant to Section 1904, provided, however, that the Company shall deliver to such Holder a due bill or other appropriate instrument evidencing such Holder's rights to receive such additional shares, and such cash, upon the occurrence of the event requiring such adjustment. If such event does not occur, no adjustments shall be made pursuant to this Section 1906. Section 1907. Effect of Reclassification, Consolidation, Merger or Sale. If any of the following events occur, namely (i) any reclassification or change of outstanding shares of Common Stock deliverable upon conversion of the Convertible Securities (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination, but including any change in the shares of Common Stock into two or more classes or series of securities), (ii) any consolidation or merger to which the Company is a party (other than a consolidation or merger in which the Company is the continuing corporation and which does not result in any reclassification of, or change (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination) in, outstanding shares of its Common Stock) or (iii) any sale or conveyance of the properties and assets of the Company as, or substantially as, an entirety to any other corporation; then the Company, or such successor or purchasing corporation, as the case may be, shall execute with the Trustee a supplemental indenture (which shall conform to the Trust Indenture Act as in force at the date of execution of such supplemental indenture and comply with the provisions of Article Nine) providing that each Convertible Security shall be convertible into the kind and amount of shares of stock and other securities or property, including cash, receivable upon such reclassification, change, consolidation, merger, sale or conveyance by a holder of a number of shares of Common Stock deliverable upon conversion of such Convertible Securities immediately prior to such reclassification, change, consolidation, merger, sale or conveyance. Such supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article. The Company shall cause notice of the execution of such supplemental indenture to be mailed to each holder of Convertible Securities, at his address appearing on the Security Register provided for in Section 305 of this Indenture. The above provisions of this Section shall similarly apply to successive reclassifications, consolidations, mergers and sales. SECTION 1908. Taxes on Shares Issued. The delivery of stock certificates or conversion of Convertible Securities shall be made without charge to the Holder converting a Convertible Security for any [illegible] respect of the issue thereof. The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the delivery of stock registered in any name other than of the Holder of the Convertible Security converted, and the Company shall not be required to deliver any such stock certificate unless and until the person or persons requesting the delivery thereof shall have paid to the Company the amount of such [illegible] shall have established to the satisfaction of the Company that such tax has been paid. 77 SECTION 1909. Shares to be Fully Paid; Compliance with Governmental Requirements; Listing of Common Stock. The Company covenants that all shares of Common Stock which may be delivered upon conversion of Convertible Securities will upon delivery be fully paid and nonassessable by the Company and free from all taxes, liens and charges with respect to the issue thereof. The Company covenants that if any shares of Common Stock to be provided for the purpose of conversion of Convertible Securities hereunder require registration with or approval of any governmental authority under any Federal or state law before such shares may be validly delivered upon conversion, the Company will in good faith and as expeditiously as possible endeavor to secure such registration or approval, as the case may be. The Company further covenants that it will, if permitted by the rules of the New York Stock Exchange, list and keep listed for so long as the Common Stock shall be so listed on such exchange, upon official notice of issuance, all Common Stock deliverable upon conversion of the Convertible Securities. SECTION 1910. Responsibility of Trustee. Neither the Trustee nor any authenticating agent nor any conversion agent shall at any time be under any duty or responsibility to any Holder of Convertible Securities to determine whether any facts exist which may require any adjustment of the Conversion Price, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same. Neither the Trustee nor any authenticating agent nor any conversion agent shall be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities or property, which may at any time be delivered upon the conversion of any Convertible Security; and neither the Trustee nor any authenticating agent nor any conversion agent makes any representation with respect thereto. Subject to the provisions of Section 601, neither the Trustee nor any authenticating agent nor any conversion agent shall be responsible for any failure of the Company to deliver any shares of Common Stock or stock certificates or other securities or property or cash upon the surrender of any Convertible Security for the purpose of conversion or for any failure of the Company to comply with any of the covenants of the Company contained in this Article, Section 1911. Notice to Holders Prior to Certain Actions. In case: (a) the Company shall declare a dividend (or any other distribution) on the Common Stock (other than in cash out of its current or retained earnings); or (b) the Company shall authorize the granting to the holders of the Common Stock of rights or warrants to subscribe for or purchase any share of any class or any other rights or warrants; or (c) of any reclassification or change of the Common Stock (other than a subdivision or combination of its outstanding Common Stock, or a change in par value, or from par value to no par value, or from no par value to par value) or, of any consolidation or merger to which the Company is a party and for which approval of any stockholders of the Corporation is required or of the sale or transfer of all or substantially all of the assets of the Company; or (d) of the voluntary or involuntary dissolution, liquidation or winding up of the Company; the Company shall cause to be filed with the Trustee and the Company shall cause to be mailed to each holder of Convertible Securities at his address appearing on the Security Register, provided for in Section 305 of this Indenture, as promptly as possible but in any event at least fifteen days prior to the applicable date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution or rights or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution or rights are to be determined, or (y) the date on which such reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up. Failure to give such notice, or any 78 defect therein, shall not affect the legality or validity of such dividend, distribution, reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up or any adjustment in the Conversion Price required by this Article Nineteen. SECTION 1912. Covenant to Reserve Shares. The Company covenants that it will at all times reserve and keep available, free from pre-emptive rights, out of its authorized but unissued Common Stock such number of shares of Common Stock as shall then be deliverable upon the conversion of all outstanding Convertible Securities. * * * * * IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. BankAmerica Corporation By RICHARD LAIDERMAN ----------------------------------- [CORPORATE SEAL] Attest: CHERYL A. KNOWLES-SOROKIN - ------------------------- Secretary MANUFACTURERS HANOVER TRUST COMPANY OF CALIFORNIA By R.C. HYMAN ----------------------------------- [CORPORATE SEAL] Attest: JAMES NAGY - ------------------- Assistant Secretary 79 STATE OF CALIFORNIA } } ss. City AND COUNTY OF SAN FRANCISCO } On this 30th day of November, 1990 before me, a notary public in and for said State, personally appeared RICHARD LAIDERMAN, known to me to be a vice president of BANKAMERICA CORPORATION, one of the corporations that executed the within instrument, and also known to me to be the person who executed it on behalf of said corporation, and acknowledged to me that such corporation executed the within instrument. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written. [NOTARIAL SEAL] JAMES McGRAW ---------------------- NOTARY PUBLIC In and for the State of California with principal office in the City and County of San Francisco. My Commission Expires May 11, 1994 80 STATE OF CALIFORNIA } } ss. CITY AND COUNTY OF SAN FRANCISCO } On this 30th day of November, 1990 before me, a notary public in and for said State, personally appeared ROBERT C. HYMAN, known to me to be an assistant vice president of MANUFACTURERS HANOVER TRUST COMPANY OF CALIFORNIA, one of the corporations that executed the within instrument, and also known to me to be the person who executed it on behalf of said corporation, and acknowledged to me that such corporation executed the within instrument. IN WITNESS WHEREOF, I have hereunto set my hand and affixed- my official seal the day and year in this certificate first above written. [NOTARIAL SEAL] LISA M. DOUCETTE ------------------------------- NOTARY PUBLIC In and for the State of California with principal office in the City and County of San Francisco. My Commission Expires Commission Expires July 13, 1993 A-1 EXHIBIT A-l [Form of Certificate of Beneficial Ownership by a United States Person or by Certain Other Persons] Certificate BANKAMERICA CORPORATION [Insert title or sufficient description of Debt Securities to be delivered] Reference is hereby made to the Indenture dated as of September 1, 1990 (the "Indenture") between BankAmerica Corporation and Manufacturers Hanover Trust Company of California, as trustee (the "Trustee") covering the above-captioned Debt Securities. This is to certify that as of the date hereof, _______________ principal amount of Debt Securities credited to you for our account (i) is owned by persons that are not United States Persons, as defined below; (ii) is owned by United States Persons that are (a) foreign branches of United States financial institutions (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)) ("financial institutions") purchasing for their own wccount or for resale, or (b) United States Persons who acquired the Notes through foreign branches of United States financial institutions and who hold the Notes through such United States financial institutions on the date hereof (and in either case (a) or (b), each such United States financial institution encloses herewith a certificate in the form of Exhibit A-2 to the Indenture); or (iii) is owned by United States or foreign financial institutions for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), which United States or foreign financial institutions described in clause (iii) above (whether or not also described in clause (i) or (ii)) certify that they have not acquired the Notes for purposes of resale directly or indirectly to a United States Person or to a person within the United States or its possessions. [Insert if certificate does not relate to an interest payment--We undertake to advise you by tested telex followed by written confirmation if the above statement as to beneficial ownership is not correct on the date of delivery of the above-captioned Debt Securities in bearer form as to all of such Debt Securities with respect to such of said Debt Securities as then appear in your books as being held for our account.] We understand that this certificate is required in connection with United States tax laws. We irrevocably authorize you to produce this certificate or a copy hereof to any interested party in any administrative or legal proceedings with respect to the matters covered by this certificate. "United States Person" shall mean a citizen or resident of the United States of America (including the District of Columbia) or its possessions (the "United States"), a corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof or an estate or trust that is subject to United States federal income taxation regardless of the source of its income. A-2 (This certificate excepts and does not relate to __________ principal amount of Debt Securities credited to you for our account and to which we are not now able to make the certification set forth above. We understand that definitive Debt Securities cannot be delivered until we are able to so certify with respect to such principal amount of Debt Securities.] * Dated:_____________________ [To be dated on or after _______________________(the date determined as provided in the Indenture)] [Name of Person Entitled to Receive Bearer Security] ____________________________________________________ (Authorized Signatory) Name:_______________________________________________ Title:______________________________________________ A-3 EXHIBIT A-2 [Form of Certificate of Status as a Foreign Branch of a United States Financial Institution] Certificate BANKAMERICA CORPORATION [Insert title or sufficient description of Debt Securities to be delivered] Reference is hereby made to the Indenture dated as of September 1, 1990, (the "Indenture"), between BankAmerica Corporation and Manufacturers Hanover Trust Company of California, as trustee, relating to the offering of the above-captioned Debt Securities (the "Debt Securities"). Unless herein defined, terms used herein have the same meaning as given to them in the Indenture. The undersigned represents that it is a branch located outside the United States of a United States securities clearing organization, bank or other financial institution (as defined in U.S. Treasury Regulations Section 1.65-12(c)(1)(v)) that holds customers' securities in the ordinary course of its trade or business and agrees that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986 and the regulations thereunder and is not purchasing for resale directly or indirectly to a United States Person or to a person within the United States or its possessions. We undertake to advise you by tested telex followed by written confirmation if the statement in the immediately preceding sentence is not correct on the date of delivery of the above-captioned Debt Securities in bearer form. We understand that this certificate is required in connection with the United States tax laws. We irrevocably authorize you to produce this certificate or a copy hereof to any interested party in any administrative or legal proceedings with respect to the matters covered by this certificate. Dated:_____________________________ [To be dated on or after ____________________________ (the date determined as provided in the Indenture) [Name of Person Entitled to Receive Bearer Security ___________________________________________________ (Authorized Signatory) Name:______________________________________________ Title:_____________________________________________ B-1 EXHIBIT B [Form of Certificate to be Given by Euro-clear and Cedel S.A. in Connection with the Exchange of All or a Portion of a Temporary Global Security or to Obtain Interest Prior to Exchange] Certificate BANKAMERICA CORPORATION [Insert title or sufficient description of Debt Securities to be delivered] We refer to that portion,___________ of the Global Security representing the above-captioned issue [which is herewith submitted to be exchanged for definitive Debt Securities] * [for which we are seeking to obtain payment of interest]* (the "Submitted Portion"), This is to certify, pursuant to the Indenture dated as of September 1, 1990 (the "Indenture") between BankAmerica Corporation and Manufacturers Hanover Trust Company of California, as trustee (the "Trustee"), that we have received in writing, by tested telex or by electronic transmission from member organizations with respect to each of the persons appearing in our records as being entitled to a beneficial interest in the Submitted Portion a Certificate of Beneficial Ownership by a Non-United States Person or by Certain Other Persons, [and, in some cases, a Certificate of Status as a Foreign Branch of a United States Financial Institution]* substantially in the form of Exhibit A-1 [and A-2]* to the Indenture. We hereby request that you deliver to the office of ____________________ in ______________ definitive Bearer Securities in the denominations on the attached Schedule A. We further certify that as of the date hereof we have not received any notification from any of the persons giving such certificates to the effect that the statements made by them with respect to any part of the Submitted Portion are no longer true and cannot be relied on as of the date hereof. Dated:_______________________ [MORGAN GUARANTY TRUST COMPANY OF NEW YORK, BRUSSELS OFFICE, as Operator of the Euro-clear System] [CEDEL S.A.] By _______________________________ - ---------- * Delete if inappropriate. - -------------------------------------------------------------------------------- BankAmerica Corporation NationsBank (DE) Corporation - -------------------------------------------------------------------------------- FIRST SUPPLEMENTAL INDENTURE Dated as of September 15, 1998 Supplementing the Indenture, dated as of September 1, 1990, between BankAmerica Corporation and Chase Manhattan Bank and Trust Company, National Association (successor to Manufacturers Hanover Trust Company of California), as Trustee - -------------------------------------------------------------------------------- FIRST SUPPLEMENTAL INDENTURE, dated as of September 15, 1998 (the "First Supplemental Indenture"), among NationsBank (DE) Corporation, a Delaware corporation ("NationsBank (DE)") and a direct wholly owned subsidiary of NationsBank Corporation, a North Carolina corporation ("NationsBank"), BankAmerica Corporation, a Delaware corporation ("BankAmerica"), and Chase Manhattan Bank and Trust Company, National Association (successor to Manufacturers Hanover Trust Company of California), as Trustee (the "Trustee") under the Indenture referred to herein; WHEREAS, BankAmerica and the Trustee heretofore executed and delivered an Indenture, dated as of September 1, 1990 (the "Indenture"); and WHEREAS, pursuant to the Indenture BankAmerica issued and the Trustee authenticated and delivered one or more series of BankAmerica's Notes (the "Securities"); and WHEREAS, NationsBank and BankAmerica have entered into the Agreement and Plan of Reorganization, dated as of April 10, 1998, pursuant to which (i) NationsBank will merge (the "Reincorporation Merger") with and into NationsBank (DE), in accordance with the terms and conditions of the Plan of Reincorporation Merger by and between NationsBank and NationsBank (DE), dated as of August 3, 1998, with NationsBank (DE) as the surviving corporation in the Reincorporation Merger, and (ii) BankAmerica will thereafter merge (the "Merger," and together with the Reincorporation Merger, the "Reorganization")with and into NationsBank (DE), with NationsBank (DE) as the surviving corporation in the Merger; and WHEREAS, the Reorganization is expected to be consummated on September 30, 1998; and WHEREAS, Section 801 of the Indenture provides that in the case of the Reorganization, NationsBank (DE) shall expressly assume by supplemental indenture all the obligations under the Securities and the Indenture on the part of BankAmerica to be performed or observed; and WHEREAS, Section 1414 of the Indenture requires that, as a result of the Reorganization, a supplemental indenture be entered into providing that the Holder of each Security then Outstanding shall have the right thereafter to receive securities of NationsBank (DE) on the Capital Exchange Date for such Security with a Market Value equal to the principal amount of such Security; and WHEREAS, Section 901(1) of the Indenture provides that BankAmerica and the Trustee may amend the Indenture and the Securities without notice to or consent of any Holders of the Securities in order to comply with Article Eight of the Indenture; and WHEREAS, Section 901(9) of the Indenture provides that BankAmerica and the Trustee may amend the Indenture and the Securities without notice to or consent of any 2 Holders of the Securities in order to make provisions with respect to matters arising under the Indenture which shall not be inconsistent with any provision of the Indenture, provided such provisions shall not adversely affect the interests of the Holders of Securities of any series or any related coupons in any material respect; and WHEREAS, this First Supplemental Indenture has been duly authorized by all necessary corporate action on the part of each of NationsBank (DE) and BankAmerica. NOW, THEREFORE, NationsBank (DE), BankAmerica and the Trustee agree as follows for the equal and ratable benefit of the Holders of the Securities: ARTICLE I ASSUMPTION BY SUCCESSOR CORPORATION SECTION 1.1. Assumption of the Securities. NationsBank (DE) hereby expressly assumes the due and punctual payment of the principal of (and premium, if any) and interest (including all additional amounts, if any, payable pursuant to Section 1006) on all the Securities and any related coupons and the performance of every covenant of the Indenture on the part of BankAmerica to be performed or observed. SECTION 1.2. Trustee's Acceptance. The Trustee hereby accepts this First Supplemental Indenture and agrees to perform the same under the terms and conditions set forth in the Indenture. SECTION 1.3. Rights of Certain Holders in the Event of a Capital Exchange Date. The Holder of each Security Outstanding on the date of the consummation of the Merger shall have the right thereafter to receive securities of NationsBank (DE) on the Capital Exchange Date for such Security with a Market Value equal to the principal amount of such Security. ARTICLE II MISCELLANEOUS SECTION 2.1. Effect of Supplemental Indenture. Upon the later to occur of (i) the execution and delivery of this First Supplemental Indenture by NationsBank (DE), BankAmerica and the Trustee and (ii) the consummation of the Reorganization, the Indenture shall be supplemented in accordance herewith, and this First Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Securities heretofore or hereafter authenticated and delivered under the Indenture shall be bound thereby. SECTION 2.2. Indenture Remains in Full Force and Effect. Except as supplemented hereby, all provisions in the Indenture shall remain in full force and effect. 3 SECTION 2.3. Indenture and Supplemental Indenture Construed Together. This First Supplemental Indenture is an indenture supplemental to and in implementation of the Indenture, and the Indenture and this First Supplemental Indenture shall henceforth be read and construed together. SECTION 2.4. Confirmation and Preservation of Indenture. The Indenture as supplemented by this First Supplemental Indenture is in all respects confirmed and preserved. SECTION 2.5. Conflict with Trust Indenture Act. If any provision of this First Supplemental Indenture limits, qualifies or conflicts with any provision of the Trust Indenture Act ("TIA") that is required under the TIA to be part of and govern any provision of this First Supplemental Indenture, the provision of the TIA shall control. If any provision of this First Supplemental Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the provision of the TIA shall be deemed to apply to the Indenture as so modified or to be excluded by this First Supplemental Indenture, as the case may be. SECTION 2.6. Severability. In case any provision in this First Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 2.7. Terms Defined in the Indenture. All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Indenture. SECTION 2.8. Headings. The Article and Section headings of this First Supplemental Indenture have been inserted for convenience of reference only, are not to be considered part of this Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof. SECTION 2.9. Benefits of First Supplemental Indenture, etc. Nothing in this First Supplemental Indenture or the Securities, express or implied, shall give to any Person, other than the parties hereto and thereto and their successors hereunder and thereunder and the Holders of the Securities, any benefit of any legal or equitable right, remedy or claim under the Indenture, this First Supplemental Indenture or the Securities. SECTION 2.10. Successors. All agreements of NationsBank (DE) in this First Supplemental Indenture shall bind its successors. All agreements of the Trustee in this First Supplemental Indenture shall bind its successors. SECTION 2.11. Trustee Not Responsible for Recitals. The recitals contained herein shall be taken as the statements of BankAmerica and NationsBank (DE), and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to, and shall not be responsible for, the validity or sufficiency of this First Supplemental Indenture. 4 SECTION 2.12. Certain Duties and Responsibilities of the Trustees. In entering into this First Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture relating to the conduct or affecting the liability or affording protection to the Trustee, whether or not elsewhere herein so provided. SECTION 2.13. Governing Law. This First Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the jurisdiction which govern the Indenture and its construction. SECTION 2.14. Counterpart originals. The parties may sign any number of copies of this First Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 5 IN WITNESS WHEREOF, the parties have caused this First Supplemental Indenture to be duly executed as of the date first written above. NationsBank (DE) Corporation By: /s/ John E. Mack --------------------------------- Name: John E. Mack Title: Senior Vice President Attest: /s/ James W. Kiser - ----------------------------- Secretary BankAmerica Corporation By: /s/ S.M. Maguire --------------------------------- Name: S.M. Maguire Title: Senior Vice President and Assistant Treasurer Attest: /s/ Cheryl Sorokin - ----------------------------- Secretary Chase Manhattan Bank and Trust Company, National Association, as Trustee By: /s/ James Nagy --------------------------------- Name: James Nagy Title: Assistant Vice President Attest: [illegible signature] - ----------------------------- Assistant Vice President 6 EX-4 13 EXHIBIT 4(W) ================================================================================ BANKAMERICA CORPORATION TO MANUFACTURERS HANOVER TRUST COMPANY OF CALIFORNIA, Trustee ------------------ Indenture Dated as of November 1, 1991 ------------------ Subordinated Debt Securities ================================================================================ BANKAMERICA CORPORATION Reconciliation and tie between Trust Indenture Act of 1939 and Indenture, dated as of November 1, 1991 Trust Indenture Act Section Indenture Section ss. 310(a)(1) ............................................... 609 (a)(2) ............................................... 609 (a)(3) ............................................... Not Applicable (a)(4) ............................................... Not Applicable (a)(5) ............................................... 609 (b) .................................................. 608 610 (c) .................................................. Not Applicable ss. 311(a) .................................................. 613(a) (b) .................................................. 613(b) (b)(2) ............................................... 703(a)(3) 703(b) ss. 312(a) .................................................. 701 702(a) (b) .................................................. 702(b) (c) .................................................. 702(c) ss. 313(a) .................................................. 703(a) (b) .................................................. 703(b) (c) .................................................. 703(c) (d) .................................................. 703(d) ss. 314(a) .................................................. 704, 1004 (b) .................................................. Not Applicable (c)(1) ............................................... 102 (c)(2) ............................................... 102 (c)(3) ............................................... Not Applicable (d) .................................................. Not Applicable (e) .................................................. 102 ss. 315(a) .................................................. 601(a) 601(c) (b) .................................................. 602 703(a)(7) (c) .................................................. 601(b) (d) .................................................. 601(c) (d)(1) ............................................... 601(a) (d)(2) ............................................... 601(c)(2) (d)(3) ............................................... 601(c)(3) (e) .................................................. 514 ss. 316(a) .................................................. 101 (a)(1)(A) ............................................ 104(h),502 512 (a)(1)(B) ............................................ 104(h),513 (a)(2) ............................................... Not Applicable (b) .................................................. 508 (c) .................................................. 104(h) ss. 317(a)(1) ............................................... 503 (a)(2) ............................................... 504 (b) .................................................. 1003 ss. 318(a) .................................................. 107 (c) .................................................. 107 - ---------- Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture. i TABLE OF CONTENTS Page ---- PARTIES ................................................................. 1 RECITALS ................................................................ 1 ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 101. Definitions: Act......................................................... 1 Affiliate; control; controlling; controlled ................ 1 Authorized Newspaper ....................................... 2 Bank ....................................................... 2 Bearer Security ............................................ 2 Board of Directors ......................................... 2 Board Resolution ........................................... 2 Business Day ............................................... 2 Capital Exchange Agent ..................................... 2 Capital Exchange Date ...................................... 2 Capital Exchange Price ..................................... 2 Capital Securities ......................................... 2 Capital Security Election Form ............................. 2 CEDEL; CEDEL S.A ........................................... 2 Closing Price .............................................. 2 Commission ................................................. 2 Common Stock ............................................... 2 Company .................................................... 3 Company Request; Company Order ............................. 3 Controlled Subsidiary ...................................... 3 Conversion Price ........................................... 3 Convertible Securities ..................................... 3 Corporate Trust Office ..................................... 3 Corporation ................................................ 3 Coupon ..................................................... 3 Debt Securities ............................................ 3 Defaulted Interest ......................................... 3 Depositary ................................................. 3 Designated Currency ........................................ 3 Dollar ..................................................... 3 ECU ........................................................ 3 Eligible Instruments ....................................... 3 Euroclear .................................................. 3 European Communities ....................................... 3 Event of Default ........................................... 3 Exchange Rate .............................................. 4 Exchange Rate Agent ........................................ 4 Exchange Rate Officer's Certificate ........................ 4 Foreign Currency ........................................... 4 Global Exchange Agent ...................................... 4 Global Exchange Date ....................................... 4 Global Security ............................................ 4 Holder ..................................................... 4 - ---------- Note: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture. ii Page ---- Indenture .................................................. 4 Interest ................................................... 4 Interest Payment Date ...................................... 4 Market Value ............................................... 4 Maturity ................................................... 4 Officers' Certificate ...................................... 4 Opinion of Counsel ......................................... 4 Optional Securities Fund ................................... 4 Original Issue Discount Security ........................... 5 Outstanding ................................................ 5 Paying Agent ............................................... 5 Perpetual Preferred Stock .................................. 5 Person ..................................................... 5 Place of Capital Exchange .................................. 5 Place of Payment ........................................... 5 Predecessor Security ....................................... 5 Primary Federal Regulator .................................. 5 Redemption Date ............................................ 6 Redemption Price ........................................... 6 Registered Security ........................................ 6 Regular Record Date ........................................ 6 Remarketing Entity ......................................... 6 Repayment Date ............................................. 6 Repayment Price ............................................ 6 Responsible Officer ........................................ 6 Rights ..................................................... 6 Secondary Offering ......................................... 6 Securities Fund ............................................ 6 Security Register, Security Registrar ...................... 6 Senior Debt ................................................ 6 Special Record Date ........................................ 6 Stated Maturity ............................................ 6 Trust Indenture Act ........................................ 6 Trustee .................................................... 6 United States .............................................. 7 United States Alien ........................................ 7 U.S. Government Obligations ................................ 7 Voting Stock ............................................... 7 SECTION 102. Compliance Certificates and Opinions ....................... 7 SECTION 103. Form of Documents Delivered to Trustee ..................... 7 SECTION 104. Acts of Holders ............................................ 8 SECTION 105. Notices, etc., to Trustee and Company ...................... 9 SECTION 106. Notice to Holders; Waiver .................................. 9 SECTION 107. Conflict with Trust Indenture Act .......................... 10 SECTION 108. Effect of Headings and Table of Contents ................... 10 SECTION 109. Successors and Assigns ..................................... 10 SECTION 110. Separability Clause ........................................ 10 SECTION 111. Benefits of Indenture ...................................... 10 iii Page ---- SECTION 112. Governing Law .............................................. 10 SECTION 113. Legal Holidays ............................................. 10 SECTION 114. Counterparts ............................................... 10 ARTICLE TWO DEBT SECURITY FORMS SECTION 201. Forms Generally ............................................ 11 SECTION 202. Form of Trustee's Certificate of Authentication ............ 11 SECTION 203. Debt Securities in Global Form ............................. 11 ARTICLE THREE THE DEBT SECURITIES SECTION 301. Amount Unlimited; Issuable in Series ....................... 12 SECTION 302. Denominations .............................................. 14 SECTION 303. Execution, Authentication, Delivery and Dating ............. 14 SECTION 304. Temporary Debt Securities .................................. 16 SECTION 305. Registration; Registration of Transfer and Exchange ........ 18 SECTION 306. Mutilated, Destroyed, Lost and Stolen Debt Securities ...... 20 SECTION 307. Payment of Interest; Interest Rights Preserved ............. 21 SECTION 308. Persons Deemed Owners ...................................... 22 SECTION 309. Cancellation ............................................... 23 SECTION 310. Computation of Interest .................................... 23 SECTION 311. Certification by a Person Entitled to Delivery of a Bearer Security .......................................... 23 SECTION 312. Judgments .................................................. 23 ARTICLE FOUR SATISFACTION AND DISCHARGE SECTION 401. Satisfaction and Discharge of Indenture .................... 24 SECTION 402. Application of Trust Money and Eligible Instruments ........ 25 ARTICLE FIVE REMEDIES SECTION 501. Events of Default .......................................... 25 SECTION 502. Acceleration of Maturity; Rescission and Annulment ......... 25 SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee ............................................... 26 SECTION 504. Trustee May File Proofs of Claim ........................... 27 SECTION 505. Trustee May Enforce Claims without Possession of Debt Securities or Coupons .................................... 27 SECTION 506. Application of Money Collected ............................. 28 SECTiON 507. Limitation on Suits ........................................ 28 SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest and To Exchange Debt Securities for Capital Securities ........................ 29 SECTION 509. Restoration of Rights and Remedies ......................... 29 SECTION 510. Rights and Remedies Cumulative ............................. 29 SECTION 511. Delay or Omission Not Waiver ............................... 29 SECTION 512. Control by Holders of Debt Securities ...................... 29 SECTION 513. Waiver of Past Defaults .................................... 29 SECTION 514. Undertaking for Costs ...................................... 30 SECTION 515. Waiver of Stay or Extension Laws ........................... 30 iv Page ---- ARTICLE SIX THE TRUSTEE SECTION 601. Certain Duties and Responsibilities ........................ 30 SECTION 602. Notice of Defaults ......................................... 31 SECTION 603. Certain Rights of Trustee .................................. 31 SECTION 604. Not Responsible for Recitals or Issuance of Debt Securities 32 SECTION 605. May Hold Debt Securities or Coupons ........................ 32 SECTION 606. Money Held in Trust ........................................ 32 SECTION 607. Compensation and Reimbursement ............................. 32 SECTION 608. Disqualification; Conflicting Interests .................... 33 (a) Elimination of Conflicting Interest or Resignation .... 33 (b) Notice of Failure to Eliminate Conflicting Interest or Resign ........................................... 33 (c) "Conflicting Interest" Defined ........................ 33 (d) Definitions of Certain Terms Used in this Section ..... 35 (e) Calculation of Percentages of Securities .............. 36 (f) Stay of Trustee's Duty to Resign ...................... 37 (g) Amendments to Trust Indenture Act ..................... 37 SECTION 609. Corporate Trustee Required; Eligibility .................... 37 SECTION 610. Resignation and Removal; Appointment of Successor .......... 37 SECTION 611. Acceptance of Appointment by Successor ..................... 38 SECTION 612. Merger, Conversion, Consolidation or Succession to Business 39 SECTION 613. Preferential Collection of Claims Against Company .......... 39 (a) Segregation and Apportionment of Certain Collections by Trustee; Certain Exceptions ...................... 39 (b) Certain Creditor Relationships Excluded from Segregation and Apportionment ....................... 41 (c) Definitions of Certain Terms Used in this Section ..... 41 SECTION 614. Authenticating Agent ....................................... 42 ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 701. Company to Furnish Trustee Names and Addresses of Holders .. 43 SECTION 702. Preservation of Information; Communications to Holders ..... 43 SECTION 703. Reports by Trustee ......................................... 44 SECTION 704. Reports by Company ......................................... 45 ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 801. Company May Consolidate, etc., Only on Certain Terms ....... 46 SECTION 802. Successor Corporation Substituted .......................... 46 ARTICLE NINE SUPPLEMENTAL INDENTURES SECTION 901. Supplemental Indentures without Consent of Holders ......... 46 SECTION 902. Supplemental Indentures with Consent of Holders ............ 47 SECTION 903. Execution of Supplemental Indentures ....................... 48 SECTION 904. Effect of Supplemental Indentures .......................... 48 SECTION 905. Conformity with Trust Indenture Act ........................ 49 SECTION 906. Reference in Debt Securities to Supplemental Indentures .... 49 v Page ---- ARTICLE TEN COVENANTS SECTION 1001. Payment of Principal, Premium and Interest ................ 49 SECTION 1002. Maintenance of Office or Agency ........................... 49 SECTION 1003. Money for Debt Securities Payments to Be Held in Trust .... 50 SECTION 1004. Officers' Certificate as to Default ....................... 51 SECTION 1005. Limitation on Disposition of Voting Stock of, and Merger and Sale of Assets by, the Bank ........................ 51 SECTION 1006. Payment of Additional Amounts ............................. 51 SECTION 1007. Waiver of Certain Covenants ............................... 52 ARTICLE ELEVEN REDEMPTION OF DEBT SECURITIES SECTION 1101. Applicability of Article .................................. 52 SECTION 1102. Election to Redeem; Notice to Trustee ..................... 52 SECTION 1103. Selection by Trustee of Debt Securities to Be Redeemed .... 52 SECTION 1104. Notice of Redemption ...................................... 53 SECTION 1105. Deposit of Redemption Price ............................... 53 SECTION 1106. Debt Securities Payable on Redemption Date ................ 53 SECTION 1107. Debt Securities Redeemed in Part .......................... 54 ARTICLE TWELVE SINKING FUNDS SECTION 1201. Applicability of Article .................................. 54 SECTION 1202. Satisfaction of Sinking Fund Payments with Debt Securities 54 SECTION 1203. Redemption of Debt Securities for Sinking Fund ............ 55 ARTICLE THIRTEEN REPAYMENT AT THE OPTION OF HOLDERS SECTION 1301. Applicability of Article .................................. 55 SECTION 1302. Repayment of Debt Securities .............................. 55 SECTION 1303. Exercise of Option; Notice ................................ 55 SECTION 1304. Election of Repayment by Remarketing Entities ............. 56 SECTION 1305. Debt Securities Payable on the Repayment Date ............. 56 ARTICLE FOURTEEN EXCHANGE OF CAPITAL SECURITIES FOR DEBT SECURITIES SECTION 1401. Applicability of Article .................................. 57 SECTION 1402. Exchange of Capital Securities for Debt Securities at Stated Maturity ....................................... 57 SECTION 1403. Right of Early Exchange of Capital Securities for Debt Securities ............................................ 57 SECTION 1404. Notices of Exchange ....................................... 58 SECTION 1405. Rights and Duties of Holders of Debt Securities to be Exchanged for Capital Securities ...................... 59 SECTION 1406. Election to Exchange ...................................... 60 SECTION 1407. Deposit of Capital Exchange Price ......................... 60 SECTION 1408. Debt Securities Due on Capital Exchange Date; Debt Securities Exchanged in Part .......................... 60 SECTION 1409. Form of Capital Security Election Form .................... 61 SECTION 1410. Fractional Capital Securities ............................. 62 SECTION 1411. Company to Obtain Govcrnmental and Regulatory Approvals ... 62 SECTION 1412. Taxes on Exchange ......................................... 62 SECTION 1413. Covenants as to Capital Securities and Secondary Offering . 62 SECTION 1414. Provision in Case of Consolidation, Merger or Transfer of Assets ............................................. 63 SECTION 1415. Responsibility of Trustee ................................. 63 vi Page ---- SECTION 1416. Revocation of Obligation to Exchange Capital Securities for Debt Securities ......................... 63 SECTION 1417. Optional Securities Funds ................................. 63 ARTICLE FIFTEEN SECURITIES FUNDS SECTION 1501. Creation of Securities Funds .............................. 64 SECTION 1502. Designations of Securities Funds .......................... 64 SECTION 1503. Covenant of the Company to Obtain Securities Funds ........ 65 ARTICLE SIXTEEN MEETINGS OF HOLDERS OF DEBT SECURITIES SECTION 1601. Purposes for Which Meetings May Be Called ................. 65 SECTION 1602. Call, Notice and Place of Meetings ........................ 65 SECTION 1603. Persons Entitled to Vote at Meetings ...................... 66 SECTION 1604. Quorum; Action ............................................ 66 SECTION 1605. Determination of Voting Rights; Conduct and Adjournment of Meetings ............................................ 67 SECTION 1606. Counting Votes and Recording Action of Meetings ........... 67 ARTICLE SEVENTEEN DEFEASANCE SECTION 1701. Termination of Company's Obligations ...................... 68 SECTION 1702. Repayment to Company ...................................... 68 SECTION 1703. Indemnity for Eligible Instruments ........................ 69 ARTICLE EIGHTEEN SUBORDINATION OF DEBT SECURITIES SECTION 1801. Debt Securities Subordinate to Senior Debt ................ 69 SECTION 1802. Trustee and Holders of Debt Securities May Rely on Certificate of Liquidating Agent; Trustee May Require Further Evidence as to Ownership of Senior Debt; Trustee Not Fiduciary to Holders of Senior Debt ....... 70 SECTION 1803. Payment Permitted If No Default ........................... 71 SECTION 1804. Trustee Not Charged With Knowledge of Prohibition ......... 71 SECTION 1805. Trustee to Effectuate Subordination ....................... 71 SECTION 1806. Rights of Trustee as Holder of Senior Debt ................ 71 SECTION 1807. Article Applicable to Paying Agents ....................... 72 SECTION 1808. Subordination Rights Not Impaired by Acts or Omissions of the Company or Holders of Senior Debt .............. 72 ARTICLE NINETEEN CONVERSION OF CONVERTIBLE SECURITIES SECTION 1901. Applicability of Article .................................. 72 SECTION 1902. Right to Convert .......................................... 72 SECTION 1903. Exercise of Conversion Privilege; Delivery of Common Stock on Conversion; No Adjustment for Interest or Dividends ......................................... 72 SECTION 1904. Cash Payments in Lieu of Fractional Shares ................ 73 SECTION 1905. Conversion Price .......................................... 74 SECTION 1906. Adjustment to Conversion Price ............................ 74 SECTION 1907. Effect of Reclassification, Consolidation, Merger or Sale . 76 SECTION 1908. Taxes on Shares Issued 77 SECTION 1909. Shares to be Fully Paid; Compliance with Governmental Requirements; Listing of Common Stock ................. 77 vii Page ---- SECTION 1910. Responsibility of Trustee ................................. 77 SECTION 1911. Notice to Holders Prior to Certain Actions ................ 77 SECTION 1912. Covenant to Reserve Shares ................................ 78 TESTIMONIUM ............................................................. 78 SIGNATURES AND SEALS .................................................... 78 ACKNOWLEDGEMENTS ........................................................ 79 EXHIBIT A ............................................................... A-1 EXHIBIT B ............................................................... B-1 INDENTURE (the "Indenture") dated as of November 1, 1991, between BANKAMERICA CORPORATION, a Delaware corporation (hereinafter called the "Company"), having its principal place of business at Bank of America Center, 555 California Street, San Francisco, California 94104 and Manufacturers Hanover Trust Company of California, a California corporation (hereinafter called the "Trustee"), having its Corporate Trust Office at 50 California Street, San Francisco, California 94111. RECITALS OF THE COMPANY The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its subordinated debentures, notes, bonds or other evidences of indebtedness (herein called the "Debt Securities"), to be issued in one or more series. All things necessary have been done to make this Indenture a valid agreement of the Company, in accordance with its terms. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Debt Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Debt Securities or of any series thereof, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 101. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act or by Commission rule or regulation under the Trust Indenture Act, either directly or by reference therein, as in force at the date as of which this instrument was executed, except as provided in Section 905, have the meanings assigned to them therein; (3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and, except as otherwise herein expressly provided, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted in the United States at the date of such computation; and (4) the words "herein", "hereof' and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. Certain terms, used principally in Article Six, are defined in that Article. "Act" when used with respect to any Holder has the meaning specified in Section 104. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. 2 "Authorized Newspaper" means a newspaper in an official language of the country of publication or in the English language customarily published on each Business Day, whether or not published on Saturdays, Sundays or holidays, and of general circulation in the place in connection with which the term is used or in the financial community of such place. Where successive publications are required to be made in Authorized Newspapers, the successive publications may be made in the same or in different newspapers in the same city meeting the foregoing requirements and in each case on any Business Day. "Bank" means Bank of America National Trust and Savings Association, a national banking association, and any successors to any substantial part of the present business thereof. "Bearer Security" means any Debt Security established pursuant to Section 201 which is payable to bearer including, without limitation, unless the context otherwise indicates, a Debt Security in global bearer form. "Board of Directors" means either the board of directors of the Company, or the executive or any other committee of that board duly authorized to act in respect hereof. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day", when used with respect to any Place of Payment or Place of Capital Exchange, means any day which is not a Saturday or Sunday and which is not a legal holiday or a day on which banking institutions or trust companies in that Place of Payment or Place of Capital Exchange are authorized or obligated by law or executive order to close. "Capital Exchange Agent" means the Person or Persons appointed by the Company to give notices and to exchange Debt Securities of any series for Capital Securities as specified in Article Fourteen. "Capital Exchange Date", when used with respect to the Debt Securities of any series, means any date on which such Debt Securities are to be exchanged for Capital Securities pursuant to this Indenture. "Capital Exchange Price", when used with respect to any Debt Security of any series to be exchanged for Capital Securities, means the amount of Capital Securities for which such Debt Security is to be exchanged pursuant to this Indenture or the aggregate sale price of such Capital Securities in the Secondary Offering for such Debt Security, as the case may be. "Capital Securities" means any securities issued by the Company which consist of any of the following: (i) Common Stock (ii) Perpetual Preferred Stock or (iii) securities which at the date of issuance may be issued in exchange for, or the proceeds from the sale of which may be designated as Securities Funds or Optional Securities Funds for the payment of the principal of, "mandatory convertible securities" under applicable regulations of the Primary Federal Regulator. Capital Securities may have such terms, rights and preferences as may be determined by the Company. "Capital Security Election Form" means a form substantially in the form included in Section 1409. "CEDEL" or "CEDEL S.A." means Centrale de Livraison de Valeurs Mobilieres S.A. "Closing Price" has the meaning specified in Section 1906(d). "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, or if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. "Common Stock" means when used with reference to the capital stock of the Company, the class of stock which, at the date of execution of this Indenture, is designated as common stock of the Company and stock of any class or classes into which such common stock or any such other class may thereafter be changed or reclassified. In case by reason of the operation of Article Nineteen, the Convertible Securities shall be convertible into any other shares or other securities or property of the Company or any other corporation, any reference in this Indenture to the 3 conversion of Convertible Securities pursuant to Article Nineteen shall be deemed to refer to and include conversion of Convertible Securities into such other shares or other securities or property. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. "Company Request" and "Company Order" mean, respectively, a written request or order signed in the name of the Company by the Chairman of the Board, the Chairman of the Executive Committee of the Board, a Vice Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, a Vice Chairman or a Vice President (any reference to a Vice President of the Company herein shall be deemed to include any Vice President of the Company whether or not designated by a number or word or words added before or after the title "Vice President"), and by the Treasurer, an Assistant Treasurer, Secretary or an Assistant Secretary of the Company, and delivered to the Trustee. "Controlled Subsidiary" means any corporation more than 80% of the outstanding shares of Voting Stock, except for directors' qualifying shares, of which shall at the time be owned directly by the Company. "Conversion Price" has the meaning specified in Section 1904. "Convertible Securities" means any series of Debt Securities that are designated as such pursuant to Section 301. "Corporate Trust Office" means the principal corporate trust office of the Trustee at which at any particular time its corporate trust business shall be administered. The term "corporation" includes corporations, associations, companies and business trusts. The term "coupon" means any interest coupon appertaining to a Bearer Security. "Debt Securities" has the meaning stated in the first recital of this Indenture and more particularly means any Debt Securities authenticated and delivered under this Indenture. "Defaulted Interest" has the meaning specified in Section 307. "Depositary" means, with respect to the Debt Securities of any series issuable or issued in the form of a Global Security, the Person designated as Depositary by the Company pursuant to Section 301 until a successor Depositary shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Depositary" shall mean or include each Person who is then a Depositary hereunder, and if at any time there is more than one such Person, "Depositary" as used with respect to the Debt Securities of any such series shall mean the Depositary with respect to the Debt Securities of that series. "Designated Currency" has the meaning specified in Section 312. "Dollar" or "$" means the coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts. "ECU" means the European Currency Unit as defined and revised from time to time by the Council of the European Communities. "Eligible Instruments" means monetary assets, money market instruments and securities that are payable in Dollars only and essentially risk free as to collection of principal and interest, including U.S. Government Obligations. "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels Office, as operator of the Euroclear System. "European Communities" means the European Economic Community, the European Coal and Steel Community and the European Atomic Energy Community. "Event of Default" has the meaning specified in Section 501. 4 "Exchange Rate" shall have the meaning specified as contemplated in Section 301. "Exchange Rate Agent" shall have the meaning specified as contemplated in Section 301. "Exchange Rate Officer's Certificate", with respect to any date for the payment of principal of (and premium, if any) and interest on any series of Debt Securities, means a certificate setting forth the applicable Exchange Rate and the amounts payable in Dollars and Foreign Currencies in respect of the principal of (and premium, if any) and interest on Debt Securities denominated in ECU, and other composite currency or Foreign Currency, and signed by the Chairman of the Board, the Chairman of the Executive Committee of the Board, a Vice Chairman of the Board, the President, the Treasurer or any Assistant Treasurer of the Company or the Exchange Rate Agent appointed pursuant to Section 301 and delivered to the Trustee. "Foreign Currency" means a currency issued by the government of any country other than the United States of America. "Global Exchange Agent" has the meaning specified in Section 304. "Global Exchange Date" has the meaning specified in Section 304. "Global Security" means a Debt Security issued to evidence all or a part of a series of Debt Securities in accordance with Section 303. "Holder", with respect to a Registered Security, means a Person in whose name such Registered Security is registered in the Security Register and, with respect to a Bearer Security or a coupon, means the bearer thereof. "Indenture" means this instrument as originally executed or as it may from time to time be supplemented, amended or restated by or pursuant to one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and, unless the context otherwise requires, shall include the terms of a particular series of Debt Securities established as contemplated by Section 301. The term "interest", when used with respect to an Original Issue Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity. "Interest Payment Date", with respect to any Debt Security, means the Stated Maturity of an instalment of interest on such Debt Security. "Market Value" of any Capital Securities issued on any Capital Exchange Date for Debt Securities of any series shall be the sale price of such Capital Securities which are sold in the Secondary Offering for the Debt Securities of such series. In the event no such Secondary Offering takes place, the Market Value of such Capital Securities shall be the fair value of such Capital Securities on such Capital Exchange Date for Debt Securities of such series as determined by three independent nationally recognized investment banking firms selected by the Company. "Maturity", when used with respect to any Debt Security, means the date on which the principal of such Debt Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or exchange, repayment at the option of the Holder or otherwise. "Officers' Certificate" means a certificate signed by the Chairman of the Board, the Chairman of the Executive Committee of the Board, a Vice Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, a Vice Chairman or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, and delivered to the Trustee. "Opinion of Counsel" means a written opinion of counsel, who may (except as otherwise expressly provided in this Indenture) be counsel for the Company, or who may be other counsel acceptable to the Trustee, which is delivered to the Trustee. "Optional Securities Fund" means a fund pursuant to which the proceeds of sales of Capital Securities may be designated on the books of the Company for the payment of any of the principal of any Debt Security pursuant to Section 1417 of this Indenture. 5 "Original Issue Discount Security" means any Debt Security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502. "Outstanding", when used with respect to Debt Securities means, as of the date of determination, all Debt Securities theretofore authenticated and delivered under this Indenture, except: (i) Debt Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (ii) Debt Securities or portions thereof for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Debt Securities and any coupons appertaining thereto; provided, however, that if such Debt Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and (iii) Debt Securities in exchange for or in lieu of which other Debt Securities have been authenticated and delivered, or which have been paid, pursuant to this Indenture; provided, however, that in determining whether the Holders of the requisite principal amount of Debt Securities Outstanding have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Debt Securities owned by the Company or any other obligor upon the Debt Securities or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon such request, demand, authorization, direction, notice, consent or waiver, only Debt Securities which the Trustee knows to be so owned shall be so disregarded. Debt Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Debt Securities and that the pledgee is not the Company or any other obligor upon the Debt Securities or any Affiliate of the Company or of such other obligor. "Paying Agent" means any Person authorized by the Company to pay the principal of (and premium, if any) or interest on any Debt Securities on behalf of the Company. "Perpetual Preferred Stock" means any stock of any class of the Company which has a preference over Common Stock in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which is not mandatorily redeemable or repayable, or redeemable or repayable at the option of the Holder, otherwise than in shares of Common Stock or Perpetual Preferred Stock of another class or series or with the proceeds of the sale of Common Stock or Perpetual Preferred Stock. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Place of Capital Exchange", when used with respect to Debt Securities of any series, means any place where the Debt Securities of such series are exchangeable for Capital Securities as specified pursuant to Section 301. "Place of Payment", when used with respect to the Debt Securities of any series means any place where the principal of (and premium, if any) and interest on the Debt Securities of that series are payable as specified as contemplated by Section 301. "Predecessor Security" of any particular Debt Security means every previous Debt Security evidencing all or a portion of the same debt as that evidenced by such particular Debt Security, and, for the purposes of this definition, any Debt Security authenticated and delivered under Section 306 in lieu of a lost, destroyed or stolen Debt Security shall be deemed to evidence the same debt as the lost, destroyed or stolen Debt Security. "Primary Federal Regulator" means the primary United States federal regulator of the Company (which at the date of this Indenture is the Board of Governors of the Federal Reserve System), or any successor body or institution. 6 "Redemption Date", when used with respect to any Debt Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price", when used with respect to any Debt Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. "Registered Security" means any Debt Security in the form of Registered Securities established pursuant to Section 201 which is registered in the Security Register. "Regular Record Date" for the interest payable on any Interest Payment Date on the Registered Securities of any series means the date specified for that purpose as contemplated by Section 301. "Remarketing Entity", when used with respect to Debt Securities of any series which are repayable at the option of the Holders thereof before their Stated Maturity, means any person designated by the Company to purchase any such Debt Securities. "Repayment Date", when used with respect to any Debt Security to be repaid upon exercise of option for repayment by the Holder, means the date fixed for such repayment pursuant to this Indenture. "Repayment Price", when used with respect to any Debt Security to be repaid upon exercise of option for repayment by the Holder, means the price at which it is to be repaid pursuant to this Indenture. "Responsible Officer" when used with respect to the Trustee, means any officer within the Corporate Trust Department (or any successor group) of the Trustee, including any vice president, assistant vice president, trust officer, assistant secretary or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers, or to whom any corporate trust matter is referred at the Trustee's Corporate Trust Office because of such officer's knowledge of and familiarity with the particular subject. "Rights" has the meaning specified in Section 1906(c). "Secondary Offering", when used with respect to the Debt Securities of any series, means the offering and sale by the Company of Capital Securities for the account of Holders of Debt Securities of such series who elect to receive cash and not Capital Securities on the Capital Exchange Date for such series. "Securities Fund" means a fund pursuant to which the proceeds of sales of Capital Securities are designated on the books of the Company for the payment of any principal of any Debt Security pursuant to the provisions of Section 1501. "Security Register" and "Security Registrar" have the respective meanings specified in Section 305. "Senior Debt" means any obligation of the Company to its creditors whether now outstanding or subsequently incurred other than (i) any obligation as to which, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such obligation is not Senior Debt and (ii) obligations evidenced by the Debt Securities. "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 307. "Stated Maturity", when used with respect to any Debt Security or any installment of interest thereon, means the date specified in such Debt Security or a coupon representing such installment of interest as the fixed date on which the principal of such Debt Security or such installment of interest is due and payable. "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed, except as provided in Section 905. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person who is then a Trustee hereunder, and if at any time there is more than one such Person, "Trustee" as used with respect to the Debt Securities of any series shall mean the Trustee with respect to Debt Securities of that series. 7 "United States" means the United States of America (including the District of Columbia) and its possessions. "United States Alien" means any Person who, for United States Federal income tax purposes, is a foreign corporation, a non-resident alien individual, a non-resident alien fiduciary of a foreign estate or trust, or a foreign partnership one or more of the members of which is, for United States Federal income tax purposes, a foreign corporation, a non-resident alien individual or a non-resident alien fiduciary of a foreign estate or trust. "U.S. Government Obligations" means direct obligations of the United States for the payment of which its full faith and credit is pledged, or obligations of a person controlled or supervised by and acting as an agency or instrumentality of the United States the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States. "Voting Stock", as applied to the stock (or the equivalent thereof) of any corporation, means stock (or the equivalent thereof) of any class or classes, however designated, having ordinary voting power for the election of a majority of the directors of such corporation, other than stock (or such equivalent) having such power only by reason of the happening of a contingency. SECTION 102. Compliance Certificates and Opinions. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture (other than the delivery of any Debt Security to the Trustee for authentication pursuant to Section 303), the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than certificates provided pursuant to Section 704(4)) shall include (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. SECTION 103. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his or her certificate or opinion is based is erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such 8 counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters is erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION 104. Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing. If Debt Securities of a series are issuable in whole or in part as Bearer Securities, any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may, alternatively, be embodied in and evidenced by the record of Holders of Debt Securities voting in favor thereof, either in person or by proxies duly appointed in writing, at any meeting of Holders of Debt Securities duly called and held in accordance with the provisions of Article Sixteen, or a combination of such instruments and any such record. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or record or both are delivered to the Trustee, and, where it is hereby expressly required, to the Company. Such instrument or instruments and any such record (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments and so voting at any such meeting. Proof of execution of any such instrument or of a writing appointing any such agent, or of the holding by any Person of a Debt Security shall be sufficient for any purpose of this Indenture and (subject to Section 601) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. The record of any meeting of Holders of Debt Securities shall be proved in the manner provided in Section 1606. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved in any manner which the Trustee deems sufficient. (c) The ownership of Registered Securities shall be proved by the Security Register. (d) The principal amount and serial numbers of Bearer Securities held by any Person, and the date of holding the same, may be proved by the production of such Bearer Securities or by a certificate executed, as depositary, by any trust company, bank, banker or other depositary, wherever situated, if such certificate shall be deemed by the Trustee to be satisfactory, showing that at the date therein mentioned such Person had on deposit with such depositary, or exhibited to it, the Bearer Securities in the amount and with the serial numbers therein described; or such facts may be proved by the certificate or affidavit of the Person holding such Bearer Securities, if such certificate or affidavit is deemed by the Trustee to be satisfactory. The Trustee and the Company may assume that such ownership of any Bearer Security continues until (1) another certificate or affidavit bearing a later date issued in respect of the same Bearer Security is produced, or (2) such Bearer Security is produced to the Trustee by some other Person, or (3) such Bearer Security is surrendered in exchange for a Registered Security, or (4) such Bearer Security is no longer Outstanding. (e) The fact and date of execution of any such instrument or writing, the authority of the Person executing the same and the principal amount and serial numbers of Bearer Securities held by the Person so executing such instrument or writing and the date of holding the same may also be proved in any other manner which the Trustee deems sufficient; and the Trustee may in any instance require further proof with respect to any of the matters referred to in this Section. (f) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Debt Security shall bind every future holder of the same Debt Security and the Holder of every Debt Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, suffered or omitted by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Debt Security. (g) For purposes of determining the principal amount of Outstanding Debt Securities of any series the Holders of which are required, requested or permitted to give any request, demand, authorization, direction, notice, consent, waiver or take any other Act under this Indenture, (i) each Original Issue Discount Security shall be deemed to have the principal amount determined by the Trustee that could be declared to be due and payable pursuant to the 9 terms of such Original Issue Discount Security as of the date there is delivered to the Trustee and, where it is hereby expressly required, to the Company, such Act by Holders of the required aggregate principal amount of the Outstanding Debt Securities of such series and (ii) each Debt Security denominated in a Foreign Currency or composite currency shall be deemed to have the principal amount determined by the Exchange Rate Agent by converting the principal amount of such Debt Security in the currency in which such Debt Security is denominated into Dollars at the Exchange Rate as of the date such Act is delivered to the Trustee and, where it is hereby expressly required, to the Company by Holders of the required aggregate principal amount of the Outstanding Debt Securities of such series (or, if there is no such rate on such date, such rate on the date determined as specified as contemplated in Section 301). (h) The Company may set a record date for purposes of determining the identity of Holders of Debt Securities of any series entitled to vote or consent to any action by vote or consent authorized or permitted by Section 512 or Section 513. Such record date shall be the later of 30 days prior to the first solicitation of such consent or the date of the most recent list of Holders of such Debt Securities furnished to the Trustee pursuant to Section 701 prior to such solicitation. SECTION 105. Notices, etc., to Trustee and Company. Any request, demand, authorization, direction, notice, consent, waiver or other Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided), if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, Attention: Corporate Trust Department, or (2) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to the attention of its Secretary at the address of its principal office specified in the first paragraph of this instrument or at any other address previously furnished in writing to the Trustee by the Company. SECTION 106. Notice to Holders; Waiver. Except as otherwise expressly provided herein, where this Indenture provides for notice to Holders of any event, (1) such notice shall be sufficiently given to Holders of Registered Securities if in writing and mailed, first-class postage prepaid, to each Holder of a Registered Security affected by such event, at such Holder's address as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice; and (2) such notice shall be sufficiently given to Holders of Bearer Securities by publication thereof in an Authorized Newspaper in The City of New York and, if the Debt Securities of such series are then listed on The International Stock Exchange of the United Kingdom and the Republic of Ireland and such stock exchange shall so require, in London, and, if the Debt Securities of such series are then listed on the Luxembourg Stock Exchange and such stock exchange shall so require, in Luxembourg and, if the Debt Securities of such series are then listed on any other stock exchange outside the United States and such stock exchange shall so require, in any other required city outside the United States or, if not practicable, in Europe on a Business Day at least twice, the first such publication to be not earlier than the earliest date and not later than the latest date prescribed for the giving of such notice. In case, by reason of the suspension of or irregularities in regular mail service or for any other reason, it shall be impossible or impracticable to mail notice of any event to Holders when said notice is required to be given pursuant to any provision of this Indenture or of the Debt Securities, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. In any case where notice to Holders of Registered Securities is to be given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder of a ~Registered Security shall affect the sufficiency of such notice with respect to other Holders of Registered Securities or the sufficiency of any notice by publication to Holders of Bearer Securities given as provided above. In case, by reason of the suspension of publication of any Authorized Newspaper, or by reason of any other cause, it shall be impossible or impracticable to make publication of any notice to Holders of Bearer Securities as 10 provided above, then such method of publication or notification as shall be made with the approval of the Trustee shall constitute a sufficient publication of such notice. Neither failure to give notice by publication to Holders of Bearer Securities as provided above, nor any defect in any notice so published, shall affect the sufficiency of any notice mailed to Holders of Registered Securities as provided above. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. Any request, demand, authorization, direction, notice, consent, election, waiver or other Act required or permitted under this Indenture shall be in the English language, except that any published notice may be in an official language of the country of publication. SECTION 107. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control. SECTION 108. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 109. Successors and Assigns. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether expressed or not. SECTION 110. Separability Clause. In case any provision in this Indenture or in the Debt Securities or coupons shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 111. Benefits of Indenture. Nothing in this Indenture or in the Debt Securities or coupons, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any Paying Agent and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 112. Governing Law. This Indenture and the Debt Securities and coupons shall be governed by and construed in accordance with the laws of the State of California. SECTION 113. Legal Holidays. In any case where any Interest Payment Date, Redemption Date, Repayment Date, Capital Exchange Date or Stated Maturity of any Debt Security shall not be a Business Day at any Place of Payment or Place of Capital Exchange, then (notwithstanding any other provision of this Indenture or of the Debt Securities or coupons) payment of interest or principal (and premium, if any) or exchange of Debt Securities for Capital Securities or cash need not be made at such Place of Payment or Place of Capital Exchange on such date, but may be made on the next succeeding Business Day at such Place of Payment or Place of Capital Exchange with the same force and effect as if made on the Interest Payment Date, Redemption Date, Repayment Date, Capital Exchange Date or Stated Maturity, and no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date, Repayment Date, Capital Exchange Date or Stated Maturity, as the case may be. SECTION 114. Counterparts. This Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Indenture. 11 ARTICLE TWO DEBT SECURITY FORMS SECTION 201. Forms Generally. The Registered Securities, if any, and the Bearer Securities and related coupons, if any, of each series shall be in substantially the form (including temporary or permanent global form) as shall be established in or pursuant to a Board Resolution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon, as may be required to comply with the rules of any securities exchange, or as may, consistently herewith, be determined by the officers executing such Debt Securities or coupons, as evidenced by their signatures on the Debt Securities or coupons. If the form of Debt Securities of any series or coupons (including any such Global Security) is established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 303 or the authentication and delivery of such Debt Securities or coupons. Unless otherwise specified as contemplated by Section 301, Debt Securities in bearer form, other than Debt Securities in temporary or permanent global form, shall have coupons attached. The definitive Debt Securities and coupons, if any, shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Debt Securities, as evidenced by the execution of such Debt Securities and coupons. SECTION 202. Form of Trustee's Certificate of Authentication. This is one of the Debt Securities, of the series designated herein, described in the within-mentioned Indenture. MANUFACTURERS HANOVER TRUST COMPANY OF CALIFORNIA as Trustee By ------------------------------------- Authorized Officer SECTION 203. Debt Securities in Global Form. If Debt Securities of a series are issuable in whole or in part in global form, as specified as contemplated by Section 301, then, notwithstanding clause (12) of Section 301 and the provisions of Section 302, such Global Security shall represent such of the outstanding Debt Securities of such series as shall be specified therein and may provide that it shall represent the aggregate amount of Outstanding Debt Securities from time to time endorsed thereon and that the aggregate amount of Outstanding Debt Securities represented thereby may from time to time be reduced to reflect exchanges. Any endorsement of a Global Security to reflect the amount, or any increase or decrease in the amount, of Outstanding Debt Securities represented thereby shall be made in such manner and upon instructions given by such Person or Persons as shall be specified therein or in the Company Order to be delivered to the Trustee pursuant to Section 303 or Section 304. The provisions of the last sentence of Section 303(g) shall apply to any Debt Securities represented by a Debt Security in global form if such Debt Security was never issued and sold by the Company and the Company delivers to the Trustee the Debt Security in global form together with written instructions (which need not comply with Section 102 and need not be accompanied by an Opinion of Counsel) with regard to the reduction in the principal amount of Debt Securities represented thereby, together with the written statement contemplated by the last sentence of Section 303(g). Global Securities may be issued in either registered or bearer form and in either temporary or permanent form. 12 ARTICLE THREE THE DEBT SECURITIES SECTION 301. Amount Unlimited; Issuable in Series. The aggregate principal amount of Debt Securities which may be authenticated and delivered under this Indenture is unlimited. The Debt Securities may be issued in one or more series. There shall be established in or pursuant to a Board Resolution, and set forth in an Officers' Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Debt Securities of any series: (1) the title of the Debt Securities of the series (which shall distinguish the Debt Securities of the series from all other Debt Securities); (2) the limit, if any, upon the aggregate principal amount of the Debt Securities of the series which may be authenticated and delivered under this Indenture (except for Debt Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Debt Securities of the series pursuant to Section 304, 305, 306, 906, 1107, 1303, 1408 or 1903 and except for any Debt Securities which, pursuant to Section 303, are deemed never to have been authenticated and delivered hereunder); (3) the date or dates on which the principal and premium, if any, of the Debt Securities of the series are payable; (4) the rate or rates, if any, at which the Debt Securities of the series shall bear interest, or the method or methods by which such rate or rates may be determined, the date or dates from which such interest shall accrue, the Interest Payment Dates on which such interest shall be payable, the Regular Record Date for the interest payable on any Registered Security on any Interest Payment Date and the circumstances, if any, in which the Company may defer interest payments; (5) the place or places where, subject to the provisions of Section 1002, the principal of (and premium, if any) and interest on Debt Securities of the series shall be payable, any Registered Securities of the series may be surrendered for registration of transfer, Debt Securities of the series may be surrendered for exchange and notices and demands to or upon the Company in respect of the Debt Securities of the series and this Indenture may be served and where notices to Holders pursuant to Section 106 will be published; (6) if applicable, the period or periods within which or the date or dates on which, the price or prices at which and the terms and conditions upon which Debt Securities of the series may be redeemed, in whole or in part, at the option of the Company; (7) if applicable, the place or places at which, the period or periods within which, the price or prices at which and the terms and conditions upon which Debt Securities shall be exchangeable for Capital Securities of the Company, which terms and conditions shall not be inconsistent with Article Fourteen; (8) any covenant or option of the Company to create a Securities Fund for the repayment of the Debt Securities and the terms and conditions of such Securities Fund, which terms and conditions shall not be inconsistent with Article Fifteen; (9) the obligation, if any, of the Company to redeem, repay or purchase Debt Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the period or periods within which, the price or prices at which and the terms and conditions upon which Debt Securities of the series shall be redeemed, repaid or purchased, in whole or in part, pursuant to such obligation; (10) whether Debt Securities of the series are to be issuable as Registered Securities, Bearer Securities or both, whether Debt Securities of the series are to be issuable with or without coupons or both and, in the case of Bearer Securities, the date as of which such Bearer Securities shall be dated if other than the date of original issuance of the first Debt Security of such series of like tenor and term to be issued; (11) whether the Debt Securities of the series shall be issued in whole or in part in the form of a Global Security or Securities and, in such case, the Depositary and Global Exchange Agent for such Global Security 13 or Securities, whether such global form shall be permanent or temporary and, if applicable, the Global Exchange Date; (12) if Debt Securities of the series are to be issuable initially in the form of a temporary Global Security, the circumstances under which the temporary Global Security can be exchanged for definitive Debt Securities and whether the definitive Debt Securities will be Registered and/or Bearer Securities and will be in global form and whether interest in respect of any portion of such Global Security payable in respect of an Interest Payment Date prior to the Global Exchange Date shall be paid to any clearing organization with respect to a portion of such Global Security held for its account and, in such event, the terms and conditions (including any certification requirements) upon which any such interest payment received by a clearing organization will be credited to the Persons entitled to interest payable on such Interest Payment Date if other than as provided in this Article Three; (13) whether, and under what conditions, additional amounts will be payable to Holders of Debt Securities of the series pursuant to Section 1006; (14) the denominations in which any Registered Securities of the series shall be issuable, if other than denominations of $1,000 and any integral multiple thereof, and the denominations in which any Bearer Securities of such series, shall be issuable, if other than the denomination of $5,000; (15) if other than the principal amount thereof, the portion of the principal amount of Debt Securities of the series which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 502; (16) the currency or currencies of denomination of the Debt Securities of any series, which may be in Dollars, any Foreign Currency or any composite currency, including but not limited to the ECU, and, if any such currency of denomination is a composite currency other than the ECU, the agency or organization, if any, responsible for overseeing such composite currency; (17) the currency or currencies in which payment of the principal of (and premium, if any) and interest on the Debt Securities will be made, the currency or currencies, if any, in which payment of the principal of (and premium, if any) or the interest on Registered Securities, at the election of each of the Holders thereof, may also be payable and the periods within which and the terms and conditions upon which such election is to be made and the Exchange Rate and Exchange Rate Agent; (18) if the amount of payments of principal of (and premium, if any) or interest on the Debt Securities of the series may be determined with reference to an index based on a currency or currencies other than that in which the Debt Securities are denominated or designated to be payable, the manner in which such amounts shall be determined; (19) if payments of principal of (and premium, if any) or interest on the Debt Securities of the series are to be made in a Foreign Currency other than the currency in which such Debt Securities are denominated, the manner in which the Exchange Rate with respect to such payments shall be determined or if the Exchange Rate is to be determined otherwise than as provided in Section 101; (20) any Events of Default with respect to Debt Securities of such series, if not set forth herein; (21) the terms and conditions, if any, pursuant to which the Company's obligations under this Indenture may be terminated through the deposit of money or Eligible Instruments as provided in Articles Four or Seventeen; (22) the Person or Persons who shall be Security Registrar for the Debt Securities of such series if other than the Trustee, and the place or places where the Security Register for such series shall be maintained and the Person or Persons who will be the initial Paying Agent or Agents, if other than the Trustee; (23) whether the Debt Securities of the series are Convertible Securities and the terms related thereto including the Conversion Price and the date on which the right to convert expires; and 14 (24) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture). All Debt Securities of any one series and the coupons appertaining to Bearer Securities of such series, if any, shall be substantially identical except, in the case of Registered Securities, as to denomination and except as may otherwise be provided in or pursuant to such Board Resolution and set forth in such Officers' Certificate or in any such indenture supplemental hereto. Debt Securities of any particular series may be issued at various times, with different dates on which the principal or any instalment of principal is payable, with different rates of interest, if any, or different methods by which rates of interest may be determined, with different dates on which such interest may be payable and with different Redemption or Repayment Dates and may be denominated in different currencies or payable in different currencies. If any of the terms of a series of Debt Securities are established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers' Certificate setting forth the terms of the series. SECTION 302. Denominations. Debt Securities of each series shall be issuable in such form and denominations as shall be specified in the form of Debt Security for such series approved or established pursuant to Section 201 or in the Officers' Certificate delivered pursuant to Section 301. In the absence of any specification with respect to the Debt Securities of any series, the Registered Securities of such series, if any, shall be issuable in denominations of $1,000 and any integral multiple thereof and the Bearer Securities of such series, if any, shall be issuable in the denomination of $5,000. SECTION 303. Execution, Authentication, Delivery and Dating. (a) The Debt Securities shall be executed on behalf of the Company by its Chairman of the Board, the Chairman of the Executive Committee of the Board, a Vice Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, a Vice Chairman or a Vice President, and by its Treasurer or one of its Assistant Treasurers or its Secretary or one of its Assistant Secretaries under its corporate seal reproduced thereon. The signature of any of these officers on the Debt Securities may be manual or facsimile. Coupons shall bear the facsimile signature of the Treasurer or any Assistant Treasurer of the Company. Debt Securities and coupons bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Debt Securities or coupons of any series or did not hold such offices at the date of such Debt Securities or coupons. (b) At any time and from time to time after the execution and delivery of this Indenture, Debt Securities of any series may be executed by the Company and delivered to the Trustee for authentication, and, except as otherwise provided in this Article Three, shall thereupon be authenticated and delivered by the Trustee upon Company Order, without any further action by the Company provided however, that, in connection with its original issuance, a Bearer Security may be delivered only outside the United States and, except in the case of a temporary Global Security, only if the Company or its agent shall have received the certification required pursuant to Sections 304(b) (iii) and (iv), unless such certification shall have been provided earlier pursuant to Section 304(b) (v) hereof, and only if the Company has no reason to know that such certification is false. To the extent authorized in or pursuant to a Board Resolution and set forth in an Officers' Certificate, or established in one or more indentures supplemental hereto, such written Company Order may be given by any one officer of the Company, may be electronically transmitted, and may provide instructions as to registration of holders, principal amounts, rates of interest, maturity dates and other matters contemplated by such Board Resolution and Officers' Certificate or supplemental indenture to be so instructed in respect thereof. Before authorizing and delivering the first Debt Securities of any series (and upon request of the Trustee thereafter), the Company shall deliver to the Trustee (i) the certificates called for under Sections 201 and 301 hereof and (ii) an Opinion of Counsel described in the next sentence. 15 In authenticating such Debt Securities, and accepting the additional responsibilities under this Indenture in relation to any Debt Securities, the Trustee shall be entitled to receive, prior to the initial authentication of such Debt Securities, and (subject to Section 601) shall be fully protected in relying upon: (i) a Board Resolution relating thereto and, if applicable, an appropriate record of any action taken pursuant to such resolution certified by the Secretary or an Assistant Secretary of the Company; (ii) an executed supplemental indenture, if any, relating thereto; (iii) an Officers' Certificate setting forth the form and terms of the Debt Securities of such series and coupons, if any, pursuant to Sections 201 and 301 and stating that all conditions precedent provided for in this Indenture relating to the issuance of such Debt Securities have been complied with, that no Event of Default with respect to any series of Debt Securities has occurred and is continuing and that the issuance of such Debt Securities is not and will not result in an Event of Default or an event or condition which, upon the giving of notice (or the acquisition of knowledge) or the lapse of time or both, would become an Event of Default, and (iv) an Opinion of Counsel stating (A) that the form of such Debt Securities and coupons, if any, has been established in or pursuant to a Board Resolution or by a supplemental indenture as permitted by Section 201 in conformity with the provisions of this Indenture; (B) that the terms of such Debt Securities and coupons, if any, have been established in or pursuant to a Board Resolution or by a supplemental indenture as permitted by Section 301 in conformity with the provisions of this Indenture: (C) that such Debt Securities and coupons, if any, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and binding obligations of the Company, enforceable in accordance with their terms, subject, as to enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors' rights generally and the application of general principles of equity, except that where the Debt Securities of any series are to be exchanged for Capital Securities or paid from the Securities Fund, the issuance of Capital Securities will require further action by the Board of Directors; (D) that the Company has the corporate power to issue such Debt Securities and coupons, if any, and has duly taken all necessary corporate action with respect to such issuance; (E) that the issuance of such Debt Securities and coupons, if any, will not contravene the charter or by-laws of the Company or result in any violation of any of the terms or provisions of any law or regulation or of any indenture, mortgage or other agreement known to such counsel by which the Company or any of its subsidiaries is bound; (F) that all laws and requirements in respect of the execution and delivery by the Company of such Debt Securities and coupons, if any, have been complied with and that authentication and delivery of such Debt Securities by the Trustee will not violate the terms of the Indenture; and (G) such other matters as the Trustee may reasonably request. (c) If the Company shall establish pursuant to Section 301 that the Debt Securities of a series are to be issued in whole or in part in the form of one or more Global Securities, then the Company shall execute and the Trustee shall, in accordance with this Section and the Company Order with respect to such series, authenticate and deliver, one or more Global Securities in permanent or temporary form that (i) shall represent and shall be denominated in an aggregate amount equal to the aggregate principal amount of the Outstanding Debt Securities of such series to be represented by one or more Global Securities, (ii) shall be registered in the name of the Depositary for such Global Security or Securities or the nominee of such Depositary and (iii) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary's instruction. 16 (d) The Trustee shall have the right to decline to authenticate and deliver any Debt Securities under this Section 303 if (i) the Trustee, being advised by counsel, determines that such action may not lawfully be taken or (ii) the Trustee in good faith by a committee of Responsible Officers shall determine that such action would be unjustly prejudicial to Holders of Outstanding Debt Securities or (iii) the issuance of such Debt Securities will adversely affect the Trustee's own rights, duties or immunities under the Debt Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee. (e) If all the Debt Securities of any series are not to be issued at one time, it shall not be necessary to deliver an Opinion of Counsel at the time of issuance of each Debt Security, but such Opinion of Counsel, with appropriate modifications, may instead be delivered at or prior to the time of the first issuance of Debt Securities of such series. (f) Each Registered Security shall be dated the date of its authentication. Each Bearer Security shall be dated as of the date specified as contemplated by Section 301. (g) No Debt Security or coupon attached thereto shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Debt Security a certificate of authentication substantially in the form provided for herein executed by the Trustee, and such certificate upon any Debt Security shall be conclusive evidence, and the only evidence, that such Debt Security has been duly authenticated and delivered hereunder. Except as permitted by Section 306, the Trustee shall not authenticate and deliver any Bearer Security unless all appurtenant coupons for interest then matured have been detached and cancelled. Notwithstanding the foregoing, if any Debt Security or portion thereof shall have been duly authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Debt Security to the Trustee for cancellation as provided in Section 309 together with a written statement (which need not comply with Section 102 and need not be accompanied by an Opinion of Counsel) stating that such Debt Security or portion thereof has never been issued and sold by the Company, for all purposes of this Indenture such Debt Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture. (h) Each Depositary designated pursuant to Section 301 for a Global Security in registered form must, at the time of its designation and at all times while it serves as Depositary, be a clearing agency registered under the Securities Exchange Act of 1934 and any other applicable statute or regulation. SECTION 304. Temporary Debt Securities. (a) Pending the preparation of definitive Debt Securities of any series, the Company may execute, and upon receipt of documents required by Sections 301 and 303, together with a Company Order, the Trustee shall authenticate and deliver, temporary Debt Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor and terms of the definitive Debt Securities in lieu of which they are issued in registered form or, if authorized, in bearer form with one or more coupons or without coupons, and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Debt Securities may determine, as evidenced by their signatures on such Debt Securities. In the case of Debt Securities of any series issuable as Bearer Securities, such temporary Debt Securities may be in global form, representing all or any part of the Outstanding Debt Securities of such series. (b) Unless otherwise provided pursuant to Section 301: (i) Except in the case of temporary Debt Securities in global form, if temporary Debt Securities of any series are issued, the Company will cause definitive Debt Securities of such series to be prepared without unreasonable delay. After the preparation of definitive Debt Securities of such series, the related temporary Debt Securities shall be exchangeable for such definitive Debt Securities upon surrender of the temporary Debt Securities of such series at the office or agency of the Company in a Place of Payment for such series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Debt Securities of any series (accompanied, if applicable, by all unmatured coupons and all matured coupons in default appertaining thereto), the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Debt Securities of the same series of like tenor and terms and of authorized denominations; provided, however, that no Bearer Security shall be delivered in exchange for a Registered 17 Security; and provided, further, that a Bearer Security shall be delivered in exchange for a Bearer Security only in compliance with the conditions set forth in Section 305. (ii) If Debt Securities of any series are issued in temporary global form, any such temporary Global Security shall, unless otherwise provided pursuant to Section 301, be delivered to the Depositary for the benefit of Euroclear and CEDEL S.A., for credit to the respective accounts of the beneficial owners of such Debt Securities (or to such other accounts as they may direct). (iii) Without unnecessary delay but in any event not later than the date specified in, or determined pursuant to the terms of, any such temporary Global Security (the "Global Exchange Date"), the Company shall deliver definitive Debt Securities to the Trustee or the agent appointed by the Company pursuant to Section 301 to effect the exchange of the temporary Global Security for definitive Debt Securities (the "Global Exchange Agent"), in an aggregate principal amount equal to the principal amount of such temporary Global Security, executed by the Company. On or after the Global Exchange Date, such temporary Global Security shall be surrendered by the Depositary to the Global Exchange Agent, to be exchanged, in whole or from time to time in part, for definitive Debt Securities without charge and the Trustee or the Global Exchange Agent, if authorized by the Trustee pursuant to Section 614, shall authenticate and deliver, in exchange for each portion of such temporary Global Security, an equal aggregate principal amount of definitive Debt Securities of the same series of authorized denominations and of like tenor and terms as the portion of such temporary Global Security to be exchanged. Upon any exchange of a part of such temporary Global Security for definitive Debt Securities, the portion of the principal amount and any interest thereon so exchanged shall be endorsed by the Global Exchange Agent on a schedule to such temporary Global Security, whereupon the principal amount and interest payable with respect to such temporary Global Security shall be reduced for all purposes by the amount so exchanged and endorsed. The definitive Debt Securities to be delivered in exchange for any such temporary Global Security shall be in bearer form, registered form, global registered form or global bearer form, or any combination thereof, as specified as contemplated by Section 301, and, if any combination thereof is so specified, as requested by the beneficial owner thereof; provided, however, that, in the case of the exchange of the temporary Global Security for definitive Bearer Securities (including a definitive Global Bearer Security), upon such presentation by the Depositary, such temporary Global Security shall be accompanied by a certificate signed by Euroclear as to the portion of such temporary Global Security held for its account then to be exchanged and a certificate signed by CEDEL S.A. as to the portion of such temporary Global Security held for its account then to be exchanged, each in the form set forth in Exhibit B to this Indenture, unless such certificate(s) shall have been provided earlier pursuant to Section 304(b)(v) hereof; and provided, further, that definitive Bearer Securities (including a definitive global Bearer Security) shall be delivered in exchange for a portion of a temporary Global Security only in compliance with the requirements of Section 303. (iv) The interest of a beneficial owner of Debt Securities of a series in a temporary Global Security shall be exchanged for definitive Debt Securities of the same series and of like tenor and terms following the Global Exchange Date when the account holder instructs Euroclear or CEDEL S.A., as the case may be, to request such exchange on such account holder's behalf and in the case of the exchange of the temporary Global Security for definitive Bearer Securities (including a definitive Global Bearer Security), unless such certificate(s) shall have been earlier provided pursuant to Section 304(b)(v) hereof, the account holder delivers to Euroclear or CEDEL S.A., as the case may be, a certificate in the form set forth in Exhibit A-l and, if applicable, A-2 to this Indenture, dated no earlier than 15 days prior to the Global Exchange Date, copies of which certificate shall be available from the offices of Euroclear and CEDEL S.A., the Global Exchange Agent, any authenticating agent appointed for such series of Debt Securities and each Paying Agent. Unless otherwise specified in such temporary Global Security, any such exchange shall be made free of charge to the beneficial owners of such temporary Global Security, except that a Person receiving definitive Debt Securities must bear the cost of insurance, postage, transportation and the like in the event that such Person does not take delivery of such definitive Debt Securities in person at the offices of Euroclear and CEDEL S.A. Definitive Debt Securities in bearer form to be delivered in exchange for any portion of a temporary Global Security shall be delivered only outside the United States. (v) Until exchanged in full as hereinabove provided, the temporary Debt Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Debt Securities of the same series 18 and of like tenor and terms authenticated and delivered hereunder, except that interest payable on a temporary Global Security on an Interest Payment Date shall be payable to Euroclear and CEDEL S.A. on such Interest Payment Date only if there has been delivery by Euroclear and CEDEL S.A., to the Global Exchange Agent of a certificate or certificates in the form set forth in Exhibit B to this Indenture dated no earlier than the first Interest Payment Date, for credit without further interest on or after such Interest Payment Date to the respective accounts of the Persons who are the beneficial owners of such temporary Global Security on such Interest Payment Date and who have each delivered to Euroclear or CEDEL S.A., as the case may be, a certificate in the form set forth in Exhibit A-1 and, if applicable, A-2 to this Indenture dated no earlier than the first Interest Payment Date. Any interest so received by Euroclear and CEDEL S.A., and not paid as herein provided prior to the Global Exchange Date shall be returned to the Global Exchange Agent which, upon expiration of two years after such Interest Payment Date shall repay such interest to the Company in accordance with Section 1003. SECTION 305. Registration; Registration of Transfer and Exchange. The Company shall cause to be kept at one of the offices or agencies to be maintained by the Company in accordance with the provisions of this Section 305 and Section 1002, with respect to the Debt Securities of each series which are Registered Securities, a register (herein sometimes referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Registered Securities and of transfers of Registered Securities. Pursuant to Section 301, the Company shall appoint, with respect to Debt Securities of each series which are Registered Securities, a "Security Registrar" for the purpose of registering such Debt Securities and transfers and exchanges of such Debt Securities as herein provided. Upon surrender for registration of transfer of any Registered Security of any series at the office or agency of the Company maintained for such purpose, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Registered Securities of the same series of any authorized denomination or denominations, of like tenor and terms and aggregate principal amount. At the option of the Holder, Registered Securities of any series may be exchanged for other Registered Securities of the same series of any authorized denomination or denominations, of like tenor and terms and aggregate principal amount, upon surrender of the Registered Securities to be exchanged at such office or agency. Bearer Securities may not be delivered in exchange for Registered Securities. At the option of the Holder, Registered Securities or Bearer Securities of any series may be issued in exchange for Bearer Securities (except as otherwise specified as contemplated by Section 301 with respect to a Bearer Security in global form) of the same series, of any authorized denominations and of like tenor and terms and aggregate principal amount, upon surrender of the Bearer Securities to be exchanged at any such office or agency, with all unmatured coupons and all matured coupons in default thereto appertaining. If the Holder of a Bearer Security is unable to produce any such unmatured coupon or coupons or matured coupon or coupons in default, such exchange may be effected if the Bearer Securities are accompanied by payment in funds acceptable to the Company and the Trustee in an amount equal to the face amount of such missing coupon or coupons, or the surrender of such missing coupon or coupons may be waived by the Company and the Trustee if there be furnished to them such security or indemnity as they may require to save each of them and any Paying Agent harmless. If thereafter the Holder of such Security shall surrender to any Paying Agent any such missing coupon in respect of which such a payment shall have been made, such Holder shall be entitled to receive the amount of such payment, provided, however, that, except as otherwise provided in Section 1002, interest represented by coupons shall be payable only upon presentation and surrender of those coupons at an office or agency located outside the United States. Notwithstanding the foregoing, in case a Bearer Security of any series is surrendered at any such office or agency in exchange for a Registered Security of the same series and like tenor and terms after the close of business at such office or agency on (i) any Regular Record Date and before the opening of business at such office or agency on the relevant Interest Payment Date, or (ii) any Special Record Date and before the opening of business at such office or agency on the related date for payment of Defaulted Interest, such Bearer Security shall be surrendered without the coupon relating to such Interest Payment Date or proposed date of payment, as the case may be. Whenever any Debt Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Debt Securities which the Holder making the exchange is entitled to receive. 19 If at any time the Depositary for the Debt Securities of a series notifies the Company that it is unwilling or unable to continue as Depositary for the Debt Securities of such series or if at any time the Depositary for the Debt Securities of such series shall no longer be eligible under Section 303(h), the Company shall appoint a successor Depositary with respect to the Debt Securities of such series. If a successor Depositary for the Debt Securities of such series is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligibility, the Company's election pursuant to Section 301(11) shall no longer be effective with respect to the Debt Securities of such series and the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of definitive Debt Securities of such series, will authenticate and deliver, Debt Securities of such series in definitive form in an aggregate principal amount equal to the principal amount of the Global Security or Securities representing such series in exchange for such Global Security or Securities. The Company may at any time and in its sole discretion determine that the Debt Securities of any series issued in the form of one or more Global Securities shall no longer be represented by such Global Security or Securities. In such event the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of definitive Debt Securities of such series, will authenticate and deliver, Debt Securities of such series in definitive form and in an aggregate principal amount equal to the principal amount of the Global Security or Securities representing such series in exchange for such Global Security or Securities. If specified by the Company pursuant to Section 301 with respect to a series of Debt Securities, the Depositary for such series of Debt Securities may surrender a Global Security for such series of Debt Securities in exchange in whole or in part for Debt Securities of such series of like tenor and terms and in definitive form on such terms as are acceptable to the Company and such Depositary. Thereupon, the Company shall execute, and the Trustee shall authenticate and deliver, without service charge, (a) to each Person specified by such Depositary a new Debt Security or Securities of the same series, of like tenor and terms and of any authorized denomination as requested by such Person in aggregate principal amount equal to and in exchange for such Person's beneficial interest in the Global Security; and (b) to such Depositary a new Global Security of like tenor and terms and in a denomination equal to the difference, if any, between the principal amount of the surrendered Global Security and the aggregate principal amount of Debt Securities delivered to Holders thereof. In any exchange provided for in any of the preceding three paragraphs, the Company will execute and the Trustee will authenticate and deliver Debt Securities (a) in definitive registered form in authorized denominations, if the Debt Securities of such series are issuable as Registered Securities, (b) in definitive bearer form in authorized denominations, with coupons attached, if the Debt Securities of such series are issuable as Bearer Securities or (c) as either Registered or Bearer Securities, as shall be specified by the beneficial owner thereof, if the Debt Securities of such series are issuable in either form; provided, however, that no definitive Bearer Security shall be delivered in exchange for a temporary Global Security unless the Company or its agent shall have received from the person entitled to receive the definitive Bearer Security a certificate substantially in the form set forth in Exhibit A-1 and, if applicable, A-2 hereto; and provided further that delivery of a Bearer Security shall occur only outside the United States; and provided further that no definitive Bearer Security will be issued if the Company has reason to know that any such certificate is false. Upon the exchange of a Global Security for Debt Securities in definitive form, such Global Security shall be cancelled by the Trustee. Registered Securities issued in exchange for a Global Security pursuant to this Section shall be registered in such names and in such authorized denominations as the Depositary for such Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Registered Securities to the persons in whose names such Debt Securities are so registered. The Trustee shall deliver Bearer Securities issued in exchange for a Global Security pursuant to this Section to the persons, and in such authorized denominations, as the Depositary for such Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee; provided, however, that no definitive Bearer Security shall be delivered in exchange for a temporary Global Security unless the Company or its agent shall have received from the person entitled to receive the definitive Bearer Security a certificate substantially in the form set forth in Exhibit A-1 and, if applicable, A-2 hereto and provided further that delivery of a Bearer Security 20 shall occur only outside the United States; and provided further that no definitive Bearer Security will be issued if the Company has reason to know that any such certificate is false. All Debt Securities issued upon any registration of transfer or exchange of Debt Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Debt Securities surrendered upon such registration of transfer or exchange. Every Registered Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company, the Security Registrar or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company, the Security Registrar and the Trustee duly executed, by the Holder thereof or such Holder's attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange of Debt Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer, registration of transfer or exchange of Debt Securities, other than exchanges expressly provided in this Indenture to be made at the Company's own expense or without expense or without charge to the Holders. The Company shall not be required (i) to issue, register the transfer of or exchange Debt Securities of any particular series to be redeemed or exchanged for Capital Securities for a period of fifteen days preceding the first publication of the relevant notice of redemption or, if Registered Securities are outstanding and there is no publication, the mailing of the relevant notice of redemption or exchange, or (ii) to register the transfer of or exchange any Registered Security so selected for redemption or exchange in whole or in part, except the unredeemed or unexchanged portion of such Registered Security being redeemed or exchanged in part, or (iii) to exchange any Bearer Security so selected for redemption or exchange except that such a Bearer Security may be exchanged for a Registered Security of like tenor and terms of that series, provided that such Registered Security shall be simultaneously surrendered for redemption or exchange. Notwithstanding anything herein to the contrary, the exchange of Bearer Securities into Registered Securities shall be subject to applicable laws and regulations in effect at the time of exchange; neither the Company, the Trustee nor the Security Registrar shall exchange any Bearer Securities into Registered Securities if it has received an Opinion of Counsel that as a result of such exchanges the Company would suffer adverse consequences under the United States federal income tax laws and regulations then in effect and the Company has delivered to the Trustee a Company Order directing the Trustee not to make such exchanges thereafter unless and until the Trustee receives a subsequent Company Order to the contrary. The Company shall deliver copies of such Company Orders to the Security Registrar. SECTION 306. Mutilated, Destroyed, Lost and Stolen Debt Securities. If (i) any mutilated Debt Security or a Bearer Security with a mutilated coupon appertaining to it is surrendered to a Paying Agent outside the United States designated by the Company, or, in the case of any Registered Security, to the Trustee, or (ii) the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Debt Security or coupon, and there is delivered to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company and the Trustee that such Debt Security or coupon has been acquired by a bona fide purchaser, the Company shall execute and upon its written request the Trustee shall authenticate and deliver, in exchange for any such mutilated Debt Security or Bearer Security with a mutilated coupon appertaining to it or to which a destroyed, lost or stolen coupon appertains (with all appurtenant coupons not destroyed, lost or stolen) or in lieu of any such destroyed, lost or stolen Debt Security, a new Debt Security of like tenor and terms and principal amount, bearing a number not contemporaneously outstanding, with coupons corresponding to the coupons, if any, appertaining to such destroyed, lost or stolen Security or to the Security to which such destroyed, lost or stolen coupon appertains; provided, however, that any such new Bearer Security will be delivered only in compliance with the conditions set forth in Section 305. In case any such mutilated, destroyed, lost or stolen Debt Security or coupon has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Debt Security, pay such Debt Security or coupon provided; however, that payment of principal of (and premium, if any) and any interest on Bearer 21 Securities shall, except as otherwise provided in Section 1002, be payable only at an office or agency located outside the United States; and provided, further, that, with respect to any such coupons, interest represented thereby (but not any additional amounts payable as provided in Section 1006), shall be payable only upon presentation and surrender of the coupons appertaining thereto. Upon the issuance of any new Debt Security or coupon under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee and printing expenses) connected therewith. Every new Debt Security of any series, with its coupons, if any, issued pursuant to this Section in lieu of any destroyed, lost or stolen Debt Security, or in exchange for a Bearer Security to which a destroyed, lost or stolen coupon appertains, shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Debt Security and its coupons, if any, or the destroyed, lost or stolen coupon shall be at any time enforceable by anyone, and any such new Debt Security and coupons, if any, shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Debt Securities of that series and their coupons, if any, duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Debt Securities or coupons. SECTION 307. Payment of Interest; Interest Rights Preserved. Interest on any Registered Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Registered Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest. In case a Bearer Security of any series is surrendered in exchange for a Registered Security of such series after the close of business (at an office or agency in a Place of Payment for such series) on any Regular Record Date and before the opening of business (at such office or agency) on the next succeeding Interest Payment Date, such Bearer Security shall be surrendered without the coupon relating to such Interest Payment Date and interest will not be payable on such Interest Payment Date in respect of the Registered Security issued in exchange for such Bearer Security, but will be payable only to the Holder of such coupon when due in accordance with the provisions of this Indenture. At the option of the Company, payment of interest on any Registered Security may be made by check in the currency designated for such payment pursuant to the terms of such Registered Security mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or by wire transfer to an account in such currency designated by such Person in writing not less than ten days prior to the date of such payment. Any interest on any Registered Security of any series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the registered Holder on the relevant Regular Record Date by virtue of his having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Registered Securities of such series (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Registered Security of such series and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money and/or, to the extent such Debt Securities are denominated and payable in Dollars only, Eligible Instruments the payments of principal and interest on which when due (and without reinvestment and providing no tax liability will be imposed upon the Trustee or the Holder of such Registered Securities) will provide money in such amounts as will (together with any money irrevocably deposited in trust with the Trustee, without investment) be equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money and/or Eligible Instruments when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this 22 Clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date. Unless the Trustee is acting as the Security Registrar, promptly after such Special Record Date, the Company shall furnish the Trustee with a list, or shall make arrangements satisfactory to the Trustee with respect thereto, of the names and addresses of, and principal amounts of Registered Securities of such series held by, the Holders appearing on the Security Register at the close of business on such Special Record Date. In the name and at the expense of the Company, the Trustee shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder of Registered Securities of such series at his address as it appears in the Security Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names the Registered Securities of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following Clause (2). In case a Bearer Security of any series is surrendered at the office or agency in a Place of Payment for such series in exchange for a Registered Security of such series after the close of business at such office or agency on any Special Record Date and before the opening of business at such office or agency on the related proposed date for payment of Defaulted Interest, such Bearer Security shall be surrendered without the coupon relating to such proposed date of payment and Defaulted Interest will not be payable on such proposed date of payment in respect of the Registered Security issued in exchange for such Bearer Security, but will be payable only to the Holder of such coupon when due in accordance with the provisions of this Indenture. (2) The Company may make payment of any Defaulted Interest on the Registered Securities of any series in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Registered Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Debt Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Debt Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Debt Security. Subject to the limitations set forth in Section 1002, the Holder of any coupon appertaining to a Bearer Security shall be entitled to receive the interest payable on such coupon upon presentation and surrender of such coupon on or after the Interest Payment Date of such coupon at an office or agency maintained for such purpose pursuant to Section 1002. If any Registered Security is exchanged for Capital Securities after any record date and on or prior to the next succeeding Interest Payment Date (other than any Debt Security whose Maturity is prior to such Interest Payment Date), interest whose Stated Maturity is on such Interest Payment Date shall be paid by the Company on such Interest Payment Date notwithstanding such exchange, and such interest (whether or not punctually paid or duly provided for) shall be paid to the Person in whose name that Debt Security is registered at the close of business on such record date. If any Bearer Security is exchanged for Capital Securities after any record date and on or prior to the next succeeding Interest Payment Date (other than any Debt Security whose Maturity is prior to such Interest Payment Date), interest whose Stated Maturity is on such Interest Payment Date shall be payable on such Interest Payment Date notwithstanding such exchange, and such interest (whether or not punctually paid or duly provided for) shall be paid by the Company pursuant to such procedures as may be satisfactory to the Trustee. SECTION 308. Persons Deemed Owners. Prior to due presentment of a Registered Security for registration of transfer, the Company, the Trustee and any agent of the Company or of the Trustee may treat the Person in whose name such Registered Security is registered as the owner of such Registered Security for the purpose of receiving payment of principal of (and 23 premium, if any) and (subject to Section 307) interest on such Registered Security and for all other purposes whatsoever, whether or not such Registered Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. The Company, the Trustee and any agent of the Company or the Trustee may treat the bearer of any Bearer Security and the bearer of any coupon as the absolute owner of such Bearer Security or coupon for the purpose of receiving payment thereof or on account thereof and for all other purposes whatsoever, whether or not such Bearer Security or coupon be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. None of the Company, the Trustee, any Paying Agent or the Security Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. SECTION 309. Cancellation. Unless otherwise provided with respect to a series of Debt Securities, all Debt Securities and coupons surrendered for payment, redemption, repayment, transfer, exchange or credit against any sinking fund payment pursuant to this Indenture, shall, if surrendered to the Company or any agent of the Company, be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Debt Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Debt Securities so delivered shall be promptly cancelled by the Trustee. No Debt Securities shall be authenticated in lieu of or in exchange for any Debt Securities cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Debt Securities and coupons held by the Trustee shall be destroyed and certification of their destruction delivered to the Company unless by a Company Order the Company shall direct that the cancelled Debt Securities or coupons be returned to it. SECTION 310. Computation of Interest. Except as otherwise specified as contemplated by Section 301 for Debt Securities of any series, interest on the Debt Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months. SECTION 311. Certification by a Person Entitled to Delivery of a Bearer Security. Whenever any provision of this Indenture or a Debt Security contemplates that certification be given by a Person entitled to delivery of a Bearer Security, such certification shall be provided substantially in the form of Exhibit A-1 and, if applicable, A-2 hereto, with only such changes as shall be approved by the Company and consented to by the Trustee whose consent shall not unreasonably be withheld. SECTION 312. Judgments. The Company may provide, pursuant to Section 301, for the Debt Securities of any series that, to the fullest extent possible under applicable law and except as may otherwise be specified as contemplated in Section 301, (a) the obligation, if any, of the Company to pay the principal of (and premium, if any) and interest on the Debt Securities of any series and any appurtenant coupons in a Foreign Currency, composite currency or Dollars (the "Designated Currency") as may be specified pursuant to Section 301 is of the essence and agrees that judgments in respect of such Debt Securities shall be given in the Designated Currency;(b) the obligation of the Company to make payments in the Designated Currency of the principal of (and premium, if any) and interest on such Debt Securities and any appurtenant coupons shall, notwithstanding any payment in any other currency (whether pursuant to a judgment or otherwise), be discharged only to the extent of the amount in the Designated Currency that the Holder receiving such payment may, in accordance with normal banking procedures, purchase with the sum paid in such other currency (after any premium and cost of exchange) in the country of issue of the Designated Currency in the case of Foreign Currency or Dollars or in the international banking community in the case of a composite currency on the Business Day immediately following the day on which such Holder receives such payment;(c) if the amount in the Designated Currency that may be so purchased for any reason falls short of the amount originally due, the Company shall pay such additional amounts as may be necessary to compensate for such 24 shortfall; and (d) any obligation of the Company not discharged by such payment shall be due as a separate and independent obligation and, until discharged as provided herein, shall continue in full force and effect. ARTICLE FOUR SATISFACTION AND DISCHARGE SECTION 401. Satisfaction and Discharge of Indenture. This Indenture shall upon Company Request cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Debt Securities herein expressly provided for and rights to receive payments of principal and interest thereon and any right to receive additional amounts, as provided in Section 1006) and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture when (1) either (A) all Debt Securities theretofore authenticated and delivered and all coupons appertaining thereto (other than (i) coupons appertaining to Bearer Securities surrendered in exchange for Registered Securities and maturing after such exchange, surrender of which is not required or has been waived as provided in Section 305, (ii) Debt Securities and coupons which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306, (iii) coupons appertaining to Bearer Securities called for redemption or surrendered for repayment and maturing after the relevant Redemption Date or Repayment Date, as appropriate, surrender of which has been waived as provided in Section 1106 or 1303 and (iv) Debt Securities and coupons for whose payment money and/or Eligible Instruments have theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 1003) have been delivered to the Trustee cancelled or for cancellation; or (B) all such Debt Securities not theretofore delivered to the Trustee for cancellation (i) have become due and payable, or (ii) will become due and payable at their Stated Maturity within one year, or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of (B)(i), (B)(ii) or (B)(iii) above, has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose money and/or, to the extent such Debt Securities are denominated and payable in Dollars only, Eligible Instruments the payments of principal and interest on which when due (and without reinvestment and providing no tax liability will be imposed upon the Trustee or the Holders of Debt Securities) will provide money in such amounts as will (together with any money irrevocably deposited in trust with the Trustee, without investment) be sufficient to pay and discharge the entire indebtedness on such Debt Securities and coupons of such series for principal (and premium, if any) and interest, and any mandatory sinking fund, repayment or analogous payments thereon, on the scheduled due dates therefor to the date of such deposit (in the case of Debt Securities and coupons which have become due and payable) or to the Stated Maturity or Redemption Date, if any, and all Repayment Dates (in the case of Debt Securities repayable at the option of the Holders thereof); provided, however, that in the event a petition for relief under the Bankruptcy Reform Act of 1978 or a successor statute is filed with respect to the Company within 91 days after the deposit, the obligations of the Company under the Indenture with respect to the Debt Securities of such series shall not be deemed terminated or discharged, and in such event the Trustee shall be required to return the deposited money and Eligible Instruments to the Company; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and 25 (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Sections 607 and, if money or Eligible Instruments shall have been deposited with the Trustee pursuant to Subclause (B) of Clause (1) of this Section, the obligations of the Trustee under Section 402 and the last paragraph of Section 1003 shall survive. SECTION 402. Application of Trust Money and Eligible Instruments. Subject to the provisions of the last paragraph of Section 1003, all money and Eligible Instruments deposited with the Trustee pursuant to Section 401 shall be held in trust and such money and the principal and interest received on such Eligible Instruments shall be applied by it, in accordance with the provisions of the Debt Securities, the coupons and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money or Eligible Instruments have been deposited with the Trustee. ARTICLE FIVE REMEDIES SECTION 501. Events of Default. "Event of Default", wherever used herein with respect to Debt Securities of any series, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law, pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) the entry of a decree or order for relief in respect of the Company or the Bank by a court having jurisdiction in the premises in an involuntary case under the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or other similar law, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Company or the Bank or of any substantial part of the property of either, or ordering the winding up or liquidation of the affairs of either, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; or (2) the commencement by the Company or the Bank of a voluntary case under the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or other similar law, or the consent by the Company or the Bank to the entry of a decree or order for relief in an involuntary case under any such law or to the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator or other similar official of either of the foregoing or of any substantial part of the property of either, or the making by the Company or the Bank of an assignment for the benefit of creditors, or the admission by the Company or the Bank in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company or the Bank in furtherance of any such action; or (3) any other Event of Default, if any, provided with respect to Debt Securities of such series specified as contemplated by Section 301. SECTION 502. Acceleration of Maturity; Rescission and Annulment. If an Event of Default with respect to Debt Securities of any series at the time Outstanding occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in principal amount of Outstanding Debt Securities of such series may declare the principal amount (or, if the Debt Securities of such series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) of and all accrued but unpaid interest on all the Debt Securities of such series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by such Holders), and upon any 26 such declaration such principal amount (or specified amount) shall become immediately due and payable. Upon payment of such amount, all obligations of the Company in respect of the payment of principal of the Debt Securities of such series shall terminate. At any time after such a declaration of acceleration with respect to Debt Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Debt Securities of such series, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if (1) the Company has paid or deposited with the Trustee a sum sufficient to pay (A) all overdue instalments of interest on all Debt Securities of such series and any related coupons, (B) the principal of (and premium, if any, on) any Debt Securities of such series which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in such Debt Securities, (C) to the extent that payment of such interest is lawful, interest upon overdue instalments of interest on each Debt Security and any related coupons at the rate or rates prescribed therefor in such Debt Securities, and (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) all Events of Default with respect to Debt Securities of such series have been cured or waived as provided in Section 513. No such rescission shall affect any subsequent default or impair any right consequent thereon. SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if: (1) default is made in the payment of any instalment of interest on any Debt Security or any related coupon when such interest becomes due and payable and such default continues for a period of 30 days, or (2) default is made in the payment of the principal of (or premium, if any, on) any Debt Security at the Maturity thereof, or (3) defaults in the deposit of any sinking fund payment, when and as due by the terms of a Debt Security of such series, or (4) defaults in any required designation of funds as Securities Funds, or (5) defaults in the performance, or breach, of any covenant or warranty of the Company in this Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with or which has been expressly included in this Indenture solely for the benefit of series of Debt Securities other than such series), and such default or breach continues for a period of 30 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Debt Securities of such series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder, the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Debt Securities and coupons, the amount then due and payable on such Debt Securities and coupons for any overdue principal (and premium, if any) and interest, sinking fund installment and interest, including the delivery of any Capital Securities then required to be delivered, and, to the extent that payment of such interest shall be legally enforceable, interest upon the overdue principal (and premium, if any) and, upon overdue instalments of interest, at the rate or rates 27 prescribed therefor in such Debt Securities; and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay such amounts (including the delivery of any Capital Securities then required to be delivered) forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid and the delivery of any Capital Securities required to be delivered and not so delivered, or, in the case of the failure to deliver Capital Securities, money equal to the principal amount of the Debt Securities for which the Capital Securities were to be exchanged, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon such Debt Securities and coupons and collect the moneys (or money equal to the principal amount of any Debt Securities for which Capital Securities were to be exchanged) adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Debt Securities and coupons, wherever situated. If an Event of Default or a default specified in this Section with respect to Debt Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Debt Securities of such series and any related coupons by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. SECTION 504. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceedings, or any voluntary or involuntary case under the Federal bankruptcy laws as now or hereafter constituted, relative to the Company or any other obligor upon the Debt Securities of a particular series or any related coupons or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of such Debt Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (1) to file and prove a claim for the whole amount of principal (and premium, if any) and interest owing and unpaid in respect of the Debt Securities of such series and any appurtenant coupons and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and (2) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any receiver, assignee, trustee, custodian, liquidator, sequestrator or other similar official in any such proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 607. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Debt Securities or coupons or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 505. Trustee May Enforce Claims without Possession of Debt Securities or Coupons. All rights of action and claims under this Indenture or the Debt Securities or coupons may be prosecuted and enforced by the Trustee without the possession of any of the Debt Securities or coupons or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name, 28 as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Debt Securities and coupons in respect of which such judgment has been recovered. SECTION 506. Application of Money Collected. Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal (and premium, if any) or interest, upon presentation of the Debt Securities or coupons, or both, as the case may be, and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee under Section 607; SECOND: To the payment of amounts then due and unpaid to the holders of Senior Debt, to the extent required by Article Eighteen; THIRD: To the payment of the amounts then due and unpaid for principal of (and premium, if any) and interest on the Debt Securities and any coupons, in respect of which or for the benefit of which such money has been collected ratably, without preference or priority of any kind, according to the amounts due and payable on such Debt Securities and any coupons for principal (and premium, if any) and interest, respectively. The Holders of each series of Debt Securities denominated in ECU, any other composite currency or a Foreign Currency and any matured coupons relating thereto shall be entitled to receive a ratable portion of the amount determined by the Exchange Rate Agent by converting the principal amount Outstanding of such series of Debt Securities and matured but unpaid interest on such series of Debt Securities in the currency in which such series of Debt Securities is denominated into Dollars at the Exchange Rate as of the date of declaration of acceleration of the Maturity of the Debt Securities; and FOURTH: The balance, if any, to the Person or Persons entitled thereto. SECTION 507. Limitation on Suits. No Holder of any Debt Security of any series or any related coupons shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Debt Securities of such series; (2) the Holders of not less than 25% in principal amount of the Outstanding Debt Securities of such series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Debt Securities of such series; it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all of such Holders. 29 SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest and to Exchange Debt Securities for Capital Securities. Notwithstanding any other provision in this Indenture, the Holder of any Debt Security or coupon shall have the right which is absolute and unconditional to receive payment of the principal of (and premium, if any) and (subject to Section 307) interest on such Debt Security or payment of such coupon on the respective Stated Maturity or Maturities expressed in such Debt Security or coupon (or, in the case of redemption or repayment, on the Redemption Date or the Repayment Date, as the case may be), to have the Debt Securities exchanged for Capital Securities pursuant to Article Fourteen, if applicable, and to institute suit for the enforcement of any such payment or exchange, and such right shall not be impaired without the consent of such Holder, subject however, to the provisions of Article Eighteen. SECTION 509. Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case the Company, the Trustee and the Holders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. SECTION 510. Rights and Remedies Cumulative. Except as otherwise provided in Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 511. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Debt Security or coupon to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. SECTION 512. Control by Holders of Debt Securities. The Holders of a majority in principal amount of the Outstanding Debt Securities of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to the Debt Securities of such series, provided, that (1) such direction shall not be in conflict with any rule of law or with this Indenture; (2) subject to the provisions of Section 601, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall, by a Responsible Officer or Responsible Officers of the Trustee, determine that the proceeding so directed would be unjustly prejudicial to the Holders of Debt Securities of such series not joining in any such direction; and (3) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. SECTION 513. Waiver of Past Defaults. The Holders of not less than a majority in principal amount of the Outstanding Debt Securities of any series may on behalf of the Holders of all the Debt Securities of any such series and any related coupons waive any past default hereunder with respect to such series and its consequences, except a default 30 (1) in the payment of the principal of (or premium, if any) or interest on any Debt Security of such series, or (2) in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Debt Security of such series or coupon affected. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION 514. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Debt Security or coupon by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant, but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Debt Securities of any series, or to any suit instituted by any Holder for the enforcement of the payment of the principal of (or premium, if any) or interest on any Debt Security or the payment of any coupon on or after the respective Stated Maturity or Maturities expressed in such Debt Security or coupon (or, in the case of redemption or repayment, on or after the Redemption Date or Repayment Date, as the case may be) or for the enforcement of the right to exchange any Debt Securities for Capital Securities as provided in Article Fourteen. SECTION 515. Waiver of Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law whenever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE SIX THE TRUSTEE SECTION 601. Certain Duties and Responsibilities. (a) With respect to Debt Securities of any series, except during the continuance of an Event of Default with respect to the Debt Securities of such series, (1) the Trustee undertakes to perform such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. (b) In case an Event of Default with respect to Debt Securities of any series has occurred and is continuing, the Trustee shall, with respect to the Debt Securities of such series or any coupons, as the case may be, exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their 31 exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that (1) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) the Trustee shall not be liable with respect to any action taken, suffered or omitted to be taken by it with respect to Debt Securities of any series in good faith in accordance with the direction of the Holders of a majority in principal amount of the Outstanding Debt Securities of such series relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Debt Securities of such series. (d) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (e) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. SECTION 602. Notice of Defaults. Within 90 days after the occurrence of any default hereunder with respect to Debt Securities of any series the Trustee shall transmit by mail to all Holders of Debt Securities of such series, entitled to receive reports pursuant to Section 703(c), notice of such default hereunder known to the Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of (or premium, if any) or interest on any Debt Security of such series or any related coupons or in the payment of any sinking fund instalment with respect to Debt Securities of such series or in the exchange of Capital Securities for Debt Securities of such series, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interest of the Holders of Debt Securities of such series. For the purpose of this Section, the term "default' means any event which is, or after notice or lapse of time or both would become, an Event of Default with respect to Debt Securities of such series. SECTION 603. Certain Rights of Trustee. Except as otherwise provided in Section 601: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, coupon or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors shall be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; 32 (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders of Debt Securities of such series or any related coupons pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, coupon, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney, other than any such books or records containing information as to the affairs of the customers of the Company or any of its subsidiaries; provided that the Trustee may examine such books and records relating to customers to the extent that such books and records contain information as to any payments made to such customers in their capacity as Holders of Debt Securities; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; no Exchange Rate Agent, Global Exchange Agent, Capital Exchange Agent, Depositary or Paying Agent shall be deemed an agent of the Trustee and the Trustee shall not be responsible for any act or omission by any of them. SECTION 604. Not Responsible for Recitals or Issuance of Debt Securities. The recitals contained herein and in the Debt Securities, except the Trustee's certificates of authentication, and in any coupons, and the information in any registration statement, including all attachments thereto, except information provided by the Trustee therein, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Debt Securities of any series or any coupons or any Capital Securities. The Trustee shall not be accountable for the use or application by the Company of any Debt Securities or the proceeds thereof. The Trustee shall not be responsible for and makes no representations to the Company's ability or authority to issue Bearer Securities or the lawfulness thereof. SECTION 605. May Hold Debt Securities or Coupons. The Trustee, any Paying Agent, the Security Registrar or any other agent of the Company or the Trustee, in its individual or any other capacity, may become the owner or pledgee of Debt Securities and coupons, and, subject to Sections 608 and 613, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Paying Agent, Security Registrar or such agent. SECTION 606. Money Held in Trust. Money held by the Trustee or any Paying Agent in trust hereunder need not be segregated from other funds except to the extent required by law. Neither the Trustee nor any Paying Agent shall be under any liability for interest on any money received by it hereunder except as otherwise agreed with the Company. SECTION 607. Compensation and Reimbursement. The Company agrees (1) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its 33 agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust or performance of its duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. As security for the performance of the obligations of the Company under this Section the Trustee shall have a claim prior to the Debt Securities and any coupons upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of principal of (and premium, if any) or interest on particular Debt Securities or any coupons. The claims of the Trustee under this Section shall not be subject to the provisions of Article Eighteen. SECTION 608. Disqualification; Conflicting Interests. (a) If the Trustee has or shall acquire any conflicting interest, as defined in this Section with respect to the Debt Securities of any series then, within 90 days after ascertaining that it has such conflicting interest, and if the default (as defined in this Section) to which such conflicting interest relates has not been cured or duly waived or otherwise eliminated before the end of such 90-day period, the Trustee shall either eliminate such conflicting interest or, except as otherwise provided below in this Section, resign with respect to the Debt Securities of such series in the manner and with the effect hereinafter specified in this Article and the Company shall take prompt steps to have a successor appointed in the manner provided herein. (b) (1) In the event that the Trustee shall fail to comply with the provisions of Subsection (a) of this Section with respect to the Debt Securities of any series, the Trustee shall, within 10 days after the expiration of such 90-day period, transmit, in the manner and to the extent provided in Section 703(c), to all Holders of Debt Securities of such series notice of such failure. (2) Subject to the provisions of Section 514, unless the Trustee's duty to resign is stayed as provided in Subsection (f) of this Section, any Holder who has been a bona fide Holder of Debt Securities of any series referred to in Subsection (a) of this Section for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of such Trustee, and the appointment of a successor, if such Trustee fails, after written request thereof by such Holder to comply with the provisions of Subsection (a) of this Section. (c) For the purposes of this Section, the Trustee shall be deemed to have a conflicting interest with respect to the Debt Securities of any series, if a default (under the terms of this-Indenture), but exclusive of any period of grace or requirement of notice, has occurred with respect to such Debt Securities and (1) the Trustee is trustee under this Indenture with respect to the Outstanding Debt Securities of any series other than that series or is trustee under another indenture under which any other securities, or certificates of interest or participation in any other securities, of the Company are outstanding, unless such other indenture is a collateral trust indenture under which the only collateral consists of Debt Securities issued under this Indenture, provided that there shall be excluded from the operation of this paragraph (A) this Indenture with respect to the Debt Securities of any series other than that series, (B) the indenture between the Company and the Trustee dated as of June 15, 1984, as supplemented and amended from time to time, under which the Company's Floating Rate Subordinated Capital Notes due August 1, 1996, Floating Rate Subordinated Capital Notes due July, 1996, Subordinated Auction Rate Capital Notes due May 1999, Floating Rate Subordinated Capital Notes Due October, 1999, 9.75% Subordinated Notes due July 1, 2000 and 9.70% Subordinated Notes due August 1, 2000 were issued, (C) the indenture between the Company and the Trustee dated as of September 1, 1990, under which the Company's Medium Term Notes, Series E, 10% Subordinated Notes Due February 1,2003, 9 3/4% Subordinated Notes Due February 13, 2001, 9 3/4% Subordinated Notes Due March 1, 2001, 9 1/2% Subordinated Notes Due April 1, 2001 and 9.20% Subordinated Notes Due May 15, 2003 were issued, and (D) any other indenture or indentures hereafter qualified under the Trust Indenture Act under which other securities, or certificates of interest or participation in other securities, of the Company are outstanding, and 34 (i) this Indenture and such other indenture or indentures (and all series of securities issuable thereunder) are wholly unsecured and rank equally, unless the Commission shall have found and declared by order pursuant to Section 305(b) or Section 307(c) of the Trust Indenture Act that differences exist between the provisions of this Indenture with respect to the Debt Securities of such series and one or more other series or the provisions of such other indenture or indentures which are so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to disqualify the Trustee from acting as such under this Indenture with respect to the Debt Securities of such series and such other series or under such other indenture or indentures, or (ii) the Company shall have sustained the burden of proving, on application to the Commission and after opportunity for hearing thereon, that trusteeship under this Indenture with respect to the Debt Securities of such series and such other series or such other indenture or indentures is not so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to disqualify the Trustee from acting as such under this Indenture with respect to the Debt Securities of such series and such other series or under such other indenture or indentures; (2) the Trustee or any of its directors or executive officers is an underwriter for the Company; (3) the Trustee directly or indirectly controls or is directly or indirectly controlled by or is under direct or indirect common control with an underwriter for the Company; (4) the Trustee or any of its directors or executive officers is a director, officer, partner, employee, appointee or representative of the Company, or of an underwriter (other than the Trustee itself) for the Company who is currently engaged in the business of underwriting, except that (i) one individual may be a director or an executive officer, or both, of the Trustee and a director or an executive officer, or both of the Company but may not be at the same time an executive officer of both the Trustee and the Company; (ii) if and so long as the number of directors of the Trustee in office is more than nine, one additional individual may be a director or an executive officer, or both, of the Trustee and a director of the Company; and (iii) the Trustee may be designated by the Company or by any underwriter for the Company to act in the capacity of transfer agent, registrar, custodian, paying agent, fiscal agent, escrow agent, or depositary, or in any other similar capacity, or, subject to the provisions of paragraph (1) of this Subsection, to act as trustee, whether under an indenture or otherwise; (5) 10% or more of the voting securities of the Trustee is beneficially owned either by the Company or by any director, partner, or executive officer thereof, or 20% or more of such voting securities is beneficially owned, collectively, by any two or more of such persons; or 10% or more of the voting securities of the Trustee is beneficially owned either by an underwriter for the Company or by any director, partner or executive officer thereof, or is beneficially owned, collectively, by any two or more such persons; (6) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this Subsection defined), (i) 5% or more of the voting securities, or 10% or more of any other class of security, of the Company not including the Debt Securities issued under this Indenture and securities issued under any other indenture under which the Trustee is also trustee, or (ii) 10% or more of any class of security of an underwriter for the Company; (7) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this Subsection defined), 5% or more of the voting securities of any person who, to the knowledge of the Trustee, owns 10% or more of the voting securities of, or controls directly or indirectly or is under direct or indirect common control with, the Company; (8) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this Subsection defined), 10% or more of any class of security of any person who, to the knowledge of the Trustee, owns 50% or more of the voting securities of the Company; (9) the Trustee owns, on the date a default under this Indenture (but exclusive of any period of grace or requirement of notice) has occurred upon the Debt Securities of any series or any anniversary of such default while such default upon such Debt Securities remains outstanding, in the capacity of executor administrator, 35 testamentary or inter vivos trustee, guardian, committee or conservator, or in any other similar capacity, an aggregate of 25% or more of the voting securities, or of any class of security, of any person, the beneficial ownership of a specified percentage of which would have constituted a conflicting interest under paragraph (6), (7) or (8) of this Subsection. As to any such securities of which the Trustee acquired ownership through becoming executor, administrator, or testamentary trustee of an estate which included them, the provisions of the preceding sentence shall not apply, for a period of two years from the date of such acquisition, to the extent that such securities included in such estate do not exceed 25% of such voting securities or 25% of any such class of security. Promptly after the dates of any such Event of Default upon the Debt Securities of any series and annually in each succeeding year that such Event of Default upon such Debt Securities continues, the Trustee shall make a check of its holdings of such securities in any of the above-mentioned capacities as of such dates. If the Company fails to make payments in full of the principal of (or premium, if any), or interest on, any of the Debt Securities or coupons when and as the same becomes due and payable, and such failure continues for 30 days thereafter, the Trustee shall make a prompt check of its holdings of such securities in any of the above-mentioned capacities as of the date of the expiration of such 30-day period, and after such date, notwithstanding the foregoing provisions of this paragraph, all such securities so held by the Trustee, with sole or joint control over such securities vested in it, shall, but only so long as such failure shall continue, be considered as though beneficially owned by the Trustee for the purposes of paragraphs (6), (7) and (8) of this Subsection; or (10) except under the circumstances described in paragraphs (1), (3), (4), (5) or (6) of Section 613(b), the Trustee shall be or shall become a creditor of the Company. For purposes of paragraph (1) of this Subsection, and of Sections 512 and 513, the term "series" means a series, class or group of securities issuable under an indenture or this Indenture pursuant to whose terms holders of one such series may vote to direct the trustee, or otherwise take action pursuant to a vote of such holders, separately from holders of another such series; provided, that "series" shall not include any series of securities issuable under an indenture (including any series of Debt Securities issuable under this Indenture) if all such series rank equally and are wholly unsecured. The specifications of percentages on paragraphs (5) to (9), inclusive, of this Subsection shall not be construed as indicating that the ownership of such percentages of the securities of a person is or is not necessary or sufficient to constitute direct or indirect control for the purpose of paragraph (3) or (7) of this Subsection. For the purposes of paragraphs (6), (7), (8) and (9) of this Subsection only, (i) the terms "security" and "securities" shall include only such securities as are generally known as corporate securities, but shall not include any note or other evidence of indebtedness issued to evidence an obligation to repay moneys lent to a person by one or more banks, trust companies or banking firms, or any certificate of interest or participation in any such note or evidence of indebtedness; (ii) an obligation shall be deemed to be "in default" when a default in payment of principal shall have continued for 30 days or more and shall not have been cured; and (iii) the Trustee shall not be deemed to be the owner or holder of (A) any security which it holds as collateral security, as trustee or otherwise, for an obligation which is not in default as defined in Clause (ii) above, or (B) any security which it holds as collateral security under this Indenture, irrespective of any default hereunder, or (C) any security which it holds as agent for collection, or as custodian, escrow agent or depositary, or in any similar representative capacity. (d) For the purposes of this Section: (1) The term "underwriter" when used with reference to the Company means every person who, within one year prior to the time as of which the determination is made, has purchased from the Company with a view to, or has offered or sold for the Company in connection with, the distribution of any security of the Company outstanding at such time, or has participated or has had a direct or indirect participation in any such undertaking, or has participated or has had a participation in the direct or indirect underwriting of any such undertaking, but such term shall not include a person whose interest was limited to a commission from an underwriter or dealer not in excess of the usual and customary distributors' or sellers' commission. (2) The term "director" means any director of a corporation, or any individual performing similar functions with respect to any organization whether incorporated or unincorporated. 36 (3) The term "person" means an individual, a corporation, a partnership, an association, a joint-stock company, a trust, an unincorporated organization, or a government or political subdivision thereof. As used in this paragraph, the term "trust" shall include only a trust where the interest or interests of the beneficiary or beneficiaries are evidenced by a security. (4) The term "voting security" means any security presently entitling the owner or holder thereof to vote in the direction or management of the affairs of a person, or any security issued under or pursuant to any trust, agreement or arrangement whereby a trustee or trustees or agent or agents for the owner or holder of such security are presently entitled to vote in the direction of management of the affairs of a person. (5) The term "Company" means any obligor upon the Debt Securities of any series or any related coupons. (6) The term "executive officer" means the president, every vice president, every trust officer, the cashier, the secretary, and the treasurer of a corporation, and any individual customarily performing similar functions with respect to any organization, whether incorporated or unincorporated, but shall not include the chairman of the board of directors. (e) The percentages of voting securities and other securities specified in this Section shall be calculated in accordance with the following provisions: (1) A specified percentage of the voting securities of the Trustee, the Company or any other person referred to in this Section (each of whom is referred to as a "person" in this paragraph) means such amount of the outstanding voting securities of such person as entitles the holder or holders thereof to cast such specified percentage of the aggregate votes which the holders of all the outstanding voting securities of such person are entitled to cast in the direction or management of the affairs of such person. (2) A specified percentage of a class of securities of a person means such percentage of the aggregate amount of securities of the class outstanding. (3) The term "amount", when used in regard to securities, means the principal amount if relating to evidences of indebtedness, the number of shares if relating to capital shares, and the number of units if relating to any other kind of security. (4) The term "outstanding" means issued and not held by or for the account of the issuer. The following securities shall not be deemed outstanding within the meaning of this definition: (i) securities of an issuer held in a sinking fund relating to securities of the issuer of the same class; (ii) securities of an issuer held in a sinking fund relating to another class of securities of the issuer, if the obligation evidenced by such other class of securities is not in default as to principal or interest or otherwise; (iii) securities pledged by the issuer thereof as security for an obligation of the issuer not in default as to principal or interest or otherwise; and (iv) securities held in escrow if placed in escrow by the issuer thereof; provided, however, that any voting securities of an issuer shall be deemed outstanding if any person other than the issuer is entitled to exercise the voting rights thereof. (5) A security shall be deemed to be of the same class as another security if both securities confer upon the holder or holders thereof substantially the same rights and privileges; provided, however, that in the case of secured evidences of indebtedness, all of which are issued under a single indenture, differences in the interest rates or maturity dates of various series thereof shall not be deemed sufficient to constitute such series different classes and provided, further, that, in the case of unsecured evidences of indebtedness, differences in the interest rates or maturity dates thereof shall not be deemed sufficient to constitute them securities of different classes, whether or not they are issued under a single indenture. 37 (f) Except in the case of a default in the payment of the principal of or interest on any Debt Securities of any series, or in the payment of any sinking or purchase fund installment, the Trustee shall not be required to resign as provided by this Section if the Trustee shall have sustained the burden of proving, on application to the Commission and after opportunity for hearing thereon, that (i) the Event of Default under this Indenture may be cured or waived during a reasonable period and under the procedures described in such application, and (ii) a stay of the Trustee's duty to resign will not be inconsistent with the interests of Holders of such Debt Securities. The filing of such an application shall automatically stay the performance of the duty to resign until the Commission orders otherwise. (g) If Section 310(b) of the Trust Indenture Act is amended at any time after the date of this Indenture to change the circumstances under which a Trustee shall be deemed to have a conflicting interest with respect to the Debt Securities of any series or to change any of the definitions in connection therewith, this Section 608 shall be automatically amended to incorporate such changes, unless such changes would cause any Trustee then acting as Trustee hereunder with respect to any Outstanding Debt Securities to be deemed to have a conflicting interest, in which case such changes shall be incorporated herein only to the extent that such changes (i) would not cause the Trustee to be deemed to have a conflicting interest or (ii) are required by law. SECTION 609. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall be a corporation organized and doing business under the laws of the United States, any State thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $5,000,000, and subject to supervision or examination by Federal or State authority, provided, however, that if Section 310(a) of the Trust Indenture Act or the rules and regulations of the Commission under the Trust Indenture Act at any time permit a corporation organized and doing business under the laws of any other jurisdiction to serve as trustee of an indenture qualified under the Trust Indenture Act, this Section 609 shall be automatically amended to permit a corporation organized and doing business under the laws of any such other jurisdiction to serve as Trustee hereunder. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. Neither the Company nor any person directly or indirectly controlling, controlled by or under common control with the Company may serve as Trustee. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. SECTION 610. Resignation and Removal; Appointment of Successor (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 611. (b) The Trustee may resign at any time with respect to the Debt Securities of one or more series by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Debt Securities of such series. (c) The Trustee may be removed at any time with respect to the Debt Securities of any series by Act of the Holders of a majority in principal amount of the Outstanding Debt Securities of such series, delivered to the Trustee and to the Company. (d) If at any time: (1) the Trustee shall fail to comply with Section 608(a) with respect to the Debt Securities of any series after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Debt Security of such series for at least six months, unless the Trustee's duty to resign has been stayed as provided in Section 608(f), or (2) the Trustee shall cease to be eligible under Section 609 with respect to any series of Debt Securities and shall fail to resign after written request therefor by the Company or by any such Holder, or 38 (3) the Trustee shall become incapable of acting with respect to any series of Debt Securities or a decree or order for relief by a court having jurisdiction in the premises shall have been entered in respect of the Trustee in an involuntary case under the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or similar law; or a decree or order by a court having jurisdiction in the premises shall have been entered for the appointment of a receiver, custodian, liquidator, assignee, trustee, sequestrator or other similar official of the Trustee or of its property or affairs, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation, winding up or liquidation, or (4) the Trustee shall commence a voluntary case under the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or similar law or shall consent to the appointment of or taking possession by a receiver, custodian, liquidator, assignee, trustee, sequestrator or other similar official of the Trustee or its property or affairs, or shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due, or shall take corporate action in furtherance of any such action, then, in any such case, (i) the Company by a Board Resolution may remove the Trustee with respect to such series or (ii) subject to Section 514, any Holder who has been a bona fide Holder of a Debt Security of any series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee for the Debt Securities of such series and the appointment of a successor Trustee. (e) If the Trustee shall resign, be removed or become incapable of acting with respect to any series of Debt Securities, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Debt Securities or one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Debt Securities of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Debt Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Debt Securities of any particular series) and shall comply with the applicable requirements of Section 611. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Debt Securities of any series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Debt Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee with respect to the Debt Securities of such series and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Debt Securities of any series shall have been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of a Debt Security of such series for at least six months may, subject to Section 514, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Debt Securities of such series. (f) The Company shall give notice of each resignation and each removal of the Trustee with respect to the Debt Securities of any series and each appointment of a successor Trustee with respect to the Debt Securities of any series by mailing written notice of such event by first-class mail, postage prepaid, to the Holders of Registered Securities, if any, of such series as their names and addresses appear in the Security Register and, if Debt Securities of such series are issuable as Bearer Securities, by publishing notice of such event once in an Authorized Newspaper in each Place of Payment located outside the United States. Each notice shall include the name of the successor Trustee with respect to the Debt Securities of such series and the address of its Corporate Trust Office. SECTION 611. Acceptance of Appointment by Successor. (a) In the case of an appointment hereunder of a successor Trustee with respect to all Debt Securities, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to 39 such successor Trustee all the rights, powers and trusts of the retiring Trustee, and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. (b) In case of the appointment hereunder of a successor Trustee with respect to the Debt Securities of one or more (but not all) series, the Company, the retiring Trustee upon payment of its charges and each successor Trustee with respect to the Debt Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Debt Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Debt Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Debt Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture, the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Debt Securities of that or those series to which the appointment of such successor Trustee relates; but, on the request of the Company or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Debt Securities of that or those series to which the appointment of such successor Trustee relates. (c) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (a) or (b) of this Section, as the case may be. (d) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. SECTION 612. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the executing or filing of any paper or any further act on the part of any of the parties hereto. In case any Debt Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Debt Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Debt Securities. In case any Debt Securities shall not have been authenticated by such predecessor Trustee, any such successor Trustee may authenticate and deliver such Debt Securities, in either its own name or that of its predecessor Trustee, with the full force and effect which this Indenture provides for the certificate of authentication of the Trustee. SECTION 613. Preferential Collection of Claims Against Company. (a) Subject to Subsection (b) of this Section, if the Trustee shall be or shall become a creditor, directly or indirectly, secured or unsecured, of the Company within three months prior to a default, as defined in Subsection (c) of this Section, or subsequent to such a default, then, unless and until such default shall be cured, the Trustee shall set apart and hold in a special account for the benefit of the Trustee individually, the Holders of the Debt Securities and coupons and the holders of other indenture securities (as defined in Subsection (c) of this Section): (1) an amount equal to any and all reductions in the amount due and owing upon any claim as such creditor in respect of principal or interest, effected after the beginning of such three-month period and valid as 40 against the Company and its other creditors, except any such reduction resulting from the receipt or disposition of any property described in paragraph (2) of this Subsection, or from the exercise of any right of set-off which the Trustee could have exercised if a voluntary or involuntary case had been commenced in respect of the Company under the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or other similar law upon the date of such default; and (2) all property received by the Trustee in respect of any claim as such creditor, either as security therefor, or in satisfaction or composition thereof, or otherwise, after the beginning of such three-month period, or an amount equal to the proceeds of any such property, if disposed of, subject however, to the rights, if any, of the Company and its other creditors in such property or such proceeds. Nothing herein contained, however, shall affect the right of the Trustee: (A) to retain for its own account (i) payments made on account of any such claim by any Person (other than the Company) who is liable thereon, and (ii) the proceeds of the bona fide sale of any such claim by the Trustee to a third Person, and (iii) distributions made in cash, securities or other property in respect of claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or other similar law; (B) to realize, for its own account, upon any property held by it as security for any such claim, if such property was so held prior to the beginning of such three-month period; (C) to realize, for its own account, but only to the extent of the claim hereinafter mentioned, upon any property held by it as security for any such claim, if such claim was created after the beginning of such three-month period and such property was received as security therefor simultaneously with the creation thereof, and if the Trustee shall sustain the burden of proving that at the time such property was so received the Trustee had no reasonable cause to believe that a default as defined in Subsection (c) of this Section would occur within three months; or (D) to receive payment on any claim referred to in paragraph (B) or (C), against the release of any property held as security for such claim as provided in paragraph (B) or (C), as the case may be, to the extent of the fair value of such property. For the purposes of paragraphs (B), (C) and (D), property substituted after the beginning of such three-month period for property held as security at the time of such substitution shall, to the extent of the fair value of the property released, have the same status as the property released, and, to the extent that any claim referred to in any of such paragraphs is created in renewal of or in substitution for or for the purpose of repaying or refunding any pre-existing claim of the Trustee as such creditor, such claim shall have the same status as such pre-existing claim. If the Trustee shall be required to account, the funds and property held in such special account and the proceeds thereof shall be apportioned among the Trustee, the Holders and the holders of other indenture securities in such manner that the Trustee, the Holders and the holders of other indenture securities realize, as a result of payments from such special account and payments of dividends on claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or other similar law, the same percentage of their respective claims, figured before crediting to the claim of the Trustee anything on account of the receipt by it from the Company of the funds and property in such special account and before crediting to the respective claims of the Trustee and the Holders and the holders of other indenture securities dividends on claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or other similar law, but after crediting thereon receipts on account of the indebtedness represented by their respective claims from all sources other than from such dividends and from the funds and property so held in such special account. As used in this paragraph, with respect to any claim, the term "dividends" shall include any distribution with respect to such claim, in bankruptcy or receivership or proceedings for reorganization pursuant to the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or other similar law, whether such distribution is made in cash, securities, or other property, but shall not include any 41 such distribution with respect to the secured portion, if any, of such claim. The court in which such bankruptcy, receivership or proceedings for reorganization is pending shall have jurisdiction (i) to apportion among the Trustee and the Holders and the holders of other indenture securities, in accordance with the provisions of this paragraph, the funds and property held in such special account and proceeds thereof, or (ii) in lieu of such apportionment, in whole or in part, to give to the provisions of this paragraph due consideration in determining the fairness of the distributions to be made to the Trustee and the Holders and the holders of other indenture securities with respect to their respective claims, in which event it shall not be necessary to liquidate or to appraise the value of any securities or other property held in such special account or as security for any such claim, or to make a specific allocation of such distributions as between the secured and unsecured portions of such claims, or otherwise to apply the provisions of this paragraph as a mathematical formula. Any Trustee which has resigned or been removed after the beginning of such three-month period shall be subject to the provisions of this Subsection as though such resignation or removal had not occurred. If any Trustee has resigned or been removed prior to the beginning of such three-month period, it shall be subject to the provisions of this Subsection if and only if the following conditions exist: (i) the receipt of property or reduction of claim, which would have given rise to the obligation to account, if such Trustee had continued as Trustee, occurred after the beginning of such three-month period; and (ii) such receipt of property or reduction of claim occurred within three months after such resignation or removal. (b) There shall be excluded from the operation of Subsection (a) of this Section a creditor relationship arising from (1) the ownership or acquisition of securities issued under any indenture, or any security or securities having a maturity of one year or more at the time of acquisition by the Trustee; (2) advances authorized by a receivership or bankruptcy court of competent jurisdiction or by this Indenture, for the purpose of preserving any property which shall at any time be subject to the lien of this Indenture or of discharging tax liens or other prior liens or encumbrances thereon, if notice of such advances and of the circumstances surrounding the making thereof is given to the Holders at the time and in the manner provided in this Indenture; (3) disbursements made in the ordinary course of business in the capacity of trustee under an indenture, transfer agent, registrar, custodian, paying agent, fiscal agent or depositary, or other similar capacity, (4) an indebtedness created as a result of services rendered or premises rented; or an indebtedness created as a result of goods or securities sold in a cash transaction as defined in Subsection (c) of this Section; (5) the ownership of stock or of other securities of a corporation organized under the provisions of Section 25(a) of the Federal Reserve Act, as amended, which is directly or indirectly a creditor of the Company; or (6) the acquisition, ownership, acceptance or negotiation of any drafts, bills of exchange, acceptances or obligations which fall within the classification of self-liquidating paper as defined in Subsection (c) of this Section. (c) For the purposes of this Section only: (1) The term "default" means any failure to make payment in full of the principal of or interest on any of the Debt Securities or upon the other indenture securities when and as such principal or interest becomes due and payable. (2) The term "other indenture securities" means securities upon which the Company is an obligor outstanding under any other indenture (i) under which the Trustee is also trustee, (ii) which contains provisions substantially similar to the provisions of this Section, and (iii) under which a default exists at the time of the apportionment of the funds and property held in such special account. (3) The term "cash transaction" means any transaction in which full payment for goods or securities sold is made seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks and payable upon demand. 42 (4) The term "self-liquidating paper" means any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Company for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Company arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation. (5) The term "Company" means any obligor upon the Debt Securities. SECTION 614. Authenticating Agent. The Trustee shall upon Company request appoint one or more authenticating agents (including, without limitation, the Company or any Affiliate thereof with respect to one or more series of Debt Securities which shall be authorized on behalf of the Trustee in authenticating Debt Securities of such series in connection with the issue, delivery, registration of transfer, exchange, partial redemption or repayment of such Debt Securities. Wherever reference is made in this Indenture to the authentication of Debt Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication on behalf of the Trustee by an authenticating agent and a certificate of authentication executed on behalf of the Trustee by an authenticating agent. Each authenticating agent must be acceptable to the Company and must be a corporation organized and doing business under the laws of the United States or of any State, having a principal office in the State of California or the Borough of Manhattan, The City of New York, having a combined capital surplus of at least $1,000,000, authorized under such laws to do a trust business and subject to supervision or examination by Federal or State authorities or the equivalent foreign authority in the case of an authenticating agent who is not organized and doing business under the laws of the United States or of any State thereof or the District of Columbia. Any corporation succeeding to the corporate agency business of an authenticating agent shall continue to be an authenticating agent without the execution or filing of any paper or any further act on the part of the Trustee or such authenticating agent. An authenticating agent may at any time resign with respect to one or more series of Debt Securities by giving written notice of resignation to the Trustee and to the Company. The Trustee may at any time terminate the agency of an authenticating agent with respect to one or more series of Debt Securities by giving written notice of termination to such authenticating agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time an authenticating agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee promptly may appoint a successor authenticating agent. Any successor authenticating agent upon acceptance of its appointment hereunder shall become vested with all rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an authenticating agent herein. No successor authenticating agent shall be appointed unless eligible under the provisions of this Section. The Company agrees to pay to each authenticating agent from time to time reasonable compensation for its services under this Section, subject to the provisions of Section 607. The provisions of Sections 104, 111, 306, 309, 603, 604 and 605 shall be applicable to any authenticating agent. Pursuant to each appointment made under this Section, the Debt Securities of each series covered by such appointment may have endorsed thereon, in lieu of the Trustee's certificate of authentication, an alternate certificate of authentication in substantially the following form: 43 This is one of the Debt Securities, of the series designated herein, described in the within-mentioned Indenture. MANUFACTURERS HANOVER TRUST COMPANY OF CALIFORNIA By_________________________________________ As Authenticating Agent for the Trustee By_________________________________________ Authorized Officer ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 701. Company to Furnish Trustee Names and Addresses of Holders. The Company will furnish or cause to be furnished to the Trustee with respect to Debt Securities of each series for which it acts as Trustee: (1) semi-annually, not more than 15 days after the Regular Record Date in respect of the Debt Securities of such series or on June 30 and December 31 of each year with respect to each series of Debt Securities for which there are no Regular Record Dates, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of Registered Securities as of such Regular Record Date or June 15 or December 15, as the case may be, and (2) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished, provided, however, that if and so long as the Trustee shall be the Security Registrar, no such list need be furnished. SECTION 702. Preservation of Information; Communications to Holders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders of Registered Securities contained in the most recent list furnished to the Trustee as provided in Section 701 and the names and addresses of Holders of Registered Securities received by the Trustee in its capacity as Paying Agent or Security Registrar, if so acting. The Trustee may destroy any list furnished to it as provided in Section 701 upon receipt of a new list so furnished. The Trustee shall preserve for at least two years the names and addresses of Holders of Bearer Securities filed with the Trustee pursuant to Section 703(c). (b) If three or more Holders of Debt Securities of any series (hereinafter referred to as "applicants") apply in writing to the Trustee, and furnish to the Trustee proof that each such applicant has owned a Debt Security for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other Holders of Debt Securities of such series (in which case the applicants must hold Debt Securities of such series) or with all Holders of Debt Securities with respect to their rights under this Indenture or under the Debt Securities and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall, within five Business Days after the receipt of such application, at its election, either (i) afford such applicants access to the information preserved at the time by the Trustee in accordance with Section 702(a), or (ii) inform such applicants as to the approximate number of Holders of Debt Securities of such series or of all Debt Securities, as the case may be, whose names and addresses appear in the information preserved at the time by the Trustee in accordance with Section 702(a), and as to the approximate cost of mailing to such Holders the form of proxy or other communication, if any, specified in such application. 44 If the Trustee shall elect not to afford such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each Holder whose name and address appear in the information preserved at the time by the Trustee in accordance with Section 702(a), a copy of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender, the Trustee shall mail to such applicants and file with the Commission, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interests of the Holders or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Holders with reasonable promptness after the entry of such order and the renewal of such tender, otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application. (c) Every Holder of Debt Securities or coupons, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with Section 702(b), regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 702(b). SECTION 703. Reports by Trustee. (a) Within 60 days after May 15 of each year commencing with the year 1992, the Trustee shall transmit by mail to all Holders of Debt Securities of any series with respect to which it acts as Trustee, as provided in Subsection (c) of this Section, a brief report dated as of such May 15 with respect to any of the following events which may have occurred within the previous twelve months (but if no such event has occurred within such period, no report need be transmitted): (1) any change to its eligibility under Section 609 and its qualifications under Section 608; (2) the creation of or any material change to a relationship specified in paragraphs (1) through (10) of Section 608(c); (3) the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) which remain unpaid on the date of such report, and for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Debt Securities of such series or any related coupons, on any property or funds held or collected by it as Trustee, except that the Trustee shall not be required (but may elect) to report such advances if such advances so remaining unpaid aggregate not more than 1/2 of 1% of the principal amount of the Outstanding Debt Securities of such series on the date of such report; (4) the amount, interest rate and maturity date of all other indebtedness owing by the Company (or any other obligor on the Debt Securities of such series) to the Trustee in its individual capacity, on the date of such report, with a brief description of any property held as collateral security therefor, except an indebtedness based upon a creditor relationship arising in any manner described in Section 613(b)(2), (3), (4) or (6); (5) any change to the property and funds, if any, physically in the possession of the Trustee as such on the date of such report, (6) any additional issue of Debt Securities which the Trustee has not previously reported; and (7) any action taken by the Trustee in the performance of its duties hereunder which it has not previously reported and which in its opinion materially affects the Debt Securities, except action in respect of a default, notice of which has been or is to be withheld by the Trustee in accordance with Section 602; 45 provided, however, that if the Trust Indenture Act is amended subsequent to the date hereof to eliminate the requirement of the Trustee's brief report, the report required by this Section need not be transmitted to any Holders. (b) The Trustee shall transmit by mail to all Holders of Debt Securities of any series for which it acts as the Trustee, as provided in Subsection (c) of this Section, a brief report with respect to the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) since the date of the last report transmitted pursuant to Subsection (a) of this Section (or if no such report has yet been so transmitted, since the date of execution of this instrument) for the reimbursement of which it claims or may claim a right or charge, prior to that of the Debt Securities of such series, on property or funds held or collected by it as Trustee, and which it has not previously reported pursuant to this Subsection, except that the Trustee for each series shall not be required (but may elect) to report such advances if such advances remaining unpaid at any time aggregate 10% or less of the principal amount of the Debt Securities of such series Outstanding at such time, such report to be transmitted within 90 days after such time. (c) Reports pursuant to this Section shall be transmitted by mail: (1) to all Holders of Registered Securities, as the names and addresses of such Holders appear in the Security Register. (2) to such Holders of Bearer Securities as have, within the two years preceding such transmission, filed their names and addresses with the Trustee for that purpose; and (3) except in the case of reports pursuant to Subsection (b) of this Section, to each Holder of a Debt Security whose name and address is preserved at the time by the Trustee, as provided in Section 702(a). (d) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which any Debt Securities of such series are listed, with the Commission and also with the Company. The Company will notify the Trustee when any series of Debt Securities are listed on any stock exchange. SECTION 704. Reports by Company. The Company will: (1) file with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934; or, if the Company is not required to file information, documents or reports pursuant to either of said Sections, then it will file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Securities Exchange Act of 1934 in respect of a security listed and registered on a National Securities Exchange as may be prescribed from time to time in such rules and regulations; (2) file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and (3) transmit by mail to all Holders of Debt Securities, in the manner and to the extent provided in Section 703(c) with respect to reports pursuant to Section 703(a), within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant to paragraphs (1) and (2) of this Section as may be required by rules and regulations prescribed from time to time by the Commission. 46 ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 801. Company May Consolidate, etc., Only on Certain Terms. The Company shall not consolidate with or merge into any other corporation or convey, transfer or lease its properties and assets substantially as an entirety to any Person, unless: (1) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety shall be a corporation organized and existing under the laws of the United States of America, any political subdivision thereof or any State thereof and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of (and premium, if any) and interest (including all additional amounts, if any, payable pursuant to Section 1006) on all the Debt Securities and any related coupons and the performance of every covenant of this Indenture on the part of the Company to be performed or observed; (2) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time, or both, would become an Event of Default, shall have happened and be continuing; (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each stating that such consolidation, merger, conveyance, transfer or lease and, such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been met. SECTION 802. Successor Corporation Substituted. Upon any consolidation with or merger into any other corporation, or any conveyance, transfer or lease of the properties and assets of the Company substantially as an entirety in accordance with Section 801, the successor corporation formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor had been named as the Company herein, and thereafter, except in the case of a lease, the Company (which term for this purpose shall mean the Person named as the "Company" in the first paragraph of this instrument or any successor corporation which shall theretofore have become such in the manner presented in this Article) shall be relieved of all obligations and covenants under this Indenture and the Debt Securities and coupons. ARTICLE NINE SUPPLEMENTAL INDENTURES SECTION 901. Supplemental Indentures without Consent of Holders. Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another corporation to the Company, and the assumption by such successor of the covenants of the Company herein and in the Debt Securities contained; or (2) to add to the covenants of the Company, for the benefit of the Holders of all or any series of Debt Securities or coupons (and if such covenants are to be for the benefit of less than all series of Debt Securities, or coupons stating that such covenants are expressly being included solely for the benefit of such series), to convey, transfer, assign, mortgage or pledge any property to or with the Trustee, or to surrender any right or power herein conferred upon the Company; or 47 (3) to add to any additional Events of Default (and if such Events of Default are to be applicable to less than all series of Debt Securities, stating that such Events of Default are expressly being included solely to be applicable to such series); or (4) to add to, change or eliminate any of the provisions of this Indenture to provide that Bearer Securities may be registrable as to principal, to change or eliminate any restrictions on the payment of principal (or premium, if any) on Registered Securities or of principal (or premium, if any) or any interest on Bearer Securities, to permit Bearer Securities to be issued in exchange for Registered Securities, to permit Bearer Securities to be issued in exchange for Bearer Securities of other authorized denominations or to permit or facilitate the issuance of Debt Securities in uncertificated form, provided any such action shall not adversely affect the interests of the Holders of Debt Securities of any series or any related coupons in any material respect; or (5) to change or eliminate any of the provisions of this Indenture, provided that any such change or elimination (a) shall become effective only when there is no Debt Security Outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision or (b) shall not apply to any Debt Security Outstanding; or (6) to establish the form or terms of Debt Securities of any series as permitted by Sections 201 and 301; or (7) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Debt Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 611(b); or (8) to evidence any changes to Section 608, 609 or 703(a) permitted by the terms thereof; or (9) to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture which shall not be inconsistent with any provision of this Indenture, provided such other provisions shall not adversely affect the interests of the Holders of Debt Securities of any series or any related coupons in any material respect; or (10) to add to or change or eliminate any provision of this Indenture as shall be necessary or desirable in accordance with any amendments to the Trust Indenture Act, provided such action shall not adversely affect the interest of Holders of the Debt Securities of any series or any appurtenant coupons in any material respect. SECTION 902. Supplemental Indentures with Consent of Holders. With the consent of the Holders of not less than 66 2/3% in principal amount of the Outstanding Debt Securities of each series affected by such supplemental indenture, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders under this Indenture of such Debt Securities of such series and any related coupons; provided, however, that an indenture supplemental hereto which changes the required ownership set forth in the definition of Controlled Subsidiary in Section 101 hereof from 80% to a majority but does not change any other provision of this Indenture or modify in any other manner the rights of the Holders of all the Debt Securities under this Indenture may be entered into with the consent of the Holders of at least a majority in principal amount of the Outstanding Debt Securities of each series; and provided further, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Debt Security or coupon affected thereby, (1) change the Stated Maturity of the principal or any installment of principal of, or any installment of interest on, any Debt Security, or reduce the principal amount thereof or the interest thereon or any premium payable upon redemption or repayment thereof, or change any obligation of the Company to pay additional amounts pursuant to Section 1006 (except as contemplated by Section 801(1) and permitted by Section 901(1)), or reduce the amount of the principal of an Original Issue Discount Security that would be due 48 and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502, or change any Place of Payment, or the coin or currency in which any Debt Security or the interest thereon or any coupon is payable, or impair any right to the delivery of Capital Securities in exchange for Debt Securities provided for in this Indenture or the right to institute suit for the enforcement of any such payment or delivery on or after the Stated Maturity thereof (or, in the case of redemption, repayment or exchange, on or after the Redemption Date, Repayment Date or Capital Exchange Date, as the case may be); or (2) reduce the percentage in principal amount of the Outstanding Debt Securities of any series, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or reduce the requirements of Section 1604 for quorum or voting; or (3) modify any of the provisions of this Section, Section 513 or Section 1007, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Debt Security affected thereby; provided, however, that this clause shall not be deemed to require the consent of any Holder with respect to changes in the references to "the Trustee" and concomitant changes in this Section and Section 1007, or the deletion of this proviso, in accordance with the requirements of Section 611(b) and 901(7); or (4) adversely affect the right to repayment, if any, of Debt Securities of any series at the option of the Holders thereof; or (5) impair the right of any Holder of Debt Securities of any series to receive Capital Securities on any Capital Exchange Date for Debt Securities of such series with a Market Value equal to the principal amount of such Holder's Debt Securities of such series or in an amount sufficient to provide proceeds upon sale by the Company in the Secondary Offering equal to the principal amount of such Holder's Debt Securities of such series; or (6) impair the right of any Holder of Convertible Securities of any series to convert such Debt Securities pursuant to Article Nineteen; and provided, further, that no change shall be made in the provisions of Article Eighteen that will affect adversely the holders of Senior Debt without the consent of the holders of all Senior Debt Outstanding. A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Debt Securities, or which modifies the rights of the Holders of Debt Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Debt Securities of any other series. It shall not be necessary for any Act of Holders of the Debt Securities under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. SECTION 903. Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. SECTION 904. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Debt Securities theretofore or thereafter authenticated and delivered hereunder and of any coupons appertaining thereto shall be bound thereby. 49 SECTION 905. Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. SECTION 906. Reference in Debt Securities to Supplemental Indentures. Debt Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Debt Securities of any series and any appurtenant coupons so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Debt Securities of such series and any appurtenant coupons. ARTICLE TEN COVENANTS SECTION 1001. Payment of Principal, Premium and Interest. The Company covenants and agrees for the benefit of each series of Debt Securities and any appurtenant coupons that it will duly and punctually pay the principal of (and premium, if any) and interest on the Debt Securities and any appurtenant coupons in accordance with the terms of the Debt Securities, any appurtenant coupons and this Indenture. Any interest due on Bearer Securities on or before Maturity, other than additional amounts, if any, payable as provided in Section 1006 in respect of principal of (or premium, if any, on) such a Debt Security, shall be payable only upon presentation and surrender of the several coupons for such interest installments as are evidenced thereby as they severally mature. For all purposes of this Indenture, the exchange of Capital Securities for Debt Securities of any series pursuant to the Indenture shall constitute full payment of principal of the Debt Securities of such series being exchanged on any Capital Exchange Date for Debt Securities of such series, without prejudice to any Holder's rights pursuant to Section 1413. SECTION 1002. Maintenance of Office or Agency. The Company will maintain in each Place of Payment for any series of Debt Securities an office or agency where Debt Securities (but, except as otherwise provided below, unless such Place of Payment is located outside the United States, not Bearer Securities) may be presented or surrendered for payment, where Debt Securities may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Debt Securities and this Indenture may be served. If Debt Securities of a series are issuable as Bearer Securities, the Company will maintain, subject to any laws or regulations applicable thereto, an office or agency in a Place of Payment for such series which is located outside the United States where Debt Securities of such series and the related coupons may be presented and surrendered for payment (including payment of any additional amounts payable on Debt Securities of such series pursuant to Section 1006); provided, however, that if the Debt Securities of such series are listed on The Stock Exchange of the United Kingdom and the Republic of Ireland or the Luxembourg Stock Exchange or any other stock exchange located outside the United States and such stock exchange shall so require, the Company will maintain a Paying Agent in London or Luxembourg or any other required city located outside the United States, as the case may be, so long as the Debt Securities of such series are listed on such exchange. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of any such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee its agent to receive all presentations, surrenders, notices and demands, except that Bearer Securities of that series and the related coupons may be presented and surrendered for payment (including payment of any additional amounts payable on Bearer Securities of that series pursuant to Section 1006) at the place specified for the purpose pursuant to Section 301(5). No payment of principal of, premium or interest on Bearer Securities shall be made at any office or agency of the Company in the United States or by check mailed to any address in the United States or by transfer to an 50 account maintained with a bank located in the United States; provided, however, payment of principal of and any premium and interest denominated in Dollars (including additional amounts payable in respect thereof) on any Bearer Security may be made at an office or agency of, and designated by, the Company located in the United States if (but only if) payment of the full amount of such principal, premium, interest or additional amounts in Dollars at all offices outside the United States maintained for the purpose by the Company in accordance with this Indenture is illegal or effectively precluded by exchange controls or other similar restrictions and the Trustee receives an Opinion of Counsel that such payment within the United States is legal. Unless otherwise provided as contemplated by Section 301 with respect to any series of Debt Securities, at the option of the Holder of any Bearer Security or related coupon, payment may be made by check in the currency designated for such payment pursuant to the terms of such Bearer Security presented or mailed to an address outside the United States or by transfer to an account in such currency maintained by the payee with a bank located outside the United States. The Company may also from time to time designate one or more other offices or agencies (in or outside of such Place of Payment) where the Debt Securities of one or more series and any appurtenant coupons (subject to the preceding paragraph) may be presented or surrendered for any or all such purposes, and may from time to time rescind such designations; provided however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in each Place of Payment for any series of Debt Securities, for such purposes. The Company will give prompt written notice to the Trustee of any such designation and any change in the location of any such other office or agency. SECTION 1003. Money for Debt Securities Payments to Be Held in Trust. If the Company shall at any time act as its own Paying Agent with respect to any series of Debt Securities, it will, on or before each due date of the principal of (and premium, if any) or interest on any of the Debt Securities of such series and any appurtenant coupons, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents with respect to any series of Debt Securities, it will, prior to each due date of the principal of (and premium, if any) or interest on any Debt Securities of such series and any appurtenant coupons, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. The Company will cause each Paying Agent with respect to any series of Debt Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will (1) hold all sums held by it for the payment of the principal of (and premium, if any) or interest on Debt Securities of such series and any appurtenant coupons in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (2) give the Trustee notice of any default by the Company (or any other obligor upon the Debt Securities of such series or any appurtenant coupons) in the making of any payment of principal of (and premium, if any) or interest on the Debt Securities of such series or any appurtenant coupons; and (3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. The Company may at any time, for the purpose of terminating its obligations under this Indenture with respect to Debt Securities of any series or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. 51 Any principal and interest received on the Eligible Instruments deposited with the Trustee or any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any) or interest on any Debt Security of any series or any appurtenant coupons or any money on deposit with the Trustee or any Paying Agent representing amounts deducted from the Redemption Price or Repayment Price with respect to unmatured coupons not presented upon redemption or exercise of the Holder's option for repayment pursuant to Section 1106 or 1303 and remaining unclaimed for two years after such principal (and premium, if any) or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust, and the Holder of such Debt Security or any coupon appertaining thereto shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money (including the principal and interest received on Eligible Instruments deposited with the Trustee), and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in an Authorized Newspaper of general circulation in each of the City and County of San Francisco and the Borough of Manhattan, The City of New York, and each Place of Payment or mailed to each such Holder, or both, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 1004. Officers' Certificate as to Default. The Company will deliver to the Trustee, on or before a date not more than four months after the end of each fiscal year of the Company (which on the date hereof is the calendar year) ending after the date hereof, an Officers' Certificate, stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions of this Indenture, and, if the Company shall be in default, specifying all such defaults and the nature thereof of which they may have knowledge. SECTION 1005. Limitation on Disposition of Voting Stock of and Merger and Sale of Assets by the Bank. The Company will not (1) sell, transfer or otherwise dispose of any shares of Voting Stock of the Bank or permit the Bank to issue, sell, or otherwise dispose of any shares of its Voting Stock, unless, after giving effect to any such transaction, the Bank remains a Controlled Subsidiary; or (2) permit the Bank to (a) merge or consolidate, unless the surviving corporation is a Controlled Subsidiary; or (b) convey or transfer its properties and assets substantially as an entirety to any Person, except to a Controlled Subsidiary. SECTION 1006. Payment of Additional Amounts. If the Debt Securities of a series provide for the payment of additional amounts, the Company will pay to the Holder of any Debt Security of any series or any coupon appertaining thereto additional amounts upon the terms and subject to the conditions provided therein. Whenever in this Indenture there is mentioned, in any context, the payment of the principal of (or premium, if any) or interest on, or in respect of, any Debt Security of any series or any related coupon or the net proceeds received on the sale or exchange of any Debt Security of any series, such mention shall be deemed to include mention of the payment of additional amounts provided for in the terms of such Debt Securities and this Section to the extent that, in such context, additional amounts are, were or would be payable in respect thereof pursuant to the provisions of this Section and express mention of the payment of additional amounts (if applicable) in any provisions hereof shall not be construed as excluding additional amounts in those provisions hereof where such express mention is not made. If the Debt Securities of a series provide for the payment of additional amounts, at least 10 days prior to the first Interest Payment Date with respect to that series of Debt Securities (or if the Debt Securities of that series will not bear interest prior to Maturity, the first day on which a payment of principal (and premium, if any) is made), 52 and at least 10 days prior to each date of payment of principal (and premium, if any) or interest if there has been any change with respect to the matters set forth in the below-mentioned Officers' Certificate, the Company will furnish the Trustee and the Company's principal Paying Agent or Paying Agents, if other than the Trustee, with an Officers' Certificate instructing the Trustee and such Paying Agent or Paying Agents whether such payment of principal of (and premium, if any) or interest on the Debt Securities of that series shall be made to Holders of Debt Securities of that series or the related coupons who are United States Aliens without withholding for or on account of any tax, assessment or other governmental charge described in the Debt Securities of that series. If any such withholding shall be required, then such Officers' Certificate shall specify by country the amount, if any, required to be withheld on such payments to such Holders of Debt Securities or coupons and the Company will pay to the Trustee or such Paying Agent the additional amounts, if any, required by the terms of such Debt Securities and the first paragraph of this Section. The Company covenants to indemnify the Trustee and any Paying Agent for, and to hold them harmless against, any loss, liability or expense reasonably incurred without negligence or bad faith on their part arising out of or in connection with actions taken or omitted by any of them in reliance on any Officers' Certificate furnished pursuant to this Section. SECTION 1007. Waiver of Certain Covenants. The Company may omit in any particular instance to comply with any covenant or condition set forth in Section 1005, with respect to the Debt Securities of any series if, before the time for such compliance the Holders of at least 66 2/3% in principal amount of the Debt Securities of such series at the time Outstanding shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such covenant or condition shall remain in full force and effect. ARTICLE ELEVEN REDEMPTION OF DEBT SECURITIES SECTION 1101. Applicability of Article. Debt Securities of any series which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise specified as contemplated by Section 301 for Debt Securities of any series) in accordance with this Article. SECTION 1102. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Debt Securities shall be evidenced by an Officers' Certificate authorized by or pursuant to a Board Resolution. In case of any redemption at the election of the Company of less than all of the Debt Securities of any series, the Company shall, at least 45 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount and the tenor and terms of the Debt Securities of any series to be redeemed. In the case of any redemption of Debt Securities prior to the expiration of any restriction on such redemption provided in the terms of such Debt Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers' Certificate evidencing compliance with such restriction. SECTION 1103. Selection by Trustee of Debt Securities to Be Redeemed. Except as otherwise specified as contemplated by Section 301 for Debt Securities of any series, if less than all the Debt Securities of any series with like tenor and terms are to be redeemed, the particular Debt Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Debt Securities of such series with like tenor and terms not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to the minimum authorized denomination for Debt Securities of such series or any integral multiple thereof which is also an authorized denomination) of the principal amount of Registered Securities or Bearer Securities (if issued in more than one authorized denomination) of such series of a denomination larger than the minimum authorized denomination for Debt Securities of such series. 53 The Trustee shall promptly notify the Company in writing of the Debt Securities selected for redemption and, in the case of any Debt Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Debt Securities shall relate, in the case of any Debt Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Debt Security which has been or is to be redeemed. SECTION 1104. Notice of Redemption. Notice of redemption shall be given in the manner provided in Section 106 not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Debt Securities to be redeemed. All notices of redemption shall state: (1) the Redemption Date, (2) the Redemption Price, (3) if less than all Outstanding Debt Securities of any series are to be redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the particular Debt Securities to be redeemed, (4) that on the Redemption Date the Redemption Price will become due and payable upon each such Debt Security to be redeemed, and that interest thereon shall cease to accrue on and after said date, (5) the Place or Places of Payment where such Debt Securities, together in the case of Bearer Securities with all coupons, if any, appertaining thereto maturing after the Redemption Date, are to be surrendered for payment of the Redemption Price, (6) that Bearer Securities may be surrendered for payment only at such place or places which are outside the United States, except as otherwise provided in Section 1002, (7) that the redemption is for a sinking fund, if such is the case, and (8) the CUSIP number, if any. A notice of redemption published as contemplated by Section 106 need not identify particular Registered Securities to be redeemed. Notice of redemption of Debt Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. SECTION 1105. Deposit of Redemption Price. On or prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money and/or, to the extent such Debt Securities to be redeemed are denominated and payable in Dollars only, Eligible Instruments the payments of principal and interest on which when due (and without reinvestment and providing no tax liability will be imposed upon the Trustee or the Holders of the Debt Securities to be redeemed) will provide money on or prior to the Redemption Date in such amounts as will (together with any money irrevocably deposited in trust with the Trustee, without investment) be sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the Debt Securities or portions thereof which are to be redeemed on that date; provided, however, that deposits with respect to Bearer Securities shall be made with a Paying Agent or Paying Agents located outside the United States except as otherwise provided in Section 1002, unless otherwise specified as contemplated by Section 301. SECTION 1106. Debt Securities Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Debt Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Debt Securities shall cease to bear interest and the coupons for such interest appertaining to any Bearer Securities so to be redeemed, except to the extent provided below, shall be void. Upon surrender of any such Debt Security for 54 redemption in accordance with said notice, such Debt Security shall be paid by the Company at the Redemption Price, together with accrued interest to the Redemption Date; provided however, that installments of interest on Bearer Securities whose Stated Maturity is on or prior to the Redemption Date shall be payable only upon presentation and surrender of coupons for such interest (at an office or agency located outside the United States except as otherwise provided in Section 1002), and provided further, that installments of interest on Registered Securities whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Debt Securities, or one or more Predecessor Securities, registered as such on the relevant Record Dates according to their terms and the provisions of Section 307. If any Bearer Security surrendered for redemption shall not be accompanied by all appurtenant coupons maturing after the Redemption Date, such Bearer Security may be paid after deducting from the Redemption Price an amount equal to the face amount of all such missing coupons, or the surrender of such missing coupon or coupons may be waived by the Company and the Trustee if there be furnished to them such security or indemnity as they may require to save each of them and any Paying Agent harmless. If thereafter the Holder of such Bearer Security shall surrender to the Trustee or any Paying Agent any such missing coupon in respect of which a deduction shall have been made from the Redemption Price, such Holder shall be entitled to receive the amount so deducted without interest thereon; provided, however, that interest represented by coupons shall be payable only upon presentation and surrender of those coupons at an office or agency located outside of the United States except as otherwise provided in Section 1002. If any Debt Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Debt Security. SECTION 1107. Debt Securities Redeemed in Part. Any Registered Security which is to be redeemed only in part shall be surrendered at a Place of Payment therefor (with, if the Company, the Security Registrar or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company, the Security Registrar and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Debt Security without service charge, a new Registered Security or Registered Securities of the same series and of like tenor and terms, of any authorized denominations as requested by such Holder in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Debt Security so surrendered. ARTICLE TWELVE SINKING FUNDS SECTION 1201. Applicability of Article. The provisions of this Article shall be applicable to any sinking fund for the retirement of Debt Securities of a series except as otherwise specified as contemplated by Section 301 for Debt Securities of such series. The minimum amount of any sinking fund payment provided for by the terms of Debt Securities of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the term of Debt Securities of any series is herein referred to as an "optional sinking fund payment". If provided for by the terms of Debt Securities of any series, the amount of any sinking fund payment may be subject to reduction as provided in Section 1202. Each sinking fund payment shall be applied to the redemption of Debt Securities of any series as provided for by the terms of Debt Securities of such series. SECTION 1202. Satisfaction of Sinking Fund Payments with Debt Securities. The Company (1) may deliver Outstanding Debt Securities of a series (other than any previously called for redemption), together in the case of any Bearer Securities of such series with all unmatured coupons appertaining thereto, and (2) may apply as a credit Debt Securities of a series which have been redeemed either at the election of the Company pursuant to the terms of such Debt Securities or through the application of permitted optional sinking 55 fund payments pursuant to the terms of such Debt Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to the Debt Securities of such series required to be made pursuant to the terms of such Debt Securities as provided for by the terms of such series; provided that such Debt Securities have not been previously so credited. Such Debt Securities shall be received and credited for such purpose by the Trustee at the Redemption Price specified in such Debt Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly. If as a result of the delivery or credit of Debt Securities in lieu of cash payments pursuant to this Section 1202, the principal amount of Debt Securities to be redeemed in order to exhaust the aforesaid cash payment shall be less than $100,000, the Trustee need not call Debt Securities for redemption, except upon Company Request, and such cash payment shall be held by the Trustee or a Paying Agent and applied to the next succeeding sinking fund payment, provided, however, that the Trustee or such Paying Agent shall at the request of the Company from time to time pay over and deliver to the Company any cash payment so being held by the Trustee or such Paying Agent upon delivery by the Company to the Trustee of Debt Securities purchased by the Company having an unpaid principal amount equal to the cash payment requested to be released to the Company. SECTION 1203. Redemption of Debt Securities for Sinking Fund. Not less than 60 days prior to each sinking fund payment date for any series of Debt Securities (unless a shorter period shall be satisfactory to the Trustee), the Company will deliver to the Trustee an Officers' Certificate specifying the amount of the next ensuing sinking fund payment for that series pursuant to the terms of that series, the portion thereof, if any, which is to be satisfied by payment of cash, the portion thereof, if any, which is to be satisfied by crediting Debt Securities of that series pursuant to Section 1202 and the basis for any such credit and, prior to or concurrently with the delivery of such Officers' Certificate, will also deliver to the Trustee any Debt Securities to be so credited and not theretofore delivered to the Trustee. Not less than 30 days (unless a shorter period shall be satisfactory to the Trustee) before each such sinking fund payment date the Trustee shall select the Debt Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 1103 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 1104. Such notice having been duly given, the redemption of such Debt Securities shall be made upon the terms and in the manner stated in Sections 1105, 1106 and 1107. ARTICLE THIRTEEN REPAYMENT AT THE OPTION OF HOLDERS SECTION 1301. Applicability of Article. Debt Securities of any series which are repayable at the option of the Holders thereof before their Stated Maturity shall be repaid in accordance with their terms and (except as otherwise specified pursuant to Section 301 for Debt Securities of such series) in accordance with this Article. SECTION 1302. Repayment of Debt Securities. Each Debt Security which is subject to repayment in whole or in part at the option of the Holder thereof on a Repayment Date shall be repaid at the applicable Repayment Price together with interest accrued to such Repayment Date as specified pursuant to Section 301. SECTION 1303. Exercise of Option: Notice. Each Holder desiring to exercise such Holder's option for repayment shall, as conditions to such repayment, surrender the Debt Security to be repaid in whole or in part together with written notice of the exercise of such option at any office or agency of the Company in a Place of Payment, not less than 30 nor more than 45 days prior to the Repayment Date; provided, however, that surrender of Bearer Securities together with written notice of exercise of such option shall be made at an office or agency located outside the United States except as otherwise provided in Section 1002. Such notice, which shall be irrevocable, shall specify the principal amount of such Debt Security to be repaid, which shall be equal to the minimum authorized denomination for such Debt Security or an integral multiple thereof, and shall identify the Debt Security to be repaid and, in the case of a partial repayment of the Debt Security, shall specify the denomination or denominations of the Debt Security or Debt Securities of the same series to be issued to the Holder for the portion of the principal of the Debt Security surrendered which is not to be repaid. 56 If any Bearer Security surrendered for repayment shall not be accompanied by all unmatured coupons and all matured coupons in default, such Bearer Security may be paid after deducting from the Repayment Price an amount equal to the face amount of all such missing coupons, or the surrender of such missing coupon or coupons may be waived by the Company and the Trustee if there be furnished to them such security or indemnity as they may require to save each of them and any Paying Agent harmless. If thereafter the Holder of such Bearer Security shall surrender to the Trustee or any Paying Agent any such missing coupon in respect of which a deduction shall have been made from the Repayment Price, such Holder shall be entitled to receive the amount so deducted without interest thereon; provided, however, that interest represented by coupons shall be payable only at an office or agency located outside the United States except as otherwise provided in Section 1002. The Company shall execute and the Trustee shall authenticate and deliver without service charge to the Holder of any Registered Security so surrendered a new Registered Security or Securities of the same series, of any authorized denomination specified in the foregoing notice, in an aggregate principal amount equal to any portion of the principal of the Registered Security so surrendered which is not to be repaid. The Company shall execute and the Trustee shall authenticate and deliver without service charge to the Holder of any Bearer Security so surrendered a new Registered Security or Securities or new Bearer Security or Securities (and all appurtenant unmatured coupons and matured coupons in default) or any combination thereof of the same series of any authorized denomination or denominations specified in the foregoing notice, in an aggregate principal amount equal to any portion of the principal of the Debt Security so surrendered which is not to be paid; provided, however, that the issuance of a Registered Security therefor shall be subject to applicable laws and regulations, including provisions of the United States federal income tax laws and regulations in effect at the time of the exchange; neither the Company, the Trustee nor the Security Registrar shall issue Registered Securities for Bearer Securities if it has received an Opinion of Counsel that as a result of such issuance the Company would suffer adverse consequences under the United States federal income tax laws then in effect and the Company has delivered to the Trustee a Company Order directing the Trustee not to make such issuances thereafter unless and until the Trustee receives a subsequent Company Order to the contrary. The Company shall deliver copies of such Company Order to the Security Registrar. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the repayment of Debt Securities shall relate, in the case of any Debt Security repaid or to be repaid only in part, to the portion of the principal of such Debt Security which has been or is to be repaid. SECTION 1304. Election of Repayment by Remarketing Entities. The Company may elect, with respect to Debt Securities of any series which are repayable at the option of the Holders thereof before their Stated Maturity, at any time prior to any Repayment Date to designate one or more Remarketing Entities to purchase, at a price equal to the Repayment Price, Debt Securities of such series from the Holders thereof who give notice and surrender their Debt Securities in accordance with Section 1303. SECTION 1305. Debt Securities Payable on the Repayment Date. Notice of exercise of the option of repayment having been given and the Debt Securities so to be repaid having been surrendered as aforesaid, such Debt Securities shall, unless purchased in accordance with Section 1304, on the Repayment Date become due and payable at the price therein specified and from and after the Repayment Date such Debt Securities shall cease to bear interest and shall be paid on the Repayment Date, and the coupons for such interest appertaining to Bearer Securities so to be repaid, except to the extent provided above, shall be void, unless the Company shall default in the payment of such price, in which case the Company shall continue to be obligated for the principal amount of such Debt Securities and shall be obligated to pay interest on such principal amount at the rate borne by such Debt Securities from time to time until payment in full of such principal amount. 57 ARTICLE FOURTEEN EXCHANGE OF CAPITAL SECURITIES FOR DEBT SECURITIES SECTION 1401. Applicability of Article. If an Officers' Certificate or supplemental indenture pursuant to Section 301 provides for the exchange of Capital Securities for Debt Securities of any series at the election of the Company or otherwise, Debt Securities of such series shall be exchanged for Capital Securities in accordance with their terms and (except as otherwise specified in such Officers' Certificate or supplemental indenture) in accordance with this Article. SECTION 1402. Exchange of Capital Securities for Debt Securities at Stated Maturity. At the Stated Maturity of Debt Securities of any series which may be exchanged, subject to prepayment prior to such Stated Maturity on the Capital Exchange Date selected by the Company for Debt Securities of such series, as described below, early exchange pursuant to Section 1403 or payment in cash pursuant to Section 502, 1416 or 1417, the Company shall exchange Capital Securities with a Market Value equal to the principal amount of the Outstanding Debt Securities of such series for the Debt Securities of such series in whole. The Company shall give notice in the manner provided in Section 106 to Holders of the Debt Securities of any series to be exchanged, the Trustee and the Capital Exchange Agent as to the type of Capital Securities to be exchanged for the Debt Securities of such series on the Capital Exchange Date for Debt Securities of such series. Such notice shall include a form of Capital Security Election Form substantially as set forth in Section 1409, shall make the statements and contain the information included in Section 1404(a), and shall be given no less than 90 days prior to the Stated Maturity of such Debt Securities. Notice of such Capital Exchange Date, together with the amount of Capital Securities being exchanged for each $1,000 principal amount of Debt Securities of such series, or the minimum denomination of the Debt Securities of such series, if larger, shall also be given by the Company in the manner required by Section 1404(b) not less than three Business Days prior to such Capital Exchange Date. The Capital Exchange Date for any prepayment of Debt Securities of each series may be selected by the Company to be any date between a date 60 days prior to the Stated Maturity of such Debt Securities and such Stated Maturity, inclusive, and to be the date of the closing of the Secondary Offering for Debt Securities of such series. In the event the Company fails to effect such Secondary Offering, the Capital Exchange Date will be the Stated Maturity of the Debt Securities of such series. Notice of each such Capital Exchange Date, together with the amount of Capital Securities being exchanged for each $1,000 principal amount of Debt Securities of such series, or the minimum denomination of the Debt Securities of such series, if larger, shall also be given by the Company in the manner required by Section 1404(b) not less than three Business Days prior to such Capital Exchange Date. The Company will effect each Secondary Offering such that the closing of the Secondary Offering will occur on the Capital Exchange Date. SECTION 1403. Right of Early Exchange of Capital Securities for Debt Securities. The Debt Securities of any series to be exchanged may be exchanged at the election of the Company, as a whole or from time to time in part, prior to the Stated Maturity thereof for Capital Securities with a Market Value equal to the principal amount of such Debt Securities on any early Capital Exchange Date, together with accrued interest to such Capital Exchange Date. The Company shall give notice in the manner provided in Section 106 to Holders of the Debt Securities of any series to be exchanged, the Trustee and the Capital Exchange Agent not less than 90 days nor more than 120 days prior to any early Capital Exchange Date for Debt Securities of such series, which notice shall include a form of Capital Security Election Form substantially as set forth in Section 1409 and make the statements and contain the information included in Section 1404(a). Notice of each such early Capital Exchange Date, together with the amount of Capital Securities being exchanged for each $1,000 principal amount of Debt Securities of such series, or the minimum denomination of such series, if larger, shall also be given by the Company in the manner required by Section 1404(b) not less than three Business Days prior to such early Capital Exchange Date. The Company may at its option accelerate any such Capital Exchange Date within the 60-day period prior to such Capital Exchange Date by giving notice of such accelerated Capital Exchange Date, together with the amount 58 of Capital Securities being exchanged for each $1,000 principal amount of Debt Securities of such series, or the minimum denomination of such series, if larger, in the manner required by Section 1404(b) not less than three Business Days prior to such accelerated Capital Exchange Date. The Company will effect each Secondary Offering such that the closing of such Secondary Offering will occur on the Capital Exchange Date. SECTION 1404. Notices of Exchange. (a) All notices of exchange subject to this paragraph shall state: (1) the type of Capital Securities to be exchanged for the Debt Securities of such series on the Capital Exchange Date for Debt Securities of such series; (2) the proposed Capital Exchange Date; (3) that each Holder of Debt Securities of such series being exchanged will receive on such Capital Exchange Date accrued and unpaid interest in cash and may elect to receive on such Capital Exchange Date Capital Securities with a Market Value equal to the principal amount of the Debt Securities of such series owned by such Holder and that, in the absence of any such election by the Holder, such Holder will be deemed to have received on such Capital Exchange Date Capital Securities having such Market Value and to have elected to have such Capital Securities sold for such Holder by the Company in the related Secondary Offering for cash proceeds to such Holder on such Capital Exchange Date equal to the aggregate principal amount of all Debt Securities of such series being exchanged owned by such Holder; (4) that on such Capital Exchange Date the Capital Exchange Price will become due and payable upon each such Debt Security to be exchanged and that interest thereon will cease to accrue on and after said date; (5) if less than all the Outstanding Debt Securities of any series are to be exchanged, the identification and principal amount of the particular Debt Securities to be exchanged; (6) that each Holder for whom Capital Securities are being offered in the Secondary Offering shall be deemed to have appointed the Company its attorney-in-fact to execute any and all documents and agreements the Company deems necessary or appropriate to effect such Secondary Offering; (7) (A) that the Company will assume, unless advised to the contrary in writing within 30 days after the date of the notice of exchange, that the Capital Securities are to be offered for the account of the Holder, that such Holder has not held any position, office or other material relationship with the Company within three years preceding the Secondary Offering, that the Holder owns no other Capital Securities, and that after completion of the Secondary Offering the Holder will own less than one percent of the class of such Capital Securities, and (B) that if any of these assumptions is not correct, the Holder shall promptly so advise the Company; (8) the Place or Places of Capital Exchange; (9) that Bearer Securities may be surrendered for payment or exchange only at a Place or Places of Capital Exchange which are outside the United States, except as otherwise provided in Section 1002; and (10) the CUSIP number, if any. (b) Each notice of exchange subject to this paragraph shall be given in the manner provided in Section 106 to each Holder of Debt Securities to be exchanged, and the Company shall forthwith give such notice by telephone to the Trustee and the Capital Exchange Agent, promptly confirmed in writing. (c) (1) Except as may otherwise be specified pursuant to Section 301 for Debt Securities of any series, if less than all the Debt Securities of any series are to be exchanged, the Company shall at least 135 days prior to the related Capital Exchange Date (unless a shorter period shall be satisfactory to the Trustee) notify the Trustee of such Capital Exchange Date and of the principal amount of Debt Securities of such series to be exchanged and the particular Debt Securities to be exchanged shall be selected not more than 135 days prior to the related Capital Exchange Date by the Trustee, from the Outstanding Debt Securities of such series not previously exchanged, by 59 such method as the Trustee shall deem fair and appropriate and which may provide for the selection for exchange of portions (equal to the minimum authorized denomination for Debt Securities of such series or any integral multiple thereof) of the principal amount of Registered or Bearer Securities of such series of a denomination larger than the minimum authorized denomination for Debt Securities of such series. In any case where Debt Securities of such series are registered in the same name, the Trustee in its discretion may treat the aggregate principal amount so registered as if it were represented by one Debt Security of such series. (2) The Trustee shall promptly notify the Company in writing of the Debt Securities selected for exchange and, in the case of any Debt Securities selected for partial exchange, the principal amount thereof to be exchanged. (3) For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the exchange of Debt Securities shall relate, in the case of any Debt Securities exchanged or to be exchanged only in part, to the portion of the principal amount of such Debt Security which has been or is to be exchanged. SECTION 1405. Rights and Duties of Holders of Debt Securities to be Exchanged for Capital Securities. (a) Subject to Section 503, and without prejudice to the rights pursuant to Section 1413 of Holders of Debt Securities of any series to be exchanged, no Holder of Debt Securities of such series shall be entitled to receive any cash from the Company on any Capital Exchange Date or at the Stated Maturity of any Debt Security of such series except from the proceeds of the sale of such Holder's Capital Securities in the related Secondary Offering and except as provided herein with respect to fractional Capital Securities, amounts equal to expenses of the sale in the related Secondary Offering of such Capital Securities accrued and unpaid interest and acceleration upon an Event of Default. In the event that the Company does not effect such Secondary Offering, such Holder will receive Capital Securities with a Market Value equal to the principal amount of Debt Securities of such series owned by such Holder which are subject to such exchange and not cash other than in lieu of any fractional Capital Securities and for accrued and unpaid interest, without prejudice to such Holder's rights pursuant to Section 1413. (b) Each Holder for whom Capital Securities are being offered in the Secondary Offering shall be deemed to have appointed the Company its attorney-in-fact to execute any and all documents and agreements the Company deems necessary or appropriate to effect such Secondary Offering. (c) Unless advised to the contrary in writing within 30 days following the date of the notice described in Section 1404(a) by any Holder for whom Capital Securities are being offered in the Secondary Offering, the Company shall assume for the purposes of any Secondary Offering that the Capital Securities are to be offered for the account of such Holder, that such Holder has not held any position, office or other material relationship with the Company within three years preceding the Secondary Offering, that such Holder owns no other Capital Securities, and that after completion of the Secondary Offering such Holder will own less than one percent of the class of such Capital Securities. (d) Each Holder for whom Capital Securities are being offered in the Secondary Offering agrees to indemnify and hold harmless the Company, any other Holder, and any underwriter, agent or other similar person from and against any and all losses, claims, damages and liabilities resulting from or based upon any untrue statement or alleged untrue statement of any material fact contained in any notice of exchange, any offering memorandum or selling document or registration statement relating to the Secondary Offering, a preliminary prospectus or prospectus contained therein, or any amendment thereof or supplement thereto, or resulting from or based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, which untrue statement, alleged untrue statement, omission or alleged omission is made therein (i) in reliance upon and in conformity with any written information furnished to the Company by or on behalf of any such Holder specifically for use in connection with the preparation thereof or (ii) because of such Holder's failure to advise the Company in writing that any of the assumptions described in Section 1404(a) (7) (A) and Subsection (c) of this Section is incorrect. (e) In order for any Holder who has duly returned a Capital Security Election Form to receive Capital Securities on any Capital Exchange Date for any Debt Security of any series, (1) the Holder of any Registered Security to be exchanged shall surrender such Debt Security (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly 60 executed by, the Holder of any Registered Security or his attorney duly authorized in writing), to the Capital Exchange Agent on the Capital Exchange Date, and (2) the Holder of any Bearer Security to be exchanged shall surrender such Debt Security and all unmatured coupons and all matured coupons in default with the Capital Security Election Form at a Place of Capital Exchange outside the United States designated pursuant to Section 1404(a) (8) except as otherwise provided in Section 1002. If the Holder of a Bearer Security is unable to produce any such Debt Security or coupons, the surrender of such Debt Security or coupons may be waived by the Company and the Trustee, if there be furnished to them such security or indemnity as they may require to save each of them and any Capital Exchange Agent harmless in respect of such Debt Security or coupons. Except as provided in Section 307, no payment or adjustment shall be made upon any exchange on account of any interest accrued on any Debt Securities surrendered for exchange or on account of any dividends or interest on the Capital Securities issued upon exchange. (f) Debt Securities of any series to be exchanged shall be deemed to have been exchanged on the Capital Exchange Date therefor in accordance with the foregoing provisions, and at such time the rights of the Holders of such Debt Securities as Holders shall cease (subject to the provisions of Section 307 and without prejudice to the rights of Holders of Debt Securities of such series pursuant to Section 1413), and the Person or Persons entitled to receive the Capital Securities issuable upon such exchange shall be treated for all purposes as the record holder or holders of such Capital Securities at such time. SECTION 1406. Election to Exchange. The election of the Company to exchange Capital Securities for Debt Securities pursuant to Section 1403 shall be evidenced by a Board Resolution. SECTION 1407. Deposit of Capital Exchange Price. On any Capital Exchange Date for Debt Securities of any series which may be exchanged, the Company shall deposit with the Trustee or with a Capital Exchange Agent in the City and County of San Francisco or the Borough of Manhattan, The City of New York (or, if the Company is acting as Capital Exchange Agent, segregate and hold in trust as provided in Section 1003) Capital Securities and an amount of money which together are sufficient to pay the Capital Exchange Price of, and (except if such Capital Exchange Date shall be an Interest Payment Date) accrued interest on, all the Debt Securities of such series or portions thereof which are to be exchanged on that date; provided, however, that deposits with respect to Bearer Securities shall be made with a Capital Exchange Agent or Capital Exchange Agents, located outside the United States except as otherwise provided in Section 1002, unless otherwise specified as contemplated by Section 301. SECTION 1408. Debt Securities Due on Capital Exchange Date; Debt Securities Exchanged in Part. Notice of exchange having been given as aforesaid, the Debt Securities of any series so to be exchanged shall, on the Capital Exchange Date for such Debt Securities, become due and payable at the Capital Exchange Price therein specified, and from and after such date (unless the Company shall default in the payment of the Capital Exchange Price and accrued interest) Debt Securities of such series to be exchanged shall cease to bear interest and the coupons for such interest appertaining to any Bearer Securities so to be exchanged, except to the extent provided below, shall be void. Upon surrender of any Debt Security of such series for exchange in accordance with said notice, such Debt Security shall be paid by the Company at the Capital Exchange Price, together with accrued interest to the Capital Exchange Date; provided, however, that if such Capital Exchange Date is an Interest Payment Dare, the interest payable on such date shall be paid to the Holder of Debt Securities of such series according to the terms of the Debt Securities of such series and the provisions of Section 307; and provided further, that exchanges of Bearer Securities shall be made only and installments of interest on Bearer Securities whose Stated Maturity is on or prior to the Capital Exchange Date shall be payable only at an office or agency located outside the United States except as otherwise provided in Section 1002 and, unless otherwise specified as contemplated by Section 301, only upon presentation and surrender of those Bearer Securities and coupons. If any Bearer Security surrendered for exchange shall not be accompanied by all unmatured coupons and all matured coupons in default such Bearer Security may be paid after deducting from the Capital Exchange Price an amount equal to the face amount of all missing coupons, or the surrender of such missing coupons may be waived by 61 the Company and the Trustee if there be furnished to them such security or indemnity as they may require to save each of them and any Capital Exchange Agent harmless. If thereafter the Holder of such Bearer Security shall surrender to the Trustee or Capital Exchange Agent any such missing coupon in respect of which a deduction shall have been made from the Capital Exchange Price, such Holder shall be entitled to receive the amount so deducted; provided, however, that interest on Bearer Securities shall be payable only at an office or agency located outside of the United States except as otherwise provided in Section 1002. If any Debt Security of any series called for exchange shall not be so paid or exchanged upon surrender thereof for exchange, the principal shall, until paid, bear interest from such Capital Exchange Date at the rate or rates prescribed therefor in such Debt Security; provided, however, that in the case of Bearer Securities, any such principal and interest thereon shall be paid at an office or agency located outside the United States except as otherwise provided in Section 1002. Any Registered Security which is to be exchanged only in part shall be surrendered as provided herein (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder or his attorney duly authorized in writing) and the Company shall execute, the Trustee shall authenticate and there shall be delivered to the Holder of such Debt Security without service charge a new Registered Security or Securities of the same series, of any authorized denomination or denominations as requested by such Holder in aggregate principal amount equal to and in exchange for the unexchanged portion of principal of the Debt Security so surrendered. Any Bearer Security which is to be exchanged only in part shall be surrendered as provided herein and the Company shall execute, the Trustee shall authenticate and there shall be delivered to the Holder of such Debt Security without service charge a new Registered Security or Securities or new Bearer Security or Securities (and all appurtenant unmatured coupons and coupons in default) or any combination thereof of the same series of any authorized denomination or denominations as requested by such Holder in aggregate principal amount equal to and in exchange for the unexchanged portion of principal of the Debt Security so surrendered; provided, however, the issuance of a Registered Security therefor shall be subject to applicable laws and regulations, including provisions of the United States federal income tax laws and regulations in effect at the time of the exchange; neither the Company, the Trustee nor the Security Registrar shall issue Registered Securities in exchange for Bearer Securities if it has received an Opinion of Counsel that as a result of such exchanges the Company would suffer adverse consequences under the United States federal income tax laws then in effect and the Company has delivered to the Trustee a Company Order directing the Trustee not to make such exchanges thereafter unless and until the Company delivers to the Trustee a subsequent Company Order to the contrary. The Company shall deliver copies of such Company Orders to the Security Registrar. SECTION 1409. Form of Capital Security Election Form. The form of Capital Security Election Form shall be substantially as follows with such additions, deletions or changes thereto as may be approved by the Company: CAPITAL SECURITY ELECTION FORM To: [Insert Names and Addresses of Capital Exchange Agents] The undersigned Holder of [insert title of Debt Security] ("Debt Securities") of BankAmerica Corporation hereby elects to receive on the Capital Exchange Date determined pursuant to the Indenture dated as of November 1, 1991 ("Indenture"), between BankAmerica Corporation and Manufacturers Hanover Trust Company of California, as Trustee, and referred to in the notice of exchange published or delivered to the undersigned with this Capital Security Election Form, Capital Securities of BankAmerica Corporation with a Market Value equal to the principal amount of the Debt Securities being exchanged owned by the undersigned Holder and, in the case of Bearer Securities, delivered herewith together with all coupons appertaining thereto. Unless this Capital Security Election Form together with, in the case of Bearer Securities, such Bearer Securities and coupons, is received by any Capital Exchange Agent named above at an address shown above on or prior to _______________ the Holder will 62 be deemed to have elected to participate in the sale of the Holder's Capital Securities in the Secondary Offering and will receive cash on the Capital Exchange Date in an amount equal to the principal amount of all Debt Securities being exchanged owned by the Holder. All terms used herein and not otherwise defined herein shall have the meanings specified in the Indenture. Dated__________________________ _____________________________ Name of Holder SECTION 1410. Fractional Capital Securities. No fractional Capital Securities shall be issued upon exchange for any Debt Securities. If more than one Debt Security of any series shall be surrendered for exchange at one time by the same Holder, the amount of all Capital Securities which shall be issuable upon exchange thereof shall be computed on the basis of the aggregate principal amount of Debt Securities of such series so surrendered. In lieu of issuing any fractional Capital Security, the Company shall pay a cash adjustment in respect of such fraction in an amount equal to the same fraction of the Market Value of the Capital Security. SECTION 1411. Company to Obtain Governmental and Regulatory Approvals. The Company covenants that if any Capital Securities required to be exchanged for Debt Securities hereunder require registration with or approval of any governmental authority under any federal or state law, or any national securities exchange, before such Capital Securities may be issued, the Company will in good faith and as expeditiously as possible endeavor to cause such Capital Securities to be duly registered or approved, as the case may be; provided, however, that nothing in this Section shall be deemed to affect in any way the obligation of the Company to exchange Capital Securities for Debt Securities as provided in this Article. SECTION 1412. Taxes on Exchange. The Company will pay any and all transfer, stamp or similar taxes that may be payable in respect of the issue or delivery of Capital Securities in exchange for Debt Securities pursuant hereto. SECTION 1413. Covenants as to Capital Securities and Secondary Offering. (a) The Company covenants that it will issue, or cause to be issued, Capital Securities of the type, in the amounts and at the times required by this Indenture. (b) The Company covenants that all Capital Securities which may be issued in exchange for Debt Securities will upon issuance be duly and validly issued and, if applicable, fully paid and nonassessable. (c) The Company unconditionally undertakes to sell Capital Securities in each Secondary Offering (and to bear all expenses of each Secondary Offering, including underwriting discounts and commissions) at the times and in the manner required by this Indenture unless all Holders have duly elected to receive Capital Securities on the related Capital Exchange Date. (d) The Company agrees to indemnify and hold harmless in connection with any Secondary Offering any Holder for the account of whom Capital Securities are being offered and sold from and against any and all losses, claims, damages and liabilities resulting from or based upon any untrue statement or alleged untrue statement of any material fact contained in any notice of exchange, any offering memorandum or selling document or registration statement relating to the Secondary Offering, any preliminary prospectus or prospectus contained therein, or any amendment thereof or supplement thereto, or resulting from or based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or resulting from the Company's failure to comply with Section 1411; provided however, the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement, alleged untrue statement, omission or alleged omission made therein (i) in reliance upon and in conformity with written information furnished to the Company by or on behalf of any such Holder specifically for use in connection with the preparation thereof or (ii) because of such Holder's failure to advise the Company in writing that any of the assumptions described in Section 1404(a) (7) (A) is incorrect. In connection with any Secondary Offering, the Company agrees to obtain appropriate indemnification of any Holder for the 63 account of whom Capital Securities are being offered and sold in any Secondary Offering from any underwriter, agent or other similar person. SECTION 1414. Provision in Case of Consolidation, Merger or Transfer of Assets. In case of any consolidation of the Company with, or merger of the Company into, any other corporation (other than a consolidation or merger in which the Company is the continuing corporation), or in case of any conveyance or transfer of the properties and assets of the Company substantially as an entirety, the corporation formed by such consolidation or the corporation into which the Company shall have been merged or the corporation which shall have acquired such assets of the Company, as the case may be, shall execute and deliver to the Trustee a supplemental indenture providing that the Holder of each Debt Security then Outstanding shall have the right thereafter to receive securities of such successor on the Capital Exchange Date for such Debt Security with a Market Value equal to the principal amount of such Debt Security. The above provisions of this Section shall similarly apply to successive consolidations, mergers, conveyances or transfers. SECTION 1415. Responsibility of Trustee. The Trustee shall not at any time be under any duty or responsibility to any Holder of Debt Securities of any series to be exchanged to determine the Market Value of any Capital Securities delivered in exchange for Debt Securities of such series and may rely on and shall be entitled to receive prior to any Capital Exchange Date for Debt Securities of such series an Officers' Certificate of the Company as to the Market Value of the Capital Securities being exchanged for the Debt Securities of such series and the amount of Capital Securities being exchanged for each $1,000 principal amount of Debt Securities of such series or the minimum denomination of such series, if larger, and that such Capital Securities qualify as Capital Securities under the definition thereof contained herein. The Trustee shall not be accountable with respect to the validity or value (or the kind or amount) of any Capital Securities which may at any time be issued or delivered in exchange for any Debt Security, and the Trustee does not make any representation with respect thereto. The Trustee shall not be responsible for any failure of the Company to issue, transfer or deliver any Capital Securities or Capital Security certificates or other securities or property upon the surrender of any Debt Security for the purpose of exchange or to comply with any of the covenants of the Company contained in this Article. SECTION 1416. Revocation of Obligation to Exchange Capital Securities for Debt Securities. The Company's obligation to exchange Capital Securities for Debt Securities of any series as provided in Section 1402 is absolute and unconditional; provided, however, that such obligation may be revoked at the option of the Company at any time on not less than 60 days' prior notice given in the manner provided in Section 106 to the Holders of Debt Securities of such series, the Trustee and the Capital Exchange Agent, if the Company shall determine that under then regulations of the Company's Primary Federal Regulator either the Debt Securities are no longer includable as capital or it is no longer necessary for the Company to be obligated to exchange Capital Securities for Debt Securities in order for the Debt Securities to maintain the same capital treatment as they are then receiving under such regulations or if approval of the Primary Federal Regulator is obtained for such revocation. In the event such obligation is revoked (a) the Company will pay the Debt Securities of such series in cash at 100% of the principal amount thereof on the Stated Maturity thereof, and (b) the Company may, at any time on or after a date selected by the Company, on not less than 60 days' prior notice given in the manner provided in Section 106 to the Holders of Debt Securities of such series and the Trustee, redeem the Debt Securities of such series, in whole or in part, for cash at 100% of the principal amount thereof, plus accrued interest to the Redemption Date. SECTION 1417. Optional Securities Funds. (a) (1) With respect to Debt Securities of any series for which an Officers' Certificate or supplemental indenture pursuant to Section 301 provides that the Debt Securities of such series are exchangeable for Capital Securities, the Company may elect to establish a fund (referred to herein as the "Optional Securities Funds") 64 to which funds may at any time be designated by the Company as provided in Section 1502 as if such Optional Securities Funds were Securities Funds (as defined in Article Fifteen) to be used to pay the principal of the Debt Securities of such series. (2) Notwithstanding any provisions to the contrary contained in this Indenture or in the Debt Securities of any series, neither funds designated as Optional Securities Funds nor any other property from time to time held as Optional Securities Funds shall be deemed to be for any purpose property of the Holders or trust funds for the benefit of the Holders, and the Optional Securities Funds shall not constitute security for the payment of the Debt Securities. (b) In lieu of, or in addition to, any exchange of Capital Securities for Debt Securities of any series which may be made in accordance with the provisions of Sections 1402 and 1403, the Company may elect to redeem the Debt Securities of such series in accordance with the provisions of Section 1106 and the terms of the Debt Securities of each series, in whole or in part, by paying the principal of such Debt Securities with funds designated as Optional Securities Funds at a price equal to the percentage of the principal amount established in the terms of the Debt Securities of such series on the Redemption Date of the Debt Securities to be so redeemed, and (except if such Redemption Date shall be an Interest Payment Date) by paying accrued interest on such Debt Securities. If such Redemption Date is an Interest Payment Date, the interest payable on such date shall be paid to the Holder of Debt Securities of such series according to the terms of the Debt Securities of such series and the provisions of Section 307. (c) The Company shall give notice of such proposed redemption in the manner provided in Section 106 to the Holders of the Debt Securities of such series within the time prescribed for the giving of the initial notice in Section 1402 or 1403, depending upon the Redemption Date selected by the Company. Such notice shall state the Redemption Date and the place or places where the Debt Securities of the series to be paid are to be surrendered for payment; provided however, if such redemption is of less than all of the Debt Securities of such series and is to be made on a Capital Exchange Date specified in accordance with Section 1402 or 1403, then such notice may be incorporated into any initial notice of such Capital Exchange Date and provided that no notice of any redemption may be given unless there are sufficient Optional Securities Funds to pay the principal amount of the Debt Securities to be redeemed. (d) If less than all the Debt Securities of any series are to be so redeemed, then Sections 1404(c) and 1408 shall apply to the redemption in the same manner as if such Debt Securities were to be exchanged for Capital Securities. (e) Funds designated as Optional Securities Funds shall be released from such designation under the circumstances described in Section 1503. ARTICLE FIFTEEN SECURITIES FUNDS SECTION 1501. Creation of Securities Funds. A fund (the "Securities Funds") will be established when specified in an Officers' Certificate or supplemental indenture pursuant to Section 301 for the Debt Securities of any series pursuant to which funds may be designated by the Company as provided in Section 1502, to be used to pay the principal of the Debt Securities of that series. Notwithstanding any provision to the contrary contained in this Indenture or in the Debt Securities of any series, neither funds designated as Securities Funds nor any other property from time to time held as Securities Funds shall be deemed to be for any purpose property of the Holders or trust funds for the benefit of the Holders, and the Securities Funds shall not constitute security for the payment of the Debt Securities. SECTION 1502. Designations of Securities Funds. The Securities Funds will consist of amounts equal to (i) the net proceeds of the sale of Capital Securities for cash from time to time after the date of initial issuance of the Debt Securities of any series for which funds may be designated by the Company as provided in this Section, and (ii) the market value, as determined by the Company, 65 of Capital Securities sold from time to time after the date of initial issuance of the Debt Securities of such series in exchange for other property, less the expenses to effect any such exchanges, and (iii) other funds which the regulations of the Primary Federal Regulator then permit for the payment of principal of "mandatory convertible securities (equity commitment notes)" as defined in such regulations; provided that (x) the Company has designated such amounts as Securities Funds on its books and records in the manner required by the Primary Federal Regulator, and (y) there shall be deducted from the Securities Funds an amount equal to the amount of any funds used to redeem or repay the Debt Securities of such series for which Securities Funds are required to be designated or any similar securities. SECTION 1503. Covenant of the Company to Obtain Securities Funds. Notwithstanding anything else contained herein, the Company hereby covenants and agrees that with regard to the Debt Securities of any series which by its terms requires the designation of Securities Funds (i) by the Interest Payment Date which occurs on or next preceding the date when one-third of the period from the date of issuance of the Debt Securities of such series to their Stated Maturity has elapsed, it will have obtained Securities Funds in an amount that will equal at least one-third of the original aggregate principal amount of the Debt Securities of such series (or such lesser amount as the Primary Federal Regulator may permit from time to time) and will have prepared and delivered to the Trustee an Officer's Certificate to the foregoing effect, (ii) by the Interest Payment Date which occurs on or next preceding the date when two-thirds of the period from the date of issuance of the Debt Securities of such series to their Stated Maturity has elapsed, it will have obtained Securities Funds in an amount that will equal at least two-thirds of the original aggregate principal amount of the Debt Securities of such series (or such lesser amount as the Primary Federal Regulator may permit from time to time) and will have prepared and delivered to the Trustee an Officers' Certificate to the foregoing effect, and (iii) by 60 days prior to the Stated Maturity of the Debt Securities of such series, it will have obtained Securities Funds in an amount that will equal not less than the original aggregate principal amount of the Debt Securities of such series (or such lesser amount as the Primary Federal Regulator may permit from time to time) and will have prepared and delivered to the Trustee an Officers' Certificate to the foregoing effect; provided, however, that such covenant and agreement of the Company shall be cancelled, and amounts theretofore designated as Securities Funds will be released from such designation in the event and to the extent that the Company shall determine that under then regulations of the Company's Primary Federal Regulator either the Debt Securities are no longer includable as capital or it is no longer necessary for the Company to be obligated to pay the principal of the Debt Securities out of Securities Funds in order for the Debt Securities to maintain the same capital treatment as they are then receiving under such regulations, in the event and to the extent that approval of the Primary Federal Regulator is obtained for such cancellation and release or in the event and to the extent that the Company shall have exchanged or redeemed such Debt Securities pursuant to the terms of such Debt Securities of such series from a source other than amounts designated as Securities Funds. ARTICLE SIXTEEN MEETINGS OF HOLDERS OF DEBT SECURITIES SECTION 1601. Purposes for Which Meetings May Be Called. If Debt Securities of a series are issuable in whole or in part as Bearer Securities, a meeting of Holders of Debt Securities of such series may be called at any time and from time to time pursuant to this Article to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other Act provided by this Indenture to be made, given or taken by Holders of Debt Securities of such series. SECTION 1602. Call, Notice and Place of Meetings. (a) The Trustee may at any time call a meeting of Holders of Debt Securities of any series issuable as Bearer Securities for any purpose specified in Section 1601, to be held at such time and at such place in the City and County of San Francisco, the Borough of Manhattan, The City of New York, or in London as the Trustee shall determine. Notice of every meeting of Holders of Debt Securities of any series, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be given, in the manner provided in Section 106, not less than 21 nor more than 180 days prior to the date fixed for the meeting. 66 (b) In case at any time the Company, pursuant to a Board Resolution, or the Holders of at least 10% in principal amount of the Outstanding Debt Securities of any series shall have requested the Trustee to call a meeting of the Holders of Debt Securities of such series for any purpose specified in Section 1601, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have made the first publication of the notice of such meeting within 21 days after receipt of such request or shall not thereafter proceed to cause the meeting to be held as provided herein, then the Company or the Holders of Debt Securities of such series in the amount above specified, as the case may be, may determine the time and the place in the City and County of San Francisco, the Borough of Manhattan, The City of New York, or in London for such meeting and may call such meeting for such purposes by giving notice thereof as provided in subsection (a) of this Section. SECTION 1603. Persons Entitled to Vote at Meetings. To be entitled to vote at any meeting of Holders of Debt Securities of any series, a Person shall be (1) a Holder of one or more Outstanding Debt Securities of such series, or (2) a Person appointed by an instrument in writing as proxy for a Holder or Holders of one or more Outstanding Debt Securities of such series by such Holder or Holders. The only Persons who shall be entitled to be present or to speak at any meeting of Holders of Debt Securities of any series shall be the Persons entitled to vote at such meeting and their counsel, any representatives of the Trustee and its counsel and any representatives of the Company and its counsel. SECTION 1604. Quorum; Action. The Persons entitled to vote a majority in principal amount of the Outstanding Debt Securities of a series shall constitute a quorum for a meeting of Holders of Debt Securities of such series, provided, however, that if any action is to be taken at such meeting with respect to a consent or waiver which this Indenture expressly provides may be given by the Holders of not less than 66 2/3% in principal amount of the Outstanding Debt Securities of a series, the Persons entitled to vote 66 2/3% in principal amount of the Outstanding Debt Securities of such series shall constitute a quorum. In the absence of a quorum within 30 minutes of the time appointed for any such meeting, the meeting shall, if convened at the request of Holders of Debt Securities of such series, be dissolved. In the absence of a quorum in any other case the meeting may be adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for a period of not less than 10 days as determined by the chairperson of the meeting prior to the adjournment of such adjourned meeting. Notice of the reconvening of any adjourned meeting shall be given as provided in Section 1602(a), except that such notice need be given only once not less than five days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage, as provided above, of the principal amount of the Outstanding Debt Securities of such series which shall constitute a quorum. Except as limited by the provisos to Section 902, any resolution presented to a meeting or adjourned meeting duly reconvened at which a quorum is present as aforesaid may be adopted only by the affirmative vote of the Holders of a majority in principal amount of the Outstanding Debt Securities of that series; provided, however, that, except as limited by the provisos to Section 902, any resolution with respect to any consent or waiver which this Indenture expressly provides may be given by the Holders of not less than 66 2/3% in principal amount of the Outstanding Debt Securities of a series may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid only by the affirmative vote of the Holders of 66 2/3% in principal amount of the Outstanding Debt Securities of that series; and provided, further, that, except as limited by the provisos to Section 902, any resolution with respect to any request, demand, authorization, direction, notice, consent, waiver or other Act which this Indenture expressly provides may be made, given or taken by the Holders of a specified percentage, which is less than a majority, in principal amount of the Outstanding Debt Securities of a series may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid by the affirmative vote of the Holders of such specified percentage in principal amount of the Outstanding Debt Securities of that series. Any resolution passed or decision taken at any meeting of Holders of Debt Securities of any series duly held in accordance with this Section shall be binding on all the Holders of Debt Securities of such series and the related coupons, whether or not present or represented at the meeting. 67 SECTION 1605. Determination of Voting Rights; Conduct and Adjournment of Meetings. (a) Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders of Debt Securities of such series in regard to proof of the holding of Debt Securities of such series and of the appointment of proxies and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. Except as otherwise permitted or required by any such regulations, the holding of Debt Securities shall be proved in the manner specified in Section 104 and the appointment of any proxy shall be proved in the manner specified in Section 104 or, in the case of Bearer Securities, by having the signature of the person executing the proxy witnessed or guaranteed by any trust company, bank or banker authorized by Section 104 to certify to the holding of Bearer Securities. Such regulations may provide that written instruments appointing proxies, regular on their face, may be presumed valid and genuine without the proof specified in Section 104 or other proof. (b) The Trustee shall, by an instrument in writing, appoint a temporary chairperson of the meeting, unless the meeting shall have been called by the Company or by Holders of Debt Securities as provided in Section 1602(b), in which case the Company or the Holders of Debt Securities of the series calling the meeting, as the case may be, shall in like manner appoint a temporary chairperson. A permanent chairperson and a permanent secretary of the meeting shall be elected by vote of the Persons entitled to vote a majority in principal amount of the Outstanding Debt Securities of such series represented at the meeting. (c) At any meeting each Holder of a Debt Security of such series or proxy shall be entitled to one vote for each $1,000 principal amount (or the equivalent in ECU, any other composite currency or a Foreign Currency) of Debt Securities of such series held or represented by him; provided however, that no vote shall be cast or counted at any meeting in respect of any Debt Security challenged as not Outstanding and ruled by the chairperson of the meeting not to be Outstanding. The chairperson of the meeting shall have no right to vote, except as a Holder of a Debt Security of such series or proxy. (d) Any meeting of Holders of Debt Securities of any series duly called pursuant to Section 1602 at which a quorum is present may be adjourned from time to time by Persons entitled to vote a majority in principal amount of the Outstanding Debt Securities of such series represented at the meeting, and the meeting may be held as so adjourned without further notice. SECTION 1606. Counting Votes and Recording Action of Meetings. The vote upon any resolution submitted to any meeting of Holders of Debt Securities of any series shall be by written ballots on which shall be subscribed the signatures of the Holders of Debt Securities of such series or of their representatives by proxy and the principal amounts and serial numbers of the Outstanding Debt Securities of such series held or represented by them. The permanent chairperson of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in triplicate of all votes cast at the meeting. A record, at least in triplicate, of the proceedings of each meeting of Holders of Debt Securities of any series shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was given as provided in Section 1602 and, if applicable, Section 1604. Each copy shall be signed and verified by the affidavits of the permanent chairperson and secretary of the meeting and one such copy shall be delivered to the Company, and another to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated. 68 ARTICLE SEVENTEEN DEFEASANCE Section 1701. Termination of Company's Obligations. With respect to any series of Debt Securities, if the Company deposits irrevocably in trust with the Trustee money and/or, to the extent such Debt Securities are denominated and payable in Dollars only, Eligible Instruments the payments of principal and interest on which when due (and without reinvestment and providing no tax liability will be imposed upon the Trustee or the Holders of such Debt Securities) will provide money in such amounts as will (together with any money irrevocably deposited in trust with the Trustee, without investment) be sufficient, to pay principal (and premium, if any) and interest when due on the Debt Securities of such series and any coupons appertaining thereto and any mandatory sinking fund, repayment or analogous payments thereon on the scheduled due dates therefor at the Stated Maturity thereof, the Company's obligations under Section 1005 shall terminate with respect to the Debt Securities of the series for which such deposit was made; provided, however, that (i) no Event of Default with respect to the Debt Securities of such series under Section 501 (1) or 501(2) or event that with notice or lapse of time or both would constitute such an Event of Default shall have occurred and be continuing on such date and (ii) such termination shall not relieve the Company of its obligations under the Debt Securities of such series and this Indenture to pay when due the principal of (and premium, if any) and interest and additional amounts on such Debt Securities and any coupons appertaining thereto if such Debt Securities or coupons are not paid (or payment is not provided for) when due from the money and Eligible Instruments (and the proceeds thereof) so deposited. It shall be a condition to the deposit of cash and/or Eligible Instruments and the termination of the Company's obligations with respect to the Debt Securities of any series under Section 1005 pursuant to the provisions of this Section that the Company deliver to the Trustee (i) an opinion of nationally recognized independent tax counsel to the effect that (a) Holders of Debt Securities of such series and any coupons appertaining thereto will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and termination and (b) such Holders (and future Holders) will be subject to tax in the same amount, manner and timing as if such deposit and termination has not occurred and (ii) an Officers' Certificate to the effect that under the laws in effect on the date such money and/or Eligible Instruments are deposited with the Trustee, the amount thereof will be sufficient, after payment of all Federal, state and local taxes in respect thereof payable by the Trustee, to pay principal (and premium, if any) and interest when due on the Debt Securities of such series and any coupons appertaining thereto. It shall be an additional condition to the deposit of cash and/or Eligible Instruments and the termination of the Company's obligations under Section 1005 pursuant to the provisions if this Section, with respect to the Debt Securities of any series then listed on the New York Stock Exchange, that the Company deliver an Opinion of Counsel that the Debt Securities of such series will not be delisted from the New York Stock Exchange as a result of such deposit and termination. After a deposit as provided herein, the Trustee shall, upon Company Request, acknowledge in writing the discharge of the Company's obligations with respect to the Debt Securities of such series under Section 1005 pursuant to the provisions of this Section. SECTION 1702. Repayment to Company. The Trustee and any Paying Agent shall promptly pay to the Company upon Company Request any money or Eligible Instruments not required for the payment of the principal of (and premium, if any) and interest on the Debt Securities of any series and any related coupons for which money or Eligible Instruments have been deposited pursuant to Section 1701 held by them at any time. The Trustee and any Paying Agent shall pay to the Company upon Company Request any money held by them for the payment of principal (and premium, if any) and interest that remains unclaimed for two years after the Maturity of the Debt Securities for which a deposit has been made pursuant to Section 1701. After such payment to the Company, the Holders of the Debt Securities of such series and any related coupons shall thereafter, as unsecured general creditors, look only to the Company for the payment thereof. 69 SECTION 1703. Indemnity for Eligible Instruments. The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the deposited Eligible Instruments or the principal or interest received on such Eligible Instruments. ARTICLE EIGHTEEN SUBORDINATION OF DEBT SECURITIES SECTION 1801. Debt Securities Subordinate to Senior Debt. The Company covenants and agrees that anything in this Indenture or the Debt Securities of any series to the contrary notwithstanding, the indebtedness evidenced by the Debt Securities of each series and any coupons appurtenant thereto is subordinate and junior in right of payment to all Senior Debt to the extent provided herein, and each Holder of Debt Securities of each series and coupons appurtenant thereto, by such Holder's acceptance thereof, likewise covenants and agrees to the subordination herein provided and shall be bound by the provisions hereof. Senior Debt shall continue to be Senior Debt and entitled to the benefits of these subordination provisions irrespective of any amendment, modification or waiver of any term of the Senior Debt or extension or renewal of the Senior Debt. In the event that the Company shall default in the payment of any principal of (or premium, if any) or interest on any Senior Debt when the same become due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, upon written notice of such default to the Company by the Holders of Senior Debt or any trustee therefor, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made on account of the principal of (or premium, if any) or interest on any of the Debt Securities, or in respect of any redemption, repayment, retirement, purchase or other acquisition of any of the Debt Securities. In the event of (a) any insolvency, bankruptcy, receivership, liquidation, reorganization, readjustment, composition or other similar proceeding relating to the Company, its creditors or its property, (b) any proceeding for the liquidation, dissolution or other winding up of the Company, voluntary or involuntary, whether or not involving insolvency or bankruptcy proceedings, (c) any assignment by the Company for the benefit of creditors, or (d) any other marshalling of the assets of the Company, all Senior Debt (including any interest thereon accruing after the commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made to any Holder of any of the Debt Securities or coupons appurtenant thereto on account thereof. Any payment or distribution, whether in cash, securities or other property (other than securities of the Company or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Debt Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Debt Securities of any series or coupons appurtenant thereto shall be paid or delivered directly to the Holders of Senior Debt in accordance with the priorities then existing among such Holders until all Senior Debt (including any interest thereon accruing after the commencement of any such proceedings) shall have been paid in full. In the event of any such proceeding, after payment in full of all sums owing with respect to Senior Debt, the Holders of the Debt Securities and coupons appurtenant thereto, together with the Holders of any obligations of the Company ranking on a parity with the Debt Securities, shall be entitled to be paid from the remaining assets of the Company the amounts at the time due and owing on account of unpaid principal of (and premium, if any) and interest on the Debt Securities and such other obligations before any 70 payment or other distribution, whether in cash, property or otherwise, shall be made on account of any capital stock or any obligations of the Company ranking junior to the Debt Securities and such other obligations. In the event that, notwithstanding the foregoing, any payment or distribution of any character or any security, whether in cash, securities or other property (other than securities of the Company or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Debt Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), shall be received by the Trustee or any Holder in contravention of any of the terms hereof such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to, the holders of the Senior Debt at the time outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Debt remaining unpaid, to the extent necessary to pay all such Senior Debt in full. In the event of the failure of the Trustee or any Holder to endorse or assign any such payment, distribution or security, each holder of Senior Debt is hereby irrevocably authorized to endorse or assign the same. No present or future holder of any Senior Debt shall be prejudiced in the right to enforce subordination of the indebtedness evidenced by the Debt Securities by any act or failure to act on the part of the Company. Nothing contained herein shall impair, as between the Company and the Holders of Debt Securities of each series, the obligation of the Company to pay to such Holders the principal of (and premium, if any) and interest on such Debt Securities and coupons appurtenant thereto or prevent the Trustee or the Holder from exercising all rights, powers and remedies otherwise permitted by applicable law or hereunder upon a default or Event of Default hereunder, all subject to the rights of the holders of the Senior Debt to receive cash, securities or other property otherwise payable or deliverable to the Holders. Senior Debt shall not be deemed to have been paid in full unless the holders thereof shall have received cash, securities or other property equal to the amount of such Senior Debt then outstanding. Upon the payment in full of all Senior Debt, the Holders of Debt Securities of each series and coupons appurtenant thereto, if any, shall be subrogated to all rights of any holders of Senior Debt to receive any further payments or distributions applicable to the Senior Debt until the indebtedness evidenced by the Debt Securities of such series and coupons appertaining thereto, if any, shall have been paid in full, and such payments or distributions received by such Holders, by reason of such subrogation, of cash, securities or other property which otherwise would be paid or distributed to the holders of Senior Debt, shall, as between the Company and its creditors other than the holders of Senior Debt, on the one hand, and such Holders, on the other hand, be deemed to be a payment by the Company on account of Senior Debt, and not on account of the Debt Securities of such series. The Trustee and Holders will take such action (including, without limitation, the delivery of this Indenture to an agent for the holders of Senior Debt or consent to the filing of a financing statement with respect hereto) as may, in the opinion of counsel designated by the holders of a majority in principal amount of the Senior Debt at the time outstanding, be necessary or appropriate to assure the effectiveness of the subordination effected by these provisions. The provisions of this Section 1801 shall not impair any rights, interests, remedies or powers of any secured creditor of the Company in respect of any security interest the creation of which is not prohibited by the provisions of this Indenture. The securing of any obligations of the Company, otherwise ranking on a parity with the Debt Securities or ranking junior to the Debt Securities, shall not be deemed to prevent such obligations from constituting, respectively, obligations ranking on a parity with the Debt Securities or ranking junior to the Debt Securities. SECTION 1802. Trustee and Holders of Debt Securities May Rely on Certificate of Liquidating Agent; Trustee May Require Further Evidence as to Ownership of Senior Debt; Trustee Not Fiduciary to Holders of Senior Debt. Upon any payment or distribution of assets of the Company referred to in this Article Eighteen, the Trustee and the Holders shall be entitled to rely upon an order or decree made by any court of competent jurisdiction in which such dissolution or winding up or liquidation or reorganization or arrangement proceedings are pending or upon a certificate of the trustee in bankruptcy, receiver, assignee for the benefit of creditors or other Person making such payment or distribution, delivered to the Trustee or to the Holders, for the purpose of ascertaining the persons 71 entitled to participate in such distribution, the holders of the Senior Debt and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Eighteen. In the absence of any such bankruptcy trustee, receiver, assignee or other Person, the Trustee shall be entitled to rely upon a written notice by a Person representing himself or herself to be a holder of Senior Debt (or a trustee or representative on behalf of such holder) as evidence that such Person is a holder of such Senior Debt (or is such a trustee or representative). In the event that the Trustee determines, in good faith, that further evidence is required with respect to the right of any Person as a holder of Senior Debt to participate in any payments or distributions pursuant to this Article Eighteen, the Trustee may request such person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt held by such Person, as to the extent to which such Person is entitled to participate in such payment or distribution, and as to other facts pertinent to the rights of such Person under this Article Eighteen, and if such evidence is not furnished, the Trustee may offer any payment to such Person pending judicial determination as to the right of such Person to receive payment. The Trustee, however, shall not be deemed to owe any fiduciary duty to the holders of Senior Debt. SECTION 1803. Payment Permitted If No Default. Nothing contained in this Article Eighteen or elsewhere in this Indenture, or in any of the Debt Securities, shall prevent (a) the Company at any time, except during the pendency of any dissolution, winding up, liquidation or reorganization proceedings referred to in, or under the conditions described in, Section 1801, from making payments of the principal of (or premium, if any) or interest on the Debt Securities or (b) the application by the Trustee or any Paying Agent of any moneys deposited with it hereunder to payments of the principal of or interest on the Debt Securities, if, at the time of such deposit, the Trustee or such Paying Agent, as the case may be, did not have the written notice provided for in Section 1804 of any event prohibiting the making of such deposit, or if, at the time of such deposit (whether or not in trust) by the Company with the Trustee or any Paying Agent (other than the Company) such payment would not have been prohibited by the provisions of this Article, and the Trustee or any Paying Agent shall not be affected by any notice to the contrary received by it on or after such date. SECTION 1804. Trustee Not Charged with Knowledge of Prohibition. Anything in this Article Eighteen or elsewhere in this Indenture contained to the contrary notwithstanding, the Trustee shall not at any time be charged with knowledge of the existence of any facts which would prohibit the making of any payment of money to or by the Trustee and shall be entitled conclusively to assume that no such facts exist and that no event specified in Section 1801 has happened, until the Trustee shall have received an Officers' Certificate to that effect or notice in writing to that effect signed by or on behalf of the holder or holders, or their representatives, of Senior Debt who shall have been certified by the Company or otherwise established to the reasonable satisfaction of the Trustee to be such holder or holders or representatives or from any trustee under any indenture pursuant to which such Senior Debt shall be outstanding. The Company shall give prompt written notice to the Trustee and to the Paying Agent of any facts which would prohibit the payment of money to or by the Trustee or any Paying Agent. SECTION 1805. Trustee to Effectuate Subordination. Each Holder of Debt Securities or coupons by such Holder's acceptance thereof authorizes and directs the Trustee in such Holder's behalf to take such action as may be necessary or appropriate to effectuate the subordination as between such Holder and holders of Senior Debt as provided in this Article and appoints the Trustee its attorney-in-fact for any and all such purposes. SECTION 1806. Rights of Trustee as Holder of Senior Debt. The Trustee shall be entitled to all the rights set forth in this Article with respect to any Senior Debt which may at the time be held by it, to the same extent as any other holder of Senior Debt provided that nothing in this Article shall deprive the Trustee of any rights as such holder and provided further that nothing in this Article shall apply to claims of, or payments to, the Trustee under or pursuant to Section 607. 72 SECTION 1807. Article Applicable to Paying Agents. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article shall in such case (unless the context shall otherwise require) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if the Paying Agent were named in this Article in addition to or in place of the Trustee; provided, however, that Sections 1804 and 1806 shall not apply to the Company or any Affiliate of the Company if the Company or such Affiliate acts as Paying Agent. SECTION 1808. Subordination Rights Not Impaired by Acts or Omissions of the Company or Holders of Senior Debt. No right of any present or future holders of any Senior Debt to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof which any such holder may have or be otherwise charged with. The holders of Senior Debt may, at any time or from time to time and in their absolute discretion, change the manner, place or terms of payment, change or extend the time of payment of, or renew or alter, any such Senior Debt, or amend or supplement any instrument pursuant to which any such Senior Debt is issued or by which it may be secured, or release any security therefor, or exercise or refrain from exercising any other of their rights unders the Senior Debt including, without limitation, the waiver of default thereunder, all without notice to or assent from the Holders of the Debt Securities or the Trustee and without affecting the obligations of the Company, the Trustee or the Holders of the Debt Securities under this Article. ARTICLE NINETEEN CONVERSION OF CONVERTIBLE SECURITIES SECTION 1901. Applicability of Article. If an Officers' Certificate or supplemental indenture pursuant to Section 301 provides that the Debt Securities of a series shall be Convertible Securities, Debt Securities of such series shall be convertible in accordance with their terms and (except as otherwise specified in such Officers' Certificate or supplemental indenture) in accordance with this Article. SECTION 1902. Right to Convert. Subject to and upon compliance with the provisions of this Article, the Holder of any Convertible Security shall have the right, at such Holder's option, at any time prior to the close of business on the date set forth in the Officers' Certificate delivered pursuant to Section 301 hereof (or if such Convertible Security is called for redemption or submitted for repayment, then in respect of such Convertible Security to and including but not after the close of business on the Redemption or Repayment Date, as the case may be, unless the Company shall default in the payment due) to convert the principal amount of any such Convertible Security, or, in the case of any Convertible Security of a denomination greater than $1,000, any portion of such principal which is $1,000 or an integral multiple thereof, into that number of fully paid and nonassessable shares of Common Stock (as such shares shall then be constituted) obtained by dividing the principal amount of the Convertible Security or portion thereof surrendered for conversion by the Conversion Price, by surrender of the Convertible Security so to be converted in whole or in part in the manner provided in Section 1903. Such conversion shall be effected by the Company. SECTION 1903. Exercise of Conversion Privilege; Delivery of Common Stock on Conversion; No Adjustment for Interest or Dividends. In order to exercise the conversion privilege, the Holder of any Convertible Security to be converted in whole or in part shall surrender such Convertible Security at an office or agency maintained by the Company pursuant to Section 1002, accompanied by the funds, if any, required by the last paragraph of this Section, together with written notice of conversion in the form provided on the Convertible Securities, that the Holder elects to convert such Convertible Security or the portion thereof specified in said notice. Such notice shall also state the name or names 73 (with address) in which the certificate or certificates for shares of Common Stock which shall be deliverable on such conversion shall be registered, and shall be accompanied by transfer taxes, if required pursuant to Section 1908. Each Convertible Security surrendered for conversion shall, unless the shares deliverable on conversion are to be registered in the same name as the registration of such Convertible Security, be duly endorsed by, or accompanied by instruments of transfer in form satisfactory to the Company duly executed by, the Holder or such Holder's duly authorized attorney. As promptly as practicable after the surrender of such Convertible Security and the receipt of such notice and funds, if any, as aforesaid, the Company shall deliver at such office or agency to such Holder, or on such Holder's written order, a certificate or certificates for the number of full shares deliverable upon the conversion of such Convertible Security or portion thereof in accordance with the provisions of this Article and a check or cash in respect of any fractional interest in respect of a share of Common Stock arising upon such conversion as provided in Section 1904. In case any Convertible Security of a denomination greater than $1,000 shall be surrendered for partial conversion and subject to Section 302, the Company shall execute and the Trustee shall authenticate and deliver to or upon the written order of the Holder of the Convertible Security so surrendered, without charge to such Holder, a new Convertible Security or Convertible Securities in authorized denominations in an aggregate principal amount equal to the unconverted portion of the surrendered Convertible Security. Each conversion shall be deemed to have been effected on the date on which such Convertible Security shall have been surrendered (accompanied by the funds, if any, required by the last paragraph of this Section) and such notice shall have been received by the Company, as aforesaid, and the person in whose name any certificate or certificates for shares of Common Stock shall be registrable upon such conversion shall be deemed to have become on said date the holder of record of the shares represented thereby; provided however, that any such surrender on any date when the stock transfer books of the Company shall be closed shall constitute the person in whose name the certificates are to be registered as the record holder thereof for all purposes on the next succeeding day on which stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date upon which such Convertible Security shall have been surrendered. Any Convertible Security or portion thereof surrendered for conversion during the period from the close of business on the Regular Record Date for any Interest Payment Date to the opening of business on such Interest Payment Date shall (unless such Convertible Security or portion thereof being converted shall have been called for redemption or submitted for repayment on a date in such period) be accompanied by payment, in legal tender or other funds acceptable to the Company, of an amount equal to the interest otherwise payable on such Interest Payment Date on the principal amount being converted; provided however, that no such payment need be made if there shall exist at the time of conversion a default in the payment of interest on the Convertible Securities. An amount equal to such payment shall be paid by the Company on such Interest Payment Date to the Holder of such Convertible Security on such Regular Record Date, provided, however, that if the Company shall default in the payment of interest on such Interest Payment Date, such amount shall be paid to the person who made such required payment. Except as provided above in this Section, no adjustment shall be made for interest accrued on any Convertible Security converted or for dividends on any shares issued upon the conversion of such Convertible Security as provided in this Article. SECTION 1904. Cash Payments in Lieu of Fractional Shares. No fractional shares of Common Stock or scrip representing fractional shares shall be delivered upon conversion of Convertible Securities. If more than one Convertible Security shall be surrendered for conversion at one time by the same Holder, the number of full shares which shall be deliverable upon conversion shall be computed on the basis of the aggregate principal amount of the Convertible Securities (or specified portions thereof to the extent permitted hereby) so surrendered. If any fractional share of stock would be deliverable upon the conversion of any Convertible Security or Convertible Securities, the Company shall make an adjustment therefor in cash at the current market value of such fractional share of stock. The market value of a share of Common Stock shall be the Closing Price on the Business Day immediately preceding the day on which the Convertible Securities (or specified portions thereof) are deemed to have been convened. 74 SECTION 1905. Conversion Price. The Conversion Price shall be as specified in the form of Convertible Security hereinabove set forth, subject to adjustment as provided in this Article. SECTION 1906. Adjustment to Conversion Price. The Conversion Price shall be adjusted from time to time as follows: (a) In case the Company shall (i) pay a dividend or make a distribution on the Common Stock in shares of its capital stock (whether shares of Common Stock or of capital stock of any other class), (ii) subdivide or reclassify its outstanding Common Stock into a greater number of securities (including Common Stock), or (iii) combine or reclassify its outstanding Common Stock into a smaller number of securities (including Common Stock), the Conversion Price in effect immediately prior thereto shall be adjusted so that the Holder of any Convertible Security thereafter surrendered for conversion shall be entitled to receive the number of shares of capital stock of the Company which such Holder would have owned or have been entitled to receive after the happening of any of the events described above had such Convertible Security been convened immediately prior to the happening of such event. An adjustment made pursuant to this subsection (a) shall become effective immediately after the record date in the case of a dividend and shall become effective immediately after the effective date in the case of a subdivision or combination. If, as a result of an adjustment made pursuant to this subsection (a), the Holder of any Convertible Security thereafter surrendered for conversion shall become entitled to receive shares of two or more classes of capital stock of the Company, the Board of Directors of the Company (whose determination shall be conclusive and shall be described in a written statement filed with the Trustee and any conversion agent) shall determine the allocation of the adjusted Conversion Price between or among shares of such classes of capital stock. In the event that at any time, as a result of an adjustment made pursuant to this subsection (a) of this Section 1906, the Holder of any Convertible Security thereafter converted shall become entitled to receive any shares or other securities of the Company other than shares of Common Stock, thereafter the number of such other shares so received upon conversion of any Convertible Security shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the shares of Common Stock contained in this Section 1906, and other provisions of this Article Nineteen with respect to the shares of Common Stock shall apply on like terms to any such other shares or other securities. (b) In case the Company shall fix a record date for the issuance of rights or warrants to all holders of its Common Stock (or securities convertible into Common Stock) entitling them (for a period expiring within 45 days after such record date) to subscribe for or purchase Common Stock at a price per share (or a conversion price per share) less than the current market price per share of Common Stock (as defined in subsection (d) below) at such record date, the Conversion Price in effect immediately prior thereto shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to such record date by a fraction of which the numerator shall be the number of shares of Common Stock outstanding on such record date plus the number of shares which the aggregate offering price of the total number of shares so offered (or the aggregate initial conversion price of the convertible securities so offered) would purchase at such current market price, and of which the denominator shall be the number of shares of Common Stock outstanding on such record date plus the number of additional shares of Common Stock offered for subscription or purchase (or into which the convertible securities so offered are initially convertible). Such adjustment shall be made successively whenever such a record date is fixed, and shall become effective immediately after such record date. In determining whether any rights or warrants entitle the holders to subscribe for or purchase shares of Common Stock at less than such current market price, and in determining the aggregate offering price of such shares, there shall be taken into account any consideration received by the Company for such rights or warrants, the value of such consideration, if other than cash, to be determined by the Board of Directors of the Company. Common Stock owned by or held for the account of the Company or any majority owned subsidiary shall not be deemed outstanding for the purpose of any adjustment required under this subsection (b). 75 (c) In case the Company shall fix a record date for making a distribution to all holders of its Common Stock evidences of its indebtedness or assets (excluding regular quarterly or other periodic or recurring cash dividends or distributions and cash dividends or distributions paid from retained earnings of the Company or dividends or distributions referred to in subsection (a) above) or rights or warrants to subscribe or purchase (excluding those referred to in subsection (b) above), then in each such case the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to such record date by a fraction of which the numerator shall be the current market price per share (as defined in subsection (d) below) of the Common Stock on such record date less the then fair market value (as determined by the Board of Directors of the Company whose determination shall be conclusive, and described in a certificate filed with the Trustee) of the portion of the assets or evidences of indebtedness so distributed or of such rights or warrants applicable to one share of Common Stock, and the denominator shall be the current market price per share (as defined in subsection (d) below) of the Common Stock. Such adjustment shall be made successively whenever such a record date is fixed and shall become effective immediately after such record date. Notwithstanding the foregoing, in the event that the Company shall distribute any rights or warrants to acquire capital stock ("Rights") pursuant to this subsection (c), the distribution of separate certificates representing such Rights subsequent to their initial distribution (whether or not such distribution shall have occurred prior to the date of the issuance of such Subordinated Capital Securities) shall be deemed to be the distribution of such Rights for purposes of this subsection (c); provided that the Company may, in lieu of making any adjustment pursuant to this subsection (c) upon a distribution of separate certificates representing such Rights, make proper provision so that each Holder of such Convertible Security who converts such Convertible Security (or any portion thereof) (i) before the record date for such distribution of separate certificates shall be entitled to receive upon such conversion shares of Common Stock issued with Rights and (ii) after such record date and prior to the expiration, redemption or termination of such Rights shall be entitled to receive upon such conversion, in addition to the shares of Common Stock issuable upon such conversion, the same number of such Rights as would a holder of the number of shares of Common Stock that such Convertible Security so converted would have entitled the holder thereof to purchase in accordance with the terms and provisions of and applicable to the rights if such Convertible Security were converted immediately prior to the record date for such distribution. Common Stock owned by or held for the account of the Company or any majority owned subsidiary shall not be deemed outstanding for the purpose of any adjustment required under this subsection (c). (d) For the purpose of any computation under subsection (b) and (c) above, the current market price per share of Common Stock at any date shall be deemed to be the average of the daily Closing Prices for the thirty consecutive days (which are not legal holidays as defined in Section 113) commencing forty-five days (which are not legal holidays as defined in Section 113) before the day in question. The Closing Price for any day shall be (i) if the Common Stock is listed or admitted for trading on any national securities exchange, the last sale price (regular way), or the average of the closing bid and ask prices if no sale occurred, of Common Stock on the principal securities exchange on which the Common Stock is listed, (ii) if not listed as described in (i), the mean between the closing high bid and low asked quotations of Common Stock in the National Association of Securities Dealers, Inc., Automated Quotation System, or any similar system or automated dissemination of quotations of securities prices then in common use, if so quoted, or (iii) if not quoted as described in clause (ii), the mean between the high bid and low asked quotations for Common Stock as reported by the National Quotation Bureau Incorporated if at least two securities dealers have inserted both bid and asked quotations for Common Stock on at least 5 of the 10 preceding days. If none of the conditions set forth above is met, the Closing Price of Common Stock on any day or the average of such Closing Prices for any period shall be the fair market value of Common Stock as determined by a member firm of the New York Stock Exchange, Inc. selected by the Company. (e) (i) Nothing contained herein shall be construed to require an adjustment in the Conversion Price as a result of the issuance of Common Stock pursuant to, or the granting or exercise of any rights under, the Company's Shareholder Investment Plan or any successor plans providing for the purchase of shares of Common Stock by the Company's shareholders or employees at a price not less than 90% of the "average market price" during the "pricing period" as such terms, or equivalent terms, are defined in, and as calculated pursuant to, such plans from time to time. 76 (ii) In addition, no adjustment in the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1% in such price; provided, however, that any adjustments which by reason of this subsection (e) (ii) are not required to be made shall be carried forward and taken into account in any subsequent adjustment; further provided, however, that any adjustments which by reason of this subsection (e) (ii) are not otherwise required to be made shall be made no later than 3 years after the date on which occurs an event that requires an adjustment to be made or carried forward. (iii) All calculations under this Article Nineteen shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be. Anything in this Section 1906 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Conversion Price, in addition to those required by this Section 1906, as it in its discretion shall determine to be advisable in order that any stock dividends, subdivision of shares, distribution of rights to purchase stock or securities, or distribution of securities convertible into or exchangeable for stock hereafter made by the Company to its shareholders shall not be taxable. (f) Whenever the Conversion Price is adjusted, as herein provided, the Company shall promptly file with the Trustee and any conversion agent other than the Trustee an Officers' Certificate setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. Promptly after delivery of such certificate, the Company shall prepare a notice of such adjustment of the Conversion Price setting forth the adjusted Conversion Price and the date on which such adjustment becomes effective and shall mail such notice of such adjustment of the Conversion Price to the Holder of each Convertible Security at such Holder's last address appearing on the Security Register provided for in Section 305 of this Indenture. (g) In any case in which this Section 1906 provides that an adjustment shall become effective immediately after a record date for an event, the Company may defer until the occurrence of such event (i) delivering to the Holder of any Convertible Security converted after such record date and before the occurrence of such event the additional shares of Common Stock deliverable upon such conversion by reason of the adjustment required by such event over and above the Common Stock deliverable upon such conversion before giving effect to such adjustment and (ii) paying to such Holder any amount in cash in lieu of any fraction pursuant to Section 1904, provided, however, that the Company shall deliver to such Holder a due bill or other appropriate instrument evidencing such Holder's rights to receive such additional shares, and such cash, upon the occurrence of the event requiring such adjustment. If such event does not occur, no adjustments shall be made pursuant to this Section 1906. SECTION 1907. Effect of Reclassification. Consolidation, Merger or Sale. If any of the following events occur, namely (i) any reclassification or change of outstanding shares of Common Stock deliverable upon conversion of the Convertible Securities (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination, but including any change in the shares of Common Stock into two or more classes or series of securities), (ii) any consolidation or merger to which the Company is a party (other than a consolidation or merger in which the Company is the continuing corporation and which does not result in any reclassification of, or change (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination) in, outstanding shares of its Common Stock) or (iii) any sale or conveyance of the properties and assets of the Company as, or substantially as, an entirety to any other corporation; then the Company, or such successor or purchasing corporation, as the case may be, shall execute with the Trustee a supplemental indenture (which shall conform to the Trust Indenture Act as in force at the date of execution of such supplemental indenture and comply with the provisions of Article Nine) providing that each Convertible Security shall be convertible into the kind and amount of shares of stock and other securities or property, including cash, receivable upon such reclassification, change, consolidation, merger, sale or conveyance by a holder of a number of shares of Common Stock deliverable upon conversion of such Convertible Securities immediately prior to such reclassification, change, consolidation, merger, sale or conveyance. Such supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article. The Company shall cause notice of the execution of such supplemental indenture to be mailed to each holder of 77 Convertible Securities, at his address appearing on the Security Register provided for in Section 305 of this Indenture. The above provisions of this Section shall similarly apply to successive reclassifications, consolidations, mergers and sales. SECTION 1908. Taxes on Shares Issued. The delivery of stock certificates on conversions of Convertible Securities shall be made without charge to the Holder converting a Convertible Security for any tax in respect of the issue thereof. The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the delivery of stock registered in any name other than of the Holder of any Convertible Security converted, and the Company shall not be required to deliver any such stock certificate unless and until the person or persons requesting the delivery thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. SECTION 1909. Shares to be Fully Paid; Compliance with Governmental Requirements; Listing of Common Stock. The Company covenants that all shares of Common Stock which may be delivered upon conversion of Convertible Securities will upon delivery be fully paid and nonassessable by the Company and free from all taxes, liens and charges with respect to the issue thereof. The Company covenants that if any shares of Common Stock to be provided for the purpose of conversion of Convertible Securities hereunder require registration with or approval of any governmental authority under any Federal or state law before such shares may be validly delivered upon conversion, the Company will in good faith and as expeditiously as possible endeavor to secure such registration or approval, as the case may be. The Company further covenants that it will, if permitted by the rules of the New York Stock Exchange, list and keep listed for so long as the Common Stock shall be so listed on such exchange, upon official notice of issuance, all Common Stock deliverable upon conversion of the Convertible Securities. SECTION 1910. Responsibility of Trustee. Neither the Trustee nor any authenticating agent nor any conversion agent shall at any time be under any duty or responsibility to any Holder of Convertible Securities to determine whether any facts exist which may require any adjustment of the Conversion Price, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same. Neither the Trustee nor any authenticating agent nor any conversion agent shall be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities or property, which may at any time be delivered upon the conversion of any Convertible Security, and neither the Trustee nor any authenticating agent nor any conversion agent makes any representation with respect thereto. Subject to the provisions of Section 601, neither the Trustee nor any authenticating agent nor any conversion agent shall be responsible for any failure of the Company to deliver any shares of Common Stock or stock certificates or other securities or property or cash upon the surrender of any Convertible Security for the purpose of conversion or for any failure of the Company to comply with any of the covenants of the Company contained in this Article. SECTION 1911. Notice to Holders Prior to Certain Actions. In case: (a) the Company shall declare a dividend (or any other distribution) on the Common Stock (other than in cash out of its current or retained earnings); or (b) the Company shall authorize the granting to the holders of the Common Stock of rights or warrants to subscribe for or purchase any share of any class or any other rights or warrants, or (c) of any reclassification or change of the Common Stock (other than a subdivision or combination of its outstanding Common Stock, or a change in par value, or from par value to no par value, or from no par value to par value) or, of any consolidation or merger to which the Company is a party and for which approval of any 78 stockholders of the Corporation is required or of the sale or transfer of all or substantially all of the assets of the Company; or (d) of the voluntary or involuntary dissolution, liquidation or winding up of the Company; the Company shall cause to be filed with the Trustee and the Company shall cause to be mailed to each holder of Convertible Securities at his address appearing on the Security Register, provided for in Section 305 of this Indenture, as promptly as possible but in any event no less than fifteen days prior to the applicable date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution or rights or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution or rights are to be determined, or (y) the date on which such reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such dividend, distribution, reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up or any adjustment in the Conversion Price required by this Article Nineteen. SECTION 1912. Covenant to Reserve Shares. The Company covenants that it will at all times reserve and keep available, free from pre-emptive rights, out of its authorized but unissued Common Stock, such number of shares of Common Stock as shall then be deliverable upon the conversion of all outstanding Convertible Securities. * * * * * IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. BANKAMERICA CORPORATION By __________________________________ (CORPORATE SEAL] Senior Vice President Attest: - ---------------------------------- Secretary MANUFACTURERS HANOVER TRUST COMPANY OF CALIFORNIA By ___________________________________ [CORPORATE SEAL] Assistant Vice President Attest: - ---------------------------------- Assistant Secretary 79 STATE OF CALIFORNIA } } ss. CITY AND COUNTY OF SAN FRANCISCO } On this ____th day of January, 1992 before me, a notary public in and for said State, personally appeared RICHARD LAIDERMAN, known to me to be a senior vice president of BANKAMERICA CORPORATION, one of the corporations that executed the within instrument, and also known to me to be the person who executed it on behalf of said corporation, and acknowledged to me that such corporation executed the within instrument. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written. [NOTARIAL SEAL] ____________________________________ NOTARY PUBLIC In and for the State of California with principal office in the City and County of San Francisco. My Commission Expires 80 STATE OF CALIFORNIA } } ss. CITY AND COUNTY OF SAN FRANCISCO } On this __th day of January, 1992 before me, a notary public in and for said State, personally appeared JAMES DEWHIRST, known to me to be an assistant vice president of MANUFACTURERS HANOVER TRUST COMPANY OF CALIFORNIA, one of the corporations that executed the within instrument, and also known to me to be the person who executed it on behalf of said corporation, and acknowledged to me that such corporation executed the within instrumenL IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written. [NOTARIAL SEAL] ____________________________________ NOTARY PUBLIC In and for the State of California with principal office in the City and County of San Francisco. My Commission Expires A-1 EXHIBIT A-1 [Form of Certificate of Beneficial Ownership by a non-United States Person or by Certain Other Persons] Certificate BANKAMERICA CORPORATION [Insert title or sufficient description of Debt Securities to be delivered] Reference is hereby made to the Indenture dated as of November 1, 1991 (the "Indenture") between BankAmerica Corporation and Manufacturers Hanover Trust Company of California, as trustee (the "Trustee") covering the above-captioned Debt Securities. This is to certify that as of the date hereof, _______________ principal amount of Debt Securities credited to you for our account (i) is owned by persons that are not United States Persons, as defined below; (ii) is owned by United States Persons that are (a) foreign branches of United States financial institutions (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)) ("financial institutions") purchasing for their own account or for resale, or (b) United States Persons who acquired the Notes through foreign branches of United States financial institutions and who hold the Notes through such United States financial institutions on the date hereof (and in either case (a) or (b), each such United States financial institution encloses herewith a certificate in the form of Exhibit A-2 to the Indenture); or (iii) is owned by United States or foreign financial institutions for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), which United States or foreign financial institutions described in clause (iii) above (whether or not also described in clause (i) or (ii)) certify that they have not acquired the Notes for purposes of resale directly or indirectly to a United States Person or to a person within the United States or its possessions. [Insert if certificate does not relate to an interest payment--We undertake to advise you by tested telex followed by written confirmation if the above statement as to beneficial ownership is not correct on the date of delivery of the above-captioned Debt Securities in bearer form as to all of such Debt Securities with respect to such of said Debt Securities as then appear in your books as being held for our account.] We understand that this certificate is required in connection with United States tax laws. We irrevocably authorize you to produce this certificate or a copy hereof to any interested party in any administrative or legal proceedings with respect to the matters covered by this certificate. "United States Person" shall mean a citizen or resident of the United States of America (including the District of Columbia), a corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof or an estate or trust that is subject to United States federal income taxation regardless of the source of its income. A-2 [This certificate excepts and does not relate to ______________ principal amount of Debt Securities credited to you for our account and to which we are not now able to make the certification set forth above. We understand that definitive Debt Securities cannot be delivered and interest cannot be paid until we are able to so certify with respect to such principal amount of Debt Securities.]* Dated:___________________ [To be dated on or after _________________ (the date determined as provided in the Indenture)] [Name of Person Entitled to Receive Bearer Security] --------------------------------------------------------- (Authorized Signatory) Name: --------------------------------------------------------- Title: --------------------------------------------------------- - ---------- * Delete if inappropriate EXHIBIT A-2 A-3 [Form of Certificate of Status as a Foreign Branch of a United States Flnancial Institution] Certificate BANKAMERICA CORPORATION [Insert title or sufficient description of Debt Securities to be delivered] Reference is hereby made to the Indenture dated as of November 1, 1991, (the "Indenture"), between BankAmerica Corporation and Manufacturers Hanover Trust Company of California, as trustee, relating to the offering of the above-captioned Debt Securities (the "Debt Securities"). Unless herein defined, terms used herein have the same meaning as given to them in the Indenture. The undersigned represents that it is a branch located outside the United States of a United States securities clearing organization, bank or other financial institution (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)) that holds customers' securities in the ordinary course of its trade or business and agrees, and authorizes you to advise the issuer or the issuer's agent, that it will comply with the requirements of Section 165j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986 and the regulations thereunder and is not purchasing for resale directly or indirectly to a United States Person or to a person within the United States or its possessions. We undertake to advise you by tested telex followed by written confirmation if the statement in the immediately preceding sentence is not correct on the date of delivery of the above-captioned Debt Securities in bearer form. We understand that this certificate is required in connection with the United States tax laws. We irrevocably authorize you to produce this certificate or a copy hereof to any interested party in any administrative or legal proceedings with respect to the matters covered by this certificate. Dated:___________________ [To be dated on or after _________________ (the date determined as provided in the Indenture)] [Name of Person Entitled to Receive Bearer Security] --------------------------------------------------------- (Authorized Signatory) Name: --------------------------------------------------------- Title: --------------------------------------------------------- B-1 EXHIBIT B [Form of Certificate to be Given by Euroclear and Cedel S.A. in Connection with the Exchange of All or a Portion of a Temporary Global Security or to Obtain Interest Prior to Exchange] Certificate BANKAMERICA CORPORATION [Insert title or sufficient description of Debt Securities to be delivered] We refer to that portion, ___________________ of the Global Security representing the above-captioned issue (which is herewith submitted to be exchanged for definitive Debt Securities] * [for which we are seeking to obtain payment of interest]* (the "Submitted Portion"). This is to certify, pursuant to the Indenture dated as of November 1, 1991 (the "Indenture") between BankAmerica Corporation and Manufacturers Hanover Trust Company of California, as trustee (the "Trustee"), that we have received in writing, by tested telex or by electronic transmission from member organizations with respect to each of the persons appearing in our records as being entitled to a beneficial interest in the Submitted Portion a Certificate of Beneficial Ownership by a Non-United States Person or by Certain Other Persons, [and, in some cases, a Certificate of Status as a Foreign Branch of a United States Financial Institution, authorizing us to inform the issuer or the issuer's agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986 and the regulations thereunder]* substantially in the form of Exhibit A-l [and A-2]* to the Indenture. We hereby request that you deliver to the office of ___________________ in ___________________ definitive Bearer Securities in the denominations on the attached Schedule A. We further certify that as of the date hereof we have not received any notification from any of the persons giving such certificates to the effect that the statements made by them with respect to any part of the Submitted Portion are no longer true and cannot be relied on as of the date hereof. Dated: __________________________ [MORGAN GUARANTY TRUST COMPANY OF NEW YORK, BRUSSELS OFFICE, as Operator of the Euroclear System] [CEDEL S.A.] By __________________________ - ---------- * Delete if inappropriate. BANKAMERICA CORPORATION TO CHEMICAL TRUST COMPANY OF CALIFORNIA Trustee ----------------- FIRST SUPPLEMENTAL INDENTURE Dated as of September 8, 1992 ----------------- Supplemental to Indenture Dated as of November 1, 1991 FIRST BUPPLEMENTAL INDENTURE First Supplemental Indenture (the "Indenture"), dated as of September 8, 1992, between BankAmerica Corporation, a Delaware corporation (hereinafter called the "Company"), having its principal office at Bank of America Center, 555 California Street, San Francisco, California 94104, and Chemical Trust Company of California, a California corporation (hereinafter called "Trustee"), having its principal corporate trust office at 50 California Street, San Francisco, California 94111. The Company has previously executed and delivered to the Trustee an Indenture dated as of November 1, 1991 (hereinafter called the "Original Indenture"), providing for the issuance from time to time of one or more series of securities (herein called the "Debt Securities"). The Company desires and has requested the Trustee pursuant to Section 901(5) of the Original Indenture to join with it in the execution and delivery of this Indenture in order to amend the Original Indenture in a First Supplemental Indenture as set forth herein with respect solely to series of Debt Securities created and issued on or after the date hereof. Section 901(5) of the Original Indenture provides that a supplemental indenture may be entered into by the Company and the Trustee without the consent of any Holders to change or eliminate any of the provisions of the Original Indenture, provided that any such change or elimination (a) shall become effective only when there is no Debt Security Outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision or (b) shall not apply to any Debt Security Outstanding. All things necessary to make this Indenture a valid agreement of the Company and the Trustee and a valid amendment to the Original Indenture have been done. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Debt Securities of any series created and issued on or after the date hereof by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Debt Securities of any such series: (a) that the definitions in Section 101 of "Controlled Subsidiary" and "Voting Stock" are hereby deleted; (b) that Subsections (1) and (2) of Section 501, "Events of Default", are hereby amended to read in full as follows: "(1) the entry of a decree or order for relief in respect of the Company by a court having jurisdiction in the promises in an involuntary case under the Federal bankruptcy laws, as now or hereafter constituted, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; or (2) the commencement by the Company of a voluntary case under the Federal bankruptcy laws, as now or hereafter constituted, or the consent by the Company to the entry of a decree or order for relief in an involuntary case under any such law; or"; (c) that the first sentence of Section 902 is hereby amended to delete the first proviso therein relating to changes in the required ownership set forth in the definition of Controlled Subsidiary in Section 101; (d) that Section 1005, "Limitation on Disposition of Voting Stock of, and Merger and Sale of Assets by, the Bank" is hereby deleted; and (e) that nothing in this Indenture shall: (i) apply to, or alter the rights and remedies conferred by the Original Indenture upon, Debt Securities of any series created and issued prior to the date hereof or (ii) affect the rights, remedies and duties of the Trustee under the Original Indenture with respect to such Debt Securities. IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. BANKAMERICA CORPORATION By:/S/ S.M. MAGUIRE -------------------------- Vice President [Corporate Seal] Attest: /S/ [ILLEGIBLE] - -------------------------- Secretary CHEMICAL TRUST COMPANY OF CALIFORNIA By:/S/ JAMES DEWHIRST -------------------------- Assistant Vice President [Corporate Seal] Attest: /S/ [ILLEGIBLE] - -------------------------- Asst. Secretary STATE OF CALIFORNIA ) ) ss. CITY AND COUNTY OF SAN FRANCISCO ) On this 14th day of September, 1992 before me, a notary public in and for said State, personally appeared SHAUN M. MAGUIRE, known to me to be a vice president of BANKAMERICA CORPORATION, one of the corporations that executed the within instrument, and also known to me to be the person who executed it on behalf of said corporation, and acknowledged to me that such corporation executed the within instrument. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written. /s/ Daysi Bermudez ---------------------------- [NOTARIAL SEAL] NOTARY PUBLIC in and for the State of California with principal office in the City and County of San Francisco My Commission Expires 10-7-94 STATE OF CALIFORNIA ) ) ss. CITY AND COUNTY OF SAN FRANCISCO ) On this 14th day of September, 1992 before me, a notary public in and for said State, personally appeared James Dewhirst, known to me to be an assistant vice president of CHEMICAL TRUST COMPANY OF CALIFORNIA, one of the corporations that executed the within instrument, and also known to me to be the person who executed it on behalf of said corporation, and acknowledged to me that such corporation executed the within instrument. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written. /s/ Margaret Walsh ---------------------------- [NOTARIAL SEAL] NOTARY PUBLIC in and for the State of California with principal office in the City and County of San Francisco My Commission Expires 9/30/94 - -------------------------------------------------------------------------------- BankAmerica Corporation NationsBank (DE) Corporation - -------------------------------------------------------------------------------- SECOND SUPPLEMENTAL INDENTURE Dated as of September 15, 1998 Supplementing the Indenture, dated as of November 1, 1991, between BankAmerica Corporation and Chase Manhattan Bank and Trust Company, National Association (successor to Manufacturers Hanover Trust Company of California), as Trustee - -------------------------------------------------------------------------------- SECOND SUPPLEMENTAL INDENTURE, dated as of September 15, 1998 (the "Second Supplemental Indenture"), among NationsBank (DE) Corporation, a Delaware corporation ("NationsBank (DE)") and a direct wholly owned subsidiary of NationsBank Corporation, a North Carolina corporation ("NationsBank"), BankAmerica Corporation, a Delaware corporation ("BankAmerica"), and Chase Manhattan Bank and Trust Company, National Association (successor to Manufacturers Hanover Trust Company of California), as Trustee (the "Trustee") under the Indenture referred to herein; WHEREAS, BankAmerica and the Trustee heretofore executed and delivered an Indenture, dated as of November 1, 1991, as amended by a First Supplemental Indenture dated as of September 8, 1992 (the "Indenture"); and WHEREAS, pursuant to the Indenture BankAmerica issued and the Trustee authenticated and delivered one or more series of BankAmerica's Notes (the "Securities"); and WHEREAS, NationsBank and BankAmerica have entered into the Agreement and Plan of Reorganization, dated as of April 10, 1998, pursuant to which (i) NationsBank will merge (the "Reincorporation Merger") with and into NationsBank (DE), in accordance with the terms and conditions of the Plan of Reincorporation Merger by and between NationsBank and NationsBank (DE), dated as of August 3, 1998, with NationsBank (DE) as the surviving corporation in the Reincorporation Merger, and (ii) BankAmerica will thereafter merge (the "Merger," and together with the Reincorporation Merger, the "Reorganization") with and into NationsBank (DE), with NationsBank (DE) as the surviving corporation in the Merger; and WHEREAS, the Reorganization is expected to be consummated on September 30, 1998; and WHEREAS, Section 801 of the Indenture provides that in the case of the Reorganization, NationsBank (DE) shall expressly assume by supplemental indenture all the obligations under the Securities and the Indenture on the part of BankAmerica to be performed or observed; and WHEREAS, Section 1414 of the Indenture requires that, as a result of the Reorganization, a supplemental indenture be entered into providing that the Holder of each Security then Outstanding shall have the right thereafter to receive securities of NationsBank (DE) on the Capital Exchange Date for such Security with a Market Value equal to the principal amount of such Security; and WHEREAS, Section 901(1) of the Indenture provides that BankAmerica and the Trustee may amend the Indenture and the Securities without notice to or consent of any Holders of the Securities in order to comply with Article Eight of the Indenture; and 2 WHEREAS, Section 901(9) of the Indenture provides that BankAmerica and the Trustee may amend the Indenture and the Securities without notice to or consent of any Holders of the Securities in order to make provisions with respect to matters arising under the Indenture which shall not be inconsistent with any provision in the Indenture, provided such provisions shall not adversely affect the interests of the Holders of Securities of any series or any related coupons in any material respect; and WHEREAS, this Second Supplemental Indenture has been duly authorized by all necessary corporate action on the part of each of NationsBank (DE) and BankAmerica. NOW, THEREFORE, NationsBank (DE), BankAmerica and the Trustee agree as follows for the equal and ratable benefit of the Holders of the Securities: ARTICLE I ASSUMPTION BY SUCCESSOR CORPORATION SECTION 1.1. Assumption of the Securities. NationsBank (DE) hereby expressly assumes the due and punctual payment of the principal of (and premium, if any) and interest (including all additional amounts, if any, payable pursuant to Section 1006) on all the Securities and any related coupons and the performance of every covenant of the Indenture on the part of BankAmerica to be performed or observed. SECTION 1.2. Trustee's Acceptance. The Trustee hereby accepts this Second Supplemental Indenture and agrees to perform the same under the terms and conditions set forth in the Indenture. SECTION 1.3. Rights of Certain Holders in the Event of an Exchange Date. The Holder of each Security Outstanding on the date of the consummation of the Merger shall have the right thereafter to receive securities of NationsBank (DE) on the Capital Exchange Date for such Security with a Market Value equal to the principal amount of such Security. ARTICLE II MISCELLANEOUS SECTION 2.1. Effect of Supplemental Indenture. Upon the later to occur of (i) the execution and delivery of this Second Supplemental Indenture by NationsBank (DE), BankAmerica and the Trustee and (ii) the consummation of the Reorganization, the Indenture shall be supplemented in accordance herewith, and this Second Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Securities heretofore or hereafter authenticated and delivered under the Indenture shall be bound thereby. 3 SECTION 2.2. Indenture Remains in Full Force and Effect. Except as supplemented hereby, all provisions in the Indenture shall remain in full force and effect. SECTION 2.3. Indenture and Supplemental Indenture Construed Together. This Second Supplemental Indenture is an indenture supplemental to and in implementation of the Indenture, and the Indenture and this Second Supplemental Indenture shall henceforth be read and construed together. SECTION 2.4. Confirmation and Preservation of Indenture. The Indenture as supplemented by this Second Supplemental Indenture is in all respects confirmed and preserved. SECTION 2.5. Conflict with Trust Indenture Act. If any provision of this Second Supplemental Indenture limits, qualifies or conflicts with any provision of the Trust Indenture Act ("TIA") that is required under the TIA to be part of and govern any provision of this Second Supplemental Indenture, the provision of the TIA shall control. If any provision of this Second Supplemental Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the provision of the TIA shall be deemed to apply to the Indenture as so modified or to be excluded by this Second Supplemental Indenture, as the case may be. SECTION 2.6. Severability. In case any provision in this Second Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 2.7. Terms Defined in the Indenture. All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Indenture. SECTION 2.8. Headings. The Article and Section headings of this Second Supplemental Indenture have been inserted for convenience of reference only, are not to be considered part of this Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof. SECTION 2.9. Benefits of Second Supplemental Indenture, etc. Nothing in this Second Supplemental Indenture or the Securities, express or implied, shall give to any Person, other than the parties hereto and thereto and their successors hereunder and thereunder and the Holders of the Securities, any benefit of any legal or equitable right, remedy or claim under the Indenture, this Second Supplemental Indenture or the Securities. SECTION 2.10. Successors. All agreements of NationsBank (DE) in this Second Supplemental Indenture shall bind its successors. All agreements of the Trustee in this Second Supplemental Indenture shall bind its successors. 4 SECTION 2.11. Trustee Not Responsible for Recitals. The recitals contained herein shall be taken as the statements of BankAmerica and NationsBank (DE), and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to, and shall not be responsible for, the validity or sufficiency of this Second Supplemental Indenture. SECTION 2.12. Certain Duties and Responsibilities of the Trustees. In entering into this Second Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture relating to the conduct or affecting the liability or affording protection to the Trustee, whether or not elsewhere herein so provided. SECTION 2.13. Governing Law. This Second Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the jurisdiction which govern the Indenture and its construction. SECTION 2.14. Counterpart originals. The parties may sign any number of copies of this Second Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 5 IN WITNESS WHEREOF, the parties have caused this Second Supplemental Indenture to be duly executed as of the date first written above. NationsBank (DE) Corporation By: /s/ John E. Mack --------------------------------- Name: John E. Mack Title: Senior Vice President Attest: /s/ James W. Kiser - ----------------------------- Secretary BankAmerica Corporation By: /s/ S.M. Maguire --------------------------------- Name: S.M. Maguire Title: Senior Vice President and Assistant Treasurer Attest: /s/ Cheryl Sorokin - ----------------------------- Secretary Chase Manhattan Bank and Trust Company, National Association, as Trustee By: /s/ James Nagy --------------------------------- Name: James Nagy Title: Assistant Vice President Attest: [illegible signature] - ----------------------------- Assistant Vice President 6 EX-4 14 EXHIBIT 4(X) [CONFORMED COPY] ================================================================================ BANKAMERICA CORPORATION TO BANKERS TRUST COMPANY OF CALIFORNIA, NATIONAL ASSOCIATION, Trustee ---------- INDENTURE Dated as of November 1, 1991 ---------- Senior Debt Securities ================================================================================ BANKAMERICA CORPORATION Reconciliation and tie between Trust Indenture Act of 1939 and Indenture, dated as of November 1, 1991 Trust Indenture Act Section Indenture Section ss. 310(a)(1) .............................................. 609 (a)(2) .............................................. 609 (a)(3) .............................................. Not Applicable (a)(4) .............................................. Not Applicable (a)(5) .............................................. 609 (b) ................................................. 608 610 (c) ................................................. Not Applicable ss. 311(a) ................................................. 613(a) (b) ................................................. 613(b) (b)(2) .............................................. 703(a)(3) 703(b) ss. 312(a) ................................................. 701 702(a) (b) ................................................. 702(b) (c) ................................................. 702(c) ss. 313(a) ................................................. 703(a) (b) ................................................. 703(b) (c) ................................................. 703(c) (d) ................................................. 703(d) ss. 314(a) ................................................. 704, 1007 (b) ................................................. Not Applicable (c)(1) .............................................. 102 (c)(2) .............................................. 102 (c)(3) .............................................. Not Applicable (d) ................................................. Not Applicable (e) ................................................. 102 ss. 315(a) ................................................. 601(a) 601(c) (b) ................................................. 602 703(a)(7) (c) ................................................. 601(b) (d) ................................................. 601(c) (d)(1) .............................................. 601(a) (d)(2) .............................................. 601(c)(2) (d)(3) .............................................. 601(c)(3) (e) ................................................. 514 ss. 316(a) ................................................. 101 (a)(1)(A) ........................................... 104(h), 502 512 (a)(1)(B) ........................................... 104(h), 513 (a)(2) .............................................. Not Applicable (b) ................................................. 508 (c) ................................................. 104(h) ss.317 (a)(1) .............................................. 503 (a)(2) .............................................. 504 (b) ................................................. 1003 ss. 318(a) ................................................. 107 (c) ................................................. 107 - ---------- Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture. i TABLE OF CONTENTS
Page ---- PARTIES ................................................................................................... 1 RECITALS .................................................................................................. 1 ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 101. Definitions: Act ......................................................................................... 1 Affiliate; control; controlling; controlled ................................................. 1 Authorized Newspaper ........................................................................ 2 Bank ........................................................................................ 2 Bearer Security ............................................................................. 2 Board of Directors .......................................................................... 2 Board Resolution ............................................................................ 2 Business Day ................................................................................ 2 CEDEL; CEDEL S.A. ........................................................................... 2 Commission .................................................................................. 2 Company ..................................................................................... 2 Company Request; Company Order .............................................................. 2 Controlled Subsidiary ....................................................................... 2 Corporate Trust Office ...................................................................... 2 Corporation ................................................................................. 2 Coupon ...................................................................................... 2 Debt Securities ............................................................................. 2 Defaulted Interest .......................................................................... 2 Depositary .................................................................................. 2 Designated Currency ......................................................................... 3 Dollar ...................................................................................... 3 ECU ......................................................................................... 3 Eligible Instruments ........................................................................ 3 Euroclear ................................................................................... 3 European Communities ........................................................................ 3 Event of Default ............................................................................ 3 Exchange Rate ............................................................................... 3 Exchange Rate Agent ......................................................................... 3 Exchange Rate Office's Certificate .......................................................... 3 Foreign Currency ............................................................................ 3 Global Exchange Agent ....................................................................... 3 Global Exchange Date ........................................................................ 3 Global Security ............................................................................. 3 Holder ...................................................................................... 3 Indenture ................................................................................... 3 Interest .................................................................................... 3 Interest Payment Date ....................................................................... 3 Maturity .................................................................................... 4 Officers' Certificate ....................................................................... 4 Opinion of Counsel .......................................................................... 4 Original Issue Discount Security ............................................................ 4
- ---------- Note: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture. ii
Page ---- Outstanding ................................................................................. 4 Paying Agent ................................................................................ 4 Person ...................................................................................... 4 Place of Payment ............................................................................ 4 Predecessor Security ........................................................................ 4 Redemption Date ............................................................................. 5 Redemption Price ............................................................................ 5 Registered Security ......................................................................... 5 Regular Record Date ......................................................................... 5 Remarketing Entity .......................................................................... 5 Repayment Date .............................................................................. 5 Repayment Price ............................................................................. 5 Responsible Officer ......................................................................... 5 Security Register, Security Registrar ....................................................... 5 Special Record Date ......................................................................... 5 Stated Maturity ............................................................................. 5 Trust Indenture Act ......................................................................... 5 Trustee ..................................................................................... 5 United States ............................................................................... 5 United States Mien .......................................................................... 5 U.S. Government Obligations ................................................................. 5 Voting Stock ................................................................................ 6 SECTION 102. Compliance Certificates and Opinions ........................................................ 6 SECTION 103. Form of Documents Delivered to Trustee ...................................................... 6 SECTION 104. Acts of Holders ............................................................................. 6 SECTION 105. Notices, etc., to Trustee and Company ....................................................... 8 SECTION 106. Notice to Holders; Waiver ................................................................... 8 SECTION 107. Conflict with Trust Indenture Act ........................................................... 9 SECTION 108. Effect of Headings and Table of Contents .................................................... 9 SECTION 109. Successors and Assigns ...................................................................... 9 SECTION 110. Separability Clause ......................................................................... 9 SECTION 1ll. Benefits of Indenture ....................................................................... 9 SECTION 112. Governing Law ............................................................................... 9 SECTION 113. Legal Holidays .............................................................................. 9 SECTION 114. Counterparts ................................................................................ 9 ARTICLE TWO DEBT SECURITY FORMS SECTION 201. Fawn Generally .............................................................................. 9 SECTION 202. Form of Trustee's Certificate of Authentication ............................................. 10 SECTION 203. Debt Securities in Global Form .............................................................. 10 ARTICLE THREE THE Den SECURITIES SECTION 301. Amount Unlimited, Issuable in Series ........................................................ 11 SECTION 302. Denominations ............................................................................... 13 SECTION 303. Execution, Authentication, Delivery and Dating .............................................. 13 SECTION 304. Temporary Debt Securities ................................................................... 15 SECTION 305. Registration; Registration of Transfer and Exchange ......................................... 17 SECTION 306. Mutilated, Destroyed, Lost and Stolen Debt Securities ....................................... 19
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Page ---- SECTION 307. Payment of Interest; Interest Rights Preserved .............................................. 20 SECTION 308. Persons Deemed Owners ....................................................................... 21 SECTION 309. Cancellation ................................................................................ 21 SECTION 310. Computation of Interest ..................................................................... 22 SECTION 311. Certification by a Person Entitled to Delivery of a Bearer Security ......................... 22 SECTION 312. Judgments ................................................................................... 22 ARTICLE FOUR SATISFACTION AND DISCHARGE SECTION 401. Satisfaction and Discharge of Indenture ..................................................... 22 SECTION 402. Application of Trust Money and Eligible Instruments ......................................... 23 ARTICLE FIVE REMEDIES SECTION 501. Events of Default ........................................................................... 23 SECTION 502. Acceleration of Maturity Rescission and Annulment ........................................... 25 SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee ............................. 25 SECTION 504. Trustee May File Proofs of Claim ............................................................ 26 SECTION 505. Trustee May Enforce Claims without Possession of Debt Securities or Coupons ................. 26 SECTION 506. Application of Money Collected .............................................................. 26 SECTION 507. Limitation on Suits ......................................................................... 27 SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest ................... 27 SECTION 509. Restoration of Rights and Remedies .......................................................... 27 SECTION 510. Rights and Remedies Cumulative .............................................................. 28 SECTION 511. Delay or Omission Not Waiver ................................................................ 28 SECTION 512. Control by Holders of Debt Securities ....................................................... 28 SECTION 513. Waiver of Past Defaults ..................................................................... 28 SECTION 514. Undertaking for Costs ....................................................................... 28 SECTION 515. Waiver of Stay or Extension Laws ............................................................ 29 ARTICLE SIX THE TRUSTEE SECTION 601. Certain Duties and Responsibilities ......................................................... 29 SECTION 602. Notice of Defaults .......................................................................... 30 SECTION 603. Certain Rights of Trustee ................................................................... 30 SECTION 604. Not Responsible for Recitals or Issuance of Debt Securities ................................. 31 SECTION 605. May Hold Debt Securities or Coupons ....................................................... 31 SECTION 606. Money Held in Trust ......................................................................... 31 SECTION 607. Compensation and Reimbursement .............................................................. 31 SECTION 608. Disqualification; Conflicting Interests ..................................................... 32 (a) Elimination of Conflicting Interest or Resignation .................................... 32 (b) Notice of Failure to Eliminate Conflicting Interest or Resign ......................... 32 (c) "Conflicting Interest" Defined ........................................................ 32 (d) Definitions of Certain Terms Used in this Section ..................................... 34 (e) Calculation of Percentages of Securities .............................................. 35 (f) Stay of Trustee's Duty to Resign ...................................................... 35 (g) Amendments to Trust Indenture Act ..................................................... 36 SECTION 609. Corporate Trustee Required; Eligibility ..................................................... 36 SECTION 610. Resignation and Removal, Appointment of Successor ........................................... 36 SECTION 611. Acceptance of Appointment by Successor ...................................................... 37
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Page ---- SECTION 612. Merger, Conversion, Consolidation or Succession to Business ................................. 38 SECTION 613. Preferential Collection of Claims Against Company ........................................... 38 (a) Segregation and Apportionment of Certain Collections by Trustee; Certain Exceptions .................................................................. 38 (b) Certain Creditor Relationships Excluded from Segregation and Apportionment ....................................................................... 40 (c) Definitions of Certain Terms Used in this Section ..................................... 40 SECTION 614. Authenticating Agent ........................................................................ 41 ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 701. Company to Furnish Trustee Names and Addresses of Holders ................................... 42 SECTION 702. Preservation of Information; Communications to Holders ...................................... 42 SECTION 703. Reports by Trustee .......................................................................... 43 SECTION 704. Reports by Company .......................................................................... 44 ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 801. Company May Consolidate, etc., Only on Certain Terms ........................................ 45 SECTION 802. Successor Corporation Substituted ........................................................... 45 ARTICLE NINE SUPPLEMENTAL INDENTURES SECTION 901. Supplemental Indentures without Consent of Holders .......................................... 45 SECTION 902. Supplemental Indentures with Consent of Holders ............................................. 46 SECTION 903. Execution of Supplemental Indentures ........................................................ 47 SECTION 904. Effect of Supplemental Indentures ........................................................... 47 SECTION 905. Conformity with Trust Indenture Act ......................................................... 47 SECTION 906. Reference in Debt Securities to Supplemental Indentures ..................................... 47 ARTICLE TEN COVENANTS SECTION 1001. Payment of Principal, Premium and Interest .................................................. 48 SECTION 1002. Maintenance of Office or Agency ............................................................. 48 SECTION 1003. Money for Debt Securities Payments to Be Held in Trust ...................................... 49 SECTION 1004. Limitation on Mortgages and Liens ........................................................... 50 SECTION 1005. Limitation on Disposition of Voting Stock of, and Merger and Sale of Assets by, the Bank .... 50 SECTION 1006. Payment of Additional Amounts ............................................................... 50 SECTION 1007. Officers' Certificate as to Default ......................................................... 51 SECTION 1008. Waiver of Certain Covenants ................................................................. 51 ARTICLE ELEVEN REDEMPTION OF DEBT SECURITIES SECTION 1101. Applicability of Article .................................................................... 51 SECTION 1102. Election to Redeem; Notice to Trustee ....................................................... 51 SECTION 1103. Selection by Trustee of Debt Securities to Be Redeemed ...................................... 51 SECTION 1104. Notice of Redemption ........................................................................ 52 SECTION 1105. Deposit of Redemption Price ................................................................. 52
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Page ---- SECTION 1106. Debt Securities Payable on Redemption Date .................................................. 53 SECTION 1107. Debt Securities Redeemed in Part ............................................................ 53 ARTICLE TWELVE SINKING FUNDS SECTION 1201. Applicability of Article .................................................................... 53 SECTION 1202. Satisfaction of Sinking Fund Payments with Debt Securities. ................................. 54 SECTION 1203. Redemption of Debt Securities for Sinking Fund .............................................. 54 ARTICLE THIRTEEN REPAYMENT AT THE OPTION OF HOLDERS SECTION 1301. Applicability of Article .................................................................... 54 SECTION 1302. Repayment of Debt Securities ................................................................ 54 SECTION 1303. Exercise of Option; Notice .................................................................. 54 SECTION 1304. Election of Repayment by Remarketing Entities ............................................... 55 SECTION 1305. Debt Securities Payable on the Repayment Date ARTICLE FOURTEEN MEETINGS OF HOLDERS OF DEBT SECURITIES SECTION 1401. Purposes for Which Meetings May Be Called ................................................... 56 SECTION 1402. Call, Notice and Place of Meetings .......................................................... 56 SECTION 1403. Persons Entitled to Vote at Meetings ........................................................ 56 SECTION 1404. Quorum; Action .............................................................................. 56 SECTION 1405. Determination of Voting Rights; Conduct and Adjournment of Meetings ......................... 57 SECTION 1406. Counting Votes and Recording Action of Meetings ............................................. 58 ARTICLE FIFTEEN DEFEASANCE SECTION 1501. Termination of Company's Obligations ........................................................ 58 SECTION 1502. Repayment to Company ........................................................................ 59 SECTION 1503. Indemnity for Eligible Instruments .......................................................... 59 TESTIMONIUM ............................................................................................... 60 SIGNATURES AND SEALS ...................................................................................... 60 ACKNOWLEDGEMENTS .......................................................................................... 61 EXHIBIT A ................................................................................................. A-1 EXHIBIT B ................................................................................................. B-1
INDENTURE (the "Indenture") dated as of November 1, 1991, between BANKAMERICA CORPORATION, a Delaware corporation (hereinafter called the "Company"), having its principal place of business at Bank of America Center, 555 California Street, San Francisco, California 94104 and Bankers Trust Company of California, National Association, a national banking association (hereinafter called the "Trustee"), having its Corporate Trust Office at 50 Fremont Street, San Francisco, California 94105. RECITALS OF THE COMPANY The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its debentures, notes, bonds and other evidences of indebtedness (herein called the "Debt Securities"). All things necessary have been done to make this Indenture a valid agreement of the Company, in accordance with its terms. Now, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Debt Securities of any series created and issued on or after the date hereof by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of such Debt Securities or of any such series, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 101. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act or by Commission rule or regulation under the Trust Indenture Act, either directly or by reference therein, as in force at the date as of which this instrument was executed, except as provided in Section 905, have the meanings assigned to them therein; (3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and, except as otherwise herein expressly provided, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted in the United States at the date of such computation; and (4) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. Certain terms, used principally in Article Six, are defined in that Article. "Act" when used with respect to any Holder has the meaning specified in Section 104. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. 2 "Authorized Newspaper" means a newspaper in an official language of the country of publication or in the English language customarily published on each Business Day, whether or not published on Saturdays, Sundays or holidays, and of general circulation in the place in connection with which the term is used or in the financial community of such place. Where successive publications are required to be made in Authorized Newspapers, the successive publications may be made in the same or in different newspapers in the same city meeting the foregoing requirements and in each case on any Business Day. "Bank" means Bank of America National Trust and Savings Association, a national banking association, and any successors to any substantial part of the present business thereof. "Bearer Security" means any Debt Security established pursuant to Section 201 which is payable to bearer including, without limitation, unless the context otherwise indicates, a Debt Security in global bearer form. "Board of Directors" means either the board of directors of the Company, or the executive or any other committee of that board duly authorized to act in respect hereof. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day", when used with respect to any Place of Payment, means any day which is not a Saturday or Sunday and which is not a legal holiday or a day on which banking institutions or trust companies in that Place of Payment are authorized or obligated by law or executive order to close. "CEDEL" or "CEDEL S.A." means Centrale de Livraison de Valeurs Mobilieres S.A. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, or if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. "Company Request" and "Company Order" mean, respectively, a written request or order signed in the name of the Company by the Chairman of the Board, the Chairman of the Executive Committee of the Board, a Vice Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, a Vice Chairman or a Vice President (any reference to a Vice President of the Company herein shall be deemed to include any Vice President of the Company whether or not designated by a number or word or words added before or after the title "Vice President"), and by the Treasurer, an Assistant Treasurer, Secretary or an Assistant Secretary of the Company, and delivered to the Trustee. "Controlled Subsidiary" means any corporation more than 80% of the outstanding shares of Voting Stock, except for directors' qualifying shares, of which shall at the time be owned directly by the Company. "Corporate Trust Office" means the principal corporate trust office of the Trustee at which at any particular time its corporate trust business shall be administered. The term "corporation" includes corporations, associations, companies and business trusts. The term "coupon" means any interest coupon appertaining to a Bearer Security. "Debt Securities" has the meaning stated in the first recital of this Indenture and more particularly means any Debt Securities authenticated and delivered under this Indenture. "Defaulted Interest" has the meaning specified in Section 307. "Depositary" means, respect to the Debt Securities of any series issuable or issued in the form of a Global Security, the Person designated as Depositary by the Company pursuant to Section 301 until a successor Depositary shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Depositary" shall 3 mean or include each Person who is then a Depositary hereunder, and if at any time there is more than one such Person, "Depositary" as used with respect to the Debt Securities of any such series shall mean the Depositary with respect to the Debt Securities of that series. "Designated Currency" has the meaning specified in Section 312. "Dollar" or "$" means the coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts. "ECU" means the European Currency Unit as defined and revised from time to time by the Council of the European Communities. "Eligible Instruments" means monetary assets, money market instruments and securities that are payable in Dollars only and essentially risk free as to collection of principal and interest, including U.S. Government Obligations. "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels Office, as operator of the Euroclear System. "European Communities" means the European Economic Community, the European Coal and Steel Community and the European Atomic Energy Community. "Event of Default" has the meaning specified in Section 501. "Exchange Rate" shall have the meaning specified as contemplated in Section 301. "Exchange Rate Agent" shall have the meaning specified as contemplated in Section 301. "Exchange Rate Officer's Certificate", with respect to any date for the payment of principal of (and premium, if any) and interest on any series of Debt Securities, means a certificate setting forth the applicable Exchange Rate and the amounts payable in Dollars and Foreign Currencies in respect of the principal of (and premium, if any) and interest on Debt Securities denominated in ECU, and other composite currency or Foreign Currency, and signed by the Chairman of the Board, the Chairman of the Executive Committee of the Board, a Vice Chairman of the Board, the President, the Treasurer or any Assistant Treasurer of the Company or the Exchange Rate Agent appointed pursuant to Section 301 and delivered to the Trustee. "Foreign Currency" means a currency issued by the government of any country other than the United States of America. "Global Exchange Agent" has the meaning specified in Section 304. "Global Exchange Date" has the meaning specified in Section 304. "Global Security" means a Debt Security issued to evidence all or a part of a series of Debt Securities in accordance with Section 303. "Holder", with respect to a Registered Security, means a Person in whose name such Registered Security is registered in the Security Register and, with respect to a Bearer Security or a coupon, means the bearer thereof. "Indenture" means this instrument as originally executed or as it may from time to time be supplemented, amended or restated by or pursuant to one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and, unless the context otherwise requires, shall include the terms of a particular series of Debt Securities established as contemplated by Section 301. The term "interest", when used with respect to an Original Issue Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity. "Interest Payment Date", with respect to any Debt Security, means the Stated Maturity of an instalment of interest on such Debt Security. 4 "Maturity", when used with respect to any Debt Security, means the date on which the principal of such Debt Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption, repayment at the option of the Holder or otherwise. "Officers' Certificate" means a certificate signed by the Chairman of the Board, the Chairman of the Executive Committee of the Board, a Vice Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, a Vice Chairman or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, and delivered to the Trustee. "Opinion of Counsel" means a written opinion of counsel, who may (except as otherwise expressly provided in this Indenture) be counsel for the Company, or who may be other counsel acceptable to the Trustee, which is delivered to the Trustee. "Original Issue Discount Security" means any Debt Security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502. "Outstanding", when used with respect to Debt Securities means, as of the date of determination, all Debt Securities theretofore authenticated and delivered under this Indenture, except: (i) Debt Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (ii) Debt Securities or portions thereof for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Debt Securities and any coupons appertaining thereto; provided, however, that if such Debt Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and (iii) Debt Securities in exchange for or in lieu of which other Debt Securities have been authenticated and delivered, or which have been paid, pursuant to this Indenture; provided, however, that in determining whether the Holders of the requisite principal amount of Debt Securities Outstanding have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Debt Securities owned by the Company or any other obligor upon the Debt Securities or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon such request, demand, authorization, direction, notice, consent or waiver, only Debt Securities which the Trustee knows to be so owned shall be so disregarded. Debt Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Debt Securities and that the pledgee is not the Company or any other obligor upon the Debt Securities or any Affiliate of the Company or of such other obligor. "Paying Agent" means any Person authorized by the Company to pay the principal of (and premium, if any) or interest on any Debt Securities on behalf of the Company. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Place of Payment", when used with respect to the Debt Securities of any series means any place where the principal of (and premium, if any) and interest on the Debt Securities of that series are payable as specified as contemplated by Section 301. "Predecessor Security" of any particular Debt Security means every previous Debt Security evidencing all or a portion of the same debt as that evidenced by such particular Debt Security; and, for the purposes of this definition, any Debt Security authenticated and delivered under Section 306 in lieu of a lost, destroyed or stolen Debt Security shall be deemed to evidence the same debt as the lost, destroyed or stolen Debt Security. 5 "Redemption Date", when used with respect to any Debt Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price", when used with respect to any Debt Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. "Registered Security" means any Debt Security in the form of Registered Securities established pursuant to Section 201 which is registered in the Security Register. "Regular Record Date" for the interest payable on any Interest Payment Date on the Registered Securities of any series means the date specified for that purpose as contemplated by Section 301. "Remarketing Entity", when used with respect to Debt Securities of any series which are repayable at the option of the Holders thereof before their Stated Maturity, means any person designated by the Company to purchase any such Debt Securities. "Repayment Date", when used with respect to any Debt Security to be repaid upon exercise of option for repayment by the Holder, means the date fixed for such repayment pursuant to this Indenture. "Repayment Price", when used with respect to any Debt Security to be repaid upon exercise of option for repayment by the Holder, means the price at which it is to be repaid pursuant to this Indenture. "Responsible Officer", when used with respect to the Trustee means the chairman or any vice-chairman of the board of directors, the chairman or any vice-chairman of the executive committee of the board of directors, the chairman of the trust committee, the president, any vice president (whether or not designated by a number or a word or words added before or after the title "vice president"), the secretary, any assistant secretary, the treasurer, any assistant treasurer, the cashier, any assistant cashier, any trust officer or assistant trust officer, the controller or any assistant controller or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of such officer's knowledge of and familiarity with the particular subject. "Security Register" and "Security Registrar" have the respective meanings specified in Section 305. "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 307. "Stated Maturity", when used with respect to any Debt Security or any instalment of interest thereon, means the date specified in such Debt Security or a coupon representing such instalment of interest as the fixed date on which the principal of such Debt Security or such instalment of interest is due and payable. "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed, except as provided in Section 905. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person who is then a Trustee hereunder, and if at any time there is more than one such Person, "Trustee" as used with respect to the Debt Securities of any series shall mean the Trustee with respect to Debt Securities of that series. "United States" means the United States of America (including the District of Columbia) and its possessions. "United States Alien" means any Person who, for United States Federal income tax purposes, is a foreign corporation, a non-resident alien individual, a non-resident alien fiduciary of a foreign estate or trust, or a foreign partnership one or more of the members of which is, for United States Federal income tax purposes, a foreign corporation, a non-resident alien individual or a non-resident alien fiduciary of a foreign estate or trust. "U.S. Government Obligations" means direct obligations of the United States for the payment of which its full faith and credit is pledged, or obligations of a person controlled or supervised by and acting as an agency or 6 instrumentality of the United States the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States. "Voting Stock", as applied to the stock (or the equivalent thereof) of any corporation, means stock (or the equivalent thereof) of any class or classes, however designated, having ordinary voting power for the election of a majority of the directors of such corporation, other than stock (or such equivalent) having such power only by reason of the happening of a contingency. SECTION 102. Compliance Certificates and Opinions. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture (other than the delivery of any Debt Security to the Trustee for authentication pursuant to Section 303), the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than certificates provided pursuant to Section 704(4)) shall include (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. SECTION 103. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his or her certificate or opinion is based is erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters is erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION 104. Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of 7 substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing. If Debt Securities of a series are issuable in whole or in part as Bearer Securities, any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may, alternatively, be embodied in and evidenced by the record of Holders of Debt Securities voting in favor thereof, either in person or by proxies duly appointed in writing, at any meeting of Holders of Debt Securities duly called and held in accordance with the provisions of Article Fourteen, or a combination of such instruments and any such record. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or record or both are delivered to the Trustee, and, where it is hereby expressly required, to the Company. Such instrument or instruments and any such record (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments and so voting at any such meeting. Proof of execution of any such instrument or of a writing appointing any such agent, or the holding by any Person of a Debt Security, shall be sufficient for any purpose of this Indenture and (subject to Section 601) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. The record of any meeting of Holders of Debt Securities shall be proved in the manner provided in Section 1406. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved in any manner which the Trustee deems sufficient. (c) The ownership of Registered Securities shall be proved by the Security Register. (d) The principal amount and serial numbers of Bearer Securities held by any Person, and the date of holding the same, may be proved by the production of such Bearer Securities or by a certificate executed, as depositary, by any trust company, bank, banker or other depositary, wherever situated, if such certificate shall be deemed by the Trustee to be satisfactory, showing that at the date therein mentioned such Person had on deposit with such depositary, or exhibited to it, the Bearer Securities in the amount and with the serial numbers therein described; or such facts may be proved by the certificate or affidavit of the Person holding such Bearer Securities, if such certificate or affidavit is deemed by the Trustee to be satisfactory. The Trustee and the Company may assume that such ownership of any Bearer Security continues until (1) another certificate or affidavit bearing a later date issued in respect of the same Bearer Security is produced, or (2) such Bearer Security is produced to the Trustee by some other Person, or (3) such Bearer Security is surrendered in exchange for a Registered Security, or (4) such Bearer Security is no longer Outstanding. (e) The fact and date of execution of any such instrument or writing, the authority of the Person executing the same and the principal amount and serial numbers of Bearer Securities held by the Person so executing such instrument or writing and the date of holding the same may also be proved in any other manner which the Trustee deems sufficient; and the Trustee may in any instance require further proof with respect to any of the matters referred to in this Section. (f) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Debt Security shall bind every future holder of the same Debt Security and the Holder of every Debt Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, suffered or omitted by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Debt Security. (g) For purposes of determining the principal amount of Outstanding Debt Securities of any series the Holders of which are required, requested or permitted to give any request, demand, authorization, direction, notice, consent, waiver or take any other Act under this Indenture, (i) each Original Issue Discount Security shall be deemed to have the principal amount determined by the Trustee that could be declared to be due and payable pursuant to the terms of such Original Issue Discount Security as of the date there is delivered to the Trustee and, where it is hereby expressly required, to the Company, such Act by Holders of the required aggregate principal amount of the Outstanding Debt Securities of such series and (ii) each Debt Security denominated in a Foreign Currency or composite currency shall be deemed to have the principal amount determined by the Exchange Rate Agent by converting the principal amount of such Debt Security in the currency in which such Debt Security is denominated into Dollars at the Exchange Rate as of the date such Act is delivered to the Trustee and, where it is hereby expressly required, to the Company, by Holders of the required aggregate principal amount of the Outstanding Debt 8 Securities of such series (or, if there is no such rate on such date, such rate on the date determined as specified as contemplated in Section 301). (h) The Company may set a record date for purposes of determining the identity of Holders of Debt Securities of any series entitled to vote or consent to any action by vote or consent authorized or permitted by Section 512 or Section 513. Such record date shall be the later of 30 days prior to the first solicitation of such consent or the date of the most recent list of Holders of such Debt Securities furnished to the Trustee pursuant to Section 701 prior to such solicitation. SECTION 105. Notices, etc., to Trustee and Company. Any request, demand, authorization, direction, notice, consent, waiver or other Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided), if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, Attention: Corporate Trust Department, or (2) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to the attention of its Secretary at the address of its principal office specified in the first paragraph of this instrument or at any other address previously furnished in writing to the Trustee by the Company. SECTION 106. Notice to Holders: Waiver. Except as otherwise expressly provided herein, where this Indenture provides for notice to Holders of any event, (1) such notice shall be sufficiently given to Holders of Registered Securities if in writing and mailed, first-class postage prepaid, to each Holder of a Registered Security affected by such event, at such Holder's address as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice; and (2) such notice shall be sufficiently given to Holders of Bearer Securities by publication thereof in an Authorized Newspaper in the City of New York and, if the Debt Securities of such series are then listed on The International Stock Exchange of the United Kingdom and the Republic of Ireland and such stock exchange shall so require, in London, and, if the Debt Securities of such series are then listed on the Luxembourg Stock Exchange and such stock exchange shall so require, in Luxembourg and, if the Debt Securities of such series are then listed on any other stock exchange outside the United States and such stock exchange shall so require, in any other required city outside the United States or, if not practicable, in Europe on a Business Day at least twice, the first such publication to be not earlier than the earliest date and not later than the latest date prescribed for the giving of such notice. In case, by reason of the suspension of or irregularities in regular mail service or for any other reason, it shall be impossible or impracticable to mail notice of any event to Holders when said notice is required to be given pursuant to any provision of this Indenture or of the Debt Securities, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. In any case where notice to Holders of Registered Securities is to be given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder of a Registered Security shall affect the sufficiency of such notice with respect to other Holders of Registered Securities or the sufficiency of any notice by publication to Holders of Bearer Securities given as provided above. In case, by reason of the suspension of publication of any Authorized Newspaper, or by reason of any other cause, it shall be impossible or impracticable to make publication of any notice to Holders of Bearer Securities as provided above, then such method of publication or notification as shall be made with the approval of the Trustee shall constitute a sufficient publication of such notice. Neither failure to give notice by publication to Holders of Bearer Securities as provided above, nor any defect in any notice so published, shall affect the sufficiency of any notice mailed to Holders of Registered Securities as provided above. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such 9 notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. Any request, demand, authorization, direction, notice, consent, election, waiver or other Act required or permitted under this Indenture shall be in the English language, except that any published notice may be in an official language of the country of publication. SECTION 107. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control. SECTION 108. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 109. Successors and Assigns. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether expressed or not. SECTION 110. Separability Clause. In case any provision in this Indenture or in the Debt Securities or coupons shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 111. Benefits of Indenture. Nothing in this Indenture or in the Debt Securities or coupons, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any Paying Agent and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 112. Governing Law. This Indenture and the Debt Securities and coupons shall be governed by and construed in accordance with the laws of the State of California. SECTION 113. Legal Holidays. In any case where any Interest Payment Date, Redemption Date, Repayment Date or Stated Maturity of any Debt Security shall not be a Business Day at any Place of Payment, then (notwithstanding any other provision of this Indenture or of the Debt Securities or coupons) payment of interest or principal (and premium, if any) need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date, Redemption Date, Repayment Date or Stated Maturity, and no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date, Repayment Date or Stated Maturity, as the case may be. SECTION 114. Counterparts. This Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Indenture. ARTICLE TWO DEBT SECURITY FORMS SECTION 201. Forms Generally. The Registered Securities, if any, and the Bearer Securities and related coupons, if any, of each series shall be in substantially the form (including temporary or permanent global form) as shall be established in or pursuant to a 10 Board Resolution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon, as may be required to comply with the rules of any securities exchange, or as may, consistently herewith, be determined by the officers executing such Debt Securities or coupons, as evidenced by their signatures on the Debt Securities or coupons. If the form of Debt Securities of any series or coupons (including any such Global Security) is established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 303 or the authentication and delivery of such Debt Securities or coupons. Unless otherwise specified as contemplated by Section 301, Debt Securities in bearer form other than Debt Securities in temporary or permanent global form shall have coupons attached. The definitive Debt Securities and coupons, if any, shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Debt Securities, as evidenced by the execution of such Debt Securities and coupons. SECTION 202. Form of Trustee's Certificate of Authentication. This is one of the Debt Securities, of the series designated herein, described in the within-mentioned Indenture. BANKERS TRUST COMPANY OF CALIFORNIA, NATIONAL ASSOCIATION as Trustee By _________________________________ Authorized Officer SECTION 203. Debt Securities in Global Form. If Debt Securities of a series are issuable in whole or in part in global form, as specified as contemplated by Section 301, then, notwithstanding clause (10) of Section 301 and the provisions of Section 302, such Global Security shall represent such of the outstanding Debt Securities of such series as shall be specified therein and may provide that it shall represent the aggregate amount of Outstanding Debt Securities from time to time endorsed thereon and that the aggregate amount of Outstanding Debt Securities represented thereby may from time to time be reduced to reflect exchanges. Any endorsement of a Global Security to reflect the amount, or any increase or decrease in the amount, of Outstanding Debt Securities represented thereby shall be made in such manner and upon instructions given by such Person or Persons as shall be specified therein or in the Company Order to be delivered to the Trustee pursuant to Section 303 or Section 304. The provisions of the last sentence of Section 303(g) shall apply to any Debt Securities represented by a Debt Security in global form if such Debt Security was never issued and sold by the Company and the Company delivers to the Trustee the Debt Security in global form together with written instructions (which need not comply with Section 102 and need not be accompanied by an Opinion of Counsel) with regard to the reduction in the principal amount of Debt Securities represented thereby, together with the written statement contemplated by the last sentence of Section 303(g). Global Securities may be issued in either registered or bearer form and in either temporary or permanent form. 11 ARTICLE THREE THE DEBT SECURITIES SECTION 301. Amount Unlimited: Issuable in Series. The aggregate principal amount of Debt Securities which may be authenticated and delivered under this Indenture is unlimited. The Debt Securities may be issued in one or more series. There shall be established in or pursuant to a Board Resolution, and set forth in an Officers' Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Debt Securities of any series: (1) the title of the Debt Securities of the series (which shall distinguish the Debt Securities of the series from all other Debt Securities); (2) the limit, if any, upon the aggregate principal amount of the Debt Securities of the series which may be authenticated and delivered under this Indenture (except for Debt Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Debt Securities of the series pursuant to Section 304, 305, 306, 906, 1107 or 1303 and except for any Debt Securities which, pursuant to Section 303, are deemed never to have been authenticated and delivered hereunder); (3) the date or dates on which the principal and premium, if any, of the Debt Securities of the series are payable; (4) the rate or rates, if any, at which the Debt Securities of the series shall bear interest, or the method or methods by which such rate or rates may be determined, the date or dates from which such interest shall accrue, the Interest Payment Dates on which such interest shall be payable, the Regular Record Date for the interest payable on any Registered Security on any Interest Payment Date and the circumstances, if any, in which the Company may defer interest payments; (5) the place or places where, subject to the provisions of Section 1002, the principal of (and premium, if any) and interest on Debt Securities of the series shall be payable, any Registered Securities of the series may be surrendered for registration of transfer, Debt Securities of the series may be surrendered for exchange and notices and demands to or upon the Company in respect of the Debt Securities of the series and this Indenture may be served and where notices to Holders pursuant to Section 106 will be published; (6) if applicable, the period or periods within which or the date or dates on which, the price or prices at which and the terms and conditions upon which Debt Securities of the series may be redeemed, in whole or in part, at the option of the Company, (7) the obligation, if any, of the Company to redeem, repay or purchase Debt Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the period or periods within which, the price or prices at which and the terms and conditions upon which Debt Securities of the series shall be redeemed, repaid or purchased, in whole or in part, pursuant to such obligation; (8) whether Debt Securities of the series are to be issuable as Registered Securities, Bearer Securities or both, whether Debt Securities of the series are to be issuable with or without coupons or both and, in the case of Bearer Securities, the date as of which such Bearer Securities shall be dated if other than the date of original issuance of the first Debt Security of such series of like tenor and term to be issued; (9) whether the Debt Securities of the series shall be issued in whole or in part in the form of a Global Security or Securities and, in such case, the Depositary and Global Exchange Agent for such Global Security or Securities, whether such global form shall be permanent or temporary and, if applicable, the Global Exchange Date; (10) if Debt Securities of the series are to be issuable initially in the form of a temporary Global Security, the circumstances under which the temporary Global Security can be exchanged for definitive Debt Securities and whether the definitive Debt Securities will be Registered and/or Bearer Securities and will be in global form and whether interest in respect of any portion of such Global Security payable in respect of an Interest 12 Payment Date prior to the Global Exchange Date shall be paid to any clearing organization with respect to a portion of such Global Security held for its account and, in such event, the terms and conditions (including any certification requirements) upon which any such interest payment received by a clearing organization will be credited to the Persons entitled to interest payable on such Interest Payment Date if other than as provided in this Article Three; (11) whether, and under what conditions, additional amounts will be payable to Holders of Debt Securities of the series pursuant to Section 1006; (12) the denominations in which any Registered Securities of the series shall be issuable, if other than denominations of $1,000 and any integral multiple thereof, and the denominations in which any Bearer Securities of such series, shall be issuable, if other than the denomination of $5,000; (13) if other than the principal amount thereof, the portion of the principal amount of Debt Securities of the series which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 502; (14) the currency or currencies of denomination of the Debt Securities of any series, which may be in Dollars, any Foreign Currency or any composite currency, including but not limited to the ECU, and, if any such currency of denomination is a composite currency other than the ECU, the agency or organization, if any, responsible for overseeing such composite currency; (15) the currency or currencies in which payment of the principal of (and premium, if any) and interest on the Debt Securities will be made, the currency or currencies, if any, in which payment of the principal of (and premium, if any) or the interest on Registered Securities, at the election of each of the Holders thereof, may also be payable and the periods within which and the terms and conditions upon which such election is to be made and the Exchange Rate and Exchange Rate Agent; (16) if the amount of payments of principal of (and premium, if any) or interest on the Debt Securities of the series may be determined with reference to an index based on a currency or currencies other than that in which the Debt Securities are denominated or designated to be payable, the manner in which such amounts shall be determined; (17) if payments of principal of (and premium, if any) or interest on the Debt Securities of the series are to be made in a Foreign Currency other than the currency in which such Debt Securities are denominated, the manner in which the Exchange Rate with respect to such payments shall be determined or if the Exchange Rate is to be determined otherwise than as provided in Section 101; (18) any Events of Default with respect to Debt Securities of such series, if not set forth herein; (19) the terms and conditions, if any, pursuant to which the Company's obligations under this Indenture may be terminated through the deposit of money or Eligible Instruments as provided in Articles Four and Fifteen; (20) the Person or Persons who shall be Security Registrar for the Debt Securities of such series if other than the Trustee, and the place or places where the Security Register for such series shall be maintained and the Person or Persons who will be the initial Paying Agent or Agents, if other than the Trustee; and (21) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture). All Debt Securities of any one series and the coupons appertaining to Bearer Securities of such series, if any, shall be substantially identical except, in the case of Registered Securities, as to denomination and except as may otherwise be provided in or pursuant to such Board Resolution and set forth in such Officers' Certificate or in any such indenture supplemental hereto. Debt Securities of any particular series may be issued at various times, with different dates on which the principal or any instalment of principal is payable, with different rates of interest, if any, or different methods by which rates of interest may be determined, with different dates on which such interest may be payable and with 13 different Redemption or Repayment Dates and may be denominated in different currencies or payable in different currencies. If any of the terms of a series of Debt Securities are established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers' Certificate setting forth the terms of the series. SECTION 302. Denominations. Debt Securities of each series shall be issuable in such form and denominations as shall be specified in the form of Debt Security for such series approved or established pursuant to Section 201 or in the Officers' Certificate delivered pursuant to Section 301. In the absence of any specification with respect to the Debt Securities of any series, the Registered Securities of such series, if any, shall be issuable in denominations of $1,000 and any integral multiple thereof and the Bearer Securities of such series, if any, shall be issuable in the denomination of $5,000. SECTION 303. Execution, Authentication, Delivery and Dating. (a) The Debt Securities shall be executed on behalf of the Company by its Chairman of the Board, the Chairman of the Executive Committee of the Board, a Vice Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, a Vice Chairman or a Vice President, and by its Treasurer or one of its Assistant Treasurers or its Secretary or one of its Assistant Secretaries under its corporate seal reproduced thereon. The signature of any of these officers on the Debt Securities may be manual or facsimile. Coupons shall bear the facsimile signature of the Treasurer or any Assistant Treasurer of the Company. Debt Securities and coupons bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Debt Securities or coupons of any series or did not hold such offices at the date of such Debt Securities or coupons. (b) At any time and from time to time after the execution and delivery of this Indenture, Debt Securities of any series may be executed by the Company and delivered to the Trustee for authentication, and, except as otherwise provided in this Article Three, shall thereupon be authenticated and delivered by the Trustee upon Company Order, without any further action by the Company; provided, however, that, in connection with its original issuance, a Bearer Security may be delivered only outside the United States and, except in the case of a temporary Global Security, only if the Company or its agent shall have received the certification required pursuant to Sections 304(b)(iii) and (iv), unless such certification shall have been provided earlier pursuant to Section 304(b) (v) hereof, and only if the Company has no reason to know that such certification is false. To the extent authorized in or pursuant to a Board Resolution and set forth in an Officers' Certificate, or established in one or more indentures supplemental hereto, such written Company Order may be given by any one officer of the Company, may be electronically transmitted, and may provide instructions as to registration of holders, principal amounts, rates of interest, maturity dates and other matters contemplated by such Board Resolution and Officers' Certificate or supplemental indenture to be so instructed in respect thereof. Before authorizing and delivering the first Debt Securities of any series (and upon request of the Trustee thereafter), the Company shall deliver to the Trustee (i) the certificates called for under Sections 201 and 301 hereof and (ii) an Opinion of Counsel described in the next sentence. In authenticating such Debt Securities, and accepting the additional responsibilities under this Indenture in relation to any Debt Securities, the Trustee shall be entitled to receive, prior to the initial authentication of such Debt Securities, and (subject to Section 601) shall be fully protected in relying upon: (i) a Board Resolution relating thereto and, if applicable, an appropriate record of any action taken pursuant to such resolution certified by the Secretary or an Assistant Secretary of the Company; (ii) an executed supplemental indenture, if any, relating thereto; (iii) an Officers' Certificate setting forth the form and terms of the Debt Securities of such series and coupons, if any, pursuant to Sections 201 and 301 and stating that all conditions precedent provided for in this 14 Indenture relating to the issuance of such Debt Securities have been complied with, that no Event of Default with respect to any series of Debt Securities has occurred and is continuing and that the issuance of such Debt Securities is not and will not result in an Event of Default or an event or condition which, upon the giving of notice (or the acquisition of knowledge) or the lapse of time or both, would become an Event of Default; and (iv) an Opinion of Counsel stating (A) that the form of such Debt Securities and coupons, if any, has been established in or pursuant to a Board Resolution or by a supplemental indenture as permitted by Section 201 in conformity with the provisions of this Indenture; (B) that the terms of such Debt Securities and coupons, if any, have been established in or pursuant to a Board Resolution or by a supplemental indenture as permitted by Section 301 in conformity with the provisions of this Indenture; (C) that such Debt Securities and coupons, if any, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and binding obligations of the Company, enforceable in accordance with their terms, subject, as to enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors' rights generally and the application of general principles of equity; (D) that the Company has the corporate power to issue such Debt Securities and coupons, if any, and has duly taken all necessary corporate action with respect to such issuance; (E) that the issuance of such Debt Securities and coupons, if any, will not contravene the charter or by-laws of the Company or result in any violation of any of the terms or provisions of any law or regulation or of any indenture, mortgage or other agreement known to such counsel by which the Company or any of its subsidiaries is bound; (F) that all laws and requirements in respect of the execution and delivery by the Company of such Debt Securities and coupons, if any, have been complied with and that authentication and delivery of such Debt Securities by the Trustee will not violate the terms of the Indenture; and (G) such other matters as the Trustee may reasonably request. (c) If the Company shall establish pursuant to Section 301 that the Debt Securities of a series are to be issued in whole or in part in the form of one or more Global Securities, then the Company shall execute and the Trustee shall, in accordance with this Section and the Company Order with respect to such series, authenticate and deliver one or more Global Securities in permanent or temporary form that (i) shall represent and shall be denominated in an aggregate amount equal to the aggregate principal amount of the Outstanding Debt Securities of such series to be represented by one or more Global Securities, (ii) shall be registered in the name of the Depositary for such Global Security or Securities or the nominee of such Depositary and (iii) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary's instruction. (d) The Trustee shall have the right to decline to authenticate and deliver any Debt Securities under this Section 303 if (i) the Trustee, being advised by counsel, determines that such action may not lawfully be taken or (ii) the Trustee in good faith by a committee of Responsible Officers shall determine that such action would be unjustly prejudicial to Holders of Outstanding Debt Securities or (iii) the issuance of such Debt Securities will adversely affect the Trustee's own rights, duties or immunities under the Debt Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee. (e) If all the Debt Securities of any series are not to be issued at one time, it shall not be necessary to deliver an Opinion of Counsel at the time of issuance of each Debt Security, but such Opinion of Counsel, with appropriate modifications, may instead be delivered at or prior to the time of the first issuance of Debt Securities of such series. (f) Each Registered Security shall be dated the date of its authentication. Each Bearer Security shall be dated as of the date specified as contemplated by Section 301. 15 (g) No Debt Security or coupon attached thereto shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Debt Security a certificate of authentication substantially in the form provided for herein executed by the Trustee, and such certificate upon any Debt Security shall be conclusive evidence, and the only evidence, that such Debt Security has been duly authenticated and delivered hereunder. Except as permitted by Section 306, the Trustee shall not authenticate and deliver any Bearer Security unless all appurtenant coupons for interest then matured have been detached and cancelled. Notwithstanding the foregoing, if any Debt Security or portion thereof shall have been duly authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Debt Security to the Trustee for cancellation as provided in Section 309 together with a written statement (which need not comply with Section 102 and need not be accompanied by an Opinion of Counsel) stating that such Debt Security or portion thereof has never been issued and sold by the Company, for all purposes of this Indenture such Debt Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture. (h) Each Depositary designated pursuant to Section 301 for a Global Security in registered form must, at the time of its designation and at all times while it serves as Depositary, be a clearing agency registered under the Securities Exchange Act of 1934 and any other applicable statute or regulation. SECTION 304. Temporary Debt Securities. (a) Pending the preparation of definitive Debt Securities of any series, the Company may execute, and upon receipt of documents required by Sections 301 and 303, together with a Company Order, the Trustee shall authenticate and deliver, temporary Debt Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor and terms of the definitive Debt Securities in lieu of which they are issued in registered form or, if authorized, in bearer form with one or more coupons or without coupons, and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Debt Securities may determine, as evidenced by their signatures on such Debt Securities. In the case of Debt Securities of any series issuable as Bearer Securities, such temporary Debt Securities may be in global form, representing all or any part of the Outstanding Debt Securities of such series. (b) Unless otherwise provided pursuant to Section 301: (i) Except in the case of temporary Debt Securities in global form, if temporary Debt Securities of any series are issued, the Company will cause definitive Debt Securities of such series to be prepared without unreasonable delay. After the preparation of definitive Debt Securities of such series, the related temporary Debt Securities shall be exchangeable for such definitive Debt Securities upon surrender of the temporary Debt Securities of such series at the office or agency of the Company in a Place of Payment for such series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Debt Securities of any series (accompanied, if applicable, by all unmatured coupons and all matured coupons in default appertaining thereto), the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Debt Securities of the same series of like tenor and terms and of authorized denominations; provided, however, that no Bearer Security shall be delivered in exchange for a Registered Security, and provided, further, that a Bearer Security shall be delivered in exchange for a Bearer Security only in compliance with the conditions set forth in Section 305. (ii) If Debt Securities of any series are issued in temporary global form, any such temporary Global Security shall, unless otherwise provided pursuant to Section 301, be delivered to the Depositary for the benefit of Euroclear and CEDEL S.A., for credit to the respective accounts of the beneficial owners of such Debt Securities (or to such other accounts as they may direct). (iii) Without unnecessary delay but in any event not later than the date specified in, or determined pursuant to the terms of, any such temporary Global Security (the "Global Exchange Date"), the Company shall deliver definitive Debt Securities to the Trustee or the agent appointed by the Company pursuant to Section 301 to effect the exchange of the temporary Global Security for definitive Debt Securities (the "Global Exchange Agent"), in an aggregate principal amount equal to the principal amount of such temporary Global Security, executed by the Company. On or after the Global Exchange Date, such temporary Global Security shall be surrendered by the Depositary to the Global Exchange Agent, to be exchanged, in whole or from time to time in part, for definitive Debt Securities without charge and the Trustee or the Global Exchange Agent, if 16 authorized by the Trustee pursuant to Section 614, shall authenticate and deliver, in exchange for each portion of such temporary Global Security, an equal aggregate principal amount of definitive Debt Securities of the same series of authorized denominations and of like tenor and terms as the portion of such temporary Global Security to be exchanged. Upon any exchange of a part of such temporary Global Security for definitive Debt Securities, the portion of the principal amount and any interest thereon so exchanged shall be endorsed by the Global Exchange Agent on a schedule to such temporary Global Security, whereupon the principal amount and interest payable with respect to such temporary Global Security shall be reduced for all purposes by the amount so exchanged and endorsed. The definitive Debt Securities to be delivered in exchange for any such temporary Global Security shall be in bearer form, registered form, global registered form or global bearer form, or any combination thereof, as specified as contemplated by Section 301, and, if any combination thereof is so specified, as requested by the beneficial owner thereof; provided, however, that, in the case of the exchange of the temporary Global Security for definitive Bearer Securities (including a definitive Global Bearer Security), upon such presentation by the Depositary, such temporary Global Security shall be accompanied by a certificate signed by Euroclear as to the portion of such temporary Global Security held for its account then to be exchanged and a certificate signed by CEDEL S.A. as to the portion of such temporary Global Security held for its account then to be exchanged, each in the form set forth in Exhibit B to this Indenture, unless such certificate(s) shall have been provided earlier pursuant to Section 304(b) (v) hereof; and provided, further, that definitive Bearer Securities (including a definitive global Bearer Security) shall be delivered in exchange for a portion of a temporary Global Security only in compliance with the requirements of Section 303. (iv) The interest of a beneficial owner of Debt Securities of a series in a temporary Global Security shall be exchanged for definitive Debt Securities of the same series and of like tenor and terms following the Global Exchange Date when the account holder instructs Euroclear or CEDEL S.A., as the case may be, to request such exchange on such account holder's behalf and, in the case of the exchange of the temporary Global Security for definitive Bearer Securities (including a definitive Global Bearer Security), unless such certificate(s) shall have been provided earlier pursuant to Section 304(b)(v) hereof, the account holder delivers to Euroclear or CEDEL S.A., as the case may be, a certificate in the form set forth in Exhibit A-1 and, if applicable, A-2 to this Indenture, dated no earlier than 15 days prior to the Global Exchange Date, copies of which certificate shall be available from the offices of Euroclear and CEDEL S.A., the Global Exchange Agent, any authenticating agent appointed for such series of Debt Securities and each Paying Agent Unless otherwise specified in such temporary Global Security, any such exchange shall be made free of charge to the beneficial owners of such temporary Global Security, except that a Person receiving definitive Debt Securities must bear the cost of insurance, postage, transportation and the like in the event that such Person does not take delivery of such definitive Debt Securities in person at the offices of Euroclear and CEDEL S.A. Definitive Debt Securities in bearer form to be delivered in exchange for any portion of a temporary Global Security shall be delivered only outside the United States. (v) Until exchanged in full as hereinabove provided, the temporary Debt Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Debt Securities of the same series and of like tenor and terms authenticated and delivered hereunder, except that interest payable on a temporary Global Security on an Interest Payment Date shall be payable to Euroclear and CEDEL S.A. on such Interest Payment Date only if there has been delivery by Euroclear and CEDEL S.A. to the Global Exchange Agent of a certificate or certificates in the form set forth in Exhibit B to this Indenture dated no earlier than the first Interest Payment Date, for credit without further interest on or after such Interest Payment Date to the respective accounts of the Persons who are the beneficial owners of such temporary Global Security on such Interest Payment Date and who have each delivered to Euroclear or CEDEL S.A., as the case may be, a certificate in the form set forth in Exhibit A-1 and, if applicable, A-2 to this Indenture dated no earlier than the first Interest Payment Date. Any interest so received by Euroclear and CEDEL S.A. and not paid as herein provided prior to the Global Exchange Date shall be returned to the Global Exchange Agent which, upon expiration of two years after such Interest Payment Date shall repay such interest to the Company in accordance with Section 1003. 17 SECTION 305. Registration; Registration of Transfer and Exchange. The Company shall cause to be kept at one of the offices or agencies to be maintained by the Company in accordance with the provisions of this Section 305 and Section 1002, with respect to the Debt Securities of each series which are Registered Securities, a register (herein sometimes referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Registered Securities and of transfers of Registered Securities. Pursuant to Section 301, the Company shall appoint, with respect to Debt Securities of each series which are Registered Securities, a "Security Registrar" for the purpose of registering such Debt Securities and transfers and exchanges of such Debt Securities as herein provided. Upon surrender for registration of transfer of any Registered Security of any series at the office or agency of the Company maintained for such purpose, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Registered Securities of the same series of any authorized denomination or denominations, of like tenor and terms and aggregate principal amount. At the option of the Holder, Registered Securities of any series may be exchanged for other Registered Securities of the same series of any authorized denomination or denominations, of like tenor and terms and aggregate principal amount, upon surrender of the Registered Securities to be exchanged at such office or agency. Bearer Securities may not be delivered in exchange for Registered Securities. At the option of the Holder, Registered Securities or Bearer Securities of any series may be issued in exchange for Bearer Securities (except as otherwise specified as contemplated by Section 301 with respect to a Bearer Security in global form) of the same series, of any authorized denominations and of like tenor and terms and aggregate principal amount, upon surrender of the Bearer Securities to be exchanged at any such office or agency, with all unmatured coupons and all matured coupons in default thereto appertaining. If the Holder of a Bearer Security is unable to produce any such unmatured coupon or coupons or matured coupon or coupons in default, such exchange may be effected if the Bearer Securities are accompanied by payment in funds acceptable to the Company and the Trustee in an amount equal to the face amount of such missing coupon or coupons, or the surrender of such missing coupon or coupons may be waived by the Company and the Trustee if there be furnished to them such security or indemnity as they may require to save each of them and any Paying Agent harmless. If thereafter the Holder of such Security shall surrender to any Paying Agent any such missing coupon in respect of which such a payment shall have been made, such Holder shall be entitled to receive the amount of such payment, provided, however, that, except as otherwise provided in Section 1002, interest represented by coupons shall be payable only upon presentation and surrender of those coupons at an office or agency located outside the United States. Notwithstanding the foregoing, in case a Bearer Security of any series is surrendered at any such office or agency in exchange for a Registered Security of the same series and like tenor and terms after the close of business at such office or agency on (i) any Regular Record Date and before the opening of business at such office or agency on the relevant Interest Payment Date, or (ii) any Special Record Date and before the opening of business at such office or agency on the related date for payment of Defaulted Interest, such Bearer Security shall be surrendered without the coupon relating to such Interest Payment Date or proposed date of payment, as the case may be. Whenever any Debt Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Debt Securities which the Holder making the exchange is entitled to receive. If at any time the Depositary for the Debt Securities of a series notifies the Company that it is unwilling or unable to continue as Depositary for the Debt Securities of such series or if at any time the Depositary for the Debt Securities of such series shall no longer be eligible under Section 303(h), the Company shall appoint a successor Depositary with respect to the Debt Securities of such series. If a successor Depositary for the Debt Securities of such series is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligibility, the Company's election pursuant to Section 301(9) shall no longer be effective with respect to the Debt Securities of such series and the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of definitive Debt Securities of such series, will authenticate and deliver, Debt Securities of such series in definitive form in an aggregate principal amount equal to the principal amount of the Global Security or Securities representing such series in exchange for such Global Security or Securities. 18 The Company may at any time and in its sole discretion determine that the Debt Securities of any series issued in the form of one or more Global Securities shall no longer be represented by such Global Security or Securities. In such event the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of definitive Debt Securities of such series, will authenticate and deliver, Debt Securities of such series in definitive form and in an aggregate principal amount equal to the principal amount of the Global Security or Securities representing such series in exchange for such Global Security or Securities. If specified by the Company pursuant to Section 301 with respect to a series of Debt Securities, the Depositary for such series of Debt Securities may surrender a Global Security for such series of Debt Securities in exchange in whole or in pan for Debt Securities of such series of like tenor and terms and in definitive form on such terms as are acceptable to the Company and such Depositary. Thereupon, the Company shall execute, and the Trustee shall authenticate and deliver, without service charge, (a) to each Person specified by such Depositary a new Debt Security or Securities of the same series, of like tenor and terms and of any authorized denomination as requested by such Person in aggregate principal amount equal to and in exchange for such Person's beneficial interest in the Global Security, and (b) to such Depositary a new Global Security of like tenor and terms and in a denomination equal to the difference, if any, between the principal amount of the surrendered Global Security and the aggregate principal amount of Debt Securities delivered to Holders thereof. In any exchange provided for in any of the preceding three paragraphs, the Company will execute and the Trustee will authenticate and deliver Debt Securities (a) in definitive registered form in authorized denominations, if the Debt Securities of such series are issuable as Registered Securities, (b) in definitive bearer form in authorized denominations, with coupons attached, if the Debt Securities of such series are issuable as Bearer Securities or (c) as either Registered or Bearer Securities, as shall be specified by the beneficial owner thereof, if the Debt Securities of such series are issuable in either form; provided however, that no definitive Bearer Security shall be delivered in exchange for a temporary Global Security unless the Company or its agent shall have received from the person entitled to receive the definitive Bearer Security a certificate substantially in the form set forth in Exhibit A-1 and, if applicable, A-2 hereto; and provided further that delivery of a Bearer Security shall occur only outside the United States; and provided further that no definitive Bearer Security will be issued if the Company has reason to know that any such certificate is false. Upon the exchange of a Global Security for Debt Securities in definitive form, such Global Security shall be cancelled by the Trustee. Registered Securities issued in exchange for a Global Security pursuant to this Section shall be registered in such names and in such authorized denominations as the Depositary for such Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Registered Securities to the persons in whose names such Debt Securities are so registered. The Trustee shall deliver Bearer Securities issued in exchange for a Global Security pursuant to this Section to the persons, and in such authorized denominations, as the Depositary for such Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Truster, provided however, that no definitive Bearer Security shall be delivered in exchange for a temporary Global Security unless the Company or its agent shall have received from the person entitled to receive the definitive Bearer Security a certificate substantially in the form set forth in Exhibit A-1 and, if applicable, A-2 hereto; and provided further that delivery of a Bearer Security shall occur only outside the United States; and provided further that no definitive Bearer Security will be issued if the Company has reason to know that any such certificate is false. All Debt Securities issued upon any registration of transfer or exchange of Debt Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Debt Securities surrendered upon such registration of transfer or exchange. Every Registered Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company, the Security Registrar or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company, the Security Registrar and the Trustee duly executed, by the Holder thereof or such Holder's attorney duly authorized in writing. 19 No service charge shall be made for any registration of transfer or exchange of Debt Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer, registration of transfer or exchange of Debt Securities, other than exchanges expressly provided in this Indenture to be made at the Company's own expense or without expense or without charge to the Holders. The Company shall not be required (i) to issue, register the transfer of or exchange Debt Securities of any particular series to be redeemed for a period of fifteen days preceding the first publication of the relevant notice of redemption or, if Registered Securities are outstanding and there is no publication, the mailing of the relevant notice of redemption of Debt Securities of such series selected for redemption under Section 1103 and ending at the close of business on the day of such mailing, or (ii) to register the transfer of or exchange any Registered Security so selected for redemption in whole or in part, except the unredeemed portion of such Registered Security being redeemed in part, or (iii) to exchange any Bearer Security so selected for redemption except that such a Bearer Security may be exchanged for a Registered Security of like tenor and terms of that series, provided that such Registered Security shall be simultaneously surrendered for redemption. Notwithstanding anything herein to the contrary, the exchange of Bearer Securities into Registered Securities shall be subject to applicable laws and regulations in effect at the time of exchange; neither the Company, the Trustee nor the Security Registrar shall exchange any Bearer Securities into Registered Securities if it has received an Opinion of Counsel that as a result of such exchanges the Company would suffer adverse consequences under the United States federal income tax laws and regulations then in effect and the Company has delivered to the Trustee a Company Order directing the Trustee not to make such exchanges thereafter unless and until the Trustee receives a subsequent Company Order to the contrary. The Company shall deliver copies of such Company Orders to the Security Registrar. SECTION 306. Mutilated, Destroyed, Lost and Stolen Debt Securities. If (i) any mutilated Debt Security or a Bearer Security with a mutilated coupon appertaining to it is surrendered to a Paying Agent outside the United States designated by the Company, or, in the case of any Registered Security, to the Trustee, or (ii) the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Debt Security or coupon, and there is delivered to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company and the Trustee that such Debt Security or coupon has been acquired by a bona fide purchaser, the Company shall execute and upon its written request the Trustee shall authenticate and deliver, in exchange for any such mutilated Debt Security or Bearer Security with a mutilated coupon appertaining to it or to which a destroyed, lost or stolen coupon appertains (with all appurtenant coupons not destroyed, lost or stolen) or in lieu of any such destroyed, lost or stolen Debt Security, a new Debt Security of like tenor and terms and principal amount, bearing a number not contemporaneously outstanding, with coupons corresponding to the coupons, if any, appertaining to such destroyed, lost or stolen Security or to the Security to which such destroyed, lost or stolen coupon appertains; provided, however, that any such new Bearer Security will be delivered only in compliance with the conditions set forth in Section 305. In case any such mutilated, destroyed, lost or stolen Debt Security or coupon has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Debt Security, pay such Debt Security or coupon; provided, however, that payment of principal of (and premium, if any) and any interest on Bearer Securities shall, except as otherwise provided in Section 1002, be payable only at an office or agency located outside the United States; and provided, further, that, with respect to any such coupons, interest represented thereby (but not any additional amounts payable as provided in Section 1006), shall be payable only upon presentation and surrender of the coupons appertaining thereto. Upon the issuance of any new Debt Security or coupon under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee and printing expenses) connected therewith. Every new Debt Security of any series, with its coupons, if any, issued pursuant to this Section in lieu of any destroyed, lost or stolen Debt Security, or in exchange for a Bearer Security to which a destroyed, lost or stolen 20 coupon appertains, shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Debt Security and its coupons, if any, or the destroyed, lost or stolen coupon shall be at any time enforceable by anyone, and any such new Debt Security and coupons, if any, shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Debt Securities of that series and their coupons, if any, duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Debt Securities or coupons. SECTION 307. Payment of Interest; Interest Rights Preserved. Interest on any Registered Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Registered Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest. In case a Bearer Security of any series is surrendered in exchange for a Registered Security of such series after the close of business (at an office or agency in a Place of Payment for such series) on any Regular Record Date and before the opening of business (at such office or agency) on the next succeeding Interest Payment Date, such Bearer Security shall be surrendered without the coupon relating to such Interest Payment Date and interest will not be payable on such Interest Payment Date in respect of the Registered Security issued in exchange for such Bearer Security, but will be payable only to the Holder of such coupon when due in accordance with the provisions of this Indenture. At the option of the Company, payment of interest on any Registered Security may be made by check in the currency designated for such payment pursuant to the terms of such Registered Security mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or by wire transfer to an account in such currency designated by such Person in writing not later than ten days prior to the date of such payment. Any interest on any Registered Security of any series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the registered Holder on the relevant Regular Record Date by virtue of his having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Registered Securities of such series (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Registered Security of such series and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money and/or, to the extent such Debt Securities are denominated and payable in Dollars only, Eligible Instruments the payments of principal and interest on which when due (and without reinvestment and providing no tax liability will be imposed upon the Trustee or the Holder of such Registered Securities) will provide money in such amounts as will (together with any money irrevocably deposited in trust with the Trustee, without investment) be equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment such money and/or Eligible Instruments when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment The Trustee shall promptly notify the Company of such Special Record Date. Unless the Trustee is acting as the Security Registrar, promptly after such Special Record Date, the Company shall furnish the Trustee with a list, or shall make arrangements satisfactory to the Trustee with respect thereto, of the names and addresses of, and principal amounts of Registered Securities of such series held by, the Holders appearing on the Security Register at the close of business on such Special Record Date. In the name and at the expense of the Company, the Trustee shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder of Registered Securities of such series at his 21 address as it appears in the Security Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names the Registered Securities of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following Clause (2). In case a Bearer Security of any series is surrendered at the office or agency in a Place of Payment for such series in exchange for a Registered Security of such series after the close of business at such office or agency on any Special Record Date and before the opening of business at such office or agency on the related proposed date for payment of Defaulted Interest, such Bearer Security shall be surrendered without the coupon relating to such proposed date of payment and Defaulted Interest will not be payable on such proposed date of payment in respect of the Registered Security issued in exchange for such Bearer Security, but will be payable only to the Holder of such coupon when due in accordance with the provisions of this Indenture. (2) The Company may make payment of any Defaulted Interest on the Registered Securities of any series in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Registered Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Debt Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Debt Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Debt Security. Subject to the limitations set forth in Section 1002, the Holder of any coupon appertaining to a Bearer Security shall be entitled to receive the interest payable on such coupon upon presentation and surrender of such coupon on or after the Interest Payment Date of such coupon at an office or agency maintained for such purpose pursuant to Section 1002. SECTION 308. Persons Deemed Owners. Prior to due presentment of a Registered Security for registration of transfer, the Company, the Trustee and any agent of the Company or of the Trustee may treat the Person in whose name such Registered Security is registered as the owner of such Registered Security for the purpose of receiving payment of principal of (and premium, if any) and (subject to Section 307) interest on such Registered Security and for all other purposes whatsoever, whether or not such Registered Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. The Company, the Trustee and any agent of the Company or the Trustee may treat the bearer of any Bearer Security and the bearer of any coupon as the absolute owner of such Bearer Security or coupon for the purpose of receiving payment thereof or on account thereof and for all other purposes whatsoever, whether or not such Bearer Security or coupon be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. None of the Company, the Trustee, any Paying Agent or the Security Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. SECTION 309. Cancellation. Unless otherwise provided with respect to a series of Debt Securities, all Debt Securities and coupons surrendered for payment, redemption, repayment, transfer, exchange or credit against any sinking fund payment pursuant to this Indenture, shall, if surrendered to the Company or any agent of the Company, be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Debt Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Debt Securities so delivered shall be promptly cancelled by the Trustee. No Debt Securities shall be authenticated in lieu of or in exchange for any Debt Securities cancelled as provided in this 22 Section, except as expressly permitted by this Indenture. All cancelled Debt Securities and coupons held by the Trustee shall be destroyed and certification of their destruction delivered to the Company unless by a Company Order the Company shall direct that the cancelled Debt Securities or coupons be returned to it. SECTION 310. Computation of Interest. Except as otherwise specified as contemplated by Section 301 for Debt Securities of any series, interest on the Debt Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months. SECTION 311. Certification by a Person Entitled to Delivery of a Bearer Security. Whenever any provision of this Indenture or a Debt Security contemplates that certification be given by a Person entitled to delivery of a Bearer Security, such certification shall be provided substantially in the form of Exhibit A-1 and, if applicable, A-2 hereto, with only such changes as shall be approved by the Company and consented to by the Trustee whose consent shall not unreasonably be withheld. SECTION 312. Judgments. The Company may provide, pursuant to Section 301, for the Debt Securities of any series that, to the fullest extent possible under applicable law and except as may otherwise be specified as contemplated in Section 301, (a) the obligation, if any, of the Company to pay the principal of (and premium, if any) and interest on the Debt Securities of any series and any appurtenant coupons in a Foreign Currency, composite currency or Dollars (the "Designated Currency") as may be specified pursuant to Section 301 is of the essence and agrees that judgments in respect of such Debt Securities shall be given in the Designated Currency") the obligation of the Company to make payments in the Designated Currency of the principal of (and premium, if any) and interest on such Debt Securities and any appurtenant coupons shall, notwithstanding any payment in any other currency (whether pursuant to a judgment or otherwise), be discharged only to the extent of the amount in the Designated Currency that the Holder receiving such payment may, in accordance with normal banking procedures, purchase with the sum paid in such other currency (after any premium and cost of exchange) in the country of issue of the Designated Currency in the case of Foreign Currency or Dollars or in the international banking community in the case of a composite currency on the Business Day immediately following the day on which such Holder receives such payment; (c) if the amount in the Designated Currency that may be so purchased for any reason falls short of the amount originally due, the Company shall pay such additional amounts as may be necessary to compensate for such shortfall and (d) any obligation of the Company not discharged by such payment shall be due as a separate and independent obligation and, until discharged as provided herein, shall continue in full force and effect. ARTICLE FOUR SATISFACTION AND DISCHARGE SECTION 401. Satisfaction and Discharge of Indenture. This Indenture shall upon Company Request cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Debt Securities herein expressly provided for and rights to receive payments of principal and interest thereon and any right to receive additional amounts, as provided in Section 1006) and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture when (1) either (A) all Debt Securities theretofore authenticated and delivered and all coupons appertaining thereto (other than (i) coupons appertaining to Bearer Securities surrendered in exchange for Registered Securities and maturing after such exchange, surrender of which is not required or has been waived as provided in Section 305, (ii) Debt Securities and coupons which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306, (iii) coupons appertaining to Bearer Securities called for redemption or surrendered for repayment and maturing after the relevant Redemption Date or Repayment Date, as appropriate, surrender of which has been waived as provided in Section 1106 or 1303 and (iv) Debt Securities and coupons for whose payment money and/or Eligible Instruments have 23 theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 1003) have been delivered to the Trustee cancelled or for cancellation; or (B) all such Debt Securities not theretofore delivered to the Trustee for cancellation (i) have become due and payable, or (ii) will become due and payable at their Stated Maturity within one year, or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of (B) (i), (B) (ii) or (B) (iii) above, has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose money and/or, to the extent such Debt Securities are denominated and payable in Dollars only, Eligible Instruments the payments of principal and interest on which when due (and without reinvestment and providing no tax liability will be imposed upon the Trustee or the Holders of Debt Securities) will provide money in such amounts as will (together with any money irrevocably deposited in trust with the Trustee, without investment) be sufficient to pay and discharge the entire indebtedness on such Debt Securities and coupons of such series for principal (and premium, if any) and interest, and any mandatory sinking fund, repayment or analogous payments thereon, on the scheduled due dates therefor to the date of such deposit (in the case of Debt Securities and coupons which have become due and payable) or to the Stated Maturity or Redemption Date, if any, and all Repayment Dates (in the case of Debt Securities repayable at the option of the Holders thereof); provided, however, that in the event a petition for relief under the Bankruptcy Reform Act of 1978 or a successor statute is filed with respect to the Company within 91 days after the deposit, the obligations of the Company under the Indenture with respect to the Debt Securities of such series shall not be deemed terminated or discharged, and in such event the Trustee shall be required to return the deposited money and Eligible Instruments to the Company, (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company, and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Sections 607 and, if money or Eligible Instruments shall have been deposited with the Trustee pursuant to Subclause (B) of Clause (1) of this Section, the obligations of the Trustee under Section 402 and the last paragraph of Section 1003 shall survive. SECTION 402. Application of Trust Money and Eligible Instruments. Subject to the provisions of the last paragraph of Section 1003, all money and Eligible Instruments deposited with the Trustee pursuant to Section 401 shall be held in trust and such money and the principal and interest received on such Eligible Instruments shall be applied by it, in accordance with the provisions of the Debt Securities, the coupons and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money or Eligible Instruments have been deposited with the Trustee. ARTICLE FIVE REMEDIES SECTION 501. Events of Default. "Event of Default", wherever used herein with respect to Debt Securities of any series, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or 24 be effected by operation of law, pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) default in the payment of any interest upon any Debt Security of such series or a related coupon, if any, when it becomes due and payable, and continuance of such default for a period of 30 days; or (2) default in the payment of the principal of (or premium, if any, on) any Debt Security of such series at its Maturity or (3) default in the deposit of any sinking fund payment, when and as due by the terms of a Debt Security of such series; or (4) default in the performance, or breach, of any covenant or warranty of the Company in this Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with or which has expressly been included in this Indenture solely for the benefit of Debt Securities of a series other than such series), and continuance of such default or breach for a period of 90 days after there has been given by registered or certified mail, to the Company by the Trustee, or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Debt Securities of such series, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (5) if an event of default, as defined in any mortgage, indenture or instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness for money borrowed of the Company (including a default under this Indenture with respect to Debt Securities of any series other than such series) in excess of $25,000,000, whether such indebtedness now exists or shall hereafter be created, shall happen and shall constitute a failure to pay at maturity or shall result in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable, and such acceleration shall not be rescinded or annulled, or such indebtedness shall not have been discharged, within a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Debt Securities of such series a written notice specifying such event of default and requiring the Company to cause such acceleration to be rescinded or annulled or to cause such indebtedness to be discharged and stating that such notice is a "Notice of Default" hereunder provided however, that, subject to the provisions of Sections 601 and 602, in the absence of actual knowledge of a Responsible Officer of the Trustee, as such officer, assigned to its corporate trust department, the Trustee shall not be charged with knowledge of any event of default unless written notice thereof shall have been given to the Trustee by the Company, by the trustee then acting under any mortgage, indenture or other instrument (including any other trustee acting under this Indenture for any other series of Debt Securities) under which such event of default shall have occurred, by the holder or an agent of any holder of such indebtedness, or by the Holders of at least 25% in principal amount of the Outstanding Debt Securities of such series; or (6) the entry of a decree or order for relief in respect of the Company or the Bank by a court having jurisdiction in the premises in an involuntary case under the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or other similar law, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Company or the Bank or of any substantial part of the property of either, or ordering the winding up or liquidation of the affairs of either, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; or (7) the commencement by the Company or the Bank of a voluntary case under the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or other similar law, or the consent by the Company or the Bank to the entry of a decree or order for relief in an involuntary case under any such law or to the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator or other similar official of either of the foregoing or of any substantial part of the property of either, or the making by the Company or the Bank of an assignment for the benefit of creditors, or the admission by the Company or the Bank in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company or the Bank in furtherance of any such action, or 25 (8) any other Event of Default, if any, provided with respect to Debt Securities of such series specified as contemplated by Section 301. SECTION 502. Acceleration of Maturity; Rescission and Annulment. If an Event of Default with respect to Debt Securities of any series at the time Outstanding occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in principal amount of Outstanding Debt Securities of such series may declare the principal amount (or, if the Debt Securities of such series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) of and all accrued but unpaid interest on all the Debt Securities of such series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by such Holders), and upon any such declaration such principal amount (or specified amount) shall become immediately due and payable. Upon payment of such amount, all obligations of the Company in respect of the payment of principal of the Debt Securities of such series shall terminate. At any time after such a declaration of acceleration with respect to Debt Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Debt Securities of such series, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if (1) the Company has paid or deposited with the Trustee a sum sufficient to pay (A) all overdue instalments of interest on all Debt Securities of such series and any related coupons, (B) the principal of (and premium, if any, on) any Debt Securities of such series which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in such Debt Securities, (C) to the extent that payment of such interest is lawful, interest upon overdue instalments of interest on each Debt Security and any related coupons at the rate or rates prescribed therefor in such Debt Securities, and (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) all Events of Default with respect to Debt Securities of such series, other than the non-payment of the principal of Debt Securities of such series which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 513. No such rescission shall affect any subsequent default or impair any right consequent thereon. SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if: (1) default is made in the payment of any instalment of interest on any Debt Security or any related coupon when such interest becomes due and payable and such default continues for a period of 30 days, or (2) default is made in the payment of the principal of (or premium, if any, on) any Debt Security at the Maturity thereof, the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Debt Securities and coupons, the amount then due and payable on such Debt Securities and coupons for principal (and premium, if any) and interest and, to the extent that payment of such interest shall be legally enforceable, interest upon the overdue principal (and premium, if any) and, upon overdue instalments of interest, at the rate or rates prescribed therefor in such Debt Securities; and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. 26 If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon such Debt Securities and coupons and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Debt Securities and coupons, wherever situated. If an Event of Default with respect to Debt Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Debt Securities of such series and any related coupons by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. SECTION 504. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceedings, or any voluntary or involuntary case under the Federal bankruptcy laws as now or hereafter constituted, relative to the Company or any other obligor upon the Debt Securities of a particular series or any related coupons or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of such Debt Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (1) to file and prove a claim for the whole amount of principal (and premium, if any) and interest owing and unpaid in respect of the Debt Securities of such series and any appurtenant coupons and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and (2) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any receiver, assignee, trustee, custodian, liquidator, sequestrator or other similar official in any such proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 607. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Debt Securities or coupons or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding, SECTION 505. Trustee May Enforce Claims without Possession of Debt Securities or Coupons. All rights of action and claims under this Indenture or the Debt Securities or coupons may be prosecuted and enforced by the Trustee without the possession of any of the Debt Securities or coupons or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name, as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Debt Securities and coupons in respect of which such judgment has been recovered. SECTION 506. Application of Money Collected. Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal (and premium, if 27 any) or interest, upon presentation of the Debt Securities or coupons, or both, as the case may be, and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee under Section 607; SECOND: To the payment of the amounts then due and unpaid for principal of (and premium, if any) and interest on the Debt Securities and any coupons, in respect of which or for the benefit of which such money has been collected ratably, without preference or priority of any kind, according to the amounts due and payable on such Debt Securities and any coupons for principal (and premium, if any) and interest, respectively. The Holders of each series of Debt Securities denominated in ECU, any other composite currency or a Foreign Currency and any matured coupons relating thereto shall be entitled to receive a ratable portion of the amount determined by the Exchange Rate Agent by converting the principal amount Outstanding of such series of Debt Securities and matured but unpaid interest on such series of Debt Securities in the currency in which such series of Debt Securities is denominated into Dollars at the Exchange Rate as of the date of declaration of acceleration of the Maturity of the Debt Securities; and THIRD: The balance, if any, to the Person or Persons entitled thereto. SECTION 507. Limitation on Suits. No Holder of any Debt Security of any series or any related coupons shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Debt Securities of such series; (2) the Holders of not less than 25% in principal amount of the Outstanding Debt Securities of such series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder, (3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding, and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Debt Securities of such series; it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all of such Holders. SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest. Notwithstanding any other provision in this Indenture, the Holder of any Debt Security or coupon shall have the right which is absolute and unconditional to receive payment of the principal of (and premium, if any) and (subject to Section 307) interest on such Debt Security or payment of such coupon on the respective Stated Maturity or Maturities expressed in such Debt Security or coupon (or, in the case of redemption or repayment, on the Redemption Date or the Repayment Date, as the case may be) and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder. SECTION 509. Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case the Company, the Trustee and the Holders shall, subject to 28 any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. SECTION 510. Rights and Remedies Cumulative. Except as otherwise provided in Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 511. Delay or Omission Nor Waiver. No delay or omission of the Trustee or of any Holder of any Debt Security or coupon to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. SECTION 512. Control by Holders of Debt Securities. The Holders of a majority in principal amount of the Outstanding Debt Securities of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to the Debt Securities of such series, provided, that (1) such direction shall not be in conflict with any rule of law or with this Indenture; (2) subject to the provisions of Section 601, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall, by a Responsible Officer or Responsible Officers of the Trustee, determine that the proceeding so directed would be unjustly prejudicial to the Holders of Debt Securities of such series not joining in any such director and (3) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. SECTION 513. Waiver of Past Defaults. The Holders of not less than a majority in principal amount of the Outstanding Debt Securities of any series may on behalf of the Holders of all the Debt Securities of any such series and any related coupons waive any past default hereunder with respect to such series and its consequences, except a default (1) in the payment of the principal of (or premium, if any) or interest on any Debt Security of such series, or (2) in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Debt Security of such series or coupon affected. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION 514. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Debt Security or coupon by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in 29 such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Debt Securities of any series, or to any suit instituted by any Holder for the enforcement of the payment of the principal of (or premium, if any) or interest on any Debt Security or the payment of any coupon on or after the respective Stated Maturity or Maturities expressed in such Debt Security or coupon (or, in the case of redemption or repayment, on or after the Redemption Date or Repayment Date, as the case may be). SECTION 515. Waiver of Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law whenever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE SIX THE TRUSTEE SECTION 601. Certain Duties and Responsibilities. (a) With respect to Debt Securities of any series, except during the continuance of an Event of Default with respect to the Debt Securities of such series, (1) the Trustee undertakes to perform such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. (b) In case an Event of Default with respect to Debt Securities of any series has occurred and is continuing, the Trustee shall, with respect to the Debt Securities of such series or any coupons, as the case may be, exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that (1) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) the Trustee shall not be liable with respect to any action taken, suffered or omitted to be taken by it with respect to Debt Securities of any series in good faith in accordance with the direction of the Holders of a majority in principal amount of the Outstanding Debt Securities of such series relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Debt Securities of such series. (d) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or 30 powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (e) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. SECTION 602. Notice of Defaults. Within 90 days after the occurrence of any default hereunder with respect to Debt Securities of any series the Trustee shall transmit by mail to all Holders of Debt Securities of such series, entitled to receive reports pursuant to Section 703(c), notice of such default hereunder known to the Trustee, unless such default shall have been cured or waived; provided however, that, except in the case of a default in the payment of the principal of (or premium, if any) or interest on any Debt Security of such series or any related coupons or in the payment of any sinking fund instalment with respect to Debt Securities of such series, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interest of the Holders of Debt Securities of such series; and provided, further, that in the case of any default of the character specified in Section 501(4) with respect to Debt Securities of such series no such notice to Holders shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default with respect to Debt Securities of such series. SECTION 603. Certain Rights of Trustee. Except as otherwise provided in Section 601: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, coupon or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors shall be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders of Debt Securities of such series or any related coupons pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, coupon, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney, other than any such books or records containing information as to the affairs of the customers of the Company or any of its subsidiaries; provided that the Trustee may examine such books and records relating to customers to the extent that such books and 31 records contain information as to any payments made to such customers in their capacity as Holders of Debt Securities; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder"; no Exchange Rate Agent, Global Exchange Agent, Depositary or Paying Agent shall be deemed an agent of the Trustee and the Trustee shall not be responsible for any act or omission by any of them. SECTION 604. Not Responsible for Recitals or Issuance of Debt Securities. The recitals contained herein and in the Debt Securities, except the Trustee's certificates of authentication, and in any coupons, and the information in any registration statement, including all attachments thereto, except information provided by the Trustee therein, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Debt Securities of any series or any coupons. The Trustee shall not be accountable for the use or application by the Company of any Debt Securities or the proceeds thereof. The Trustee shall not be responsible for and makes no representations to the Company's ability or authority to issue Bearer Securities or the lawfulness thereof. SECTION 605. May Hold Debt Securities or Coupons. The Trustee, any Paying Agent, the Security Registrar or any other agent of the Company or the Trustee, in its individual or any other capacity, may become the owner or pledgee of Debt Securities and coupons, and, subject to Sections 608 and 613, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Paying Agent, Security Registrar or such agent. SECTION 606. Money Held in Trust. Money held by the Trustee or any Paying Agent in trust hereunder need not be segregated from other funds except to the extent required by law. Neither the Trustee nor any Paying Agent shall be under any liability for interest on any money received by it hereunder except as otherwise agreed with the Company. SECTION 607. Compensation and Reimbursement. The Company agrees (1) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust or performance of its duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. As security for the performance of the obligations of the Company under this Section the Trustee shall have a claim prior to the Debt Securities and any coupons upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of principal of (and premium, if any) or interest on particular Debt Securities or any coupons. 32 SECTION 608. Disqualification; Conflicting Interests. (a) If the Trustee has or shall acquire any conflicting interest, as defined in this Section with respect to the Debt Securities of any series then, within 90 days after ascertaining that it has such conflicting interest, and if the default (as defined in this Section) to which such conflicting interest relates has not been cured or duly waived or otherwise eliminated before the end of such 90-day period, the Trustee shall either eliminate such conflicting interest or, except as otherwise provided below in this Section, resign with respect to the Debt Securities of such series in the manner and with the effect hereinafter specified in this Article and the Company shall take prompt steps to have a successor appointed in the manner provided herein. (b) (1) In the event that the Trustee shall fail to comply with the provisions of Subsection (a) of this Section with respect to the Debt Securities of any series, the Trustee shall, within 10 days after the expiration of such 90-day period, transmit, in the manner and to the extent provided in Section 703(c), to all Holders of Debt Securities of such series notice of such failure. (2) Subject to the provisions of Section 514, unless the Trustee's duty to resign is stayed as provided in Subsection (f) of this Section, any Holder who has been a bona fide Holder of Debt Securities of any series referred to in Subsection (a) of this Section for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of such Trustee, and the appointment of a successor, if such Trustee fails, after written request thereof by such Holder to comply with the provisions of Subsection (a) of this Section. (c) For the purposes of this Section, the Trustee shall be deemed to have a conflicting interest with respect to the Debt Securities of any series, if an Event of Default (as defined in this Indenture), but exclusive of any period of grace or requirement of notice, has occurred with respect to such Debt Securities and (1) the Trustee is trustee under this Indenture with respect to the Outstanding Debt Securities of any series other than that series or is trustee under another indenture under which any other securities, or certificates of interest or participation in any other securities, of the Company are outstanding, unless such other indenture is a collateral trust indenture under which the only collateral consists of Debt Securities issued under this Indenture, provided that there shall be excluded from the operation of this paragraph (A) this Indenture with respect to the Debt Securities of any series; (B) the following indentures dated as of the dates indicated between the Company and Wells Fargo Bank, National Association, as amended or supplemented from time to time and as to which the Trustee was appointed as successor trustee: indenture dated as of December 1, 1973, under which the Company's 7 7/8% Debentures due December 1, 2003 were issued, indenture dated as of February 15, 1975, under which the Company's 8 7/8% Debentures due December 15, 2005 were issued, indenture dated as of May 1, 1976, under which the Company's 8 3/4% Debentures due May 1, 2001 were issued, indenture dated as of May 15, 1977, under which the Company's 8.35% Debentures due May 15, 2007 were issued, indenture dated as of November 1, 1981, indenture dated as of April 13, 1982, under which the Company's Money Multiplier Notes due 1992 were issued, and indenture dated as of May 31, 1982, under which the Company's Money Multiplier Notes due 1993 were issued; (C) the indenture dated as of November 1, 1983, between the Company and The Bank of California, National Association, as amended and supplemented from time to time, and as to which the Trustee was appointed as successor trustee, under which the Company's Three Year Extendible Notes due November 15, 1995, Three Year Extendible Notes due February 1,1996, Extendible Notes due May 1, 1994 and Medium Term Notes, Series C, were issued; (D) the indenture between the Company and the Trustee dated as of July 15, 1988, under which the Company's Medium Term Notes, Series D were issued, and the First Supplemental Indenture to such indenture dated as of November 1, 1990, pursuant to which the Company's Medium Term Notes, Series E, were issued; and (E) any other indenture or indentures hereafter qualified under the Trust Indenture Act under which other securities, or certificates of interest or participation in other securities, of the Company are outstanding, and (i) this Indenture and such other indenture or indentures (and all series of securities issuable thereunder) are wholly unsecured and rank equally, unless the Commission shall have found and declared by order pursuant to Section 305(b) or Section 307(c) of the Trust Indenture Act that differences exist between the provisions of this Indenture with respect to the Debt Securities of such series and one or more other series or the provisions of such other indenture or indentures which are so likely to involve a material 33 conflict of interest as to make it necessary in the public interest or for the protection of investors to disqualify the Trustee from acting as such under this Indenture with respect to the Debt Securities of such series and such other series or under such other indenture or indentures, or (ii) the Company shall have sustained the burden of proving, on application to the Commission and after opportunity for hearing thereon, that trusteeship under this Indenture with respect to the Debt Securities of such series and such other series or such other indenture or indentures is not so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to disqualify the Trustee from acting as such under this Indenture with respect to the Debt Securities of such series and such other series or under such other indenture or indentures; (2) the Trustee or any of its directors or executive officers is an underwriter for the Company; (3) the Trustee directly or indirectly controls or is directly or indirectly controlled by or is under direct or indirect common control with the Company or an underwriter for the Company; (4) the Trustee or any of its directors or executive officers is a director, officer, partner, employee, appointee or representative of the Company, or of an underwriter (other than the Trustee itself) for the Company who is currently engaged in the business of underwriting, except that (i) one individual may be a director or an executive officer, or both, of the Trustee and a director or an executive officer, or both of the Company but may not be at the same time an executive officer of both the Trustee and the Company; (ii) if and so long as the number of directors of the Trustee in office is more than nine, one additional individual may be a director or an executive officer, or both, of the Trustee and a director of the Company, and (iii) the Trustee may be designated by the Company or by any underwriter for the Company to act in the capacity of transfer agent, registrar, custodian, paying agent, fiscal agent, escrow agent, or depositary, or in any other similar capacity, or, subject to the provisions of paragraph (1) of this Subsection, to act as trustee, whether under an indenture or otherwise; (5) 10% or more of the voting securities of the Trustee is beneficially owned either by the Company or by any director, partner, or executive officer thereof, or 20% or more of such voting securities is beneficially owned, collectively, by any two or more of such persons; or 10% or more of the voting securities of the Trustee is beneficially owned either by an underwriter for the Company or by any director, partner or executive officer thereof, or is beneficially owned, collectively, by any two or more such persons; (6) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this Subsection defined), (i) 5% or more of the voting securities, or 10% or more of any other class of security, of the Company not including the Debt Securities issued under this Indenture and securities issued under any other indenture under which the Trustee is also trustee, or (ii) 10% or more of any class of security of an underwriter for the Company; (7) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this Subsection defined), 5% or more of the voting securities of any person who, to the knowledge of the Trustee, owns 10% or more of the voting securities of, or controls directly or indirectly or is under direct or indirect common control with, the Company; (8) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this Subsection defined), 10% or more of any class of security of any person who, to the knowledge of the Trustee, owns 50% or more of the voting securities of the Company; (9) the Trustee owns, on the date an Event of Default (as defined herein, but exclusive of any period of grace or requirement of notice) has occurred upon the Debt Securities of any series or any anniversary of such default while such default upon such Debt Securities remains outstanding, in the capacity of executor, administrator, testamentary or inter vivos trustee, guardian, committee or conservator, or in any other similar capacity, an aggregate of 25% or more of the voting securities, or of any class of security, of any person, the beneficial ownership of a specified percentage of which would have constituted a conflicting interest under paragraph (6), (7) or (8) of this Subsection. As to any such securities of which the Trustee acquired ownership through becoming executor, administrator or testamentary trustee of an estate which included 34 them, the provisions of the preceding sentence shall not apply, for a period of two years from the date of such acquisition, to the extent that such securities included in such estate do not exceed 25% of such voting securities or 25% of any such class of security. Promptly after the dates of any such Event of Default upon the Debt Securities of any series and annually in each succeeding year that such Event of Default upon such Debt Securities continues, the Trustee shall make a check of its holdings of such securities in any of the above-mentioned capacities as of such dates. If the Company fails to make payments in full of the principal of (or premium, if any), or interest on, any of the Debt Securities or coupons when and as the same becomes due and payable, and such failure continues for 30 days thereafter, the Trustee shall make a prompt check of its holdings of such securities in any of the above-mentioned capacities as of the date of the expiration of such 30-day period, and after such date, notwithstanding the foregoing provisions of this paragraph, all such securities so held by the Trustee, with sole or joint control over such securities vested in it, shall, but only so long as such failure shall continue, be considered as though beneficially owned by the Trustee for the purposes of paragraphs (6), (7) and (8) of this Subsection; or (10) except under the circumstances described in paragraphs (1), (3), (4), (5) or (6) of Section 613(b), the Trustee shall be or shall become a creditor of the Company. For purposes of paragraph (1) of this Subsection, and of Sections 512 and 513, the term "series" means a series, class or group of securities issuable under an indenture or this Indenture pursuant to whose terms holders of one such series may vote to direct the trustee, or otherwise take action pursuant to a vote of such holders, separately from holders of another such series; provided that "series" shall not include any series of securities issuable under an indenture (including any series of Debt Securities issuable under this Indenture) if all such series rank equally and are wholly unsecured. The specifications of percentages on paragraphs (5) to (9), inclusive, of this Subsection shall not be construed as indicating that the ownership of such percentages of the securities of a person is or is not necessary or sufficient to constitute direct or indirect control for the purpose of paragraph (3) or (7) of this Subsection. For the purposes of paragraphs (6), (7), (8) and (9) of this Subsection only, (i) the terms "security" and "securities" shall include only such securities as are generally known as corporate securities, but shall not include any note or other evidence of indebtedness issued to evidence an obligation to repay moneys lent to a person by one or more banks, trust companies or banking firms, or any certificate of interest or participation in any such note or evidence of indebtedness; (ii) an obligation shall be deemed to be "in default" when a default in payment of principal shall have continued for 30 days or more and shall not have been cured; and (iii) the Trustee shall not be deemed to be the owner or holder of (A) any security which it holds as collateral security, as trustee or otherwise, for an obligation which is not in default as defined in Clause (ii) above, or (B) any security which it holds as collateral security under this Indenture, irrespective of any default hereunder, or (C) any security which it holds as agent for collection, or as custodian, escrow agent or depositary, or in any similar representative capacity. (d) For the purposes of this Section: (1) The term "underwriter" when used with reference to the Company means every person who, within one year prior to the time as of which the determination is made, has purchased from the Company with a view to, or has offered or sold for the Company in connection with, the distribution of any security of the Company outstanding at such time, or has participated or has had a direct or indirect participation in any such undertaking, or has participated or has had a participation in the direct or indirect underwriting of any such undertaking, but such term shall not include a person whose interest was limited to a commission from an underwriter or dealer not in excess of the usual and customary distributors' or sellers' commission. (2) The term "director" means any director of a corporation, or any individual performing similar functions with respect to any organization whether incorporated or unincorporated. (3) The term "person" means an individual, a corporation, a partnership, an association, a joint-stock company, a trust, an unincorporated organization, or a government or political subdivision thereof. As used in this paragraph, the term "trust" shall include only a trust where the interest or interests of the beneficiary or beneficiaries are evidenced by a security. 35 (4) The term "voting security" means any security presently entitling the Owner or holder thereof to vote in the direction or management of the affairs of a person, or any security issued under or pursuant to any trust, agreement or arrangement whereby a trustee or trustees or agent or agents for the owner or holder of such security are presently entitled to vote in the direction of management of the affairs of a person. (5) The term "Company" means any obligor upon the Debt Securities of any series or any related coupons. (6) The term "executive officer" means the president, every vice president, every trust officer, the cashier, the secretary, and the treasurer of a corporation, and any individual customarily performing similar functions with respect to any organization, whether incorporated or unincorporated, but shall not include the chairman of the board of directors. (e) The percentages of voting securities and other securities specified in this Section shall be calculated in accordance with the following provisions: (1) A specified percentage of the voting securities of the Trustee, the Company or any other person referred to in this Section (each of whom is referred to as a "person" in this paragraph) means such amount of the outstanding voting securities of such person as entitles the holder or holders thereof to cast such specified percentage of the aggregate votes which the holders of all the outstanding voting securities of such person are entitled to cast in the direction or management of the affairs of such person. (2) A specified percentage of a class of securities of a person means such percentage of the aggregate amount of securities of the class outstanding. (3) The term "amount", when used in regard to securities, means the principal amount if relating to evidences of indebtedness, the number of shares if relating to capital shares, and the number of units if relating to any other kind of security. (4) The term "outstanding" means issued and not held by or for the account of the issuer. The following securities shall not be deemed outstanding within the meaning of this definition: (i) securities of an issuer held in a sinking fund relating to securities of the issuer of the same class; (ii) securities of an issuer held in a sinking fund relating to another class of securities of the issuer, if the obligation evidenced by such other class of securities is not in default as to principal or interest or otherwise; (iii) securities pledged by the issuer thereof as security for an obligation of the issuer not in default as to principal or interest or otherwise; and (iv) securities held in escrow if placed in escrow by the issuer thereof; provided however, that any voting securities of an issuer shall be deemed outstanding if any person other than the issuer is entitled to exercise the voting rights thereof. (5) A security shall be deemed to be of the same class as another security if both securities confer upon the holder or holders thereof substantially the same rights and privileges; provided, however, that in the case of secured evidences of indebtedness, all of which are issued under a single indenture, differences in the interest rates or maturity dates of various series thereof shall not be deemed sufficient to constitute such series different classes and provided, further, that, in the case of unsecured evidences of indebtedness, differences in the interest rates or maturity dates thereof shall not be deemed sufficient to constitute them securities of different classes, whether or not they are issued under a single indenture. (f) Except in the case of an Event of Default in the payment of the principal of or interest on any Debt Securities of any series, or in the payment of any sinking or purchase fund installment, the Trustee shall not be required to resign as provided by this Section if the Trustee shall have sustained the burden of proving, on application to the Commission and after opportunity for hearing thereon, that (i) the Event of Default under this Indenture may be cured or waived during a reasonable period and under the procedures described in such application, and (ii) a stay of the Trustee's duty to resign will not be inconsistent with the interests of Holders of 36 such Debt Securities. The filing of such an application shall automatically stay the performance of the duty to resign until the Commission orders otherwise. (g) If Section 310(b) of the Trust Indenture Act is amended at any time after the date of this Indenture to change the circumstances under which a Trustee shall be deemed to have a conflicting interest with respect to the Debt Securities of any series or to change any of the definitions in connection therewith, this Section 608 shall be automatically amended to incorporate such changes, unless such changes would cause any Trustee then acting as Trustee hereunder with respect to any Outstanding Debt Securities to be deemed to have a conflicting interest, in which case such changes shall be incorporated herein only to the extent that such changes (i) would not cause the Trustee to be deemed to have a conflicting interest or (ii) are required by law. SECTION 609. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall be a corporation organized and doing business under the laws of the United States, any State thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $5,000,000, and subject to supervision or examination by Federal or State authority, provided however, that if Section 310(a) of the Trust Indenture Act or the rules and regulations of the Commission under the Trust Indenture Act at any time permit a corporation organized and doing business under the laws of any other jurisdiction to serve as trustee of an indenture qualified under the Trust Indenture Act, this Section 609 shall be automatically wended to permit a corporation organized and doing business under the laws of any such other jurisdiction to serve as Trustee hereunder. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. Neither the Company nor any person directly or indirectly controlling, controlled by or under common control with the Company may serve as Trustee. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. SECTION 610. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 611. (b) The Trustee may resign at any time with respect to the Debt Securities of one or more series by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Debt Securities of such series. (c) The Trustee may be removed at any time with respect to the Debt Securities of any series by Act of the Holders of a majority in principal amount of the Outstanding Debt Securities of such series, delivered to the Trustee and to the Company. (d) If at any time: (1) the Trustee shall fail to comply with Section 608(a) with respect to the Debt Securities of any series after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Debt Security of such series for at least six months, unless the Trustee's duty to resign has been stayed as provided in Section 608(f) or (2) the Trustee shall cease to be eligible under Section 609 with respect to any series of Debt Securities and shall fail to resign after written request therefor by the Company or by any such Holder, or (3) the Trustee shall become incapable of acting with respect to any series of Debt Securities or a decree or order for relief by a court having jurisdiction in the premises shall have been entered in respect of the Trustee in an involuntary case under the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or similar law; or a decree or order by a court having jurisdiction in the premises shall have been entered for the appointment of a receiver, custodian, liquidator, 37 assignee, trustee, sequestrator or other similar official of the Trustee or of its property or affairs, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation, winding up or liquidation, or (4) the Trustee shall commence a voluntary case under the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or similar law or shall consent to the appointment of or taking possession by a receiver, custodian, liquidator, assignee, trustee, sequestrator or other similar official of the Trustee or its property or affairs, or shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due, or shall take corporate action in furtherance of any such action, then, in any such case, (i) the Company by a Board Resolution may remove the Trustee with respect to such series or (ii) subject to Section 514, any Holder who has been a bona fide Holder of a Debt Security of any series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee for the Debt Securities of such series and the appointment of a successor Trustee. (e) If the Trustee shall resign, be removed or become incapable of acting with respect to any series of Debt Securities, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Debt Securities or one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Debt Securities of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Debt Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Debt Securities of any particular series) and shall comply with the applicable requirements of Section 611. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Debt Securities of any series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Debt Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee with respect to the Debt Securities of such series and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Debt Securities of any series shall have been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of a Debt Security of such series for at least six months may, subject to Section 514, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Debt Securities of such series. (f) The Company shall give notice of each resignation and each removal of the Trustee with respect to the Debt Securities of any series and each appointment of a successor Trustee with respect to the Debt Securities of any series by mailing written notice of such event by first-class mail, postage prepaid, to the Holders of Registered Securities, if any, of such series as their names and addresses appear in the Security Register and, if Debt Securities of such series are issuable as Bearer Securities, by publishing notice of such event once in an Authorized Newspaper in each Place of Payment located outside the United States. Each notice shall include the name of the successor Trustee with respect to the Debt Securities of such series and the address of its Corporate Trust Office. SECTION 611. Acceptance of Appointment by Successor. (a) In the case of an appointment hereunder of a successor Trustee with respect to all Debt Securities, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee, and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. (b) In case of the appointment hereunder of a successor Trustee with respect to the Debt Securities of one or more (but not all) series, the Company, the retiring Trustee upon payment of its charges and each successor Trustee 38 with respect to the Debt Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Debt Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Debt Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Debt Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture, the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Debt Securities of that or those series to which the appointment of such successor Trustee relates; but, on the request of the Company or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Debt Securities of that or those series to which the appointment of such successor Trustee relates. (c) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (a) or (b) of this Section, as the case may be. (d) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. SECTION 612. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the executing or filing of any paper or any further act on the part of any of the parties hereto. In case any Debt Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Debt Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Debt Securities. In case any Debt Securities shall not have been authenticated by such predecessor Trustee, any such successor Trustee may authenticate and deliver such Debt Securities, in either its own name or that of its predecessor Trustee, with the full force and effect which this Indenture provides for the certificate of authentication of the Trustee. SECTION 613. Preferential Collection of Claims Against Company. (a) Subject to Subsection (b) of this Section, if the Trustee shall be or shall become a creditor, directly or indirectly, secured or unsecured, of the Company within three months prior to a default, as defined in Subsection (c) of this Section, or subsequent to such a default, then, unless and until such default shall be cured, the Trustee shall set apart and hold in a special account for the benefit of the Trustee individually, the Holders of the Debt Securities and coupons and the holders of other indenture securities (as defined in Subsection (c) of this Section): (1) an amount equal to any and all reductions in the amount due and owing upon any claim as such creditor in respect of principal or interest, effected after the beginning of such three-month period and valid as against the Company and its other creditors, except any such reduction resulting from the receipt or disposition of any property described in paragraph (2) of this Subsection, or from the exercise of any right of set-off which the Trustee could have exercised if a voluntary or involuntary case had been commenced in respect of the 39 Company under the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or other similar law upon the date of such default; and (2) all property received by the Trustee in respect of any claim as such creditor, either as security therefor, or in satisfaction or composition thereof, or otherwise, after the beginning of such three-month period, or an amount equal to the proceeds of any such property, if disposed of, subject, however, to the rights, if any, of the Company and its other creditors in such property or such proceeds. Nothing herein contained, however, shall affect the right of the Trustee: (A) to retain for its own account (i) payments made on account of any such claim by any Person (other than the Company) who is liable thereon, and (ii) the proceeds of the bona fide sale of any such claim by the Trustee to a third Person, and (iii) distributions made in cash, securities or other property in respect of claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or other similar law; (B) to realize, for its own account, upon any property held by it as security for any such claim, if such property was so held prior to the beginning of such three-month period; (C) to realize, for its own account, but only to the extent of the claim hereinafter mentioned, upon any property held by it as security for any such claim, if such claim was created after the beginning of such three-month period and such property was received as security therefor simultaneously with the creation thereof, and if the Trustee shall sustain the burden of proving that at the time such property was so received the Trustee had no reasonable cause to believe that a default as defined in Subsection (c) of this Section would occur within three months; or (D) to receive payment on any claim referred to in paragraph (B) or (C), against the release of any property held as security for such claim as provided in paragraph (B) or (C), as the case may be, to the extent of the fair value of such property. For the purposes of paragraphs (B), (C) and (D), property substituted after the beginning of such three-month period for property held as security at the time of such substitution shall, to the extent of the fair value of the property released, have the same status as the property released, and, to the extent that any claim referred to in any of such paragraphs is created in renewal of or in substitution for or for the purpose of repaying or refunding any preexisting claim of the Trustee as such creditor, such claim shall have the same status as such pre-existing claim. If the Trustee shall be required to account, the funds and property held in such special account and the proceeds thereof shall be apportioned among the Trustee, the Holders and the holders of other indenture securities in such manner that the Trustee, the Holders and the holders of other indenture securities realize, as a result of payments from such special account and payments of dividends on claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or other similar law, the same percentage of their respective claims, figured before crediting to the claim of the Trustee anything on account of the receipt by it from the Company of the funds and property in such special account and before crediting to the respective claims of the Trustee and the Holders and the holders of other indenture securities dividends on claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or other similar law, but after crediting thereon receipts on account of the indebtedness represented by their respective claims from all sources other than from such dividends and from the funds and property so held in such special account As used in this paragraph, with respect to any claim, the term "dividends" shall include any distribution with respect to such claim, in bankruptcy or receivership or proceedings for reorganization pursuant to the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or other similar law, whether such distribution is made in cash, securities, or other property, but shall not include any such distribution with respect to the secured portion, if any, of such claim. The court in which such bankruptcy, receivership or proceedings for reorganization is pending shall have jurisdiction (i) to apportion among the Trustee and the Holders and the holders of other indenture securities, in accordance with the provisions of this paragraph, 40 the funds and property held in such special account and proceeds thereof, or (ii) in lieu of such apportionment, in whole or in part, to give to the provisions of this paragraph due consideration in determining the fairness of the distributions to be made to the Trustee and the Holders and the holders of other indenture securities with respect to their respective claims, in which event it shall not be necessary to liquidate or to appraise the value of any securities or other property held in such special account or as security for any such claim, or to make a specific allocation of such distributions as between the secured and unsecured portions of such claims, or otherwise to apply the provisions of this paragraph as a mathematical formula. Any Trustee which has resigned or been removed after the beginning of such three-month period shall be subject to the provisions of this Subsection as though such resignation or removal had not occurred. If any Trustee has resigned or been removed prior to the beginning of such three-month period, it shall be subject to the provisions of this Subsection if and only if the following conditions exist (i) the receipt of property or reduction of claim, which would have given rise to the obligation to account, if such Trustee had continued as Trustee, occurred after the beginning of such three-month period; and (ii) such receipt of property or reduction of claim occurred within three months after such resignation or removal. (b) There shall be excluded from the operation of Subsection (a) of this Section a creditor relationship arising from (1) the ownership or acquisition of securities issued under any indenture, or any security or securities having a maturity of one year or more at the time of acquisition by the Trustee; (2) advances authorized by a receivership or bankruptcy court of competent jurisdiction or by this Indenture, for the purpose of preserving any property which shall at any time be subject to the lien of this Indenture or of discharging tax liens or other prior liens or encumbrances thereon, if notice of such advances and of the circumstances surrounding the making thereof is given to the Holders at the time and in the manner provided in this Indenture; (3) disbursements made in the ordinary course of business in the capacity of trustee under an indenture, transfer agent, registrar, custodian, paying agent, fiscal agent or depositary, or other similar capacity; (4) an indebtedness created as a result of services rendered or premises rented, or an indebtedness created as a result of goods or securities sold in a cash transaction as defined in Section (c) of this Section; (5) the ownership of stock or of other securities of a corporation organized under the provisions of Section 25(a) of the Federal Reserve Act, as amended, which is directly or indirectly a creditor of the Company; or (6) the acquisition, ownership, acceptance or negotiation of any drafts, bills of exchange, acceptances or obligations which fail within the classification of self-liquidating paper as defined in Subsection (c) of this Section. (c) For the purposes of this Section only; (1) The term "default" means any failure to make payment in full of the principal of or interest on any of the Debt Securities or upon the other indenture securities when and as such principal or interest becomes due and payable. (2) The term "other indenture securities" means securities upon which the Company is an obligor outstanding under any other indenture (i) under which the Trustee is also trustee, (ii) which contains provisions substantially similar to the provisions of this Section, and (iii) under which a default exists at the time of the apportionment of the- funds and property held in such special account (3) The term "cash transaction" means any transaction in which full payment for goods or securities sold is made seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks and payable upon demand. 41 (4) The term "self-liquidating paper" means any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Company for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing tide to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Company arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation. (5) The term "Company" means any obligor upon the Debt Securities. SECTION 614. Authenticating Agent. The Trustee shall upon Company request appoint one or more authenticating agents (including, without limitation, the Company or any Affiliate thereof with respect to one or more series of Debt Securities which shall be authorized on behalf of the Trustee in authenticating Debt Securities of such series in connection with the issue, delivery, registration of transfer, exchange, partial redemption or repayment of such Debt Securities. Wherever reference is made in this Indenture to the authentication of Debt Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication on behalf of the Trustee by an authenticating agent and a certificate of authentication executed on behalf of the Trustee by an authenticating agent. Each authenticating agent must be acceptable to the Company and must be a corporation organized and doing business under the laws of the United States or of any State, having a principal office in the State of California or the Borough of Manhattan, The City of New York, having a combined capital surplus of at least $1,000,000, authorized under such laws to do a trust business and subject to supervision or examination by Federal or State authorities or the equivalent foreign authority in the case of an authenticating agent who is not organized and doing business under the laws of the United States or of any State thereof or the District of Columbia. Any corporation succeeding to the corporate agency business of an authenticating agent shall continue to be an authenticating agent without the execution or filing of any paper or any further act on the part of the Trustee or such authenticating agent. An authenticating agent may at any time resign with respect to one or more series of Debt Securities by giving written notice of resignation to the Trustee and to the Company. The Trustee may at any time terminate the agency of an authenticating agent with respect to one or more series of Debt Securities by giving written notice of termination to such authenticating agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time an authenticating agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee promptly may appoint a successor authenticating agent. Any successor authenticating agent upon acceptance of its appointment hereunder shall become vested with all rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an authenticating agent herein. No successor authenticating agent shall be appointed unless eligible under the provisions of this Section. The Trustee agrees to pay to each authenticating agent from time to time reasonable compensation for its services under this Section, and the Trustee shall be entitled to be reimbursed for such payments, subject to the provisions of Section 607. The provisions of Sections 104, 111, 306, 309, 603, 604 and 605 shall be applicable to any authenticating agent. Pursuant to each appointment made under this Section, the Debt Securities of each series covered by such appointment may have endorsed thereon, in lieu of the Trustee's certificate of authentication, an alternate certificate of authentication in substantially the following form: 42 This is one of the Debt Securities, of the series designated herein, described in the within-mentioned Indenture. BANKERS TRUST COMPANY OF CALIFORNIA, NATIONAL ASSOCIATION By ______________________________________ As Authenticating Agent for the Trustee By_____________________________________ Authorized Officer ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 701. Company to Furnish Trustee Names and Addresses of Holders. The Company will furnish or cause to be furnished to the Trustee with respect to Debt Securities of each series for which it acts as Trustee: (1) semi-annually, not more than 15 days after the Regular Record Date in respect of the Debt Securities of such series or on June 30 and December 31 of each year with respect to each series of Debt Securities for which there are no Regular Record Dates, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of Registered Securities as of such Regular Record Date or June 15 or December 15, as the case may be, and (2) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; provided, however, that if and so long as the Trustee shall be the Security Registrar, no such list need be furnished. SECTION 702. Preservation of Information; Communications to Holders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders of Registered Securities contained in the most recent list furnished to the Trustee as provided in Section 701 and the names and addresses of Holders of Registered Securities received by the Trustee in its capacity as Paying Agent or Security Registrar, if so acting. The Trustee may destroy any list furnished to it as provided in Section 701 upon receipt of a new list so furnished. The Trustee shall preserve for at least two years the names and addresses of Holders of Bearer Securities filed with the Trustee pursuant to Section 703(c). (b) If three or more Holders of Debt Securities of any series (hereinafter referred to as "applicants") apply in writing to the Trustee, and furnish to the Trustee proof that each such applicant has owned a Debt Security for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other Holders of Debt Securities of such series (in which case the applicants must hold Debt Securities of such series) or with all Holders of Debt Securities with respect to their rights under this Indenture or under the Debt Securities and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall, within five Business Days after the receipt of such application, at its election, either (i) afford such applicants access to the information preserved at the time by the Trustee in accordance with Section 702(a), or (ii) inform such applicants as to the approximate number of Holders of Debt Securities of such series or of all Debt Securities, as the case may be, whose names and addresses appear in the information preserved at the time by the Trustee in accordance with Section 702(a), and as to the approximate cost of mailing to such Holders the form of proxy or other communication, if any, specified in such application. 43 If the Trustee shall elect not to afford such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each Holder whose name and address appear in the information preserved at the time by the Trustee in accordance with Section 702(a), a copy of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender, the Trustee shall mail to such applicants and file with the Commission, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interests of the Holders or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Holders with reasonable promptness after the entry of such order and the renewal of such tender, otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application. (c) Every Holder of Debt Securities or coupons, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with Section 702(b), regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 702(b). SECTION 703. Reports by Trustee. (a) Within 60 days after May 15 of each year commencing with the year 1992, the Trustee shall transmit by mail to all Holders of Debt Securities of any series with respect to which it acts as Trustee, as provided in Subsection (c) of this Section, a brief report dated as of such May 15 with respect to any of the following events which may have occurred within the previous twelve months (but if no such event has occurred within such period, no report need be transmitted): (1) any change to its eligibility under Section 609 and its qualifications under Section 608. (2) the creation of or any material change to a relationship specified in paragraphs (1) through (10) of Section 608(c); (3) the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) which remain unpaid on the date of such report, and for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Debt Securities of such series or any related coupons, on any property or funds held or collected by it as Trustee, except that the Trustee shall not be required (but may elect) to report such advances if such advances so remaining unpaid aggregate not more than 1/2 of 1% of the principal amount of the Outstanding Debt Securities of such series on the date of such report; (4) the mount, interest rate and maturity date of all other indebtedness owing by the Company (or any other obligor on the Debt Securities of such series) to the Trustee in its individual capacity, on the date of such report, with a brief description of any property held as collateral security therefor, except an indebtedness based upon a creditor relationship arising in any manner described in Section 613(b) (2), (3), (4) or (6); (5) any change to the property and funds, if any, physically in the possession of the Trustee as such on the date of such report; (6) any additional issue of Debt Securities which the Trustee has not previously reported and (7) any action taken by the Trustee in the performance of its duties hereunder which it has not previously reported and which in its opinion materially affects the Debt Securities, except action in respect of a default, notice of which has been or is to be withheld by the Trustee in accordance with Section 602; 44 provided, however, that if the Trust Indenture Act is amended subsequent to the date hereof to eliminate the requirement of the Trustee's brief report, the report required by this Section need not be transmitted to any Holders. (b) The Trustee shall transmit by mail to all Holders of Debt Securities of any series for which it acts as the Trustee, as provided in Subsection (c) of this Section, a brief report with respect to the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) since the date of the last report transmitted pursuant to Subsection (a) of this Section (or if no such report has yet been so transmitted, since the date of execution of this instrument) for the reimbursement of which it claims or may claim a right or charge, prior to that of the Debt Securities of such series, on property or funds held or collected by it as Trustee, and which it has not previously reported pursuant to this Subsection, except that the Trustee for each series shall not be required (but may elect) to report such advances if such advances remaining unpaid at any time aggregate 10% or less of the principal amount of the Debt Securities of such series Outstanding at such time, such report to be transmitted within 90 days after such time. (c) Reports pursuant to this Section shall be transmitted by mail: (1) to all Holders of Registered Securities, as the names and addresses of such Holders appear in the Security Register. (2) to such Holders of Bearer Securities as have, within the two years preceding such transmission, filed their names and addresses with the Trustee for that purpose; and (3) except in the case of reports pursuant to Subsection (b) of this Section, to each Holder of a Debt Security whose name and address is preserved at the time by the Trustee, as provided in Section 702(a). (d) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which any Debt Securities of such series are listed, with the Commission and also with the Company. The Company will notify the Trustee when any series of Debt Securities are listed on any stock exchange. SECTION 704. Reports by Company. The Company will: (1) file with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934; or, if the Company is not required to file information, documents or reports pursuant to either of said Sections, then it will file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Securities Exchange Act of 1934 in respect of a security listed and registered on a National Securities Exchange as may be prescribed from time to time in such rules and regulations; (2) file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and (3) transmit by mail to all Holders of Debt Securities, in the manner and to the extent provided in Section 703(c) with respect to reports pursuant to Section 703(a), within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant to paragraphs (1) and (2) of this Section as may be required by rules and regulations prescribed from time to time by the Commission. 45 ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 801. Company May Consolidate, etc., Only on Certain Terms. The Company shall not consolidate with or merge into any other corporation or convey, transfer or lease its properties and assets substantially as an entirety to any Person, unless: (1) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety shall be a corporation organized and existing under the laws of the United States of America, any political subdivision thereof or any State thereof and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of (and premium, if any) and interest (including all additional amounts, if any, payable pursuant to Section 1006) on all the Debt Securities and any related coupons and the performance of every covenant of this Indenture on the part of the Company to be performed or observed, (2) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time, or both, would become an Event of Default, shall have happened and be continuing; (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each stating that such consolidation, merger, conveyance, transfer or lease and, such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been met. SECTION 802. Successor Corporation Substituted. Upon any consolidation with or merger into any other corporation, or any conveyance, transfer or lease of the properties and assets of the Company substantially as an entirety in accordance with Section 801, the successor corporation formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor had been named as the Company herein, and thereafter, except in the case of a lease, the Company (which term for this purpose shall mean the Person named as the "Company" in the first paragraph of this instrument or any successor corporation which shall theretofore have become such in the manner presented in this Article) shall be relieved of all obligations and covenants under this Indenture and the Debt Securities and coupons. ARTICLE NINE SUPPLEMENTAL INDENTURES SECTION 901. Supplemental Indentures without Consent of Holders. Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another corporation to the Company, and the assumption by such successor of the covenants of the Company herein and in the Debt Securities contained; or (2) to add to the covenants of the Company, for the benefit of the Holders of all or any series of Debt Securities or coupons (and if such covenants are to be for the benefit of less than all series of Debt Securities, or coupons stating that such covenants are expressly being included solely for the benefit of such series), to convey, transfer, assign, mortgage or pledge any property to or with the Trustee, or to surrender any right or power herein conferred upon the Company, or 46 (3) to add to any additional Events of Default (and if such Events of Default are to be applicable to less than all series of Debt Securities, stating that such Events of Default are expressly being included solely to be applicable to such series); or (4) to add to, change or eliminate any of the provisions of this Indenture to provide that Bearer Securities may be registrable as to principal, to change or eliminate any restrictions on the payment of principal (or premium, if any) on Registered Securities or of principal (or premium, if any) or any interest on Bearer Securities, to permit Bearer Securities to be issued in exchange for Registered Securities, to permit Bearer Securities to be issued in exchange for Bearer Securities of other authorized denominations or to permit or facilitate the issuance of Debt Securities in uncertificated form, provided any such action shall not adversely affect the interests of the Holders of Debt Securities of any series or any related coupons in any material respect; or (5) to change or eliminate any of the provisions of this Indenture, provided that any such change or elimination (a) shall become effective only when there is no Debt Security Outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision or (b) shall not apply to any Debt Security Outstanding; or (6) to establish the form or terms of Debt Securities of any series as permitted by Sections 201 and 301; or (7) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Debt Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 611(b); or (8) to evidence any changes to Section 608, 609 or 703(a) permitted by the terms thereof; or (9) to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture which shall not be inconsistent with any provision of this Indenture, provided such other provisions shall not adversely affect the interests of the Holders of Debt Securities of any series or any related coupons in any material respect; or (10) to add to or change or eliminate any provision of this Indenture as shall be necessary or desirable in accordance with any amendments to the Trust Indenture Act, provided such action shall not adversely affect the interest of Holders of Debt Securities of any series or any appurtenant coupons in any material respect. SECTION 902. Supplemental Indentures with Consent of Holders. With the consent of the Holders of not less than 66 2/3% in principal amount of the Outstanding Debt Securities of each series affected by such supplemental indenture, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders under this Indenture of such Debt Securities of such series and any related coupons provided however, that an indenture supplemental hereto which changes the required ownership set forth in the definition of Controlled Subsidiary in Section 101 hereof from 80% to a majority but does not change any other provision of this Indenture or modify in any other manner the rights of the Holders of all the Debt Securities under this Indenture may be entered into with the consent of the Holders of at least a majority in principal amount of the Outstanding Debt Securities of each series; and provided further, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Debt Security or coupon affected thereby, (1) change the Stated Maturity of the principal or any instalment of principal of, or any instalment of interest on, any Debt Security, or reduce the principal amount thereof or the interest thereon or any premium payable upon redemption or repayment thereof, or change any obligation of the Company to pay additional amounts pursuant to Section 1006 (except as contemplated by Section 801(1) and permitted by Section 901(1)), or reduce the amount of the principal of an Original Issue Discount Security that would be due 47 and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502, or change any Place of Payment, or the coin or currency in which any Debt Security or the interest thereon or any coupon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption or repayment, on or after the Redemption Date or Repayment Date, as the case may be), or (2) reduce the percentage in principal amount of the Outstanding Debt Securities of any series, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or reduce the requirements of Section 1404 for quorum or voting, or (3) modify any of the provisions of this Section, Section 513 or Section 1008, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Debt Security affected thereby; provided, however, that this clause shall not be deemed to require the consent of any Holder with respect to changes in the references to "the Trustee" and concomitant changes in this Section and Section 1008, or the deletion of this proviso, in accordance with the requirements of Section 611(b) and 901(7); or (4) adversely affect the right to repayment, if any, of Debt Securities of any series at the option of the Holders thereof. A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Debt Securities, or which modifies the rights of the Holders of Debt Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Debt Securities of any other series. It shall not be necessary for any Act of Holders of the Debt Securities under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. SECTION 903. Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. SECTION 904. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Debt Securities theretofore or thereafter authenticated and delivered hereunder and of any coupons appertaining thereto shall be bound thereby. SECTION 905. Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. SECTION 906. Reference in Debt Securities to Supplemental Indentures. Debt Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Debt Securities of any series and any appurtenant coupons so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any such supplemental indenture may be prepared and executed by the Company and authenticated 48 and delivered by the Trustee in exchange for Outstanding Debt Securities of such series and any appurtenant coupons. ARTICLE TEN COVENANTS SECTION 1001. Payment of Principal. Premium and interest. The Company covenants and agrees for the benefit of each series of Debt Securities and any appurtenant coupons that it will duly and punctually pay the principal of (and premium, if any) and interest on the Debt Securities and any appurtenant coupons in accordance with the terms of the Debt Securities, any appurtenant coupons and this Indenture. Any interest due on Bearer Securities on or before Maturity, other than additional amounts, if any, payable as provided in Section 1006 in respect of principal of (or premium, if any, on) such a Debt Security, shall be payable only upon presentation and surrender of the several coupons for such interest instalments as are evidenced thereby as they severally mature. SECTION 1002. Maintenance of Office or Agency. The Company will maintain in each Place of Payment for any series of Debt Securities an office or agency where Debt Securities (but, except as otherwise provided below, unless such Place of Payment is located outside the United States, not Bearer Securities) may be presented or surrendered for payment, where Debt Securities may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Debt Securities and this Indenture may be served. If Debt Securities of a series are issuable as Bearer Securities, the Company will maintain, subject to any laws or regulations applicable thereto, an office or agency in a Place of Payment for such series which is located outside the United States where Debt Securities of such series and the related coupons may be presented and surrendered for payment (including payment of any additional amounts payable on Debt Securities of such series pursuant to Section 1006); provided, however, that if the Debt Securities of such series are listed on The Stock Exchange of the United Kingdom and the Republic of Ireland or the Luxembourg Stock Exchange or any other stock exchange located outside the United States and such stock exchange shall so require, the Company will maintain a Paying Agent in London or Luxembourg or any other required city located outside the United States, as the case may be, so long as the Debt Securities of such series are listed on such exchange. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of any such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee its agent to receive all presentations, surrenders, notices and demands, except that Bearer Securities of that series and the related coupons may be presented and surrendered for payment (including payment of any additional amounts payable on Bearer Securities of that series pursuant to Section 1006) at the place specified for the purpose pursuant to Section 301(5). No payment of principal of, premium or interest on Bearer Securities shall be made at any office or agency of the Company in the United States or by check mailed to any address in the United States or by transfer to an account maintained with a bank located in the United States; provided however, payment of principal of and any premium and interest denominated in Dollars (including additional amounts payable in respect thereof) on any Bearer Security may be made at an office or agency of, and designated by, the Company located in the United States if (but only if) payment of the full amount of such principal, premium, interest or additional amounts in Dollars at all offices outside the United States maintained for the purpose by the Company in accordance with this Indenture is illegal or effectively precluded by exchange controls or other similar restrictions and the Trustee receives an Opinion of Counsel that such payment within the United States is legal. Unless otherwise provided as contemplated by Section 301 with respect to any series of Debt Securities, at the option of the Holder of any Bearer Security or related coupon, payment may be made by check in the currency designated for such payment pursuant to the terms of such Bearer Security presented or mailed to an address outside the United States or by transfer to an account in such currency maintained by the payee with a bank located outside the United States. 49 The Company may also from time to time designate one or more other offices or agencies (in or outside of such Place of Payment) where the Debt Securities of one or more series and any appurtenant coupons (subject to the preceding paragraph) may be presented or surrendered for any or all such purposes, and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in each Place of Payment for any series of Debt Securities, for such purposes. The Company will give prompt written notice to the Trustee of any such designation and any change in the location of any such other office or agency. SECTION 1003. Money for Debt Securities Payments to Be Held in Trust. If the Company shall at any time act as its own Paying Agent with respect to any series of Debt Securities, it will, on or before each due date of the principal of (and premium, if any) or interest on any of the Debt Securities of such series and any appurtenant coupons, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents with respect to any series of Debt Securities, it will, prior to each due date of the principal of (and premium, if any) or interest on any Debt Securities of such series and any appurtenant coupons, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act The Company will cause each Paying Agent with respect to any series of Debt Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will (1) hold all sums held by it for the payment of the principal of (and premium, if any) or interest on Debt Securities of such series and any appurtenant coupons in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (2) give the Trustee notice of any default by the Company (or any other obligor upon the Debt Securities of such series or any appurtenant coupons) in the making of any payment of principal of (and premium, if any) or interest on the Debt Securities of such series or any appurtenant coupons; and (3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. The Company may at any time, for the purpose of terminating its obligations under this Indenture with respect to Debt Securities of any series or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any principal and interest received on the Eligible Instruments deposited with the Trustee or any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any) or interest on any Debt Security of any series or any appurtenant coupons or any money on deposit with the Trustee or any Paying Agent representing amounts deducted from the Redemption Price or Repayment Price with respect to unmatured coupons not presented upon redemption or exercise of the Holder's option for repayment pursuant to Section 1106 or 1303 and remaining unclaimed for two years after such principal (and premium, if any) or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Debt Security or any coupon appertaining thereto shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money (including the principal and interest received on Eligible Instruments deposited with the Trustee), and all liability of the 50 Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in an Authorized Newspaper of general circulation in each of the City and County of San Francisco and the Borough of Manhattan, The City of New York, and each Place of Payment or mailed to each such Holder, or both, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 1004. Limitation on Mortgages and Liens. So long as any of the Debt Securities shall be outstanding, the Company shall not create, assume, incur or suffer to exist, as security for indebtedness for borrowed money, any mortgage, pledge, encumbrance or lien or charge of any kind upon the Voting Stock of the Bank (other than directors' qualifying shares) without effectively providing that the Debt Securities shall be secured equally and ratably with (or prior to) such indebtedness; provided, however, that the Company may create, assume, incur or suffer to exist any such mortgage, pledge, encumbrance or lien or charge without regard to the foregoing provisions so long as after giving effect thereto, the Company will own at least 80% of the Voting Stock of the Bank then issued and outstanding, free and clear of any such mortgage, pledge, encumbrance or lien or charge. SECTION 1005. Limitation on Disposition of Voting Stock of and Merger and Sale of Assets by the Bank. The Company will not: (1) sell, transfer or otherwise dispose of any shares of Voting Stock of the Bank or permit the Bank to issue, sell, or otherwise dispose of any shares of its Voting Stock, unless, after giving effect to any such transaction, the Bank remains a Controlled Subsidiary; or (2) permit the Bank to (a) merge or consolidate, unless the surviving corporation is a Controlled Subsidiary; or (b) convey or transfer its properties and assets substantially as an entirety to any Person, except to a Controlled Subsidiary. SECTION 1006. Payment of Additional Amounts. If the Debt Securities of a series provide for the payment of additional amounts, the Company will pay to the Holder of any Debt Security of any series or any coupon appertaining thereto additional amounts upon the terms and subject to the conditions provided therein. Whenever in this Indenture there is mentioned, in any context, the payment of the principal of (or premium, if any) or interest on, or in respect of, any Debt Security of any series or any related coupon or the net proceeds received on the sale or exchange of any Debt Security of any series, such mention shall be deemed to include mention of the payment of additional amounts provided for in the terms of such Debt Securities and this Section to the extent that, in such context, additional amounts are, were or would be payable in respect thereof pursuant to the provisions of this Section and express mention of the payment of additional amounts (if applicable) in any provisions hereof shall not be construed as excluding additional amounts in those provisions hereof where such express mention is not made. If the Debt Securities of a series provide for the payment of additional amounts, at least 10 days prior to the first Interest Payment Date with respect to that series of Debt Securities (or if the Debt Securities of that series will not bear interest prior to Maturity, the first day on which a payment of principal (and premium, if any) is made), and at least 10 days prior to each date of payment of principal (and premium, if any) or interest if there has been any change with respect to the matters set forth in the below-mentioned Officers' Certificate, the Company will furnish the Trustee and the Company's principal Paying Agent or Paying Agents, if other than the Trustee, with an Officers' Certificate instructing the Trustee and such Paying Agent or Paying Agents whether such payment of principal of (and premium, if any) or interest on the Debt Securities of that series shall be made to Holders of Debt Securities of that series or the related coupons who are United States Aliens without withholding for or on account of any tax, assessment or other governmental charge described in the Debt Securities of that series. If any such withholding shall be required, then such Officers' Certificate shall specify by country the amount, if any, required to 51 be withheld on such payments to such Holders of Debt Securities or coupons and the Company will pay to the Trustee or such Paying Agent the additional amounts, if any, required by the terms of such Debt Securities and the first paragraph of this Section. The Company covenants to indemnify the Trustee and any Paying Agent for, and to hold them harmless against, any loss, liability or expense reasonably incurred without negligence or bad faith on their part arising out of or in connection with actions taken or omitted by any of them in reliance on any Officers' Certificate furnished pursuant to this Section. SECTION 1007. Officers' Certificate as to Default. The Company will deliver to the Trustee, on or before a date not more than four months after the end of each fiscal year of the Company (which on the date hereof is the calendar year) ending after the date hereof, an Officers' Certificate, stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions of this Indenture, and, if the Company shall be in default, specifying all such defaults and the nature thereof of which they may have knowledge. The Company will deliver written notice to the Trustee promptly after any officer of the Company has knowledge of the occurrence of any event which with the giving of notice or the lapse of time or both would become an Event of Default under Clause (5) of Section 501. SECTION 1008. Waiver of Certain Covenants. The Company may omit in any particular instance to comply with any covenant or condition set forth in Sections 1004 and 1005, with respect to the Debt Securities of any series if, before the time for such compliance the Holders of at least 66 2/3% in principal amount of the Debt Securities of such series at the time Outstanding shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such covenant or condition shall remain in full force and effect. ARTICLE ELEVEN REDEMPTION OF DEBT SECURITIES SECTION 1101. Applicability of Article. Debt Securities of any series which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise specified as contemplated by Section 301 for Debt Securities of any series) in accordance with this Article. SECTION 1102. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Debt Securities shall be evidenced by an Officers' Certificate authorized by or pursuant to a Board Resolution. In case of any redemption at the election of the Company of less than all of the Debt Securities of any series, the Company shall, at least 45 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount and the tenor and terms of the Debt Securities of any series to be redeemed. In the case of any redemption of Debt Securities prior to the expiration of any restriction on such redemption provided in the terms of such Debt Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers' Certificate evidencing compliance with such restriction. SECTION 1103. Selection by Trustee of Debt Securities to Be Redeemed. Except as otherwise specified as contemplated by Section 301 for Debt Securities of any series, if less than all the Debt Securities of any series with like tenor and terms are to be redeemed, the particular Debt Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Debt Securities of such series with like tenor and terms not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to the minimum authorized denomination for Debt Securities of such series or any integral multiple 52 thereof which is also an authorized denomination) of the principal amount of Registered Securities or Bearer Securities (if issued in more than one authorized denomination) of such series of a denomination larger than the minimum authorized denomination for Debt Securities of such series. The Trustee shall promptly notify the Company in writing of the Debt Securities selected for redemption and, in the case of any Debt Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Debt Securities shall relate, in the case of any Debt Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Debt Security which has been or is to be redeemed. SECTION 1104. Notice of Redemption. Notice of redemption shall be given in the manner provided in Section 106 not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Debt Securities to be redeemed. All notices of redemption shall state: (1) the Redemption Date, (2) the Redemption Price, (3) if less than all Outstanding Debt Securities of any series are to be redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the particular Debt Securities to be redeemed, (4) that on the Redemption Date the Redemption Price will become due and payable upon each such Debt Security to be redeemed, and that interest thereon shall cease to accrue on and after said date, (5) the Place or Places of Payment where such Debt Securities, together in the case of Bearer Securities with all coupons, if any, appertaining thereto maturing after the Redemption Date, are to be surrendered for payment of the Redemption Price, (6) that Bearer Securities may be surrendered for payment only at such place or places which are outside the United States, except as otherwise provided in Section 1002, (7) that the redemption is for a sinking fund, if such is the case, and (8) the CUSIP number, if any. A notice of redemption published as contemplated by Section 106 need not identify particular Registered Securities to be redeemed. Notice of redemption of Debt Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. SECTION 1105. Deposit of Redemption Price. On or prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money and/or, to the extent the Debt Securities to be redeemed are denominated and payable in Dollars only, Eligible Instruments the payments of principal and interest on which when due (and without reinvestment and providing no tax liability will be imposed upon the Trustee or the Holders of the Debt Securities to be redeemed) will provide money on or prior to the Redemption Date in such amounts as will (together with any money irrevocably deposited in trust with the Trustee, without investment) be sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the Debt Securities or portions thereof which are to be redeemed on that date provides however, that deposits with respect to Bearer Securities shall be made with a Paying Agent or Paying Agents located outside the United States except as otherwise provided in Section 1002, unless otherwise specified as contemplated by Section 301. 53 SECTION 1106. Debt Securities Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Debt Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Debt Securities shall cease to bear interest and the coupons for such interest appertaining to any Bearer Securities so to be redeemed, except to the extent provided below, shall be void. Upon surrender of any such Debt Security for redemption in accordance with said notice, such Debt Security shall be paid by the Company at the Redemption Price, together with accrued interest to the Redemption Date; provided, however, that instalments of interest on Bearer Securities whose Stated Maturity is on or prior to the Redemption Date shall be payable only upon presentation and surrender of coupons for such interest (at an office or agency located outside the United States except as otherwise provided in Section 1002), and provided further, that instalments of interest on Registered Securities whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Debt Securities, or one or more Predecessor Securities, registered as such on the relevant Record Dates according to their terms and the provisions of Section 307. If any Bearer Security surrendered for redemption shall not be accompanied by all appurtenant coupons maturing after the Redemption Date, such Bearer Security may be paid after deducting from the Redemption Price an amount equal to the face amount of all such missing coupons, or the surrender of such missing coupon or coupons may be waived by the Company and the Trustee if there be furnished to them such security or indemnity as they may require to save each of them and any Paying Agent harmless. If thereafter the Holder of such Bearer Security shall surrender to the Trustee or any Paying Agent any such missing coupon in respect of which a deduction shall have been made from the Redemption Price, such Holder shall be entitled to receive the amount so deducted without interest thereon; provided however, that interest represented by coupons shall be payable only upon presentation and surrender of those coupons at an office or agency located outside of the United States except as otherwise provided in Section 1002. If any Debt Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Debt Security. SECTION 1107. Debt Securities Redeemed in Part. Any Registered Security which is to be redeemed only in part shall be surrendered at a Place of Payment therefor (with, if the Company, the Security Registrar or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company, the Security Registrar and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Debt Security without service charge, a new Registered Security or Registered Securities of the same series and of like tenor and terms, of any authorized denominations as requested by such Holder in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Debt Security so surrendered. ARTICLE TWELVE SINKING FUNDS SECTION 1201. Applicability of Article. The provisions of this Article shall be applicable to any sinking fund for the retirement of Debt Securities of a series except as otherwise specified as contemplated by Section 301 for Debt Securities of such series. The minimum amount of any sinking fund payment provided for by the terms of Debt Securities of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the term of Debt Securities of any series is herein referred to as an "optional sinking fund payment". If provided for by the terms of Debt Securities of any series, the amount of any sinking fund payment may be subject to reduction as provided in Section 1202. Each sinking fund payment shall be applied to the redemption of Debt Securities of any series as provided for by the terms of Debt Securities of such series. 54 SECTION 1202. Satisfaction of Sinking Fund Payments with Debt Securities. The Company (1) may deliver Outstanding Debt Securities of a series (other than any previously called for redemption), together in the case of any Bearer Securities of such series with all unmatured coupons appertaining thereto, and (2) may apply as a credit Debt Securities of a series which have been redeemed either at the election of the Company pursuant to the terms of such Debt Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Debt Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to the Debt Securities of such series required to be made pursuant to the terms of such Debt Securities as provided for by the terms of such series; provided that such Debt Securities have not been previously so credited. Such Debt Securities shall be received and credited for such purpose by the Trustee at the Redemption Price specified in such Debt Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly. If as a result of the delivery or credit of Debt Securities in lieu of cash payments pursuant to this Section 1202, the principal amount of Debt Securities to be redeemed in order to exhaust the aforesaid cash payment shall be less than $100,000, the Trustee need not call Debt Securities for redemption, except upon Company Request, and such cash payment shall be held by the Trustee or a Paying Agent and applied to the next succeeding sinking fund payment, provided, however, that the Trustee or such Paying Agent shall at the request of the Company from time to time pay over and deliver to the Company any cash payment so being held by the Trustee or such Paying Agent upon delivery by the Company to the Trustee of Debt Securities purchased by the Company having an unpaid principal amount equal to the cash payment requested to be released to the Company. SECTION 1203. Redemption of Debt Securities for Sinking Fund. Not less than 60 days prior to each sinking fund payment date for any series of Debt Securities (unless a shorter period shall be satisfactory to the Trustee), the Company will deliver to the Trustee an Officers' Certificate specifying the amount of the next ensuing sinking fund payment for that series pursuant to the terms of that series, the portion thereof, if any, which is to be satisfied by payment of cash, the portion thereof, if any, which is to be satisfied by crediting Debt Securities of that series pursuant to Section 1202 and the basis for any such credit and, prior to or concurrently with the delivery of such Officers' Certificate, will also deliver to the Trustee any Debt Securities to be so credited and not theretofore delivered to the Trustee. Not less than 30 days (unless a shorter period shall be satisfactory to the Trustee) before each such sinking fund payment date the Trustee shall select the Debt Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 1103 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 1104. Such notice having been duly given, the redemption of such Debt Securities shall be made upon the terms and in the manner stated in Sections 1105, 1106 and 1107. ARTICLE THIRTEEN REPAYMENT AT THE OPTION OF HOLDERS SECTION 1301. Applicability of Article. Debt Securities of any series which are repayable at the option of the Holders thereof before their Stated Maturity shall be repaid in accordance with their terms and (except as otherwise specified pursuant to Section 301 for Debt Securities of such series) in accordance with this Article. SECTION 1302. Repayment of Debt Securities. Each Debt Security which is subject to repayment in whole or in part at the option of the Holder thereof on a Repayment Date shall be repaid at the applicable Repayment Price together with interest accrued to such Repayment Date as specified pursuant to Section 301. SECTION 1303. Exercise of Option; Notice. Each Holder desiring to exercise such Holder's option for repayment shall, as conditions to such repayment, surrender the Debt Security to be repaid in whole or in part together with written notice of the exercise of such option at any office or agency of the Company in a Place of Payment, not less than 30 nor more than 45 days prior to 55 the Repayment Date; provided however, that surrender of Bearer Securities together with written notice of exercise of such option shall be made at an office or agency located outside the United States except as otherwise provided in Section 1002. Such notice, which shall be irrevocable, shall specify the principal amount of such Debt Security to be repaid, which shall be equal to the minimum authorized denomination for such Debt Security or an integral multiple thereof, and shall identify the Debt Security to be repaid and, in the case of a partial repayment of the Debt Security shall specify the denomination or denominations of the Debt Security or Debt Securities of the same series to be issued to the Holder for the portion of the principal of the Debt Security surrendered which is not to be repaid. If any Bearer Security surrendered for repayment shall not be accompanied by all unmatured coupons and all matured coupons in default, such Bearer Security may be paid after deducting from the Repayment Price an amount equal to the face amount of all such missing coupons, or the surrender of such missing coupon or coupons may be waived by the Company and the Trustee if there be furnished to them such security or indemnity as they may require to save each of them and any Paying Agent harmless. If thereafter the Holder of such Bearer Security shall surrender to the Trustee or any Paying Agent any such missing coupon in respect of which a deduction shall have been made from the Repayment Price, such Holder shall be entitled to receive the amount so deducted without interest thereon; provided, however, that interest represented by coupons shall be payable only at an office or agency located outside the United States except as otherwise provided in Section 1002. The Company shall execute and the Trustee shall authenticate and deliver without service charge to the Holder of any Registered Security so surrendered a new Registered Security or Securities of the same series, of any authorized denomination specified in the foregoing notice, in an aggregate principal amount equal to any portion of the principal of the Registered Security so surrendered which is not to be repaid. The Company shall execute and the Trustee shall authenticate and deliver without service charge to the Holder of any Bearer Security so surrendered a new Registered Security or Securities or new Bearer Security or Securities (and all appurtenant unmatured coupons and matured coupons in default) or any combination thereof of the same series of any authorized denomination or denominations specified in the foregoing notice, in an aggregate principal amount equal to any portion of the principal of the Debt Security so surrendered which is not to be paid, provided, however, that the issuance of a Registered Security therefor shall be subject to applicable laws and regulations, including provisions of the United States federal income tax laws and regulations in effect at the time of the exchange; neither the Company, the Trustee nor the Security Registrar shall issue Registered Securities for Bearer Securities if it has received an Opinion of Counsel that as a result of such issuance the Company would suffer adverse consequences under the United States federal income tax laws then in effect and the Company has delivered to the Trustee a Company Order directing the Trustee not to make such issuances thereafter unless and until the Trustee receives a subsequent Company Order to the contrary. The Company shall deliver copies of such Company Order to the Security Registrar. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the repayment of Debt Securities shall relate, in the case of any Debt Security repaid or to be repaid only in part, to the portion of the principal of such Debt Security which has been or is to be repaid. SECTION 1304. Election of Repayment by Remarketing Entities. The Company may elect, with respect to Debt Securities of any series which are repayable at the option of the Holders thereof before their Stated Maturity, at any time prior to any Repayment Date to designate one or more Remarketing Entities to purchase, at a price equal to the Repayment Price, Debt Securities of such series from the Holders thereof who give notice and surrender their Debt Securities in accordance with Section 1303. SECTION 1305. Securities Payable on the Repayment Date. Notice of exercise of the option of repayment having been given and the Debt Securities so to be repaid having been surrendered as aforesaid, such Debt Securities shall, unless purchased in accordance with Section 1304, on the Repayment Date become due and payable at the price therein specified and from and after the Repayment Date such Debt Securities shall cease to bear interest and shall be paid on the Repayment Date, and the coupons for such interest appertaining to Bearer Securities so to be repaid, except to the extent provided above, shall be void, unless the Company shall default in the payment of such price, in which case the Company shall continue to be obligated 56 for the principal amount of such Debt Securities and shall be obligated to pay interest on such principal amount at the rate borne by such Debt Securities from time to time until payment in full of such principal amount. ARTICLE FOURTEEN MEETINGS OF HOLDERS OF DEBT SECURITIES SECTION 1401. Purposes for Which Meetings May Be Called. If Debt Securities of a series are issuable in whole or in part as Bearer Securities, a meeting of Holders of Debt Securities of such series may be called at any time and from time to time pursuant to this Article to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other Act provided by this Indenture to be made, given or taken by Holders of Debt Securities of such series. SECTION 1402. Call, Notice and Place of Meetings. (a) The Trustee may at any time call a meeting of Holders of Debt Securities of any series issuable as Bearer Securities for any purpose specified in Section 1401, to be held at such time and at such place in the City and County of San Francisco, the Borough of Manhattan, The City of New York, or in London as the Trustee shall determine. Notice of every meeting of Holders of Debt Securities of any series, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be given, in the manner provided in Section 106, not less than 21 nor more than 180 days prior to the date fixed for the meeting. (b) In case at any time the Company, pursuant to a Board Resolution, or the Holders of at least 10% in principal amount of the Outstanding Debt Securities of any series shall have requested the Trustee to call a meeting of the Holders of Debt Securities of such series for any purpose specified in Section 1401, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have made the first publication of the notice of such meeting within 21 days after receipt of such request or shall not thereafter proceed to cause the meeting to be held as provided herein, then the Company or the Holders of Debt Securities of such series in the amount above specified, as the case may be, may determine the time and the place in the City and County of San Francisco, the Borough of Manhattan, The City of New York, or in London for such meeting and may call such meeting for such purposes by giving notice thereof as provided in subsection (a) of this Section. SECTION 1403. Persons Entitled to Vote at Meetings. To be entitled to vote at any meeting of Holders of Debt Securities of any series, a Person shall be (1) a Holder of one or more Outstanding Debt Securities of such series, or (2) a Person appointed by an instrument in writing as proxy for a Holder or Holders of one or more Outstanding Debt Securities of such series by such Holder or Holders. The only Persons who shall be entitled to be present or to speak at any meeting of Holders of Debt Securities of any series shall be the Persons entitled to vote at such meeting and their counsel, any representatives of the Trustee and its counsel and any representatives of the Company and its counsel. SECTION 1404. Quorum; Action. The Persons entitled to vote a majority in principal amount of the Outstanding Debt Securities of a series shall constitute a quorum for a meeting of Holders of Debt Securities of such series provided, however, that if any action is to be taken at such meeting with respect to a consent or waiver which this Indenture expressly provides may be given by the Holders of not less than 66 2/3% in principal amount of the Outstanding Debt Securities of a series, the Persons entitled to vote 66 2/3% in principal amount of the Outstanding Debt Securities of such series shall constitute a quorum. In the absence of a quorum within 30 minutes of the time appointed for any such meeting, the meeting shall, if convened at the request of Holders of Debt Securities of such series, be dissolved. In the absence of a quorum in any other case the meeting may be adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for a period of not less than 10 days as determined by the chairperson of the meeting prior to the adjournment of such adjourned meeting. Notice of the reconvening of any adjourned meeting shall be given as provided in Section 1402(a), except that such notice need be given only once not less than five days prior to the date on which the meeting is scheduled to be reconvened. 57 Notice of the reconvening of an adjourned meeting shall state expressly the percentage, as provided above, of the principal amount of the Outstanding Debt Securities of such series which shall constitute a quorum. Except as limited by the provisos to Section 902, any resolution presented to a meeting or adjourned meeting duly reconvened at which a quorum is present as aforesaid may be adopted only by the affirmative vote of the Holders of a majority in principal amount of the Outstanding Debt Securities of that series; provided, however, that, except as limited by the provisos to Section 902, any resolution with respect to any consent or waiver which this Indenture expressly provides may be given by the Holders of not less than 66 2/3% in principal amount of the Outstanding Debt Securities of a series may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid only by the affirmative vote of the Holders of 66 2/3% in principal amount of the Outstanding Debt Securities of that series; and provided, further, that, except as limited by the provisos to Section 902, any resolution with respect to any request, demand, authorization, direction, notice, consent, waiver or other Act which this Indenture expressly provides may be made, given or taken by the Holders of a specified percentage, which is less than a majority, in principal amount of the Outstanding Debt Securities of a series may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid by the affirmative vote of the Holders of such specified percentage in principal amount of the Outstanding Debt Securities of that series. Any resolution passed or decision taken at any meeting of Holders of Debt Securities of any series duly held in accordance with this Section shall be binding on all the Holders of Debt Securities of such series and the related coupons, whether or not present or represented at the meeting. SECTION 1405. Determination of Voting Rights; Conduct and Adjournment of Meetings. (a) Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders of Debt Securities of such series in regard to proof of the holding of Debt Securities of such series and of the appointment of proxies and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. Except as otherwise permitted or required by any such regulations, the holding of Debt Securities shall be proved in the manner specified in Section 104 and the appointment of any proxy shall be proved in the manner specified in Section 104 or, in the case of Bearer Securities, by having the signature of the person executing the proxy witnessed or guaranteed by any trust company, bank or banker authorized by Section 104 to certify to the holding of Bearer Securities. Such regulations may provide that written instruments appointing proxies, regular on their face, may be presumed valid and genuine without the proof specified in Section 104 or other proof. (b) The Trustee shall, by an instrument in writing, appoint a temporary chairperson of the meeting, unless the meeting shall have been called by the Company or by Holders of Debt Securities as provided in Section 1402(b), in which case the Company or the Holders of Debt Securities of the series calling the meeting, as the case may be, shall in like manner appoint a temporary chairperson. A permanent chairperson and a permanent secretary of the meeting shall be elected by vote of the Persons entitled to vote a majority in principal amount of the Outstanding Debt Securities of such series represented at the meeting. (c) At any meeting each Holder of a Debt Security of such series or proxy shall be entitled to one vote for each $1,000 principal amount (or the equivalent in ECU, any other composite currency or a Foreign Currency) of Debt Securities of such series held or represented by him; provided however, that no vote shall be cast or counted at any meeting in respect of any Debt Security challenged as not Outstanding and ruled by the chairperson of the meeting not to be Outstanding. The chairperson of the meeting shall have no right to vote, except as a Holder of a Debt Security of such series or proxy. (d) Any meeting of Holders of Debt Securities of any series duly called pursuant to Section 1402 at which a quorum is present may be adjourned from time to time by Persons entitled to vote a majority in principal amount of the Outstanding Debt Securities of such series represented at the meeting, and the meeting may be held as so adjourned without further notice. 58 SECTION 1406. Counting Votes and Recording Action of Meetings. The vote upon any resolution submitted to any meeting of Holders of Debt Securities of any series shall be by written ballots on which shall be subscribed the signatures of the Holders of Debt Securities of such series or of their representatives by proxy and the principal amounts and serial numbers of the Outstanding Debt Securities of such series held or represented by them. The permanent chairperson of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in triplicate of all votes cast at the meeting. A record, at least in triplicate, of the proceedings of each meeting of Holders of Debt Securities of any series shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was given as provided in Section 1402 and, if applicable, Section 1404. Each copy shall be signed and verified by the affidavits of the permanent chairperson and secretary of the meeting and one such copy shall be delivered to the Company, and another to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated. ARTICLE FIFTEEN DEFEASANCE Section 1501. Termination of Company's Obligations. With respect to any series of Debt Securities, if the Company deposits irrevocably in trust with the Trustee money and/or, to the extent such Debt Securities are denominated and payable in Dollars only, Eligible Instruments the payments of principal and interest on which when due (and without reinvestment and providing no tax liability will be imposed upon the Trustee or the Holders of such Debt Securities) will provide money in such amounts as will (together with any money irrevocably deposited in trust with the Trustee, without investment) be sufficient to pay principal (and premium, if any) and interest when due on the Debt Securities of such series and any coupons appertaining thereto and any mandatory sinking fund, repayment or analogous payments thereon on the scheduled due dates therefor at the Stated Maturity thereof, the Company's obligations under Sections 1004 and 1005 shall terminate with respect to the Debt Securities of the series for which such deposit was made; provided however, that (i) no Event of Default with respect to the Debt Securities of such series under Section 501(6) or 501(7) or event that with notice or lapse of time or both would constitute such an Event of Default shall have occurred and be continuing on such date and (ii) such termination shall not relieve the Company of its obligations under the Debt Securities of such series and this Indenture to pay when due the principal of (and premium, if any) and interest and additional amounts on such Debt Securities and any coupons appertaining thereto if such Debt Securities or coupons are not paid (or payment is not provided for) when due from the money and Eligible Instruments (and the proceeds thereof) so deposited. It shall be a condition to the deposit of cash and/or Eligible Instruments and the termination of the Company's obligations with respect to the Debt Securities of any series under Sections 1004 and 1005 pursuant to the provisions of this Section that the Company deliver to the Trustee (i) an opinion of nationally recognized independent tax counsel to the effect that (a) Holders of Debt Securities of such series and any coupons appertaining thereto will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and termination and (b) such Holders (and future Holders) will be subject to tax in the same amount, manner and timing as if such deposit and termination has not occurred and (ii) an Officers' Certificate to the effect that under the laws in effect on the date such money and/or Eligible Instruments are deposited with the Trustee, the amount thereof will be sufficient, after payment of all Federal, state and local taxes in respect thereof payable by the Trustee, to pay principal (and premium, if any) and interest when due on the Debt Securities of such series and any coupons appertaining thereto. It shall be an additional condition to the deposit of cash and/or Eligible Instruments and the termination of the Company's obligations under Sections 1004 and 1005 pursuant to the provisions of this Section, with respect to the Debt Securities of any series then listed on the New York Stock Exchange, that the Company deliver an Opinion of 59 Counsel that the Debt Securities of such series will not be delisted from the New York Stock Exchange as a result of such deposit and termination. After a deposit as provided herein, the Trustee shall, upon Company Request, acknowledge in writing the discharge of the Company's obligations with respect to the Debt Securities of such series under Sections 1004 and 11005 pursuant to the provisions of this Section. SECTION 1502. Repayment to Company. The Trustee and any Paying Agent shall promptly pay to the Company upon Company Request any money or Eligible Instruments not required for the payment of the principal of (and premium, if any) and interest on the Debt Securities of any series and any related coupons for which money or Eligible Instruments have been deposited pursuant to Section 1501 held by them at any time. The Trustee and any Paying Agent shall pay to the Company upon Company Request any money held by them for the payment of principal (and premium, if any) and interest that remains unclaimed for two years after the Maturity of the Debt Securities for which a deposit has been made pursuant to Section 1301. After such payment to the Company, the Holders of the Debt Securities of such series and any related coupons shall thereafter, as unsecured general creditors, look only to the Company for the payment thereof. SECTION 1503. Indemnity for Eligible Instruments. The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the deposited Eligible Instruments or the principal or interest received on such Eligible Instruments. * * * * * 60 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. BANKAMERICA CORPORATION By RICHARD LAIDERMAN ------------------------------------- Senior Vice President [CORPORATE SEAL] Attest: CHERYL SOROKIN - ---------------------------------------- Secretary BANKERS TRUST COMPANY OF CALIFORNIA, NATIONAL ASSOCIATION By LAWRENCE J. BELL ------------------------------------- Assistant Vice President [CORPORATE SEAL] Attest: JAMES J. McGRAW - ---------------------------------------- Assistant Secretary 61 STATE OF CALIFORNIA ) ) ss. CITY AND COUNTY OF SAN FRANCISCO ) On this 21st day of January, 1992 before me, a notary public in and for said State, personally appeared RICHARD LAIDERMAN, known to me to be a senior vice president of BANKAMERICA CORPORATION, one of the corporations that executed the within instrument, and also known to me to be the person who executed it on behalf of said corporation, and acknowledged to me that such corporation executed the within instrument. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written. [NOTARIAL SEAL] ELIZABETH A. PROSEK ---------------------------------------- NOTARY PUBLIC In and for the State of California with principal office in the City and County of San Francisco. My Commission Expires June 8, 1992 62 STATE OF CALIFORNIA ) CITY AND COUNTY OF SAN FRANCISCO ) ss. ) On this 21st day of January, 1992 before me, a notary public in and for said State, personally appeared LAWRENCE J. BELL, known to me to be an assistant vice president of Bankers Trust Company of California, National Association, one of the corporations that executed the within instrument, and also known to me to be the person who executed it on behalf of said corporation, and acknowledged to me that such corporation executed the within instrument. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written. [NOTARIAL SEAL] GLENN W. ANDERSEN ---------------------------------------- NOTARY PUBLIC In and for the State of California with principal office in the City and County of San Francisco. My Commission Expires July 18, 1992 A-I EXHIBIT A-l [Form of Certificate of Beneficial Ownership by a Non-United States Person or by Certain Other Persons] Certificate BANKAMERICA CORPORATION [Insert title or sufficient description of Debt Securities to be delivered] Reference is hereby made to the Indenture dated as of November 1, 1991 (the "Indenture") between BankAmerica Corporation and Bankers Trust Company of California, National Association, as trustee (the "Trustee") covering the above-captioned Debt Securities. This is to certify that as of the date hereof, _____________________________ principal amount of Debt Securities credited to you for our account (i) is owned by persons that are not United States Persons, as defined below; (ii) is owned by United States Persons that are (a) foreign branches of United States financial institutions (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)) ("financial institutions") purchasing for their own account or for resale, or (b) United States Persons who acquired the Notes through foreign branches of United States financial institutions and who hold the Notes through such United States financial institutions on the date hereof (and in either case (a) or (b), each such United States financial institution encloses herewith a certificate in the form of Exhibit A-2 to the Indenture); or (iii) is owned by United States or foreign financial institutions for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), which United States or foreign financial institutions described in clause (iii) above (whether or not also described in clause (i) or (ii)) certify that they have not acquired the Notes for purposes of resale directly or indirectly to a United States Person or to a person within the United States or its possessions. [Insert if certificate does not relate to an interest payment--We undertake to advise you by tested telex followed by written confirmation if the above statement as to beneficial ownership is not correct on the date of delivery of the above-captioned Debt Securities in bearer form as to all of such Debt Securities with respect to such of said Debt Securities as then appear in your books as being held for our account.] We understand that this certificate is required in connection with United States tax laws. We irrevocably authorize you to produce this certificate or a copy hereof to any interested party in any administrative or legal proceedings with respect to the matters covered by this certificate. "United States Person" shall mean a citizen or resident of the United States of America (including the District of Columbia), a corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof or an estate or trust that is subject to United States federal income taxation regardless of the source of its income. A-2 [This certificate excepts and does not relate to _______ principal amount of Debt Securities credited to you for our account and to which we are not now able to make the certification set forth above. We understand that definitive Debt Securities cannot be delivered and interest cannot be paid until we are able to so certify with respect to such principal amount of Debt Securities.]* Dated___________________________________ [To be dated on or after ______________________________ (the date determined as provided in the Indenture)] [Name of Person Entitled to Receive Bearer Security] ________________________________________ (Authorized Signatory) Name____________________________________ Title___________________________________ - ---------- * Delete if inappropriate A-3 EXHIBIT A-2 (Form of Certificate of Status as a Foreign Branch of a United States Financial Institution] Certificate BANKAMERICA CORPORATION [Insert title or sufficient description of Debt Securities to be delivered] Reference is hereby made to the Indenture dated as of November 1, 1991 (the "Indenture"), between BankAmerica Corporation and Bankers Trust Company of California, National Association, as trustee, relating to the offering of the above-captioned Debt Securities (the "Debt Securities"). Unless herein defined, terms used herein have the same meaning as given to them in the Indenture. The undersigned represents that it is a branch located outside the United States of a United States securities clearing organization, bank or other financial institution (as defined in U.S. Treasury Regulation Section l.165-12(c)(1)(v)) that holds customers' securities in the ordinary course of its trade or business and agrees, and authorizes you to advise the issuer or the issuer's agent, that it will comply with the requirements of Section 1650)(3)(A), (B) or (C) of the Internal Revenue Code of 1986 and the regulations thereunder and is not purchasing for resale directly or indirectly to a United States Person or to a person within the United States or its possessions. We undertake to advise you by tested telex followed by written confirmation if the statement in the immediately preceding sentence is not correct on the date of delivery of the above-captioned Debt Securities in bearer form. We understand that this certificate is required in connection with the United States tax laws. We irrevocably authorize you to produce this certificate or a copy hereof to any interested party in any administrative or legal proceedings with respect to the matters covered by this certificate. Dated___________________________________ [To be dated on or after ______________________________ (the date determined as provided in the Indenture)] [Name of Person Entitled to Receive Bearer Security] ________________________________________ (Authorized Signatory) Name____________________________________ Title___________________________________ B-1 EXHIBIT B [Form of Certificate to be Given by Euroclear and Cedel S.A. in Connection with the Exchange of All or a Portion of a Temporary Global Security or to Obtain Interest Prior to Exchange] Certificate BANKAMERICA CORPORATION [Insert title or sufficient description of Debt Securities to be delivered] We refer to that portion, _________________ of the Global Security representing the above-captioned issue [which is herewith submitted to be exchanged for definitive Debt Securities]* [for which we are seeking to obtain payment of interest]* (the "Submitted Portion"). This is to certify, pursuant to the Indenture dated as of November 1, 1991 (the "Indenture") between BankAmerica Corporation and Bankers Trust Company of California, National Association, as trustee (the "Trustee"), that we have received in writing, by tested telex or by electronic transmission from member organizations with respect to each of the persons appearing in our records as being entitled to a beneficial interest in the Submitted Portion a Certificate of Beneficial Ownership by a Non-United States Person or by Certain Other Persons [and, in some cases, a Certificate of Status as a Foreign Branch of a United States Financial Institution, authorizing us to inform the issuer or the issuer's agent that it will comply with the requirements of Section 165(j) (3) (A), (B) or (C) of the Internal Revenue Code of 1986 and the regulations thereunder] substantially in the form of Exhibit A-1 [and A-2]* to the Indenture. We hereby request that you deliver to the office of ___________________ in __________________ definitive Bearer Securities in the denominations on the attached Schedule A. We further certify that as of the date hereof we have not received any notification from any of the persons giving such certificates to the effect that the statements made by them with respect to any part of the Submitted Portion are no longer true and cannot be relied on as of the date hereof. Dated:______________________________ (MORGAN GUARANTY TRUST COMPANY OF NEW YORK, BRUSSELS OFFICE, as Operator of the Euroclear System] [CEDEL S.A.] By______________________________________ - ---------- * Delete if inappropriate. BANKAMERICA CORPORATION TO FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION Trustee ---------- FIRST SUPPLEMENTAL INDENTURE Dated as of August 1, 1994 ---------- Supplemental to Indenture Dated as of November 1, 1991 FIRST SUPPLEMENTAL INDENTURE First Supplemental Indenture (the "Indenture"), dated as of August 1, 1994, between BankAmerica Corporation, a Delaware corporation (hereinafter called the "Company"), having its principal office at Bank of America Center, 555 California Street, San Francisco, California 94104, and First Trust of California, National Association, a national banking association (hereinafter called "Trustee"), having its principal corporate trust office at 101 California Street, San Francisco, California 94111. The Company has previously executed and delivered to the Trustee's predecessor in interest an Indenture dated as of November 1, 1991 (hereinafter called the "Original Indenture"), providing for the issuance from time to time of one or more series of securities (herein called the "Debt Securities"). The Company desires and has requested the Trustee pursuant to Section 901(5) of the Original Indenture to join with it in the execution and delivery of this Indenture in order to amend the Original Indenture in a First Supplemental Indenture as set forth herein with respect solely to series of Debt Securities created and issued on or after the date hereof. Section 901(5) of the Original Indenture provides that a supplemental indenture may be entered into by the Company and the Trustee without the consent of any Holders to change or eliminate any of the provisions of the Original Indenture, provided that any such change or elimination (a) shall become effective only when there is no Debt Security Outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision or (b) shall not apply to any Debt Security Outstanding. All things necessary to make this Indenture a valid agreement of the Company and the Trustee and a valid amendment to the Original Indenture have been done. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Debt Securities of any series created and issued on or after the date hereof by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Debt Securities of any such series: (a) that Subsection (5) of Section 501, ."Events of Default", is hereby deleted; and (b) that nothing in this Indenture shall: (i) apply to, or alter the rights and remedies conferred by the Original Indenture upon, Debt Securities of any series created and issued prior to the date hereof or (ii) affect the rights, remedies and duties of the Trustee under the Original Indenture with respect to such Debt Securities. IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. BANKAMERICA CORPORATION By: /s/ SHAUN M. MCGUIRE ------------------------------------ Senior Vice President [Corporate Seal] Attest: /s/ Cheryl Sorokin - ---------------------------------- Secretary FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION By: /s/ LISA D. JONES ------------------------------------ Senior Vice President [Corporate Seal] Attest: /s/ [ILLEGIBLE] - ---------------------------------- Secretary STATE OF CALIFORNIA ) ) ss. CITY AND COUNTY OF SAN FRANCISCO ) On this 19th day of August, 1994 before me, a notary public in and for said State, personally appeared SHAUN M. MAGUIRE, known to me to be a senior vice president of BANKAMERICA CORPORATION, one of the corporations that executed the within instrument, and also known to me to be the person who executed it on behalf of said corporation, and acknowledged to me that such corporation executed the within instrument. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written. /s/ JANET E. SULLIVAN --------------------------------------- [NOTARIAL SEAL] NOTARY PUBLIC In and for the State of California with principal office in the City and County of San Francisco. My Commission Expires 6/21/96. [SEAL] - ---------------------------------------- JANET E. SULLIVAN Comm. # 967863 NOTARY PUBLIC - CALIFORNIA City and County of San Francisco My Comm. Expires Jun. 21, 1996 - ---------------------------------------- STATE OF CALIFORNIA ) ) ss. CITY AND COUNTY OF SAN FRANCISCO ) On this 19th day of August, 1994 before me, a notary public in and for said State, personally appeared Lisa D. Jones, known to me to be a vice president of FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, one of the corporations that executed the within instrument, and also known to me to be the person who executed it on behalf of said corporation, and acknowledged to me that such corporation executed the within instrument. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written. /s/ JANET E. SULLIVAN --------------------------------------- [NOTARIAL SEAL] NOTARY PUBLIC In and for the State of California with principal office in the City and County of San Francisco. My Commission Expires 6/21/96. [SEAL] - ---------------------------------------- JANET E. SULLIVAN Comm. # 967863 NOTARY PUBLIC - CALIFORNIA City and County of San Francisco My Comm. Expires Jun. 21, 1996 - ---------------------------------------- - -------------------------------------------------------------------------------- BankAmerica Corporation NationsBank (DE) Corporation - -------------------------------------------------------------------------------- SECOND SUPPLEMENTAL INDENTURE Dated as of September 30, 1998 Supplementing the Indenture, dated as of November 1, 1991, between BankAmerica Corporation and U.S. Bank Trust National Association (successor to Bankers Trust Company of California, National Association, and First Trust of California, National Association), as Trustee - -------------------------------------------------------------------------------- SECOND SUPPLEMENTAL INDENTURE, dated as of September 30, 1998 (the "Second Supplemental Indenture"), among NationsBank (DE) Corporation, a Delaware corporation ("NationsBank (DE)") and a direct wholly owned subsidiary of NationsBank Corporation, a North Carolina corporation ("NationsBank"), BankAmerica Corporation, a Delaware corporation ("BankAmerica"), and U.S. Bank Trust National Association (successor to Bankers Trust Company of California, National Association, and First Trust of California, National Association), as Trustee (the "Trustee") under the Indenture referred to herein; WHEREAS, BankAmerica and the Trustee heretofore executed and delivered an Indenture, dated as of November 1, 1991, as amended by the First Supplemental Indenture dated as of August 1, 1994 (the "Indenture"); and WHEREAS, pursuant to the Indenture BankAmerica issued and the Trustee authenticated and delivered one or more series of BankAmerica's Notes (the "Securities"); and WHEREAS, NationsBank and BankAmerica have entered into the Agreement and Plan of Reorganization, dated as of April 10, 1998, pursuant to which (i) NationsBank will merge (the "Reincorporation Merger") with and into NationsBank (DE), in accordance with the terms and conditions of the Plan of Reincorporation Merger by and between NationsBank and NationsBank (DE), dated as of August 3, 1998, with NationsBank (DE) as the surviving corporation in the Reincorporation Merger, and (ii) BankAmerica will thereafter merge (the "Merger," and together with the Reincorporation Merger, the "Reorganization")with and into NationsBank (DE), with NationsBank (DE) as the surviving corporation in the Merger; and WHEREAS, the Reorganization is expected to be consummated on September 30, 1998; and WHEREAS, Section 801 of the Indenture provides that in the case of the Reorganization, NationsBank (DE) shall expressly assume by supplemental indenture all the obligations under the Securities and the Indenture on the part of BankAmerica to be performed or observed; and WHEREAS, Section 901(1) of the Indenture provides that BankAmerica and the Trustee may amend the Indenture and the Securities without notice to or consent of any Holders of the Securities in order to comply with Article Eight of the Indenture; and WHEREAS, this Second Supplemental Indenture has been duly authorized by all necessary corporate action on the part of each of NationsBank (DE) and BankAmerica. NOW, THEREFORE, NationsBank (DE), BankAmerica and the Trustee agree as follows for the equal and ratable benefit of the Holders of the Securities: 2 ARTICLE I ASSUMPTION BY SUCCESSOR CORPORATION SECTION 1.1. Assumption of the Securities. NationsBank (DE) hereby expressly assumes the due and punctual payment of the principal of (and premium, if any) and interest (including all additional amounts, if any, payable pursuant to Section 1006) on the Securities and any related coupons and the performance of every covenant of the Indenture on the part of BankAmerica to be performed or observed. SECTION 1.2. Trustee's Acceptance. The Trustee hereby accepts this Second Supplemental Indenture and agrees to perform the same under the terms and conditions set forth in the Indenture. ARTICLE II MISCELLANEOUS SECTION 2.1. Effect of Supplemental Indenture. Upon the later to occur of (i) the execution and delivery of this Second Supplemental Indenture by NationsBank (DE), BankAmerica and the Trustee and (ii) the consummation of the Reorganization, the Indenture shall be supplemented in accordance herewith, and this Second Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Securities heretofore or hereafter authenticated and delivered under the Indenture shall be bound thereby. SECTION 2.2. Indenture Remains in Full Force and Effect. Except as supplemented hereby, all provisions in the Indenture shall remain in full force and effect. SECTION 2.3. Indenture and Supplemental Indenture Construed Together. This Second Supplemental Indenture is an indenture supplemental to and in implementation of the Indenture, and the Indenture and this Second Supplemental Indenture shall henceforth be read and construed together. SECTION 2.4. Confirmation and Preservation of Indenture. The Indenture as supplemented by this Second Supplemental Indenture is in all respects confirmed and preserved. SECTION 2.5. Conflict with Trust Indenture Act. If any provision of this Second Supplemental Indenture limits, qualifies or conflicts with any provision of the Trust Indenture Act ("TIA") that is required under the TIA to be part of and govern any provision of this Second Supplemental Indenture, the provision of the TIA shall control. If any provision of this Second Supplemental Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the provision of the TIA shall be deemed to apply to the Indenture as so modified or to be excluded by this Second Supplemental Indenture, as the case may be. 3 SECTION 2.6. Severability. In case any provision in this Second Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 2.7. Terms Defined in the Indenture. All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Indenture. SECTION 2.8. Headings. The Article and Section headings of this Second Supplemental Indenture have been inserted for convenience of reference only, are not to be considered part of this Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof. SECTION 2.9. Benefits of Second Supplemental Indenture, etc. Nothing in this Second Supplemental Indenture or the Securities, express or implied, shall give to any Person, other than the parties hereto and thereto and their successors hereunder and thereunder and the Holders of the Securities, any benefit of any legal or equitable right, remedy or claim under the Indenture, this Second Supplemental Indenture or the Securities. SECTION 2.10. Successors. All agreements of NationsBank (DE) in this Second Supplemental Indenture shall bind its successors. All agreements of the Trustee in this Second Supplemental Indenture shall bind its successors. SECTION 2.11. Trustee Not Responsible for Recitals. The recitals contained herein shall be taken as the statements of BankAmerica and NationsBank (DE), and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to, and shall not be responsible for, the validity or sufficiency of this Second Supplemental Indenture. SECTION 2.12. Certain Duties and Responsibilities of the Trustees. In entering into this Second Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture relating to the conduct or affecting the liability or affording protection to the Trustee, whether or not elsewhere herein so provided. SECTION 2.13. Governing Law. This Second Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the jurisdiction which govern the Indenture and its construction. SECTION 2.14. Counterpart originals. The parties may sign any number of copies of this Second Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 4 IN WITNESS WHEREOF, the parties have caused this Second Supplemental Indenture to be duly executed as of the date first written above. NationsBank (DE) Corporation By: /s/ John E. Mack --------------------------------- Name: John E. Mack Title: Senior Vice President Attest: /s/ James W. Kiser - ---------------------------- Secretary BankAmerica Corporation By: /s/ S.M. Maguire --------------------------------- Name: S.M. Maguire Title: Senior Vice President and Assistant Treasurer Attest: /s/ Cheryl Sorokin - ---------------------------- Secretary U.S. Bank Trust National Association, as Trustee By: /s/ Judy P. Manansala --------------------------------- Name: Judy P. Manansala Title: Trust Officer Attest: [illegible signature] - ---------------------------- 5 EX-4 15 EXHIBIT 4(Y) DATED AS OF NOVEMBER 15, 1996 BANKAMERICA CORPORATION as Issuer -and- FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION as Agent ------------------------------------- SECOND AMENDED AND RESTATED AGENCY AGREEMENT in respect of a EURO MEDIUM-TERM NOTE PROGRAMME ------------------------------------- TABLE OF CONTENTS
Clause Page - ------ ---- 1. Definitions and interpretation.......................................................2 2. Appointment of Agent and Paying Agents...............................................5 3. Issue of Temporary Global Notes......................................................6 4. Issue of Permanent Global Notes......................................................7 5. Issue of Definitive Notes............................................................8 6. Exchanges............................................................................8 7. Terms of Issue.......................................................................9 8. Payments............................................................................11 9. Determinations and notifications in respect of Notes................................12 10. Notice of any withholding or deduction..............................................15 11. Duties of the Agent in connection with early redemption.............................16 12. Publication of notices..............................................................16 13. Cancellation of Notes, Receipts, Coupons and Talons.................................16 14. Exchange; Issue of new and replacement Notes, Receipts, Coupons and Talons..........18 15. Copies of this Agreement and each Pricing Supplement available for inspection.......20 16. Commissions and expenses............................................................20 17. Indemnity...........................................................................20 18. Repayment by the Agent..............................................................21 19. Conditions of appointment...........................................................21 20. Communication between the parties...................................................22 21. Changes in Agent and Paying Agents..................................................22 22. Merger and consolidation............................................................24 23. Notifications.......................................................................25 24. Change of specified office..........................................................25 25. Notices.............................................................................25 26. Taxes and stamp duties..............................................................26 27. Currency indemnity..................................................................26 28. Amendments; Meetings of Holders.....................................................26 29. Calculation Agency Agreement........................................................29 30. Descriptive Headings................................................................29 31. Governing Law.......................................................................29 32. Counterparts........................................................................30 APPENDIX A Terms and Conditions.......................................................................A-1 APPENDIX B Forms of Global and Definitive Notes, Coupons, Receipts and Talons........................................................................B-1 APPENDIX C Form of Calculation Agency Agreement.......................................................C-1 APPENDIX D Form of Operating & Administrative Procedures Memorandum.................................................................................D-1 APPENDIX E Form of the Notes..........................................................................E-1
SECOND AMENDED AND RESTATED AGENCY AGREEMENT in respect of a EURO MEDIUM-TERM NOTE PROGRAMME THIS SECOND AMENDED AND RESTATED AGREEMENT is made as of November 15, 1996 BETWEEN: (1) BankAmerica Corporation of San Francisco, California, U.S.A. (the "Company"); and (2) First Trust of New York, National Association ("First Trust"), of New York, U.S.A. (the "Agent," which expression shall include Union Bank of Switzerland, London Branch, in its capacity as First Trust's agent with respect to First Trust's obligations as issuing and principal paying agent under this Agreement, and any successor agent appointed in accordance with Clause 21), and it amends and restates the Amended and Restated Agency Agreement dated as of November 16, 1994 (the "Prior Agency Agreement"). WHEREAS: (A) The Company has entered into a Second Amended and Restated Programme Agreement (the "Programme Agreement") dated November 15, 1996 with Bank of America International Limited, BA Asia Limited, Goldman Sachs International, Lehman Brothers International (Europe), Merrill Lynch International, PaineWebber International (U.K.) Ltd., and Salomon Brothers International Limited (the "Dealers") pursuant to which the Company may issue notes (the "Notes") in an aggregate principal amount of up to U.S.$10,000,000,000 (or its equivalent in other currencies or currency units) outstanding at any time; (B) Clause 28(1) of the Prior Agency Agreement provides that such Agreement may be amended by the Company and the Agent, without the consent of the holder of any Note, Receipt or Coupon, to make any further modifications of the terms of such Agreement necessary or desirable to allow for the issuance of any additional Notes (which modifications shall not be materially adverse to holders of outstanding Notes); (C) The Company desires and has requested the Agent pursuant to Clause 28(1) of the Prior Agency Agreement to join with it in the execution and delivery of this Agreement in order to amend and restate the Prior Agency Agreement as set forth herein solely with respect to Notes issued on or after the date hereof; and (D) The Notes to be issued on or after the date hereof will be issued subject to, and with the benefit of, this Agreement. IT IS HEREBY AGREED as follows: 1. Definitions and interpretation (1) The following expressions shall have the following meanings: "Cedel Bank" means Cedel Bank, societe anonyme; "Conditions" means, in respect of any Series of Notes, the terms and conditions of the Notes of such Series, such terms and conditions being in the form or substantially in the form set out in Appendix A hereto or in such other form, having regard to the terms of the relevant Series, as may be agreed between the Company, the Agent and the relevant Purchaser or Purchasers from time to time; "Dealer" means Bank of America International Limited, BA Asia Limited, Goldman Sachs International, Lehman Brothers International (Europe), Merrill Lynch International, PaineWebber International (U.K.) Ltd. and Salomon Brothers International Limited, and includes any other entities appointed as dealers from time to time pursuant to the Programme Agreement, and excludes any entity whose appointment has been terminated pursuant to the Programme Agreement; "Definitive Note" means a Note in definitive form substantially in the form set out in Part 3 of Appendix B hereto (or in such other form as may be agreed between the Company, the Agent and the relevant Purchaser or Purchasers) issued or to be issued by the Company pursuant to this Agreement in exchange for the whole, but not for a part, of a Permanent Global Note; "Dual Currency Notes" means Notes in respect of which principal and/or interest is payable in one or more Specified Currencies other than the Specified Currency in which they are denominated. "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear System; "Global Note" means a Temporary Global Note or a Permanent Global Note; "Issue Date" means, in respect of any Note, the date of issue and purchase of such Note pursuant to Section 2 of the Programme Agreement, being in the case of any Note in the form of a Permanent Global Note or a Definitive Note, the same date as the date of issue of the Temporary Global Note which initially represented such Note; "Listing Rules" means in the case of Notes which are, or are to be, listed on a Stock Exchange, the listing rules and regulations for the time being in force for such Stock Exchange; "Note" means any note issued or to be issued by the Company pursuant to the Programme Agreement, which Note may be represented by a Global Note or a Definitive Note; "Noteholders" means the several persons who are for the time being holders of outstanding Notes save that for so long as any of the Notes are represented by a Global Note, each person who is for the time being shown in the records of Euroclear and/or Cedel Bank (in which regard any certificate or other document issued by Euroclear and/or Cedel Bank as to the principal amount of such Notes standing to the account of any person shall be conclusive and binding for all purposes save in the case of manifest error) as the holder of a particular principal amount of such Notes (other than Cedel Bank if Cedel Bank shall be an account holder of Euroclear and other than Euroclear if Euroclear shall be an account holder of Cedel Bank), shall be treated by the Company, the Agent and any other Paying Agent as a holder of such principal amount of such Notes for all purposes other than for the payment of principal and interest on such Notes, the right to which shall be vested, as against the Company, the Agent and any other Paying Agent, solely in the bearer of the Global Note in accordance with and subject to its terms (and the expressions "Noteholder," "holder of Notes" and related expressions shall be construed accordingly); "Offering Circular" means the Offering Circular relating to the Programme as revised, supplemented, amended or updated from time to time, including in relation to each Tranche of Notes, the Pricing Supplement relating to such Tranche and such other documents as are from time to time incorporated therein by reference; "outstanding" means, in relation to the Notes, all the Notes issued other than (a) those which have been redeemed in full in accordance with this Agreement or the Conditions, (b) those in respect of which the date for redemption in accordance with the Conditions has occurred and the redemption moneys (including all interest (if any) accrued thereon to the date for such redemption and any interest (if any) payable under the Conditions after such date) have been duly paid to the Agent as provided herein (and, where appropriate, notice has been given to the Noteholders in accordance with Condition 16) and remain available for payment against presentation of Notes, (c) those which have become void under Condition 15, (d) those which have been purchased and cancelled as provided in Condition 5, (e) those Notes which have been surrendered in exchange for new or replacement Notes pursuant to Condition 14, (f) (for the purposes only of determining how many Notes are outstanding and without prejudice to their status for any other purpose) those Notes alleged to have been lost, stolen or destroyed and in respect of which replacement Notes have been issued pursuant to Condition 14 and (g) Temporary Global Notes to the extent that they shall have been duly exchanged for Permanent Global Notes and Permanent Global Notes to the extent that they shall have been duly exchanged for Definitive Notes, in each case pursuant to their respective provisions; "Paying Agents" means, in relation to all Series of the Notes, the several institutions (including, where the context permits or requires, the Agent) at their respective specified offices named as such at the end of the Conditions or such other or further paying agents at their respective specified offices for all or any Series of the Notes as may from time to time be appointed in respect thereof by the Company and notice of whose appointment is given to the Noteholders pursuant to Clause 21 or Clause 23 and in accordance with Condition 16. "Permanent Global Note" means a permanent global note substantially in the form set out in Part 2 of Appendix B hereto (or in such other form as may be agreed between the Company, the Agent and the relevant Purchaser or Purchasers) comprising Notes issued or to be issued by the Company in exchange for the whole or part of a Temporary Global Note issued in respect of the Notes of the same Tranche; "Pricing Supplement" means the pricing supplement issued in relation to each Tranche of Notes (substantially in the form of Annex D to the Procedures Memorandum) as a supplement to the Offering Circular and giving details of that Tranche; "Programme" means the Euro Medium-Term Note Programme established by the Programme Agreement; "Programme Agreement" means the second amended and restated agreement of even date herewith between the Company and the Dealers concerning the purchase of Notes to be issued by the Company and includes any amendment or supplement thereto; "Purchaser" means a Dealer or any third party other than a dealer (as defined in Section 2(12) of the United States Securities Act of 1933), who agrees to purchase Notes pursuant to the Programme Agreement and references to a relevant Purchaser or Purchasers mean in relation to any Note, the Purchaser or Purchasers to whom the Company has agreed to issue and sell such Note; "Series" means all Notes which are denominated in the same currency and which have the same Maturity Date or Redemption Month or Redemption Date (as the case may be) and Interest/Payment Basis and Interest Payment Dates (if any) (all as indicated in the applicable Pricing Supplement) and the terms of which (except for the Issue Date or Interest Commencement Date (as the case may be) and/or the Issue Price (except in the case of Zero Coupon Notes) (all as indicated as aforesaid)) are otherwise identical (including whether or not the Notes are listed and whether the Notes are Senior Notes or Subordinated Notes); and the expressions "Notes of the relevant Series" and "holders of Notes of the relevant Series" and related expressions shall be construed accordingly; "Specified Currency" means the currency (which expression shall include European Currency Units ("ECUs")) in which Notes are denominated and, in the case of Dual Currency Notes, the currency or currencies in which payment in respect of the Notes is to be made; "Stock Exchange" means the Luxembourg Stock Exchange or such other stock exchange(s) on which any Notes may from time to time be listed and references in this Agreement to the "relevant Stock Exchange" shall, in relation to any Notes, be references to the Stock Exchange on which such Notes are from time to time, or will be, listed; "Temporary Global Note" means a temporary global note substantially in the form set out in Part 1 of Appendix B hereto (or in such other form as may be agreed between the Company, the Agent and the relevant Purchaser or Purchasers) comprising Notes issued or to be issued by the Company pursuant to the Programme Agreement and issued in respect of the Notes of the same Tranche; "Tranche" means all Notes of the same Series with the same Issue Date, Interest Commencement Date and Issue Price; and "U.S.$" and "U.S. dollars" means the coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts in the United States of America. (2) Terms and expressions (including the definitions of currencies or composite currencies) defined in the Conditions or Appendix E or used in the applicable Pricing Supplement shall have the same meanings in this Agreement, except where the context requires otherwise. (3) Any references to Notes shall, unless the context otherwise requires, include any Temporary Global Notes, Permanent Global Notes and Definitive Notes. (4) Any reference herein to Euroclear and/or Cedel Bank shall, whenever the context so permits, be deemed to include a reference to any additional or alternative clearance system approved by the Company and the Agent. (5) Nothing in this Agreement shall apply to, or alter the rights and remedies conferred by the Prior Agency Agreement upon, Notes created and issued prior to the date hereof. 2. Appointment of Agent and Paying Agents (1) The Agent is hereby appointed as agent of the Company, to act as issuing and principal paying agent, upon the terms and subject to the conditions set out below, for the purposes of, INTER ALIA: (a) completing, authenticating and issuing Notes; (b) exchanging Temporary Global Notes for Permanent Global Notes and exchanging Permanent Global Notes for Definitive Notes in accordance with the terms of such Global Notes; (c) paying sums due on Global Notes and Definitive Notes, Receipts and Coupons; (d) determining the interest and/or other amounts payable in respect of the Notes in accordance with the Conditions and Clause 9 hereof; (e) arranging on behalf of the Company for notices to be communicated to the Noteholders and the relevant Stock Exchanges; (f) ensuring that all necessary action is taken to comply with the periodic reporting requirements of the Bank of England, the German Central Bank and the Ministry of Finance of Japan with respect to the Notes to be issued under the Programme; (g) receiving notice from Euroclear and/or Cedel Bank relating to the certificates of non-U.S. beneficial ownership of the Notes; (h) notifying the relevant Dealer or Dealers of the end of the restricted period in respect of each Series of Notes based upon the determinations and certifications of such Dealer(s); and (i) performing all other obligations and duties imposed upon it by the Conditions and this Agreement. (2) The Company hereby appoints each of the Agent at c/o Union Bank of Switzerland, London Branch, P.O. Box 428, 100 Liverpool Street, London EC2M 2RH and Kredietbank S.A. Luxembourgeoise, 43 Boulevard Royal, L-2955, Luxembourg (together with the Agent, the "Paying Agents," which expression shall include any additional or successor paying agent appointed in accordance with Clause 21 and "Paying Agent" shall mean any of the Paying Agents) as paying agent of the Company upon the terms and subject to the conditions set out below, for the purposes of paying sums due on Notes, Receipts and Coupons. 3. Issue of Temporary Global Notes (1) Subject to subclause (2), following receipt of confirmation (the "Confirmation") from the Company in respect of an issue of Notes in accordance with the provisions of the Procedures Memorandum set out in Appendix D hereto (as from time to time varied, with the prior approval of the Agent, by the Company and the relevant Purchaser or Purchasers in respect of a Tranche or Series of Notes of such issue) the Agent will take the steps required of the Agent in the Procedures Memorandum. For this purpose the Agent is authorized on behalf of the Company: (a) to prepare a Temporary Global Note or Temporary Global Notes containing the relevant Conditions and to complete, in accordance with such Confirmation, the necessary details on such Temporary Global Note(s); (b) to authenticate such Temporary Global Note(s); and (c) to deliver such Temporary Global Note(s) to the specified common depositary of Euroclear and Cedel Bank in accordance with the Confirmation against receipt from the common depositary of confirmation that such common depositary is holding the Temporary Global Note(s) in safe custody for the account of Euroclear and/or Cedel Bank and to instruct Euroclear or Cedel Bank or both of them (as the case may be) to credit the Notes represented by such Temporary Global Note(s), unless otherwise agreed in writing between the Agent and the Company, to the Agent's distribution account (or in the case of a syndicated note issue, the lead manager's account). (2) The Agent shall only be required to perform its obligations under subclause (1) if it holds a master Temporary Global Note duly executed by a person or persons authorized to execute the same on behalf of the Company, which may be used by the Agent for the purpose of preparing Temporary Global Notes in accordance with paragraph (a) of that subclause. (3) The Agent shall provide Euroclear and/or Cedel Bank with the notifications, instructions or other information to be given by the Agent to Euroclear and/or Cedel Bank. 4. Issue of Permanent Global Notes (1) Subject to subclause (2), upon the occurrence of any event which pursuant to the terms of a Temporary Global Note requires the issue of a Permanent Global Note, the Agent shall issue a Permanent Global Note in accordance with the terms of the Temporary Global Note. For this purpose the Agent is authorized on behalf of the Company: (a) to prepare a Permanent Global Note containing the relevant Conditions and to complete, in accordance with the terms of the Temporary Global Note, the necessary details on such Permanent Global Note and attach a copy of the applicable Pricing Supplement to such Permanent Global Note; (b) to authenticate such Permanent Global Note; and (c) to deliver such Permanent Global Note to the specified common depositary that is holding the Temporary Global Note for the time being on behalf of Euroclear and/or Cedel Bank in exchange for such Temporary Global Note or, in the case of a partial exchange, after noting the details of such exchange in the appropriate spaces on both the Temporary Global Note and the Permanent Global Note, and in either case against receipt from the common depositary of confirmation that such common depositary is holding the Permanent Global Note in safe custody for the account of Euroclear and/or Cedel Bank. (2) The Agent shall only be required to perform its obligations under subclause (1) if it holds a master Permanent Global Note duly executed by a person or persons authorized to execute the same on behalf of the Company, which may be used by the Agent for the purpose of preparing Permanent Global Notes in accordance with paragraph (a) of that subclause. (3) The Agent shall provide Euroclear and/or Cedel Bank with the notifications, instructions or other information to be given by the Agent to Euroclear and/or Cedel Bank. 5. Issue of Definitive Notes (1) Upon notice from Euroclear or Cedel Bank pursuant to the terms of a Permanent Global Note requiring the issue of one or more Definitive Note(s), the Agent shall deliver the relevant Definitive Note(s) in accordance with the terms of the Permanent Global Note. For this purpose the Agent is hereby authorized on behalf of the Company: (a) to authenticate (if so instructed by the Company) such Definitive Note(s); and (b) to deliver such Definitive Note(s) to or to the order of Euroclear and/or Cedel Bank. The Agent shall notify the Company forthwith upon receipt of a request for issue of any Definitive Note(s) in accordance with the provisions of a Permanent Global Note (and shall state the aggregate principal amount of such Permanent Global Note to be exchanged in connection therewith). (2) The Company undertakes to deliver to the Agent, pursuant to a request for the issue of Definitive Notes under the terms of the relevant Permanent Global Note, sufficient numbers of executed Definitive Notes to enable the Agent to comply with its obligations under this Clause 5. 6. Exchanges Upon any exchange of all or a portion of an interest in a Temporary Global Note for an interest in a Permanent Global Note or upon any exchange of all, but not a portion, of an interest in a Permanent Global Note for Definitive Notes, the Global Note shall be endorsed to reflect the reduction of its principal amount by the aggregate principal amount so exchanged. Until exchanged in full, the holder of an interest in any Global Note shall in all respects be entitled to the same benefits as the holder of Notes, Receipts and Coupons authenticated and delivered hereunder, subject as set out in the Conditions. The Agent is hereby authorized on behalf of the Company (i) to endorse or to arrange for the endorsement of the relevant Global Note to reflect the reduction in the principal amount represented thereby by the amount so exchanged and, if appropriate, to endorse the Permanent Global Note to reflect any increase in the principal amount represented thereby, and in either case, to sign in the relevant space on the relevant Global Note recording such exchange or increase and (ii) in the case of a total exchange, to cancel or arrange for the cancellation of the relevant Global Note. 7. Terms of Issue (1) The Agent shall cause all Temporary Global Notes, Permanent Global Notes and Definitive Notes delivered to and held by it under this Agreement to be maintained in safe custody and shall ensure that such Notes are issued only in accordance with the provisions of this Agreement and the relevant Global Note and Conditions. (2) Subject to the procedures set out in the Procedures Memorandum, for the purposes of subclause (1) the Agent is entitled to treat a telephone, telex or facsimile communication from a person purporting to be (and who the Agent, after ascertaining that such person appears on the list of persons described in Clause 19(7), believes in good faith to be) the authorized representative of the Company named in the list referred to in, or notified pursuant to, Clause 19(7) as sufficient instructions and authority of the Company for the Agent to act in accordance with subclause (1). (3) In the event that a person who has signed on behalf of the Company a master Temporary Global Note, a master Permanent Global Note or Definitive Notes not yet issued but held by the Agent in accordance with Clause 5(2) ceases to be authorized as described in Clause 19(7), the Agent shall (unless the Company gives notice to the Agent that Notes signed by that person do not constitute valid and binding obligations of the Company or otherwise until replacements have been provided to the Agent) continue to have authority to issue any such Notes, and the Company hereby warrants to the Agent that such Notes shall, unless notified as aforesaid, be valid and binding obligations of the Company. Promptly upon such person ceasing to be authorized, the Company shall provide the Agent with replacement master Temporary Global Notes, master Permanent Global Notes and Definitive Notes and the Agent shall cancel and destroy the master Temporary Global Notes, master Permanent Global Notes and Definitive Notes held by it which are signed by such person and shall provide to the Company a confirmation of destruction in respect thereof specifying the Notes so cancelled and destroyed. (4) Unless otherwise agreed in writing between the Company and the Agent, each Note credited to the Agent's distribution account with Euroclear or Cedel Bank following the delivery of a Temporary Global Note or Permanent Global Note to a common depositary pursuant to Clause 3(1)(c) or 4(1)(c), respectively, shall be held to the order of the Company. The Agent shall procure that the principal amount of Notes which the relevant Purchaser has agreed to purchase is: (a) debited from the Agent's distribution account; and (b) credited to the securities account of such Purchaser with Euroclear or Cedel Bank (as specified in the Confirmation), in each case only upon receipt by the Agent on behalf of the Company of the purchase price due from the relevant Purchaser in respect of such Notes. (5) If on the relevant Issue Date a Purchaser does not pay the full purchase price due from it in respect of any Note (the "Defaulted Note") and, as a result, the Defaulted Note remains in the Agent's distribution account with Euroclear and/or Cedel Bank after such Issue Date, the Agent will continue to hold the Defaulted Note to the order of the Company. The Agent shall notify the Company forthwith of the failure of the Purchaser to pay the full purchase price due from it in respect of any Defaulted Note and, subsequently, shall notify the Company forthwith upon receipt from the Purchaser of the full purchase price in respect of such Defaulted Note. (6) If the Agent pays an amount (the "Advance") to the Company on the basis that a payment (the "Payment") will be received from a Purchaser and if the Payment is not received by the Agent on the date the Agent pays the Company, the Agent shall notify the Company by tested telex or facsimile that the Payment has not been received and the Company shall repay to the Agent the Advance and shall pay interest on the Advance (or the unreimbursed portion thereof) from (and including) the date such Advance is made to (but excluding) the earlier of repayment of the Advance and receipt by the Agent of the Payment (at a rate quoted at that time by the Agent as its cost of funding the Advance). (7) In the event of an issue of Notes and subject to receipt of a Confirmation from the Company in accordance with the terms of the Procedures Memorandum, the Agent will promptly, and in any event prior to the Issue Date in respect of such issue, send the Pricing Supplement to the Company, relevant Stock Exchange and the relevant Dealers. 8. Payments (1) The Agent shall advise the Company, no later than ten Business Days (as defined below) immediately preceding the date on which any payment is to be made to the Agent with respect to Notes pursuant to this subclause (1), of the payment amount, payment date, whether the Notes are Senior Notes or Subordinated Notes and payment instructions which shall provide for separate accounts for Senior Notes and Subordinated Notes and the Company shall on each date on which any payment in respect of any Notes becomes due, transfer to the account(s) specified by the Agent not later than the Payment Time such amounts in the relevant currency as shall be sufficient for the purposes of such payment in funds settled through such payment system as the Agent and the Company may agree. As used in this subclause (1), the term "Payment Time" means 2:00 p.m. local time in the principal financial center of the country of the currency in which the payment is to be made (which in the case of payment in ECU is Brussels). (2) No later than the third Business Day immediately preceding the date on which any payment is to be made to the Agent pursuant to subclause (1), the Agent shall receive a confirmation from the Company that payment will be made. For the purposes of this Clause 8, "Business Day" means a day which is: (a) a day (other than a Saturday or a Sunday) on which commercial banks and foreign exchange markets settle payments in London; (b) either (i) in relation to a payment to be made in a Specified Currency other than ECU, a day on which commercial banks and foreign exchange markets settle payments in the principal financial center of the country of the relevant Specified Currency (if other than London, and which, if the Specified Currency is Australian dollars, shall be Sydney and if the Specified Currency is New Zealand dollars, shall be Auckland) or (ii) in relation to a payment to be made in ECU, an ECU Settlement Day (as defined in the 1991 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. as amended and updated at the Issue Date of the Notes,); and (c) a day (other than a Saturday or a Sunday) on which banks settle payments in the relevant place of business of the Agent. (3) Subject to the Agent being satisfied in its sole discretion that payment will be duly made as provided in subclause (1), the Agent or the relevant Paying Agent shall pay or cause to be paid all amounts due in respect of the Notes on behalf of the Company in the manner provided in the Conditions. If any payment provided for in subclause (1) is made late but otherwise in accordance with the provisions of this Agreement, the Agent and each Paying Agent shall nevertheless make payments in respect of the Notes as aforesaid following receipt by it of such payment. (4) If for any reason the Agent considers in its sole discretion that the amounts to be received by the Agent pursuant to subclause (1) will be, or the amounts actually received by it pursuant thereto are, insufficient to satisfy all claims in respect of all payments then falling due in respect of either the Senior Notes or the Subordinated Notes, the Agent shall then forthwith notify the Company of such insufficiency and, until such time as the Agent has received the full amount of all such payments, neither the Agent nor any Paying Agent shall be obliged to pay any such claims; provided that in the event that payments are received in the account for payment of Senior Notes which are sufficient to pay the Senior Notes, payments shall be made on the Senior Notes and all payments on the Subordinated Notes shall be made in accordance with Condition 2 of the Conditions. (5) Without prejudice to subclauses (3) and (4), if the Agent pays any amounts to the holders of Notes, Receipts or Coupons or to any Paying Agent at a time when it has not received payment in full in respect of the relevant Notes in accordance with subclause (1) (the excess of the amounts so paid over the amounts so received being the "Shortfall"), the Company shall, in addition to paying amounts due under subclause (1), pay to the Agent on demand interest (at a rate which represents the Agent's actual overnight cost of funding the Shortfall) on the Shortfall (or the unreimbursed portion thereof) until the receipt in full by the Agent of the Shortfall. The Agent shall notify the Company by tested telex or facsimile as soon as practicable, it being understood that the Company shall have the right to make such payment subsequently with good value as of such Business Day. (6) The Agent shall on demand promptly reimburse each Paying Agent for payments in respect of Notes properly made by such Paying Agent in accordance with this Agreement and the Conditions unless the Agent has notified the Paying Agent, prior to the opening of business in the location of the office of the Paying Agent through which payment in respect of the Notes can be made on the due date of a payment in respect of the Notes, that the Agent does not expect to receive sufficient funds to make payment of all amounts falling due in respect of such Notes. 9. Determinations and notifications in respect of Notes (1) The Agent shall make all such determinations and calculations (howsoever described) as it is required to do under the Conditions, all subject to and in accordance with the Conditions and Clause 29 hereof. (2) The Agent shall not be responsible to the Company or to any third party (except in the event of negligence, wilful default or bad faith) as a result of the Agent having acted on any quotation given by any Reference Bank which subsequently may be found to be incorrect. (3) The Agent shall promptly notify the Company, any other Paying Agent and (in respect of a Series of Notes listed on a Stock Exchange) the relevant Stock Exchange of, INTER ALIA, each Rate of Interest, Interest Amount and Interest Payment Date and all other amounts, rates and dates which it is obliged to determine or calculate under the Conditions as soon as practicable after the determination thereof and of any subsequent amendment thereto pursuant to the Conditions. (4) The Agent shall use its best efforts to cause each Rate of Interest, Interest Amount and Interest Payment Date and all other amounts, rates and dates which it is obliged to determine or calculate under the Conditions to be published as required in accordance with the Conditions as soon as possible after their determination or calculation. (5) If the Agent does not at any material time for any reason determine and/or calculate and/or publish the Rate of Interest, Interest Amount and/or Interest Payment Date in respect of any Interest Period or any other amount, rate or date as provided in this Clause 9, it shall forthwith notify the Company and the other Paying Agents of such fact. (6) At the end of each calendar month, the Agent shall, if required, provide (i) the Bank of England with information on the amount, interest rate and other terms of each issue of Sterling-denominated Notes during the month, and such other information as the Bank of England may require from time to time, (ii) the Japanese Ministry of Finance with information on the amount, interest rate and other terms of each issue of Yen-denominated Notes during the month, and such other information as the Japanese Ministry of Finance may require from time to time, and (iii) the German Central Bank with information on the amount, interest rate and other terms of each issue of Deutsche Mark-denominated Notes during the month, and such other information as the German Central Bank may require from time to time. (7) For purposes of monitoring the aggregate principal amount of Notes issued under the Programme, the Agent shall determine the U.S. dollar equivalent of the principal amount of each issue of Notes denominated in another currency, each issue of Dual Currency Notes and Indexed Notes, each issue of Zero Coupon Notes and each issue of Partly Paid Notes, as follows: (a) the U.S. dollar equivalent of the principal amount of Notes denominated in a currency other than U.S. dollars shall be determined by the Agent by reference to a spot rate displayed on a page on the Reuters Monitor Money Rates Service or the appropriate Associated Press-Dow Jones Telerate Service or such other service as is agreed between the Agent and the Company from time to time and such Notes shall be revalued at least monthly and the most recent valuation used; (b) the U.S. dollar equivalent of the principal amount of Dual Currency Notes and Indexed Notes shall be determined in the manner specified above by reference to the original principal amount of such Notes, and if Notes are payable in alternate currencies or currency equivalents at the option of the holder, the largest amount payable shall be used; (c) the U.S. dollar equivalent of the principal amount of Zero Coupon Notes and other Notes sold for 90% or less of their principal amount at stated maturity shall be calculated at least monthly, and the proceeds received or to be received, plus any portion of original issue discount which is amortized from the date of issue to the date of the most recent valuation, without adjustment for any underwriting, placement agent or similar discount, fee or charge, or any other payment, receipt, or expense, shall be used for the valuation instead of their principal amount at stated maturity; and (d) the U.S. dollar equivalent of the principal amount of Partly Paid Notes shall be the principal amount regardless of the amount paid up on such Notes. (8) The Agent will determine the Rate of Interest pursuant to Condition 4(b)(iv) in the event that the Relevant Screen Page is not available or if, in the case of subclause (x) thereof, no offered quotation appears or, in the case of subclause (y) thereof, fewer than three of such offered quotations appear, at the time specified in Condition 4(b)(iv), as follows: (a) the Rate of Interest for the applicable Interest Period shall, subject as provided below, be the arithmetic mean (rounded, if necessary, to the fifth decimal place with 0.000005 being rounded upwards) of the offered quotations (expressed as a percentage rate per annum), of which the Agent is advised by all Reference Banks (as defined below) as at 11:00 a.m. (London time) on the Interest Determination Date plus or minus (as specified in the applicable Pricing Supplement) the Margin (if any), all as determined by the Agent; (b) if on the Interest Determination Date to which subclause (8)(a) applies, two or three only of the Reference Banks advise the Agent of such offered quotations, the Rate of Interest for the next Interest Period shall be determined as in subclause (8)(a) on the basis of the rates of those Reference Banks advising such offered quotations; (c) if on the Interest Determination Date to which subclause (8)(a) applies, one only or none of the Reference Banks advises the Agent of such rates, the Rate of Interest for the next Interest Period shall be whichever is the higher of: (1) the Rate of Interest in effect for the last preceding Interest Period to which subclause (8)(a) shall have applied (plus or minus (as specified in the applicable Pricing Supplement), where a different Margin is to be applied to the next Interest Period than that which applied to the last preceding Interest Period, the Margin relating to the next Interest Period in place of the Margin relating to the last preceding Interest Period); or (2) the reserve interest rate (the "Reserve Interest Rate") which shall be the rate per annum which the Agent determines to be either (x) the arithmetic mean (rounded, if necessary, to the fifth decimal place with 0.000005 being rounded upwards) of the lending rates for the Specified Currency which banks selected by the Agent in the principal financial center of the country of the Specified Currency (which, if Australian dollars, shall be Sydney and, if New Zealand dollars, shall be Auckland) are quoting on the relevant Interest Determination Date for the next Interest Period to the Reference Banks or those of them (being at least two in number) to which such quotations are, in the opinion of the Agent, being so made, plus or minus (as specified in the applicable Pricing Supplement) the Margin (if any), or (y) in the event that the Agent can determine no such arithmetic mean, the lowest lending rate for the Specified Currency which banks selected by the Agent in the principal financial center of the country of the Specified Currency (which, if Australian dollars, shall be Sydney and, if New Zealand dollars, shall be Auckland) are quoting on such Interest Determination Date to leading European banks for the next Interest Period, plus or minus (as specified in the applicable Pricing Supplement) the Margin (if any), provided that if the banks selected as aforesaid by the Agent are not quoting as mentioned above, the Rate of Interest shall be the Rate of Interest specified in (1) above; and (d) unless otherwise specified in the applicable Pricing Supplement, the Reference Banks will be Barclays Bank PLC, National Westminster Bank PLC, Bankers Trust Company and The Bank of Tokyo, Ltd. So long as any Floating Rate Note to which subclause (8)(a) is applicable remains outstanding, in the case of any bank being unable or unwilling to continue to act as a Reference Bank, the Company shall specify the London office of some other leading bank engaged in the Eurodollar market to act as such in its place. The Agent shall promptly notify the Company of each determination made as aforesaid. 10. Notice of any withholding or deduction If the Company is, in respect of any payments, compelled to withhold or deduct any amount for or on account of taxes, duties, assessments or governmental charges as specifically contemplated under the Conditions, the Company shall give notice thereof to the Agent as soon as it becomes aware of the requirement to make such withholding or deduction and shall give to the Agent such information as it shall require to enable it to comply with such requirement. 11. Duties of the Agent in connection with early redemption (1) If the Company decides to redeem any Notes for the time being outstanding prior to their Maturity Date or the Interest Payment Date falling in the Redemption Month (as the case may be) in accordance with the Conditions, the Company shall give notice of such decision to the Agent not less than 40 days before the relevant redemption date. (2) If only some of the Notes of like tenor and of the same Series are to be redeemed on such date the Agent (or, in the case of a Global Note, Euroclear and/or Cedel Bank) shall make the required drawing in accordance with the Conditions. (3) The Agent shall publish the notice required in connection with any such redemption and shall at the same time also publish a separate list of serial numbers of any Notes previously drawn and not presented for redemption. Such notice shall specify the date fixed for redemption, the redemption amount, the manner in which redemption will be effected and, in the case of a partial redemption, the serial numbers of the Notes to be redeemed. Such notice will be published in accordance with the Conditions. 12. Publication of notices On behalf of and at the request and expense of the Company, the Agent shall cause to be published all notices required to be given by the Company in accordance with the Conditions. 13. Cancellation of Notes, Receipts, Coupons and Talons (1) Any Notes which are purchased pursuant to the Conditions by or on behalf of the Company, together (in the case of Notes in definitive form) with all unmatured Receipts, Coupons or Talons (if any) attached thereto or surrendered therewith, may, at the Company's option, be surrendered to the Agent for cancellation. Where any Notes, Receipts, Coupons or Talons are purchased and surrendered to the Agent for cancellation as aforesaid, the Company shall procure that all relevant details are promptly given to the Agent and that all Notes, Receipts, Coupons or Talons to be so cancelled are delivered to the Agent. All Notes which are redeemed, all Receipts or Coupons which are paid and all Talons which are exchanged shall be cancelled by the Agent or Paying Agent by which they are redeemed, paid or exchanged. Each of the Paying Agents shall give to the Agent details of all payments made by it and shall deliver all cancelled Notes, Receipts, Coupons and Talons to the Agent or to any Paying Agent authorized from time to time in writing by the Agent to accept delivery of cancelled Notes, Receipts, Coupons and Talons (an "Authorized Agent"). (2) A certificate stating: (a) the aggregate principal amount of Notes which have been redeemed and the aggregate amount paid in respect thereof; (b) the number of Notes cancelled together (in the case of Notes in definitive form) with details of all unmatured Receipts, Coupons or Talons (if any) attached thereto or delivered therewith; (c) the aggregate amount paid in respect of interest on the Notes; (d) the total number by maturity date of Receipts, Coupons and Talons so cancelled; and (e) the serial numbers of such Notes, shall be given to the Company by the Agent as soon as reasonably practicable and in any event within 30 days after the date of such repayment or, as the case may be, payment or exchange. (3) Subject to being duly notified in due time, the Agent shall give a certificate to the Company, within three months of the date of purchase and cancellation of Notes as aforesaid, stating: (a) the principal amount of Notes so purchased and cancelled; (b) the serial numbers of such Notes; and (c) the total number by maturity date of the Receipts, Coupons and Talons (if any) appertaining thereto and surrendered therewith or attached thereto. (4) The Agent or an Authorized Agent shall destroy all cancelled Notes, Receipts, Coupons and Talons (unless otherwise instructed by the Company) and, forthwith upon destruction, furnish the Company and, in the case of an Authorized Agent, the Agent with a certificate of the serial numbers of the Notes and the number by maturity date of Receipts, Coupons and Talons so destroyed. (5) Without prejudice to the obligations of the Agent pursuant to subclause (2), the Agent shall keep a full and complete record of all Notes, Receipts, Coupons and Talons (other than serial numbers of Coupons, except those which have been replaced pursuant to Condition 14) and of all new or replacement Notes, Receipts, Coupons or Talons issued in substitution for exchanged or mutilated, defaced, destroyed, lost or stolen Notes, Receipts, Coupons or Talons. The Agent shall at all reasonable times make such record available to the Company and any person authorized by the Company for inspection and for the taking of copies thereof or extracts therefrom. (6) All records and certificates made or given pursuant to this Clause 13 and Clause 14 shall make a distinction between Notes, Receipts, Coupons and Talons of each Series. 14. Exchange; Issue of new and replacement Notes, Receipts, Coupons and Talons (1) The Company will cause a sufficient quantity of additional forms of Notes, Receipts, Coupons and Talons to be available, upon request, to the Agent at its specified office for the purpose of issuing Notes, Receipts, Coupons and Talons as provided below. (2) Notes (together with any Receipts, Coupons and Talons appertaining thereto) may be exchanged for Notes of the same Series in any authorized denominations and of like tenor and terms and aggregate principal amount, upon surrender of the Notes to be exchanged with all unmatured Receipts, Coupons and Talons appertaining thereto at the specified office of the Agent, in accordance with all applicable laws and regulations, upon payment, if the Company shall so require, of the costs incurred in connection therewith. If the Noteholder is unable to produce any of the Receipts, Coupons and Talons appertaining to such Note, such new Note will only have attached to it Receipts, Coupons and Talons corresponding to those (if any) attached to the Note which is presented for exchange, unless the surrender of such missing Receipts, Coupons or Talons is waived by the Company upon the condition that the Noteholder furnish such indemnity as the Company may require. Whenever any Notes are so surrendered for exchange, the Company shall execute, and the Agent shall authenticate and deliver, each Note which the Noteholder making the exchange is entitled to receive. (3) The Agent will, subject to and in accordance with the Conditions and the following provisions of this Clause 14, cause to be delivered any replacement Notes, Receipts, Coupons and Talons which the Company may determine to issue in place of Notes, Receipts, Coupons and Talons which have been lost, stolen, mutilated, defaced or destroyed. In the case of a mutilated or defaced Note, the Agent shall ensure that (unless otherwise covered by such indemnity as the Company may require) any replacement Note will only have attached to it Receipts, Coupons and Talons corresponding to those (if any) attached to the mutilated or defaced Note which is presented for replacement. (4) The Agent shall not issue any replacement Note, Receipt, Coupon or Talon unless and until the applicant therefor shall have: (a) paid such costs as may be incurred in connection therewith; (b) furnished it with such evidence (including evidence as to the serial number of such Note, Receipt, Coupon or Talon) and indemnity (which may include a bank guarantee) as the Company may reasonably require; and (c) in the case of any mutilated or defaced Note, Receipt, Coupon or Talon, surrendered the same to the Agent. (5) The Agent shall cancel any Notes (and the Receipts, Coupons and Talons appertaining thereto) presented for exchange or any mutilated or defaced Notes, Receipts, Coupons and Talons in respect of which new or replacement Notes, Receipts, Coupons and Talons, as the case may be, have been issued pursuant to this Clause 14 and shall furnish the Company with a certificate stating the serial numbers of the Notes, Receipts, Coupons and Talons so cancelled and, unless otherwise instructed by the Company in writing, shall destroy such cancelled Notes, Receipts, Coupons and Talons and furnish the Company with a destruction certificate containing the information specified in Clause 13(4). (6) The Agent shall, on issuing any new or replacement Note, Receipt, Coupon or Talon, forthwith inform the Company and the Paying Agents of the serial number of such new or replacement Note, Receipt, Coupon or Talon issued and (if known) of the serial number of the Note, Receipt, Coupon or Talon in place of which such new or replacement Note, Receipt, Coupon or Talon has been issued. Whenever new or replacement Receipts, Coupons or Talons are issued pursuant to the provisions of this Clause 14, the Agent shall also notify the Paying Agents of the maturity dates of the exchanged or lost, stolen, mutilated, defaced or destroyed Receipts, Coupons or Talons and of the new or replacement Receipts, Coupons or Talons issued. (7) The Agent shall keep a full and complete record of all new and replacement Notes, Receipts, Coupons and Talons issued and shall make such record available all at reasonable times to the Company and any persons authorized by the Company for inspection and for the taking of copies thereof or extracts therefrom. (8) Whenever any Note, Receipt, Coupon or Talon for which a new or replacement Note, Receipt, Coupon or Talon has been issued and in respect of which the serial number is known is presented to the Agent or any of the Paying Agents for payment, the Agent or, as the case may be, the relevant Paying Agent shall immediately send notice thereof to the Company and the Agent. 15. Copies of this Agreement and each Pricing Supplement available for inspection The Agent and the Paying Agents shall, for as long as any Note remains outstanding, hold copies of this Agreement, each Pricing Supplement, the Company's Certificate of Incorporation as amended and restated from time to time and the latest annual and any interim reports of the Company available for inspection. For this purpose, the Company shall furnish the Agent and the Paying Agents with sufficient copies of each of such documents. 16. Commissions and expenses (1) The Company shall pay to the Agent such fees and commissions as the Company and the Agent may separately agree in respect of the services of the Agent and the Paying Agents hereunder together with any reasonable out-of-pocket expenses (including legal, printing, postage, tax, cable and advertising expenses required in connection with the Notes issued hereunder) incurred by the Agent and the Paying Agents in connection with their said services. (2) The Agent shall make payment of the fees and commissions due hereunder to the Paying Agents and shall reimburse their expenses promptly after the receipt of the relevant moneys from the Company. The Company shall not be responsible for any such payment or reimbursement by the Agent to the Paying Agents. 17. Indemnity (1) The Company shall indemnify the Agent and each of the Paying Agents against any direct losses, liabilities, costs, claims, actions, demands or expenses (including, but not limited to, all reasonable costs, legal fees, charges and expenses paid or incurred in disputing or defending any of the foregoing but excluding loss of profits) which it may incur or which may be made against the Agent or any Paying Agent as a result of or in connection with its appointment by the Company or the exercise of its powers and duties hereunder except such as may result from its own wilful default, negligence or bad faith or that of its officers, directors or employees or the breach by it of the terms of this Agreement. (2) The Agent and the Paying Agents shall not be liable for any action taken or omitted hereunder except for their own wilful default, negligence or bad faith or that of their respective officers, directors or employees or the breach by any of them of the terms of this Agreement. (3) Neither the Agent nor any of the Paying Agents shall be responsible for the acts or failure to act of any other of them and each of the Agent and the Paying Agents shall indemnify the Company against any loss, liability, cost, claim, action, demand or expense (including, but not limited to, all reasonable costs, legal fees, charges and expenses paid or incurred in disputing or defending any of the foregoing but excluding loss of profits) which the Company may incur or which may be made against it as a result of the breach by the Agent or any such Paying Agent of the terms of this Agreement or its wilful default, negligence or bad faith or that of its officers, directors or employees. 18. Repayment by the Agent The Agent shall, forthwith on demand, upon the Company being discharged from its obligation to make payments in respect of any Notes under the Conditions, provided that there is no outstanding, bona fide and proper claim in respect of any such payments, pay to the Company sums equivalent to any amounts paid to it by the Company in respect of such Notes. 19. Conditions of appointment (1) The Agent shall be entitled to deal with money paid to it by the Company for the purpose of this Agreement in the same manner as other money paid to a banker by its customers except: (a) that it shall not exercise any right of set-off, lien or similar claim in respect thereof; (b) as provided in subclause (2) below; and (c) that it shall not be liable to account to the Company for any interest thereon except as otherwise agreed between the Company and the Agent. (2) In acting hereunder and in connection with the Notes, the Agent and the Paying Agents shall act solely as agents of the Company and will not thereby assume any obligations towards or relationship of agency or trust for or with any of the owners or holders of the Notes, Receipts, Coupons or Talons, except that all funds held by the Agent or the Paying Agents for payment to the Noteholders shall be held in trust, to be applied as set forth herein, but need not be segregated from other funds except as required by law; provided, however, that monies paid by the Company to the Agent for the payment of principal or interest on Notes remaining unclaimed at the end of one year after such principal or interest shall become due and payable shall be repaid to the Company as provided and in the manner set forth in the Notes where upon all liability of the Agent with respect thereto shall cease. (3) The Agent and the Paying Agents hereby undertake to the Company to perform such obligations and duties, and shall be obliged to perform such duties and only such duties, as are herein, in the Conditions and in the Procedures Memorandum specifically set forth, and no implied duties or obligations shall be read into this Agreement or the Notes against the Agent and the Paying Agents. (4) The Agent may consult with legal and other professional advisers and the opinion of such advisers shall be full and complete protection in respect of any action taken, omitted or suffered hereunder in good faith and in accordance with the opinion of such advisers. (5) Each of the Agent and the Paying Agents shall be protected and shall incur no liability for or in respect of any action taken, omitted or suffered in reliance upon any instruction, request or order from the Company or any notice, resolution, direction, consent, certificate, affidavit, statement, cable, telex or other paper or document which it reasonably believes to be genuine and to have been delivered, signed or sent by the proper party or parties or upon written instructions from the Company. (6) Any of the Agent and the Paying Agents and their officers, directors and employees may become the owner of, or acquire any interest in, any Notes, Receipts, Coupons or Talons with the same rights that it or he would have if the Agent or the relevant Paying Agent, as the case may be, concerned were not appointed hereunder, and may engage or be interested in any financial or other transaction with the Company and may act on, or as depositary, trustee or agent for, any committee or body of holders of Notes or Coupons or in connection with any other obligations of the Company as freely as if the Agent or the relevant Paying Agent, as the case may be, were not appointed hereunder. (7) The Company shall provide the Agent with a certified copy of the list of persons authorized to execute documents and take action on behalf of the Company in connection with this Agreement and shall notify the Agent immediately in writing if any of such persons ceases to be so authorized or if any additional person becomes so authorized together, in the case of an additional authorized person, with a certified copy of the revised list of persons authorized to execute documents and take action on behalf of the Company. 20. Communication between the parties A copy of all communications relating to the subject matter of this Agreement between the Company and any holders of Notes, Receipts or Coupons and any of the Paying Agents shall be sent to the Agent by the relevant Paying Agent. 21. Changes in Agent and Paying Agents (1) The Company agrees that, until no Note is outstanding or until moneys for the payment of all amounts in respect of all outstanding Notes have been made available to the Agent (whichever is the later): (a) so long as any Notes are listed on a Stock Exchange, there will at all times be a Paying Agent (or the Agent) having a specified office in each location required by the rules and regulations of the relevant Stock Exchange; (b) there will at all times be a Paying Agent (or the Agent) with a specified office in a city approved by the Company and the Agent in continental Europe; and (c) there will at all times be an Agent. In addition, the Company shall appoint a Paying Agent having a specified office in New York City in the circumstances described in the final paragraph of Condition 6(b). Any variation, termination, appointment or change shall only take effect (other than in the case of insolvency, when it shall be of immediate effect) after not less than 30 nor more than 45 days' prior notice thereof shall have been given to the Agent and the Noteholders in accordance with Condition 16. (2) The Agent may (subject as provided in subclause (4)) at any time resign as Agent by giving written notice to the Company of such intention on its part, specifying the date on which its desired resignation shall become effective; provided that such date shall never be less than three months after the receipt of such notice by the Company unless the Company agrees to accept less notice. (3) The Agent may (subject as provided in subclause (4)) be removed at any time by the filing with it of an instrument in writing signed on behalf of the Company specifying such removal and the date when it shall become effective. (4) Any resignation under subclause (2) or removal under subclause (3) shall only take effect upon the appointment by the Company of a successor Agent and (other than in cases of insolvency of the Agent) on the expiry of the notice to be given under Clause 23. If, by the day falling 10 days before the expiry of any notice under subclause (2), the Company has not appointed a successor Agent, then the Agent shall be entitled, on behalf of the Company, to appoint as a successor Agent in its place such reputable financial institution of good standing as it may reasonably determine to be capable of performing the duties of the Agent hereunder. (5) In case at any time the Agent resigns, or is removed, or becomes incapable of action or is adjudged bankrupt or insolvent, or files a voluntary petition in bankruptcy or makes an assignment for the benefit of its creditors or consents to the appointment of an administrator, liquidator or administrative or other receiver of all or a substantial part of its property, or if an administrator, liquidator or administrative or other receiver of it or all or a substantial part of its property is appointed, or it admits in writing its inability to pay or meet its debts as they become due, or if an order of any court is entered approving any petition filed by or against it under the provisions of any applicable bankruptcy or insolvency law or if any officer takes charge or control of it or of its property or affairs for the purpose of rehabilitation, administration or liquidation, a successor Agent may be appointed by the Company by an instrument in writing filed with the successor Agent. Upon the appointment as aforesaid of a successor Agent and acceptance by the latter of such appointment and (other than in case of insolvency of the Agent) upon expiry of the notice to be given under Clause 23 the Agent so superseded shall cease to be the Agent hereunder. (6) Subject to subclause (1), the Company may, after prior consultation with the Agent, terminate the appointment of any of the Paying Agents at any time and/or appoint one or more further Paying Agents by giving to the Agent, and to the relevant Paying Agent, at least 45 days' notice in writing to that effect. (7) Subject to subclause (1), all or any of the Paying Agents may resign their respective appointments hereunder at any time by giving the Company and the Agent at least 45 days' written notice to that effect. (8) Upon its resignation or removal becoming effective, the Agent or the relevant Paying Agent: (a) shall forthwith transfer all moneys held by it hereunder and, in the case of the Agent, the records referred to in Clauses 13(5) and 14(7) to the successor Agent hereunder; and (b) shall be entitled to the payment by the Company of its commissions and fees for the services theretofore rendered hereunder in accordance with the terms of Clause 16 and to the reimbursement of all reasonable out-of-pocket expenses (including legal fees and together with any applicable value added tax or similar tax thereon) incurred in connection therewith. (9) Upon its appointment becoming effective, a successor Agent and any new Paying Agent shall, without further act, deed or conveyance, become vested with all the authority, rights, powers, trust, immunities, duties and obligations of such predecessor with like effect as if originally named as Agent or (as the case may be) a Paying Agent hereunder. 22. Merger and consolidation Any corporation into which the Agent or any Paying Agent may be merged, or any corporation with which the Agent or any of the Paying Agents may be consolidated, or any corporation resulting from any merger or consolidation to which the Agent or any of the Paying Agents shall be a party, or any corporation to which the Agent or any of the Paying Agents shall sell or otherwise transfer all or substantially all the assets of the Agent or any Paying Agent shall, on the date when such merger, consolidation or transfer becomes effective and to the extent permitted by any applicable laws, become the successor Agent or, as the case may be, Paying Agent under this Agreement without the execution or filing of any paper or any further act on the part of the parties hereto, unless otherwise required by the Company, and after the said effective date all references in this Agreement to the Agent or, as the case may be, such Paying Agent shall be deemed to be references to such corporation. Notice of any such merger, consolidation or transfer shall forthwith be given to the Company by the relevant Agent or Paying Agent. 23. Notifications Following receipt of notice of resignation from the Agent or any Paying Agent and forthwith upon appointing a successor Agent or, as the case may be, further or other Paying Agent or on giving notice to terminate the appointment of any Agent or, as the case may be, Paying Agent, the Company shall give or cause to be given not more than 45 days' nor less than 30 days' notice thereof to the Noteholders in accordance with the Conditions. 24. Change of specified office If the Agent or any Paying Agent determines to change its specified office it shall give to the Company and (if applicable) the Agent written notice of such determination giving the address of the new specified office which shall be in the same city and stating the date on which such change is to take effect, which shall not be less than 45 days thereafter. The Agent (on behalf of the Company) shall within 15 days of receipt of such notice (unless the appointment of the Agent or the relevant Paying Agent, as the case may be, is to terminate pursuant to Clause 21 on or prior to the date of such change) give or cause to be given not more than 45 days' nor less than 30 days' notice thereof to the Noteholders in accordance with the Conditions. 25. Notices Any notice or communication given hereunder shall be sufficiently given or served: (a) if delivered in person to the relevant address specified on the signature pages hereof and, if so delivered, shall be deemed to have been delivered at time of receipt; or (b) if sent by facsimile (and followed by delivery to the relevant address) or telex to the relevant number specified on the signature pages hereof and, if so sent, shall be deemed to have been delivered upon transmission provided such transmission is confirmed by the answer back of the recipient (in the case of telex) or when an acknowledgement of receipt is received (in the case of facsimile). 26. Taxes and stamp duties The Company agrees to pay any and all stamp and other documentary taxes or duties (other than any interest or penalties arising as a result of a failure by any other person to account promptly to the relevant authorities for any such duties or taxes after such person shall have received from the Company the full amount payable in respect thereof) which may be payable in connection with the execution, delivery, performance and enforcement of this Agreement. 27. Currency indemnity If, under any applicable law and whether pursuant to a judgment being made or registered against the Company or for any other reason, any payment under or in connection with this Agreement is made or is to be satisfied in a currency (the "other currency") other than that in which the relevant payment is expressed to be due (the "required currency") under this Agreement, then, to the extent that the payment (when converted into the required currency at the rate of exchange on the date of payment or, if it is not practicable for the Agent or the relevant Paying Agent to purchase the required currency with the other currency on the date of payment, at the rate of exchange as soon thereafter as it is practicable for it to do so or, in the case of a liquidation, insolvency or analogous process at the rate of exchange on the latest date permitted by applicable law for the determination of liabilities in such liquidation, insolvency or analogous process) actually received by the Agent or the relevant Paying Agent falls short of the amount due under the terms of this Agreement, the Company shall, as a separate and independent obligation, indemnify and hold harmless the Agent against the amount of such shortfall. For the purposes of this Clause 27, "rate of exchange" means the rate at which the Agent is able on the relevant date to purchase the required currency with the other currency and shall take into account any premium and other costs of exchange. 28. Amendments; Meetings of Holders (1) This Agreement, the Notes and any Receipts and Coupons attached to the Notes may be amended by the Company and the Agent, without consent of the holder of any Note, Receipt or Coupon (i) for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained herein or therein, or to evidence the succession of another corporation to the Company as provided in Condition 11, (ii) to make any further modifications of the terms of this Agreement necessary or desirable to allow for the issuance of any additional Notes (which modifications shall not be materially adverse to holders of outstanding Notes) or (iii) in any manner which the Company (and, in the case of this Agreement, the Agent) may deem necessary or desirable and which shall not materially adversely affect the interests of the holders of the Notes, Receipts and Coupons. In addition, (a) with the consent of the holders of not less than a majority in aggregate principal amount of the Senior Notes then outstanding affected thereby, or by a resolution adopted by a majority in aggregate principal amount of such outstanding Senior Notes affected thereby present or represented at a meeting of such holders at which a quorum is present, this Agreement with respect to such Senior Notes and the terms and conditions of such Senior Notes, Receipts and Coupons may be modified or amended by the parties hereto, and future compliance and past defaults in respect thereto waived, and (b) with the consent of the holders of not less than a majority in aggregate principal amount of the Subordinated Notes then outstanding affected thereby, or by a resolution adopted by a majority in aggregate principal amount of such outstanding Subordinated Notes affected thereby present or represented at a meeting of such holders at which a quorum is present, this Agreement with respect to such Subordinated Notes and the terms and conditions of such Subordinated Notes, Receipts and Coupons may be modified or amended by the parties hereto, and future compliance and past defaults in respect thereto waived, in each case as provided in Conditions 12 and 13 and subject to the limitations therein provided. (2) The holders of Senior Notes and Subordinated Notes will have separate meetings and vote as separate classes of Notes. A meeting of holders of Senior or Subordinated Notes may be called by the holders of at least 10 per cent. in principal amount of the outstanding Senior or Subordinated Notes, respectively, at any time and from time to time to make, give or take any request, demand authorization, direction, notice, consent, waiver or other action provided by this Agreement or such Notes to be made, given or taken by holders of such Notes. (3) The Agent may at any time call a meeting of holders of Senior or Subordinated Notes for any purpose specified in subclause (1) to be held at such time and at such place in The City of New York or in London, as the Agent and the Company shall determine. Notice of every meeting of holders of Senior or Subordinated Notes, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be given by the Agent to the Company and to the holders of the respective Notes, in the same manner as provided in Condition 16, not less than 21 nor more than 180 days prior to the date fixed for the meeting. If at any time the Company or the holders of at least 10 per cent. in principal amount of the outstanding Senior or Subordinated Notes shall have requested the Agent to call a meeting of the holders to take any action authorized in subclause (1), by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Agent shall not have given notice of such meeting within 21 days after receipt of such request or shall not thereafter proceed to cause the meeting to be held as provided herein, then the Company, or the holders of Senior or Subordinated Notes, as the case may be, in the amount above-specified, as the case may be, may determine the time and the place in The City of New York or London for such meeting and may call such meeting by giving notice thereof as provided in this subclause (3). (4) To be entitled to vote at any meeting of holders of Senior or Subordinated Notes, a person shall be a holder of outstanding Senior or Subordinated Notes, as the case may be, affected thereby at the time of such meeting, or a person appointed by an instrument in writing as proxy for such holder. (5) The persons entitled to vote a majority in principal amount of the outstanding Senior or Subordinated Notes affected thereby shall constitute a quorum in respect of such Senior or Subordinated Notes. In the absence of a quorum, within 30 minutes of the time appointed for any such meeting, the meeting may be adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such adjourned meeting. Notice of the reconvening of any adjourned meeting shall be given as provided in subclause (3) except that such notice need be given not less than five days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly that 25 per cent. of the principal amount of the outstanding Senior or Subordinated Notes affected thereby shall constitute a quorum. Subject to the foregoing, at the reconvening of any meeting adjourned for a lack of a quorum, the persons entitled to vote 25 per cent. in principal amount of the outstanding Senior or Subordinated Notes affected thereby, as the case may be, shall constitute a quorum for the taking of any action set forth in the notice of the original meeting. Any meeting of holders of Senior or Subordinated Notes at which a quorum is present may be adjourned from time to time by vote of a majority in principal amount of the outstanding Senior or Subordinated Notes affected thereby, as the case may be, represented at the meeting, and the meeting may be held as so adjourned without further notice. At a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid, any resolution and all matters shall be effectively passed and decided if passed or decided by the persons entitled to vote a majority in principal amount of the outstanding Senior or Subordinated Notes represented and voting at such meeting, provided that such amount approving such resolution shall be not less than 25 per cent. in principal amount of the outstanding Senior or Subordinated Notes affected thereby, as the case may be. (6) The Agent may make such reasonable regulations as it may deem advisable for any meeting of holders of Senior or Subordinated Notes in regard to proof of the holding of such Notes and of the appointment of proxies and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. The Agent shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or holders of Senior or Subordinated Notes as provided above, in which case the Company or the holders of Senior or Subordinated Notes calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the persons entitled to vote a majority in principal amount of the outstanding Senior or Subordinated Notes represented at the meeting. The chairman of the meeting shall have no right to vote, except as a holder of Senior or Subordinated Notes affected thereby or as a proxy. A record, at least in triplicate, of the proceedings of each meeting of holders of Senior or Subordinated Notes shall be prepared, and one such copy shall be delivered to the Company and another to the Agent to be preserved by the Agent. 29. Calculation Agency Agreement A form of calculation agency agreement is annexed to this Agreement as Appendix C. Where the Conditions require functions to be carried out by a calculation agent (including in respect of Indexed Notes and Dual Currency Notes), the Company may execute such an agreement or an agreement in such form as the Company and the calculation agent may agree and any calculations will be made in the manner specified in the applicable Pricing Supplement. 30. Descriptive Headings The descriptive headings in this Agreement are for convenience of reference only and shall not define or limit the provisions hereof. 31. Governing Law This Agreement is governed by, and shall be construed in accordance with, the laws of the State of California, United States of America, applicable to agreements made and to be performed wholly within such jurisdiction. 32. Counterparts This Agreement may be executed in one or more counterparts all of which shall constitute one and the same agreement. [Signature Page Next] IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. The Company - ----------- BANKAMERICA CORPORATION 555 California Street San Francisco, California 94104 Telephone: 1 415 953 8496 Telefax: 1 415 622 3611 Attention: Shaun M. Maguire, Senior Vice President and Assistant Treasurer By: /s/ S.M. Maguire -------------------------------------- Name: Shaun M. Maguire Title:Senior Vice President and Assistant Treasurer The Agent FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION 100 Wall Street, Suite 1600 New York, New York 10005 Telephone: 1 212 361 2460 Telefax: 1 212 809 5459 Attention: John Bowman, Vice President By: /s/ John Bowman -------------------------------------- Name: John Bowman Title: Vice President The Agent's agent with respect to its obligations as issuing and principal paying agent under this Agreement UNION BANK OF SWITZERLAND, LONDON BRANCH Telephone: 44 171 901 6126 Telefax: 44 171 901 6118 Attention: Margaret Potter By: /s/ Nicola Dale -------------------------------------- Name: Nicola Dale Title: Authorised Officer - -------------------------------------------------------------------------------- BankAmerica Corporation NationsBank (DE) Corporation - -------------------------------------------------------------------------------- AMENDMENT TO SECOND AMENDED AND RESTATED AGENCY AGREEMENT Dated as of September 30, 1998 Amending the Second Amended and Restated Agency Agreement dated as of November 15, 1996, between BankAmerica Corporation and U.S. Bank Trust, National Association (successor to First Trust of New York, National Association), as Agent - -------------------------------------------------------------------------------- AMENDMENT TO SECOND AMENDED AND RESTATED AGENCY AGREEMENT, dated as of September 30, 1998 (the "Amendment"), among NationsBank (DE) Corporation, a Delaware corporation ("NationsBank (DE)") and a direct wholly owned subsidiary of NationsBank Corporation, a North Carolina corporation ("NationsBank"), BankAmerica Corporation, a Delaware corporation ("BankAmerica"), and U.S. Bank Trust National Association, as Agent (the "Agent") under the Agency Agreement referred to herein; WHEREAS, BankAmerica and the Agent heretofore executed and delivered a Second Amended and Restated Agency Agreement, dated as of November 15, 1996 (the "Agency Agreement"); and WHEREAS, pursuant to the Agency Agreement BankAmerica issued and the Agent authenticated and delivered one or more series of BankAmerica's Euro Medium-Term Notes (the "Notes"); and WHEREAS, NationsBank and BankAmerica have entered into the Agreement and Plan of Reorganization, dated as of April 10, 1998, pursuant to which (i) NationsBank will merge (the "Reincorporation Merger") with and into NationsBank (DE), in accordance with the terms and conditions of the Plan of Reincorporation Merger by and between NationsBank and NationsBank (DE), dated as of August 3, 1998, with NationsBank (DE) as the surviving corporation in the Reincorporation Merger, and (ii) BankAmerica will thereafter merge (the "Merger," and together with the Reincorporation Merger, the "Reorganization")with and into NationsBank (DE), with NationsBank (DE) as the surviving corporation in the Merger; and WHEREAS, the Reorganization is expected to be consummated on September 30, 1998, at which time, NationsBank (DE) will change its name to BankAmerica Corporation; and WHEREAS, Condition 11 of the Terms and Conditions of the Notes, which are attached as Appendix A of the Agency Agreement (the "Terms and Conditions"), provides that in the case of the Reorganization, NationsBank (DE) shall expressly assume by amendment to the Agency Agreement all the obligations under the Notes and the Agency Agreement on the part of BankAmerica to be performed or observed; and WHEREAS, Section 28(1) of the Agency Agreement provides that BankAmerica and the Agent may amend the Agency Agreement and the Notes without notice to or consent of any Holders of the Notes in order to comply with Condition 11 of the Terms and Conditions; and 2 WHEREAS, this Amendment has been duly authorized by all necessary corporate action on the part of each of NationsBank (DE) and BankAmerica. NOW, THEREFORE, NationsBank (DE), BankAmerica and the Agent agree as follows for the equal and ratable benefit of the Holders of the Notes: ARTICLE I ASSUMPTION BY SUCCESSOR CORPORATION SECTION 1.1. Assumption of the Notes. NationsBank (DE) hereby expressly assumes the due and punctual payment of the principal of (and premium, if any) and interest (including all Additional Amounts, if any, as provided in Condition 9 of the Terms and Conditions) on all the Notes, Receipts and Coupons, according to their tenor, and the performance of every covenant and condition of the Notes and the Agency Agreement to be performed by BankAmerica. SECTION 1.2. Agent's Acceptance. The Agent hereby accepts this Amendment and agrees to perform the same under the terms and conditions set forth in the Agency Agreement. ARTICLE II MISCELLANEOUS SECTION 2.1. Effect of Amendment. Upon the later to occur of (i) the execution and delivery of this Amendment by NationsBank (DE), BankAmerica and the Agent and (ii) the consummation of the Reorganization, the Agency Agreement shall be amended in accordance herewith, and this Amendment shall form a part of the Agency Agreement for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered under the Agency Agreement shall be bound thereby. SECTION 2.2. Agency Agreement Remains in Full Force and Effect. Except as amended hereby, all provisions in the Agency Agreement shall remain in full force and effect. SECTION 2.3. Agency Agreement and Amendment. This Amendment amends the Agency Agreement, and the Agency Agreement and this Amendment shall henceforth be read and construed together. 3 SECTION 2.4. Confirmation and Preservation of Agency Agreement. The Agency Agreement, as amended by this Amendment is in all respects confirmed and preserved. SECTION 2.5 Severability. In case any provision in this Amendment shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 2.6 Terms Defined in the Agency Agreement. All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Agency Agreement, including its appendices. SECTION 2.7. Headings. The Article and Section headings of this Amendment have been inserted for convenience of reference only, are not to be considered part of this Amendment and shall in no way modify or restrict any of the terms or provisions hereof. SECTION 2.8. Benefits of Amendment, etc. Nothing in this Amendment or the Notes, express or implied, shall give to any Person, other than the parties hereto and thereto and their successors hereunder and thereunder and the Holders of the Notes, any benefit of any legal or equitable right, remedy or claim under the Agency Agreement, this Amendment or the Notes. SECTION 2.9. Successors. All agreements of NationsBank (DE) in this Amendment shall bind its successors. All agreements of the Agent in this Amendment shall bind its successors. SECTION 2.10. Agent Not Responsible for Recitals. The recitals contained herein shall be taken as the statements of BankAmerica and NationsBank (DE), and the Agent assumes no responsibility for their correctness. The Agent makes no representations as to, and shall not be responsible for, the validity or sufficiency of this Amendment. SECTION 2.11. Certain Duties and Responsibilities of the Agent. In entering into this Amendment, the Agent shall be entitled to the benefit of every provision of the Agency Agreement relating to the conduct or affecting the liability or affording protection to the Agent, whether or not elsewhere herein so provided. SECTION 2.13. Governing Law. This Amendment to the Agency Agreement shall be governed by, and construed in accordance with, the laws of the jurisdiction which govern the Agency Agreement and its construction. 4 SECTION 2.14. Counterpart originals. The parties may sign any number of copies of this Amendment. Each signed copy shall be an original, but all of them together represent the same agreement. 5 IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed as of the date first written above. NationsBank (DE) Corporation By: /s/ John E. Mack --------------------------------- Name: John E. Mack Title: Senior Vice President BankAmerica Corporation By: /s/ S.M. Maguire --------------------------------- Name: S.M. Maguire Title: Senior Vice President and Assistant Treasurer U.S. Bank Trust, National Association, as Agent By: /s/ John D. Bowman --------------------------------- Name: John D. Bowman Title: Vice President The Agent's agent with respect to its obligations as issuing and principal paying agent under the Agency Agreement. Midland Bank PLC, London office By: /s/ Colin Groome --------------------------------- Name: Colin Groome Title: Head of Issuer Services 6 EX-4 16 EXHIBIT 4(Z) ================================================================================ BANKAMERICA CORPORATION to BANKERS TRUST COMPANY Trustee ---------- JUNIOR SUBORDINATED INDENTURE Dated as of November 27, 1996 ---------- ================================================================================ TABLE OF CONTENTS ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 1.1. Definitions ................................................ 1 SECTION 1.2. Compliance Certificate and Opinions ........................ 10 SECTION 1.3. Forms of Documents Delivered to Trustee .................... 11 SECTION 1.4. Acts of Holders ............................................ 11 SECTION 1.5. Notices, Etc. to Trustee and Company ....................... 13 SECTION 1.6. Notice to Holders; Waiver .................................. 14 SECTION 1.7. Conflict with Trust Indenture Act .......................... 14 SECTION 1.8. Effect of Headings and Table of Contents ................... 14 SECTION 1.9. Successors and Assigns ..................................... 15 SECTION 1.10. Separability Clause ........................................ 15 SECTION 1.11. Benefits of Indenture ...................................... 15 SECTION 1.12. Governing Law .............................................. 15 SECTION 1.13. Non-Business Days .......................................... 15 ARTICLE II SECURITY FORMS SECTION 2.1. Forms Generally ............................................ 15 SECTION 2.2. Form of Face of Security. .................................. 16 SECTION 2.3. Form of Reverse of Security ................................ 20 SECTION 2.4. Additional Provisions Required in Global Security .......... 23 SECTION 2.5. Form of Trustee's Certificate of Authentication ............ 24 ARTICLE III THE SECURITIES SECTION 3.1. Title and Terms ............................................ 24 SECTION 3.2. Denominations .............................................. 27 SECTION 3.3. Execution, Authentication, Delivery and Dating ............. 27 SECTION 3.4. Temporary Securities ....................................... 28 SECTION 3.5. Global Securities .......................................... 29 SECTION 3.6. Registration, Transfer and Exchange Generally, Certain Transfers and Exchanges; Securities Act Legends .... 30 SECTION 3.7. Mutilated, Destroyed, Lost and Stolen Securities ........... 33 SECTION 3.8. Payment of Interest; Interest Rights Preserved ............. 34 SECTION 3.9. Persons Deemed Owners ...................................... 35 SECTION 3.10. Cancellation ............................................... 35 SECTION 3.11. Computation of Interest .................................... 36 SECTION 3.12. Deferrals of Interest Payment Dates ........................ 36 SECTION 3.13. Right of Set-Off ........................................... 37 i SECTION 3.14. Agreed Tax Treatment ....................................... 37 SECTION 3.15. CUSIP Numbers .............................................. 37 ARTICLE IV SATISFACTION AND DISCHARGE SECTION 4.1. Satisfaction and Discharge of Indenture ..................... 37 SECTION 4.2. Application of Trust Money .................................. 39 ARTICLE V REMEDIES SECTION 5.1. Events of Default .......................................... 39 SECTION 5.2. Acceleration of Maturity; Rescission and Annulment ......... 40 SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee ..................................... 41 SECTION 5.4. Trustee May File Proofs of Claim ........................... 42 SECTION 5.5. Trustee May Enforce Claim Without Possession of Securities. 43 SECTION 5.6. Application of Money Collected ............................. 43 SECTION 5.7. Limitation on Suits ........................................ 43 SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium and Interest; Direct Action by Holders of Capital Securities ........................... 44 SECTION 5.9. Restoration of Rights and Remedies ......................... 44 SECTION 5.10. Rights and Remedies Cumulative ............................. 45 SECTION 5.11. Delay or Omission Not Waiver ............................... 45 SECTION 5.12. Control by Holders ......................................... 45 SECTION 5.13. Waiver of Past Defaults .................................... 45 SECTION 5.14. Undertaking for Costs ...................................... 46 SECTION 5.15. Waiver of Usury, Stay or Extension Laws .................... 46 ARTICLE VI THE TRUSTEE SECTION 6.1. Certain Duties and Responsibilities ........................ 47 SECTION 6.2. Notice of Defaults ......................................... 48 SECTION 6.3. Certain Rights of Trustee .................................. 48 SECTION 6.4. Not Responsible for Recitals or Issuance of Securities ..... 49 SECTION 6.5. May Hold Securities ........................................ 49 SECTION 6.6. Money Held in Trust ........................................ 50 SECTION 6.7. Compensation and Reimbursement ............................. 50 SECTION 6.8. Disqualification; Conflicting Interests .................... 50 SECTION 6.9. Corporate Trustee Required; Eligibility .................... 51 SECTION 6.10. Resignation and Removal; Appointment of Successor .......... 51 SECTION 6.11. Acceptance of Appointment by Successor ..................... 53 SECTION 6.12. Merger, Conversion, Consolidation or ii Succession to Business ..................................... 54 SECTION 6.13. Preferential Collection of Claims Against Company .......... 54 SECTION 6.14. Appointment of Authenticating Agent ........................ 54 ARTICLE VII HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 7.1. Company to Furnish Trustee Names and Addresses of Holders .. 56 SECTION 7.2. Preservation of Information, Communications to Holders ..... 56 SECTION 7.3. Reports by Trustee ......................................... 56 SECTION 7.4. Reports by Company ......................................... 57 ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 8.1. Company May Consolidate, Etc., Only on Certain Terms ........ 57 Section 8.2. Successor Corporation Substituted ........................... 58 ARTICLE IX SUPPLEMENTAL INDENTURES SECTION 9.1. Supplemental Indentures without Consent of Holders ......... 59 SECTION 9.2. Supplemental indentures with Consent of Holders ............ 60 SECTION 9.3. Execution of Supplemental Indentures ....................... 61 SECTION 9.4. Effect of Supplemental Indentures .......................... 61 SECTION 9.5. Conformity with Trust Indenture Act ........................ 61 SECTION 9.6. Reference in Securities to Supplemental Indentures ......... 61 ARTICLE X COVENANTS SECTION 10.1. Payment of Principal, Premium and Interest ................. 62 SECTION 10.2. Maintenance of Office or Agency ............................ 62 SECTION 10.3. Money for Security Payments to be Held in Trust ............ 62 SECTION 10.4. Statement as to Compliance ................................. 64 SECTION 10.5. Waiver of Certain Covenants ................................ 64 SECTION 10.6. Additional Sums ............................................ 64 SECTION 10.7. Additional Covenants ....................................... 65 SECTION 10.8. Original Issue Discount .................................... 65 ARTICLE XI REDEMPTION OF SECURITIES SECTION 11.1. Applicability of This Article .............................. 66 SECTION 11.2. Election to Redeem; Notice to Trustee ...................... 66 iii SECTION 11.3. Selection of Securities to be Redeemed ..................... 66 SECTION 11.4. Notice of Redemption ....................................... 67 SECTION 11.5. Deposit of Redemption Price ................................ 68 SECTION 11.6. Payment of Securities Called for Redemption ................ 68 SECTION 11.7. Right of Redemption of Securities Initially Issued to a BankAmerica Trust ..................................... 69 ARTICLE XII SINKING FUNDS SECTION 12.1. Applicability of Article ................................... 69 SECTION 12.2. Satisfaction of Sinking Fund Payments with Securities ...... 69 SECTION 12.3. Redemption of Securities for Sinking Fund .................. 70 ARTICLE XIII SUBORDINATION OF SECURITIES SECTION 13.1. Securities Subordinate to Senior Indebtedness .............. 71 SECTION 13.2. No Payment When Senior Indebtedness in Default; Payment Over of Proceeds Upon Dissolution, Etc ............. 71 SECTION 13.3. Payment Permitted If No Default ............................ 73 SECTION 13.4. Subrogation to Rights of Holders of Senior Indebtedness .... 73 SECTION 13.5. Provisions Solely to Define Relative Rights ................ 74 SECTION 13.6. Trustee to Effectuate Subordination ........................ 74 SECTION 13.7. No Waiver of Subordination Provisions ...................... 74 SECTION 13.8. Notice to Trustee .......................................... 75 SECTION 13.9. Reliance on Judicial Order or Certificate of Liquidating Agent .......................................... 75 SECTION 13.10. Trustee Not Fiduciary for Holders of Senior indebtedness ... 76 SECTION 13.11. Rights of Trustee as Holder of Senior Indebtedness; Preservation of Trustee`s Rights ........................... 76 SECTION 13.12. Article Applicable to Paying Agents ........................ 76 ANNEX A - Form of Trust Agreement ANNEX B - Form of Amended and Restated Trust Agreement ANNEX C - Form of Guarantee Agreement ANNEX D - Form of Restricted Securities Certificate ANNEX E - Form of Unrestricted Securities Certificate iv JUNIOR SUBORDINATED INDENTURE, dated as of November 27, 1996, between BANKAMERICA CORPORATION, a Delaware corporation (hereinafter called the "Company") having its principal office at 555 California Street, San Francisco, California 94104, and BANKERS TRUST COMPANY, a New York banking corporation, as Trustee (hereinafter called the "Trustee"). RECITALS OF THE COMPANY The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured junior subordinated debt securities in series (hereinafter called the "Securities") of substantially the tenor hereinafter provided, including, without limitation, Securities issued to evidence loans made to the Company of the proceeds from the issuance from time to time by one or more business trusts (each a "BankAmerica Trust," and, collectively, the "BankAmerica Trusts") of preferred trust interests in such Trusts (the "Capital Securities") and common interests in such Trusts (the "Common Securities" and, collectively with the Capital Securities, the "Trust Securities"), and to provide the terms and conditions upon which the Securities are to be authenticated, issued and delivered. All things necessary to make the Securities, when executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid obligations of the Company, and to make this Indenture a valid agreement of the Company, in accordance with their and its terms, have been done. NOW THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities or of any series thereof, as follows: ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 1.1. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) The terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; (2) All other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (3) All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles which are generally accepted at the date or time of such computation; provided, that when two or more principles are so generally accepted, it shall mean that set of principles consistent with those in use by the Company; and (4) The words "herein," "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. "Act" when used with respect to any Holder has the meaning specified in Section 1.4. "Additional Interest" means the interest, if any, that shall accrue on any interest on the Securities of any series the payment of which has not been made on the applicable Interest Payment Date and which shall accrue at the rate per annum specified or determined as specified in such Security. "Additional Sums" has the meaning specified in Section 10.6. "Additional Taxes" means the sum of any additional taxes, duties and other governmental charges to which a BankAmerica Trust has become subject from time to time as a result of a Tax Event. "Administrator" means, in respect of any BankAmerica Trust, each Person identified as an "Administrator" in the related Trust Agreement, solely in such Person's capacity as Administrator of such BankAmerica Trust under such Trust Agreement and not in such Person's individual capacity, or any successor administrator appointed as therein provided. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person; provided, however, no BankAmerica Trust to which Securities have been issued shall be deemed to be an Affiliate of the Company. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and, the terms "controlling" and "controlled", have meanings correlative to the foregoing. "Agent Member" means any member of, or participant in, the Depository. "Allocable Amounts," when used with respect to any Senior Subordinated Debt, means the amount necessary to pay all principal (and premium, if any) and interest, if any, on such Senior Subordinated Debt in full less, if applicable, any portion of such amount which would have been paid to, and retained by, the holders of such Senior Subordinated Debt (whether as a result of the receipt of payments by the holders of such Senior Subordinated Debt from the Company or any other obligor thereon or from any holders of, or trustee in respect of, other indebtedness that is subordinate and junior in right of payment to such Senior Subordinated Debt pursuant to any provision of such indebtedness for the payment over of amounts received on account of such indebtedness to the holders of such Senior Subordinated Debt) but for the fact that such Senior 2 Subordinated Debt is subordinate or junior in right of payment to trade accounts payable or accrued liabilities arising in the ordinary course of business. "Applicable Procedures" means, with respect to any transfer or transaction involving a Global Security or beneficial interest therein, the rules and procedures of the Depository for such Security, in each case to the extent applicable to such transaction and as in effect from time to time. "Authenticating Agent" means any Person authorized by the Trustee pursuant to Section 6.14 to act on behalf of the Trustee to authenticate Securities of one or more series. "BankAmerica Guarantee" means the guarantee by the Company of distributions on the Capital Securities of a BankAmerica Trust to the extent provided in the Guarantee Agreement. "BankAmerica Trust" has the meaning specified in the first recital of this Indenture. "Board of Directors" means either the board of directors of the Company or any executive committee or other committee of that board duly authorized to act hereunder. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors, or officers of the Company to which authority to act on behalf of the Board of Directors has been delegated, and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day" means any day other than (i) a Saturday or Sunday, (ii) a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office of the Trustee, or, with respect to the Securities of a series initially issued to a BankAmerica Trust, the principal office of the Property Trustee under the related Trust Agreement, is closed for business. "Capital Securities" has the meaning specified in the first recital of this Indenture. "Capital Treatment Event" means, with respect to an issue of Capital Securities under the related Trust Agreement, the reasonable determination by the Company (as evidenced by an Officers' Certificate delivered to the Trustee) that, as a result of the occurrence of any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision thereof or therein, or as a result of any official or administrative pronouncement or action or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or such pronouncement, action or decision is announced on or after the Original Issue Date of such Capital Securities, there is more than an insubstantial risk that the Company will not be entitled to treat an amount equal to the Liquidation Amount of such Capital Securities as "Tier I Capital" (or the then equivalent thereof) for purposes of the capital adequacy guidelines of the Federal Reserve, as then in effect and applicable to the Company. 3 "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. "Common Securities" has the meaning specified in the first recital of this Indenture. "Common Stock" means the common stock, par value $1.5625 per share, of the Company. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor corporation shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor corporation. "Company Request" and "Company Order" mean, respectively, the written request or order signed in the name of the Company by the Chairman of the Board of Directors, the Chairman of the Executive Committee of the Board of Directors, a Vice Chairman of the Board of Directors, the Chief Executive Officer, the President, the Chief Operating Officer, a Vice Chairman or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, and delivered to the Trustee. "Corporate Trust Office" means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office as of the date of this Indenture is located at Four Albany Street, New York, New York 10006, Attention: Corporate Trust and Agency Group--Corporate Market Services. "Corporation" includes a corporation, association, company, joint-stock company or business trust. "Defaulted Interest" has the meaning specified in Section 3.8. "Depository" means, with respect to the Securities of any series issuable or issued in whole or in part in the form of one or more Global Securities, the Person designated as Depository by the Company pursuant to Section 3.1 with respect to such series (or any successor thereto). "Discount Security" means any security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.2. "Distributions," with respect to the Trust Securities issued by a BankAmerica Trust, means amounts payable in respect of such Trust Securities as provided in the related Trust Agreement and referred to therein as "Distributions." "Dollar" means the currency of the United States of America that, as at the time of payment, is legal tender for the payment of public and private debts. "DTC" means The Depository Trust Company. 4 "Event of Default" unless otherwise specified in the supplemental indenture creating a series of Securities has the meaning specified in Article V. "Exchange Act" means the Securities Exchange Act of 1934 and any statute successor thereto, in each case as amended from time to time. "Extension Period" has the meaning specified in Section 3.12. "Federal Reserve" means the Board of Governors of the Federal Reserve System. "Global Security" means a Security in the form prescribed in Section 2.4 evidencing all or part of a series of Securities, issued to the Depository or its nominee for such series, and registered in the name of such Depository or its nominee. "Guarantee Agreement" means the Guarantee Agreement substantially in the form attached hereto as Annex C, or substantially in such form as may be specified as contemplated by Section 3.1 with respect to the Securities of any series, in each case as amended from time to time. "Holder" means a Person in whose name a Security is registered in the Securities Register. "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and shall include the terms of each particular series of Securities established as contemplated by Section 3.1. "Institutional Accredited Investor" means an institutional accredited investor within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act. "Interest Payment Date" means as to each series of Securities the Stated Maturity of an installment of interest on such Securities. "Junior Subordinated Debt" means any obligation of the Company to its creditors, whether now outstanding or subsequently incurred, where the instrument creating or evidencing the obligation or pursuant to which the obligation is outstanding provides that it is subordinated and junior in right of payment to Senior Indebtedness pursuant to subordination provisions substantially similar to those set forth in this Indenture. Junior Subordinated Debt includes the Securities. "Maturity" when used with respect to any Security means the date on which the principal of such Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise. "Moody's" means Moody's Investors Service, Inc. "Notice of Default" means a written notice of the kind specified in Section 5.1(3). 5 "Officers' Certificate" means a certificate signed by the Chairman of the Board of Directors, a Vice Chairman of the Board of Directors, the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, and delivered to the Trustee. "Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Company, and who shall be acceptable to the Trustee. "Original Issue Date" means the date of issuance specified as such in each Security. "Other Securities" means Securities transferred, upon exchange or otherwise, to holders of "Other Capital Securities" as defined in the related Trust Agreement. "Outstanding" means, when used in reference to any Securities, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: (i) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (ii) Securities for whose payment money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent in trust for the Holders of such Securities; and (iii) Securities in substitution for or in lieu of which other Securities have been authenticated and delivered or which have been paid pursuant to Section 3.7, unless proof satisfactory to the Trustee is presented that any such Securities are held by Holders in whose hands such Securities are valid, binding and legal obligations of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which a Responsible Officer of the Trustee knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor. Upon the written request of the Trustee, the Company shall furnish to the Trustee promptly an Officers' Certificate listing and identifying all Securities, if any, known by the Company to be owned or held by or for the account of the Company, or any other obligor on the Securities or any Affiliate of the Company or such obligor, and, subject to the provisions of Section 6.1, the Trustee shall be entitled to accept such Officers' Certificate as conclusive evidence of the facts therein set forth and of the fact that all Securities not listed therein are Outstanding for the purpose of any such determination. 6 "Paying Agent" means the Trustee or any Person authorized by the Company to pay the principal of (and premium, if any) or interest on any Securities on behalf of the Company. "Person" means any individual, corporation, partnership, joint venture, trust, unincorporated organization or government or any agency or political subdivision thereof. "Place of Payment" means, with respect to the Securities of any series, the place or places where the principal of (and premium, if any) and interest on the Securities of such series are payable pursuant to Sections 3.1. "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any security authenticated and delivered under Section 3.7 in lieu of a lost, destroyed or stolen Security shall be deemed to evidence the same debt as the lost, destroyed or stolen Security. "Proceeding" has the meaning specified in Section 13.2. "Property Trustee" means, in respect of any BankAmerica Trust, the commercial bank or trust company identified as the "Property Trustee" in the related Trust Agreement, solely in its capacity as Property Trustee of such BankAmerica Trust under such Trust Agreement and not in its individual capacity, or its successor in interest in such capacity, or any successor property trustee appointed as therein provided. "Redemption Date," when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price," when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. "Regular Record Date" for the interest payable on any Interest Payment Date with respect to the Securities of a series means, unless otherwise provided pursuant to Section 3.1 with respect to Securities of a series, the date which is fifteen days next preceding such Interest Payment Date (whether or not a Business Day). "Regulation D" means Regulation D under the Securities Act (or any successor provision), as it may be amended from time to time. "Responsible Officer" means when used with respect to the Trustee, any officer assigned to the Corporate Trust Office, including any managing director, vice president, assistant vice president, assistant treasurer, assistant secretary or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers, and also, with respect to a particular matter, any other officer, to whom such matter is referred because of such officer's knowledge of and familiarity with the particular subject. 7 "Restricted Security" means each Security required pursuant to Section 3.6(c) to bear a Restricted Securities Legend. "Restricted Securities Certificate" means a certificate substantially in the form set forth in Annex D. "Restricted Securities Legend" means a legend substantially in the form of the legend required in the form of Security set forth in Section 2.2 to be placed upon a Restricted Security. "Rights Plan" means a plan of the Company providing for the issuance by the Company to all holders of its Common Stock of rights entitling the holders thereof to subscribe for or purchase shares of Common Stock or any class or series of preferred stock, which rights (i) are deemed to be transferred with such shares of Common Stock, (ii) are not exercisable and (iii) are also issued in respect of future issuances of Common Stock, in each case until the occurrence of a specified event or events. "Rule 144A" means Rule 144A under the Securities Act. "S&P" means Standard & Poor's Ratings Services. "Securities" or "Security" means any debt securities or debt security, as the case may be, authenticated and delivered under this Indenture. "Securities Act" means the Securities Act of 1933 (or any successor statute), as it may be amended from time to time. "Securities Register" and "Securities Registrar" have the respective meanings specified in Section 3.6. "Senior Debt" means any obligation of the Company to its creditors, whether now outstanding or subsequently incurred, other than any obligation as to which, in the instrument creating or evidencing the obligation or pursuant to which the obligation is outstanding, it is provided that such obligation is not Senior Debt. Senior Debt does not include Senior Subordinated Debt or Junior Subordinated Debt. "Senior Indebtedness" means (i) Senior Debt (but excluding trade accounts payable and accrued liabilities arising in the ordinary course of business) and (ii) the Allocable Amounts of Senior Subordinated Debt. "Senior Subordinated Debt" means any obligation of the Company to its creditors, whether now outstanding or subsequently incurred, where the instrument creating or evidencing the obligation or pursuant to which the obligation is outstanding, provides that it is subordinate and junior in right of payment to Senior Debt pursuant to subordinated provisions substantially similar to those applicable to the Company's outstanding Senior Subordinated Debt. Senior Subordinated Debt includes the indebtedness of the Company issued under the Subordinated Indenture between the Company and Chemical Trust Company of California, as successor 8 trustee, dated as of June 15, 1984, as amended by the First Supplemental Indenture, dated as of May 15, 1987, and as further amended by the Second Supplemental Indenture, dated as of September 30, 1987; the Subordinated Indenture between the Company and Bankers Trust Company, as trustee, dated as of July 15, 1988; the Subordinated Indenture between the Company and Chemical Trust Company of California, as successor trustee, dated as of September 1, 1990; the Subordinated Indenture between the Company and Chemical Trust Company of California, as successor trustee, dated as of November 1, 1991, as amended by the First Supplemental Indenture, dated as of September 8, 1992; the Subordinated Indenture between the Company's predecessor and The Chase Manhattan Bank, as successor trustee, dated as of March 15, 1987, as amended by the First Supplemental Indenture, dated as of April 22, 1992; the Subordinated Indenture between the Company's predecessor and The First National Bank of Chicago, as trustee, dated as of December 10, 1990, as amended by the First Supplemental Indenture, dated as of April 22, 1992. "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.8. "Stated Maturity" when used with respect to any Security or any installment of principal thereof or interest thereon means the date specified pursuant to the terms of such Security as the date on which the principal of such Security or such installment of interest is due and payable, in the case of such principal, as such date may be shortened or extended as provided pursuant to the terms of such Security and this Indenture. "Subsidiary" means a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries. For purposes of this definition, "voting stock" means stock which ordinarily has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency. "Successor Security" of any particular Security means every Security issued after, and evidencing all or a portion of the same debt as that evidenced by, such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 3.6 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security. "Tax Event" means the receipt by a BankAmerica Trust of an Opinion of Counsel (as defined in the relevant Trust Agreement) experienced in such matters to the effect that, as a result of any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or which pronouncement or decision is announced on or after the date of issuance of the Capital Securities of such BankAmerica Trust, there is more than an insubstantial risk that (i) such BankAmerica Trust is, or will be within 90 days of the date of such Opinion of Counsel, subject to United States Federal income tax with respect to income received or accrued on the corresponding series of Securities issued by the Company to such BankAmerica Trust, (ii) 9 interest payable by the Company on such corresponding series of Securities is not, or within 90 days of the date of such Opinion of Counsel, will not be, deductible by the Company, in whole or in part, for United States Federal income tax purposes or (iii) such BankAmerica Trust is, or will be within 90 days of the date of such Opinion of Counsel, subject to more than a de minimis amount of other taxes, duties or other governmental charges. "Trust Agreement" means the Trust Agreement substantially in the form attached hereto as Annex A, as amended by the form of Amended and Restated Trust Agreement substantially in the form attached hereto as Annex B, or substantially in such form as may be specified as contemplated by Section 3.1 with respect to the Securities of any series, in each case as amended from time to time. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person who is then a Trustee hereunder and, if at any time there is more than one such Person, "Trustee" as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series. "Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbb), as amended and as in effect on the date as of this Indenture, except as provided in Section 9.5. "Trust Securities" has the meaning specified in the first recital of this Indenture. "Unrestricted Securities Certificate" means a certificate substantially in the form set forth in Annex E. "Vice President" when used with respect to the Company, means any duly appointed vice president, whether or not designated by a number or a word or words added before or after the title "vice president." SECTION 1.2. Compliance Certificate and Opinions. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent (including covenants, compliance with which constitutes a condition precedent), if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent (including covenants compliance with which constitute a condition precedent), if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than the certificates provided pursuant to Section 10.4) shall include: 10 (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. SECTION 1.3. Forms of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions, or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION 1.4. Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given to or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments is or are delivered to the Trustee, and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of 11 execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 6.1) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a Person acting in other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. (c) The fact and date of the execution by any Person of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient and in accordance with such reasonable rules as the Trustee may determine. (d) The ownership of Securities shall be proved by the Securities Register. (e) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the transfer thereof or in exchange therefor or in lieu thereof in respect of anything done or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security. (f) The Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities of any series entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders of Securities of such series, provided that the Company may not set a record date for, and the provisions of this paragraph shall not apply with respect to, the giving or making of any notice, declaration, request or direction referred to in the next paragraph. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities of the relevant series on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date, provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date (as hereinafter in this Section 1.4(f) provided) by Holders of the requisite principal amount of Outstanding Securities of such series on such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of Outstanding Securities of the relevant series on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder of Securities of the relevant series in the manner set forth in Section 1.6. 12 The Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Securities of any series entitled to join in the giving or making of (i) any Notice of Default, (ii) any declaration of acceleration referred to in Section 5.2, (iii) any request to institute proceedings referred to in Section 5.7(2) or (iv) any direction referred to in Section 5.12, in each case with respect to Securities of such series. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities of such series on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date, provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities of such series on such record date. Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of Outstanding Securities of the relevant series on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Company's expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Company in writing and to each Holder of Securities of the relevant series in the manner set forth in Section 1.6. With respect to any record date set pursuant to this Section, the party hereto which sets such record dates may designate any day as the "Expiration Date" and from time to time may change the Expiration Date to any earlier or later day, provided that no such change shall be effective unless notice of the proposed new Expiration Date is given to the other party hereto in writing, and to each Holder of Securities of the relevant series in the manner set forth in Section 10.6, on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section, the party hereto which set such record date shall be deemed to have initially designated the 180th day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the 180th day after the applicable record date. (g) Without limiting the foregoing, a Holder entitled hereunder to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount. SECTION 1.5. Notices, Etc. to Trustee and Company. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, 13 (1) the Trustee by any Holder, any holder of Capital Securities or the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust office, or (2) the Company by the Trustee, any Holder or any holder of Capital Securities shall be sufficient for every purpose (except as otherwise provided in Section 5.1) hereunder if in writing and mailed, first class, postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this instrument or at any other address previously furnished in writing to the Trustee by the Company. SECTION 1.6. Notice to Holders; Waiver. Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first class postage prepaid, to each Holder affected by such event, at the address of such Holder as it appears in the Securities Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. In case, by reason of the suspension of or irregularities in regular mail service or for any other reason, it shall be impossible or impracticable to mail notice of any event to Holders when said notice is required to be given pursuant to any provision of this Indenture or of the relevant Securities, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. SECTION 1.7. Conflict with Trust Indenture Act. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by any of Sections 310 to 317, inclusive, of the Trust Indenture Act through operation of Section 318(c) thereof, such imposed duties shall control. This Indenture, the Company and the Trustee shall be deemed for all purposes hereof to be subject to and governed by the Trust Indenture Act to the same extent as would be the case if this Indenture were so qualified on the date hereof. SECTION 1.8. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. 14 SECTION 1.9. Successors and Assigns. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. SECTION 1.10. Separability Clause. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 1.11. Benefits of Indenture. Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, the holders of Senior Indebtedness, the Holders of the Securities and, to the extent expressly provided in Sections 5.2, 5.8, 5.9, 5.11, 5.13, 9.1 and 9.2, the holders of Capital Securities, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 1.12. Governing Law. This Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of California, except that the rights, duties and obligations of the Trustee shall be governed by and construed in accordance with the laws of the State of New York. SECTION 1.13. Non-Business Days. In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day, then (notwithstanding any other provision of this Indenture or the Securities) payment of interest or principal (and premium, if any) need not be made on such date, but may be made on the next succeeding Business Day (and no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, until such next succeeding Business Day except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day (in each case with the same force and effect as if made on the Interest Payment Date or Redemption Date or at the Stated Maturity). ARTICLE II SECURITY FORMS SECTION 2.1. Forms Generally. The Securities of each series and the Trustee's certificate of authentication shall be in substantially the forms set forth in this Article, or in such other form or forms as shall be 15 established by or pursuant to a Board Resolution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with applicable tax laws or the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such securities, as evidenced by their execution of the Securities. If the form of Securities of any series is established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 3.3 with respect to the authentication and delivery of such Securities. The Trustee's certificate of authentication shall be substantially in the form set forth in this Article. The definitive Securities shall be printed, lithographed or engraved or produced by any combination of these methods, if required by any securities exchange on which the Securities may be listed, on a steel engraved border or steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange on which the Securities may be listed, all as determined by the officers executing such Securities, as evidenced by their execution of such securities. Securities distributed to holders of Book-Entry Capital Securities upon the dissolution of a BankAmerica Trust shall be distributed in the form of one or more Global Securities registered in the name of a Depository or its nominee, and deposited with the Security Registrar, as custodian for such Depository, or held by such Depository, for credit by the Depository to the respective accounts of the beneficial owners of the Securities represented thereby (or such other accounts as they may direct). Securities distributed to holders of Capital Securities other than Book-Entry Capital Securities upon the dissolution of a BankAmerica Trust shall not be issued in the form of a Global Security or any other form intended to facilitate book-entry trading in beneficial interests in such Securities. SECTION 2.2. Form of Face of Security. [If the Security is a Restricted Security, then insert -- THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF. 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) BY [THE INITIAL PURCHASER] [AN INVESTOR WHO WAS PRIOR TO THE DISTRIBUTION OF THIS SECURITY HOLDING RELATED CAPITAL SECURITIES AS AN INITIAL PURCHASER THEREOF] (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH THE PROVISIONS OF RULE 903 16 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) BY SUBSEQUENT INVESTORS HOLDING THIS SECURITY IN BOOK-ENTRY FORM AS SET FORTH IN (A) ABOVE AND, IN ADDITION, TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER JURISDICTIONS OF THE UNITED STATES. THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS.] NO EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH, A "PLAN"), NO ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY (A "PLAN ASSET ENTITY"), AND NO PERSON INVESTING "PLAN ASSETS" OF ANY PLAN, MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 96-23, 95-60, 91-38, 90-1 OR 84-14 WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THIS SECURITY OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT IT EITHER (A) IS NOT A PLAN OR A PLAN ASSET ENTITY AND IS NOT PURCHASING THIS SECURITY ON BEHALF OF OR WITH "PLAN ASSETS" OF ANY PLAN OR (B) IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14 WITH RESPECT TO SUCH PURCHASE OR HOLDING. BANKAMERICA CORPORATION (Title of Security) No. $ BANKAMERICA CORPORATION, a corporation organized and existing under the laws of Delaware (hereinafter called the "Company", which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to _____________________________, or registered assigns, the principal sum of _______________ Dollars [if the Security is a Global Security, then insert, if applicable --, or such other principal amount as may be set forth in the records of the Securities Registrar hereinafter referred to in accordance with the Indenture,] on _____________, ___. The Company further promises to pay interest on said principal sum from ______________, ___________ or from the most recent interest payment date (each such date, an "Interest Payment Date") on which interest has been paid or duly provided for, [monthly] [quarterly] (semi-annually] [if applicable, insert--(subject to deferral as set forth herein)] in 17 arrears on [insert applicable Interest Payment Dates] of each year, commencing ________, ________ at the rate of ___% per annum, until the principal hereof shall have become due and payable, [if applicable, insert--plus Additional Interest, if any,] until the principal hereof is paid or duly provided for or made available for payment [if applicable, insert--and on any overdue principal and (without duplication and to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the rate of ___% per annum, compounded [monthly] [quarterly] [semi-annually]]. The amount of interest payable for any period less than a full interest period shall be computed on the basis of twelve 30-day months and a 360-day year and the actual number of days elapsed in a partial month in a period. The amount of interest payable for any full interest period shall be computed by dividing the rate per annum by [twelve] [four] [two]. In the event that any date on which interest is payable on this Security is not a Business Day, then a payment of the interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the date the payment was originally payable. A "Business Day" shall mean any day other than (i) a Saturday or Sunday, (ii) a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office of the Trustee [if applicable, insert--, or the principal office of the Property Trustee under the Trust Agreement hereinafter referred to for [BankAmerica Capital ________,]] is closed for business. The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities is registered at the close of business on the Regular Record Date for such interest installment, which shall be the [insert definition of Regular Record Dates]. Any such interest installment not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. [If applicable, insert--So long as no Event of Default has occurred and is continuing, the Company shall have the right at any time during the term of this Security to defer payment of interest on this Security, at any time or from time to time, for up to consecutive [monthly] [quarterly] [semi-annual] interest payment periods with respect to each deferral period (each an "Extension Period"), during which Extension Periods the Company shall have the right to make partial payments of interest on any Interest Payment Date, and at the end of which the Company shall pay all interest then accrued and unpaid (together with Additional Interest thereon to the extent permitted by applicable law); provided, however, that no Extension Period shall extend beyond the Stated Maturity of the principal of this Security; provided, further, that during any such Extension Period, the Company shall not, and shall not permit any Subsidiary of the Company to, (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire 18 or make a liquidation payment with respect to, any of the Company's capital stock or (ii) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank pari passu in all respects with or junior in interest to this Security or make any guarantee payments with respect to any guarantee by the Company of the debt securities of any Subsidiaries of the Company if such guarantee ranks pari passu with or junior in interest to this Security (other than (a) dividends or distributions in Common Stock, (b) any declaration of a dividend in connection with the implementation of a Rights Plan, the issuance of any Common Stock or any class or series of preferred stock of the Company under any Rights Plan in the future or the redemption or repurchase of any rights distributed pursuant to a Rights Plan, (c) payments under any BankAmerica Guarantee, and (d) purchases of Common Stock related to the issuance of Common Stock or rights under any of the Company's benefit plans for its directors, officers or employees). Prior to the termination of any such Extension Period, the Company may further extend the interest payment period, provided that no Extension Period shall exceed consecutive [months] [quarters] [semi-annual periods] or extend beyond the Stated Maturity of the principal of this Security. Upon the termination of any such Extension Period and upon the payment of all amounts then due on any Interest Payment Date, the Company may elect to begin a new Extension Period, subject to the above requirements. No interest shall be due and payable during an Extension Period except at the end thereof. The Company shall give the Property Trustee and the Trustee notice of its election to begin any Extension Period at least one Business Day prior to the earlier of (i) the date on which Distributions on the Capital Securities would be payable but for such deferral or (ii) the date the Property Trustee is required to give notice to any applicable self-regulatory organization or to holders of such Capital Securities of the record date or the date such Distributions are payable, but in any event not less than one Business Day prior to such record date. For purposes hereof, neither the Company's Senior Debt nor its Senior Subordinated Debt shall be deemed to be pari passu with this Security. Payment of the principal of (and premium, if any) and interest on this Security will be made at the office or agency of the Company maintained for that purpose in the United States, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts [if applicable, insert--; provided, however, that at the option of the Company payment of interest may be made (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Securities Register or (ii) by wire transfer in immediately available funds at such place and to such account as may be designated by the Person entitled thereto as specified in the Securities Register]. The indebtedness evidenced by this Security is, to the extent provided in the Indenture, subordinate and junior in right of payments to the prior payment in full of all Senior Indebtedness, and this Security is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his behalf to take such actions as may be necessary or appropriate to effectuate the subordination so provided and (c) appoints the Trustee his attorney-in-fact for any and all such purposes. Each Holder hereof, by his acceptance 19 hereof, waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Indebtedness, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. BANKAMERICA CORPORATION By: _______________________________ [President, Vice President, Treasurer or Assistant Treasurer] Attest: _______________________________________ [Secretary or Assistant Secretary] SECTION 2.3. Form of Reverse of Security. This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities") issued and to be issued in one or more series under a Junior Subordinated Indenture, dated as of November 27, 1996 (herein called the "Indenture"), between the Company and Bankers Trust Company, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Trustee, the Company and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof [, limited in aggregate principal amount to $___________]. All terms used in this Security that are defined in the Indenture [if applicable, insert--or in the Amended and Restated Trust Agreement, dated as of ____________, ____, as amended (the "Trust Agreement"), for [BankAmerica Capital ________,] among BANKAMERICA CORPORATION, as Depositor, and the Trustees named therein, shall have the meanings assigned to them in the Indenture [if applicable, insert--or the Trust Agreement, as the case may be]. 20 [If applicable, insert--The Company may at any time, at its option, on or after __________ ____ and subject to the terms and conditions of Article XI of the Indenture, redeem this Security in whole at any time or in part from time to time, without premium or penalty, at a redemption price equal to 100% of the principal amount thereof plus accrued and unpaid interest [if applicable, insert--including Additional Interest, if any] to the Redemption Date.] [If applicable, insert--The Company may, at its option, on or after __________, ____, and subject to the terms and conditions of Article XI of the Indenture, redeem this Security in whole at any time or in part from time to time, at the following Redemption Prices (expressed as percentages of the principal amount): If redeemed during the 12-month period beginning __________. Redemption Year Price ---- ----- and at 100% on or after _________, ____, together in the case of any such redemption with accrued interest to but excluding the date fixed for redemption.] [If applicable, insert--Upon the occurrence and during the continuation of a Tax Event or Capital Treatment Event in respect of a BankAmerica Trust, the Company may, at its option, [at any time] [before _________, ____ and] within 90 days of the occurrence of such Tax Event or Capital Treatment Event redeem this Security, in whole but not in part, subject to the provisions of Section 11.7 and the other provisions of Article XI of the Indenture, at a redemption price equal to [describe formulation].] In the event of redemption of this Security in part only, a new Security or Securities of this series for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. The Indenture contains provisions for satisfaction and discharge of the entire indebtedness of this Security upon compliance by the Company with certain conditions set forth in the Indenture. The Indenture permits, with certain exceptions as therein provided, the Company and the Trustee at any time to enter into a supplemental indenture or indentures for the purpose of modifying in any manner the rights and obligations of the Company and of the Holders of the Securities, with the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of each series to be affected by such supplemental indenture. The Indenture also contains provisions permitting Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent 21 or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. [If the Security is not a Discount Security ,--As provided in and subject to the provisions of the Indenture, if an Event of Default with respect to the Securities of this series at the time Outstanding occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of this series may declare the principal amount of all the Securities of this series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), provided that, in the case of the Securities of this series issued to a BankAmerica Trust, if upon an Event of Default, the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of this series fails to declare the principal of all the Securities of this series to be immediately due and payable, the holders of at least 25% in aggregate Liquidation Amount of the Capital Securities of such BankAmerica Trust then outstanding shall have such right by a notice in writing to the Company and the Trustee; and upon any such declaration the principal amount of and the accrued interest (including any Additional Interest) on all the Securities of this series shall become immediately due and payable, provided that the payment of principal and interest (including any Additional Interest) on such Securities shall remain subordinated to the extent provided in Article XXIII of the Indenture.] [If the Security is a Discount Security ,--As provided in and subject to the provisions of the Indenture, if an Event of Default with respect to the Securities of this series at the time Outstanding occurs and is continuing, then and in every such case the Trustee or the Holders of not less than such portion of the principal amount as may be specified in the terms of this series may declare an amount of principal of the Securities of this series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), provided that, in the case of the Securities of this series issued to a BankAmerica Trust, if upon an Event of Default, the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of this series fails to declare the principal of all the Securities of this series to be immediately due and payable, the holders of at least 25% in aggregate Liquidation Amount of the Capital Securities of such BankAmerica Trust then outstanding shall have such right by a notice in writing to the Company and the Trustee. Such amount shall be calculated by the Company and shall be equal to--insert formula for determining the amount. Upon any such declaration, such amount of the principal of and the accrued interest (including any Additional Interest) on all the Securities of this series shall become immediately due and payable, provided that the payment of principal and interest (including any Additional Interest) on such Securities shall remain subordinated to the extent provided in Article XIII of the Indenture. Upon payment (i) of the amount of principal so declared due and payable and (ii) of interest on any overdue principal and overdue interest (in each case to the extent that the payment of such interest shall be legally enforceable), all of the Company's obligations in respect of the payment of the principal of and interest, if any, on this Security shall terminate.] No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay 22 the principal of (and premium, if any) and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer" of this Security is registrable in the Securities Register, upon surrender of this Security for registration of transfer at the office or agency of the Company maintained under Section 10.2 of the Indenture duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee shall treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. The Securities of this series are issuable only in registered form without coupons in minimum denominations of $100,000 and any integral multiples of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of such series of a different authorized denomination, as requested by the Holder surrendering the same. The Company and, by its acceptance of this Security or a beneficial interest therein, the Holder of, and any Person that acquires a beneficial interest in, this Security agree that for United States Federal, state and local tax purposes it is intended that this Security constitute indebtedness. THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, EXCEPT THAT THE RIGHTS, DUTIES AND) OBLIGATIONS OF THE TRUSTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SECTION 2.4. Additional Provisions Required in Global Security. Any Global Security issued hereunder shall, in addition to the provisions contained in Sections 2.2 and 2.3, bear a legend in substantially the following form: "THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF 23 A DEPOSITORY OR A NOMINEE OF A DEPOSITORY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY." SECTION 2.5. Form of Trustee's Certificate of Authentication. This is one of the Securities referred to in the within mentioned Indenture. Dated: Bankers Trust Company as Trustee By: ----------------------------------- Authorized Signatory ARTICLE III THE SECURITIES SECTION 3.1. Title and Terms. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more series. There shall be established in or pursuant to a Board Resolution, and set forth in an Officers' Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of a series: (a) the title of the securities of such series, which shall distinguish the Securities of the series from all other Securities; (b) the limit, if any, upon the aggregate principal amount of the Securities of such series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 3.4, 3.5, 3.6, 3.7, 9.6 or 11.6 and except for any Securities which, pursuant to Section 3.3, are deemed never to have been authenticated and delivered hereunder); provided, however, that the authorized aggregate principal amount of such series may be increased above such amount by a Board Resolution to such effect; (c) the Stated Maturity or Maturities on which the principal of the Securities of such series is payable or the method of determination thereof; 24 (d) the rate or rates, if any, at which the Securities of such series shall bear interest, if any, the rate or rates and extent to which Additional Interest, if any, shall be payable in respect of any Securities of such series, the Interest Payment Dates on which such interest shall be payable, the right, pursuant to Section 3.12 or as otherwise set forth therein, of the Company to defer or extend an Interest Payment Date, and the Regular Record Date for the interest payable on any Interest Payment Date or the method by which any of the foregoing shall be determined; (e) the place or places where the principal of (and premium, if any) and interest on the Securities of such series shall be payable, the place or places where the Securities of such series may be presented for registration of transfer or exchange, and the place or places where notices and demands to or upon the Company in respect of the Securities of such series may be made; (f) the period or periods within or the date or dates on which, if any, the price or prices at which and the terms and conditions upon which the Securities of such series may be redeemed, in whole or in part, at the option of the Company; (g) the obligation or the right, if any, of the Company to redeem, repay or purchase the Securities of such series pursuant to any sinking fund, amortization or analogous provisions, or at the option of a Holder thereof, and the period or periods within which, the price or prices at which, the currency or currencies (including currency unit or units) in which and the other terms and conditions upon which Securities of the series shall be redeemed, repaid or purchased, in whole or in part, pursuant to such obligation; (h) the denominations in which any Securities of such series shall be issuable, if other than denominations of $100,000 and any integral multiple of $1,000 in excess thereof; (i) if other than Dollars, the currency or currencies (including currency unit or units) in which the principal of (and premium, if any) and interest, if any, on the Securities of the series shall be payable, or in which the Securities of the series shall be denominated and the manner of determining the equivalent thereof in Dollars for purposes of the definition of Outstanding; (j) the additions, modifications or deletions, if any, in the Events of Default or covenants of the Company set forth herein with respect to the Securities of such series; (k) if other than the principal amount thereof, the portion of the principal amount of Securities of such series that shall be payable upon declaration of acceleration of the Maturity thereof; (1) the additions or changes, if any, to this Indenture with respect to the Securities of such series as shall be necessary to permit or facilitate the issuance of the Securities of such series in bearer form, registrable or not registrable as to principal, and with or without interest coupons; (m) any index or indices used to determine the amount of payments of principal of and premium, if any, on the Securities of such series or the manner in which such amounts will be determined; 25 (n) whether the Securities of the series, or any portion thereof, shall initially be issuable in the form of a temporary Global Security representing all or such portion of the Securities of such series and provisions for the exchange of such temporary Global Security for definitive Securities of such series; (o) if applicable, that any Securities of the series shall be issuable in whole or in part in the form of one or more Global Securities and, in such case, the respective Depositories for such Global Securities, the form of any legend or legends which shall be borne by any such Global Security in addition to or in lieu of that set forth in Section 2.4 and any circumstances in addition to or in lieu of those set forth in Section 3.5 in which any such Global Security may be exchanged in whole or in part for Securities registered, and any transfer of such Global Security in whole or in part may be registered, in the name or names of Persons other than the Depository for such Global Security or a nominee thereof; (p) the appointment of any Paying Agent or Agents for the Securities of such series; (q) the terms of any right to convert or exchange Securities of such series into any other securities or property of the Company, and the additions or changes, if any, to this Indenture with respect to the Securities of such series to permit or facilitate such conversion or exchange; (r) the form or forms of the Trust Agreement, Amended and Restated Trust Agreement and Guarantee Agreement, if different from the forms attached hereto as Annexes A, B and C, respectively; (s) the relative degree, if any, to which the Securities of the series shall be senior to or be subordinated to other series of Securities in right of payment, whether such other series of Securities are Outstanding or not; and (t) any other terms of the Securities of such series (which terms shall not be inconsistent with the provisions of this Indenture). All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided herein or in or pursuant to such Board Resolution and set forth in such Officers' Certificate or in any such indenture supplemental hereto. If any of the terms of the series are established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers' Certificate setting forth the terms of the series. The Securities shall be subordinated in right of payment to Senior Indebtedness as provided in Article XIII. Unless otherwise provided with respect to the Securities of any series, at the option of the Company, interest on the Securities of any series that bears interest may be paid (i) by mailing a check to the address of the person entitled thereto as such address shall appear in the Security 26 Register or (ii) by wire transfer in immediately available funds at such place and to such account as may be designated by the person entitled thereto as specified in the Security Register. SECTION 3.2. Denominations. The Securities of each series shall be in registered form without coupons and shall be issuable in denominations of $100,000 and any integral multiple of $1,000 in excess thereof, unless otherwise specified as contemplated by Section 3.1. SECTION 3.3. Execution, Authentication, Delivery and Dating. The Securities shall be executed on behalf of the Company by its President, one of its Vice Presidents, its Treasurer or an Assistant Treasurer under its corporate seal reproduced or impressed thereon and attested by its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities. If the form or terms of the Securities of the series have been established by or pursuant to one or more Board Resolutions as permitted by Sections 2.1 and 3.1, in authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be fully protected in relying upon, an Opinion of Counsel stating, (1) if the form of such Securities has been established by or pursuant to Board Resolution as permitted by Section 2.1, that such form has been established in conformity with the provisions of this Indenture; (2) if the terms of such Securities have been established by or pursuant to Board Resolution as permitted by Section 3.1, that such terms have been established in conformity with the provisions of this Indenture; and (3) that such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. 27 If such form or terms have been so established, the Trustee shall not be required to authenticate such Securities if the issue of such Securities pursuant to this Indenture will affect the Trustee's own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee. Notwithstanding the provisions of Section 3.1 and of the preceding paragraph, if all Securities of a series are not to be originally issued at one time, it shall not be necessary to deliver the Officers' Certificate otherwise required pursuant to Section 3.1 or the Company Order and Opinion of Counsel otherwise required pursuant to such preceding paragraph at or prior to the authentication of each Security of such series if such documents are delivered at or prior to the authentication upon original issuance of the first Security of such series to be issued. Each Security shall be dated the date of its authentication. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by the manual signature of one of its authorized officers, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 3.10, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture. SECTION 3.4. Temporary Securities. Pending the preparation of definitive Securities of any series, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Securities of such series in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as- the officers executing such Securities may determine, as evidenced by their execution of such Securities. If temporary Securities of any series are issued, the Company will cause definitive Securities of such series to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at the office or agency of the Company designated for that purpose without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor one or more definitive Securities of the same series, of any authorized denominations having the same Original Issue Date and Stated Maturity and having the same terms as such temporary Securities. Until so exchanged, the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series. 28 SECTION 3.5. Global Securities. (a) Each Global Security issued under this Agreement shall be registered in the name of the Depository designated by the Company for such Global Security or a nominee thereof and delivered to such Depository or a nominee thereof or custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Agreement. (b) Notwithstanding any other provision in this Agreement, no Global Security may be exchanged in whole or in part for Securities registered, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depository for such Global Security or a nominee thereof unless (a) such Depository advises the Trustee in writing that such Depository is no longer willing or able to properly discharge its responsibilities as Depository with respect to such Global Security, and the Company is unable to locate a qualified successor, (b) the Company executes and delivers to the Trustee a Company Order stating that the Company elects to terminate the book-entry system through the Depository, (c) there shall have occurred and be continuing an Event of Default or (d) pursuant to the following sentence. All or any portion of a Global Security may be exchanged for a Security that has a like aggregate principal amount and is not a Global Security upon 20 days' prior request made by the Depository or its Agent Member to the Securities Registrar. (c) If any Global Security is to be exchanged for other Securities or cancelled in whole, it shall be surrendered by or on behalf of the Depository or its nominee to the Security Registrar for exchange or cancellation as provided in this Article III. If any Global Security is to be exchanged for other Securities or cancelled in part, or if another Security is to be exchanged in whole or in part for a beneficial interest in any Global Security, then either (i) such Global Security shall be so surrendered for exchange or cancellation as provided in this Article III or (ii) the principal amount thereof shall be reduced, subject to Section 3.6(b)(v), or increased by an amount equal to the portion thereof to be so exchanged or cancelled, or equal to the principal amount of such other Security to be so exchanged for a beneficial interest therein, as the case may be, by means of an appropriate adjustment made on the records of the Security Registrar, whereupon the Trustee, in accordance with the Applicable Procedures, shall instruct the Depository or its authorized representative to make a corresponding adjustment to its records. Upon any such surrender or adjustment of a Global Security by the Depository, accompanied by registration instructions, the Trustee shall, subject to Section 3.5(b) and as otherwise provided in this Article III, authenticate and deliver any Securities issuable in exchange for such Global Security (or any portion thereof) in accordance with the instructions of the Depository. The Trustee shall not be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such instructions. (d) Every Security authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Security or any portion thereof, whether pursuant to this Article III, Section 9.6 or 11.6 or otherwise, shall be authenticated and delivered in the form of, and shall be, a Global Security, unless such Security is registered in the name of a Person other than the Depository for such Global Security or a nominee thereof. 29 (e) The Depository or its nominee, as registered owner of a Global Security, shall be the Holder of such Global Security for all purposes under this Indenture and the Securities, and owners of beneficial interests in a Global Security shall hold such interests pursuant to the Applicable Procedures. Accordingly, any such owner's beneficial interest in a Global Security shall be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depository or its nominee or its Agent Members. Neither the Trustee nor the Securities Registrar shall have any liability in respect of any transfers effected by the Depository. (f) The rights of owners of beneficial interests in a Global Security shall be exercised only through the Depository and shall be limited to those established by law and agreements between such owners and the Depository and/or its Agent Members. SECTION 3.6. Registration, Transfer and Exchange Generally, Certain Transfers and Exchanges; Securities Act Legends. (a) The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. Such register is herein sometimes referred to as the "Securities Register. The Trustee is hereby appointed "Securities Registrar" for the purpose of registering Securities and transfers of Securities as herein provided. Upon surrender for registration of transfer of any Security at the office or agency of the Company designated for that purpose the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of the same series of any authorized denominations, of a like aggregate principal amount, of the same Original Issue Date and Stated Maturity and having the same terms and bearing such restrictive legends as may be required by this Indenture. At the option of the Holder, Securities may be exchanged for other Securities of the same series of any authorized denominations, of a like aggregate principal amount, of the same Original Issue Date and Stated Maturity and having the same terms and bearing such restrictive legends as may be required by this Indenture, upon surrender of the Securities to be exchanged at such office or agency. Whenever any securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. All Securities issued upon any transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange. Every Security presented or surrendered for transfer or exchange shall (if so required by the Company or the Securities Registrar) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing. 30 No service charge shall be made to a Holder for any transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Securities. Neither the Company nor the Trustee shall be required, pursuant to the provisions of this Section, (a) to issue, transfer or exchange any Security of any series during a period beginning at the opening of business 15 days before the day of selection for redemption of Securities pursuant to Article XI and ending at the close of business on the day of mailing of notice of redemption or (b) to transfer or exchange any Security so selected for redemption in whole or in part, except, in the case of any Security to be redeemed in part, any portion thereof not to be redeemed. (b) Certain Transfers and Exchanges. Notwithstanding any other provision of this Indenture, transfers and exchanges of Securities and beneficial interests in a Global Security of the kinds specified in this Section 3.6(b) shall be made only in accordance with this Section 3.6(b). (i) Restricted Non-Global Security to Global Security. If the Holder of a Restricted Security (other than a Global Security) wishes at any time to transfer all or any portion of such Security to a Person who wishes to take delivery thereof in the form of a beneficial interest in a Global Security, such transfer may be effected only in accordance with the provisions of this Clause (b)(i) and subject to the Applicable Procedures. Upon receipt by the Security Registrar of (A) such Security as provided in Section 3.6(a) and instructions satisfactory to the Security Registrar directing that a beneficial interest in the Global Security in a specified principal amount not greater than the principal amount of such Security be credited to a specified Agent Member's account and (B) a Restricted Securities Certificate duly executed by such Holder or his attorney duly authorized in writing, then the Security Registrar shall cancel such Security (and issue a new Security in respect of any untransferred portion thereof) as provided in Section 3.6(a) and increase the aggregate principal amount of the Global Security by the specified principal amount as provided as provided in Section 3.5(c). (ii) Non-Global Security to Non-Global Security. A Security that is not a Global Security may be transferred, in whole or in part, to a Person who takes delivery in the form of another Security that is not a Global Security as provided in Section 3.6(a), provided that if the Security to be transferred in whole or in part is a Restricted Security, then the Security Registrar shall have received a Restricted Securities Certificate duly executed by the transferor Holder or his attorney duly authorized in writing. (iii) Exchanges between Global Security and Non-Global Security. A beneficial interest in a Global Security may be exchanged for a Security that is not a Global Security as provided in Section 3.5. (iv) Certain Initial Transfers of Non-Global Securities. In the case of Securities initially issued other than in global form, an initial transfer or exchange of such Securities that does not involve any change in beneficial ownership may be made to an Institutional Accredited Investor or Investors as if such transfer or exchange were not an initial transfer or exchange; provided 31 that written certification shall be provided by a Holder of such Securities to the Securities Registrar that such transfer or exchange does not involve a change in beneficial ownership. (v) Limitations relating to Principal Amount. Notwithstanding any other provision of this Indenture and unless otherwise specified as permitted by Section 3.1, Securities or portions thereof may be transferred or exchanged only in principal amounts of not less than $100,000. Any transfer, exchange or other disposition of Securities in contravention of this Section 3.6(b)(v) shall be deemed to be void and of no legal effect whatsoever, any such transferee shall be deemed not to be the Holder or owner of any beneficial interest in such Securities for any purpose, including but not limited to the receipt of interest payable on such Securities, and such transferee shall be deemed to have no interest whatsoever in such Securities. (c) Restricted Securities Legend. Except as set forth below, all Securities shall bear a Restricted Securities Legend: (i) subject to the following Clauses of this Section 3.6(c), a Security or any portion thereof which is exchanged, upon transfer or otherwise, for a Global Security or any portion thereof shall bear the Restricted Securities Legend; (ii) subject to the following Clauses of this Section 3.6(c), a new Security which is not a Global Security and is issued in exchange for another Security (including a Global Security) or any portion thereof, upon transfer or otherwise, shall bear a Restricted Securities Legend; (iii) after the date which is three years following the Original Issue Date of a Security, a new Security (other than a Global Security) which does not bear a Restricted Securities Legend shall, unless the Securities Registrar is otherwise instructed by the Company in writing, be issued in exchange for or in lieu of a Restricted Security or any portion thereof which bears such a legend if the Trustee has received an Unrestricted Securities Certificate, in the form of Exhibit B hereto, duly executed by the Holder of such legended Restricted Security or his attorney duly authorized in writing, and after such date and receipt of such certificate, the Trustee shall authenticate and deliver such a new Security in exchange for or in lieu of such other Security as provided in this Article III; (iv) a new Security (other than a Global Security) which does not bear a Restricted Securities Legend may be issued in exchange for or in lieu of a Restricted Security or any portion thereof which bears such a legend if, in the Company's judgment, placing such a legend upon such new Security is not necessary to ensure compliance with the registration requirements of the Securities Act, and the Trustee, at the written direction of the Company in the form of an Officers' Certificate, shall authenticate and deliver such a new Security as provided in this Article III; (v) notwithstanding the foregoing provisions of this Section 3.6(c), a Successor Security of a Security that does not bear a Restricted Securities Legend shall not bear such form of legend unless the Company has reasonable cause to believe that such Successor Security is a "restricted security" within the meaning of Rule 144, in which case the Trustee, at the written direction of the Company in the form of an Officers' Certificate, shall authenticate and deliver a new 32 Security bearing a Restricted Securities Legend in exchange for such Successor Security as provided in this Article III; and (v) Securities distributed to a holder of Capital Securities upon dissolution of a BankAmerica Trust shall bear a Restricted Securities Legend if the Capital Securities so held bear a similar legend. SECTION 3.7. Mutilated, Destroyed, Lost and Stolen Securities. If any mutilated Security is surrendered to the Trustee together with such security or indemnity as may be required by the Company or the Trustee to save each of them harmless, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of the same issue and series of like tenor and principal amount, having the same Original Issue Date and Stated Maturity, and bearing a number not contemporaneously outstanding. If there shall be delivered to the Company and to the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security, and (ii) such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of the same issue and series of like tenor and principal amount, having the same Original Issue Date and Stated Maturity as such destroyed, lost or stolen Security, and bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. 33 SECTION 3.8. Payment of Interest; Interest Rights Preserved. Interest on any Security of any series which is payable, and is punctually paid or duly provided for, on any Interest Payment Date, shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest in respect of Securities of such series, except that, unless otherwise provided in the Securities of such series, interest payable on the Stated Maturity of the principal of a Security shall be paid to the Person to whom principal is paid. The initial payment of interest on any Security of any series which is issued between a Regular Record Date and the related Interest Payment Date shall be payable as provided in such Security or in the Board Resolution pursuant to Section 3.1 with respect to the related series of Securities. Any interest on any Security which is payable, but is not timely paid or duly provided for, on any Interest Payment Date for Securities of such series (herein called "Defaulted Interest"), shall forthwith cease to be payable to the registered Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities of such series in respect of which interest is in default (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class, postage prepaid, to each Holder of a Security of such series at the address of such Holder as it appears in the Securities Register not less than 10 days prior to such Special Record Date. The Trustee may, in its discretion, in the name and at the expense of the Company, cause a similar notice to be published at least once in a newspaper, customarily published in the English language on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, but such publication shall not be a condition precedent to the establishment of such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered on such Special Record Date and shall no longer be payable pursuant to the following Clause (2). 34 (2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of the series in respect of which interest is in default may be listed and, upon such notice as may be required by such exchange (or by the Trustee if the Securities are not listed), if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. SECTION 3.9. Persons Deemed Owners. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name any Security is registered as the owner of such Security for the purpose of receiving payment of principal of and (subject to Section 3.8) any interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. No holder of any beneficial interest in any Global Security held on its behalf by a Depository shall have any rights under this Indenture with respect to such Global Security, and such Depository may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by a Depository or impair, as between a Depository and such holders of beneficial interests, the operation of customary practices governing the exercise of the rights of the Depository (or its nominee) as Holder of any Security. SECTION 3.10. Cancellation. All Securities surrendered for payment, redemption, transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee, and any such Securities and Securities surrendered directly to the Trustee for any such purpose shall be promptly canceled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section, except as expressly permitted by this Indenture. All canceled Securities shall be destroyed by the Trustee and the Trustee shall deliver to the Company a certificate of such destruction. 35 SECTION 3.11. Computation of Interest. Except as otherwise specified as contemplated by Section 3.1 for Securities of any series, interest on the Securities of each series for any partial period shall be computed on the basis of a 360-day year of twelve 30-day months and the actual days elapsed in a partial month in such period, and interest on the Securities of each series for a full period shall be computed by dividing the rate per annum by the number of interest periods that together constitute a full twelve months. SECTION 3.12. Deferrals of Interest Payment Dates. If specified as contemplated by Section 2.1 or Section 3.1 with respect to the Securities of a particular series, so long as no Event of Default has occurred and is continuing, the Company shall have the right, at any time during the term of such series, from time to time to defer the payment of interest on such Securities for such period or periods as may be specified as contemplated by Section 3.1 (each, an "Extension Period") during which Extension Periods the Company shall have the right to make partial payments of interest on any Interest Payment Date. No Extension Period shall end on a date other than an Interest Payment Date. At the end of any such Extension Period the Company shall pay all interest then accrued and unpaid on the Securities (together with Additional Interest thereon, if any, at the rate specified for the Securities of such series to the extent permitted by applicable law); provided, however, that no Extension Period shall extend beyond the Stated Maturity of the principal of the Securities of such series; provided, further, that during any such Extension Period, the Company shall not, and shall not permit any Subsidiary to, (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of the Company's capital stock, or (ii) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank pari passu in all respects with or junior in interest to the Securities of such series or make any guarantee payments with respect to any guarantee by the Company of the debt securities of any Subsidiary of the Company if such guarantee ranks pari passu with or junior in interest to the securities of such series (other than (a) dividends or distributions in Common Stock, (b) any declaration of a dividend in connection with the implementation of a Rights Plan, or the issuance of any Common Stock of any class or series of preferred stock of the Company under any Rights Plan in the future or the redemption or repurchase of any rights pursuant thereto, (c) payments under any BankAmerica Guarantee, and (d) purchases of Common Stock related to the issuance of Common Stock or rights under any of the Company's benefit plans for its directors, officers or employees). Prior to the termination of any such Extension Period, the Company may further extend the interest payment period, provided that no Extension Period shall exceed the period or periods specified in such Securities or extend beyond the Stated Maturity of the principal of such Securities. Upon the termination of any Extension Period and upon the payment of all amounts then due on any Interest Payment Date, the Company may elect to begin a new Extension Period, subject to the above requirements. No interest shall be due and payable during an Extension Period, except at the end thereof. The Company shall give the Property Trustee and the Trustee notice of its election to begin any such Extension Period at least one Business Day prior to the earlier of (i) the date the Distributions on the Capital Securities of such BankAmerica Trust would have been payable except for the election to begin such Extension 36 Period or (ii) the date the Property Trustee of such BankAmerica Trust is required to give notice to any applicable self-regulatory organization or to holders of such Capital Securities of the record date or the date such Distributions are payable, but in any event not less than one Business Day prior to such record date. For purposes hereof, neither the Company's Senior Debt nor its Senior Subordinated Debt shall be deemed to be pari passu with the Securities. The Trustee, at the expense of the Company, shall promptly give notice of the Company's election to begin any such Extension Period to the Holders of the Outstanding Securities of such series. SECTION 3.13. Right of Set-Off. With respect to the Securities of a series issued to a BankAmerica Trust, notwithstanding anything to the contrary herein, the Company shall have the right to set-off any payment it is otherwise required to make thereunder in respect of any such Security to the extent the Company has theretofore made, or is concurrently on the date of such payment making, a payment under the BankAmerica Guarantee relating to such Security or under Section 5.8 hereof. SECTION 3.14. Agreed Tax Treatment. Each Security issued hereunder shall provide that the Company and, by its acceptance of a Security or a beneficial interest therein, the Holder of, and any Person that acquires a beneficial interest in, such Security agree that for United States Federal, state and local tax purposes it is intended that such Security constitutes indebtedness. SECTION 3.15. CUSIP Numbers. The Company in issuing the Securities may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption or other related material as a convenience to Holders; provided that any such notice or other related material may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of redemption or other related material and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. ARTICLE IV SATISFACTION AND DISCHARGE SECTION 4.1. Satisfaction and Discharge of Indenture. This Indenture shall, upon Company Request, cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for and as otherwise provided in this Section 4.1) and the Trustee, on demand of and at the 37 expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (1) either (A) all Securities theretofore authenticated and delivered (other than (i) Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 3.7 and (ii) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 10.3) have been delivered to the Trustee for cancellation; or (B) all such Securities not theretofore delivered to the Trustee for cancellation (i) have become due and payable, or (ii) will become due and payable at their Stated Maturity within one year of the date of deposit, or (iii) are to be called for redemption within one year by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of Clause (B)(i), (ii) or (iii) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for such purpose an amount in the currency or currencies in which the Securities of such series are payable sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any) and interest (including any Additional Interest) to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, or the earlier resignation or removal of the Trustee or any Authenticating Agent, the obligations of the Company to the Trustee under Section 6.7, the obligations of the Company to any Authenticating Agent under Section 6.14 and, if money shall have been deposited with the Trustee pursuant to subclause (B) of clause (1) of this Section, the obligations of the Trustee under Section 4.2 and the last paragraph of Section 10.3 shall survive. 38 SECTION 4.2. Application of Trust Money. Subject to the provisions of the last paragraph of Section 10.3, all money deposited with the Trustee pursuant to Section 4.1 shall be held in trust and applied by the Trustee, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for the payment of which such money or obligations have been deposited with or received by the Trustee. ARTICLE V REMEDIES SECTION 5.1. Events of Default. "Event of Default," wherever used herein with respect to the Securities of any series, means any one of the following events that has occurred and is continuing (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) default in the payment of any interest upon any Security of that series, including any Additional Interest in respect thereof, when it becomes due and payable, and continuance of such default for a period of 30 days (subject to the deferral of any due date in the case of an Extension Period); or (2) default in the payment of the principal of (or premium, if any, on) any Security of that series at its Maturity; or (3) default in the performance or breach, in any material respect, of any covenant of the Company in this Indenture (other than a covenant a default in the performance of which or the breach of which is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of that series a written notice specifying such default or breach and requiring it to be remedied; or (4) the entry of a decree or order for relief in respect of the Company by a court having jurisdiction in the premises in an involuntary case under Federal or State bankruptcy laws, as now or hereafter constituted, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; or 39 (5) the commencement by the Company of a voluntary case under Federal or State bankruptcy laws, as now or hereafter constituted, or the consent by the Company to the entry of a decree or order for relief in an involuntary case under any such laws; or (6) any other Event of Default provided with respect to Securities of that series. SECTION 5.2. Acceleration of Maturity; Rescission and Annulment. If an Event of Default (other than an Event of Default specified in Section 5.1(4) or 5.1(5)) with respect to Securities of any series at the time Outstanding occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of that series may declare the principal amount (or, if the Securities of that series are Discount Securities, such portion of the principal amount as may be specified in the terms of that series) of all the Securities of that series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), provided that, in the case of the Securities of a series issued to a BankAmerica Trust, if, upon an Event of Default, the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of that series fail to declare the principal of all the Securities of that series to be immediately due and payable, the holders of at least 25% in aggregate Liquidation Amount (as defined in the related Trust Agreement) of the corresponding series of Capital Securities then outstanding shall have such right by a notice in writing to the Company and the Trustee; and upon any such declaration such principal amount (or specified portion thereof) of and the accrued interest (including any Additional Interest) on all the Securities of such series shall become immediately due and payable. Payment of principal and interest (including any Additional Interest) on such Securities shall remain subordinated to the extent provided in Article XIII notwithstanding that such amount shall become immediately due and payable as herein provided. If an Event of Default specified in Section 5.1(4) or 5.1(5) with respect to Securities of any series at the time Outstanding occurs, the principal amount of all the Securities of that series (or, if the Securities of that series are Discount Securities, such portion of the principal amount of such Securities as may be specified by the terms of that series) shall automatically, and without any declaration or other action on the part of the Trustee or any Holder, become immediately due and payable. At any time after such a declaration of acceleration with respect to Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Securities of that series, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if: (1) the Company has paid or deposited with the Trustee a sum sufficient to pay: (A) all overdue installments of interest (including any Additional Interest) on all Securities of that series, 40 (B) the principal of (and premium, if any, on) any Securities of that series which have become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Securities, and (C) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) all Events of Default with respect to Securities of that series, other than the non-payment of the principal of Securities of that series which has become due solely by such acceleration, have been cured or waived as provided in Section 5.13. In the case of Securities of a series issued to a BankAmerica Trust, the holders of a majority in aggregate Liquidation Amount (as defined in the related Trust Agreement) of the related series of Capital Securities issued by such BankAmerica Trust shall also have the right to rescind and annul such declaration and its consequences by written notice to the Company and the Trustee, subject to the satisfaction of the conditions set forth in Clauses (1) and (2) above of this Section 5.2. No such rescission shall affect any subsequent default or impair any right consequent thereon. SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if: (1) default is made in the payment of any installment of interest (including any Additional Interest) on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or (2) default is made in the payment of the principal of (and premium, if any, on) any Security at the Maturity thereof, the Company will, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal, including any sinking fund payment or analogous obligations (and premium, if any) and interest (including any Additional Interest); and, in addition thereto, all amounts owing the Trustee under Section 6.7. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon the Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Securities, wherever situated. 41 If an Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. SECTION 5.4. Trustee May File Proof of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, (a) the Trustee (irrespective of whether the principal of the Securities of any series shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal (and premium, if any) or interest (including any Additional Interest)) shall be entitled and empowered, by intervention in such proceeding or otherwise, (i) to file and prove a claim for the whole amount of principal (and premium, if any) and interest (including any Additional Interest) owing and unpaid in respect to the Securities and to file such other papers or documents as may be necessary or advisable and to take any and all actions as are authorized under the Trust Indenture Act in order to have the claims of the Holders and any predecessor to the Trustee under Section 6.7 allowed in any such judicial proceedings; and (ii) in particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same in accordance with Section 5.6; and (b) any custodian, receiver, assignee, trustee, liquidator, sequestrator (or other similar official) in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee for distribution in accordance with Section 5.6, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it and any predecessor Trustee under Section 6.7. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, however, that the Trustee may, on behalf of the Holders, vote for the election of a trustee in bankruptcy or similar official and be a member of a creditors' or other similar committee. 42 SECTION 5.5. Trustee May Enforce Claim Without Possession of Securities. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of all the amounts owing the Trustee and any predecessor Trustee under Section 6.7, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered. SECTION 5.6. Application of Money Collected. Any money or property collected or to be applied by the Trustee with respect to a series of Securities pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money or property on account of principal (or premium, if any) or interest (including any Additional Interest), upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee and any predecessor Trustee; SECOND: Subject to Article XIII, to the payment of the amounts then due and unpaid upon such series of Securities for principal (and premium, if any) and interest (including any Additional Interest), in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such series of Securities for principal (and premium, if any) and interest (including any Additional Interest), respectively; and THIRD: The balance, if any, to the Person or Persons entitled thereto. SECTION 5.7. Limitation on Suits. No Holder of any Securities of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture or for the appointment of a receiver, assignee, trustee, liquidator, sequestrator (or other similar official) or for any other remedy hereunder, unless: (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that series; (2) the Holders of not less than 25% in principal amount of the Outstanding Securities of that series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; 43 (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities of that series; it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing itself of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Securities, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders. SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium and Interest; Direct Action by Holders of Capital Securities. Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right which is absolute and unconditional to receive payment of the principal of (and premium, if any) and (subject to Section 3.8) interest (including any Additional Interest) on such Security on the respective Stated Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder. In the case of Securities of a series issued to a BankAmerica Trust, any holder of the corresponding series of Capital Securities issued by such BankAmerica Trust shall have the right, upon the occurrence of an Event of Default described in Section 5.1(1) or 5.1(2), to institute a suit directly against the Company for enforcement of payment to such holder of principal of (premium, if any) and (subject to Section 3.8) interest (including any Additional Interest) on the Securities having a principal amount equal to the aggregate Liquidation Amount (as defined in the Trust Agreement under which such BankAmerica Trust is formed) of such Capital Securities of the corresponding series held by such holder. SECTION 5.9. Restoration of Rights and Remedies. If the Trustee, any Holder or any holder of Capital Securities has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee, such Holder or such holder of Capital Securities, then and in every such case the Company, the Trustee, the Holders and such holder of Capital Securities shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee, the Holders and the holders of Capital Securities shall continue as though no such proceeding had been instituted. 44 SECTION 5.10. Rights and Remedies Cumulative. Except as otherwise provided in the last paragraph of Section 3.7, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 5.11. Delay or Omission Not Waiver No delay or omission of the Trustee, any Holder of any Security or any holder of any Capital Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders and the right and remedy given to the holders of Capital Securities by Section 5.8 may be exercised from time to time, and as often as may be deemed expedient, by the Trustee, the Holders or the holders of Capital Securities, as the case may be. SECTION 5.12. Control by Holders. The Holders of a majority in principal amount of the Outstanding Securities of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series, provided that: (1) such direction shall not be in conflict with any rule of law or with this Indenture, (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction, and (3) subject to the provisions of Section 6.1, the Trustee shall have the right to decline to follow such direction if a Responsible Officer or Officers of the Trustee shall, in good faith, determine that the proceeding so directed would be unjustly prejudicial to the Holders not joining in any such direction or would involve the Trustee in personal liability. SECTION 5.13. Waiver of Past Defaults. The Holders of not less than a majority in principal amount of the Outstanding Securities of any series affected thereby and, in the case of any Securities of a series issued to a BankAmerica Trust, the holders of a majority in aggregate Liquidation Amount (as defined in the related Trust Agreement) Capital Securities issued by such BankAmerica Trust, may waive any past default hereunder and its consequences with respect to such series except a default: 45 (1) in the payment of the principal of (or premium, if any) or interest (including any Additional Interest) on any Security of such series, or (2) in respect of a covenant or provision hereof which under Article IX cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected. Any such waiver shall be deemed to be on behalf of the Holders of all the Securities of such series or, in the case of a waiver by holders of Capital Securities issued by such BankAmerica Trust, by all holders of Capital Securities issued by such BankAmerica Trust. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION 5.14. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities of any series, or to any suit instituted by any Holder for the enforcement of the payment of the principal of (or premium, if any) or interest (including any Additional Interest) on any Security on or after the respective Stated Maturities expressed in such Security. SECTION 5.15. Waiver of Usury; Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. 46 ARTICLE VI THE TRUSTEE SECTION 6.1. Certain Duties and Responsibilities. (a) Except during the continuance of an Event of Default, (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. (b) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct except that (1) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of Holders pursuant to Section 5.12 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Securities of such series. (d) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. 47 (e) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. SECTION 6.2. Notice of Defaults. Within 90 days after actual knowledge by a Responsible Officer of the Trustee of the occurrence of any default hereunder with respect to the Securities of any series, the Trustee shall transmit by mail to all Holders of Securities of such series, as their names and addresses appear in the Securities Register, notice of such default, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of (or premium, if any) or interest (including any Additional Interest) on any Security of such series, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of Securities of such series; and provided, further, that, in the case of any default of the character specified in Section 5.1(3), no such notice to Holders of Securities of such series shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default with respect to Securities of such series. SECTION 6.3. Certain Rights of Trustee. Subject to the provisions of Section 6.1: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, Security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity 48 against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, indenture, Security or other paper or document, but the Trustee in its discretion may make such inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (h) the Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Indenture; (i) the Trustee shall not be charged with knowledge of any Event of Default unless either (i) a Responsible Officer of the Trustee shall have actual knowledge thereof or (2) the Trustee shall have received notice thereof in accordance with Section 1.5(1) hereof from the Company or a Holder; and (j) no permissive power or authority available to the Trustee shall be construed as a duty. SECTION 6.4. Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of the Securities or the proceeds thereof. SECTION 6.5. May Hold Securities. The Trustee, any Authenticating Agent, any Paying Agent, any Securities Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 6.8 and 6.13, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Securities Registrar or such other agent. 49 SECTION 6.6. Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company. SECTION 6.7. Compensation and Reimbursement. The Company agrees (1) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder in such amounts as the Company and the Trustee shall agree from time to time (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense (including the reasonable compensation and the expenses and disbursements of its agents and counsel) incurred without negligence or bad faith, arising out of or in connection with the acceptance or administration of this trust or the performance of its duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The obligations of the Company under this Section 6.7 shall survive the termination of the Indenture or the earlier resignation or removal of the Trustee. To secure the Company's payment obligations in this Section, the Company and the Holders agree that the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee. Such lien shall survive the satisfaction and discharge of this Indenture. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 5.1(4) or (5) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under the Bankruptcy Reform Act of 1978 or any successor statute. SECTION 6.8. Disqualification; Conflicting Interests. The Trustee for the Securities of any series issued hereunder shall be subject to the provisions of Section 310(b) of the Trust Indenture Act. Nothing herein shall prevent the Trustee from filing with the Commission the application referred to in the second to last paragraph of said Section 310(b). 50 SECTION 6.9. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall be (a) a corporation organized and doing business under the laws of the United States of America or of any State or Territory or the District of Columbia, authorized under such laws to exercise corporate trust powers and subject to supervision or examination by Federal, State, Territorial or District of Columbia authority, or (b) a corporation or other Person organized and doing business under the laws of a foreign government that is permitted to act as Trustee pursuant to a rule, regulation or order of the Commission, authorized under such laws to exercise corporate trust powers, and subject to supervision or examination by authority of such foreign government or a political subdivision thereof substantially equivalent to supervision or examination applicable to United States institutional trustees, in either case having a combined capital and surplus of at least $50,000,000, subject to supervision or examination by Federal or State authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then, for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published, if at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. Neither the Company nor any Person directly or indirectly controlling, controlled by or under common control with the Company shall serve as Trustee for the Securities of any series issued hereunder. SECTION 6.10. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 6.11. (b) The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (c) The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series, delivered to the Trustee and to the Company. 51 (d) If at any time: (1) the Trustee shall fail to comply with Section 6.8 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or (2) the Trustee shall cease to be eligible under Section 6.9 and shall fail to resign after written request therefor by the Company or by any such Holder, or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (i) the Company, acting pursuant to the authority of a Board Resolution, may remove the Trustee with respect to all Securities, or (ii) subject to Section 5.14, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause with respect to the Securities of one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee with respect to the Securities of that or those series. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee with respect to the Securities of such series and supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of a Security for at least six months may, subject to Section 5.14, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (f) The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series by mailing written notice of such event by first-class mail, postage prepaid, to the Holders of Securities of such series as their names and addresses appear in the Securities Register. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office. 52 SECTION 6.11. Acceptance of Appointment by Successor. (a) In case of the appointment hereunder of a successor Trustee with respect to all Securities, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. (b) In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more series, the Company, the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an instrument in writing or an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such instrument in writing or supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such instrument in writing or supplemental indenture the resignation or removal of the retiring Trust shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts, and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates. (c) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all rights, powers and trusts referred to in paragraph (a) or (b) of this Section, as the case may be. (d) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be eligible under this Article. 53 SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated, and in case any Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor Trustee or the name of such successor Trustee, and in all cases the certificate of authentication shall have the full force which it is provided anywhere in the Securities or in this Indenture that the certificate of the Trustee shall have. SECTION 6.13. Preferential Collection of Claims Against Company. If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor). SECTION 6.14. Appointment of Authenticating Agent. The Trustee may appoint an Authenticating Agent or Agents with respect to one or more series of Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities of such series issued upon original issue and upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 3.7, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, or of any State or Territory or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or State authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section. 54 Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of an Authenticating Agent shall be the successor Authenticating Agent hereunder, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. An Authenticating Agent may resign at any time by giving written notice thereof to the trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall give notice of such appointment in the manner provided in Section 1.6 to all Holders of Securities of the series with respect to which such Authenticating Agent will serve. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provision of this Section. The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section. If an appointment with respect to one or more series is made pursuant to this Section, the Securities of such series may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternative certificate of authentication in the following form: This is one of the Securities referred to in the within mentioned Indenture. Dated: Bankers Trust Company As Trustee By: _________________________________ As Authenticating Agent By: _________________________________ Authorized Officer 55 ARTICLE VII HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 7.1. Company to Furnish Trustee Names and Addresses of Holders. The Company will furnish or cause to be furnished to the Trustee: (a) semi-annually, not more than 15 days after each Regular Record Date in each year, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of such Regular Record Date, and (b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished, excluding from any such list names and addresses received by the Trustee in its capacity as Securities Registrar. SECTION 7.2. Preservation of Information, Communications to Holders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 7.1 and the names and addresses of Holders received by the Trustee in its capacity as Securities Registrar. The Trustee may destroy any list furnished to it as provided in Section 7.1 upon receipt of a new list so furnished. (b) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided in the Trust Indenture Act. (c) Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of information as to the names and addresses of the Holders made pursuant to the Trust Indenture Act. SECTION 7.3. Reports by Trustee. (a) The Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act, at the times and in the manner provided pursuant thereto. (b) Reports so required to be transmitted at stated intervals of not more than 12 months shall be transmitted no later than 60 days after December 31 in each calendar year, commencing 60 days after the first December 31 after the first issuance of Securities under this Indenture. 56 (c) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each securities exchange upon which any Securities are listed and also with the Commission. The Company will notify the Trustee when any Securities are listed on any securities exchange. SECTION 7.4. Reports by Company. The Company shall file with the Trustee and with the Commission, and transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided in the Trust Indenture Act; provided that any such information, documents or reports required to be filed with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act shall be filed with the Trustee within 15 days after the same is required to be filed with the Commission. Notwithstanding that the Company may not be required to remain subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company shall continue to file with the Commission and provide the Trustee with the annual reports and the information, documents and other reports which are specified in Sections 13 and 15(d) of the Exchange Act. The Company also shall comply with the other provisions of Trust Indenture Act Section 314(a). ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 8.1. Company May Consolidate, Etc., Only on Certain Terms. The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and no Person shall consolidate with or merge into the Company or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless: (1) in case the Company shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety shall be a corporation, partnership or trust organized and existing under the laws of the United States of America or any State or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of (and premium, if any) and interest (including any Additional Interest) on all the Securities and the performance of every covenant of this Indenture on the part of the Company to be performed or observed; 57 (2) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time, or both, would become an Event of Default, shall have happened and be continuing; (3) in the case of the Securities of a series issued to a BankAmerica Trust, such consolidation, merger, conveyance, transfer or lease is permitted under the related Trust Agreement and BankAmerica Guarantee and does not give rise to any breach or violation of the related Trust Agreement or BankAmerica Guarantee; and (4) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and any such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with; and the Trustee, subject to Section 6.1, may rely upon such Officers' Certificate and Opinion of Counsel as conclusive evidence that such transaction complies with this Section 8.1. SECTION 8.2. Successor Corporation Substituted. Upon any consolidation or merger by the Company with or into any other Person, or any conveyance, transfer or lease by the Company of its properties and assets substantially as an entirety to any Person in accordance with Section 8.1, the successor corporation formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; and in the event of any such conveyance, transfer or lease the Company shall be discharged from all obligations and covenants under the Indenture and the Securities and may be dissolved and liquidated. Such successor Person may cause to be signed, and may issue either in its own name or in the name of the Company, any or all of the Securities issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor Person instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities which previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication pursuant to such provisions and any Securities which such successor Person thereafter shall cause to be signed and delivered to the Trustee on its behalf for the purpose pursuant to such provisions. All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Securities had been issued at the date of the execution hereof. In case of any such consolidation, merger, sale, conveyance or lease, such changes in phraseology and form may be made in the Securities thereafter to be issued as may be appropriate. 58 ARTICLE IX SUPPLEMENTAL INDENTURES SECTION 9.1. Supplemental Indentures without Consent of Holders. Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another Person to the Company, and the assumption by any such successor of the covenants of the Company herein and in the Securities contained; or (2) to convey, transfer, assign, mortgage or pledge any property to or with the Trustee or to surrender any right or power herein conferred upon the Company; or (3) to establish the form or terms of Securities of any series as permitted by Sections 2.1. or 3.1; or (4) to add to the covenants of the Company for the benefit of the Holders of all or any series of Securities (and if such covenants are to be for the benefit of less than all series of Securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power herein conferred upon the Company; or (5) to add any additional Events of Default for the benefit of the Holders of all or any series of Securities (and if such additional Events of Default are to be for the benefit of less than all series of Securities, stating that such additional Events of Default are expressly being included solely for the benefit of such series); or (6) to change or eliminate any of the provisions of this Indenture, provided that any such change or elimination (a) shall become effective only when there is no Security Outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision or (b) shall not apply to any Outstanding Securities; or (7) to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture, provided that such action pursuant to this clause (7) shall not adversely affect the interest of the Holders of Securities of any series in any material respect or, in the case of the Securities of a series issued to a BankAmerica Trust and for so long as any of the corresponding series of Capital Securities issued by such BankAmerica Trust shall remain outstanding, the holders of such Capital Securities; or (8) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration 59 of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 6.11(b); or (9) to comply with the requirements of the Commission in order to effect or maintain the qualification of this Indenture under the Trust Indenture Act. SECTION 9.2. Supplemental Indentures with Consent of Holders. With the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of each series affected by such supplemental indenture, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities of such series under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby, (1) except to the extent permitted by Section 3.12 or as otherwise specified as contemplated by Section 2.1 or Section 3.1 with respect to the deferral of the payment of interest on the Securities of any series, change the Stated Maturity of the principal of, or any installment of interest (including any Additional Interest) on, any Security, or reduce the principal amount thereof or the rate of interest thereon or reduce any premium payable upon the redemption thereof, or reduce the amount of principal of a Discount Security that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.2, or change the place of payment where, or the coin or currency in which, any Security or interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date), or (2) reduce the percentage in principal amount of the Outstanding Securities of any series, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or (3) modify any of the provisions of this Section, Section 5.13 or Section 10.5, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Security affected thereby; provided, further, that, in the case of the Securities of a series issued to a BankAmerica Trust, so long as any of the corresponding series of Capital Securities issued by such BankAmerica Trust remains outstanding, (i) no such amendment shall be made that adversely affects the holders of such Capital Securities in any material respect, and no termination of this Indenture shall occur, and no waiver of any Event of Default or compliance with any covenant under this Indenture shall be effective, without the prior consent of the holders of at least a majority of the aggregate Liquidation Amount of such Capital Securities then outstanding unless and until the principal (and premium, if any) of the Securities of such series and all accrued and, subject to 60 Section 3.8, unpaid interest (including any Additional Interest) thereon have been paid in full and (ii) no amendment shall be made to Section 5.8 of this Indenture that would impair the rights of the holders of Capital Securities provided therein without the prior consent of the holders of each Capital Security then outstanding unless and until the principal (and premium, if any) of the Securities of such series and all accrued and (subject to Section 3.8) unpaid interest (including any Additional Interest) thereon have been paid in full. A supplemental indenture that changes or eliminates any covenant or other provision of this Indenture that has expressly been included solely for the benefit of one or more particular series of Securities or Capital Securities, or which modifies the rights of the Holders of Securities or holders of Capital Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities or holders of Capital Securities of any other series. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. SECTION 9.3. Execution of Supplemental Indentures. In executing or accepting the additional trusts created by any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture, and that all conditions precedent have been complied with. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise or that may subject it to any liability. SECTION 9.4. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. SECTION 9.5. Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. SECTION 9.6. Reference in Securities to Supplemental Indentures. Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Company, bear a notation in form approved by the Company as to any matter provided for in such supplemental indenture. If the 61 Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series. ARTICLE X COVENANTS SECTION 10.1. Payment of Principal, Premium and Interest. The Company covenants and agrees for the benefit of each series of securities that it will duly and punctually pay the principal of (and premium, if any) and interest on the Securities of that series in accordance with the terms of such Securities and this Indenture. SECTION 10.2. Maintenance of Office or Agency. The Company will maintain in each Place of Payment for any series of Securities, an office or agency where Securities of that series may be presented or surrendered for payment and an office or agency where Securities of that series may be surrendered for transfer or exchange and where notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be served. The Company initially appoints the Trustee, acting through its Corporate Trust Office, as its agent for said purposes. The Company will give prompt written notice to the Trustee of any change in the location of any such office or agency. If at any time the Company shall fail to maintain such office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all of such purposes, and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in each Place of Payment for Securities of any series for such purposes. The Company will give prompt written notice to the Trustee of any such designation and any change in the location of any such office or agency. SECTION 10.3. Money for Security Payments to be Held in Trust. If the Company shall at any time act as its own Paying Agent with respect to any series of Securities, it will, on or before each due date of the principal of (and premium, if any) or interest on any of the Securities of such series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee of its failure so to act. 62 Whenever the Company shall have one or more Paying Agents, it will, prior to 10:00 a.m. New York City time on each due date of the principal of or interest on any Securities, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal and premium (if any) or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its failure so to act. The Company will cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will: (1) hold all sums held by it for the payment of the principal of (and premium, if any) or interest on Securities in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (2) give the Trustee notice of any default by the Company (or any other obligor upon the Securities) in the making of any payment of principal (and premium, if any) or interest; (3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent; and (4) comply with the provisions of the Trust Indenture Act applicable to it as a Paying Agent. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any) or interest on any Security and remaining unclaimed for two years after such principal (and premium, if any) or interest has become due and payable shall be paid on Company Request to the Company, or (if then held by the Company) shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company. 63 SECTION 10.4. Statement as to Compliance. The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year of the Company ending after the date hereof, an Officers' Certificate executed by the principal executive officer, principal financial officer or principal accounting officer of the Company covering the preceding calendar year, stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance, observance or fulfillment of or compliance with any of the terms, provisions, covenants and conditions of this Indenture, and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. For the purpose of this Section 10.4, compliance shall be determined without regard to any grace period (other than an Extension Period) or requirement of notice provided pursuant to the terms of this Indenture. SECTION 10.5. Waiver of Certain Covenants. The Company may omit in any particular instance to comply with any covenant or condition provided pursuant to Section 3.1, 9.1(3) or 9.1(4) with respect to the Securities of any series, if before or after the time for such compliance the Holders of at least a majority in principal amount of the Outstanding Securities of such series shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company in respect of any such covenant or condition shall remain in full force and effect. SECTION 10.6. Additional Sums. In the case of the Securities of a series issued to a BankAmerica Trust, so long as no Event of Default has occurred and is continuing and except as otherwise specified as contemplated by Section 2.1 or Section 3.1, in the event that (i) a BankAmerica Trust is the Holder of all of the Outstanding Securities of such series and (ii) a Tax Event in respect of such BankAmerica Trust shall have occurred and be continuing, the Company shall pay to such BankAmerica Trust (and its permitted successors or assigns under the related Trust Agreement) as Holder of the Securities of such series for so long as such BankAmerica Trust (or its permitted successor or assignee) is the registered holder of any Securities of such series, such additional sums as may be necessary in order that the amount of Distributions (including any Additional Amounts (as defined in such Trust Agreement)) paid by such BankAmerica Trust on the related Capital Securities and Common Securities that at any time remain outstanding in accordance with the terms thereof shall not be reduced as a result of any Additional Taxes (the "Additional Sums"). Whenever in this Indenture or the Securities there is a reference in any context to the payment of principal of or interest on the Securities, such mention shall be deemed to include mention of the payments of the Additional Sums provided for in this paragraph to the extent that, in such context, Additional Sums are, were or would be payable in respect thereof pursuant to the provisions of this paragraph and express mention of the payment of Additional Sums (if applicable) in any provisions hereof shall not be construed as excluding Additional Sums in those provisions hereof where such express mention is not made. 64 SECTION 10.7. Additional Covenants. The Company covenants and agrees with each Holder of Securities of each series that it shall not, and it shall not permit any Subsidiary of the Company to, (a) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of the Company's capital stock, or (b) make any payment of principal of or interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank pari passu in all respects with or junior in interest to the Securities of such series or make any guarantee payments with respect to any guarantee by the Company of debt securities of any subsidiary of the Company if such guarantee ranks pari passu with or junior in interest to the Securities (other than (a) dividends or distributions in Common Stock, (b) any declaration of a dividend in connection with the implementation of a Rights Plan, the issuance of any Common Stock of any class or series of preferred stock of the Company under any Rights Plan in the future or the redemption or repurchase of any such rights pursuant thereto, (c) payments under any BankAmerica Guarantee, and (d) purchases of Common Stock related to the issuance of Common Stock or rights under any of the Company's benefit plans for its directors, officers or employees) if at such time (i) there shall have occurred any event of which the Company has actual knowledge that (A) with the giving of notice or the lapse of time, or both, would constitute an Event of Default with respect to the Securities of such series and (B) in respect of which the Company shall not have taken reasonable steps to cure, (ii) if the Securities of such series are held by a BankAmerica Trust, the Company shall be in default with respect to its payment of any obligations under the BankAmerica Guarantee relating to the Capital Securities issued by such BankAmerica Trust or (iii) the Company shall have given notice of its election to begin an Extension Period with respect to the Securities of such series as provided herein and shall not have rescinded such notice, or such Extension Period, or any extension thereof, shall be continuing. For purposes hereof, neither the Company's Senior Debt nor its Senior Subordinated Debt shall be deemed to be pari passu with the Securities. The Company also covenants with each Holder of Securities of a series issued to a BankAmerica Trust (i) to maintain directly or indirectly 100% ownership of the Common Securities of such BankAmerica Trust; provided, however, that any permitted successor of the Company hereunder may succeed to the Company's ownership of such Common Securities, (ii) as holder of the Common Securities not to voluntarily terminate, wind-up or liquidate such BankAmerica Trust, except upon prior approval of the Federal Reserve, if then required under applicable capital guidelines or policies of the Federal Reserve, and (a) in connection with a distribution of the Securities of such series to the holders of Capital Securities in liquidation of such BankAmerica Trust or (b) in connection with certain mergers, consolidations or amalgamations permitted by the related Trust Agreement and (iii) to use its reasonable efforts, consistent with the terms and provisions of such Trust Agreement, to cause such BankAmerica Trust to remain classified as a grantor trust and not an association taxable as a corporation for United States federal income tax purposes. SECTION 10.8. Original Issue Discount. On or before December 15 of each year during which any Securities are outstanding, the Company shall furnish to each Paying Agent such information as may be reasonably requested 65 by each Paying Agent in order that each Paying Agent may prepare the information which it is required to report for such year on Internal Revenue Service Forms 1096 and 1099 pursuant to Section 6049 of the Internal Revenue Code of 1986, as amended. Such information shall include the amount of original issue discount includible in income for each $1,000 of principal amount at Stated Maturity of outstanding Securities during such year. ARTICLE XI REDEMPTION OF SECURITIES SECTION 11.1. Applicability of This Article. Redemption of Securities of any series (whether by operation of a sinking fund or otherwise) as permitted or required by any form of Security issued pursuant to this Indenture shall be made in accordance with such form of Security and this Article; provided, however, that if any provision of any such form of Security shall conflict with any provision of this Article, the provision of such form of Security shall govern. Except as otherwise set forth in the form of Security for such series, each Security of such series shall be subject to partial redemption only in the amount of $1,000 or integral multiples thereof and the principal amount of the unredeemed portion of such Security is not less than $100,000. SECTION 11.2. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Securities shall be evidenced by or pursuant to a Board Resolution. In case of any redemption at the election of the Company of any of the Securities of any particular series and having the same terms, the Company shall, not less than 30 nor more than 60 days prior to the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee and, in the case of Securities of a series held by a BankAmerica Trust, the related Property Trustee of such date and of the principal amount of Securities of that series to be redeemed and provide the additional information required to be included in the notice or notices contemplated by Section 11.4. In the case of any redemption of Securities prior to the expiration any restriction on such redemption provided in the terms of such Securities, the Company shall furnish the Trustee with an Officers' Certificate and an Opinion of Counsel evidencing compliance with such restriction. The Company shall have received the prior approval of the Federal Reserve if then required under applicable capital guidelines or policies of the Federal Reserve prior to redeeming any Securities pursuant hereto. SECTION 11.3. Selection of Securities to be Redeemed. If less than all the Securities of any series are to be redeemed, the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of a portion of the principal amount of any Security of such series. If less than all the Securities of such series and of a specified tenor are to be redeemed (unless such redemption affects only a single Security), the particular Securities to be redeemed shall be 66 selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series and specified tenor not previously called for redemption in accordance with the preceding sentence. The Trustee shall promptly notify the Company in writing of the Securities selected for partial redemption and the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security which has been or is to be redeemed. If the Company shall so direct, Securities registered in the name of the Company, any Affiliate or any Subsidiary thereof shall not be included in the Securities selected for redemption. SECTION 11.4. Notice of Redemption. Notice of redemption shall be given by first-class mail, postage prepaid, mailed not later than the thirtieth day, and not earlier than the sixtieth day, prior to the Redemption Date, to each Holder of Securities to be redeemed, at the address of such Holder as it appears in the Securities Register. With respect to Securities of each series to be redeemed, each notice of redemption shall state: (a) the Redemption Date; (b) the Redemption Price or if the Redemption Price cannot be calculated prior to the time the notice is required to be sent, the estimate of the Redemption Price provided pursuant to the Indenture together with a statement that it is an estimate and that the actual Redemption Price will be calculated on the third Business Day prior to the Redemption Date (if such an estimate of the Redemption Price is given, a subsequent notice shall be given as set forth above setting forth the Redemption Price promptly following the calculation thereof); (c) if less than all Outstanding Securities of such particular series and having the same terms are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the particular Securities to be redeemed; (d) that on the Redemption Date, the Redemption Price will become due and payable upon each such Security or portion thereof, and that interest thereon, if any, shall cease to accrue on and after said date; (e) the place or places where such Securities are to be surrendered for payment of the Redemption Price; (f) that the redemption is for a sinking fund, if such is the case; and (g) such other provisions as may be required in respect of the terms of a particular series of Securities. 67 Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company and shall not be irrevocable. The notice if mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. In any case, a failure to give such notice by mail or any defect in the notice to the Holder of any Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security. SECTION 11.5. Deposit of Redemption Price. Prior to 10:00 a.m. New York City time on the Redemption Date specified in the notice of redemption given as provided in Section 11.4, the Company will deposit with the Trustee or with one or more Paying Agents (or if the Company is acting as its own Paying Agent, the Company will segregate and hold in trust as provided in Section 10.3) an amount of money sufficient to pay the Redemption Price of, and any accrued interest (including Additional Interest) on, all the Securities which are to be redeemed on that date. SECTION 11.6. Payment of Securities Called for Redemption. If any notice of redemption has been given as provided in Section 11.4, the Securities or portion of Securities with respect to which such notice has been given shall become due and payable on the date and at the place or places stated in such notice at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date. On presentation and surrender of such Securities at a Place of Payment in said notice specified, the said securities or the specified portions thereof shall be paid and redeemed by the Company at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date; provided, however, that, unless otherwise specified as contemplated by Section 3.1, installments of interest whose Stated Maturity is on or prior to the Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant record dates according to their terms and the provisions of Section 3.8. Upon presentation of any Security redeemed in part only, the Company shall execute and the Trustee shall authenticate and deliver to the Holder thereof, at the expense of the Company, a new Security or Securities of the same series, of authorized denominations, in aggregate principal amount equal to the unredeemed portion of the Security so presented and having the same Original Issue Date, Stated Maturity and terms. If a Global Security is so surrendered, such new Security (subject to Section 3.5) will also be a new Global Security. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal of and premium, if any, on such Security shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security. 68 SECTION 11.7. Right of Redemption of Securities Initially Issued to a BankAmerica Trust. In the case of the Securities of a series initially issued to a BankAmerica Trust, if specified as contemplated by Section 3.1, the Company, at its option, may redeem such Securities (i) on or after the date ten years after the Original Issue Date of such Securities, in whole at any time or in part from time to time, or (ii) upon the occurrence and during the continuation of a Tax Event or Capital Treatment Event, prior to the date ten years after the Original Issue Date of such Securities and within 90 days following the occurrence of such Tax Event or Capital Treatment Event in respect of such BankAmerica Trust, in whole (but not in part), in each case at a Redemption Price specified as contemplated by Section 3.1. ARTICLE XII SINKING FUNDS SECTION 12.1. Applicability of Article. The provisions of this Article shall be applicable to any sinking fund for the retirement of Securities of any series except as otherwise specified as contemplated by Section 3.1 for such Securities. The minimum amount of any sinking fund payment provided for by the terms of any Securities of any series is herein referred to as a "mandatory sinking fund payment," and any sinking fund payment in excess of such minimum amount which is permitted to be made by the terms of such Securities of any series is herein referred to as an "optional sinking fund payment." If provided for by the terms of any Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 12.2. Each sinking fund payment shall be applied to the redemption (or purchase by tender or otherwise) of Securities of any series as provided for by the terms of such Securities. SECTION 12.2. Satisfaction of Sinking Fund Payments with Securities. In lieu of making all or any part of a mandatory sinking fund payment with respect to any Securities of a series in cash, the Company may at its option, at any time no more than 16 months and no less than 45 days prior to the date on which such sinking fund payment is due, deliver to the Trustee Securities of such series (together with the unmatured coupons, if any, appertaining thereto) theretofore purchased or otherwise acquired by the Company, except Securities of such series that have been redeemed through the application of mandatory or optional sinking fund payments pursuant to the terms of the Securities of such series, accompanied by a Company Order instructing the Trustee to credit such obligations and stating that the Securities of such series were originally issued by the Company by way of bona fide sale or other negotiation for value; provided that the Securities to be so credited have not been previously so credited. The Securities to be so credited shall be received and credited for such purpose by the Trustee at the redemption price for such Securities, as specified in the Securities 69 so to be redeemed, for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly. SECTION 12.3. Redemption of Securities for Sinking Fund. Not less than 45 days prior to each sinking fund payment date for any series of Securities, the Company will deliver to the Trustee an Officers' Certificate specifying the amount of the next ensuing sinking fund payment for such Securities pursuant to the terms of such Securities, the portion thereof, if any, which is to be satisfied by payment of cash in the currency in which the Securities of such series are payable (except as provided pursuant to Section 3.1) and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities pursuant to Section 12.2 and will also deliver to the Trustee any Securities to be so delivered. Such Officers' Certificate shall be irrevocable and upon its delivery the Company shall be obligated to make the cash payment or payments therein referred to, if any, on or before the succeeding sinking fund payment date. In the case of the failure of the Company to deliver such Officers' Certificate (or, as required by this Indenture, the Securities and coupons, if any, specified in such Officers' Certificate) by the due date therefor, the sinking fund payment due on the succeeding sinking fund payment date for such series shall be paid entirely in cash and shall be sufficient to redeem the principal amount of the Securities of such series subject to a mandatory sinking fund payment without the right to deliver or credit securities as provided in Section 12.2 and without the right to make the optional sinking fund payment with respect to such series at such time. Any sinking fund payment or payments (mandatory or optional) made in cash plus any unused balance of any preceding sinking fund payments made with respect to the Securities of any particular series shall be applied by the Trustee (or by the Company if the Company is acting as its own Paying Agent) on the sinking fund payment date on which such payment is made (or, if such payment is made before a sinking fund payment date, on the sinking fund payment date immediately following the date of such payment) to the redemption of Securities of such series at the Redemption Price specified in such Securities with respect to the sinking fund. Any sinking fund moneys not so applied or allocated by the Trustee (or, if the Company is acting as its own Paying Agent, segregated and held in trust by the Company as provided in Section 10.3) for such series and together with such payment (or such amount so segregated) shall be applied in accordance with the provisions of this Section 12.3. Any and all sinking fund moneys with respect to the Securities of any particular series held by the Trustee (or if the Company is acting as its own Paying Agent, segregated and held in trust as provided in Section 10.3) on the last sinking fund payment date with respect to Securities of such series and not held for the payment or redemption of particular Securities of such series shall be applied by the Trustee (or by the Company if the Company is acting as its own Paying Agent), together with other moneys, if necessary, to be deposited (or segregated) sufficient for the purpose, to the payment of the principal of the Securities of such series at Maturity. The Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 11.3 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 11.4. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Section 11.6. On or before each sinking fund payment date, the Company shall pay to the 70 Trustee (or, if the Company is acting as its own Paying Agent, the Company shall segregate and hold in trust as provided in Section 10.3) in cash a sum in the currency in which Securities of such series are payable (except as provided pursuant to Section 3.1) equal to the principal, premium, if any, and any interest accrued to the Redemption Date for Securities or portions thereof to be redeemed on such sinking fund payment date pursuant to this Section 12.3. Neither the Trustee nor the Company shall redeem any Securities of a series with sinking fund moneys or mail any notice of redemption of Securities of such series by operation of the sinking fund for such series during the continuance of a default in payment of interest, if any, on any Securities of such series or of any Event of Default (other than an Event of Default occurring as a consequence of this paragraph) with respect to the Securities of such series, except that if the notice of redemption shall have been provided in accordance with the provisions hereof, the Trustee (or the Company, if the Company is then acting as its own Paying Agent) shall redeem such Securities if cash sufficient for that purpose shall be deposited with the Trustee (or segregated by the Company) for that purpose in accordance with the terms of this Article XII. Except as aforesaid, any moneys in the sinking fund for such series at the time when any such default or Event of Default shall occur and any moneys thereafter paid into such sinking fund shall, during the continuance of such default or Event of Default, be held as security for the payment of the Securities and coupons, if any, of such series; provided, however, that in case such default or Event of Default shall have been cured or waived herein, such moneys shall thereafter be applied on the next sinking fund payment date for the Securities of such series on which such moneys may be applied pursuant to the provisions of this Section 12.3. ARTICLE XIII SUBORDINATION OF SECURITIES SECTION 13.1. Securities Subordinate to Senior Indebtedness. The Company covenants and agrees, and each Holder of a Security, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Article, the payment of the principal of (and premium, if any) and interest (including any Additional Interest) on each and all of the Securities are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Indebtedness. SECTION 13.2. No Payment When Senior Indebtedness in Default; Payment Over of Proceeds Upon Dissolution, Etc. In the event that the Company shall default in the payment of any principal of (or premium, if any) or interest on any Senior Indebtedness when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, upon written notice of such default to the Company by the holders of Senior Indebtedness or any trustee therefor, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or 71 otherwise) shall be made or agreed to be made on account of the principal of (or premium, if any) or interest on any of the Securities, or in respect of any redemption, repayment, retirement, purchase or other acquisition of any of the Securities. In the event of (a) any insolvency, bankruptcy, receivership, liquidation, reorganization, readjustment, composition or other similar proceedings relating to the Company, its creditors or its property, (b) any proceeding for the liquidation, dissolution or other winding up of the Company, voluntary or involuntary, whether or not involving insolvency or bankruptcy proceedings, (c) any assignment by the Company for the benefit of creditors or (d) any other marshalling of the assets of the Company (each such event, if any, herein sometimes referred to as a "Proceeding"), all Senior Indebtedness (including any interest thereon accruing after the commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made to any Holder of any of the Securities on account thereof. Any payment or distribution, whether in cash, securities or other property (other than securities of the Company or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Indebtedness at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Securities of any series shall be paid or delivered directly to the holders of Senior Indebtedness in accordance with the priorities then existing among such holders until all Senior Indebtedness (including any interest thereon accruing after the commencement of any Proceeding) shall have been paid in full. In the event of any Proceeding, after payment in full of all sums owing with respect to Senior Indebtedness, the Holders of the Securities, together with the holders of any obligations of the Company ranking on a parity with the Securities (which for this purpose only shall include the Allocable Amounts of Senior Subordinated Debt), shall be entitled to be paid from the remaining assets of the Company the amounts at the time due and owing on account of unpaid principal of (and premium, if any) and interest on the Securities and such other obligations before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any capital stock or any obligations of the Company ranking junior to the Securities and such other obligations. In the event that, notwithstanding the foregoing, any payment or distribution of any character or any security, whether in cash, securities or other property (other than securities of the Company or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Indebtedness at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), shall be received by the Trustee or any Holder in contravention of any of the terms hereof and before all Senior Indebtedness shall have been paid in full, such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to, the holders of the Senior Indebtedness at the time outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Indebtedness remaining unpaid, to the extent necessary to pay all such Senior Indebtedness in 72 full. In the event of the failure of the Trustee or any Holder to endorse or assign any such payment, distribution or security, each holder of Senior Indebtedness is hereby irrevocably authorized to endorse or assign the same. The Trustee and Holders will take such action (including, without limitation, the delivery of this Indenture to an agent for the holders of Senior Indebtedness or consent to the filing of a financing statement with respect hereto) as may, in the opinion of counsel designated by the holders of a majority in principal amount of the Senior Indebtedness at the time outstanding, be necessary or appropriate to assure the effectiveness of the subordination effected by these provisions. The provisions of this Section 13.2 shall not impair any rights, interests, remedies or powers of any secured creditor of the Company in respect of any security interest the creation of which is not prohibited by the provisions of this Indenture. The securing of any obligations of the Company, otherwise raking on a parity with the Securities or ranking junior to the Securities, shall not be deemed to prevent such obligations from constituting, respectively, obligations ranking on a parity with the Securities or ranking junior to the Securities. SECTION 13.3. Payment Permitted If No Default. Nothing contained in this Article or elsewhere in this Indenture, or in any of the Securities, shall prevent (a) the Company at any time, except during the conditions described in the first paragraph of Section 13.2 or the pendency of any Proceeding referred to in Section 13.2, from making payments at any time of principal of (and premium, if any) or interest (including Additional Interest) on the Securities, or (b) the application by the Trustee of any moneys deposited with it hereunder to the payment of or on account of the principal of (and premium, if any) or interest (including any Additional Interest) on the Securities or the retention of such payment by the Holders, if, at the time of such application by the Trustee, it did not have knowledge that such payment would have been prohibited by the provisions of this Article. SECTION 13.4. Subrogation to Rights of Holders of Senior Indebtedness. Subject to the payment in full of all amounts due or to become due on all Senior Indebtedness, or the provision for such payment in cash of cash equivalents or otherwise in a manner satisfactory to the holders of Senior Indebtedness, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Indebtedness pursuant to the provisions of this Article (equally and ratably with the holders of all indebtedness of the Company which by its express terms is subordinated to Senior Indebtedness of the Company to substantially the same extent as the Securities are subordinated to the Senior Indebtedness and is entitled to like rights of subrogation by reason of any payments or distributions made to holders of such Senior Indebtedness) to the rights of the holders of such Senior Indebtedness to receive payments and distributions of cash, property and securities applicable to the Senior Indebtedness until the principal of (and premium, if any) and interest on the Securities shall be paid in full. For purposes of such subrogation, no payments or 73 distributions to the holders of the Senior Indebtedness of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article, and no payments over pursuant to the provisions of this Article to the holders of Senior Indebtedness by Holders of the Securities or the Trustee, shall, as among the Company, its creditors other than holders of Senior Indebtedness, and the Holders of the Securities, be deemed to be a payment or distribution by the Company to or on account of the Senior Indebtedness. SECTION 13.5. Provisions Solely to Define Relative Rights. The provisions of this Article are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Indebtedness on the other hand. Nothing contained in this Article or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as between the Company and the Holders of the Securities, the obligations of the Company, which are absolute and unconditional, to pay to the Holders of the Securities the principal of (and premium, if any) and interest (including any Additional Interest) on the Securities as and when the same shall become due and payable in accordance with their terms; or (b) affect the relative rights against the Company of the Holders of the Securities and creditors of the Company other than their rights in relation to the holders of Senior Indebtedness; or (c) prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture including, without limitation, filing and voting claims in any Proceeding, subject to the rights, if any, under this Article of the holders of Senior Indebtedness to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder. SECTION 13.6. Trustee to Effectuate Subordination. Each Holder of a Security by his or her acceptance thereof authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination provided in this Article and appoints the Trustee his or her attorney-in-fact for any and all such purposes. SECTION 13.7. No Waiver of Subordination Provisions. No right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or be otherwise charged with. Without in any way limiting the generality of the immediately preceding paragraph, the holders of Senior Indebtedness may, at any time and from to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to the Holders of the Securities and without impairing or releasing the subordination provided in this Article or the obligations hereunder of the Holders of the Securities to the holders of Senior 74 Indebtedness, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness or any instrument evidencing the same or any agreement under which Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii) release any Person liable in any manner for the collection of Senior Indebtedness; and (iv) exercise or refrain from exercising any rights against the Company and any other Person. SECTION 13.8. Notice to Trustee. The Company shall give prompt written notice to the Trustee of any fact known to the Company which would prohibit the making of any payment to or by the Trustee in respect of the Securities. Notwithstanding the provisions of this Article or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until the Trustee shall have received written notice thereof from the Company or a holder of Senior Indebtedness or from any trustee, agent or representative therefor; provided, however, that if the Trustee shall not have received the notice provided for in this Section at least two Business Days prior to the date upon which by the terms hereof any monies may become payable for any purpose (including, without limitation, the payment of the principal of (and premium, if any) or interest (including any Additional Interest) on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary which may be received by it within two Business Days prior to such date. Subject to the provisions of Section 6.1, the Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior Indebtedness (or a trustee or attorney-in-fact therefor) to establish that such notice has been given by a holder of Senior Indebtedness (or a trustee or attorney-in-fact therefor). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. SECTION 13.9. Reliance on Judicial Order or Certificate of Liquidating Agent. Upon any payment or distribution of assets of the Company referred to in this Article, the Trustee, subject to the provisions of Section 6.1, and the Holders of the Securities shall be entitled to rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating 75 trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article. SECTION 13.10. Trustee Not Fiduciary for Holders of Senior Indebtedness. The Trustee, in its capacity as trustee under this Indenture, shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Company or to any other Person cash, property or securities to which any holders of Senior Indebtedness shall be entitled by virtue of this Article or otherwise. SECTION 13.11. Rights of Trustee as Holder of Senior Indebtedness; Preservation of Trustee's Rights. The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article with respect to any Senior Indebtedness which may at any time be held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. SECTION 13.12. Article Applicable to Paying Agents. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article in addition to or in place of the Trustee. 76 This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. BANKAMERICA CORPORATION By: /s/ [ILLEGIBLE] ------------------------------------ Attest: BANKERS TRUST COMPANY as Trustee By: ------------------------------------ * * * * * This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. BANKAMERICA CORPORATION By: ------------------------------------ Attest: /s/ [ILLEGIBLE] BANKERS TRUST COMPANY as Trustee By: /s/ [ILLEGIBLE] ------------------------------------ Annex A See Tab A.3. Annex B See Tab 3. Annex C See Tab 2. ANNEX D -- Form of Restricted Securities Certificate RESTRICTED SECURITIES CERTIFICATE (For transfers pursuant to ss. 3.6(b) of the Indenture) [____________________________] as Security Registrar (address] Re: _____________ of [BankAmerica Institutional Capital ___] (the "Trust") (the "Securities") Reference is made to the Indenture, dated as of November 27, 1996 (the "Indenture"), entered into between BankAmerica Corporation, and Bankers Trust Company, as Trustee. Terms used herein and defined in the Indenture or in Regulation S, Rule 144A or Rule 144 under the U.S. Securities Act of 1933 (the "Securities Act") are used herein as so defined. This certificate relates to $_____________ aggregate principal amount of Securities, which are evidenced by the following certificate(s) (the "Specified Securities"): CUSIP No(s). ______________________ CERTIFICATE No(s). ________________ CURRENTLY IN BOOK-ENTRY FORM: Yes___ No___ (check one) The person in whose name this certificate is executed below (the "Undersigned") hereby certifies that either (i) it is the sole beneficial owner of the Specified Securities or (ii) it is acting on behalf of all the beneficial owners of the Specified Securities and is duly authorized by them to do so. Such beneficial owner or owners are referred to herein collectively as the "Owner". If the Specified Securities are represented by a Global Security, they are held through a Depository or an Agent Member in the name of the Undersigned, as or on behalf of the Owner. If the Specified Securities are not represented by a Global Security, they are registered in the name of the Undersigned, as or on behalf of the Owner. The Owner has requested that the Specified Securities be transferred to a person (the "Transferee") who will take delivery in the form of a Restricted Security. In connection with such transfer, the Owner hereby certifies that, unless such transfer is being effected pursuant to an effective registration statement under the Securities Act, it is being effected in accordance with Rule 144A, Rule 904 of Regulation S or Rule 144 under the Securities Act and all applicable securities laws of the states of the United States and other jurisdictions. Accordingly, the Owner hereby further certifies as: (1) Rule 144A Transfers. If the transfer is being effected in accordance with Rule 144A: (A) the Specified Securities are being transferred to a person that the Owner and any person acting on its behalf reasonably believe is a "qualified institutional buyer" within the meaning of Rule 144A, acquiring for its own account or for the account of a qualified institutional buyer; and (B) the Owner and any person acting on its behalf have taken reasonable steps to ensure that the Transferee is aware that the Owner may be relying on Rule 144A in connection with the transfer; and (2) Rule 904 Transfers. If the transfer is being effected in accordance with Rule 904: (A) the Owner is not a distributor of the Securities, an affiliate of the Company or any such distributor or a person acting in behalf of any of the foregoing; (B) the offer of the Specified Securities was not made to a person in the United States; (C) either; (i) at the time the buy order was originated, the Transferee was outside the United States or the Owner and any person acting on its behalf reasonably believed that the Transferee was outside the United States, or (ii) the transaction is being executed in, on or through the facilities of the Eurobond market, as regulated by the Association of International Bond Dealers, or another designated offshore securities market and neither the Owner nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States; (D) no directed selling efforts have been made in the United States by or on behalf of the Owner or any affiliate thereof; and (E) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities act. 2 (3) Rule 144 Transfers. If the transfer is being effected pursuant to Rule 144: (A) the transfer is occurring after a holding period of at least two years (computed in accordance with paragraph (d) of Rule 144) has elapsed since the date the Specified Securities were acquired from the Company or from an affiliate (as such term is defined in Rule 144) of the Company, whichever is later, and is being effected in accordance with the applicable amount, manner of sale and notice requirements of paragraphs (e); (f) and (h) of Rule 144; or (B) the transfer is occurring after a holding period of at least three years has elapsed since the date the Specified Securities were acquired from the Company or from an affiliate (as such term is defined in Rule 144) of the Company, whichever is later, and the Owner is not, and during the preceding three months has not been, an affiliate of the Company. This certificate and the statements contained herein are made for your benefit and the benefit of the Company and the Initial Purchasers (as defined in the related Trust Agreement). Dated: ________________________________________ (Print the name of the Undersigned, as such term is defined in the second paragraph of this certificate.) By:_____________________________________ Name: Title: (If the Undersigned is a corporation, partnership or fiduciary, the title of the person signing on behalf of the Undersigned must be stated.) 3 ANNEX E -- Form of Unrestricted Securities Certificate UNRESTRICTED SECURITIES CERTIFICATE (For removal of Restricted Capital Securities Legends pursuant to ss. 3.6(c) of the Indenture) [____________________________] as Security Registrar (address] Re: ________________________ of [BankAmerica Institutional Capital __] (the "Trust") (the "Securities") Reference is made to the Indenture, dated as of November 27, 1996 (the "Indenture"), between BankAmerica Corporation and Bankers Trust Company, as Trustee. Terms used herein and defined in the Indenture or in Rule 144 under the U.S. Securities Act of 1933 (the "Securities Act") are used herein as so defined. This certificate relates to $_____________ aggregate principal amount of Securities, which are evidenced by the following certificate(s) (the "Specified Securities"): CUSIP No(s). ______________________ CERTIFICATE No(s). ________________ CURRENTLY IN BOOK-ENTRY FORM: Yes___ No____ (check one) The person in whose name this certificate is executed below (the "Undersigned") hereby certifies that either (i) it is the sole beneficial owner of the Specified Securities or (ii) it is acting on behalf of all the beneficial owners of the Specified Securities and is duly authorized by them to do so. Such beneficial owner or owners are referred to herein collectively as the "Owner". If the Specified Securities are represented by a Global Security, they are held through the Depository or an Agent Member in the name of the Undersigned, as or on behalf of the Owner. If the Specified Securities are not represented by a Global Security, they are registered in the name of the Undersigned, as or on behalf of the Owner. The Owner has requested that the Specified Securities be exchanged for Securities bearing no Restricted Securities Legend pursuant to Section 3.6(c) of the Indenture. In connection with such exchange, the Owner hereby certifies that the exchange is occurring after a period of at least three years has elapsed since the date the Specified Securities were acquired from the Company or from an affiliate (as such term is defined in Rule 144) of the Company, whichever is later, and the Owner is not, and during the preceding three months has not been, an affiliate of the Company. The Owner also acknowledges that any future transfers of the Specified Securities must comply with all applicable securities laws of the states of the United States and other jurisdictions. This certificate and the statements contained herein are made for your benefit and the benefit of the Company and the Initial Purchasers (as defined in the related Trust Agreement). Dated: ________________________________________ (Print the name of the Undersigned, as such term is defined in the second paragraph of this certificate.) By:_____________________________________ Name: Title: (If the Undersigned is a corporation, partnership or fiduciary, the title of the person signing on behalf of the Undersigned must be stated.) 2 - -------------------------------------------------------------------------------- BankAmerica Corporation NationsBank (DE) Corporation - -------------------------------------------------------------------------------- FIRST SUPPLEMENTAL INDENTURE Dated as of September 15, 1998 Supplementing the Junior Subordinated Indenture, dated as of November 27, 1996, between BankAmerica Corporation and Bankers Trust Company, as Trustee - -------------------------------------------------------------------------------- FIRST SUPPLEMENTAL INDENTURE, dated as of September 15, 1998 (the "First Supplemental Indenture"), among NationsBank (DE) Corporation, a Delaware corporation ("NationsBank (DE)") and a direct wholly owned subsidiary of NationsBank Corporation, a North Carolina corporation ("NationsBank"), BankAmerica Corporation, a Delaware corporation ("BankAmerica"), and Bankers Trust Company, as Trustee (the "Trustee") under the Indenture referred to herein; WHEREAS, BankAmerica and the Trustee heretofore executed and delivered a Junior Subordinated Indenture, dated as of November 27, 1996 (the "Indenture"); and WHEREAS, pursuant to the Indenture BankAmerica issued and the Trustee authenticated and delivered one or more series of BankAmerica's Notes (the "Securities"); and WHEREAS, NationsBank and BankAmerica have entered into the Agreement and Plan of Reorganization, dated as of April 10, 1998, pursuant to which (i) NationsBank will merge (the "Reincorporation Merger") with and into NationsBank (DE), in accordance with the terms and conditions of the Plan of Reincorporation Merger by and between NationsBank and NationsBank (DE), dated as of August 3, 1998, with NationsBank (DE) as the surviving corporation in the Reincorporation Merger, and (ii) BankAmerica will thereafter merge (the "Merger," and together with the Reincorporation Merger, the "Reorganization")with and into NationsBank (DE), with NationsBank (DE) as the surviving corporation in the Merger; and WHEREAS, the Reorganization is expected to be consummated on September 30, 1998; and WHEREAS, Section 8.1 of the Indenture provides that in the case of the Reorganization, NationsBank (DE) shall expressly assume by supplemental indenture all the obligations under the Securities and the Indenture on the part of BankAmerica to be performed or observed; and WHEREAS, Section 9.1 of the Indenture provides that BankAmerica and the Trustee may amend the Indenture and the Securities without notice to or consent of any Holders of the Securities in order to comply with Article VIII of the Indenture; and WHEREAS, this First Supplemental Indenture has been duly authorized by all necessary corporate action on the part of each of NationsBank (DE) and BankAmerica. NOW, THEREFORE, NationsBank (DE), BankAmerica and the Trustee agree as follows for the equal and ratable benefit of the Holders of the Securities: 2 ARTICLE I ASSUMPTION BY SUCCESSOR CORPORATION SECTION 1.1. Assumption of the Securities. NationsBank (DE) hereby expressly assumes the due and punctual payment of the principal of (and premium, if any) and interest (including any Additional Interest) on all the Securities and the performance of every covenant of the Indenture on the part of BankAmerica to be performed or observed. SECTION 1.2. Trustee's Acceptance. The Trustee hereby accepts this First Supplemental Indenture and agrees to perform the same under the terms and conditions set forth in the Indenture. ARTICLE II MISCELLANEOUS SECTION 2.1. Effect of Supplemental Indenture. Upon the later to occur of (i) the execution and delivery of this First Supplemental Indenture by NationsBank (DE), BankAmerica and the Trustee and (ii) the consummation of the Reorganization, the Indenture shall be supplemented in accordance herewith, and this First Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Securities heretofore or hereafter authenticated and delivered under the Indenture shall be bound thereby. SECTION 2.2. Indenture Remains in Full Force and Effect. Except as supplemented hereby, all provisions in the Indenture shall remain in full force and effect. SECTION 2.3. Indenture and Supplemental Indenture Construed Together. This First Supplemental Indenture is an indenture supplemental to and in implementation of the Indenture, and the Indenture and this First Supplemental Indenture shall henceforth be read and construed together. SECTION 2.4. Confirmation and Preservation of Indenture. The Indenture as supplemented by this First Supplemental Indenture is in all respects confirmed and preserved. SECTION 2.5. Conflict with Trust Indenture Act. If any provision of this First Supplemental Indenture limits, qualifies or conflicts with any provision of the Trust Indenture Act ("TIA") that is required under the TIA to be part of and govern any provision of this First Supplemental Indenture, the provision of the TIA shall control. If any provision of this First Supplemental Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the provision of the TIA shall be deemed to apply to the Indenture as so modified or to be excluded by this First Supplemental Indenture, as the case may be. 3 SECTION 2.6. Severability. In case any provision in this First Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 2.7. Terms Defined in the Indenture. All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Indenture. SECTION 2.8. Headings. The Article and Section headings of this First Supplemental Indenture have been inserted for convenience of reference only, are not to be considered part of this Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof. SECTION 2.9. Benefits of First Supplemental Indenture, etc. Nothing in this First Supplemental Indenture or the Securities, express or implied, shall give to any Person, other than the parties hereto and thereto and their successors hereunder and thereunder and the Holders of the Securities, any benefit of any legal or equitable right, remedy or claim under the Indenture, this First Supplemental Indenture or the Securities. SECTION 2.10. Successors. All agreements of NationsBank (DE) in this First Supplemental Indenture shall bind its successors. All agreements of the Trustee in this First Supplemental Indenture shall bind its successors. SECTION 2.11. Trustee Not Responsible for Recitals. The recitals contained herein shall be taken as the statements of BankAmerica and NationsBank (DE), and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to, and shall not be responsible for, the validity or sufficiency of this First Supplemental Indenture. SECTION 2.12. Certain Duties and Responsibilities of the Trustees. In entering into this First Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture relating to the conduct or affecting the liability or affording protection to the Trustee, whether or not elsewhere herein so provided. SECTION 2.13. Governing Law. This First Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the jurisdiction which govern the Indenture and its construction. SECTION 2.14. Counterpart originals. The parties may sign any number of copies of this First Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 4 IN WITNESS WHEREOF, the parties have caused this First Supplemental Indenture to be duly executed as of the date first written above. NationsBank (DE) Corporation By: /s/ John E. Mack ------------------------------------ Name: John E. Mack Title: Senior Vice President Attest: /s/ James W. Kiser - -------------------------------- Secretary BankAmerica Corporation By: /s/ S.M. Maguire ------------------------------------ Name: S.M. Maguire Title: Senior Vice President and Assistant Treasurer Attest: /s/ Cheryl Sorokin - -------------------------------- Secretary Bankers Trust Company, as Trustee By: /s/ Ednora G. Linares ------------------------------------ Name: Ednora G. Linares Title: Assistant Vice President Attest: /s/ Marc Parilla - -------------------------------- Marc Parilla Assistant Treasurer 5 EX-4 17 EXHIBIT 4(AA) - -------------------------------------------------------------------------------- BANKAMERICA CORPORATION to BANKERS TRUST COMPANY Trustee ---------- JUNIOR SUBORDINATED INDENTURE Dated as or December 20, 1996 ---------- - -------------------------------------------------------------------------------- BANKAMERICA CORPORATION Reconciliation and tie between the Trust Indenture Act of 1939 (including cross-references to provisions of Sections 310 to and including 317 which, pursuant to Section 318(c) of the Trust Indenture Act of 1939, as amended by the Trust Reform Act of 1990, are a part of and govern the Indenture whether or not physically contained therein) and the Junior Subordinated Indenture, dated as of December 20, 1996. Trust Indenture Indenture Act Section Section ----------- ------- ss. 310 (a) (1), (2) and (5) ................................ 6.9 (a) (3) ............................................. Not Applicable (a) (4) ............................................. Not Applicable (b) ................................................. 6.8 ..................................................... 6.10. (c) ................................................. Not Applicable ss. 311 (a) ................................................. 6.13(a) (b) ................................................. 6.13(b) (b) (2) ............................................. 7.3(a) (2) ..................................................... 7.3(a) (2) ss. 312 (a) ................................................. 7.1 ..................................................... 7.2(a) (b) ................................................. 7.2(b) (c) ................................................. 7.2(c) ss. 313 (a) ................................................. 7.3(a) (b) ................................................. 7.3(b) (c) ................................................. 7.3(a), 7.3(b) (d) ................................................. 7.3(c) ss. 314 (a) (1), (2) and (3) ................................ 7.4 (a) (4) ............................................. 10.5 (b) ................................................. Not Applicable (c) (1) ............................................. 1.2 (c) (2) ............................................. 1.2 (c) (3) ............................................. Not Applicable (d) ................................................. Not Applicable (e) ................................................. 1.2 (f) ................................................. Not Applicable ss. 315 (a) ................................................. 6.1(a) (b) ................................................. 6.2 ..................................................... 7.3(a) (6) (c) ................................................. 6.1(b) (d). ................................................ 6.1(c) (d) (1).............................................. 6.1(a) (1) (d) (2).............................................. 6.1(c) (2) (d) (3) ............................................. 6.1(c) (3) (e) ................................................. 5.14 ss. 316 (a) ................................................. 1.1 (a) (1) (A) ......................................... 5.12 (a) (1) (B) ......................................... 5.13 (a) (2) ............................................. Not Applicable (b) ................................................. 5.8 (c) ................................................. 1.4(f) ss. 317 (a) (1) ............................................. 5.3 (a) (2) ............................................. 5.4 (b) ................................................. 10.3 ss. 318 (a) ................................................. 1.7 ---------- - ---------- Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Junior Subordinated Indenture. ii TABLE OF CONTENTS ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 1.1. Definitions ........................................... 1 SECTION 1.2. Compliance Certificate and Opinions ................... 9 SECTION 1.3. Forms of Documents Delivered to Trustee ............... 10 SECTION 1.4. Acts of Holders ....................................... 11 SECTION 1.5. Notices, Etc. to Trustee and Company .................. 13 SECTION 1.6. Notice to Holders; Waiver ............................. 13 SECTION 1.7. Conflict with Trust Indenture Act ..................... 13 SECTION 1.8. Effect of Headings and Table of Contents .............. 14 SECTION 1.9. Successors and Assigns ................................ 14 SECTION 1.10. Separability Clause ................................... 14 SECTION 1.11. Benefits of Indenture ................................. 14 SECTION 1.12. Governing Law ......................................... 14 SECTION 1.13. Non-Business Days ..................................... 14 ARTICLE II SECURITY FORMS SECTION 2.1. Forms Generally ....................................... 15 SECTION 2.2. Form of Face of Security .............................. 15 SECTION 2.3. Form of Reverse of Security ........................... 19 SECTION 2.4. Additional Provisions Required in Global Security ..... 22 SECTION 2.5. Form of Trustee's Certificate of Authentication ....... 23 ARTICLE III THE SECURITIES SECTION 3.1. Title and Terms ....................................... 23 SECTION 3.2. Denominations ......................................... 26 SECTION 3.3. Execution, Authentication, Delivery and Dating ........ 26 SECTION 3.4. Temporary Securities .................................. 27 SECTION 3.5. Registration, Transfer and Exchange ................... 28 SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities ...... 29 SECTION 3.7. Payment of Interest; Interest Rights Preserved ........ 30 SECTION 3.8. Persons Deemed Owners ................................. 31 SECTION 3.9. Cancellation .......................................... 32 SECTION 3.10. Computation of Interest ............................... 32 SECTION 3.11. Deferrals of Interest Payment Dates ................... 32 SECTION 3.12. Right of Set-Off ...................................... 33 SECTION 3.13. Agreed Tax Treatment .................................. 33 SECTION 3.14. Shortening or Extension of Stated Maturity ............ 34 iii Page SECTION 3.15. CUSIP Numbers ......................................... 34 ARTICLE IV SATISFACTION AND DISCHARGE SECTION 4.1. Satisfaction and Discharge of Indenture ............... 34 SECTION 4.2. Application of Trust Money ............................ 35 ARTICLE V REMEDIES SECTION 5.1. Events of Default ..................................... 36 SECTION 5.2. Acceleration of Maturity; Rescission and Annulment .... 37 SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee .......................................... 38 SECTION 5.4. Trustee May File Proofs of Claim ...................... 39 SECTION 5.5. Trustee May Enforce Claim Without Possession of Securities ....................................... 39 SECTION 5.6. Application of Money Collected ........................ 40 SECTION 5.7. Limitation on Suits ................................... 40 SECTION 5.8. Unconditional Right of Holders to Receive Principal Premium and Interest; Direct Action by Holders of Preferred Securities .................. 41 SECTION 5.9. Restoration of Rights and Remedies .................... 41 SECTION 5.10. Rights and Remedies Cumulative ........................ 41 SECTION 5.11. Delay or Omission Not Waiver .......................... 42 SECTION 5.12. Control by Holders .................................... 42 SECTION 5.13. Waiver of Past Defaults ............................... 42 SECTION 5.14. Undertaking for Costs ................................. 43 SECTION 5.15. Waiver of Usury, Stay or Extension Laws ............... 43 ARTICLE VI THE TRUSTEE SECTION 6.1. Certain Duties and Responsibilities ................... 43 SECTION 6.2. Notice of Defaults .................................... 45 SECTION 6.3. Certain Rights of Trustee ............................. 45 SECTION 6.4. Not Responsible for Recitals or Issuance of Securities .......................................... 46 SECTION 6.5. May Hold Securities ................................... 46 SECTION 6.6. Money Held in Trust ................................... 46 SECTION 6.7. Compensation and Reimbursement ........................ 47 SECTION 6.8. Disqualification; Conflicting Interests ............... 47 SECTION 6.9. Corporate Trustee Required; Eligibility ............... 47 SECTION 6.10. Resignation and Removal; Appointment of Successor ..... 48 SECTION 6.11. Acceptance of Appointment by Successor ................ 49 SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business ......................................... 50 SECTION 6.13. Preferential Collection of Claims Against Company ..... 51 iv Page SECTION 6.14. Appointment of Authenticating Agent ................... 51 ARTICLE VII HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 7.1. Company to Furnish Trustee Names and Addresses of Holders .......................................... 53 SECTION 7.2. Preservation of Information, Communications to Holders .......................................... 53 SECTION 7.3. Reports by Trustee .................................... 53 SECTION 7.4. Reports by Company .................................... 54 ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 8.1. Company May Consolidate, Etc., Only on Certain Terms .. 54 SECTION 8.2. Successor Corporation Substituted ..................... 55 ARTICLE IX SUPPLEMENTAL INDENTURES SECTION 9.1. Supplemental Indentures without Consent of Holders .... 56 SECTION 9.2. Supplemental Indentures with Consent of Holders ....... 57 SECTION 9.3. Execution of Supplemental Indentures .................. 58 SECTION 9.4. Effect of Supplemental Indentures ..................... 58 SECTION 9.5. Conformity with Trust Indenture Act ................... 58 SECTION 9.6. Reference in Securities to Supplemental Indentures .... 58 ARTICLE X COVENANTS SECTION 10.1. Payment of Principal, Premium and Interest ............ 59 SECTION 10.2. Maintenance of Office or Agency ....................... 59 SECTION 10.3. Money for Security Payments to be Held in Trust ..... 59 SECTION 10.4. Statement as to Compliance ........................... 61 SECTION 10.5. Waiver of Certain Covenants ........................... 61 SECTION 10.6. Additional Sums ....................................... 61 SECTION 10.7. Additional Covenants .................................. 62 SECTION 10.8. Original Issue Discount ............................... 62 ARTICLE XI REDEMPTION OF SECURITIES SECTION 11.1. Applicability of This Article ......................... 63 SECTION 11.2. Election to Redeem; Notice to Trustee ................. 63 SECTION 11.3. Selection of Securities to be Redeemed ................ 63 v Page SECTION 11.4. Notice of Redemption .................................. 64 SECTION 11.5. Deposit of Redemption Price ........................... 65 SECTION 11.6. Payment of Securities Called for Redemption ........... 65 SECTION 11.7. Right of Redemption of Securities Initially Issued to a BankAmerica Trust ....................... 66 ARTICLE XII SINKING FUNDS SECTION 12.1. Applicability of Article .............................. 66 SECTION 12.2. Satisfaction of Sinking Fund Payments with Securities.. 66 SECTION 12.3. Redemption of Securities for Sinking Fund ............. 67 ARTICLE XIII SUBORDINATION OF SECURITIES SECTION 13.1. Securities Subordinate to Senior Indebtedness ......... 68 SECTION 13.2. No Payment When Senior Indebtedness in Default; Payment Over of Proceeds Upon Dissolution, Etc ...... 68 SECTION 13.3. Payment Permitted If No Default ....................... 70 SECTION 13.4. Subrogation to Rights of Holders of Senior Indebtedness ........................................ 70 SECTION 13.5. Provisions Solely to Define Relative Rights ........... 71 SECTION 13.6. Trustee to Effectuate Subordination ................... 71 SECTION 13.7. No Waiver of Subordination Provisions ................. 71 SECTION 13.8. Notice to Trustee ..................................... 72 SECTION 13.9. Reliance on Judicial Order or Certificate of Liquidating Agent ................................... 72 SECTION 13.10. Trustee Not Fiduciary for Holders of Senior Indebtedness ........................................ 73 SECTION 13.11. Rights of Trustee as Holder of Senior Indebtedness; Preservation of Trustee's Rights ...... 73 SECTION 13.12. Article Applicable to Paying Agents ................... 73 ANNEX A - Form of Trust Agreement ANNEX B - Form of Amended and Restated Trust Agreement ANNEX C - Form of Guarantee Agreement vi JUNIOR SUBORDINATED INDENTURE, dated as of December 20, 1996, 1996, between BANKAMERICA CORPORATION, a Delaware corporation (hereinafter called the "Company") having its principal office at 555 California Street, San Francisco, California 94104, and Bankers Trust Company, a New York banking corporation, as Trustee (hereinafter called the "Trustee"). RECITALS OF THE COMPANY The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured junior subordinated debt securities in series (hereinafter called the "Securities") of substantially the tenor hereinafter provided, including, without limitation, Securities issued to evidence loans made to the Company of the proceeds from the issuance from time to time by one or more business trusts (each a "BankAmerica Trust," and, collectively, the "BankAmerica Trusts") of preferred trust interests in such Trusts (the "Preferred Securities") and common interests in such Trusts (the "Common Securities" and, collectively with the Preferred Securities, the "Trust Securities"), and to provide the terms and conditions upon which the Securities are to be authenticated, issued and delivered. All things necessary to make the Securities, when executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid obligations of the Company, and to make this Indenture a valid agreement of the Company, in accordance with their and its terms, have been done. NOW THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities or of any series thereof, as follows: ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 1.1. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) The terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; (2) All other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (3) All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles which are generally accepted at the date or time of such computation; provided, that when two or more principles are so generally accepted, it shall mean that set of principles consistent with those in use by the Company: and (4) The words "herein," "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. "Act" when used with respect to any Holder has the meaning specified in Section 1.4. "Additional Interest" means the interest, if any, that shall accrue on any interest on the Securities of any series the payment of which has not been made on the applicable Interest Payment Date and which shall accrue at the rate per annum specified or determined as specified in such Security. "Additional Sums" has the meaning specified in Section 10.6. "Additional Taxes" means the sum of any additional taxes, duties and other governmental charges to which a BankAmerica Trust has become subject from time to time as a result of a Tax Event. "Administrative Trustee" means, in respect of any BankAmerica Trust, each Person identified as an "Administrative Trustee" in the related Trust Agreement, solely in such Person's capacity as Administrative Trustee of such BankAmerica Trust under such Trust Agreement and not in such Person's individual capacity, or any successor administrative trustee appointed as therein provided. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person; provided, however, no BankAmerica Trust to which Securities have been issued shall be deemed to be an Affiliate of the Company. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Allocable Amounts," when used with respect to any Senior Subordinated Debt, means the amount necessary to pay all principal (and premium, if any) and interest, if any, on such Senior Subordinated Debt in full less, if applicable, any portion of such amount which would have been paid to, and retained by, the holders of such Senior Subordinated Debt (whether as a result of the receipt of payments by the holders of such Senior Subordinated Debt from the Company or any other obligor thereon or from any holders of, or trustee in respect of, other indebtedness that is subordinate and junior in right of payment to such Senior Subordinated Debt pursuant to any provision of such indebtedness for the payment over of amounts received on account of such indebtedness to the holders of such Senior Subordinated Debt) but for the fact that such Senior 2 Subordinated Debt is subordinate or junior in right of payment to trade accounts payable or accrued liabilities arising in the ordinary course of business. "Authenticating Agent" means any Person authorized by the Trustee pursuant to Section 6.14 to act on behalf of the Trustee to authenticate Securities of one or more series. "BankAmerica Guarantee" means the guarantee by the Company of distributions on the Preferred Securities (which includes any similar preferred securities) of a BankAmerica Trust (which includes any similar trust) to the extent provided in the Guarantee Agreement (which includes any similar guarantee agreement). "BankAmerica Trust" has the meaning specified in the first recital of this Indenture. "Board of Directors" means either the board of directors of the Company or any executive committee or other committee of that board duly authorized to act hereunder. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors, or officers of the Company to which authority to act on behalf of the Board of Directors has been delegated, and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day" means any day other than (i) a Saturday or Sunday, (ii) a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office of the Trustee, or, with respect to the Securities of a series initially issued to a BankAmerica Trust, the principal office of the Property Trustee under the related Trust Agreement, is closed for business. "Capital Treatment Event" means, with respect to an issue of Preferred Securities under the related Trust Agreement, the reasonable determination by the Company (as evidenced by an Officers' Certificate delivered to the Trustee) that, as a result of the occurrence of any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision thereof or therein, or as a result of any official or administrative pronouncement or action or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or such pronouncement, action or decision is announced on or after the Original Issue Date of such Preferred Securities, there is more than an insubstantial risk that the Company will not be entitled to treat an amount equal to the Liquidation Amount of such Preferred Securities as "Tier I Capital" (or the then equivalent thereof) for purposes of the capital adequacy guidelines of the Federal Reserve, as then in effect and applicable to the Company. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. "Common Securities" has the meaning specified in the first recital of this Indenture. 3 "Common Stock" means the common stock, par value $ 1.5625 per share, of the Company. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor corporation shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor corporation. "Company Request" and "Company Order" mean, respectively, the written request or order signed in the name of the Company by the Chairman of the Board of Directors, the Chairman of the Executive Committee of the Board of Directors, a Vice Chairman of the Board of Directors, the Chief Executive Officer, the President, the Chief Operating Officer, a Vice Chairman or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, and delivered to the Trustee. "Corporate Trust Office" means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office as of the date of this Indenture is located at Four Albany Street, New York, New York 10006, Attention: Corporate Trust and Agency Group--Corporate Market Services. "Corporation" includes a corporation, association, company, joint-stock company or business trust. "Defaulted Interest" has the meaning specified in Section 3.7. "Depository" means, with respect to the Securities of any series issuable or issued in whole or in part in the form of one or more Global Securities, the Person designated as Depository by the Company pursuant to Section 3.1 with respect to such series (or any successor thereto). "Discount Security" means any security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.2. "Distributions," with respect to the Trust Securities issued by a BankAmerica Trust, means amounts payable in respect of such Trust Securities as provided in the related Trust Agreement and referred to therein as "Distributions." "Dollar" means the currency of the United States of America that, as at the time of payment, is legal tender for the payment of public and private debts. "Event of Default" unless otherwise specified in the supplemental indenture creating a series of Securities has the meaning specified in Article V. "Exchange Act" means the Securities Exchange Act of 1934 and any statute successor thereto, in each case as amended from time to time. "Extension Period' has the meaning specified in Section 3.11. 4 "Federal Reserve" means the Board of Governors of the Federal Reserve System. "Global Security" means a Security in the form prescribed in Section 2.4 evidencing all or part of a series of Securities, issued to the Depository or its nominee for such series, and registered in the name of such Depository or its nominee. "Guarantee Agreement" means the Guarantee Agreement substantially in the form attached hereto as Annex C, or substantially in such form as may be specified as contemplated by Section 3.1 with respect to the Securities of any series, in each case as amended from time to time. "Holder" means a Person in whose name a Security is registered in the Securities Register. "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and shall include the terms of each particular series of Securities established as contemplated by Section 3.1. "Interest Payment Date" means as to each series of Securities the Stated Maturity of an installment of interest on such Securities. "Junior Subordinated Debt" means any obligation of the Company to its creditors, whether now outstanding or subsequently incurred, where the instrument creating or evidencing the obligation or pursuant to which the obligation is outstanding provides that it is subordinated and junior in right of payment to Senior Indebtedness pursuant to subordination provisions substantially similar to those set forth in this Indenture. Junior Subordinated Debt includes the Securities and $463,918,000 aggregate principal amount of the Company's Junior Subordinated Deferrable Interest Debentures, Series A and $309,279,000 aggregate principal amount of the Company's Junior Subordinated Deferrable Interest Debentures, Series B. "Maturity" when used with respect to any Security means the date on which the principal of such Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise. "Moody's" means Moody's Investors Service, Inc. "Notice of Default" means a written notice of the kind specified in Section 5.1(3). "Officers' Certificate" means a certificate signed by the Chairman of the Board of Directors, a Vice Chairman of the Board of Directors, the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, and delivered to the Trustee. "Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Company, and who shall be acceptable to the Trustee. 5 "Original Issue Date" means the date of issuance specified as such in each Security. "Outstanding" means, when used in reference to any Securities, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: (i) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (ii) Securities for whose payment money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent in trust for the Holders of such Securities; and (iii) Securities in substitution for or in lieu of which other Securities have been authenticated and delivered or which have been paid pursuant to Section 3.6, unless proof satisfactory to the Trustee is presented that any such Securities are held by Holders in whose hands such Securities are valid, binding and legal obligations of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which a Responsible Officer of the Trustee knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor. Upon the written request of the Trustee, the Company shall furnish to the Trustee promptly an Officers' Certificate listing and identifying all Securities, if any, known by the Company to be owned or held by or for the account of the Company, or any other obligor on the Securities or any Affiliate of the Company or such obligor, and, subject to the provisions of Section 6.1, the Trustee shall be entitled to accept such Officers' Certificate as conclusive evidence of the facts therein set forth and of the fact that all Securities not listed therein are Outstanding for the purpose of any such determination. "Paying Agent" means the Trustee or any Person authorized by the Company to pay the principal of (and premium, if any) or interest on any Securities on behalf of the Company. "Person" means any individual, corporation, partnership, joint venture, trust, unincorporated organization or government or any agency or political subdivision thereof. "Place of Payment" means, with respect to the Securities of any series, the place or places where the principal of (and premium, if any) and interest on the Securities of such series are payable pursuant to Sections 3.1 and 3.11. 6 "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any security authenticated and delivered under Section 3.6 in lieu of a lost, destroyed or stolen Security shall be deemed to evidence the same debt as the lost, destroyed or stolen Security. "Preferred Securities" has the meaning specified in the first recital of this Indenture. "Proceeding" has the meaning specified in Section 13.2. "Property Trustee" means, in respect of any BankAmerica Trust, the commercial bank or trust company identified as the "Property Trustee" in the related Trust Agreement, solely in its capacity as Property Trustee of such BankAmerica Trust under such Trust Agreement and not in its individual capacity, or its successor in interest in such capacity, or any successor property trustee appointed as therein provided. "Redemption Date," when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price," when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. "Regular Record Date" for the interest payable on any Interest Payment Date with respect to the Securities of a series means, unless otherwise provided pursuant to Section 3.1 with respect to Securities of a series, the date which is fifteen days next preceding such Interest Payment Date (whether or not a Business Day). "Responsible Officer" means when used with respect to the Trustee, any officer assigned to the Corporate Trust Office, including any managing director, vice president, assistant vice president, assistant treasurer, assistant secretary or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers, and also, with respect to a particular matter, any other officer, to whom such matter is referred because of such officer's knowledge of and familiarity with the particular subject. "Rights Plan" means a plan of the Company providing for the issuance by the Company to all holders of its Common Stock of rights entitling the holders thereof to subscribe for or purchase shares of Common Stock or any class or series of preferred stock, which rights (i) are deemed to be transferred with such shares of Common Stock, (ii) are not exercisable and (iii) are also issued in respect of future issuances of Common Stock, in each case until the occurrence of a specified event or events. "S&P" means Standard & Poor's Ratings Services. "Securities" or "Security" means any debt securities or debt security, as the case may be, authenticated and delivered under this Indenture. 7 "Securities Register" and "Securities Registrar" have the respective meanings specified in Section 3.5. "Senior Debt" means any obligation of the Company to its creditors, whether now outstanding or subsequently incurred, other than any obligation as to which, in the instrument creating or evidencing the obligation or pursuant to which the obligation is outstanding, it is provided that such obligation is not Senior Debt. Senior Debt does not include Senior Subordinated Debt or Junior Subordinated Debt. "Senior Indebtedness" means (i) Senior Debt (but excluding trade accounts payable and accrued liabilities arising in the ordinary course of business) and (ii) the Allocable Amounts of Senior Subordinated Debt. "Senior Subordinated Debt" means any obligation of the Company to its creditors, whether now outstanding or subsequently incurred, where the instrument creating or evidencing the obligation or pursuant to which the obligation is outstanding, provides that it is subordinate and junior in right of payment to Senior Debt pursuant to subordinated provisions substantially similar to those applicable to the Company's outstanding Senior Subordinated Debt. Senior Subordinated Debt includes the indebtedness of the Company issued under the Subordinated Indenture between the Company and Chemical Trust Company of California, as successor trustee, dated as of June 15, 1984, as amended by the First Supplemental Indenture, dated as of May 15, 1987, and as further amended by the Second Supplemental Indenture, dated as of September 30, 1987; the Subordinated Indenture between the Company and Bankers Trust Company, as trustee, dated as of July 15, 1988; the Subordinated Indenture between the Company and Chemical Trust Company of California, as successor trustee, dated as of September 1, 1990; the Subordinated Indenture between the Company and Chemical Trust Company of California, as successor trustee, dated as of November 1, 1991, as amended by the First Supplemental Indenture, dated as of September 8, 1992; the Subordinated Indenture between the Company's predecessor and The Chase Manhattan Bank, as successor trustee, dated as of March 15, 1987, as amended by the First Supplemental Indenture, dated as of April 22, 1992; the Subordinated Indenture between the Company's predecessor and The First National Bank of Chicago, as trustee, dated as of December 10, 1990, as amended by the First Supplemental Indenture, dated as of April 22, 1992. "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.7. "Stated Maturity" when used with respect to any Security or any installment of principal thereof or interest thereon means the date specified pursuant to the terms of such Security as the date on which the principal of such Security or such installment of interest is due and payable, in the case of such principal, as such date may be shortened or extended as provided pursuant to the terms of such Security and this Indenture. "Subsidiary" means a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries. For purposes of this definition, "voting stock" 8 means stock which ordinarily has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency. "Tax Event" means the receipt by a BankAmerica Trust of an Opinion of Counsel (as defined in the relevant Trust Agreement) experienced in such matters to the effect that as a result of any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or which pronouncement or decision is announced on or after the date of issuance of the Preferred Securities of such BankAmerica Trust, there is more than an insubstantial risk that (i) such BankAmerica Trust is, or will be within 90 days of the date of such Opinion of Counsel, subject to United States Federal income tax with respect to income received or accrued on the corresponding series of Securities issued by the Company to such BankAmerica Trust, (ii) interest payable by the Company on such corresponding series of Securities is not, or within 90 days of the date of such Opinion of Counsel, will not be, deductible by the Company, in whole or in part, for United States Federal income tax purposes or (iii) such BankAmerica Trust is, or will be within 90 days of the date of such Opinion of Counsel, subject to more than a de minimis amount of other taxes, duties or other governmental charges. "Trust Agreement" means the Trust Agreement substantially in the form attached hereto as Annex A, as amended by the form of Amended and Restated Trust Agreement substantially in the form attached hereto as Annex B, or substantially in such form as may be specified as contemplated by Section 3.1 with respect to the Securities of any series, in each case as amended from time to time. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person who is then a Trustee hereunder and, if at any time there is more than one such Person, "Trustee" as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series. "Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.77aaa-77bbb), as amended and as in effect on the date as of this Indenture, except as provided in Section 9.5. "Trust Securities" has the meaning specified in the first recital of this Indenture. "Vice President" when used with respect to the Company, means any duly appointed vice president, whether or not designated by a number or a word or words added before or after the title "vice president." SECTION 1.2. Compliance Certificate and Opinions. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent (including covenants, compliance with which constitutes a condition precedent), if any, provided for in this Indenture relating to the proposed action have 9 been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent (including covenants compliance with which constitute a condition precedent), if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than the certificates provided pursuant to Section 10.4) shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. SECTION 1.3. Forms of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions, or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. 10 SECTION 1.4. Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given to or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments is or are delivered to the Trustee, and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 6.1) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a Person acting in other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. (c) The fact and date of the execution by any Person of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient and in accordance with such reasonable rules as the Trustee may determine. (d) The ownership of Securities shall be proved by the Securities Register. (e) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the transfer thereof or in exchange therefor or in lieu thereof in respect of anything done or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security. (f) The Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities of any series entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders of Securities of such series, provided that the Company may not set a record date for, and the provisions of this paragraph shall not apply with respect to, the giving or making of any notice, declaration, request or direction referred to in the next paragraph. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities of the relevant series on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date, provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date (as hereinafter in this Section 1.4(f) provided) by Holders of the requisite principal amount of Outstanding Securities of such series on such record date. Nothing 11 in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of Outstanding Securities of the relevant series on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder of Securities of the relevant series in the manner set forth in Section 1.6. The Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Securities of any series entitled to join in the giving or making of (i) any Notice of Default, (ii) any declaration of acceleration referred to in Section 5.2, (iii) any request to institute proceedings referred to in Section 5.7(2) or (iv) any direction referred to in Section 5.12, in each case with respect to Securities of such series. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities of such series on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date, provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities of such series on such record date. Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of Outstanding Securities of the relevant series on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Company's expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Company in writing and to each Holder of Securities of the relevant series in the manner set forth in Section 1.6. With respect to any record date set pursuant to this Section, the party hereto which sets such record dates may designate any day as the "Expiration Date" and from time to time may change the Expiration Date to any earlier or later day, provided that no such change shall be effective unless notice of the proposed new Expiration Date is given to the other party hereto in writing, and to each Holder of Securities of the relevant series in the manner set forth in Section 10.6, on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section, the party hereto which set such record date shall be deemed to have initially designated the 180th day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the 180th day after the applicable record date. (g) Without limiting the foregoing, a Holder entitled hereunder to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount. 12 SECTION 1.5. Notices, Etc. to Trustee and Company. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Holder, any holder of Preferred Securities or the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust office, or (2) the Company by the Trustee, any Holder or any holder of Preferred Securities shall be sufficient for every purpose (except as otherwise provided in Section 5.1) hereunder if in writing and mailed, first class, postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this instrument or at any other address previously furnished in writing to the Trustee by the Company. SECTION 1.6. Notice to Holders; Waiver. Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first class postage prepaid, to each Holder affected by such event, at the address of such Holder as it appears in the Securities Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. In case, by reason of the suspension of or irregularities in regular mail service or for any other reason, it shall be impossible or impracticable to mail notice of any event to Holders when said notice is required to be given pursuant to any provision of this Indenture or of the relevant Securities, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. SECTION 1.7. Conflict with Trust Indenture Act. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by any of Sections 310 to 317, inclusive, of the Trust Indenture Act through operation of Section 318(c) thereof, such imposed duties shall control. 13 SECTION 1.8. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 1.9. Successors and Assigns. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. SECTION 1.10. Separability Clause. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 1.11. Benefits of Indenture. Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, the holders of Senior Indebtedness, the Holders of the Securities and, to the extent expressly provided in Sections 5.2, 5.8, 5.9, 5.11, 5.13, 9.1 and 9.2, the holders of Preferred Securities, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 1.12. Governing Law. This Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of California, except that the rights, duties and obligations of the Trustee shall be governed by and construed in accordance with the laws of the State of New York. SECTION 1.13. Non-Business Days. In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day, then (notwithstanding any other provision of this Indenture or the Securities) payment of interest or principal (and premium, if any) need not be made on such date, but may be made on the next succeeding Business Day (and no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, until such next succeeding Business Day except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day (in each case with the same force and effect as if made on the Interest Payment Date or Redemption Date or at the Stated Maturity). 14 ARTICLE II SECURITY FORMS SECTION 2.1. Forms Generally. The Securities of each series and the Trustee's certificate of authentication shall be in substantially the forms set forth in this Article, or in such other form or forms as shall be established by or pursuant to a Board Resolution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with applicable tax laws or the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such securities, as evidenced by their execution of the Securities. If the form of Securities of any series is established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 3.3 with respect to the authentication and delivery of such Securities. The Trustee's certificate of authentication shall be substantially in the form set forth in this Article. The definitive Securities shall be printed, lithographed or engraved or produced by any combination of these methods, if required by any securities exchange on which the Securities may be listed, on a steel engraved border or steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange on which the Securities may be listed, all as determined by the officers executing such Securities, as evidenced by their execution of such securities. SECTION 2.2. Form of Face of Security. THE SECURITIES EVIDENCED HEREBY ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK OR ANY NONBANK SUBSIDIARY OF THE COMPANY AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY. BANKAMERICA CORPORATION (Title of Security) No. $ BANKAMERICA CORPORATION, a corporation organized and existing under the laws of Delaware (hereinafter called the "Company", which term includes any successor corporation 15 under the Indenture hereinafter referred to), for value received, hereby promises to pay to ____________________, or registered assigns, the principal sum of ________________ Dollars on ___________________, ______ [; provided that the Company may(i) shorten the Stated Maturity of the principal of this Security to a date not earlier than ___________, and (ii) extend the Stated Maturity of the principal of this Security at any time on one or more occasions, subject to certain conditions specified in Section 3.14 of the Indenture, but in no event to a date later than_____________]. The Company further promises to pay interest on said principal sum from ____________, or from the most recent interest payment date (each such date, an "Interest Payment Date") on which interest has been paid or duly provided for, [monthly] [quarterly] [semi-annually] [if applicable, insert--(subject to deferral as set forth herein)] in arrears on [insert applicable Interest Payment Dates] of each year, commencing __________, at the rate of ___% per annum, until the principal hereof shall have become due and payable, [if applicable, insert--plus Additional Interest, if any,] until the principal hereof is paid or duly provided for or made available for payment [if applicable, insert--and on any overdue principal and (without duplication and to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the rate of ___% per annum, compounded [monthly] [quarterly] [semi-annually]]. The amount of interest payable for any period less than a full interest period shall be computed on the basis of twelve 30-day months and a 360-day year and the actual number of days elapsed in a partial month in a period. The amount of interest payable for any full interest period shall be computed by dividing the rate per annum by [twelve][four] [two]. [If applicable, insert-The interest payable on [first Interest Payment Date] shall be [$___.] In the event that any date on which interest is payable on this Security is not a Business Day, then a payment of the interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the date the payment was originally payable. A "Business Day" shall mean any day other than (i) a Saturday or Sunday, (ii) a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office of the Trustee [if applicable, insert--, or the principal office of the Property Trustee under the Trust Agreement hereinafter referred to for [BankAmerica Capital ,]] is closed for business. The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities is registered at the close of business on the Regular Record Date for such interest installment, which shall be the [insert definition of Regular Record Dates], except that interest payable on the Stated Maturity of the principal of this Security shall be paid to the Person to whom principal is paid. Any such interest installment not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. 16 [If applicable, insert--So long as no Event of Default has occurred and is continuing, the Company shall have the right at any time during the term of this Security to defer payment of interest on this Security, at any time or from time to time, for up to consecutive [monthly] [quarterly] [semi-annual] interest payment periods with respect to each deferral period (each an "Extension Period"), during which Extension Periods the Company shall have the right to make partial payments of interest on any Interest Payment Date, and at the end of which the Company shall pay all interest then accrued and unpaid (together with Additional Interest thereon to the extent permitted by applicable law); provided, however, that no Extension Period shall extend beyond the Stated Maturity of the principal of this Security; provided, further, that during any such Extension Period, the Company shall not, and shall not permit any Subsidiary of the Company to, (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of the Company's capital stock or (ii) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank pari passu in all respects with or junior in interest to this Security or make any guarantee payments with respect to any guarantee by the Company of the debt securities of any Subsidiaries of the Company if such guarantee ranks pari passu with or junior in interest to this Security (other than (a) dividends or distributions in Common Stock, (b) any declaration of a dividend in connection with the implementation of a Rights Plan, the issuance of any Common Stock or any class or series of preferred stock of the Company under any Rights Plan in the future or the redemption or repurchase of any rights distributed pursuant to a Rights Plan, (c) payments under any BankAmerica Guarantee, and (d) purchases of Common Stock related to the issuance of Common Stock or rights under any of the Company's (or its subsidiaries') benefit plans for their directors, officers or employees). Prior to the termination of any such Extension Period, the Company may further extend the interest payment period, provided that no Extension Period shall exceed _____ consecutive [months] [quarters] [semiannual periods] or extend beyond the Stated Maturity of the principal of this Security. Upon the termination of any such Extension Period and upon the payment of all amounts then due on any Interest Payment Date, the Company may elect to begin a new Extension Period, subject to the above requirements. No interest shall be due and payable during an Extension Period except at the end thereof. The Company shall give the Holder of this Security and the Trustee notice of its election to begin any Extension Period at least one Business Day prior to the next succeeding Interest Payment Date on which interest on this Security would be payable but for such deferral [if applicable, -insert: or, with respect to the Securities issued to a BankAmerica Trust, so long as such Securities are held by such BankAmerica Trust, prior to the earlier of (i) the next succeeding date on which Distributions on the Preferred Securities would be payable but for such deferral or (ii) the date the Administrative Trustees are required to give notice to any securities exchange or other applicable self-regulatory organization or to holders of such Preferred Securities of the record date or the date such Distributions are payable, but in any event not less than one Business Day prior to such record date]. For purposes hereof, neither the Company's Senior Debt nor its Senior Subordinated Debt shall be deemed to be pari passu with this Security. Payment of the principal of (and premium, if any) and interest on this Security will be made at the office or agency of the Company maintained for that purpose in the United States, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts [if applicable, insert--; provided, however, that at the option of the Company payment of interest may be made (i) by check mailed to the address of the 17 Person entitled thereto as such address shall appear in the Securities Register or (ii) by wire transfer in immediately available funds at such place and to such account as may be designated by the Person entitled thereto as specified in the Securities Register]. The indebtedness evidenced by this Security is, to the extent provided in the Indenture. subordinate and junior in right of payments to the prior payment in full of all Senior Indebtedness, and this Security is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by such provisions. (b) authorizes and directs the Trustee on his behalf to take such actions as may be necessary or appropriate to effectuate the subordination so provided and (c) appoints the Trustee his attorney-in-fact for any and all such purposes. Each Holder hereof, by his acceptance hereof, waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Indebtedness, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. 18 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. BANKAMERICA CORPORATION By: ___________________________ [President, Vice President, Treasurer or Assistant Treasurer] Attest: ___________________________ [Secretary or Assistant Secretary] SECTION 2.3. Form of Reverse of Security. This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under a Junior Subordinated Indenture, dated as of ____________, 1996 (herein called the "Indenture"), between the Company and Bankers Trust Company, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Trustee, the Company and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof [, limited in aggregate principal amount to $__________]. All terms used in this Security that are defined in the Indenture [if applicable, insert--or in the Amended and Restated Trust Agreement, dated as of __________________, as amended (the "Trust Agreement"), for [BankAmerica Capital ____________,] among BANKAMERICA CORPORATION, as Depositor, and the Trustees named therein, shall have the meanings assigned to them in the Indenture [if applicable, insert--or the Trust Agreement, as the case may be]. [If applicable, insert--The Company may at any time, at its option, on or after _________, _____, and subject to the terms and conditions of Article XI of the Indenture, redeem this Security in whole at any time or in part from time to time, without premium or penalty, at a redemption price equal to 100% of the principal amount thereof plus accrued and unpaid interest [if applicable, insert--including Additional Interest, if any] to the Redemption Date.] [If applicable, insert-The Company may, at its option, on or after _________, ____, and subject to the terms and conditions of Article XI of the Indenture, redeem this Security in whole at any time or in part from time to time, at the following Redemption Prices (expressed as percentages of the principal amount): If redeemed during the I 2-month period beginning_________, 19 Redemption Year Price ---- ----- and at 100% on or after _________, ____, together in the case of any such redemption with accrued interest to but excluding the date fixed for redemption.] [If applicable, insert--Upon the occurrence and during the continuation of a Tax Event or Capital Treatment Event in respect of a BankAmerica Trust, the Company may, at its option, [at any time][before _________, ____ and] within 90 days of the occurrence of such Tax Event or Capital Treatment Event redeem this Security, in whole but not in part, subject to the provisions of Section 11.7 and the other provisions of Article XI of the Indenture, at a redemption price equal to [describe formulation].] In the event of redemption of this Security in part only, a new Security or Securities of this series for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. The Indenture contains provisions for satisfaction and discharge of the entire indebtedness of this Security upon compliance by the Company with certain conditions set forth in the Indenture. The Indenture permits, with certain exceptions as therein provided, the Company and the Trustee at any time to enter into a supplemental indenture or indentures for the purpose of modifying in any manner the rights and obligations of the Company and of the Holders of the Securities, with the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of each series to be affected by such supplemental indenture. The Indenture also contains provisions permitting Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. [If the Security is not a Discount Security,--As provided in and subject to the provisions of the Indenture, if an Event of Default with respect to the Securities of this series at the time Outstanding occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of this series may declare the principal amount of all the Securities of this series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), provided that, in the 20 case of the Securities of this series issued to a BankAmerica Trust, if upon an Event of Default, the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of this series fails to declare the principal of all the Securities of this series to be immediately due and payable, the holders of at least 25% in aggregate Liquidation Amount of the Preferred Securities of such BankAmerica Trust then outstanding shall have such right by a notice in writing to the Company and the Trustee; and upon any such declaration the principal amount of and the accrued interest (including any Additional Interest) on all the Securities of this series shall become immediately due and payable, provided that the payment of principal and interest (including any Additional Interest) on such Securities shall remain subordinated to the extent provided in Article XIII of the Indenture.] [If the Security is a Discount Security,--As provided in and subject to the provisions of the Indenture, if an Event of Default with respect to the Securities of this series at the time Outstanding occurs and is continuing, then and in every such case the Trustee or the Holders of not less than such portion of the principal amount as may be specified in the terms of this series may declare an amount of principal of the Securities of this series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), provided that, in the case of the Securities of this series issued to a BankAmerica Trust, if upon an Event of Default, the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of this series fails to declare the principal of all the Securities of this series to be immediately due and payable, the holders of at least 25% in aggregate Liquidation Amount of the Preferred Securities of such BankAmerica Trust then outstanding shall have such right by a notice in writing to the Company and the Trustee. Such amount shall be calculated by the Company and shall be equal to--insert formula for determining the amount. Upon any such declaration, such amount of the principal of and the accrued interest (including any Additional Interest) on all the Securities of this series shall become immediately due and payable, provided that the payment of principal and interest (including any Additional Interest) on such Securities shall remain subordinated to the extent provided in Article XIII of the Indenture. Upon payment (i) of the amount of principal so declared due and payable and (ii) of interest on any overdue principal and overdue interest (in each case to the extent that the payment of such interest shall be legally enforceable), all of the Company's obligations in respect of the payment of the principal of and interest, if any, on this Security shall terminate.] No reference herein to the indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Securities Register, upon surrender of this Security for registration of transfer at the office or agency of the Company maintained under Section 10.2 of the Indenture duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. No service charge shall be made for any such registration of 21 transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee shall treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. The Securities of this series are issuable only in registered form without coupons in minimum denominations of $[25] and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of such series of a different authorized denomination, as requested by the Holder surrendering the same. The Company and, by its acceptance of this Security or a beneficial interest therein, the Holder of, and any Person that acquires a beneficial interest in, this Security agree that for United States Federal, state and local tax purposes it is intended that this Security constitute indebtedness. THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, EXCEPT THAT THE RIGHTS, DUTIES AND OBLIGATIONS OF THE TRUSTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SECTION 2.4. Additional Provisions Required in Global Security. Any Global Security issued hereunder shall, in addition to the provisions contained in Sections 2.2 and 2.3, bear a legend in substantially the following form: "THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY." 22 SECTION 2.5. Form of Trustee's Certificate of Authentication. This is one of the Securities referred to in the within mentioned Indenture. Dated: Bankers Trust Company as Trustee By: ___________________________ Authorized Signatory ARTICLE III THE SECURITIES SECTION 3.1. Title and Terms. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more series. There shall be established in or pursuant to a Board Resolution, and set forth in an Officers' Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of a series: (a)the title of the securities of such series, which shall distinguish the Securities of the series from all other Securities; (b)the limit, if any, upon the aggregate principal amount of the Securities of such series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 3.4, 3.5, 3.6, 9.6 or 11.6 and except for any Securities which, pursuant to Section 3.3, are deemed never to have been authenticated and delivered hereunder); provided, however, that the authorized aggregate principal amount of such series may be increased above such amount by a Board Resolution to such effect; (c)the Stated Maturity or Maturities on which the principal of the Securities of such series is payable or the method of determination thereof; (d)the rate or rates, if any, at which the Securities of such series shall bear interest, if any, the rate or rates and extent to which Additional Interest, if any, shall be payable in respect of any Securities of such series, the Interest Payment Dates on which such interest shall be payable, the right, pursuant to Section 3.11 or as otherwise set forth therein, of the Company to defer or extend an Interest Payment Date, and the Regular Record Date for the interest payable on any Interest Payment Date or the method by which any of the foregoing shall be determined; 23 (e)the place or places where the principal of (and premium, if any) and interest on the Securities of such series shall be payable, the place or places where the Securities of such series may be presented for registration of transfer or exchange, and the place or places where notices and demands to or upon the Company in respect of the Securities of such series may be made; (f) the period or periods within or the date or dates on which, if any, the price or prices at which and the terms and conditions upon which the Securities of such series may be redeemed, in whole or in part, at the option of the Company; (g) the obligation or the right, if any, of the Company to redeem, repay or purchase the Securities of such series pursuant to any sinking fund, amortization or analogous provisions, or at the option of a Holder thereof, and the period or periods within which, the price or prices at which, the currency or currencies (including currency unit or units) in which and the other terms and conditions upon which Securities of the series shall be redeemed, repaid or purchased, in whole or in part, pursuant to such obligation; (h) the denominations in which any Securities of such series shall be issuable, if other than denominations of $25 and any integral multiple thereof; (i) if other than Dollars, the currency or currencies (including currency unit or units) in which the principal of (and premium, if any) and interest, if any, on the Securities of the series shall be payable, or in which the Securities of the series shall be denominated and the manner of determining the equivalent thereof in Dollars for purposes of the definition of Outstanding; j) the additions, modifications or deletions, if any, in the Events of Default or covenants of the Company set forth herein with respect to the Securities of such series; (k) if other than the principal amount thereof, the portion of the principal amount of Securities of such series that shall be payable upon declaration of acceleration of the Maturity thereof; (1) the additions or changes, if any, to this Indenture with respect to the Securities of such series as shall be necessary to permit or facilitate the issuance of the Securities of such series in bearer form, registrable or not registrable as to principal, and with or without interest coupons; (m) any index or indices used to determine the amount of payments of principal of and premium, if any, on the Securities of such series or the manner in which such amounts will be determined; (n) whether the Securities of the series, or any portion thereof, shall initially be issuable in the form of a temporary Global Security representing all or such portion of the Securities of such series and provisions for the exchange of such temporary Global Security for definitive Securities of such series; (o) if applicable, that any Securities of the series shall be issuable in whole or in part in the form of one or more Global Securities and, in such case, the respective Depositories for such 24 Global Securities, the form of any legend or legends which shall be borne by any such Global Security in addition to or in lieu of that set forth in Section 2.4 and any circumstances in addition to or in lieu of those set forth in Section 3.5 in which any such Global Security may be exchanged in whole or in part for Securities registered, and any transfer of such Global Security in whole or in part may be registered, in the name or names of Persons other than the Depository for such Global Security or a nominee thereof; (p) the appointment of any Paying Agent or Agents for the Securities of such series; (q) the terms of any right to convert or exchange Securities of such series into any other securities or property of the Company, and the additions or changes, if any, to this Indenture with respect to the Securities of such series to permit or facilitate such conversion or exchange; (r) the form or forms of the Trust Agreement, Amended and Restated Trust Agreement and Guarantee Agreement, if different from the forms attached hereto as Annexes A, B and C, respectively; (s) the relative degree, if any, to which the Securities of the series shall be senior to or be subordinated to other series of Securities in right of payment, whether such other series of Securities are Outstanding or not; and (t) any other terms of the Securities of such series (which terms shall not be inconsistent with the provisions of this Indenture). All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided herein or in or pursuant to such Board Resolution and set forth in such Officers' Certificate or in any such indenture supplemental hereto. If any of the terms of the series are established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers' Certificate setting forth the terms of the series. The Securities shall be subordinated in right of payment to Senior Indebtedness as provided in Article XIII. Unless otherwise provided with respect to the Securities of any series, at the option of the Company, interest on the Securities of any series that bears interest may be paid (i) by mailing a check to the address of the person entitled thereto as such address shall appear in the Security Register or (ii) by wire transfer in immediately available funds at such place and to such account as may be designated by the person entitled thereto as specified in the Security Register. SECTION 3.2. Denominations. 25 The Securities of each series shall be in registered form without coupons and shall be issuable in denominations of $25 and any integral multiple thereof, unless otherwise specified as contemplated by Section 3.1. SECTION 3.3. Execution, Authentication, Delivery and Dating. The Securities shall be executed on behalf of the Company by its President, one of its Vice Presidents, its Treasurer or an Assistant Treasurer under its corporate seal reproduced or impressed thereon and attested by its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities. If the form or terms of the Securities of the series have been established by or pursuant to one or more Board Resolutions as permitted by Sections 2.1 and 3.1, in authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be fully protected in relying upon, an Opinion of Counsel stating, (1)if the form of such Securities has been established by or pursuant to Board Resolution as permitted by Section 2.1, that such form has been established in conformity with the provisions of this Indenture; (2)if the terms of such Securities have been established by or pursuant to Board Resolution as permitted by Section 3.1, that such terms have been established in conformity with the provisions of this Indenture; and (3) that such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. If such form or terms have been so established, the Trustee shall not be required to authenticate such Securities if the issue of such Securities pursuant to this Indenture will affect the Trustee's own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee. 26 Notwithstanding the provisions of Section 3.1 and of the preceding paragraph, if all Securities of a series are not to be originally issued at one time, it shall not be necessary to deliver the Officers' Certificate otherwise required pursuant to Section 3.1 or the Company Order and Opinion of Counsel otherwise required pursuant to such preceding paragraph at or prior to the authentication of each Security of such series if such documents are delivered at or prior to the authentication upon original issuance of the first Security of such series to be issued. Each Security shall be dated the date of its authentication. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by the manual signature of one of its authorized officers, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 3.9, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture. SECTION 3.4. Temporary Securities. Pending the preparation of definitive Securities of any series, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Securities of such series in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities. If temporary Securities of any series are issued, the Company will cause definitive Securities of such series to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at the office or agency of the Company designated for that purpose without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor one or more definitive Securities of the same series, of any authorized denominations having the same Original Issue Date and Stated Maturity and having the same terms as such temporary Securities. Until so exchanged, the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series. 27 SECTION 3.5. Registration, Transfer and Exchange. The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. Such register is herein sometimes referred to as the "Securities Register." The Trustee is hereby appointed "Securities Registrar" for the purpose of registering Securities and transfers of Securities as herein provided. Upon surrender for registration of transfer of any Security at the office or agency of the Company designated for that purpose the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of the same series of any authorized denominations, of a like aggregate principal amount, of the same Original Issue Date and Stated Maturity and having the same terms. At the option of the Holder, Securities may be exchanged for other Securities of the same series of any authorized denominations, of a like aggregate principal amount, of the same Original Issue Date and Stated Maturity and having the same terms, upon surrender of the Securities to be exchanged at such office or agency. Whenever any securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. All Securities issued upon any transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange. Every Security presented or surrendered for transfer or exchange shall (if so required by the Company or the Securities Registrar) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made to a Holder for any transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Securities. The provisions of Clauses (1), (2), (3) and (4) below shall apply only to Global Securities: (1) Each Global Security authenticated under this Indenture shall be registered in the name of the Depository designated for such Global Security or a nominee thereof and delivered to such Depository or a nominee thereof or custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture. (2) Notwithstanding any other provision in this Indenture, no Global Security may be exchanged in whole or in part for Securities registered, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depository for such Global Security or a nominee thereof unless (A) such Depository (i) has notified the Company that it is unwilling or unable to continue as Depository for such Global Security or 28 (ii) has ceased to be a clearing agency registered under the Exchange Act at a time when the Depository is required to be so registered to act as depositary, in each case unless the Company has approved a successor Depository within 90 days, (B) there shall have occurred and be continuing an Event of Default with respect to such Global Security, (C) the Company in its sole discretion determines that such Global Security will be so exchangeable or transferable or (D) there shall exist such circumstances, if any, in addition to or in lieu of the foregoing as have been specified for this purpose as contemplated by Section 3.1. (3) Subject to Clause (2) above, any exchange of a Global Security for other Securities may be made in whole or in part, and all Securities issued in exchange for a Global Security or any portion thereof shall be registered in such names as the Depository for such Global Security shall direct. (4) Every Security authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Security or any portion thereof, whether pursuant to this Section, Section 3.4, 3.6, 9.6 or 11.6 or otherwise, shall be authenticated and delivered in the form of, and shall be, a Global Security, unless such Security is registered in the name of a Person other than the Depository for such Global Security or a nominee thereof. Neither the Company nor the Trustee shall be required, pursuant to the provisions of this Section, (a) to issue, transfer or exchange any Security of any series during a period beginning at the opening of business 15 days before the day of selection for redemption of Securities pursuant to Article XI and ending at the close of business on the day of mailing of notice of redemption or (b) to transfer or exchange any Security so selected for redemption in whole or in part, except, in the case of any Security to be redeemed in part, any portion thereof not to be redeemed. SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities. If any mutilated Security is surrendered to the Trustee together with such security or indemnity as may be required by the Company or the Trustee to save each of them harmless, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of the same issue and series of like tenor and principal amount, having the same Original Issue Date and Stated Maturity, and bearing a number not contemporaneously outstanding. If there shall be delivered to the Company and to the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security, and (ii) such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of the same issue and series of like tenor and principal amount, having the same Original Issue Date and Stated Maturity as such destroyed, lost or stolen Security, and bearing a number not contemporaneously outstanding. 29 In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. SECTION 3.7. Payment of Interest; Interest Rights Preserved. Interest on any Security of any series which is payable, and is punctually paid or duly provided for, on any Interest Payment Date, shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest in respect of Securities of such series, except that, unless otherwise provided in the Securities of such series, interest payable on the Stated Maturity of the principal of a Security shall be paid to the Person to whom principal is paid. The initial payment of interest on any Security of any series which is issued between a Regular Record Date and the related Interest Payment Date shall be payable as provided in such Security or in the Board Resolution pursuant to Section 3.1 with respect to the related series of Securities. Any interest on any Security which is payable, but is not timely paid or duly provided for, on any Interest Payment Date for Securities of such series (herein called "Defaulted Interest"), shall forthwith cease to be payable to the registered Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or (2) below: (1)The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities of such series in respect of which interest is in default (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when 30 deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class, postage prepaid, to each Holder of a Security of such series at the address of such Holder as it appears in the Securities Register not less than 10 days prior to such Special Record Date. The Trustee may, in its discretion, in the name and at the expense of the Company, cause a similar notice to be published at least once in a newspaper, customarily published in the English language on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, but such publication shall not be a condition precedent to the establishment of such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered on such Special Record Date and shall no longer be payable pursuant to the following Clause (2). (2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of the series in respect of which interest is in default may be listed and, upon such notice as may be required by such exchange (or by the Trustee if the Securities are not listed), if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. SECTION 3.8. Persons Deemed Owners. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name any Security is registered as the owner of such Security for the purpose of receiving payment of principal of and (subject to Section 3.7) any interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. No holder of any beneficial interest in any Global Security held on its behalf by a Depository shall have any rights under this Indenture with respect to such Global Security, and such Depository may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by a Depository or impair, as between a Depository and such holders of beneficial 31 interests, the operation of customary practices governing the exercise of the rights of the Depository (or its nominee) as Holder of any Security. SECTION 3.9. Cancellation. All Securities surrendered for payment, redemption, transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee, and any such Securities and Securities surrendered directly to the Trustee for any such purpose shall be promptly canceled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section, except as expressly permitted by this Indenture. All canceled Securities shall be destroyed by the Trustee and the Trustee shall deliver to the Company a certificate of such destruction. SECTION 3.10. Computation of Interest. Except as otherwise specified as contemplated by Section 3.1 for Securities of any series, interest on the Securities of each series for any partial period shall be computed on the basis of a 360-day year of twelve 30-day months and the actual days elapsed in a partial month in such period, and interest on the Securities of each series for a full period shall be computed by dividing the rate per annum by the number of interest periods that together constitute a full twelve months. SECTION 3.11. Deferrals of Interest Payment Dates. If specified as contemplated by Section 2.1 or Section 3.1 with respect to the Securities of a particular series, so long as no Event of Default has occurred and is continuing, the Company shall have the right, at any time during the term of such series, from time to time to defer the payment of interest on such Securities for such period or periods as may be specified as contemplated by Section 3.1 (each, an "Extension Period ") during which Extension Periods the Company shall have the right to make partial payments of interest on any Interest Payment Date. No Extension Period shall end on a date other than an Interest Payment Date. At the end of any such Extension Period the Company shall pay all interest then accrued and unpaid on the Securities (together with Additional Interest thereon, if any, at the rate specified for the Securities of such series to the extent permitted by applicable law); provided, however, that no Extension Period shall extend beyond the Stated Maturity of the principal of the Securities of such series; provided, further, that during any such Extension Period, the Company shall not, and shall not permit any Subsidiary to, (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with. respect to, any of the Company's capital stock, or (ii) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank pari passu in all respects with or junior in interest to the Securities of such series or make any guarantee payments with respect to any guarantee by the Company of the debt securities of any Subsidiary of the Company if such guarantee ranks pari passu with or junior in interest to the securities of such 32 series (other than (a) dividends or distributions in Common Stock, (b) any declaration of a dividend in connection with the implementation of a Rights Plan, or the issuance of any Common Stock of any class or series of preferred stock of the Company under any Rights Plan in the future or the redemption or repurchase of any rights pursuant thereto, (c) payments under any BankAmerica Guarantee, and (d) purchases of Common Stock related to the issuance of Common Stock or rights under any of the Company's (or its subsidiaries') benefit plans for their directors, officers or employees). Prior to the termination of any such Extension Period, the Company may further extend the interest payment period, provided that no Extension Period shall exceed the period or periods specified in such Securities or extend beyond the Stated Maturity of the principal of such Securities. Upon the termination of any Extension Period and upon the payment of all amounts then due on any Interest Payment Date, the Company may elect to begin a new Extension Period, subject to the above requirements. No interest shall be due and payable during an Extension Period, except at the end thereof. The Company shall give the Holders of the Securities of such series and the Trustee notice of its election to begin any such Extension Period at least one Business Day prior to the next succeeding Interest Payment Date on which interest on Securities of such series would be payable but for such deferral or, with respect to the Securities of a series issued to a BankAmerica Trust, so long as such Securities are held by such BankAmerica Trust, prior to the earlier of (i) the next succeeding date on which Distributions on the Preferred Securities of such BankAmerica Trust would be payable but for such deferral or (ii) the date the Administrative Trustees of such BankAmerica Trust are required to give notice to any securities exchange or other applicable self-regulatory organization or to holders of such Preferred Securities of the record date or the date such Distributions are payable, but in any event not less than one Business Day prior to such record date. For purposes hereof, neither the Company's Senior Debt nor its Senior Subordinated Debt shall be deemed to be pari passu with the Securities. The Trustee, at the expense of the Company, shall promptly give notice of the Company's election to begin any such Extension Period to the Holders of the Outstanding Securities of such series. SECTION 3.12. Right of Set-Off. With respect to the Securities of a series issued to a BankAmerica Trust, notwithstanding anything to the contrary herein, the Company shall have the right to set-off any payment it is otherwise required to make thereunder in respect of any such Security to the extent the Company has theretofore made, or is concurrently on the date of such payment making, a payment under the BankAmerica Guarantee relating to such Security or under Section 5.8 hereof. SECTION 3.13. Agreed Tax Treatment. Each Security issued hereunder shall provide that the Company and, by its acceptance of a Security or a beneficial interest therein, the Holder of, and any Person that acquires a beneficial interest in, such Security agree that for United States Federal, state and local tax purposes it is intended that such Security constitutes indebtedness. 33 SECTION 3.14. Shortening or Extension of Stated Maturity. If specified as contemplated by Section 2.1 or Section 3.1 with respect to the Securities of a particular series and except as otherwise specified therein, the Company shall have the right to (i) shorten the Stated Maturity of the principal of the Securities of such series at any time to any date not earlier than the first date on which the Company has the right to redeem the Securities of such series, and (ii) extend the Stated Maturity of the principal of the Securities of such series at any time at its election for one or more periods, but in no event to a date later than the 49th anniversary of the first Interest Payment Date following the Original Issue Date of the Securities of such series; provided that, if the Company elects to exercise its right to extend the Stated Maturity of the principal of the Securities of such series pursuant to clause (ii), above, at the time such election is made and at the time of extension (A) the Company is not in bankruptcy, otherwise insolvent or in liquidation, (B) the Company is not in default in the payment of any interest or principal on such Securities, (C) in the case of any series of Securities issued to a BankAmerica Trust, such BankAmerica Trust is not in arrears on payments of Distributions on the Preferred Securities issued by such BanicAmerica Trust and no deferred Distributions are accumulated and (D) such Securities are rated not less than BBB- by S&P or Baa3 by Moody's or the equivalent by any other nationally recognized statistical rating organization. In the event the Company elects to shorten or extend the Stated Maturity of any series of Securities, it shall give notice to the Trustee, and the Trustee shall give notice of such shortening or extension to the Holders, no less than 30 and no more than 90 days prior to the effectiveness thereof. SECTION 3.15. CUSIP Numbers. The Company in issuing the Securities may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption or other related material as a convenience to Holders; provided that any such notice or other related material may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of redemption or other related material and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. ARTICLE IV SATISFACTION AND DISCHARGE SECTION 4.1. Satisfaction and Discharge of Indenture. This Indenture shall, upon Company Request, cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for and as otherwise provided in this Section 4.1) and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when 34 (1) either (A) all Securities theretofore authenticated and delivered (other than (i) Securities which have been destroyed, lost or stolen and which have been replaced or paid, as provided in Section 3.6 and (ii) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 10.3) have been delivered to the Trustee for cancellation; or (B) all such Securities not theretofore delivered to the Trustee for cancellation (i) have become due and payable, or (ii) will become due and payable at their Stated Maturity within one year of the date of deposit, or (iii)are to be called for redemption within one year by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of Clause (B) (i), (ii) or (iii) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for such purpose an amount in the currency or currencies in which the Securities of such series are payable sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any) and interest (including any Additional Interest) to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, or the earlier resignation or removal of the Trustee or any Authenticating Agent, the obligations of the Company to the Trustee under Section 6.7, the obligations of the Company to any Authenticating Agent under Section 6.14 and, if money shall have been deposited with the Trustee pursuant to subclause (B) of clause (1) of this Section, the obligations of the Trustee under Section 4.2 and the last paragraph of Section 10.3 shall survive. SECTION 4.2. Application of Trust Money. Subject to the provisions of the last paragraph of Section 10.3, all money deposited with the Trustee pursuant to Section 4. 1 shall be held in trust and applied by the Trustee, in accordance 35 with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium. if any) and interest for the payment of which such money or obligations have been deposited with or received by the Trustee. ARTICLE V REMEDIES SECTION 5.1. Events of Default. "Event of Default," wherever used herein with respect to the Securities of any series, means any one of the following events that has occurred and is continuing (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) default in the payment of any interest upon any Security of that series, including any Additional Interest in respect thereof, when it becomes due and payable, and continuance of such default for a period of 30 days (subject to the deferral of any due date in the case of an Extension Period); or (2)default in the payment of the principal of (or premium, if any, on) any Security of that series at its Maturity; or (3) default in the performance, or breach, in any material respect, of any covenant of the Company in this Indenture (other than a covenant a default in the performance of which or the breach of which is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of that series a written notice specifying such default or breach and requiring it to be remedied; or (4) the entry of a decree or order for relief in respect of the Company by a court having jurisdiction in the premises in an involuntary case under Federal or State bankruptcy laws, as now or hereafter constituted, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; or (5) the commencement by the Company of a voluntary case under Federal or State bankruptcy laws, as now or hereafter constituted, or the consent by the Company to the entry of a decree or order for relief in an involuntary case under any such laws; or (6)any other Event of Default provided with respect to Securities of that series. 36 SECTION 5.2. Acceleration of Maturity; Rescission and Annulment. If an Event of Default (other than an Event of Default specified in Section 5.1(4) or 5.1(5)) with respect to Securities of any series at the time Outstanding occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of that series may declare the principal amount (or, if the Securities of that series are Discount Securities, such portion of the principal amount as may be specified in the terms of that series) of all the Securities of that series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), provided that, in the case of the Securities of a series issued to a BankAmerica Trust, if, upon an Event of Default, the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of that series fail to declare the principal of all the Securities of that series to be immediately due and payable, the holders of at least 25% in aggregate Liquidation Amount (as defined in the related Trust Agreement) of the corresponding series of Preferred Securities then outstanding shall have such right by a notice in writing to the Company and the Trustee; and upon any such declaration such principal amount (or specified portion thereof) of and the accrued interest (including any Additional Interest) on all the Securities of such series shall become immediately due and payable. Payment of principal and interest (including any Additional Interest) on such Securities shall remain subordinated to the extent provided in Article XIII notwithstanding that such amount shall become immediately due and payable as herein provided. If an Event of Default specified in Section 5.1(4) or 5.1(5) with respect to Securities of any series at the time Outstanding occurs, the principal amount of all the Securities of that series (or, if the Securities of that series are Discount Securities, such portion of the principal amount of such Securities as may be specified by the terms of that series) shall automatically, and without any declaration or other action on the part of the Trustee or any Holder, become immediately due and payable. At any time after such a declaration of acceleration with respect to Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Securities of that series, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if: (1) The Company has paid or deposited with the Trustee a sum sufficient to pay: (A)all overdue installments of interest (including any Additional Interest) on all Securities of that series, (B)the principal of (and premium, if any, on) any Securities of that series which have become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Securities, and (C)all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and 37 (2) all Events of Default with respect to Securities of that series, other than the non-payment of the principal of Securities of that series which has become due solely by such acceleration have been cured or waived as provided in Section 5.13. In the case of Securities of a series issued to a BankAmerica Trust, the holders of a majority in aggregate Liquidation Amount (as defined in the related Trust Agreement) of the related series of Preferred Securities issued by such BankAmerica Trust shall also have the right to rescind and annul such declaration and its consequences by written notice to the Company and the Trustee, subject to the satisfaction of the conditions set forth in Clauses (1) and (2) above of this Section 5.2. No such rescission shall affect any subsequent default or impair any right consequent thereon. SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if: (1) default is made in the payment of any installment of interest (including any Additional Interest) on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or (2) default is made in the payment of the principal of (and premium, if any, on) any Security at the Maturity thereof, the Company will, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal, including any sinking fund payment or analogous obligations (and premium, if any) and interest (including any Additional Interest); and, in addition thereto, all amounts owing the Trustee under Section 6.7. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon the Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Securities, wherever situated. If an Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. 38 SECTION 5.4. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, (a) the Trustee (irrespective of whether the principal of the Securities of any series shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal (and premium, if any) or interest (including any Additional Interest)) shall be entitled and empowered, by intervention in such proceeding or otherwise, (i) to file and prove a claim for the whole amount of principal (and premium, if any) and interest (including any Additional Interest) owing and unpaid in respect to the Securities and to file such other papers or documents as may be necessary or advisable and to take any and all actions as are authorized under the Trust Indenture Act in order to have the claims of the Holders and any predecessor to the Trustee under Section 6.7 allowed in any such judicial proceedings; and (ii) in particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same in accordance with Section 5.6; and (b) any custodian, receiver, assignee, trustee, liquidator, sequestrator (or other similar official) in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee for distribution in accordance with Section 5.6, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it and any predecessor Trustee under Section 6.7. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, however, that the Trustee may, on behalf of the Holders, vote for the election of a trustee in bankruptcy or similar official and be a member of a creditors' or other similar committee. SECTION 5.5. Trustee May Enforce Claim Without Possession of Securities. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of all the amounts owing the Trustee and any predecessor Trustee 39 under Section 6.7, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered. SECTION 5.6. Application of Money Collected. Any money or property collected or to be applied by the Trustee with respect to a series of Securities pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money or property on account of principal (or premium, if any) or interest (including any Additional Interest), upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee and any predecessor Trustee; SECOND: Subject to Article XIII, to the payment of the amounts then due and unpaid upon such series of Securities for principal (and premium, if any) and interest (including any Additional Interest), in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such series of Securities for principal (and premium, if any) and interest (including any Additional Interest), respectively; and THIRD: The balance, if any, to the Person or Persons entitled thereto. SECTION 5.7. Limitation on Suits. No Holder of any Securities of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture or for the appointment of a receiver, assignee, trustee, liquidator, sequestrator (or other similar official) or for any other remedy hereunder, unless: (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that series; (2) the Holders of not less than 25% in principal amount of the Outstanding Securities of that series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities of that series; 40 it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing itself of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Securities, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders. SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium and Interest; Direct Action by Holders of Preferred Securities. Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right which is absolute and unconditional to receive payment of the principal of (and premium, if any) and (subject to Section 3.7) interest (including any Additional Interest) on such Security on the respective Stated Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder. In the case of Securities of a series issued to a BankAmerica Trust, any holder of the corresponding series of Preferred Securities issued by such BankAmerica Trust shall have the right, upon the occurrence of an Event of Default described in Section 5.1(1) or 5.1(2), to institute a suit directly against the Company for enforcement of payment to such holder of principal of (premium, if any) and (subject to Section 3.7) interest (including any Additional Interest) on the Securities having a principal amount equal to the aggregate Liquidation Amount (as defined in the Trust Agreement under which such BankAmerica Trust is formed) of such Preferred Securities of the corresponding series held by such holder. SECTION 5.9. Restoration of Rights and Remedies. If the Trustee, any Holder or any holder of Preferred Securities has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee, such Holder or such holder of Preferred Securities, then and in every such case the Company, the Trustee, the Holders and such holder of Preferred Securities shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee, the Holders and the holders of Preferred Securities shall continue as though no such proceeding had been instituted. SECTION 5.10. Rights and Remedies Cumulative. Except as otherwise provided in the last paragraph of Section 3.6, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. 41 SECTION 5.11. Delay or Omission Not Waiver. No delay or omission of the Trustee, any Holder of any Security or any holder of any Preferred Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders and the right and remedy given to the holders of Preferred Securities by Section 5.8 may be exercised from time to time, and as often as may be deemed expedient, by the Trustee, the Holders or the holders of Preferred Securities, as the case may be. SECTION 5.12. Control by Holders. The Holders of a majority in principal amount of the Outstanding Securities of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series, provided that: (1) such direction shall not be in conflict with any rule of law or with this Indenture, (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction, and (3) subject to the provisions of Section 6.1, the Trustee shall have the right to decline to follow such direction if a Responsible Officer or Officers of the Trustee shall, in good faith, determine that the proceeding so directed would be unjustly prejudicial to the Holders not joining in any such direction or would involve the Trustee in personal liability. SECTION 5.13. Waiver of Past Defaults. The Holders of not less than a majority in principal amount of the Outstanding Securities of any series affected thereby and, in the case of any Securities of a series issued to a BankAmerica Trust, the holders of a majority in aggregate Liquidation Amount (as defined in the related Trust Agreement) of the Preferred Securities issued by such BankAmerica Trust, may waive any past default hereunder and its consequences with respect to such series except a default: (1) in the payment of the principal of (or premium, if any) or interest (including any Additional Interest) on any Security of such series, or (2) in respect of a covenant or provision hereof which under Article IX cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected. 42 Any such waiver shall be deemed to be on behalf of the Holders of all the Securities of such series or, in the case of a waiver by holders of Preferred Securities issued by such BankAmerica Trust, by all holders of Preferred Securities issued by such BankAmerica Trust. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION 5.14. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities of any series, or to any suit instituted by any Holder for the enforcement of the payment of the principal of (or premium, if any) or interest (including any Additional Interest) on any Security on or after the respective Stated Maturities expressed in such Security. SECTION 5.15. Waiver of Usury, Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE VI THE TRUSTEE SECTION 6.1. Certain Duties and Responsibilities. (a) Except during the continuance of an Event of Default, 43 (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. (b) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. (c) No provision of this indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct except that (1) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of Holders pursuant to Section 5.12 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Securities of such series. (d) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (e) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. 44 SECTION 6.2. Notice of Defaults. Within 90 days after actual knowledge by a Responsible Officer of the Trustee of the occurrence of any default hereunder with respect to the Securities of any series, the Trustee shall transmit by mail to all Holders of Securities of such series, as their names and addresses appear in the Securities Register, notice of such default, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of (or premium, if any) or interest (including any Additional Interest) on any Security of such series, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of Securities of such series; and provided, further, that, in the case of any default of the character specified in Section 5.1(3), no such notice to Holders of Securities of such series shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default with respect to Securities of such series. SECTION 6.3. Certain Rights of Trustee. Subject to the provisions of Section 6.1: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, Security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; 45 (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, indenture, Security or other paper or document, but the Trustee in its discretion may make such inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (h) the Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Indenture; (i) the Trustee shall not be charged with knowledge of any Event of Default unless either (i) a Responsible Officer of the Trustee shall have actual knowledge thereof or (2) the Trustee shall have received notice thereof in accordance with Section 1.5(1) hereof from the Company or a Holder; and (j) no permissive power or authority available to the Trustee shall be construed as a duty. SECTION 6.4. Not Responsible for Recitals or Issuance of Securities. The recitals contained herein [ILLEGIBLE] in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of the Securities or the proceeds thereof. SECTION 6.5. May Hold Securities. The Trustee, any Authenticating Agent, any Paying Agent, any Securities Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 6.8 and 6.13, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Securities Registrar or such other agent. SECTION 6.6. Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company. 46 SECTION 6.7. Compensation and Reimbursement The Company agrees (1) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder in such amounts as the Company and the Trustee shall agree from time to time (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense (including the reasonable compensation and the expenses and disbursements of its agents and counsel) incurred without negligence or bad faith, arising out of or in connection with the acceptance or administration of this trust or the performance of its duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The obligations of the Company under this Section 6.7 shall survive the termination of the Indenture or the earlier resignation or removal of the Trustee. To secure the Company's payment obligations in this Section, the Company and the Holders agree that the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee. Such lien shall survive the satisfaction and discharge of this Indenture. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 5.1(4) or (5) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under the Bankruptcy Reform Act of 1978 or any successor statute. SECTION 6.8. Disqualification; Conflicting Interests. The Trustee for the Securities of any series issued hereunder shall be subject to the provisions of Section 310(b) of the Trust Indenture Act. Nothing herein shall prevent the Trustee from filing with the Commission the application referred to in the second to last paragraph of said Section 310(b). SECTION 6.9. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall be 47 (a) a corporation organized and doing business under the laws of the United States of America or of any State or Territory or the District of Columbia, authorized under such laws to exercise corporate trust powers and subject to supervision or examination by Federal, State, Territorial or District of Columbia authority, or (b) a corporation or other Person organized and doing business under the laws of a foreign government that is permitted to act as Trustee pursuant to a rule, regulation or order of the Commission, authorized under such laws to exercise corporate trust powers, and subject to supervision or examination by authority of such foreign government or a political subdivision thereof substantially equivalent to supervision or examination applicable to United States institutional trustees, in either case having a combined capital and surplus of at least $50,000,000, subject to supervision or examination by Federal or State authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then, for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. Neither the Company nor any Person directly or indirectly controlling, controlled by or under common control with the Company shall serve as Trustee for the Securities of any series issued hereunder. SECTION 6.10. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 6.11. (b) The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (c) The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series, delivered to the Trustee and to the Company. (d) If at any time: (1) the Trustee shall fail to comply with Section 6.8 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or 48 (2) the Trustee shall cease to be eligible under Section 6.9 and shall fail to resign after written request therefor by the Company or by any such Holder, or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (i) the Company, acting pursuant to the authority of a Board Resolution, may remove the Trustee with respect to all Securities, or (ii) subject to Section 5.14. any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause with respect to the Securities of one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee with respect to the Securities of that or those series. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee with respect to the Securities of such series and supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of a Security for at least six months may, subject to Section 5.14, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (f) The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series by mailing written notice of such event by first-class mail, postage prepaid to the Holders of Securities of such series as their names and addresses appear in the Securities Register. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office. SECTION 6.11. Acceptance of Appointment by Successor. (a) In case of the appointment hereunder of a successor Trustee with respect to all Securities, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver 49 an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. (b) In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more series, the Company, the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an instrument in writing or an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such instrument in writing or supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such instrument in writing or supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts, and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates. (c) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all rights, powers and trusts referred to in paragraph (a) or (b) of this Section, as the case may be. (d) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be eligible under this Article. SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. 50 In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated, and in case any Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor Trustee or in the name of such successor Trustee, and in all cases the certificate of authentication shall have the full force which it is provided anywhere in the Securities or in this Indenture that the certificate of the Trustee shall have. SECTION 6.13. Preferential Collection of Claims Against Company. If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor). SECTION 6.14. Appointment of Authenticating Agent. The Trustee may appoint an Authenticating Agent or Agents with respect to one or more series of Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities of such series issued upon original issue and upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 3.6, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, or of any State or Territory or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or State authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section. Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of an Authenticating Agent shall be the successor Authenticating Agent hereunder, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. 51 An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall give notice of such appointment in the manner provided in Section 1.6 to all Holders of Securities of the series with respect to which such Authenticating Agent will serve. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provision of this Section. The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section. If an appointment with respect to one or more series is made pursuant to this Section, the Securities of such series may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternative certificate of authentication in the following form: This is one of the Securities referred to in the within mentioned Indenture. Dated: Bankers Trust Company As Trustee By: ____________________________ As Authenticating Agent By: ____________________________ Authorized Officer 52 ARTICLE VII HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 7.1. Company to Furnish Trustee Names and Addresses of Holders. The Company will furnish or cause to be furnished to the Trustee: (a) semi-annually, not more than 15 days after each Regular Record Date in each year, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of such Regular Record Date, and (b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished, excluding from any such list names and addresses received by the Trustee in its capacity as Securities Registrar. SECTION 7.2. Preservation of Information, Communications to Holders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 7.1 and the names and addresses of Holders received by the Trustee in its capacity as Securities Registrar. The Trustee may destroy any list furnished to it as provided in Section 7.1 upon receipt of a new list so furnished. (b) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided in the Trust Indenture Act. (c) Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of information as to the names and addresses of the Holders made pursuant to the Trust Indenture Act. SECTION 7.3. Reports by Trustee. (a) The Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act, at the times and in the manner provided pursuant thereto. (b) Reports so required to be transmitted at stated intervals of not more than 12 months shall be transmitted no later than 60 days after December 31 in each calendar year, commencing 60 days after the first December 31 after the first issuance of Securities under this Indenture. 53 (c) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each securities exchange upon which any Securities are listed and also with the Commission. The Company will notify the Trustee when any Securities are listed on any securities exchange. SECTION 7.4. Reports by Company. The Company shall file with the Trustee and with the Commission, and transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided in the Trust Indenture Act; provided that any such information, documents or reports required to be filed with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act shall be filed with the Trustee within 15 days after the same is required to be filed with the Commission. Notwithstanding that the Company may not be required to remain subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company shall continue to file with the Commission and provide the Trustee with the annual reports and the information, documents and other reports which are specified in Sections 13 and 15(d) of the Exchange Act. The Company also shall comply with the other provisions of Trust Indenture Act Section 314(a). ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 8.1. Company May Consolidate, Etc., Only on Certain Terms. The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and no Person shall consolidate with or merge into the Company or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless: (1) in case the Company shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety shall be a corporation, partnership or trust organized and existing under the laws of the United States of America or any State or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of (and premium, if any) and interest (including any Additional Interest) on all the Securities and the performance of every covenant of this Indenture on the part of the Company to be performed or observed; (2) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time, or both, would become an Event of Default, shall have happened and be continuing; 54 (3) in the case of the Securities of a series issued to a BankAmerica Trust, such consolidation, merger, conveyance, transfer or lease is permitted under the related Trust Agreement and BankAmerica Guarantee and does not give rise to any breach or violation of the related Trust Agreement or BankAmerica Guarantee; and (4) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and any such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with; and the Trustee, subject to Section 6.1, may rely upon such Officers' Certificate and Opinion of Counsel as conclusive evidence that such transaction complies with this Section 8.1. SECTION 8.2. Successor Corporation Substituted. Upon any consolidation or merger by the Company with or into any other Person, or any conveyance, transfer or lease by the Company of its properties and assets substantially as an entirety to any Person in accordance with Section 8.1, the successor corporation formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; and in the event of any such conveyance, transfer or lease the Company shall be discharged from all obligations and covenants under the Indenture and the Securities and may be dissolved and liquidated. Such successor Person may cause to be signed, and may issue either in its own name or in the name of the Company, any or all of the Securities issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor Person instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities which previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication pursuant to such provisions and any Securities which such successor Person thereafter shall cause to be signed and delivered to the Trustee on its behalf for the purpose pursuant to such provisions. All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Securities had been issued at the date of the execution hereof. In case of any such consolidation, merger, sale, conveyance or lease, such changes in phraseology and form may be made in the Securities thereafter to be issued as may be appropriate. 55 ARTICLE IX SUPPLEMENTAL INDENTURES SECTION 9.1. Supplemental Indentures without Consent of Holders Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another Person to the Company, and the assumption by any such successor of the covenants of the Company herein and in the Securities contained; or (2) to convey, transfer, assign, mortgage or pledge any property to or with the Trustee or to surrender any right or power herein conferred upon the Company; or (3) to establish the form or terms of Securities of any series as permitted by Sections 2.1 or 3.1; or (4) to add to the covenants of the Company for the benefit of the Holders of all or any series of Securities (and if such covenants are to be for the benefit of less than all series of Securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power herein conferred upon the Company; or (5) to add any additional Events of Default for the benefit of the Holders of all or any series of Securities (and if such additional Events of Default are to be for the benefit of less than all series of Securities, stating that such additional Events of Default are expressly being included solely for the benefit of such series); or (6) to change or eliminate any of the provisions of this Indenture, provided that any such change or elimination (a) shall become effective only when there is no Security Outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision or, (b) shall not apply to any Outstanding Securities; or (7) to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture, provided that such action pursuant to this clause (7) shall not adversely affect the interest of the Holders of Securities of any series in any material respect or, in the case of the Securities of a series issued to a BankAmerica Trust and for so long as any of the corresponding series of Preferred Securities issued by such BankAmerica Trust shall remain outstanding, the holders of such Preferred Securities; or (8) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration 56 of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 6.11(b); or (9) to comply with the requirements of the Commission in order to effect or maintain the qualification of this Indenture under the Trust Indenture Act. SECTION 9.2. Supplemental Indentures with Consent of Holders. With the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of each series affected by such supplemental indenture, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities of such series under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby, (1) except to the extent permitted by Section 3.11 or as otherwise specified as contemplated by Section 2.1 or Section 3.1 with respect to the deferral of the payment of interest on the Securities of any series, change the Stated Maturity of the principal of, or any installment of interest (including any Additional Interest) on, any Security, or reduce the principal amount thereof or the rate of interest thereon or reduce any premium payable upon the redemption thereof, or reduce the amount of principal of a Discount Security that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.2, or change the place of payment where, or the coin or currency in which, any Security or interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date), or (2) reduce the percentage in principal amount of the Outstanding Securities of any series, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or (3) modify any of the provisions of this Section, Section 5.13 or Section 10.5, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Security affected thereby; provided, further, that, in the case of the Securities of a series issued to a BankAmerica Trust, so long as any of the corresponding series of Preferred Securities issued by such BankAmerica Trust remains outstanding, (i) no such amendment shall be made that adversely affects the holders of such Preferred Securities in any material respect, and no termination of this Indenture shall occur, and no waiver of any Event of Default or compliance with any covenant under this Indenture shall be effective, without the prior consent of the holders of at least a majority of the aggregate Liquidation Amount of such Preferred Securities then outstanding unless and until the principal (and premium, if any) of the Securities of such series and all accrued and, subject to 57 Section 3.7, unpaid interest (including any Additional Interest) thereon have been paid in full and (ii) no amendment shall be made to Section 5.8 of this Indenture that would impair the rights of the holders of Preferred Securities provided therein without the prior consent of the holders of each Preferred Security then outstanding unless and until the principal (and premium, if any) of the Securities of such series and all accrued and (subject to Section 3.7) unpaid interest (including any Additional Interest) thereon have been paid in full. A supplemental indenture that changes or eliminates any covenant or other provision of this Indenture that has expressly been included solely for the benefit of one or more particular series of Securities or Preferred Securities, or which modifies the rights of the Holders of Securities or holders of Preferred Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities or holders of Preferred Securities of any other series. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. SECTION 9.3. Execution of Supplemental Indentures. In executing or accepting the additional trusts created by any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture, and that all conditions precedent have been complied with. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise or that may subject it to any liability. SECTION 9.4. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. SECTION 9.5. Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. SECTION 9.6. Reference in Securities to Supplemental Indentures. Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Company, bear a notation in form approved by the Company as to any matter provided for in such supplemental indenture. If the 58 Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series. ARTICLE X COVENANTS SECTION 10.1. Payment of Principal, Premium and Interest. The Company covenants and agrees for the benefit of each Series of securities that it will duly and punctually pay the principal of (and premium, if any) and interest on the Securities of that series in accordance with the terms of such Securities and this Indenture. SECTION 10.2. Maintenance of Office or Agency. The Company will maintain in each Place of Payment for any series of Securities, an office or agency where Securities of that series may be presented or surrendered for payment and an office or agency where Securities of that series may be surrendered for transfer or exchange and where notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be served. The Company initially appoints the Trustee, acting through its Corporate Trust Office, as its agent for said purposes. The Company will give prompt written notice to the Trustee of any change in the location of any such office or agency. If at any time the Company shall fail to maintain such office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all of such purposes, and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in each Place of Payment for Securities of any series for such purposes. The Company will give prompt written notice to the Trustee of any such designation and any change in the location of any such office or agency. SECTION 10.3. Money for Security Payments to be Held in Trust. If the Company shall at any time act as its own Paying Agent with respect to any series of Securities, it will, on or before each due date of the principal of (and premium, if any) or interest on any of the Securities of such series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee of its failure so to act. 59 Whenever the Company shall have one or more Paying Agents, it will, prior to 10:00 am. New York City time on each due date of the principal of or interest on any Securities, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal and premium (if any) or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its failure so to act. The Company will cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will: (1) hold all sums held by it for the payment of the principal of (and premium, if any) or interest on Securities in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (2) give the Trustee notice of any default by the Company (or any other obligor upon the Securities) in the making of any payment of principal (and premium, if any) or interest; (3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent; and (4) comply with the provisions of the Trust Indenture Act applicable to it as a Paying Agent. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any) or interest on any Security and remaining unclaimed for two years after such principal (and premium, if any) or interest has become due and payable shall be paid on Company Request to the Company, or (if then held by the Company) shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company. 60 SECTION 10.4. Statement as to Compliance. The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year of the Company ending after the date hereof, an Officers' Certificate executed by the principal executive officer, principal financial officer or principal accounting officer of the Company covering the preceding calendar year, stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance, observance or fulfillment of or compliance with any of the terms, provisions, covenants and conditions of this Indenture, and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. For the purpose of this Section 10.4, compliance shall be determined without regard to any grace period (other than an Extension Period) or requirement of notice provided pursuant to the terms of this Indenture. SECTION 10.5. Waiver of Certain Covenants. The Company may omit in any particular instance to comply with any covenant or condition provided pursuant to Section 3.1, 9.1(3) or 9.1(4) with respect to the Securities of any series, if before or after the time for such compliance the Holders of at least a majority in principal amount of the Outstanding Securities of such series shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company in respect of any such covenant or condition shall remain in full force and effect. SECTION 10.6. Additional Sums. In the case of the Securities of a series issued to a BankAmerica Trust, so long as no Event of Default has occurred and is continuing and except as otherwise specified as contemplated by Section 2.1 or Section 3.1, in the event that (i) a BankAmerica Trust is the Holder of all of the Outstanding Securities of such series and (ii) a Tax Event in respect of such BankAmerica Trust shall have occurred and be continuing, the Company shall pay to such BankAmerica Trust (and its permitted successors or assigns under the related Trust Agreement) as Holder of the Securities of such series for so long as such BankAmerica Trust (or its permitted successor or assignee) is the registered holder of any Securities of such series, such additional sums as may be necessary in order that the amount of Distributions (including any Additional Amounts (as defined in such Trust Agreement)) paid by such BankAmerica Trust on the related Preferred Securities and Common Securities that at any time remain outstanding in accordance with the terms thereof shall not be reduced as a result of any Additional Taxes (the "Additional Sums"). Whenever in this Indenture or the Securities there is a reference in any context to the payment of principal of or interest on the Securities, such mention shall be deemed to include mention of the payments of the Additional Sums provided for in this paragraph to the extent that, in such context, Additional Sums are, were or would be payable in respect thereof pursuant to the provisions of this paragraph and express mention of the payment of Additional Sums (if applicable) in any provisions hereof shall not be construed as excluding Additional Sums in those provisions hereof where such express mention is not made. 61 SECTION 10.7. Additional Covenants. The Company covenants and agrees with each Holder of Securities of each series that it shall not, and it shall not permit any Subsidiary of the Company to, (a) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of the Company's capital stock, or (b) make any payment of principal of or interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank pari passu in all respects with or junior in interest to the Securities of such series or make any guarantee payments with respect to any guarantee by the Company of debt securities of any subsidiary of the Company if such guarantee ranks pari passu with or junior in interest to the Securities (other than (a) dividends or distributions in Common Stock, (b) any declaration of a dividend in connection with the implementation of a Rights Plan, the issuance of any Common Stock of any class or series of preferred stock of the Company under any Rights Plan in the future or the redemption or repurchase of any such rights pursuant thereto, (c) payments under any BankAmerica Guarantee, and (d) purchases of Common Stock related to the issuance of Common Stock or rights under any of the Company's (or its subsidiaries') benefit plans for their directors, officers or employees) if at such time (i) there shall have occurred any event of which the Company has actual knowledge that (A) with the giving of notice or the lapse of time, or both, would constitute an Event of Default with respect to the Securities of such series and (B) in respect of which the Company shall not have taken reasonable steps to cure, (ii) if the Securities of such series are held by a BankAmerica Trust, the Company shall be in default with respect to its payment of any obligations under the BankAmerica Guarantee relating to the Preferred Securities issued by such BankAmerica Trust or (iii) the Company shall have given notice of its election to begin an Extension Period with respect to the Securities of such series as provided herein and shall not have rescinded such notice, or such Extension Period, or any extension thereof, shall be continuing. For purposes hereof, neither the Company's Senior Debt nor its Senior Subordinated Debt shall be deemed to be pari passu with the Securities. The Company also covenants with each Holder of Securities of a series issued to a BankAmerica Trust (i) to maintain directly or indirectly 100% ownership of the Common Securities of such BankAmerica Trust; provided, however, that any permitted successor of the Company hereunder may succeed to the Company's ownership of such Common Securities, (ii) as holder of the Common Securities not to voluntarily terminate, wind-up or liquidate such BankAmerica Trust, except upon prior approval of the Federal Reserve, if then required under applicable capital guidelines or policies of the Federal Reserve, and (a) in connection with a distribution of the Securities of such series to the holders of Preferred Securities in liquidation of such BankAmerica Trust or (b) in connection with certain mergers, consolidations or amalgamations permitted by the related Trust Agreement and (iii) to use its reasonable efforts, consistent with the terms and provisions of such Trust Agreement, to cause such BankAmerica Trust to remain classified as a grantor trust and not an association taxable as a corporation for United States federal income tax purposes. SECTION 10.8. Original Issue Discount. On or before December 15 of each year during which any Securities are outstanding (or on or prior to January 15, 1997 in the case of 1996), the Company shall furnish to each Paying 62 Agent such information as may be reasonably requested by each Paying Agent in order that each Paying Agent may prepare the information which it is required to report for such year on Internal Revenue Service Forms 1096 and 1099 pursuant to Section 6049 of the Internal Revenue Code of 1986, as amended. Such information shall include the amount of original issue discount includible in income for each $25 of principal amount at Stated Maturity of outstanding Securities during such year. ARTICLE XI REDEMPTION OF SECURITIES SECTION 11.1. Applicability of This Article. Redemption of Securities of any series (whether by operation of a sinking fund or otherwise) as permitted or required by any form of Security issued pursuant to this Indenture shall be made in accordance with such form of Security and this Article; provided, however, that if any provision of any such form of Security shall conflict with any provision of this Article, the provision of such form of Security shall govern. Except as otherwise set forth in the form of Security for such series, each Security of such series shall be subject to partial redemption only in the amount of $25 or integral multiples thereof. SECTION 11.2. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Securities shall be evidenced by or pursuant to a Board Resolution. In case of any redemption at the election of the Company of any of the Securities of any particular series and having the same terms, the Company shall, not less than 30 nor more than 90 days prior to the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee and, in the case of Securities of a series held by a BankAmerica Trust, the related Property Trustee of such date and of the principal amount of Securities of that series to be redeemed and provide the additional information required to be included in the notice or notices contemplated by Section 11.4. In the case of any redemption of Securities prior to the expiration of any restriction on such redemption provided in the terms of such Securities, the Company shall furnish the Trustee with an Officers' Certificate and an Opinion of Counsel evidencing compliance with such restriction. The Company shall have received the prior approval of the Federal Reserve if then required under applicable capital guidelines or policies of the Federal Reserve prior to redeeming any Securities pursuant hereto. SECTION 11.3. Selection of Securities to be Redeemed. If less than all the Securities of any series are to be redeemed, the particular Securities to be redeemed shall be selected not more than 90 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of a portion of the principal amount of any Security of such series, provided that the unredeemed portion of the principal amount of any Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) 63 for such Security. If less than all the Securities of such series and of a specified tenor are to be redeemed (unless such redemption affects only a single Security), the particular Securities to be redeemed shall be selected not more than 90 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series and specified tenor not previously called for redemption in accordance with the preceding sentence. The Trustee shall promptly notify the Company in writing of the Securities selected for partial redemption and the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security which has been or is to be redeemed. If the Company shall so direct, Securities registered in the name of the Company, any Affiliate or any Subsidiary thereof shall not be included in the Securities selected for redemption. SECTION 11.4. Notice of Redemption. Notice of redemption shall be given by first-class mail, postage prepaid, mailed not later than the thirtieth day, and not earlier than the ninetieth day, prior to the Redemption Date, to each Holder of Securities to be redeemed, at the address of such Holder as it appears in the Securities Register. With respect to Securities of each series to be redeemed, each notice of redemption shall state: (a) the Redemption Date; (b) the Redemption Price or if the Redemption Price cannot be calculated prior to the time the notice is required to be sent, the estimate of the Redemption Price provided pursuant to the Indenture together with a statement that it is an estimate and that the actual Redemption Price will be calculated on the third Business Day prior to the Redemption Date (if such an estimate of the Redemption Price is given, a subsequent notice shall be given as set forth above setting forth the Redemption Price promptly following the calculation thereof); (c) if less than all Outstanding Securities of such particular series and having the same terms are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the particular Securities to be redeemed; (d) that on the Redemption Date, the Redemption Price will become due and payable upon each such Security or portion thereof, and that interest thereon, if any, shall cease to accrue on and after said date; (e) the place or places where such Securities are to be surrendered for payment of the Redemption Price; (1) that the redemption is for a sinking fund, if such is the case; and 64 (g) such other provisions as may be required in respect of the terms of a particular series of Securities. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company and shall not be irrevocable. The notice if mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. In any case, a failure to give such notice by mail or any defect in the notice to the Holder of any Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security. SECTION 11.5. Deposit of Redemption Price. Prior to 10:00 a.m. New York City time on the Redemption Date specified in the notice of redemption given as provided in Section 11.4, the Company will deposit with the Trustee or with one or more Paying Agents (or if the Company is acting as its own Paying Agent, the Company will segregate and hold in trust as provided in Section 10.3) an amount of money sufficient to pay the Redemption Price of, and any accrued interest (including Additional Interest) on, all the Securities which are to be redeemed on that date. SECTION 11.6. Payment of Securities Called for Redemption. If any notice of redemption has been given as provided in Section 11.4, the Securities or portion of Securities with respect to which such notice has been given shall become due and payable on the date and at the place or places stated in such notice at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date. On presentation and surrender of such Securities at a Place of Payment in said notice specified, the said securities or the specified portions thereof shall be paid and redeemed by the Company at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date; provided, however, that, unless otherwise specified as contemplated by Section 3.1, installments of interest whose Stated Maturity is on or prior to the Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant record dates according to their terms and the provisions of Section 3.7. Upon presentation of any Security redeemed in part only, the Company shall execute and the Trustee shall authenticate and deliver to the Holder thereof, at the expense of the Company, a new Security or Securities of the same series, of authorized denominations, in aggregate principal amount equal to the unredeemed portion of the Security so presented and having the same Original Issue Date, Stated Maturity and terms. If a Global Security is so surrendered, such new Security (subject to Section 3.5) will also be a new Global Security. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal of and premium, if any, on such Security shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security. 65 SECTION 11.7. Right of Redemption of Securities Initially Issued to a BankAmerica Trust. In the case of the Securities of a series initially issued to a BankAmerica Trust, if specified as contemplated by Section 3.1, the Company, at its option, may redeem such Securities (i) on or after the date specified as contemplated by Section 3.1, in whole at any time or in part from time to time, or (ii) upon the occurrence and during the continuation of a Tax Event or Capital Treatment Event, prior to the date specified as contemplated by Section 3.1 and within 90 days following the occurrence of such Tax Event or Capital Treatment Event in respect of such BankAmerica Trust, in whole (but not in part), in each case at a Redemption Price specified as contemplated by Section 3.1. ARTICLE XII SINKING FUNDS SECTION 12.1. Applicability of Article. The provisions of this Article shall be applicable to any sinking fund for the retirement of Securities of any series except as otherwise specified as contemplated by Section 3.1 for such Securities. The minimum amount of any sinking fund payment provided for by the terms of any Securities of any series is herein referred to as a "mandatory sinking fund payment," and any sinking fund payment in excess of such minimum amount which is permitted to be made by the terms of such Securities of any series is herein referred to as an "optional sinking fund payment." If provided for by the terms of any Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 12.2. Each sinking fund payment shall be applied to the redemption (or purchase by tender or otherwise) of Securities of any series as provided for by the terms of such Securities. SECTION 12.2. Satisfaction of Sinking Fund Payments with Securities. In lieu of making all or any part of a mandatory sinking fund payment with respect to any Securities of a series in cash, the Company may at its option, at any time no more than 16 months and no less than 45 days prior to the date on which such sinking fund payment is due, deliver to the Trustee Securities of such series (together with the unmatured coupons, if any, appertaining thereto) theretofore purchased or otherwise acquired by the Company, except Securities of such series that have been redeemed through the application of mandatory or optional sinking fund payments pursuant to the terms of the Securities of such series, accompanied by a Company Order instructing the Trustee to credit such obligations and stating that the Securities of such series were originally issued by the Company by way of bona fide sale or other negotiation for value; provided that the Securities to be so credited have not been previously so credited. The Securities to be so credited shall be received and credited for such purpose by the Trustee at the redemption price for such Securities, as specified in the Securities 66 so to be redeemed, for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly. SECTION 12.3. Redemption of Securities for Sinking Fund. Not less than 45 days prior to each sinking fund payment date for any series of Securities, the Company will deliver to the Trustee an Officers' Certificate specifying the amount of the next ensuing sinking fund payment for such Securities pursuant to the terms of such Securities, the portion thereof, if any, which is to be satisfied by payment of cash in the currency in which the Securities of such series are payable (except as provided pursuant to Section 3.1) and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities pursuant to Section 12.2 and will also deliver to the Trustee any Securities to be so delivered. Such Officers' Certificate shall be irrevocable and upon its delivery the Company shall be obligated to make the cash payment or payments therein referred to, if any, on or before the succeeding sinking fund payment date. In the case of the failure of the Company to deliver such Officers' Certificate (or, as required by this Indenture, the Securities and coupons, if any, specified in such Officers' Certificate) by the due date therefor, the sinking fund payment due on the succeeding sinking fund payment date for such series shall be paid entirely in cash and shall be sufficient to redeem the principal amount of the Securities of such series subject to a mandatory sinking fund payment without the right to deliver or credit securities as provided in Section 12.2 and without the right to make the optional sinking fund payment with respect to such series at such time. Any sinking fund payment or payments (mandatory or optional) made in cash plus any unused balance of any preceding sinking fund payments made with respect to the Securities of any particular series shall be applied by the Trustee (or by the Company if the Company is acting as its own Paying Agent) on the sinking fund payment date on which such payment is made (or, if such payment is made before a sinking fund payment date, on the sinking fund payment date immediately following the date of such payment) to the redemption of Securities of such series at the Redemption Price specified in such Securities with respect to the sinking fund. Any sinking fund moneys not so applied or allocated by the Trustee (or, if the Company is acting as its own Paying Agent, segregated and held in trust by the Company as provided in Section 10.3) for such series and together with such payment (or such amount so segregated) shall be applied in accordance with the provisions of this Section 12.3. Any and all sinking fund moneys with respect to the Securities of any particular series held by the Trustee (or if the Company is acting as its own Paying Agent, segregated and held in trust as provided in Section 10.3) on the last sinking fund payment date with respect to Securities of such series and not held for the payment or redemption of particular Securities of such series shall be applied by the Trustee (or by the Company if the Company is acting as its own Paying Agent), together with other moneys, if necessary, to be deposited (or segregated) sufficient for the purpose, to the payment of the principal of the Securities of such series at Maturity. The Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 11.3 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 11.4. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Section 11.6. On or before each sinking fund payment date, the Company shall pay to the 67 Trustee (or, if the Company is acting as its own Paying Agent, the Company shall segregate and hold in trust as provided in Section 10.3) in cash a sum in the currency in which Securities of such series are payable (except as provided pursuant to Section 3.1) equal to the principal, premium, if any, and any interest accrued to the Redemption Date for Securities or portions thereof to be redeemed on such sinking fund payment date pursuant to this Section 12.3. Neither the Trustee nor the Company shall redeem any Securities of a series with sinking fund moneys or mail any notice of redemption of Securities of such series by operation of the sinking fund for such series during the continuance of a default in payment of interest, if any, on any Securities of such series or of any Event of Default (other than an Event of Default occurring as a consequence of this paragraph) with respect to the Securities of such series, except that if the notice of redemption shall have been provided in accordance with the provisions hereof, the Trustee (or the Company, if the Company is then acting as its own Paying Agent) shall redeem such Securities if cash sufficient for that purpose shall be deposited with the Trustee (or segregated by the Company) for that purpose in accordance with the terms of this Article XII. Except as aforesaid, any moneys in the sinking fund for such series at the time when any such default or Event of Default shall occur and any moneys thereafter paid into such sinking fund shall, during the continuance of such default or Event of Default, be held as security for the payment of the Securities and coupons, if any, of such series; provided, however, that in case such default or Event of Default shall have been cured or waived herein, such moneys shall thereafter be applied on the next sinking fund payment date for the Securities of such series on which such moneys may be applied pursuant to the provisions of this Section 12.3. ARTICLE XIII SUBORDINATION OF SECURITIES SECTION 13.1. Securities Subordinate to Senior Indebtedness. The Company covenants and agrees, and each Holder of a Security, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Article, the payment of the principal of (and premium, if any) and interest (including any Additional Interest) on each and all of the Securities are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Indebtedness. SECTION 13.2. No Payment When Senior Indebtedness in Default; Payment Over of Proceeds Upon Dissolution, Etc. In the event that the Company shall default in the payment of any principal of (or premium, if any) or interest on any Senior Indebtedness when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, upon written notice of such default to the Company by the holders of Senior Indebtedness or any trustee therefor, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or 68 otherwise) shall be made or agreed to be made on account of the principal of (or premium, if any) or interest on any of the Securities, or in respect of any redemption, repayment, retirement, purchase or other acquisition of any of the Securities. In the event of (a) any insolvency, bankruptcy, receivership, liquidation, reorganization, readjustment, composition or other similar proceedings relating to the Company, its creditors or its property, (b) any proceeding for the liquidation, dissolution or other winding up of the Company, voluntary or involuntary, whether or not involving insolvency or bankruptcy proceedings, (c) any assignment by the Company for the benefit of Creditors or (d) any other marshalling of the assets of the Company (each such event, if any, herein sometimes referred to as a "Proceeding"), all Senior Indebtedness (including any interest thereon accruing after the commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made to any Holder of any of the Securities on account thereof. Any payment or distribution, whether in cash, securities or other property (other than securities of the Company or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Indebtedness at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Securities of any series shall be paid or delivered directly to the holders of Senior Indebtedness in accordance with the priorities then existing among such holders until all Senior Indebtedness (including any interest thereon accruing after the commencement of any Proceeding) shall have been paid in full. In the event of any Proceeding, after payment in full of all sums owing with respect to Senior Indebtedness, the Holders of the Securities, together with the holders of any obligations of the Company ranking on a parity with the Securities (which for this purpose only shall include the Allocable Amounts of Senior Subordinated Debt), shall be entitled to be paid from the remaining assets of the Company the amounts at the time due and owing on account of unpaid principal of (and premium, if any) and interest on the Securities and such other obligations before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any capital stock or any obligations of the Company ranking junior to the Securities and such other obligations. In the event that, notwithstanding the foregoing, any payment or distribution of any character or any security, whether in cash, securities or other property (other than securities of the Company or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Indebtedness at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), shall be received by the Trustee or any Holder in contravention of any of the terms hereof and before all Senior Indebtedness shall have been paid in full, such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to, the holders of the Senior Indebtedness at the time outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Indebtedness remaining unpaid, to the extent necessary to pay all such Senior Indebtedness in 69 full. In the event of the failure of the Trustee or any Holder to endorse or assign any such payment, distribution or security, each holder of Senior Indebtedness is hereby irrevocably authorized to endorse or assign the same. The Trustee and Holders will take such action (including, without limitation, the delivery of this Indenture to an agent for the holders of Senior Indebtedness or consent to the filing of a financing statement with respect hereto) as may, in the opinion of counsel designated by the holders of a majority in principal amount of the Senior Indebtedness at the time outstanding, be necessary or appropriate to assure the effectiveness of the subordination effected by these provisions. The provisions of this Section 13.2 shall not impair any rights, interests, remedies or powers of any secured creditor of the Company in respect of any security interest the creation of which is not prohibited by the provisions of this Indenture. The securing of any obligations of the Company, otherwise ranking on a parity with the Securities or ranking junior to the Securities, shall not be deemed to prevent such obligations from constituting, respectively, obligations ranking on a parity with the Securities or ranking junior to the Securities. SECTION 13.3. Payment Permitted If No Default. Nothing contained in this Article or elsewhere in this Indenture, or in any of the Securities, shall prevent (a) the Company at any time, except during the conditions described in the first paragraph of Section 13.2 or the pendency of any Proceeding referred to in Section 13.2, from making payments at any time of principal of (and premium, if any) or interest (including Additional Interest) on the Securities, or (b) the application by the Trustee of any moneys deposited with it hereunder to the payment of or on account of the principal of (and premium, if any) or interest (including any Additional Interest) on the Securities or the retention of such payment by the Holders, if, at the time of such application by the Trustee, it did not have knowledge that such payment would have been prohibited by the provisions of this Article. SECTION 13.4. Subrogation to Rights of Holders of Senior Indebtedness. Subject to the payment in full of all amounts due or to become due on all Senior Indebtedness, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Indebtedness, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Indebtedness pursuant to the provisions of this Article (equally and ratably with the holders of all indebtedness of the Company which by its express terms is subordinated to Senior Indebtedness of the Company to substantially the same extent as the Securities are subordinated to the Senior Indebtedness and is entitled to like rights of subrogation by reason of any payments or distributions made to holders of such Senior Indebtedness) to the rights of the holders of such Senior Indebtedness to receive payments and distributions of cash, property and securities applicable to the Senior Indebtedness until the principal of (and premium, if any) and interest on the Securities shall be paid in full. For purposes of such subrogation, no payments or 70 distributions to the holders of the Senior Indebtedness of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article, and no payments over pursuant to the provisions of this Article to the holders of Senior Indebtedness by Holders of the Securities or the Trustee, shall, as among the Company, its creditors other than holders of Senior Indebtedness, and the Holders of the Securities, be deemed to be a payment or distribution by the Company to or on account of the Senior Indebtedness. SECTION 13.5. Provisions Solely to Define Relative Rights. The provisions of this Article are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Indebtedness on the other hand. Nothing contained in this Article or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as between the Company and the Holders of the Securities, the obligations of the Company, which are absolute and unconditional, to pay to the Holders of the Securities the principal of (and premium, if any) and interest (including any Additional Interest) on the Securities as and when the same shall become due and payable in accordance with their terms; or (b) affect the relative rights against the Company of the Holders of the Securities and creditors of the Company other than their rights in relation to the holders of Senior Indebtedness; or (c) prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture including, without limitation, filing and voting claims in any Proceeding, subject to the rights, if any, under this Article of the holders of Senior Indebtedness to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder. SECTION 13.6. Trustee to Effectuate Subordination. Each Holder of a Security by his or her acceptance thereof authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination provided in this Article and appoints the Trustee his or her attorney-in-fact for any and all such purposes. SECTION 13.7. No Waiver of Subordination Provisions. No right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or be otherwise charged with. Without in any way limiting the generality of the immediately preceding paragraph, the holders of Senior Indebtedness may, at any time and from to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to the Holders of the Securities and without impairing or releasing the subordination provided in this Article or the obligations hereunder of the Holders of the Securities to the holders of Senior 71 Indebtedness, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness or any instrument evidencing the same or any agreement under which Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii) release any Person liable in any manner for the collection of Senior Indebtedness; and (iv) exercise or refrain from exercising any rights against the Company and any other Person. SECTION 13.8. Notice to Trustee. The Company shall give prompt written notice to the Trustee of any fact known to the Company which would prohibit the making of any payment to or by the Trustee in respect of the Securities. Notwithstanding the provisions of this Article or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until the Trustee shall have received written notice thereof from the Company or a holder of Senior Indebtedness or from any trustee, agent or representative therefor; provided, however, that if the Trustee shall not have received the notice provided for in this Section at least two Business Days prior to the date upon which by the terms hereof any monies may become payable for any purpose (including, without limitation, the payment of the principal of (and premium, if any) or interest (including any Additional Interest) on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary which may be received by it within two Business Days prior to such date. Subject to the provisions of Section 6.1, the Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior Indebtedness (or a trustee or attorney-in-fact therefor) to establish that such notice has been given by a holder of Senior Indebtedness (or a trustee or attorney-in-fact therefor). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. SECTION 13.9. Reliance on Judicial Order or Certificate of Liquidating Agent. Upon any payment or distribution of assets of the Company referred to in this Article, the Trustee, subject to the provisions of Section 6.1, and the Holders of the Securities shall be entitled to rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating 72 trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article. SECTION 13.10. Trustee Not Fiduciary for Holders of Senior Indebtedness. The Trustee, in its capacity as trustee under this Indenture, shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Company or to any other Person cash, property or securities to which any holders of Senior Indebtedness shall be entitled by virtue of this Article or otherwise. SECTION 13.11. Rights of Trustee as Holder of Senior Indebtedness; Preservation of Trustee's Rights. The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article with respect to any Senior Indebtedness which may at any time be held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. SECTION 13.12. Article Applicable to Paying Agents. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article in addition to or in place of the Trustee. 73 * * * * This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. BANKAMERICA CORPORATION By: ----------------------------- Attest: /s/ SUSAN JOHNSON ------------------------ Susan Johnson Assistant Vice President BANKERS TRUST COMPANY as Trustee By: /s/ JENNA KAUFMAN ---------------------------- Jenna Kaufman Vice President 74 * * * * This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. BANKAMERICA CORPORATION By: /S/ [ILLEGIBLE] ---------------------- Attest: BANKERS TRUST COMPANY as Trustee By: ----------------------- - -------------------------------------------------------------------------------- BankAmerica Corporation NationsBank (DE) Corporation - -------------------------------------------------------------------------------- FIRST SUPPLEMENTAL INDENTURE Dated as of September 15, 1998 Supplementing the Junior Subordinated Indenture, dated as of December 20, 1996, between BankAmerica Corporation and Bankers Trust Company, as Trustee - -------------------------------------------------------------------------------- FIRST SUPPLEMENTAL INDENTURE, dated as of September 15, 1998 (the "First Supplemental Indenture"), among NationsBank (DE) Corporation, a Delaware corporation ("NationsBank (DE)") and a direct wholly owned subsidiary of NationsBank Corporation, a North Carolina corporation ("NationsBank"), BankAmerica Corporation, a Delaware corporation ("BankAmerica"), and Bankers Trust Company, as Trustee (the "Trustee") under the Indenture referred to herein; WHEREAS, BankAmerica and the Trustee heretofore executed and delivered a Junior Subordinated Indenture, dated as of December 20, 1996 (the "Indenture"); and WHEREAS, pursuant to the Indenture BankAmerica issued and the Trustee authenticated and delivered one or more series of BankAmerica's Notes (the "Securities"); and WHEREAS, NationsBank and BankAmerica have entered into the Agreement and Plan of Reorganization, dated as of April 10, 1998, pursuant to which (i) NationsBank will merge (the "Reincorporation Merger") with and into NationsBank (DE), in accordance with the terms and conditions of the Plan of Reincorporation Merger by and between NationsBank and NationsBank (DE), dated as of August 3, 1998, with NationsBank (DE) as the surviving corporation in the Reincorporation Merger, and (ii) BankAmerica will thereafter merge (the "Merger," and together with the Reincorporation Merger, the "Reorganization")with and into NationsBank (DE), with NationsBank (DE) as the surviving corporation in the Merger; and WHEREAS, the Reorganization is expected to be consummated on September 30, 1998; and WHEREAS, Section 8.1 of the Indenture provides that in the case of the Reorganization, NationsBank (DE) shall expressly assume by supplemental indenture all the obligations under the Securities and the Indenture on the part of BankAmerica to be performed or observed; and WHEREAS, Section 9.1 of the Indenture provides that BankAmerica and the Trustee may amend the Indenture and the Securities without notice to or consent of any Holders of the Securities in order to comply with Article VIII of the Indenture; and WHEREAS, this First Supplemental Indenture has been duly authorized by all necessary corporate action on the part of each of NationsBank (DE) and BankAmerica. NOW, THEREFORE, NationsBank (DE), BankAmerica and the Trustee agree as follows for the equal and ratable benefit of the Holders of the Securities: 2 ARTICLE I ASSUMPTION BY SUCCESSOR CORPORATION SECTION 1.1. Assumption of the Securities. NationsBank (DE) hereby expressly assumes the due and punctual payment of the principal of (and premium, if any) and interest (including any Additional Interest) on all the Securities and the performance of every covenant of the Indenture on the part of BankAmerica to be performed or observed. SECTION 1.2. Trustee's Acceptance. The Trustee hereby accepts this First Supplemental Indenture and agrees to perform the same under the terms and conditions set forth in the Indenture. ARTICLE II MISCELLANEOUS SECTION 2.1. Effect of Supplemental Indenture. Upon the later to occur of (i) the execution and delivery of this First Supplemental Indenture by NationsBank (DE), BankAmerica and the Trustee and (ii) the consummation of the Reorganization, the Indenture shall be supplemented in accordance herewith, and this First Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Securities heretofore or hereafter authenticated and delivered under the Indenture shall be bound thereby. SECTION 2.2. Indenture Remains in Full Force and Effect. Except as supplemented hereby, all provisions in the Indenture shall remain in full force and effect. SECTION 2.3. Indenture and Supplemental Indenture Construed Together. This First Supplemental Indenture is an indenture supplemental to and in implementation of the Indenture, and the Indenture and this First Supplemental Indenture shall henceforth be read and construed together. SECTION 2.4. Confirmation and Preservation of Indenture. The Indenture as supplemented by this First Supplemental Indenture is in all respects confirmed and preserved. SECTION 2.5. Conflict with Trust Indenture Act. If any provision of this First Supplemental Indenture limits, qualifies or conflicts with any provision of the Trust Indenture Act ("TIA") that is required under the TIA to be part of and govern any provision of this First Supplemental Indenture, the provision of the TIA shall control. If any provision of this First Supplemental Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the provision of the TIA shall be deemed to apply to the Indenture as so modified or to be excluded by this First Supplemental Indenture, as the case may be. 3 SECTION 2.6. Severability. In case any provision in this First Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 2.7. Terms Defined in the Indenture. All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Indenture. SECTION 2.8. Headings. The Article and Section headings of this First Supplemental Indenture have been inserted for convenience of reference only, are not to be considered part of this Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof. SECTION 2.9. Benefits of First Supplemental Indenture, etc. Nothing in this First Supplemental Indenture or the Securities, express or implied, shall give to any Person, other than the parties hereto and thereto and their successors hereunder and thereunder and the Holders of the Securities, any benefit of any legal or equitable right, remedy or claim under the Indenture, this First Supplemental Indenture or the Securities. SECTION 2.10. Successors. All agreements of NationsBank (DE) in this First Supplemental Indenture shall bind its successors. All agreements of the Trustee in this First Supplemental Indenture shall bind its successors. SECTION 2.11. Trustee Not Responsible for Recitals. The recitals contained herein shall be taken as the statements of BankAmerica and NationsBank (DE), and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to, and shall not be responsible for, the validity or sufficiency of this First Supplemental Indenture. SECTION 2.12. Certain Duties and Responsibilities of the Trustees. In entering into this First Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture relating to the conduct or affecting the liability or affording protection to the Trustee, whether or not elsewhere herein so provided. SECTION 2.13. Governing Law. This First Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the jurisdiction which govern the Indenture and its construction. SECTION 2.14. Counterpart originals. The parties may sign any number of copies of this First Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 4 IN WITNESS WHEREOF, the parties have caused this First Supplemental Indenture to be duly executed as of the date first written above. NationsBank (DE) Corporation By: /s/ John E. Mack ------------------------------------ Name: John E. Mack Title: Senior Vice President Attest: /s/ James W. Kiser - ------------------------------ Secretary BankAmerica Corporation By: /s/ S.M. Maguire ------------------------------------ Name: S.M. Maguire Title: Senior Vice President and Assistant Treasurer Attest: /s/ Cheryl Sorokin - ------------------------------ Secretary Bankers Trust Company, as Trustee By: /s/ Ednora G. Linares ------------------------------------ Name: Ednora G. Linares Title: Assistant Vice President Attest: /s/ Marc Parilla - ------------------------------ Marc Parilla Assistant Treasurer 5 EX-10 18 EXHIBIT 10(B) NATIONSBANK CORPORATION Plan Amendments WHEREAS, many employees of NationsBank Corporation and its subsidiaries participate in employee benefit plans that provide (i) retirement and deferred compensation benefits, (ii) equity incentive compensation and (iii) health, welfare and severance benefits; and WHEREAS, certain of those plans provide special benefits in the event of a "change in control" or "change of control" (including in certain cases accelerated vesting of benefits), including without limitation the following plans: 1986 Restricted Stock Award Plan of NationsBank Corporation, As Amended NationsBank Corporation Key Employee Stock Plan The NationsBank Pension Plan NationsBank Corporation and Designated Subsidiaries Supplemental Executive Retirement Plan NationsBank Corporation and Designated Subsidiaries Supplemental Executive Retirement Plan for Senior Management Employees NationsBank Corporation and Designated Subsidiaries Deferred Compensation Plan for Key Employees NationsBank Corporation and Designated Subsidiaries Supplemental Retirement Plan Barnett Employee Savings and Thrift Plan but specifically excluding the NationsBank Corporation 1996 Associates Stock Option Award Plan (collectively, the "Affected Plans"); and WHEREAS, pursuant to the terms and provisions of the Affected Plans, NationsBank Corporation has reserved the right to amend the Affected Plans in the manner set forth herein; NOW, THEREFORE, NationsBank Corporation does hereby declare that the Affected Plans are hereby amended effective as of the date hereof as follows: 1. Effect of BankAmerica Corporation Transaction. Each Affected Plan is hereby amended by adding the following sentence as a final section to the Affected Plan: "Notwithstanding anything contained herein to the contrary, the transactions between NationsBank Corporation and BankAmerica Corporation contemplated by that certain Agreement and Plan of Reorganization dated as of April 10, 1998 between NationsBank Corporation and BankAmerica Corporation shall not constitute or be deemed to constitute a "Change in Control" or "Change of Control" for purposes of this Plan or for any other purposes." 2. Continuation of Affected Plans. Except as expressly or by necessary implication amended hereby, the Affected Plans shall continue in full force and effect. IN WITNESS WHEREOF, NationsBank Corporation has caused this instrument to be executed by its duly authorized officer as of the 10th day of April, 1998. NATIONSBANK CORPORATION By: /s/ C. J. Cooley ------------------------------------------------- C. J. Cooley, Principal Corporate Personnel Officer The undersigned, solely in its capacity as Trustee of The NationsBank Pension Plan, hereby joins in the execution of this instrument in accordance with Section 11.1 of The NationsBank Pension Plan. NATIONSBANK, N.A. By: /s/ Tom Hortenstine ------------------------------------------- Name: Tom Hortenstine -------------------------------------- Title: SVP ------------------------------------- 2 AMENDMENT TO THE NATIONSBANK CORPORATION AND DESIGNATED SUBSIDIARIES SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN WHEREAS, NationsBank Corporation ("NationsBank") and certain of its subsidiary corporations (collectively with NationsBank, the "Participating Employers") maintain the NationsBank Corporation and Designated Subsidiaries Supplemental Executive Retirement Plan (the "Plan"); and WHEREAS, NationsBank desires to amend the Plan to modify the method of benefit payment under the Plan; and WHEREAS, the Compensation Committee of the Board of Directors of NationsBank has authorized and approved said amendment to the Plan in accordance with the provisions of Article VI of the Plan; NOW, THEREFORE, NationsBank does hereby declare that the Plan is hereby amended effective as of July 1, 1998 as follows: 1. Section 4.12 of the Plan is amended to read as follows: "Section 4.12. Special Election of Single Lump Sum or Installment Payments. (a) Alternative Methods of Payment. Notwithstanding any provisions of the Plan to the contrary, a Participant may irrevocably elect pursuant to this Section 4.12 to have the benefits payable under Sections 4.2, 4.3 or 4.4 upon the Participant's Retirement or the benefits payable under Section 4.6 upon the Participant's death while in Service paid in accordance with one of the following methods of payment and in lieu of the method otherwise applicable under the provisions of this Article IV: (i) a single lump sum payment; (ii) five (5) annual installments; or (iii) ten (10) annual installments. (b) Timing of Elections and Effective Date. Any method of payment election under this Section 4.12 must be made during the ninety (90) day period beginning on the latest of (i) the date the Participant commences participation in the Plan, (ii) the date the Participant attains age fifty-four (54) or (iii) July 1, 1998. Any such election shall be made on such form and pursuant to such procedures as are adopted by the Plan Committee for such purpose and shall become effective upon the first anniversary of the date such election is made. (c) Amount of Payments. The amount of any single lump sum payment payable under this Section 4.12 upon a Participant's Retirement shall be the Commuted Payment Amount determined for such Participant as of the date of such Participant's Retirement. The amount of any single lump sum payment payable under this Section 4.12 upon a Participant's death while in Service [or, to the extent provided in Section 4.6(b), while Disabled] shall be the actuarially equivalent single sum value of the benefits (if any) provided for in Section 4.6(c) determined as of the date of the Participant's death using assumptions consistent with those set forth in Exhibit B to the Plan. The amount of each annual installment payment payable under this Section 4.12 upon a Participant's Retirement or death while in Service shall be the amount necessary to amortize the single lump sum payment that would have been payable with respect to the Participant (if it had been elected) using the 30-year U.S. Treasury bond ask yield for the last business day of the calendar month immediately preceding the Participant's Retirement or death." 2. Except as expressly or by necessary implication amended hereby, the Plan shall continue in full force and effect. IN WITNESS WHEREOF, NationsBank has caused this instrument to be executed by its duly authorized officer as of the 24th day of June, 1998. NATIONSBANK CORPORATION By: /s/ C. J. Cooley -------------------------------- C. J. Cooley Executive Vice President 2 BANKAMERICA CORPORATION Plan Amendments WHEREAS, as a result of the consummation of the transactions contemplated by the Agreement and Plan of Reorganization between NationsBank Corporation and BankAmerica Corporation dated April 10, 1998 (the "BankAmerica Transactions"), BankAmerica Corporation (the "Corporation") and its affiliates sponsor numerous "employee benefit plans" within the meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (each a "Plan" and collectively the "Plans"); and WHEREAS, immediately prior to the consummation of the BankAmerica Transactions, certain of the Plans were sponsored by NationsBank Corporation and its affiliates (the "NationsBank Group Plans") and certain of the Plans were sponsored by BankAmerica Corporation and its affiliates (the "BankAmerica Group Plans"); and WHEREAS, for a period of time following the BankAmerica Transactions, it is anticipated that the NationsBank Group Plans and the BankAmerica Group Plans will continue to be maintained as separate employee benefit programs; and WHEREAS, the Corporation desires to amend the Plans to clarify which groups of employees are covered by the Plans from and after the consummation of the BankAmerica Transactions in order to avoid duplication of coverage; and WHEREAS, pursuant to the terms and provisions of the Plans, the Corporation has reserved the right to amend the Plans as set forth herein; NOW, THEREFORE, the Corporation does hereby declare that the Plans are hereby amended effective as of the date hereof as follows: 1. Effect of BankAmerica Transactions. Each Plan is hereby amended by adding the following Addendum: "ADDENDUM 1998-1 Effect of BankAmerica Transactions (a) Background. NationsBank Corporation and BankAmerica Corporation entered into an Agreement and Plan of Reorganization dated April 10, 1998 pursuant to which NationsBank Corporation was re-incorporated as a Delaware corporation, BankAmerica Corporation was merged into NationsBank Corporation, and the resulting corporation was renamed as BankAmerica Corporation (the "BankAmerica Transactions"). Immediately prior to the consummation of the BankAmerica Transactions, certain employee benefit plans were sponsored by NationsBank Corporation and its subsidiaries (the "NationsBank Group Plans") and certain employee benefit plans were sponsored by BankAmerica Corporation and its subsidiaries (the "BankAmerica Group Plans"). The purpose of this Addendum is to clarify which groups of employees are covered by the NationsBank Group Plans and the BankAmerica Group Plans from and after the consummation of the BankAmerica Transactions in order to avoid duplication of coverage. (b) Designation of Plan Coverage. From and after the consummation of the BankAmerica Transactions, each employee of BankAmerica Corporation or any of its affiliates shall be classified as a member of either the "NationsBank Group" or the "BankAmerica Group," but not both. In that regard, each employee who immediately prior to the consummation of the BankAmerica Transactions was employed by NationsBank Corporation or any of its affiliates shall be classified as a NationsBank Group member, and each employee who immediately prior to the consummation of the BankAmerica Transactions was employed by BankAmerica Corporation or any of its affiliates shall be classified as a BankAmerica Group member, in either case unless and until a different determination is made by the Principal Corporate Personnel Officer of BankAmerica Corporation, or any other officer of the Corporate Personnel Group of BankAmerica Corporation that is authorized by the Principal Corporate Personnel Officer (an "Authorized Officer"). Members of the NationsBank Group shall participate only in the NationsBank Group Plans in accordance with the terms and provisions of such plans, and members of the BankAmerica Group shall participate only in the BankAmerica Group Plans in accordance with the terms and provisions of such plans, in either case unless and until a different determination is made by an Authorized Officer. Any Authorized Officer shall have the full power and authority in his or her sole and exclusive discretion to determine whether an employee is classified as a member of the NationsBank Group or the BankAmerica Group for purposes of this Addendum, including without limitation in connection with job transfers and persons who are first employed after the consummation of the BankAmerica Transactions." 2. Plan Administrator for BankAmerica Group Plans. The following paragraph (c) is added to the end of Addendum 1998-1 for each BankAmerica Group Plan: "(c) Plan Administrator. From and after the consummation of the BankAmerica Transactions, "Administrative Committee," and to the extent applicable "Investment Committee," for each BankAmerica Group Plan shall mean the individuals then serving as the members of the Corporate Benefits Committee of BankAmerica Corporation (which prior to the consummation of the BankAmerica Transactions was known as the Corporate Benefits Committee of NationsBank Corporation)." 3. Continuation of Plans. Except as expressly or by necessary implication amended hereby, the Plans shall continue in full force and effect. IN WITNESS WHEREOF, BankAmerica Corporation has caused this Instrument to be executed by its duly authorized officer as of the 1st day of October, 1998. BANKAMERICA CORPORATION By: /s/ C. J. Cooley ------------------------------------------- C. J. Cooley, Principal Corporate Personnel Officer 2 EX-10 19 EXHIBIT 10(G) THE NATIONSBANK 401(k) RESTORATION PLAN (as amended and restated effective April 1, 1998)
THE NATIONSBANK 401(K) RESTORATION PLAN TABLE OF CONTENTS Page ---- ARTICLE I DEFINITIONS........................................................................1 Section 1.1 Definitions............................................................1 ARTICLE II PLAN ADMINISTRATION...............................................................3 Section 2.1 Committee..............................................................3 ARTICLE III DEFERRED COMPENSATION PROVISIONS.................................................4 Section 3.1 Employee Elections.....................................................4 Section 3.2 Deferral Accounts......................................................4 Section 3.3 Matching Contribution Restoration Accounts.............................4 Section 3.4 Account Adjustments....................................................5 Section 3.5 Account Payments.......................................................6 Section 3.6 Withdrawals on Account of an Unforeseeable Emergency...................9 ARTICLE IV AMENDMENT AND TERMINATION.........................................................9 Section 4.1 Amendment and Termination..............................................9 ARTICLE V MISCELLANEOUS PROVISIONS..........................................................10 Section 5.1 Nature of Plan and Rights.............................................10 Section 5.2 Termination of Employment.............................................10 Section 5.3 Spendthrift Provision.................................................10 Section 5.4 Employment Noncontractual.............................................10 Section 5.5 Adoption by Other Participating Employers.............................10 Section 5.6 Applicable Law........................................................10 Section 5.7 Merged Plans..........................................................10
i THE NATIONSBANK 401(k) RESTORATION PLAN (as amended and restated effective April 1, 1998) THIS INSTRUMENT OF AMENDMENT AND RESTATEMENT is executed this ___ day of February, 1999 and effective as of the 1st day of April, 1998, by BANKAMERICA CORPORATION, a Delaware corporation (the "Corporation"); Statement of Purpose -------------------- NationsBank Corporation ("NationsBank") entered into an Agreement and Plan of Reorganization with BankAmerica Corporation, a Delaware corporation ("BankAmerica"), dated April 10, 1998 (the "Reorganization Agreement"). Pursuant to the Reorganization Agreement, NationsBank was re-incorporated as a Delaware corporation, BankAmerica merged into NationsBank, and the resulting Delaware corporation was renamed "BankAmerica Corporation," all effective as of the "Effective Time" as defined in the Reorganization Agreement. References herein to the "Corporation" include both NationsBank (prior to the Effective Time) and the Delaware corporation resulting from the consummation of the transactions contemplated by the Reorganization Agreement (from and after the Effective Time). The Corporation sponsors The NationsBank 401(k) Restoration Plan (the "Restoration Plan"). The purpose of the Restoration Plan is to provide benefits, on a non-qualified and unfunded basis, to certain employees whose benefits under The NationsBank 401(k) Plan are adversely affected by the limitations of Sections 401(a)(17), 401(k)(3), 401(m), 402(g) and 415 of the Internal Revenue Code, as well as certain limits placed on the contribution rates of highly compensated participants established by the administrative committee under The NationsBank 401(k) Plan. By this Instrument, the Corporation is amending and restating the Restoration Plan effective April 1, 1998 to (i) change the name of the Restoration Plan from "The NationsBank Retirement Savings Restoration Plan" to "The NationsBank 401(k) Restoration Plan"; (ii) provide new investment elections to Covered Employees; and (iii) otherwise meet current needs. NOW, THEREFORE, for the purposes aforesaid, the Corporation hereby amends and restates the Restoration Plan effective April 1, 1998 to consist of the following Articles I through V: ARTICLE I DEFINITIONS Section 1.1 Definitions. Unless the context clearly indicates otherwise, when used in the Restoration Plan: Account means, collectively, the Deferral Account and Matching Contribution Restoration Account. Code means the Internal Revenue Code of 1986. References to the Code shall include the valid and binding governmental regulations, court decisions and other regulatory and judicial authority issued or rendered thereunder. Code Limitations means any one or more of the limitations and restrictions that Sections 401(a)(17), 401(k)(3), 401(m), 402(g) and 415 of the Code place on the Pre-Tax Employee Contributions and Matching Contributions for a Covered Employee under the 401(k) Plan. In addition, Code Limitations also means and refers to any limitations on contributions under the 401(k) Plan established by the 401(k) Plan administrative committee with respect to highly compensated participants. Committee means the committee designated pursuant to Section 2.1 of the Restoration Plan. Corporation means (i) prior to the "Effective Time" (as defined in the Agreement and Plan of Reorganization dated April 10, 1998 between NationsBank Corporation and BankAmerica Corporation), NationsBank Corporation, a North Carolina corporation and (ii) from and after the Effective Time, BankAmerica Corporation, a Delaware corporation, and any successor thereto. Covered Employee means an Employee eligible to participate in the 401(k) Plan. Deferral Account means the account established and maintained on the books of a Participating Employer to record a Covered Employee's interest under the Restoration Plan attributable to amounts credited to the Covered Employee pursuant to Section 3.2 of the Restoration Plan. Employee means an individual employed by a Participating Employer. 401(k) Plan means The NationsBank 401(k) Plan, as in effect from time to time. Prior to April 1, 1998, the 401(k) Plan was named "The NationsBank Retirement Savings Plan". Matching Contribution Restoration Account means the account established and maintained on the books of a Participating Employer to record a Covered Employee's interest under the Restoration Plan attributable to amounts credited to the Covered Employee pursuant to Section 3.3 of the Restoration Plan. Prior to January 1, 1993, the Restoration Plan referred to this account as the "Restoration Account". Participating Employer means (i) the Corporation, (ii) each other "Participating Employer" under (and as defined in) the 401(k) Plan on the date hereof and (iii) any other incorporated or unincorporated trade or business which may hereafter adopt both the 401(k) Plan and the Restoration Plan. 2 Payment Date, with respect to a Covered Employee who terminates employment with the Participating Employers on or after having attained age fifty-five (55), means the last business day of March of the calendar year following the calendar year in which such termination of employment occurs. Personnel Group means the Personnel Group of the Corporation. Plan Year means the twelve-month period commencing January 1 and ending the following December 31. Restoration Plan means this plan: The NationsBank 401(k) Restoration Plan, as in effect from time to time. Prior to April 1, 1998, the Restoration Plan was named the "NationsBank Retirement Savings Restoration Plan". Single Sum Value of the Account of a Participant who is receiving annual installments pursuant to Section 3.5(c) means the single sum present value of the installments determined as of the relevant determination date using for such purpose as the discount rate the same rate that was used in calculating the amount of the installments pursuant to Section 3.5(c) below. Any capitalized terms used in the Restoration Plan that are defined in the documents comprising the 401(k) Plan have the meanings assigned to them in the 401(k) Plan, unless such terms are otherwise defined above in this Article or unless the context clearly indicates otherwise. ARTICLE II PLAN ADMINISTRATION Section 2.1 Committee. The Restoration Plan shall be administered by the "Committee" under (and as defined in) the 401(k) Plan (although certain provisions of the Restoration Plan shall be administered by the Personnel Group as specified herein). The Committee shall be empowered to interpret the provisions of the Restoration Plan and to perform and exercise all of the duties and powers granted to it under the terms of the Restoration Plan by action of a majority of its members in office from time to time. The Committee may adopt such rules and regulations for the administration of the Restoration Plan as are consistent with the terms hereof and shall keep adequate records of its proceedings and acts. All interpretations and decisions made (both as to law and fact) and other action taken by the Committee with respect to the Restoration Plan shall be conclusive and binding upon all parties having or claiming to have an interest under the Restoration Plan. Not in limitation of the foregoing, the Committee shall have the discretion to decide any factual or interpretative issues that may arise in connection with its administration of the Restoration Plan (including without limitation any determination as to claims for benefits hereunder), and the Committee's exercise of such discretion shall be conclusive and binding on all affected parties as long as it is not arbitrary or capricious. The Committee may delegate any of its duties and powers hereunder to the extent permitted by applicable law. 3 ARTICLE III DEFERRED COMPENSATION PROVISIONS Section 3.1 Employee Elections. Prior to January 1 of a Plan Year, or at such other times as may be established by the Personnel Group, a Covered Employee who is expected to be a highly compensated employee within the meaning of section 414(q) of the Code for the Plan Year of the 401(k) Plan to which such election relates may elect to defer under the Restoration Plan the portion of the Covered Employee's Pre-Tax Employee Contributions otherwise permissible under the 401(k) Plan which cannot be credited to the Covered Employee under the 401(k) Plan for such Plan Year because of the Code Limitations. All elections made under this Section 3.1 shall be made in writing on a form, or pursuant to such other non-written procedures, as may be prescribed from time to time by the Personnel Group and shall be irrevocable for such Plan Year. An election by a Covered Employee under this Section 3.1 shall continue in effect for all subsequent Plan Years (during which the Covered Employee is a highly compensated employee) unless and until changed or terminated by the Covered Employee in accordance with procedures established from time to time by the Personnel Group. Any such change in or termination of an election under this Section 3.1 shall be effective as of the January 1 of the next succeeding Plan Year. If a Covered Employee's Pre-Tax Employee Contributions to the 401(k) Plan are suspended under the terms of the 401(k) Plan in connection with a hardship distribution, then all deferrals under this Plan (including deferrals by Key Executives pursuant to Section 3.4 below) shall be suspended (to the extent such suspension is required by Section 401(k) of the Code) for the same period that the Covered Employee's Pre-Tax Employee Contributions are suspended. Section 3.2 Deferral Accounts. A Participating Employer shall establish and maintain on its books a Deferral Account for each Covered Employee employed by such Participating Employer who elects to defer the receipt of any amount pursuant to Section 3.1 of the Restoration Plan. Such Deferral Account shall be designated by the name of the Covered Employee for whom established. The amount attributable to any Pre-Tax Employee Contribution for a particular pay period during such Plan Year which cannot be credited to the Covered Employee under the 401(k) Plan because of the Code Limitations, and which the Covered Employee has elected to defer pursuant to Section 3.1 of the Restoration Plan, shall be credited to such Deferral Account as of the date such amount would have otherwise been paid to the Covered Employee. Section 3.3 Matching Contribution Restoration Accounts. A Participating Employer shall establish and maintain on its books a Matching Contribution Restoration Account for each Covered Employee employed by such Participating Employer whose Matching Contributions under the 401(k) Plan shall have been limited, directly or indirectly, by the operation of the Code Limitations. Such Matching Contribution Restoration Account shall be designated by the name of the Covered Employee for whom established. If a Covered Employee is a Participant Eligible for Matching Contributions for the Plan Year under the 401(k) Plan, the Covered Employee's Matching Contribution Restoration Account shall be credited as of the Valuation Date under the 401(k) Plan that occurs on the last day of the Plan Year with an amount equal to the sum of Amount A and Amount B, where: 4 Amount A is seventy-five percent (75%) of the sum of the portions (if any) of the amounts credited to the Covered Employee's Deferral Account for the Plan Year pursuant to Section 3.1 of the Restoration Plan that would have been Matchable Pre-Tax Employee Contributions for the Plan Year under the 401(k) Plan had such amounts been contributed to the 401(k) Plan as Pre-Tax Employee Contributions for the Covered Employee and the Code Limitations not applied to the 401(k) Plan. Amount B is seventy-five percent (75%) of the portion (if any) of the actual Matchable Pre-Tax Employee Contributions made to the 401(k) Plan for the Covered Employee for the Plan Year with respect to which Matching Contribution allocations were not made under Section 5.2 of the 401(k) Plan or (if made) were forfeited under Section 5.4 of the 401(k) Plan because of the Code Limitations. Section 3.4 Account Adjustments. (a) Account Adjustments for Deemed Investments. The Committee shall from time to time designate one or more investment vehicle(s) in which the Accounts of Covered Employees shall be deemed to be invested. The investment vehicle(s) may be designated by reference to the investments available under other plans sponsored by a Participating Employer (including the 401(k) Plan). Each Covered Employee shall designate the investment vehicle(s) in which his or her Account shall be deemed to be invested according to the procedures developed by the Personnel Group, except as otherwise required by the terms of the Restoration Plan. No Participating Employer shall be under an obligation to acquire or invest in any of the deemed investment vehicle(s) under this subparagraph, and any acquisition of or investment in a deemed investment vehicle by a Participating Employer shall be made in the name of such Participating Employer and shall remain the sole property of such Participating Employer. Effective April 1, 1998, the designated investment vehicles shall be (and shall remain until such time as changed by the Committee in its sole discretion from time to time according to its procedures for designating investments) the following: (i) 30-Year Treasury Bond Fund; (ii) NationsBank Stable Capital Fund; (iii) Nations Strategic Fixed Income Fund; (iv) Nations Value Fund; (v) Nations Equity Index Fund; (vi) Nations Disciplined Equity Fund; (vii) Nations Managed SmallCap Index Fund; (viii) Nations International Equity Fund; (ix) NationsBank Stock Fund; (x) LifeGoal Balanced Growth Portfolio; (xi) LifeGoal Growth Portfolio; and (xii) LifeGoal Income and Growth Portfolio. The Committee shall also establish from time to time a default Fund into which a Covered Employee's Account shall be deemed to be invested if the Covered Employee fails to provide 5 investment instructions pursuant to this Section 3.4(a). Effective April 1, 1998, such default Fund shall be the NationsBank Stable Capital Fund. (b) Periodic Account Adjustments. Each Account shall be adjusted from time to time at such intervals as determined by the Personnel Group. The Personnel Group may determine the frequency of account adjustments by reference to the frequency of account adjustments under another plan sponsored by a Participating Employer. The amount of the adjustment shall equal the amount that each Covered Employee's Account would have earned (or lost) for the period since the last adjustment had the Account actually been invested in the deemed investment vehicle(s) designated by the Covered Employee for such period pursuant to Section 3.4(a). (c) Account Adjustments Prior to April 1, 1998. Prior to April 1, 1998, Account adjustments were made in accordance with the terms of the Restoration Plan then in effect. The Personnel Group shall determine in its discretion procedures to transition from the methods for determining Account adjustments prior to April 1, 1998 and the methods described in the preceding paragraphs of this Section 3.4 for periods from and after April 1, 1998. Section 3.5 Account Payments. (a) Payment Options. (i) A Covered Employee who first elects to defer amounts under this Article III after having attained age fifty-four (54) shall, at the time of the Covered Employee's initial deferral election, irrevocably elect one of the payment options described in subparagraph (iii) below. (ii) For a Covered Employee who first elects to defer amounts under this Article III before having attained age fifty-four (54), such Covered Employee shall, upon attainment of age fifty-four (54), be given the opportunity to irrevocably elect one of the payment options described in subparagraph (iii) below. (iii) The payment options from which a Covered Employee may elect are as follows: (A) single cash payment, (B) five (5) annual installments or (C) ten (10) annual installments, as such methods are more fully described below. (iv) Any election made under this Section 3.5(a) shall be made on such form, at such time and pursuant to such procedures as determined by the Personnel Group in its sole discretion from time to time. An election made under subparagraph (i) shall be effective upon the later of the date of such election or the attainment of age fifty-five (55). An election made under subparagraph (ii) shall not become effective until the attainment of age fifty-five (55) (or such later date as may be specified in the election). (v) For a Covered Employee who does not yet have an election in effect under this Section 3.5(a) or for a Covered Employee who fails to elect a payment option under this Section 3.5(a), the method of payment shall be the 6 single cash payment. In addition, if the total Account balance of a Covered Employee who is to be paid by the installment method is less than Ten Thousand Dollars ($10,000) determined as of the first installment payment date, then the method of payment shall be the single cash payment. (b) Single Cash Payments. The following provisions shall apply with respect to single cash payments under the Restoration Plan: (i) In the case of a Covered Employee whose termination of employment with the Participating Employers occurs before the Covered Employee attains age fifty-five (55), then such Covered Employee's Account, to the extent vested, shall be determined as of the date of such termination of employment, and such final vested Account balance shall be paid in a single cash payment to the Covered Employee (or to the Covered Employee's "Beneficiary" as determined under the 401(k) Plan in the case of the Covered Employee's termination of employment as the result of the Covered Employee's death) as soon as administratively practicable after the date of such termination of employment. (ii) In the case of a Covered Employee whose termination of employment with the Participating Employers occurs on or after the Covered Employee attains age fifty-five (55) and whose vested Account balance is to be paid in a single cash payment in accordance with Section 3.5(a), then such Covered Employee's Account, to the extent vested, shall continue to be credited with adjustments under Section 3.4 through the Payment Date, except that the rate for such adjustments for the period from March 1 immediately preceding the Payment Date through the Payment Date shall be the rate in effect under the 30-year Treasury Bond Fund as of such March 1. The final vested Account balance as of the Payment Date shall be paid in a single cash payment to the Covered Employee (or to the Covered Employee's "Beneficiary" as determined under the 401(k) Plan in the case of the Covered Employee's termination of employment as the result of the Covered Employee's death) on or about the Payment Date. (c) Annual Installments. In the event a Covered Employee's employment with the Participating Employers terminates after the effectiveness of the Covered Employee's election as to the method of payment under Section 3.5(a) and such method of payment under Section 3.5(a) is annual installments, the amount of such annual installments shall be calculated and paid pursuant to the provisions of this Section 3.5(c). If a Covered Employee dies after the effectiveness of the Covered Employee's election as to the method of payment under Section 3.5(a) and such method of payment under Section 3.5(a) is annual installments, such annual installments (or remaining annual installments in the case of death after commencement of payment) shall be paid to the Covered Employee's "Beneficiary" as determined under the 401(k) Plan. The first installment shall be paid on or about the Payment Date, and each subsequent installment shall be paid on or about each anniversary of the Payment Date during the selected payment period. The amount of the installments shall be calculated as follows: 7 (i) For Covered Employees who Terminate Employment on or after April 1, 1998. The Covered Employee's Account, to the extent vested, shall continue to be credited with adjustments under Section 3.4 through the Payment Date, except that the rate for such adjustments for the period from March 1 immediately preceding the Payment Date through the Payment Date shall be the rate in effect under the 30-year Treasury Bond Fund as of such March 1. The amount of the annual installments shall then be calculated, based on the vested Account balance as of the Payment Date, as equal annual installments amortized over the selected period using the same 30-year Treasury Fund rate. (ii) For Covered Employees who Terminated Employment Prior to April 1, 1998. For Covered Employees who terminated employment prior to April 1, 1998, the amount of annual installments shall be calculated in accordance with the terms of the Restoration Plan as in effect at the time such Covered Employee terminated employment with the Participating Employers. (d) Vesting of Matching Contribution Restoration Account. Notwithstanding any provision of the Restoration Plan to the contrary, if a Covered Employee is not fully (100%) vested in the amount credited to the Employee's Matching Contribution Account and/or the Employee's Pre-1993 Stock/Thrift Plan Matching Contribution Account under the 401(k) Plan at the time of the Employee's termination of employment with the Participating Employers, the amount credited to the Covered Employee's Matching Contribution Restoration Account shall be reduced at the time of such termination of employment to an amount equal to the product of (i) the amount then credited to said Matching Contribution Restoration Account multiplied by (ii) the vested percentage applicable to the Employee's Matching Contribution Account and Pre-1993 Stock/Thrift Plan Matching Contribution Account under the 401(k) Plan as of the date of such termination of employment. The amount by which the Employee's Matching Contribution Restoration Account is reduced by application of the preceding sentence shall be forfeited at the time the Employee terminates employment. (e) Other Payment Provisions. Subject to the provisions of Section 3.6, a Covered Employee shall not be paid any portion of the Employee's Account prior to the Employee's termination of employment with the Participating Employers. Any deferral or payment hereunder shall be subject to applicable payroll and withholding taxes. For purposes of the Restoration Plan, a Covered Employee shall be deemed to have terminated employment with the Participating Employers upon eligibility for benefits under the NationsBank Long-Term Disability Plan as in effect from time to time; provided, however, that the Personnel Group may in its discretion determine that a Covered Employee who is eligible to receive Long-Term Disability Plan benefits has not terminated employment if the Personnel Group concludes that the Covered Employee is likely to return to work. In the event any amount becomes payable under the provisions of the Restoration Plan to a Covered Employee, beneficiary or other person who is a minor or an incompetent, whether or not declared incompetent by a court, such amount may be paid directly to the minor or incompetent person or to such person's fiduciary (or attorney-in-fact in the case of an incompetent) as the Personnel Group, in its sole discretion, may decide, and the Personnel Group shall not be liable to any person for any such decision or any payment pursuant thereto. 8 Section 3.6 Withdrawals on Account of an Unforeseeable Emergency. A Covered Employee who is in active service of a Participating Employer may, in the Committee's sole discretion, receive a refund of all or any part of the amounts previously credited to the Covered Employee's Deferral Account (but not the Covered Employee's Matching Contribution Restoration Account) in the case of an "unforeseeable emergency". A Covered Employee requesting a payment pursuant to this Section shall have the burden of proof of establishing, to the Committee's satisfaction, the existence of such "unforeseeable emergency", and the amount of the payment needed to satisfy the same. In that regard, the Covered Employee shall provide the Committee with such financial data and information as the Committee may request. If the Committee determines that a payment should be made to a Covered Employee under this Section such payment shall be made within a reasonable time after the Committee's determination of the existence of such "unforeseeable emergency" and the amount of payment so needed. As used herein, the term "unforeseeable emergency" means a severe financial hardship to a Covered Employee resulting from a sudden and unexpected illness or accident of the Covered Employee or of a dependent of the Covered Employee, loss of the Covered Employee's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Covered Employee. The circumstances that shall constitute an "unforeseeable emergency" shall depend upon the facts of each case, but, in any case, payment may not be made to the extent that such hardship is or may be relieved (i) through reimbursement or compensation by insurance or otherwise, or (ii) by liquidation of the Covered Employee's assets, to the extent the liquidation of such assets would not itself cause severe financial hardship. Examples of what are not considered to be "unforeseeable emergencies" include the need to send a Covered Employee's child to college or the purchase of a home. Withdrawals of amounts because of an "unforeseeable emergency" shall not exceed an amount reasonably needed to satisfy the emergency need. If any withdrawal is permitted pursuant to this Section during a Plan Year, no further deferral of compensation shall be made during the Plan Year from and after the effective date of the withdrawal. ARTICLE IV AMENDMENT AND TERMINATION Section 4.1 Amendment and Termination. The Corporation shall have the right and power at any time and from time to time to amend the Restoration Plan in whole or in part, on behalf of all Participating Employers, and at any time to terminate the Restoration Plan or any Participating Employer's participation hereunder; provided, however, that no such amendment or termination shall reduce the amount actually credited to the Account(s) of any current or former Covered Employee (or beneficiary of a deceased Covered Employee) on the date of such amendment or termination, or further defer the due dates for the payment of such amounts, without the consent of the affected person. Notwithstanding the provisions of Section 3.6(a), in connection with any termination of the Restoration Plan the Committee shall have the authority to cause the Accounts of all current and former Covered Employees (and beneficiary of any deceased Covered Employees) to be paid in a single sum payment as of a date determined by the Committee or to otherwise accelerate the payment of all Accounts in such manner as the Committee shall determine in its discretion. In that regard, upon any termination of the Restoration Plan the amount of any payment to a former Covered Employee (or beneficiary of a deceased Covered Employee) who is receiving annual installments pursuant to Section 3.6(c) 9 shall be the Single Sum Value of the Covered Employee's Account determined as of the selected determination date. ARTICLE V MISCELLANEOUS PROVISIONS Section 5.1 Nature of Plan and Rights. The Restoration Plan is unfunded and intended to constitute an incentive and deferred compensation plan for a select group of officers and key management employees of the Participating Employers. If necessary to preserve the above intended plan status, the Committee, in its sole discretion, reserves the right to limit or reduce the number of actual participants and otherwise to take any remedial or curative action that the Committee deems necessary or advisable. The Accounts established and maintained under the Restoration Plan by a Participating Employer are for accounting purposes only and shall not be deemed or construed to create a trust fund of any kind or to grant a property interest of any kind to any Employee, designated beneficiary or estate. The amounts credited by a Participating Employer to such Accounts are and for all purposes shall continue to be a part of the general assets of such Participating Employer, and to the extent that an Employee, beneficiary or estate acquires a right to receive payments from such Participating Employer pursuant to the Restoration Plan, such right shall be no greater than the right of any unsecured general creditor of such Participating Employer. Section 5.2 Termination of Employment. For the purposes of the Restoration Plan, an Employee's employment with a Participating Employer shall not be considered to have terminated so long as the Employee is in the employ of any Participating Employer or other member of the Controlled Group. Section 5.3 Spendthrift Provision. No Account balance or other right or interest under the Restoration Plan of an Employee, beneficiary or estate may be assigned, transferred or alienated, in whole or in part, either directly or by operation of law, and no such balance, right or interest shall be liable for or subject to any debt, obligation or liability of the Employee, designated beneficiary or estate. Section 5.4 Employment Noncontractual. The establishment of the Restoration Plan shall not enlarge or otherwise affect the terms of any Employee's employment with his Participating Employer, and such Participating Employer may terminate the employment of the Employee as freely and with the same effect as if the Restoration Plan had not been established. Section 5.5 Adoption by Other Participating Employers. The Restoration Plan may be adopted by any Participating Employer participating under the 401(k) Plan, such adoption to be effective as of the date specified by such Participating Employer at the time of adoption. Section 5.6 Applicable Law. The Restoration Plan shall be governed and construed in accordance with the laws of the State of North Carolina, except to the extent such laws are preempted by the laws of the United States of America. Section 5.7 Merged Plans. From time to time the Participating Employers may cause other nonqualified plans to be merged into the Restoration Plan. Schedule 5.7 attached hereto 10 sets forth the names of the plans that merged into the Restoration Plan by April 1, 1998 and their respective merger dates. Schedule 5.7 shall be updated from time to time to reflect mergers after April 1, 1998. Upon such a merger, the account balance(s) immediately prior to the date of merger of each participant in the merged plan shall be transferred and credited as of the merger date to one or more accounts established under the Restoration Plan for such participant. From and after the merger date, the participant's rights shall be determined under the Restoration Plan, and the participant shall be subject to all of the restrictions, limitations and other terms and provisions of the Restoration Plan. Not in limitation of the foregoing, each Restoration Plan Account established for the participant as a result of the merger shall be periodically adjusted when and as provided in Section 3.4 hereof as in effect from time to time and shall be paid at such time and in such manner as provided in Section 3.5 and Section 3.6 hereof, except to the extent otherwise provided on Schedule 5.7. The Personnel Group shall, in its discretion, establish any procedures it deems necessary or advisable in order to administer any such plan mergers, including without limitation procedures for transitioning from the method of account adjustments under the prior plan to the methods provided for under the Restoration Plan. IN WITNESS WHEREOF, this instrument has been executed by the Corporation as of the day and year first above written. BANKAMERICA CORPORATION By: /s/ ANN P. WEST ----------------------------------- Title: SENIOR VICE PRESIDENT ----------------------------- 11 SCHEDULE 5.7 MERGED PLANS AS OF APRIL 1, 1998 Plan Name Date of Merger - --------- -------------- C&S Policy Committee Supplemental December 31, 1992 Savings Plan C&S Key Executive Supplemental December 31, 1992 Savings Plan C&S/Sovran Supplemental Retirement December 31, 1992 Plan for Former Sovran Executives (Thrift Restoration Benefits) First & Merchants Corporation Deferred March 31, 1993 Management Incentive Compensation Plan Sovran Deferred Compensation Plan March 31, 1993 NationsBank of Texas, N.A. Profit March 31, 1993 Sharing Restoration Plan Thrift Plan Reserve Account Maintained March 31, 1993 Under the NationsBank Corporation and Designated Subsidiaries Supplemental Executive Retirement Plan Bank South Executive Bonus Deferral Plan July 1, 1996 Boatmen's Bancshares, Inc. Executive Deferred December 31, 1997 Compensation Plan Fourth Financial Corporation Executive Deferred December 31, 1997 Compensation Plan NationsBank Corporation Key Employee Deferral Plan April 1, 1998 Deferred compensation components of the NationsBank April 1, 1998 Corporation Executive Incentive Compensation Plan THE NATIONSBANK 401(k) RESTORATION PLAN (as amended and restated effective July 1, 1998)
THE NATIONSBANK 401(K) RESTORATION PLAN TABLE OF CONTENTS Page ---- ARTICLE I DEFINITIONS........................................................................1 Section 1.1 Definitions............................................................1 ARTICLE II PLAN ADMINISTRATION...............................................................4 Section 2.1 Committee..............................................................4 ARTICLE III DEFERRED COMPENSATION PROVISIONS.................................................4 Section 3.1 Employee Elections.....................................................4 Section 3.2 Deferral Accounts......................................................5 Section 3.3 Matching Contribution Restoration Accounts.............................5 Section 3.4 Key Executive Deferrals................................................6 Section 3.5 Account Adjustments....................................................7 Section 3.6 Account Payments.......................................................8 Section 3.7 Withdrawals on Account of an Unforeseeable Emergency..................11 ARTICLE IV AMENDMENT AND TERMINATION........................................................11 Section 4.1 Amendment and Termination.............................................11 ARTICLE V MISCELLANEOUS PROVISIONS..........................................................12 Section 5.1 Nature of Plan and Rights.............................................12 Section 5.2 Termination of Employment.............................................12 Section 5.3 Spendthrift Provision.................................................12 Section 5.4 Employment Noncontractual.............................................12 Section 5.5 Adoption by Other Participating Employers.............................12 Section 5.6 Applicable Law........................................................13 Section 5.7 Merged Plans..........................................................13
i THE NATIONSBANK 401(k) RESTORATION PLAN (as amended and restated effective July 1, 1998) THIS INSTRUMENT OF AMENDMENT AND RESTATEMENT is executed as of the 3rd day of February, 1999 and effective as of the 1st day of July, 1998, by BANKAMERICA CORPORATION, a Delaware corporation (the "Corporation"); Statement of Purpose -------------------- NationsBank Corporation ("NationsBank") entered into an Agreement and Plan of Reorganization with BankAmerica Corporation, a Delaware corporation ("BankAmerica"), dated April 10, 1998 (the "Reorganization Agreement"). Pursuant to the Reorganization Agreement, NationsBank was re-incorporated as a Delaware corporation, BankAmerica merged into NationsBank, and the resulting Delaware corporation was renamed "BankAmerica Corporation," all effective as of the "Effective Time" as defined in the Reorganization Agreement. References herein to the "Corporation" include both NationsBank (prior to the Effective Time) and the Delaware corporation resulting from the consummation of the transactions contemplated by the Reorganization Agreement (from and after the Effective Time). The Corporation sponsors The NationsBank 401(k) Restoration Plan (the "Restoration Plan"). The purpose of the Restoration Plan is to provide benefits, on a non-qualified and unfunded basis, to certain employees whose benefits under The NationsBank 401(k) Plan are adversely affected by the limitations of Sections 401(a)(17), 401(k)(3), 401(m), 402(g) and 415 of the Internal Revenue Code, as well as certain limits placed on the contribution rates of highly compensated participants established by the administrative committee under The NationsBank 401(k) Plan. By this Instrument, the Corporation is amending and restating the Restoration Plan effective July 1, 1998 to (i) provide for special deferral elections of annual incentive compensation for certain key employees; and (ii) otherwise meet current needs. NOW, THEREFORE, for the purposes aforesaid, the Corporation hereby amends and restates the Restoration Plan effective July 1, 1998 to consist of the following Articles I through V: ARTICLE I DEFINITIONS Section 1.1 Definitions. Unless the context clearly indicates otherwise, when used in the Restoration Plan: Account means, collectively, the Deferral Account, Matching Contribution Restoration Account, Key Executive Incentive Deferral Account and Key Executive Incentive Matching Account. Annual Incentive Award means, with respect to a Key Executive, any annual incentive award payable to such Key Executive pursuant to (i) the NationsBank Corporation Executive Incentive Compensation Plan (which is being renamed the "Bank of America Executive Incentive Compensation Plan" effective September 30, 1998), (ii) the Corporate Management Incentive Plan or (iii) any other incentive compensation plan of the Corporation or any of its Subsidiaries approved for purposes of this Plan by the Committee. Annual Incentive Awards may be payable annually, quarterly, or on such other basis as provided by the applicable plan. Code means the Internal Revenue Code of 1986. References to the Code shall include the valid and binding governmental regulations, court decisions and other regulatory and judicial authority issued or rendered thereunder. Code Limitations means any one or more of the limitations and restrictions that Sections 401(a)(17), 401(k)(3), 401(m), 402(g) and 415 of the Code place on the Pre-Tax Employee Contributions and Matching Contributions for a Covered Employee under the 401(k) Plan. In addition, Code Limitations also means and refers to any limitations on contributions under the 401(k) Plan established by the 401(k) Plan administrative committee with respect to highly compensated participants. Committee means the committee designated pursuant to Section 2.1 of the Restoration Plan. Corporation means (i) prior to the "Effective Time" (as defined in the Agreement and Plan of Reorganization dated April 10, 1998 between NationsBank Corporation and BankAmerica Corporation), NationsBank Corporation, a North Carolina corporation and (ii) from and after the Effective Time, BankAmerica Corporation, a Delaware corporation, and any successor thereto. Covered Employee means an Employee eligible to participate in the 401(k) Plan. Deferral Account means the account established and maintained on the books of a Participating Employer to record a Covered Employee's interest under the Restoration Plan attributable to amounts credited to the Covered Employee pursuant to Section 3.2 of the Restoration Plan. Employee means an individual employed by a Participating Employer. 2 401(k) Plan means The NationsBank 401(k) Plan, as in effect from time to time. Prior to April 1, 1998, the 401(k) Plan was named "The NationsBank Retirement Savings Plan". Key Executive means a Covered Employee who is designated by the Committee as a Key Executive for purposes of the Restoration Plan. Key Executive Incentive Deferral Account means the account established and maintained on the books of a Participating Employer to record a Key Executive's interest under the Restoration Plan attributable to amounts credited to the Covered Employee pursuant to Section 3.4(b) of the Restoration Plan. Key Executive Incentive Matching Account means the account established and maintained on the books of a Participating Employer to record a Key Executive's interest under the Restoration Plan attributable to amounts credited to the Covered Employee pursuant to Section 3.4(c) of the Restoration Plan. Matching Contribution Restoration Account means the account established and maintained on the books of a Participating Employer to record a Covered Employee's interest under the Restoration Plan attributable to amounts credited to the Covered Employee pursuant to Section 3.3 of the Restoration Plan. Prior to January 1, 1993, the Restoration Plan referred to this account as the "Restoration Account". Participating Employer means (i) the Corporation, (ii) each other "Participating Employer" under (and as defined in) the 401(k) Plan on the date hereof and (iii) any other incorporated or unincorporated trade or business which may hereafter adopt both the 401(k) Plan and the Restoration Plan. Payment Date, with respect to a Covered Employee who terminates employment with the Participating Employers on or after having attained age fifty-five (55), means the last business day of March of the calendar year following the calendar year in which such termination of employment occurs. Personnel Group means the Personnel Group of the Corporation. Plan Year means the twelve-month period commencing January 1 and ending the following December 31. Restoration Plan means this plan: The NationsBank 401(k) Restoration Plan as in effect from time to time. Prior to April 1, 1998, the Restoration Plan was named the "NationsBank Retirement Savings Restoration Plan". Single Sum Value of the Account of a Participant who is receiving annual installments pursuant to Section 3.6(c) means the single sum present value of the installments determined as of the relevant determination date using for such 3 purpose as the discount rate the same rate that was used in calculating the amount of the installments pursuant to Section 3.6(c) below. Any capitalized terms used in the Restoration Plan that are defined in the documents comprising the 401(k) Plan have the meanings assigned to them in the 401(k) Plan, unless such terms are otherwise defined above in this Article or unless the context clearly indicates otherwise. ARTICLE II PLAN ADMINISTRATION Section 2.1 Committee. The Restoration Plan shall be administered by the "Committee" under (and as defined in) the 401(k) Plan (although certain provisions of the Restoration Plan shall be administered by the Personnel Group as specified herein). The Committee shall be empowered to interpret the provisions of the Restoration Plan and to perform and exercise all of the duties and powers granted to it under the terms of the Restoration Plan by action of a majority of its members in office from time to time. The Committee may adopt such rules and regulations for the administration of the Restoration Plan as are consistent with the terms hereof and shall keep adequate records of its proceedings and acts. All interpretations and decisions made (both as to law and fact) and other action taken by the Committee with respect to the Restoration Plan shall be conclusive and binding upon all parties having or claiming to have an interest under the Restoration Plan. Not in limitation of the foregoing, the Committee shall have the discretion to decide any factual or interpretative issues that may arise in connection with its administration of the Restoration Plan (including without limitation any determination as to claims for benefits hereunder), and the Committee's exercise of such discretion shall be conclusive and binding on all affected parties as long as it is not arbitrary or capricious. The Committee may delegate any of its duties and powers hereunder to the extent permitted by applicable law. ARTICLE III DEFERRED COMPENSATION PROVISIONS Section 3.1 Employee Elections. Prior to January 1 of a Plan Year, or at such other times as may be established by the Personnel Group, a Covered Employee who is expected to be a highly compensated employee within the meaning of section 414(q) of the Code for the Plan Year of the 401(k) Plan to which such election relates may elect to defer under the Restoration Plan the portion of the Covered Employee's Pre-Tax Employee Contributions otherwise permissible under the 401(k) Plan which cannot be credited to the Covered Employee under the 401(k) Plan for such Plan Year because of the Code Limitations. All elections made under this Section 3.1 shall be made in writing on a form, or pursuant to such other non-written procedures, as may be prescribed from time to time by the Personnel Group and shall be irrevocable for such Plan Year. An election by a Covered Employee under this Section 3.1 shall continue in effect for all subsequent Plan Years (during which the Covered Employee is a highly compensated employee) unless and until changed or terminated by the Covered Employee in accordance with procedures established from time to time by the Personnel Group. Any such change in or termination of an election under this Section 3.1 shall be effective as of the January 1 of the next succeeding Plan Year. If a Covered Employee's Pre-Tax Employee Contributions to the 401(k) Plan are suspended under the terms of the 401(k) Plan in connection with a hardship distribution, 4 then all deferrals under this Plan (including deferrals by Key Executives pursuant to Section 3.4 below) shall be suspended (to the extent such suspension is required by Section 401(k) of the Code) for the same period that the Covered Employee's Pre-Tax Employee Contributions are suspended. Section 3.2 Deferral Accounts. A Participating Employer shall establish and maintain on its books a Deferral Account for each Covered Employee employed by such Participating Employer who elects to defer the receipt of any amount pursuant to Section 3.1 of the Restoration Plan. Such Deferral Account shall be designated by the name of the Covered Employee for whom established. The amount attributable to any Pre-Tax Employee Contribution for a particular pay period during such Plan Year which cannot be credited to the Covered Employee under the 401(k) Plan because of the Code Limitations, and which the Covered Employee has elected to defer pursuant to Section 3.1 of the Restoration Plan, shall be credited to such Deferral Account as of the date such amount would have otherwise been paid to the Covered Employee. Section 3.3 Matching Contribution Restoration Accounts. A Participating Employer shall establish and maintain on its books a Matching Contribution Restoration Account for each Covered Employee employed by such Participating Employer whose Matching Contributions under the 401(k) Plan shall have been limited, directly or indirectly, by the operation of the Code Limitations. Such Matching Contribution Restoration Account shall be designated by the name of the Covered Employee for whom established. If a Covered Employee is a Participant Eligible for Matching Contributions for the Plan Year under the 401(k) Plan, the Covered Employee's Matching Contribution Restoration Account shall be credited as of the Valuation Date under the 401(k) Plan that occurs on the last day of the Plan Year with an amount equal to the sum of Amount A and Amount B, where: Amount A is seventy-five percent (75%) of the sum of the portions (if any) of the amounts credited to the Covered Employee's Deferral Account for the Plan Year pursuant to Section 3.1 of the Restoration Plan that would have been Matchable Pre-Tax Employee Contributions for the Plan Year under the 401(k) Plan had such amounts been contributed to the 401(k) Plan as Pre-Tax Employee Contributions for the Covered Employee and the Code Limitations not applied to the 401(k) Plan. Amount B is seventy-five percent (75%) of the portion (if any) of the actual Matchable Pre-Tax Employee Contributions made to the 401(k) Plan for the Covered Employee for the Plan Year with respect to which Matching Contribution allocations were not made under Section 5.2 of the 401(k) Plan or (if made) were forfeited under Section 5.4 of the 401(k) Plan because of the Code Limitations. Notwithstanding the foregoing, (i) no amount shall be credited to the Matching Contribution Restoration Account of a Covered Employee for a Plan Year to the extent it relates to incentive compensation payable to the Covered Employee for the Plan Year in excess of One Million Dollars ($1,000,000) (prior to the fifty percent (50%) reduction to the incentive compensation for 5 purposes of being considered eligible "Compensation" under and as defined in the 401(k) Plan) and (ii) any matching contributions related to the deferral of a Key Executive's Annual Incentive Award under Section 3.4 shall be determined exclusively pursuant to the provisions of Section 3.4 and not pursuant to the provisions of this Section 3.3 (although a Key Executive may be credited with matching contributions pursuant to this Section 3.3 related to any non-Annual Incentive Award components of the Key Executive's compensation deferred pursuant to the provisions of Section 3.1). Section 3.4 Key Executive Deferrals. (a) Annual Incentive Award Deferral Elections. A Key Executive with respect to a Plan Year may irrevocably elect, on a form or pursuant to such procedures as the Personnel Group shall establish from time to time, to defer all or a portion of the Key Executive's Annual Incentive Award for a given Plan Year. In order to be effective, a Key Executive's election to defer must be made on or before the date specified by the Personnel Group for such purpose. Such election must normally be made prior to the beginning of the Plan Year to which the election relates. However, the Personnel Group, in its sole and exclusive discretion, may determine that in any Plan Year during which (A) a Key Executive first becomes eligible to defer under this Section 3.4(a) (including the Plan Year in which this deferral feature is first implemented under the Restoration Plan) or (B) a Key Executive who is already eligible to defer certain incentive compensation covered by this Section 3.4(a) becomes eligible to defer incentive compensation not previously covered by this Section 3.4(a), such election may be made by such Key Executive within thirty (30) days after becoming eligible (or at such other times as the Personnel Group may determine consistent with the intent that the Plan operate so as to defer recognition of income taxes on amounts deferred until the date the amounts are actually paid). (b) Annual Incentive Award Deferral Accounts. A Participating Employer shall establish and maintain on its books a Key Executive Incentive Deferral Account for each Key Executive Participant. Each such Account shall be designated by the name of the Key Executive Participant for whom established. The amount of any Annual Incentive Award deferred by a Key Executive shall be credited to such account as of the date such Annual Incentive Award would have otherwise been paid to the Key Executive. (c) Matching Contributions Related to Annual Incentive Award Deferrals. A Participating Employer shall establish and maintain on its books a Key Executive Incentive Matching Account for each Key Executive employed by such Participating Employer who is credited with a matching contribution under this Section 3.4(c). Such Key Executive Incentive Matching Account shall be designated by the name of the Key Executive for whom established. If a Key Executive is a Participant Eligible for Matching Contributions for a Plan Year under the 401(k) Plan and has deferred any portion of the Key Executive's Annual Incentive Award under Section 3.4(a) that would have otherwise been paid during the Plan Year, then the Key Executive Incentive Matching Account of the Key Executive shall be credited as of the Valuation Date under the 401(k) Plan that occurs on the last day of the Plan Year with a matching contribution equal to Amount A times Amount B, where: Amount A is seventy-five percent (75%); and 6 Amount B is the amount of the Annual Incentive Award otherwise payable during the Plan Year that is deferred by the Key Executive pursuant to Section 3.4(a) above, but excluding any such deferrals that exceed three percent (3%) of the Key Executive's total Annual Incentive Award. Notwithstanding the foregoing, the maximum amount of such matching contribution shall equal Twenty-Two Thousand Five Hundred Dollars ($22,500). Section 3.5 Account Adjustments. (a) Account Adjustments for Deemed Investments. The Committee shall from time to time designate one or more investment vehicle(s) in which the Accounts of Covered Employees shall be deemed to be invested. The investment vehicle(s) may be designated by reference to the investments available under other plans sponsored by a Participating Employer (including the 401(k) Plan). Each Covered Employee shall designate the investment vehicle(s) in which his or her Account shall be deemed to be invested according to the procedures developed by the Personnel Group, except as otherwise required by the terms of the Restoration Plan. No Participating Employer shall be under an obligation to acquire or invest in any of the deemed investment vehicle(s) under this subparagraph, and any acquisition of or investment in a deemed investment vehicle by a Participating Employer shall be made in the name of such Participating Employer and shall remain the sole property of such Participating Employer. Effective April 1, 1998, the designated investment vehicles shall be (and shall remain until such time as changed by the Committee in its sole discretion from time to time according to its procedures for designating investments) the following: (i) 30-Year Treasury Bond Fund; (ii) NationsBank Stable Capital Fund; (iii) Nations Strategic Fixed Income Fund; (iv) Nations Value Fund; (v) Nations Equity Index Fund; (vi) Nations Disciplined Equity Fund; (vii) Nations Managed SmallCap Index Fund; (viii) Nations International Equity Fund; (ix) NationsBank Stock Fund (BankAmerica Stock Fund from and after September 30, 1998); (x) LifeGoal Balanced Growth Portfolio; (xi) LifeGoal Growth Portfolio; and (xii) LifeGoal Income and Growth Portfolio. The Committee shall also establish from time to time a default Fund into which a Covered Employee's Account shall be deemed to be invested if the Covered Employee fails to provide investment instructions pursuant to this Section 3.4(a). Effective April 1, 1998, such default Fund shall be the NationsBank Stable Capital Fund. 7 (b) Periodic Account Adjustments. Each Account shall be adjusted from time to time at such intervals as determined by the Personnel Group. The Personnel Group may determine the frequency of account adjustments by reference to the frequency of account adjustments under another plan sponsored by a Participating Employer. The amount of the adjustment shall equal the amount that each Covered Employee's Account would have earned (or lost) for the period since the last adjustment had the Account actually been invested in the deemed investment vehicle(s) designated by the Covered Employee for such period pursuant to Section 3.5(a). (c) Account Adjustments Prior to April 1, 1998. Prior to April 1, 1998, Account adjustments were made in accordance with the terms of the Restoration Plan then in effect. The Personnel Group shall determine in its discretion procedures to transition from the methods for determining Account adjustments prior to April 1, 1998 and the methods described in the preceding paragraphs of this Section 3.4 for periods from and after April 1, 1998. Section 3.6 Account Payments. (a) Payment Options. (i) A Covered Employee who first elects to defer amounts under this Article III after having attained age fifty-four (54) shall, at the time of the Covered Employee's initial deferral election, irrevocably elect one of the payment options described in subparagraph (iii) below. (ii) For a Covered Employee who first elects to defer amounts under this Article III before having attained age fifty-four (54), such Covered Employee shall, upon attainment of age fifty-four (54), be given the opportunity to irrevocably elect one of the payment options described in subparagraph (iii) below. (iii) The payment options from which a Covered Employee may elect are as follows: (A) single cash payment, (B) five (5) annual installments or (C) ten (10) annual installments, as such methods are more fully described below. (iv) Any election made under this Section 3.6(a) shall be made on such form, at such time and pursuant to such procedures as determined by the Personnel Group in its sole discretion from time to time. An election made under subparagraph (i) shall be effective upon the later of the date of such election or the attainment of age fifty-five (55). An election made under subparagraph (ii) shall not become effective until the attainment of age fifty-five (55) (or such later date as may be specified in the election). (v) For a Covered Employee who does not yet have an election in effect under this Section 3.6(a) or for a Covered Employee who fails to elect a payment option under this Section 3.6(a), the method of payment shall be the single cash payment. In addition, if the total Account balance of a Covered Employee who is to be paid by the installment method is less than Ten Thousand 8 Dollars ($10,000) determined as of the first installment payment date, then the method of payment shall be the single cash payment. (b) Single Cash Payments. The following provisions shall apply with respect to single cash payments under the Restoration Plan: (i) In the case of a Covered Employee whose termination of employment with the Participating Employers occurs before the Covered Employee attains age fifty-five (55), then such Covered Employee's Account, to the extent vested, shall be determined as of the date of such termination of employment, and such final vested Account balance shall be paid in a single cash payment to the Covered Employee (or to the Covered Employee's "Beneficiary" as determined under the 401(k) Plan in the case of the Covered Employee's termination of employment as the result of the Covered Employee's death) as soon as administratively practicable after the date of such termination of employment. (ii) In the case of a Covered Employee whose termination of employment with the Participating Employers occurs on or after the Covered Employee attains age fifty-five (55) and whose vested Account balance is to be paid in a single cash payment in accordance with Section 3.6(a), then such Covered Employee's Account, to the extent vested, shall continue to be credited with adjustments under Section 3.5 through the Payment Date, except that the rate for such adjustments for the period from March 1 immediately preceding the Payment Date through the Payment Date shall be the rate in effect under the 30-year Treasury Bond Fund as of such March 1. The final vested Account balance as of the Payment Date shall be paid in a single cash payment to the Covered Employee (or to the Covered Employee's "Beneficiary" as determined under the 401(k) Plan in the case of the Covered Employee's termination of employment as the result of the Covered Employee's death) on or about the Payment Date. (c) Annual Installments. In the event a Covered Employee's employment with the Participating Employers terminates after the effectiveness of the Covered Employee's election as to the method of payment under Section 3.6(a) and such method of payment under Section 3.6(a) is annual installments, the amount of such annual installments shall be calculated and paid pursuant to the provisions of this Section 3.6(c). If a Covered Employee dies after the effectiveness of the Covered Employee's election as to the method of payment under Section 3.6(a) and such method of payment under Section 3.6(a) is annual installments, such annual installments (or remaining annual installments in the case of death after commencement of payment) shall be paid to the Covered Employee's "Beneficiary" as determined under the 401(k) Plan. The first installment shall be paid on or about the Payment Date, and each subsequent installment shall be paid on or about each anniversary of the Payment Date during the selected payment period. The amount of the installments shall be calculated as follows: (i) For Covered Employees who Terminate Employment on or after April 1, 1998. The Covered Employee's Account, to the extent vested, shall continue to be 9 credited with adjustments under Section 3.5 through the Payment Date, except that the rate for such adjustments for the period from March 1 immediately preceding the Payment Date through the Payment Date shall be the rate in effect under the 30-year Treasury Bond Fund as of such March 1. The amount of the annual installments shall then be calculated, based on the vested Account balance as of the Payment Date, as equal annual installments amortized over the selected period using the same 30-year Treasury Fund rate. (ii) For Covered Employees who Terminated Employment Prior to April 1, 1998. For Covered Employees who terminated employment prior to April 1, 1998, the amount of annual installments shall be calculated in accordance with the terms of the Restoration Plan as in effect at the time such Covered Employee terminated employment with the Participating Employers. (d) Vesting of Matching Accounts. Notwithstanding any provision of the Restoration Plan to the contrary, if a Covered Employee is not fully (100%) vested in the amount credited to the Employee's Matching Contribution Account and/or the Employee's Pre-1993 Stock/Thrift Plan Matching Contribution Account under the 401(k) Plan at the time of the Employee's termination of employment with the Participating Employers, the amount credited to the Covered Employee's Matching Contribution Restoration Account and (if applicable) Key Executive Incentive Matching Account shall be reduced at the time of such termination of employment to an amount equal to the product of (i) the amount then credited to said Matching Contribution Restoration Account and (if applicable) Key Executive Incentive Matching Account multiplied by (ii) the vested percentage applicable to the Employee's Matching Contribution Account and Pre-1993 Stock/Thrift Plan Matching Contribution Account under the 401(k) Plan as of the date of such termination of employment. The amount by which the Employee's Matching Contribution Restoration Account and (if applicable) Key Executive Incentive Matching Account are reduced by application of the preceding sentence shall be forfeited at the time the Employee terminates employment. (e) Other Payment Provisions. Subject to the provisions of Section 3.7, a Covered Employee shall not be paid any portion of the Employee's Account prior to the Employee's termination of employment with the Participating Employers. Any deferral or payment hereunder shall be subject to applicable payroll and withholding taxes. For purposes of the Restoration Plan, a Covered Employee shall be deemed to have terminated employment with the Participating Employers upon eligibility for benefits under the NationsBank Long-Term Disability Plan as in effect from time to time; provided, however, that the Personnel Group may in its discretion determine that a Covered Employee who is eligible to receive Long-Term Disability Plan benefits has not terminated employment if the Personnel Group concludes that the Covered Employee is likely to return to work. In the event any amount becomes payable under the provisions of the Restoration Plan to a Covered Employee, beneficiary or other person who is a minor or an incompetent, whether or not declared incompetent by a court, such amount may be paid directly to the minor or incompetent person or to such person's fiduciary (or attorney-in-fact in the case of an incompetent) as the Personnel Group, in its sole discretion, may decide, and the Personnel Group shall not be liable to any person for any such decision or any payment pursuant thereto. 10 Section 3.7 Withdrawals on Account of an Unforeseeable Emergency. A Covered Employee who is in active service of a Participating Employer may, in the Committee's sole discretion, receive a refund of all or any part of the amounts previously credited to the Covered Employee's Accounts (to the extent vested) in the case of an "unforeseeable emergency". A Covered Employee requesting a payment pursuant to this Section shall have the burden of proof of establishing, to the Committee's satisfaction, the existence of such "unforeseeable emergency", and the amount of the payment needed to satisfy the same. In that regard, the Covered Employee shall provide the Committee with such financial data and information as the Committee may request. If the Committee determines that a payment should be made to a Covered Employee under this Section such payment shall be made within a reasonable time after the Committee's determination of the existence of such "unforeseeable emergency" and the amount of payment so needed. The Committee may in its discretion establish the order in which amounts shall be withdrawn under this Section from a Covered Employee's Accounts. As used herein, the term "unforeseeable emergency" means a severe financial hardship to a Covered Employee resulting from a sudden and unexpected illness or accident of the Covered Employee or of a dependent of the Covered Employee, loss of the Covered Employee's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Covered Employee. The circumstances that shall constitute an "unforeseeable emergency" shall depend upon the facts of each case, but, in any case, payment may not be made to the extent that such hardship is or may be relieved (i) through reimbursement or compensation by insurance or otherwise, or (ii) by liquidation of the Covered Employee's assets, to the extent the liquidation of such assets would not itself cause severe financial hardship. Examples of what are not considered to be "unforeseeable emergencies" include the need to send a Covered Employee's child to college or the purchase of a home. Withdrawals of amounts because of an "unforeseeable emergency" shall not exceed an amount reasonably needed to satisfy the emergency need. If any withdrawal is permitted pursuant to this Section during a Plan Year, no further deferral of compensation shall be made during the Plan Year from and after the effective date of the withdrawal. ARTICLE IV AMENDMENT AND TERMINATION Section 4.1 Amendment and Termination. The Corporation shall have the right and power at any time and from time to time to amend the Restoration Plan in whole or in part, on behalf of all Participating Employers, and at any time to terminate the Restoration Plan or any Participating Employer's participation hereunder; provided, however, that no such amendment or termination shall reduce the amount actually credited to the Account(s) of any current or former Covered Employee (or beneficiary of a deceased Covered Employee) on the date of such amendment or termination, or further defer the due dates for the payment of such amounts, without the consent of the affected person. Notwithstanding the provisions of Section 3.6(a), in connection with any termination of the Restoration Plan the Committee shall have the authority to cause the Accounts of all current and former Covered Employees (and beneficiary of any deceased Covered Employees) to be paid in a single sum payment as of a date determined by the Committee or to otherwise accelerate the payment of all Accounts in such manner as the Committee shall determine in its discretion. In that regard, upon any termination of the 11 Restoration Plan the amount of any payment to a former Covered Employee (or beneficiary of a deceased Covered Employee) who is receiving annual installments pursuant to Section 3.6(c) shall be the Single Sum Value of the Covered Employee's Account determined as of the selected determination date. ARTICLE V MISCELLANEOUS PROVISIONS Section 5.1 Nature of Plan and Rights. The Restoration Plan is unfunded and intended to constitute an incentive and deferred compensation plan for a select group of officers and key management employees of the Participating Employers. If necessary to preserve the above intended plan status, the Committee, in its sole discretion, reserves the right to limit or reduce the number of actual participants and otherwise to take any remedial or curative action that the Committee deems necessary or advisable. The Accounts established and maintained under the Restoration Plan by a Participating Employer are for accounting purposes only and shall not be deemed or construed to create a trust fund of any kind or to grant a property interest of any kind to any Employee, designated beneficiary or estate. The amounts credited by a Participating Employer to such Accounts are and for all purposes shall continue to be a part of the general assets of such Participating Employer, and to the extent that an Employee, beneficiary or estate acquires a right to receive payments from such Participating Employer pursuant to the Restoration Plan, such right shall be no greater than the right of any unsecured general creditor of such Participating Employer. Section 5.2 Termination of Employment. For the purposes of the Restoration Plan, an Employee's employment with a Participating Employer shall not be considered to have terminated so long as the Employee is in the employ of any Participating Employer or other member of the Controlled Group. Section 5.3 Spendthrift Provision. No Account balance or other right or interest under the Restoration Plan of an Employee, beneficiary or estate may be assigned, transferred or alienated, in whole or in part, either directly or by operation of law, and no such balance, right or interest shall be liable for or subject to any debt, obligation or liability of the Employee, designated beneficiary or estate. Section 5.4 Employment Noncontractual. The establishment of the Restoration Plan shall not enlarge or otherwise affect the terms of any Employee's employment with his Participating Employer, and such Participating Employer may terminate the employment of the Employee as freely and with the same effect as if the Restoration Plan had not been established. Section 5.5 Adoption by Other Participating Employers. The Restoration Plan may be adopted by any Participating Employer participating under the 401(k) Plan, such adoption to be effective as of the date specified by such Participating Employer at the time of adoption. 12 Section 5.6 Applicable Law. The Restoration Plan shall be governed and construed in accordance with the laws of the State of North Carolina, except to the extent such laws are preempted by the laws of the United States of America. Section 5.7 Merged Plans. From time to time the Participating Employers may cause other nonqualified plans to be merged into the Restoration Plan. Schedule 5.7 attached hereto sets forth the names of the plans that merged into the Restoration Plan by April 1, 1998 and their respective merger dates. Schedule 5.7 shall be updated from time to time to reflect mergers after April 1, 1998. Upon such a merger, the account balance(s) immediately prior to the date of merger of each participant in the merged plan shall be transferred and credited as of the merger date to one or more accounts established under the Restoration Plan for such participant. From and after the merger date, the participant's rights shall be determined under the Restoration Plan, and the participant shall be subject to all of the restrictions, limitations and other terms and provisions of the Restoration Plan. Not in limitation of the foregoing, each Restoration Plan Account established for the participant as a result of the merger shall be periodically adjusted when and as provided in Section 3.5 hereof as in effect from time to time and shall be paid at such time and in such manner as provided in Section 3.6 and Section 3.7 hereof, except to the extent otherwise provided on Schedule 5.7. The Personnel Group shall, in its discretion, establish any procedures it deems necessary or advisable in order to administer any such plan mergers, including without limitation procedures for transitioning from the method of account adjustments under the prior plan to the methods provided for under the Restoration Plan. IN WITNESS WHEREOF, this instrument has been executed by the Corporation as of the day and year first above written. BANKAMERICA CORPORATION By: /s/ ANN P. WEST --------------------------------------- Title: SENIOR VICE PRESIDENT ------------------------------- 13 SCHEDULE 5.7 MERGED PLANS AS OF APRIL 1, 1998 Plan Name Date of Merger - --------- -------------- C&S Policy Committee Supplemental December 31, 1992 Savings Plan C&S Key Executive Supplemental December 31, 1992 Savings Plan C&S/Sovran Supplemental Retirement December 31, 1992 Plan for Former Sovran Executives (Thrift Restoration Benefits) First & Merchants Corporation Deferred March 31, 1993 Management Incentive Compensation Plan Sovran Deferred Compensation Plan March 31, 1993 NationsBank of Texas, N.A. Profit March 31, 1993 Sharing Restoration Plan Thrift Plan Reserve Account Maintained March 31, 1993 Under the NationsBank Corporation and Designated Subsidiaries Supplemental Executive Retirement Plan Bank South Executive Bonus Deferral Plan July 1, 1996 Boatmen's Bancshares, Inc. Executive Deferred December 31, 1997 Compensation Plan Fourth Financial Corporation Executive Deferred December 31, 1997 Compensation Plan NationsBank Corporation Key Employee Deferral Plan April 1, 1998 Deferred compensation components of the NationsBank April 1, 1998 Corporation Executive Incentive Compensation Plan EX-10 20 EXHIBIT 10(H) BANK OF AMERICA EXECUTIVE INCENTIVE COMPENSATION PLAN (as amended and restated effective April 1, 1998) THIS INSTRUMENT OF AMENDMENT AND RESTATEMENT is executed effective as of April 1, 1998 by BANKAMERICA CORPORATION, a Delaware corporation (the "Corporation"). Statement of Purpose NationsBank Corporation ("NationsBank") entered into an Agreement and Plan of Reorganization with BankAmerica Corporation, a Delaware corporation ("BankAmerica"), dated April 10, 1998 (the "Reorganization Agreement"). Pursuant to the Reorganization Agreement, NationsBank was re-incorporated as a Delaware corporation, BankAmerica merged into NationsBank, and the resulting Delaware corporation was renamed "BankAmerica Corporation," all effective as of the "Effective Time" as defined in the Reorganization Agreement. References herein to the "Corporation" include both NationsBank (prior to the Effective Time) and the Delaware corporation resulting from the consummation of the transactions contemplated by the Reorganization Agreement (from and after the Effective Time). The Corporation originally established the NationsBank Corporation Executive Incentive Compensation Plan (the "Plan") effective January 1, 1994, and the Plan was most recently amended and restated effective January 1, 1997. Pursuant to the Plan, certain covered employees of the Corporation may receive annual incentive compensation based on the annual performance of the Corporation consistent with the "performance-based compensation" requirements of Section 162(m) of the Internal Revenue Code. Covered employees have been eligible to defer receipt of incentive compensation that may become payable under the Plan to Accounts established and maintained under the Plan. Effective April 1, 1998, all administration of Accounts is being transferred to the NationsBank 401(k) Restoration Plan, and all future deferrals of incentive compensation payable under this Plan will be administered under the NationsBank 401(k) Restoration Plan. This amendment and restatement of the Plan removes the deferred compensation components of the Plan effective April 1, 1998 consistent with the administrative changes described above. In addition, this amendment and restatement changes the name of the Plan and makes certain related changes in connection with the consummation of the transactions described in the Reorganization Agreement. In accordance with paragraph 7 of the Plan, the amendment and restatement of the Plan set forth herein has been approved by the Board of Directors of the Corporation. NOW, THEREFORE, the Plan is hereby amended and restated in its entirety to consist of the following paragraphs 1 through 9 effective as of the date hereof: 1. NAME: This plan shall be known as (i) prior to the Effective Time, the "NationsBank Corporation Executive Incentive Compensation Plan" and (ii) from and after the Effective Time, the "Bank of America Executive Incentive Compensation Plan" (the "Plan"). 2. PURPOSE AND INTENT: The Corporation established this Plan effective January 1, 1994 for the purpose of providing certain of its senior executive officers with annual incentive compensation based on the annual performance of the Corporation measured by objective corporate financial performance measures. This amendment and restatement is effective April 1, 1998. The intent of the Plan is to provide "performance-based compensation" within the meaning of Section 162(m)(4)(C) of the Code. The provisions of the Plan shall be construed and interpreted to effectuate such intent. 3. DEFINITIONS: For purposes of the Plan, the following terms shall have the following meanings: "CODE" means the Internal Revenue Code of 1986, as amended from time to time, and references thereto shall include the valid Treasury regulations thereunder. "COMMITTEE" means all of the members of the Compensation Committee of the Board of Directors of the Corporation who are Outside Directors. "CORPORATION" means (i) prior to the Effective Time, NationsBank Corporation, a North Carolina corporation and (ii) from and after the Effective Time, BankAmerica Corporation, a Delaware corporation, and any successor thereto. "COVERED EMPLOYEE" for a Plan Year means any employee of the Corporation whose compensation is anticipated to be subject to the provisions of Section 162(m) of the Code and who is designated by the Committee prior to April 1 of such Plan Year as a "Covered Employee" under the Plan for such Plan Year, and any other key employee of the Corporation designated by the Committee prior to April 1 of a Plan Year as a "Covered Employee" under the Plan for such Plan Year. "EFFECTIVE TIME" means the "Effective Time" as defined under the Reorganization Agreement. "NET INCOME" means, with respect to a Plan Year, "net income" of the Corporation for such Plan Year determined in accordance with generally accepted accounting principles that would be reported in the Corporation's Annual Report to Shareholders for such Plan Year assuming payment of all awards under the Plan for such Plan Year without reduction by the Committee. 2 "OUTSIDE DIRECTOR" means an "outside director" within the meaning of Section 162(m)(4)(C)(i) of the Code. "PLAN YEAR" means the fiscal year of the Corporation beginning January 1 and ending December 31. "REORGANIZATION AGREEMENT" means the Agreement and Plan of Reorganization dated April 10, 1998 between NationsBank Corporation and BankAmerica Corporation. 4. ADMINISTRATION: The Committee shall be responsible for administering the Plan. The Committee shall have all of the powers necessary to enable it to properly carry out its duties under the Plan. Not in limitation of the foregoing, the Committee shall have the power to construe and interpret the Plan and to determine all questions that shall arise thereunder. The Committee shall have such other and further specified duties, powers, authority and discretion as are elsewhere in the Plan either expressly or by necessary implication conferred upon it. The Committee may appoint such agents, who need not be members of the Committee, as it may deem necessary for the effective performance of its duties, and may delegate to such agents such powers and duties as the Committee may deem expedient or appropriate that are not inconsistent with the intent of the Plan. The decision of the Committee upon all matters within its scope of authority shall be final and conclusive on all persons, except to the extent otherwise provided by law. 5. OPERATION: (a) Prior to April 1 of a Plan Year, the Committee shall designate the Covered Employees for the Plan Year. (b) Subject to the Committee's discretion to reduce awards under the Plan, each Plan Year each Covered Employee for such Plan Year shall be entitled to an award under the Plan equal to two-tenths of one percent (0.20%) of the Corporation's Net Income for such Plan Year. (c) Notwithstanding the provisions of paragraph 5(b) to the contrary, the Committee in its sole and exclusive discretion may reduce (including a reduction to zero) any award to a Covered Employee otherwise payable under the Plan for a Plan Year. (d) In accordance with Section 162(m)(4)(C)(iii) of the Code, prior to any payment under the Plan for a Plan Year, the Committee shall certify in writing the amount of Net Income for such Plan Year. (e) A Covered Employee's award under the Plan for a Plan Year shall be paid by the Corporation to such Covered Employee in cash, less applicable payroll and withholding taxes, within seventy-five (75) days after the certification by the Committee as provided in paragraph 5(d). Notwithstanding the foregoing, a Covered Employee may be eligible to defer all or any portion of the Covered Employee's award for the Plan Year pursuant to the terms and provisions of the NationsBank 401(k) Restoration Plan (or any successor thereto). 3 (f) If the employment of a Covered Employee for a Plan Year is terminated for any reason during the Plan Year, the Covered Employee shall not receive any award under the Plan for such Plan Year. (g) Notwithstanding any provision of the Plan to the contrary, a reduction in the amount otherwise payable to a Covered Employee for a Plan Year as provided in paragraph 5(c) or paragraph 5(f) above shall not result in a recalculation of Net Income for such Plan Year. 6. SHAREHOLDER APPROVAL: Shareholder approval for and ratification of the Plan was last obtained at the annual shareholders' meeting held during April 1997. The continued effectiveness of the Plan is subject to its approval and ratification by the shareholders of the Corporation at such other times as and to the extent required by Section 162(m)(4)(C)(ii) of the Code. 7. AMENDMENT, MODIFICATION AND TERMINATION OF THE PLAN: The Board of Directors of the Corporation may amend, modify or terminate the Plan at any time, provided that no amendment, modification or termination of the Plan shall reduce the amount payable to a Covered Employee under the Plan as of the date of such amendment, modification or termination. 8. APPLICABLE LAW: The Plan shall be construed, administered, regulated and governed in all respects under and by the laws of the United States to the extent applicable, and to the extent such laws are not applicable, by the laws of the state of North Carolina. 9. MISCELLANEOUS: A Covered Employee's rights and interests under the Plan may not be assigned or transferred by the Covered Employee. To the extent the Covered Employee acquires a right to receive payments from the Corporation under the Plan, such right shall be no greater than the right of any unsecured general creditor of the Corporation. Nothing contained herein shall be deemed to create a trust of any kind or any fiduciary relationship between the Corporation and the Covered Employee. Designation as a Covered Employee in the Plan shall not entitle or be deemed to entitle a Covered Employee to continued employment with the Corporation. 4 IN WITNESS WHEREOF, this instrument has been executed by an authorized officer of the Corporation as of the day and year first above written. BANKAMERICA CORPORATION By: /s/ ANN P. WEST --------------------------- Ann P. West Senior Vice President "Corporation" 5 EX-10 21 EXHIBIT 10(I) EXHIBIT 10(i) BANK OF AMERICA CORPORATION DIRECTOR DEFERRAL PLAN As Amended and Restated Effective January 27, 1999 1. NAME: This plan shall be known as the "Bank of America Corporation Director Deferral Plan" (the "Plan"). 2. PURPOSE AND INTENT: NationsBank Corporation, a North Carolina corporation, established this Plan effective January 1, 1995 for the purpose of providing the nonemployee members of its Board of Directors with the opportunity to defer payment of the annual retainer fee and/or meetings fees payable during a year. Effective April 24, 1996, NationsBank Corporation adopted the NationsBank Corporation Directors' Stock Plan (the "Stock Plan") which provides in part that a portion of a director's annual retainer fee will be paid in cash and a portion in shares of common stock of NationsBank Corporation. The Plan was amended and restated in certain respects effective April 24, 1996 in conjunction with the adoption of the Stock Plan. NationsBank Corporation entered into an Agreement and Plan of Reorganization with BankAmerica Corporation, a Delaware corporation, dated April 10, 1998 (the "Reorganization Agreement"). Pursuant to the Reorganization Agreement, NationsBank Corporation was reincorporated as a Delaware corporation and, following such reincorporation, was renamed "BankAmerica Corporation" (the "Corporation"). The amendment and restatement of the Plan set forth herein incorporates changes approved by the Board of Directors on January 27, 1999 and makes certain other conforming changes, with the change in Plan name effective upon and subject to shareholder approval of the change in the name of the Corporation from BankAmerica Corporation to Bank of America Corporation. It is the intent of the Corporation that amounts deferred under the Plan by a director shall not be taxable to the director for income tax purposes until the time actually received by the director. The provisions of the Plan shall be construed and interpreted to effectuate such intent. 3. DEFINITIONS: For purposes of the Plan, the following terms shall have the following meanings: (a) "Accounts" of a Participant mean collectively the Participant's Cash Account and the Stock Account. (b) "Cash Account" means the account maintained in dollars on the books of the Corporation to record a Participant's interest under the Plan attributable to the cash portion of any Annual Retainer Fee and Meetings Fees deferred by the Participant into -1- the Cash Account pursuant to paragraph 5(c) below, as adjusted from time to time pursuant to the terms of the Plan. (c) "Claim" means a claim for benefits under the Plan. (d) "Claimant" means a person making a Claim. (e) "Common Stock" means the common stock of the Corporation. (f) "Compensation Committee" means the committee of individuals who are serving from time to time as the members of the Compensation Committee of the Board of Directors of the Corporation. (g) "Corporate Benefits Committee" means the committee of individuals who are serving from time to time as the members of the Corporate Benefits Committee of the Corporation. (h) "Corporate Personnel Group" means the group of employees designated as such from time to time by the Corporation. (i) "Fair Market Value" of a share of Common Stock means the closing price on the relevant date of a share of Common Stock as reflected in the report of composite trading of New York Stock Exchange listed securities for that day (or, if no shares were publicly traded on that day, the immediately preceding day that shares were so traded) published in The Wall Street Journal (Eastern Edition) or in any other publication selected by the Committee; provided, however, that if the Shares are misquoted or omitted by the selected publication(s), the Plan Administrator shall directly solicit the information from officials of the stock exchanges or from other informed independent market sources. If shares of Common Stock shall not have been publicly traded for more than ten (10) days immediately preceding such date, then the Fair Market Value of a share shall be determined by the Plan Administrator in such manner as it shall deem appropriate. (j) "Fees" means both (i) the annual retainer fee (the "Annual Retainer Fee") and (ii) any meetings fees (the "Meetings Fees") payable to a Nonemployee Director under the Corporation's compensation policies for directors in effect from time to time. (k) "Nonemployee Director" means an individual who is a member of the Board of Directors of the Corporation, but who is not an employee of the Corporation or any of its subsidiaries. (l) "Participant" means a Nonemployee Director who has elected to participate in the Plan as provided in paragraph 5(b) below. (m) "Plan Administrator" means the Corporate Personnel Group, or such other person or entity designated as the "Plan Administrator" for purposes of the Plan by the Compensation Committee. -2- (n) "Plan Year" means the twelve (12) month period beginning January 1 and ending December 31. (o) "Stock Account" means the account maintained in Stock Units on the books of the Corporation to record a Participant's interest under the Plan attributable to the portion of any Annual Retainer Fee and Meeting Fees deferred by the Participant into the Stock Account pursuant to paragraphs 5(c) and (d) below, as adjusted from time to time pursuant to the terms of the Plan. (p) "Stock Unit" means a unit having a value as of a given date equal to the Fair Market Value of one (1) share of Common Stock on such date. 4. ADMINISTRATION: The Plan Administrator shall be responsible for administering the Plan. The Plan Administrator shall have all of the powers necessary to enable it to properly carry out its duties under the Plan. Not in limitation of the foregoing, the Plan Administrator shall have the power to construe and interpret the Plan and to determine all questions that shall arise thereunder. The Plan Administrator shall have such other and further specified duties, powers, authority and discretion as are elsewhere in the Plan either expressly or by necessary implication conferred upon it. The Plan Administrator may appoint such agents as it may deem necessary for the effective performance of its duties, and may delegate to such agents such powers and duties as the Plan Administrator may deem expedient or appropriate that are not inconsistent with the intent of the Plan. The decision of the Plan Administrator upon all matters within its scope of authority shall be final and conclusive on all persons, except to the extent otherwise provided by law. 5. OPERATION: (a) Eligibility. Each Nonemployee Director shall be eligible to participate in the Plan. (b) Elections to Defer. A Nonemployee Director may become a Participant in the Plan by irrevocably electing, on a form provided by the Plan Administrator, to defer all or any portion of the Annual Retainer Fee payable to the Nonemployee Director during such Plan Year and/or the Meetings Fees payable to the Nonemployee Director for all meetings occurring during such Plan Year. Such election shall be made separately with respect to the cash and stock portions of the Annual Retainer Fee and the Meetings Fees. In order to be effective, a Nonemployee Director's election to defer must be executed and returned to the Plan Administrator on or before the date specified by the Plan Administrator for such purpose. Such election must normally be made prior to the beginning of the Plan Year to which the election relates. However, the Plan Administrator, in its sole and exclusive discretion, may determine that in certain circumstances an election may be made during a Plan Year if such determination is not inconsistent with the intent of the Plan expressed in paragraph 2 above. -3- (c) Establishment of Accounts. (i) The Corporation shall establish and maintain on its books a Cash Account and a Stock Account for each Participant. Each Account shall be designated by the name of the Participant for whom established. (ii) The Meetings Fees and the cash portion of any Annual Retainer Fee deferred by a Participant shall be credited to the Participant's Cash Account or Stock Account as the Participant shall elect. The election shall be made at the time determined by the Plan Administrator and on the form provided by the Plan Administrator. The Participant may make a separate election for the Meeting Fees and the cash portion of the Annual Retainer Fee. If no election is made, the amounts deferred shall be credited to the Participant's Cash Account. To the extent Meetings Fees and/or the cash portion of the Annual Retainer Fee are to be credited to a Participant's Cash Account, such amounts shall be credited to the Cash Account as of the date the Fees would have otherwise been paid to the Participant. To the extent Meetings Fees and/or the cash portion of the Annual Retainer Fee are to be credited to a Participant's Stock Account, the Stock Account shall be credited as of the date the Fees would have otherwise been paid to the Participant with the number of Stock Units equal to the dollar amount of the deferral divided by the Fair Market Value of a share of Common Stock on such date. (iii) The stock portion of any Annual Retainer Fee deferred by a Participant shall be credited to the Participant's Stock Account. The Stock Account shall be credited as of the date the Fee would have otherwise been paid to the Participant with the number of Stock Units equal to the number of shares of Common Stock which the Participant would have received under the Stock Plan with respect to such deferred portion of the Annual Retainer Fee. (d) Account Adjustments: Cash Account. As of the last day of each calendar month, each Cash Account shall be adjusted for such month so that the level of investment return of the Cash Account shall be substantially equal to the ask yield of the most recent auction of 30-year Treasury bonds, as quoted for the last business day of the immediately preceding calendar month in the Wall Street Journal (Eastern Edition), or if such quotations are not available in the Wall Street Journal, in a similar financial publication selected by the Plan Administrator. (e) Account Adjustments: Stock Account. Each Stock Account shall be credited additional full or fractional Stock Units for cash dividends paid on the Common Stock based on the number of Stock Units in the Stock Account on the applicable dividend record date and calculated based on the Fair Market Value of the Common Stock on the applicable dividend payment date. Each Stock Account shall also be equitably adjusted as determined by the Plan Administrator in the event of any stock dividend, stock split or similar change in the capitalization of the Corporation. (f) Payment Options. At the time a Participant first makes an election to defer Fees under the Plan, the Participant shall be given the opportunity to elect one of the -4- following payment options: (i) single cash payment, (ii) five (5) annual installments or (iii) ten (10) annual installments. The election shall be made in writing on a form provided by the Plan Administrator and must be returned to the Plan Administrator before such date as specified by the Plan Administrator. Such election shall be effective with respect to all Fees deferred under the Plan by the Participant. If a Participant fails to duly elect a payment option, the method of payment shall be the single cash payment. After the initial deferral election, a Participant may elect a new payment option from among the payment options listed above by submitting a new payment option election to the Plan Administrator. The new payment option election shall be made in writing on the form provided by the Plan Administrator. The payment option election shall become effective on the one year anniversary of the date the form is filed with the Plan Administrator, provided the Participant has remained a Nonemployee Director continuously until that date. No additional payment option election may be submitted during such one-year period. No new payment election may shorten the period of time during which payments would have been made in the absence of such election. Upon becoming effective, the new payment option shall apply with respect to all Fees deferred under the Plan by the Participant, including Fees deferred under the Plan before the election became effective. (g) Single Cash Payment. If a Participant to whom the single cash payment method applies terminates services with the Corporation as a member of the Board of Directors of the Corporation, such Participant's Accounts shall continue to be credited with adjustments under paragraph 5(d) and paragraph 5(e) above through December 31 of the calendar year in which such termination of services occurred. The number of Stock Units in the Stock Account as of such December 31 shall be converted to cash based on the Fair Market Value of the Common Stock on such date, and such cash amount together with the final Cash Account balance as of such December 31 shall be paid in a single cash payment to the Participant (or to the Participant's designated beneficiary in the case of the Participant's termination of services as the result of the Participant's death) by January 31 of the following calendar year. (h) Annual Installments. If a Participant to whom the annual installments method applies terminates service with the Corporation as a member of the Board of Directors of the Corporation, the amount of such annual installments shall be calculated and paid pursuant to the provisions of this paragraph 5(h). The Participant's Accounts shall continue to be credited with adjustments under paragraph 5(d) and paragraph 5(e) above until the Accounts are fully paid out. The first installment shall be paid by January 31 of the calendar year immediately following the calendar year in which such termination of services occurred, and each subsequent installment shall be paid by January 31 of each subsequent calendar year. Each payment shall be equal to (i) the sum of the Participant's balance in each Account as of December 31 of the calendar year immediately preceding the calendar year of payment, multiplied by (ii) a fraction, the numerator of which is one and the denominator is the number of installments remaining, including the current year's payment. For purposes of the preceding sentence, the balance of the Stock Account shall be equal to the number of the Participant's Stock Units as of each December 31 multiplied by the Fair Market Value of -5- the Common Stock on such date. In the event of the Participant's death, any remaining annual installments shall be paid to the Participant's designated beneficiary. (i) Other Payment Provisions. Subject to the provisions of paragraph 5(j) and paragraph 6 below, a Participant shall not be paid any portion of the Participant's Accounts prior to the Participant's termination of services as a member of the Board of Directors of the Corporation. Any payment hereunder shall be subject to applicable payroll and withholding taxes. In the event any amount becomes payable under the provisions of the Plan to a Participant, beneficiary or other person who is a minor or an incompetent, whether or not declared incompetent by a court, such amount may be paid directly to the minor or incompetent person or to such person's legal representative (or attorney-in-fact in the case of an incompetent) as the Plan Administrator, in its sole discretion, may decide, and the Plan Administrator shall not be liable to any person for any such decision or any payment pursuant thereto. Participants shall designate a beneficiary under the Plan on a form furnished by the Plan Administrator, and if a Participant does not have a beneficiary designation in effect, the designated beneficiary shall be the Participant's estate. (j) Withdrawals on Account of an Unforeseeable Emergency. A Participant who is in active service as a member of the Board of Directors of the Corporation may, in the Plan Administrator's sole discretion, receive a payment of all or any part of the amounts previously credited to the Participant's Cash Account (but not Stock Account) in the case of an "unforeseeable emergency." A Participant requesting a payment pursuant to this subparagraph (j) shall have the burden of proof of establishing, to the Plan Administrator's satisfaction, the existence of such "unforeseeable emergency," and the amount of the payment needed to satisfy the same. In that regard, the Participant shall provide the Plan Administrator with such financial data and information as the Plan Administrator may request. If the Plan Administrator determines that a payment should be made to a Participant under this subparagraph (j), such payment shall be made within a reasonable time after the Plan Administrator's determination of the existence of such "unforeseeable emergency" and the amount of payment so needed. As used herein, the term "unforeseeable emergency" means a severe financial hardship to a Participant resulting from a sudden and unexpected illness or accident of the Participant or of a dependent of the Participant, loss of the Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. The circumstances that shall constitute an "unforeseeable emergency" shall depend upon the facts of each case, but, in any case, payment may not be made to the extent that such hardship is or may be relieved (i) through reimbursement or compensation by insurance or otherwise, or (ii) by liquidation of the Participant's assets, to the extent the liquidation of such assets would not itself cause severe financial hardship. Examples of what are not considered to be "unforeseeable emergencies" include the need to send a Participant's child to college or the desire to purchase a home. Withdrawals of amounts because of an "unforeseeable emergency" shall not exceed an amount reasonably needed to satisfy the emergency need. -6- (k) Statements of Account. Each Participant shall receive an annual statement of the balance in the Participant's Accounts. 6. AMENDMENT, MODIFICATION AND TERMINATION OF THE PLAN: The Compensation Committee shall have the right and power at any time and from time to time to amend the Plan in whole or in part and at any time to terminate the Plan; provided, however, that no such amendment or termination shall reduce the amount actually credited to a Participant's Accounts under the Plan on the date of such amendment or termination, or further defer the due dates for the payment of such amounts, without the consent of the affected Participant. Notwithstanding the provisions of paragraph 5(f), in connection with any termination of the Plan the Compensation Committee shall have the authority to cause the Accounts of all Participants to be paid in a single cash payment as of a date determined by the Compensation Committee or to otherwise accelerate the payment of Accounts in such manner as the Compensation Committee shall determine in its discretion. 7. CLAIMS PROCEDURES: (a) General. In the event that a Claimant has a Claim under the Plan, such Claim shall be made by the Claimant's filing a notice thereof with the Plan Administrator within ninety (90) days after such Claimant first has knowledge of such Claim. Each Claimant who has submitted a Claim to the Plan Administrator shall be afforded a reasonable opportunity to state such Claimant's position and to present evidence and other material relevant to the Claim to the Plan Administrator for its consideration in rendering its decision with respect thereto. The Plan Administrator shall render its decision in writing within ninety (90) days after the Claim is referred to it, unless special circumstances require an extension of such time within which to render such decision, in which event such decision shall be rendered no later than one hundred eighty (180) days after the Claim is referred to it. A copy of such written decision shall be furnished to the Claimant. (b) Notice of Decision of Plan Administrator. Each Claimant whose Claim has been denied by the Plan Administrator shall be provided written notice thereof, which notice shall set forth: (i) the specific reason(s) for the denial: (ii) specific reference to pertinent provision(s) of the Plan upon which such denial is based; (iii) a description of any additional material or information necessary for the Claimant to perfect such Claim and an explanation of why such material or information is necessary; and (iv) an explanation of the procedure hereunder for review of such Claim; -7- all in a manner calculated to be understood by such Claimant. (c) Review of Decision of Plan Administrator. Each such Claimant shall be afforded a reasonable opportunity for a full and fair review of the decision of the Plan Administrator denying the Claim. Such review shall be by the Corporate Benefits Committee. Such appeal shall be made within ninety (90) days after the Claimant received the written decision of the Plan Administrator and shall be made by the written request of the Claimant or such Claimant's duly authorized representative of the Corporate Benefits Committee. In the event of appeal, the Claimant or such Claimant's duly authorized representative may review pertinent documents and submit issues and comments in writing to the Corporate Benefits Committee. The Corporate Benefits Committee shall review the following: (i) the initial proceedings of the Plan Administrator with respect to such Claim; (ii) such issues and comments as were submitted in writing by the Claimant or the Claimant's duly authorized representative; and (iii) such other material and information as the Corporate Benefits Committee, in its sole discretion, deems advisable for a full and fair review of the decision of the Plan Administrator. The Corporate Benefits Committee may approve, disapprove or modify the decision of the Plan Administrator, in whole or in part, or may take such other action with respect to such appeal as it deems appropriate. The decision of the Corporate Benefits Committee with respect to such appeal shall be made promptly, and in no event later than sixty (60) days after receipt of such appeal, unless special circumstances require an extension of such time within which to render such decision, in which event such decision shall be rendered as soon as possible and in no event later than one hundred twenty (120) days following receipt of such appeal. The decision of the Corporate Benefits Committee shall be in writing and in a manner calculated to be understood by the Claimant and shall include specific reasons for such decision and set forth specific references to the pertinent provisions of the Plan upon which such decision is based. The Claimant shall be furnished a copy of the written decision of the Corporate Benefits Committee. Such decision shall be final and conclusive upon all persons interested therein, except to the extent otherwise provided by applicable law. 8. APPLICABLE LAW: The Plan shall be construed, administered, regulated and governed in all respects under and by the laws of the United States to the extent applicable, and to the extent such laws are not applicable, by the laws of the state of Delaware 9. MISCELLANEOUS: A Participant's rights and interests under the Plan may not be assigned or transferred by the Participant. The Plan shall be an unsecured, unfunded arrangement. -8- To the extent the Participant acquires a right to receive payments from the Corporation under the Plan, such right shall be no greater than the right of any unsecured general creditor of the Corporation. Nothing contained herein shall be deemed to create a trust of any kind or any fiduciary relationship between the Corporation and any Participant. The Plan shall be binding on the Corporation and any successor in interest of the Corporation. IN WITNESS WHEREOF, this instrument has been executed by an authorized officer of the Corporation as of the 27th day of January, 1999. BANKAMERICA CORPORATION By: /s/ C.J. COOLEY ---------------------------------- C.J. Cooley Corporate Personnel Executive -9- EX-10 22 EXHIBIT 10(O) BARNETT BANKS, INC. THE MANAGEMENT DEFERRAL PLAN (As Amended through January 1, 1996) BARNETT BANKS, INC. THE MANAGEMENT DEFERRAL PLAN Pursuant to the authority granted to the Employee Benefits Committee under subparagraph 13.1(b) of the Plan prior to its restatement, The Management Deferral Plan (the "Plan") is hereby amended and restated this ___ day of _______________, 1996. W I T N E S S E T H: WHEREAS, the Plan was adopted, effective January 1, 1991, to allow for the deferral of compensation by certain executives and highly compensated employees and has been subsequently amended; and WHEREAS, the Plan Sponsor deems it appropriate to amend and restate the Plan effective _______________, 1996. NOW, THEREFORE, in consideration of the premises herein, the Plan Sponsor agrees as follows: ARTICLE I Definition of Terms The following words and terms as used in this Plan shall have the meaning set forth below, unless a different meaning is clearly required by the context: 1.1 "Act": The Employee Retirement Income Security Act of 1974, as the same may be amended from time to time, or the corresponding sections of any subsequent legislation which replaces it, and, to the extent not inconsistent therewith, the regulations issued thereunder. 1.2 "Administrator": The Plan Administrator provided for in ARTICLE XII hereof. 1.3 "Affiliate": Any subsidiary, parent, affiliate, or other related business entity to the Plan Sponsor. 1.4 "Beneficiary": The person or persons designated by a Participant or otherwise entitled pursuant to paragraph 8.1 to receive benefits under the Plan attributable to such Participant after the death of such Participant. 1.5 "Benefit Commencement Date": The date irrevocably elected by the Participant pursuant to subparagraph 3.3(c). The same Benefit Commencement Date shall be required for all Deferral Contributions made and Deferral Benefits attributable to a Deferral Year. Except with respect to the Benefit Commencement Date associated with a Disability Retirement Date, there may be separate Benefit Commencement Dates for different benefits under the Plan. 1.6 "Board": The Board of Directors of the Plan Sponsor, unless such term is used with respect to a particular Corporation and its Employees, in which event it shall mean the Board of Directors of that Corporation. 1.7 "Change in Control": A "Change in Control" shall be deemed to have occurred if the conditions set forth in any one of the following paragraphs shall have been satisfied. (i) any person, as defined in Section 3(a)(9) of the Securities and Exchange Act of 1934 ("Exchange Act"), as such term is modified in Sections 13(d) and 14(d) of the Exchange Act (other than (A) any employee plan established by any Corporation, (B) the Plan Sponsor or any of its affiliates (as defined in Rule 12b-2 promulgated under the Exchange Act), (C) an underwriter temporarily holding securities pursuant to an offering of such securities, or (D) a corporation owned, directly or indirectly, by stockholders of the Plan Sponsor in substantially the same proportions as their ownership of the Plan Sponsor (a "Person"), is or becomes the beneficial owner (as defined in Rule 13d-3) promulgated under the Exchange Act), directly or indirectly, of securities of the Plan Sponsor (not including in the securities beneficially owned by such Person any securities acquired directly from the Plan Sponsor) representing 25% or more of the combined voting power of the Plan Sponsor's then outstanding voting securities; (ii) during any period of up to two consecutive years (not including any period prior to November 16, 1994) individuals who, at the beginning of such period, constitute the Board cease for any reason to constitute at least a majority thereof, provided that any person who becomes a director subsequent to the beginning of such period and whose nomination for election is approved by at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved (other than a director (A) whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Plan Sponsor, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act or (B) who was designated by a Person who was entered into an agreement with the Plan Sponsor to effect a transaction described in clause (i), (iii) or (iv) of this paragraph 1.7) shall be deemed a director as of the beginning of such period; (iii) the stockholders of the Plan Sponsor approve a merger or consolidation of the Plan Sponsor with any other corporation (other than (A) a merger or consolidation that would result in the voting securities of the Plan Sponsor outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of any Corporation at least 51% of the combined voting power of the voting securities of the Plan Sponsor or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of the Plan Sponsor (or similar transaction) in which no Person is or becomes 2 the beneficial owner (as defined in clause (i) above), directly or indirectly, of securities of the Plan Sponsor (not including in the securities beneficially owned by such Person any securities acquired directly from the Plan Sponsor) representing 25% or more of the combined voting power of the Plan Sponsor's then outstanding voting securities; or (iv) the stockholders of the Plan Sponsor approve a plan of complete liquidation of the Plan Sponsor or an agreement for the sale or disposition by the Plan Sponsor of all or substantially all of the Plan Sponsor's assets, other than a sale or disposition by the Plan Sponsor of all or substantially all of the Plan Sponsor's assets to an entity, at least 75% of the combined voting power of the voting securities of which are owned by persons in substantially the same proportions as their ownership of the Plan Sponsor immediately prior to such sale. All references to provisions of the federal securities laws in this and other paragraphs of this Plan are to such provisions as in effect on January 1, 1996 without regard to any subsequent amendments of, changes to or revocation of such provisions. 1.8 "Code": The Internal Revenue Code of 1986, as the same may be amended from time to time, or the corresponding section of any subsequent Internal Revenue Code, and, to the extent not inconsistent therewith, regulations issued thereunder. 1.9 "Compensation": A Participant's (i) base salary (referred to as "Salary") and (ii) bonuses and incentive pay (collectively referred to as "Bonus") including that portion of such compensation which is electively deferred under this Plan or any other plan of the Corporation such as a 401(k) plan for such Plan Year or reduced pursuant to a salary reduction election permitted under Section 125 of the Code, but excluding any such compensation deferred from a prior period, expense reimbursement and allowances and benefits not normally paid in cash to the Participant. 1.10 "Corporation": 1.10(a) Barnett Banks, Inc., a Florida corporation, or any successor thereto; and any Affiliate executing or adopting this Plan as a participating employer. A register of such corporations which have adopted the Plan and who are at any time participating in the Plan shall be maintained by the Administrator. 1.10(b) Employment with an Affiliate shall be considered employment with the Corporation for all purposes of the Plan other than determining Eligible Employees and Compensation. 1.11 "Death Benefit": The benefit with respect to a Participant due a Participant's Beneficiary, determined separately for each subdivision of his Deferral Account and as determined in accordance with ARTICLE VI hereof. 1.12 "Deferral Account": An unfunded, bookkeeping account maintained on the books of the Corporation for a Participant which reflects his interest in amounts attributable to his Deferred Contributions under the Plan. The Deferral Account of a Participant consists of the following: 3 (i) his Deferral Contributions made to the Deferred Compensation Plan of Barnett Banks, Inc. and its Affiliates as it existed prior to January 1, 1991, but only if he elects to have such amounts applied to his Deferral Account (regardless of when such election is made). (ii) his Deferral Contributions made to the Plan with respect to Compensation earned after December 31, 1990, and (iii) adjustments to the Deferral Account as provided in paragraphs 3.3 and 3.4 hereof. Separate subdivisions of the Deferral Account shall be maintained to reflect Deferral Contributions made and Deferral Benefits attributable with respect to each Deferral Year and, within each Deferral Year, the Deferral Contributions and Deferral Benefits attributable to Deferral Contributions of Salary and Deferral Contributions of Bonus. 1.13 "Deferral Amount": With respect to each Plan Year, the sum of: (i) the Deferral Contribution which a Participant states in his first or timely amended Deferred Compensation Election filed with respect to his Salary to be paid during the Plan Year, and (ii) the Deferral Contribution which a Participant states in his first or timely amended Deferred Compensation Election filed with respect to his Bonus to be paid during a Plan Year. 1.14 "Deferral Benefit": The balance in a Participant's Deferral Account. 1.15 "Deferral Contributions": That portion of a Participant's Compensation which is deferred under the Plan. 1.16 "Deferral Year": The Plan Year with respect to which a Deferral Contribution is made. For purposes hereof, a Deferral Contribution is considered made with respect to the Plan Year in which the amount would otherwise have been paid to the Participant. 1.17 "Effective Date": (i) The Effective Date of the Plan is January 1, 1991. (ii) The Effective Date of this Restatement of the Plan is __________, 1996. With respect to any Affiliate adopting the Plan as a participating employer as of a date after the Effective Date of the Plan, the Effective Date of the Plan as to such Affiliate is the same as may be set forth in its adoption agreement or in the appropriate Appendix to the Plan prepared in connection with such adoption. 4 1.18 "Eligible Employee": 1.18(a) With respect to a Plan Year, an Employee who has not yet reached his Normal Retirement Age on the last day of the Plan Year preceding such Plan Year and who is a member of the "highly compensated group" for such Plan Year. 1.18(b) For this purpose, the term "highly compensated group" means that group of employees, determined as of the July 31 preceding the first day of a Plan Year who are classified under the Corporation's personnel practices and policies as employed in Grades 40 and above. 1.18(c) Notwithstanding the foregoing, the determination of whether an Employee is an Eligible Employee shall be made by the Administrator, and shall be conclusive and binding on the Corporation and the Employee, unless such determination is arbitrary and capricious. 1.18(d) Notwithstanding the foregoing, any special rules or eligibility criteria for employees of any Affiliate adopting the Plan as a participating employer as of a date after the Effective Date of the Plan shall be set forth in the appropriate Appendix to the Plan prepared in connection with such adoption. 1.19 "Employee": An individual who is employed in the service of the Corporation as a common law employee. Employment with an Affiliate shall be considered employment with the Corporation for all purposes of the Plan other than determining Eligible Employees and Compensation. 1.20 "Normal Retirement Age": The age of sixty-five (65) years. 1.21 "Participant": An Eligible Employee or other person qualified to participate in the Plan for so long as he is considered a Participant as provided in ARTICLE II hereof; and further differentiated as follows: (i) "Active Participant": A Participant who has an election to make Deferral Contributions to the Plan in effect at the time in question. (ii) "Inactive Participant": A Participant who does not have an election to make Deferral Contributions to the Plan in effect at the time in question. 1.22 "Plan": This document, as contained herein or duly amended, which shall be known as the "The Management Deferral Plan". 1.23 "Plan Sponsor": Barnett Banks, Inc., or any successor thereto. 1.24 "Plan Year": The calendar year. 1.25 "Potential Change in Control": A "Potential Change in Control" shall be deemed to have occurred if the conditions set forth in any one of the following paragraphs shall have been satisfied: 5 (i) the Plan Sponsor enters into an agreement, the consummation of which would result in the occurrence of a Change in Control; (ii) the Plan Sponsor or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control; or (iii) any Person becomes the beneficial owner (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities or the Plan Sponsor representing 15% or more of the combined voting power of the Plan Sponsor's then outstanding securities. 1.26 "Rate of Return": 1.26(a) The annual interest rate specified by the Administrator for the Deferral Year unless otherwise expressly provided in subparagraph 1.26(b). 1.26(b) In the event that Participant either: (i) fails or refuses to comply with the terms of a Deferred Compensation Election (as defined in paragraph 3.3) or to contribute at least the minimum Deferral Amount required under clause (i) of subparagraph 3.3(b), or (ii) dies as a result of suicide within thirteen (13) months following the first day of the Deferral Year, the annual rate of interest paid with respect to one year certificates of deposits issued by the Plan Sponsor determined as of the first day of the applicable Deferral Year. 1.26(c) Once established with respect to a Deferral Year, the Rate of Return for all Deferral Contributions made during such Deferral Year shall not be adjusted during the term of the deferral; provided that the Administrator, in its sole discretion, shall have the power, exercisable from time to time during the term of the deferral, to increase, but not to decrease, such Rate of Return. 1.27 "Scheduled Death Benefit": The anticipated death benefit(s) payable to or with respect to such Participant and his Deferral Account determined on the basis of applicable facts including such Participant's age and an initial or revised Rate of Return, assumed insurability, assumed fulfillment of the benefit entitlement requirements of the Plan and such other facts or factors as the Administrator deems appropriate. The Scheduled Death Benefit shall be set forth on annual benefits statements to be provided to Participants and may be adjusted from time to time in the event of changes in the applicable facts. 6 ARTICLE II Eligibility and Participation 2.1 Eligibility. Each Eligible Employee who is employed by the Corporation on the July 31 (or such later date as the Administrator shall determine in response to a decision by management made in the hiring of an Eligible Employee) immediately preceding a Plan Year shall be eligible to become a Participant in the Plan and to defer Compensation hereunder for such Plan Year. In the case of an Affiliate that adopts the Plan after the Effective Date of the Plan, for the first Plan Year for, or remainder of the first Plan Year in, which the Plan is adopted, each Eligible Employee of such Affiliate shall be eligible to become a Participant in the Plan and to defer Compensation hereunder as of the Effective Date of the Plan as to such Affiliate. 2.2 Notice and Election Regarding Active Participation. 2.2(a) The Administrator shall give notice of eligibility to each Eligible Employee who is anticipated to be eligible to make Deferral Contributions to the Plan within a reasonable period of time prior to the beginning of each such Plan Year or, in the case of an Eligible Employee employed by an Affiliate that adopts the Plan effective as of a date other than the first day of a Plan Year and for the first Plan Year for which the Plan is adopted, prior to the Effective Date of the Plan as to such Affiliate. 2.2(b) In order to make Deferral Contributions with respect to a Plan Year, an Eligible Employee must file with the Administrator an election which is effective as of the first day of the Plan Year in which the services that give rise to the Compensation to be deferred are rendered. Such election must be filed by the date established by the Administrator, which date shall be no later than the December 31 preceding such Plan Year. In the case of a Deferral Contribution of Bonus, the effect of this provision is that the Deferral Election must be filed no later than the December 31 preceding the Plan Year in which the Bonus is to be earned. In the case of an Eligible Employee employed by an Affiliate that adopts the Plan effective as of a date other than the first day of a Plan Year and for the first Plan Year for which the Plan is adopted, such election must be filed prior to, and shall be effective as of, the Effective Date of the Plan as to such Affiliate. 2.2(c) By executing and filing such election with the Administrator, an Eligible Employee consents and agrees to the following: (i) to execute such applications and take such physical examinations and to supply truthfully and completely such information as may be requested by any health questionnaire issued by the Administrator; (ii) to make Deferral Contributions to the Plan as specified in such election; and (iii) to be bound by all terms and conditions of the Plan and all amendments thereto. 2.3 Commencement of Active Participation. An Eligible Employee shall become an Active participant with respect to a Plan Year only if he is expected to have Compensation during 7 such Plan Year, and he timely files and has in effect a Deferred Compensation Election for such Plan Year. 2.4 Length of Participation. An individual who is or becomes a Participant shall be or remain an Active Participant whenever he has a Deferred Compensation Election in effect; and he shall be or remain an Inactive Participant whenever he is entitled to future benefits under the terms of the Plan and is not considered an Active Participant. ARTICLE III Determination of Deferral Benefits 3.1 Deferral Benefit. For purposes hereof, a Participant's Deferral Benefit shall be the balance in his Deferral Account at the time in question. 3.2 Deferral Account. 3.2(a) The Corporation shall establish and maintain on its books a Deferral Account (and appropriate subdivisions thereof) for each Participant to reflect the Participant's benefits under the Plan. 3.2(b) The balance in the Deferral Account of a Participant shall consist of his Deferral Contributions made to the Plan pursuant to paragraph 3.3, subtractions pursuant to paragraph 3.4, and deemed earnings or loss thereon determined pursuant to paragraph 3.5. 3.3 Deferred Compensation Election. 3.3(a) Subject to the restrictions and conditions hereinafter provided, an Eligible Employee shall be entitled to elect to defer, as a Deferral Contribution with respect to a Plan Year, an amount of his Compensation which is specified by and in accordance with his direction in his Deferred Compensation Election for such Plan Year. Any such election must be filed with the Administrator at the time required under subparagraph 2.2(b). 3.3(b) The following special rules shall apply: (i) A Participant who elects to make a Deferral Contribution must agree to defer a minimum Deferral Amount of at least two thousand dollars ($2,000) with respect to the Plan Year or such Deferred Compensation Election shall not be given effect. (ii) The maximum Deferral Contribution of Salary with respect to any participant for a Plan Year shall be twenty percent (20%) of his Salary for such Plan Year. (iii) The maximum Deferral Contribution of Bonus with respect to any Participant for a Plan Year shall be one hundred percent (100%) of his Bonus for such Plan Year. 8 3.3(c) Deferred Compensation Elections shall be subject to the following rules: (i) A separate Deferred Compensation Election must be filed for each Plan Year. (ii) Each Deferred Compensation Election must specify the following: (A) the Deferral Amount for the applicable period; (B) the Compensation from which the Deferral Contribution shall be withheld, if appropriate; (C) his Benefit Commencement Date, which date (I) may be his Retirement Date or some other date for payment to the Participant, (II) except where permitted by the Administrator, shall be the same for all Deferral Contributions made and Deferral Benefits payable with respect to each Deferral Year, (III) except in the case of a Disability Retirement Date, shall not be earlier than five (5) years following the applicable Deferral Year, and (IV) shall be irrevocable; provided however, that with respect to a Disability Retirement Date, the Participant's Benefit Commencement Date shall be his Disability Retirement Date, unless such Participant affirmatively elects, in his Deferred Compensation Election last filed prior to his Disability Retirement Date, for his otherwise applicable Benefit Commencement Date to apply to any benefits that may become payable as a result of a Disability Retirement. Any such election with respect to Disability Retirement shall apply to all Deferral Benefits regardless of the Deferral Year to which they relate; (D) the number of years over which the Deferral Benefits is to be paid to the Participant or his Beneficiary which period (I) shall be the same for all Deferral Contributions made and Deferral Benefits payable with respect to a Deferral Year, and (II) shall be irrevocable; (E) the Deferral Year to which it relates; and (F) such other information as the Administrator may require. (iii) A Deferred Compensation Election made by a Participant who is a member of the Corporation's Management Executive Committee or the Corporation's Management Operations Committee with respect to any Plan Year and stated as a percentage of Salary shall be deemed to refer to Salary as the same may be increased or decreased during the Plan 9 Year. A Deferred Compensation Election made by a Participant who is not a member of the Corporation's Management Executive Committee or the Corporation's Management Operations Committee with respect to any Plan Year and stated as a percentage of Salary shall be deemed to refer to Salary determined as of the effective date of the Deferred Compensation Election, regardless of whether such Salary is increased or decreased during the Plan Year. 3.3(d) Each Deferral Contribution is intended to be an elective salary reduction amount which shall be deducted from a Participant's Compensation otherwise payable to him for a Plan Year by way of Salary or Bonus. Unless otherwise approved by the Administrator: (i) Deferral Contributions of Salary shall be withheld from annual salary on a pro rata basis throughout the Plan Year (or remainder of the Plan Year, in the case of an Affiliate that adopts the Plan effective as of a date other than the first day of a Plan Year) to which the Deferral Contributions of Salary relate. (ii) Unless otherwise specifically stated in the Deferred Compensation Election filed by the Participant, Deferral Contributions of Bonus shall be withheld on a first dollar basis from the Bonus before any part is paid to the Participant, provided however, a Deferral Contribution of Bonus shall be reduced by any employment taxes required to be withheld unless the amount required to be withheld may be withheld from payments to be made to the Participant as a Bonus at the same time as the Deferral Contribution would otherwise have been paid in cash, or the Participant makes other arrangements with the Administrator to have such employment taxes withheld from other Compensation to be paid to the Participant during the Plan Year. The Deferred Compensation Election filed by the Participant may provide that the Deferral Contribution of Bonus be withheld after a threshold level of Bonus has been paid to the Participant in cash. 3.3(e) Deferral Contributions of Salary made by a Participant for a Plan Year shall be credited to his Deferral Account as of the first day of the Plan Year. 3.3(f) Deferral Contributions of Bonus made by a Participant shall be credited to his Deferral Account as of the first day of the Plan Year in which the Bonus is paid. 3.4 Subtractions from Deferral Account. The following amounts shall be subtracted from a Participant's Deferral Account and the applicable subdivision thereof. (i) All Scheduled Death Benefits payable shall be subtracted immediately after the date of the Participant's death. (ii) All distributions from a Participant's Deferral Account shall be subtracted when such distributions are made. 3.5 Crediting of Deemed Earnings to Deferral Account. At the last day of each Plan Year and at such other time as there will be a payment of a Participant's benefit under the Plan, there shall be credited to each Participant's Deferral 10 Account or such subdivision of a Participant's Deferral Account with respect to which payment is to be made, an amount representing deemed earnings on the balance of such account or subdivision thereof as of the date at which such earnings are to be credited (determined after any contributions are credited pursuant to paragraph 3.3). Such earnings shall be based on the applicable Rate of Return for the applicable Deferral Year. Notwithstanding the foregoing, no earnings shall be credited with respect to the period from the end of a Plan Year until the date of a regular benefit payment scheduled to be made on or about February 15 of the following year. In the event that deemed earnings are to be credited as a result of a payment date other than a February 15, then the applicable Rate of Return shall be prorated based on the number of complete calendar months that have elapsed between the date of the most recent crediting of earnings and the date as of which the deemed earnings are to be credited. 3.6 Equitable Adjustment in Case of Error or Omission. Where an error or omission is discovered in the Deferral Account of a Participant, the Administrator shall be authorized to make such equitable adjustment as the Administrator deems appropriate. 3.7 Statement of Benefits. Within a reasonable time after March 31 of the Plan Year and at the date a Participant's Deferral Benefit or Death Benefit becomes payable under the Plan, the Administrator shall provide to each Participant (or, if deceased, to his Beneficiary) a statement of the benefit under the Plan. 3.8 Special Rules for Adopting Affiliates. Notwithstanding the rules relating to the Deferred Compensation Election of a Participant, any special rules applicable to Participants who are employed by any Affiliate adopting the Plan as a participating employer as of a date after the Effective Date of the Plan shall be set forth in the appropriate Appendix to the Plan prepared in connection with such adoption. ARTICLE IV Vesting 4.1 Vesting. A Participant's Deferral Account and Deferral Benefit shall be fully vested and non-forfeitable at all times. ARTICLE V Retirement Dates 5.1 Normal Retirement Date. The Normal Retirement Date of a Participant shall be the first day of the Plan Year coinciding with or next following the date on which the Participant attains his Normal Retirement Age. 5.2 Delayed Retirement Date. A Participant who continues in the active employment of the Corporation beyond his Normal Retirement Date shall continue to participate in the Plan, and his Delayed Retirement Date shall be the date of his retirement from the employment of the Corporation. 11 5.3 Early Retirement Date. A Participant shall be considered to retire from the employment of the Corporation on Early Retirement under the Plan if he retires on his Early Retirement Date as defined in the Retirement Plan for Barnett Banks, Inc. and its Affiliates. 5.4 Disability Retirement Date. A Participant who, while an Employee, becomes and remains totally and permanently disabled for a period of at least one hundred eighty (180) days may retire from the employment of the Corporation prior to his Normal Retirement Date and his Disability Retirement Date shall be the date on which such one hundred eighty day period ends. The determination of total and permanent disability shall be made by the Administrator in accordance with the following standard. Totally and permanently disabled shall mean the complete inability of an Eligible Employee to perform any and every duty of his regular occupation by reason of an injury or sickness. ARTICLE VI Death Benefits 6.1 Death after Benefit Commencement Date. If a Participant dies after his Benefit Commencement Date, no benefit shall be paid under the Plan except any Death Benefit which may be provided under this ARTICLE VI. 6.2 Death before Benefit Commencement Date. If a Participant dies before his Benefit Commencement Date, no benefit shall be paid under the Plan except any Death Benefit which may be provided under this ARTICLE VI. 6.3 Death Benefits. 6.3(a) In the event a Participant dies before his Benefit Commencement Date, then the Beneficiary of such Participant shall be entitled to receive a Death Benefit under the Plan in an amount equal to the following, determined at the end of the calendar year of his death: (i) the applicable Scheduled Death Benefit for each Deferral Year for which (A) either (I) the Deferral Amount has been contributed by him, (II) the Deferral Amount has been or is anticipated to be met for the Plan Year of death based on his Deferred Compensation Election(s) then in effect, if any, and assumed continued annual compensation at the rate or in the amount last in effect prior to his death, or (III) his Deferral contribution is suspended or waived by the Administrator under the Plan at the time of his death, and (B) he satisfies any other benefit entitlement requirements therefor under the Plan; plus (ii) fifty percent (50%) of the sum of the Participant's Deferral Amounts for each Plan Year (referred to as the "Supplemental Death Benefit"); plus (iii) the sum of the balance(s) in each subdivision of his Deferral Account maintained for each Deferral Year not described in clause (i) of this subparagraph (referred to as the "Deferral Account Death Benefit"). 12 6.3(b) In the event a Participant dies after his Benefit Commencement Date, then the Beneficiary of such Participant shall be entitled to receive a Death Benefit under the Plan in an amount equal to the following, determined at the end of the calendar year of his death: (i) the benefits, if any, payable after his death under the form of payment being made to the Participant at the time of his death; plus (ii) the Supplemental Death Benefit. 6.3(c) Notwithstanding anything herein to the contrary, if a Participant dies as a result of suicide within thirteen (13) months after the first day of the Deferral Year, then the Beneficiary of such Participant shall not be entitled to any Scheduled Death Benefit or any Supplemental Death Benefit with respect to such Deferral Year, and his Beneficiary shall instead receive as a Death Benefit under the Plan the balance in the subdivision of his Deferral Account attributable to such Deferral Year. ARTICLE VII Payment of Benefits 7.1 Time of Payment of Deferral Benefit. 7.1(a) Except as provided in subparagraph 7.1(b) and except in the event of a Disability Retirement Date on which a Participant's Deferral Benefits become payable, a Participant's Deferral Benefit, if any, shall become payable to the Participant, if then alive, on February 15 of the Plan Year following the Plan Year during which his Benefit Commencement Date occurs. Notwithstanding the foregoing, however, except in the case of a Disability Retirement Date, no payment shall be made with respect to a Participant's Deferred Benefit attributable to a Deferral Year before February 15 of the fifth (5th) Plan Year following such Deferral Year. 7.1(b) In the case of a Participant who ceases to be an Employee during a Deferral Year (for any reason other than his death) and therefore fails to contribute at least the minimum Deferral Amount required under clause (i) of subparagraph 3.3(b) for such Deferral Year, the Deferral Benefit attributable to his Deferral Contribution of Salary with respect to such Deferral Year shall be paid to the Participant on the date he ceases to be an Employee or as soon thereafter as is administratively practical. 7.1(c) Notwithstanding the foregoing, payment may be delayed for a reasonable period in the event the Participant cannot be located or is not competent to receive the benefit payment, there is a dispute as to the proper recipient of such benefit payment, additional time is needed to complete the Plan allocations, or additional time is needed for other administrative reasons. 7.1(d) In the event of a Disability Retirement Date on which a Participant's Deferral Benefits become payable, an installment payment shall become payable to such Participant on the sixtieth (60th) day following his Disability Retirement Date. Otherwise, the provisions of 13 subparagraph 7.1(a) shall be followed. The effect of this provision may allow two (2) installment payments to be made within one calendar year. 7.2 Time of Payment of Death Benefit. 7.2(a) The Scheduled Death Benefit and the Deferral Account Death Benefit with respect to a Participant shall become payable to his Beneficiary on February 15 of the Plan Year following the Plan Year in which the Participant dies. 7.2(b) The Supplemental Death Benefit with respect to a Participant shall become payable to his Beneficiary on the sixtieth (60th) day following the date a claim for such Supplemental Death Benefit is filed with the Administrator. 7.2(c) Notwithstanding the foregoing, payment of the Death Benefit may be delayed for a reasonable period in the event the recipient cannot be located or is not competent to receive the benefit payment, there is a dispute as to the proper recipient of such benefit payment, additional time is needed to complete the Plan allocations, or additional time is needed for other administrative reasons. 7.3 Form of Payment of Deferral Benefit. 7.3(a) A Participant shall be paid the Deferral Benefit, if any, to which he is entitled, commencing at the applicable time provided in paragraph 7.1, in periodic installments payable annually over a period of five (5), ten (10), fifteen (15) or twenty (20) years as irrevocably elected by the Participant pursuant to subparagraph 3.3(c). 7.3(b) Notwithstanding the foregoing, a Participant who ceases to be an Employee during a Deferral Year (for any reason other than his death) and therefore fails to contribute at least the minimum Deferral Amount required under clause (i) of subparagraph 3.3(b) for such Deferral Year shall receive his Deferral Benefit attributable to Deferral Contribution of Salary made with respect to such Deferral Year in a lump sum payment. 7.4 Form of Payment of Death Benefit. The Death Benefit shall be paid in the following manner: (i) The Scheduled Death Benefit and the Deferral Account Death Benefit shall be in periodic installment payable annually over the period irrevocably elected by the Participant pursuant to subparagraph 3.3(c), commencing at the time provided in subparagraph 7.2(a). (ii) The Supplemental Death Benefit shall be in a lump sum payment made at the time described in subparagraph 7.2(b). 14 7.5 Lump Sum Payments and Periodic Installments. 7.5(a) The amount of a lump sum payment to or with respect to a Participant shall be determined by reference to the Deferral Benefit or Death Benefit which is to be paid in the form of a lump sum payment. 7.5(b) The amount of each periodic installment payment shall equal the applicable "Annual Term Certain" amount stated in the annual benefits statement with respect to the Deferral Benefit or the Scheduled Death Benefit, whichever is applicable. 7.5(c) Upon the death of a Participant after his benefit becomes payable in periodic installments, the amount of any periodic installments remaining unpaid shall be paid to his Beneficiary over the remaining term certain for such installments. 7.5(d) In the event that a Participant who has begun to receive periodic installment payments as a result of a Disability Retirement Date again becomes an Employee of the Corporation, his periodic installments shall continue regardless of his return to employment with the Corporation. 7.6 Acceleration of Time or Form of Payment. Notwithstanding any provision herein to the contrary, the Administrator in its sole discretion may accelerate the time of payment hereunder or may pay a portion or all of a Participant's Deferral Benefit, Deferral Account or Death Benefit with respect to the Participant in a lump sum payment in commutation of amounts otherwise to be paid after the Participant's separation from the service of the Corporation; provided that the Administrator shall not have such power to accelerate the time or form of payment from and after the time of a Change in Control. 7.7 Benefit Determination and Payment Procedure. The Administrator shall make all determinations concerning eligibility for benefits under the Plan, the time or terms of payments, and the form or manner of payment to the Participant or the Participant's Beneficiary, in the event of the death of the Participant. The Administrator shall promptly notify the Corporation of each such determination that benefit payments are due and provided to the Corporation all other information necessary to allow the Corporation to carry out said determination, whereupon the Corporation shall pay such benefits in accordance with the Administrator's determination. 7.8 Payments to Minors and Incompetents. If a Participant or Beneficiary entitled to receive any benefits hereunder is a minor or is adjudged to be legally incapable of giving valid receipt and discharge for such benefits, or is deemed so by the Administrator, benefits will be paid to such person as the Administrator may designate for the benefit of such Participant or Beneficiary. Such payments shall be considered a payment to such Participant or Beneficiary and shall, to the extent made, be deemed a complete discharge of any liability for such payments under the Plan. 7.9 Distribution of Benefit When Distributee Cannot Be Located. The Administrator shall make all reasonable attempts to determine the identity and/or whereabouts of a Participant or a Participant's Beneficiary entitled to benefits under the Plan, including the mailing by certified mail of a notice to the last known address shown on the Corporation's or the Administrator's records. If the Administrator is unable to locate such a person entitled to benefits hereunder, or if there has been 15 no claim made for such benefits, the Corporation shall continue to hold the benefit due such person, subject to any applicable statute of escheats. 7.10 Claims Procedure. 7.10(a) A Participant or Beneficiary (the "claimant") shall have the right to request any benefit under the Plan by filing a written claim for any such benefit with the Administrator on a form provided by the Administrator for such purpose. The Administrator shall give such claim due consideration and shall either approve or deny it in whole or in part. Within ninety (90) days following receipt of such claim by the Administrator, notice of any denial thereof, in whole or in part, shall be delivered to, and a receipt therefor shall be obtained from, the claimant or his duly authorized representative or such notice of denial shall be sent by registered mail to the claimant, or his duly authorized representative, at the address shown on the claim form or such individual's last known address. The aforesaid ninety (90) day response period may be extended to one hundred eighty (180) days after receipt of the claimant's claim if special circumstances exist and if written notice of the extension to one hundred eighty (180) days indicating the special circumstances involved and the date by which a decision is expected to be made is furnished to the claimant within ninety (90) days after receipt of the claimant's claim. Such notice of denial shall be written in a manner calculated to be understood by the claimant and shall: (i) set forth a specific reason or reasons for the denial, (ii) make specific reference to the pertinent provisions of the Plan on which any denial of benefits is based, (iii) describe any additional material or information necessary for the claimant to perfect the claim and explain why such material or information is necessary, and (iv) explain the claim review procedure of subparagraph 7.10(b). If such notice of denial is not provided to the claimant within the applicable ninety (90) day or one hundred eighty (180) day period, the claimant's claim shall be considered denied for purposes of the claim review procedure of subparagraph 7.10(b). 7.10(b) A Participant or Beneficiary whose claim filed pursuant to subparagraph 7.10(a) has been denied, in whole or in part, may, within sixty (60) days following receipt of notice of such denial, or following the expiration of the applicable period provided for in subparagraph 7.10(a) for notifying the claimant of the decision on the claim if no notice of denial is provided, make written application to the Administrator for a review of such claim, which application shall be filed with the Administrator. For purposes of such review, the claimant or his duly authorized representative may review Plan documents pertinent to such claim and may submit to the Administrator written issues and comments respecting such claim. The Administrator may schedule and hold a hearing. The Administrator shall make a full and fair review of any denial of a claim for benefits and issue its decision thereon promptly, but no later than sixty (60) days after receipt by the Administrator of the claimant's request for review, or one hundred twenty (120) days after such receipt if a hearing is to be held or if other special circumstances exist and if written notice of the 16 extension to one hundred twenty (120) days is furnished to the claimant within sixty (60) days after the receipt of the claimant's request for a review. Such decision shall be in writing, shall be delivered by the Administrator to the claimant and shall: (i) include specific reasons for the decision, (ii) be written in a manner calculated to be understood by the claimant, and (iii) contain specific references to the pertinent Plan provisions on which the decision is based. ARTICLE VIII Beneficiary Designation 8.1 Beneficiary Designation. 8.1(a) Each Participant shall be entitled to designate a Beneficiary hereunder by filing a designation in writing with the Administrator on the form provided or approved by the Administrator for such purpose. Any Beneficiary designation made hereunder shall be effective only if signed and dated by the Participant and delivered to the Administrator prior to the time of the Participant's death. Any Beneficiary designation hereunder shall remain effective until changed or revoked hereunder. 8.1(b) Any Beneficiary designation may include multiple or contingent Beneficiaries and may specify the proportionate distribution to each Beneficiary. 8.1(c) A Beneficiary designation may be changed by the Participant at any time, or from time to time, by filing a new designation in writing with the Administrator. 8.1(d) If the Participant dies without having designated a Beneficiary, or if the Beneficiary so designated has predeceased him, then his estate shall be deemed to be his Beneficiary. 8.1(e) If a Beneficiary of the Participant shall survive the Participant but shall die before the Participant's entire benefit under the Plan has been distributed, then the unpaid balance thereof shall be distributed to the such other beneficiary named by the deceased Beneficiary to receive his interest or, if none, to the estate of the deceased Beneficiary. ARTICLE IX Withdrawals 9.1 No Withdrawals Permitted. No withdrawals or other distributions shall be permitted from the Deferral Account except as provided in ARTICLE VII. 17 ARTICLE X Funding 10.1 Funding. 10.1(a)(i) The Plan Sponsor and each other Corporation reserve the right to take reasonable steps to secure the payment of all or part of the Deferral Benefits payable under this Plan, to the greatest extent possible without compromising the unfunded status of the Plan. To the extent not provided by a rabbi trust or other vehicle which the Plan Sponsor and/or any Corporation may establish at any time to provide for the security of the Deferral Benefits, each Corporation will pay Deferral Benefits from its general treasury as they become due. The Corporations may purchase insurance contracts and other investments in contemplation of Deferral Benefits becoming payable in the future. (ii) In the event of a Potential Change in Control, each Corporation will immediately fully fund, in a rabbi trust or similar vehicle, the entire Deferral Benefit payable to each of its Participants. In the event the Corporation fully funds the Plan upon a Potential Change in Control, such amount may be returned to the corporation only if a period of one (1) year shall have elapsed from the date of such Potential Change in Control without there have occurred a Change in Control or a subsequent Potential Change in Control (which, for purposes hereof, shall commence a new one (1) year period). (iii) In the event of a Change in Control, each Corporation will immediately irrevocably deposit additional cash or other property, in a rabbi trust or similar vehicle, an amount sufficient to pay the entire Deferral Benefit payable to each of its Participants, to the extent not previously funded. Furthermore, within 31 days following the end of each Plan Year ending after there has been a Change in Control, each Corporation will irrevocably deposit additional cash or other property in such trust or similar vehicle in an amount sufficient to pay the entire Deferral Benefit payable to each of its Participants as of the close of the Plan Year, to the extent not previously funded. 10.1(b) To the extent that any person acquires a right to receive payments from the Corporation under the Plan, such rights shall be no greater than the right of any unsecured general creditor of the Corporation. 10.1(c) Where more than one Corporation participates in the Plan, the funding and payment provisions hereof shall apply separately to each such Corporation. 10.1(d) The Plan Sponsor may in its discretion make the payment of any or all benefits under the Plan in lieu of payment by one or more Corporations. Where the Plan Sponsor makes payments on behalf of other Corporations, the Plan Sponsor may require contributions by participating Corporations to the Plan Sponsor at such times (whether before, at or after the time of payment), in such amounts and or on such basis as it may from time to time determine in order to defray the cost of benefits and administration of the Plan. 18 10.2 Exclusive Benefit. Although no Participant or Beneficiary will have any preferred claim or beneficial ownership interest in any Plan assets, and any rights they have under the Plan will be mere unsecured contractual rights against the Corporation, the Corporation will use all Plan assets exclusively for the benefit of Participants and Beneficiaries except that its general creditors have prior rights. ARTICLE XI Fiduciaries 11.1 Fiduciaries and Duties and Responsibilities. Authority to control and manage the operation and administration of the Plan shall be vested in the following, who, together with their membership, if any, shall be the Fiduciaries under the Plan with those powers, duties, and responsibilities specifically allocated to them by the Plan: 11.1(a) Plan Administrator. The Administrator named and serving as provided in ARTICLE XII hereof. 11.2 Limitation of Duties and Responsibilities of Fiduciaries. The duties and responsibilities, and any liability therefor, of the Fiduciaries provided for in paragraph 11.1 shall be severally limited to the duties and responsibilities specifically allocated to each such Fiduciary in accordance with the terms of the Plan, and there shall be no joint duty, responsibility, or liability among any such groups of Fiduciaries in the control and management of the operation and administration of the Plan. 11.3 Service by Fiduciaries in More Than One Capacity. Any person or group of persons may serve in more than one Fiduciary capacity with respect to the Plan. 11.4 Allocation or Delegation of Duties and Responsibilities by Fiduciaries. By written agreement filed with the Administrator, any duties and responsibilities of any Fiduciary may be allocated among Fiduciaries or may be delegated to persons other than Fiduciaries. Any written agreement shall specifically set forth the duties and responsibilities so allocated or delegated, shall contain reasonable provisions for termination, and shall be executed by the parties thereto. 11.5 Assistance and Consultation. A Fiduciary, and any delegate named pursuant to paragraph 11.4, may engage agents to assist in its duties and may consult with counsel, who may be counsel for the Corporation, with respect to any matter affecting the Plan or its obligations and responsibilities hereunder, or with respect to any action or proceeding affecting the Plan. 11.6 Compensation and Expenses. All compensation and expenses of the Fiduciaries and their agents and counsel shall be paid or reimbursed by the Corporation on such basis as the Plan Sponsor shall determine; provided, however, that each person or committeeman serving as a Fiduciary shall serve without compensation for such service unless otherwise determined by the Plan Sponsor. 19 11.7 Indemnification. The Corporation, on such basis as the Plan Sponsor shall determine, shall indemnify and hold harmless any individual who is an employee of the Corporation or an Affiliate and who is a Fiduciary or member of a Fiduciary under the Plan and any other individual who is an employee of the Corporation or an Affiliate and to whom duties of a Fiduciary are delegated pursuant to paragraph 11.4, to the extent permitted by law, from and against any liability, loss, cost or expense arising from their good faith action or inaction in connection with their responsibilities under the Plan. ARTICLE XII Plan Administrator 12.1 Appointment of Plan Administrator. 12.1(a) The Plan Sponsor may appoint one or more persons to serve as the Plan Administrator (the "Administrator") for the purpose of carrying out the duties specifically imposed on the Administrator by the Plan and the Code. In the event more than one person is appointed, the persons shall form a committee for the purpose of functioning as the Administrator of the Plan. The person or committeemen serving as Administrator shall serve for indefinite terms at the pleasure of the Plan Sponsor, and may, by thirty (30) days prior written notice to the Plan Sponsor, terminate such appointment. 12.1(b) Unless and until otherwise determined by the Board, the Employee Benefits Committee of the Plan Sponsor which is in existence on the Effective Date of the Plan shall initially serve as the Administrator. 12.2 Plan Sponsor as Plan Administrator. In the event that no Administrator is appointed or in office pursuant to paragraph 12.1, the Plan Sponsor shall be the Administrator. 12.3 Procedure if a Committee. If the Administrator is a committee, it shall appoint from its members a Chairman and a Secretary. The Secretary shall keep records as may be necessary of the acts and resolutions of such committee and be prepared to furnish reports thereof to the Plan Sponsor. Except as otherwise provided, all instruments executed on behalf of such committee may be executed by its Chairman or Secretary. 12.4 Action by Majority Vote if a Committee. If the Administrator is a committee, its action in all matters, questions and decisions shall be determined by a majority vote of its members qualified to act thereon. They may meet informally or take any action without the necessity of meeting as a group. 12.5 Appointment of Successors. Upon the death, resignation or removal of a person serving as, or on a committee which is, the Administrator, the Corporation may, but need not, appoint a successor. 12.6 Duties and Responsibilities of Plan Administrator. The Administrator shall have the following duties and responsibilities under the Plan: 20 12.6(a) The Administrator shall be responsible for the fulfillment of all relevant reporting and disclosure requirements set forth in the Plan, the Code and the Act, the distribution thereof to Participants and their Beneficiaries, and the filing thereof with the appropriate governmental officials and agencies. 12.6(b) The Administrator shall maintain and retain necessary records regarding its administration of the Plan and matters upon which disclosure is required under the Plan, the Code and the Act. 12.6(c) The Administrator shall make any elections for the Plan required to be made by it under the Plan, the Code and the Act. 12.6(d) The Administrator is empowered to settle claims against the Plan and to make such equitable adjustments in a Participant's or Beneficiary's rights or entitlements under the Plan as it deems appropriate in the event an error or omission is discovered or claimed in the operation or administration of the Plan. No interest shall be payable with respect to any overpayment or underpayment. 12.6(e) The Administrator may construe the Plan, correct defects, supply omissions or reconcile inconsistencies to the extent necessary to effectuate the Plan, and such action shall be conclusive. 12.7 Power and Authority. The Administrator is hereby vested with all the power and authority necessary in order to carry out its duties and responsibilities imposed hereunder in connection with the administration of the Plan. For such purpose, the Administrator shall have the power to adopt rules and regulations consistent with the terms of the Plan. 12.8 Availability of Records. The Corporation shall, at the request of the Administrator, make available necessary records and other information which they possess which may be required by the Administrator in order to carry out its duties hereunder. 12.9 No Action with Respect to Own Benefit. No Administrator who is a Participant shall take any part as the Administrator in any discretionary action in connection with his participation as an individual. Such action shall be taken by the remaining Administrator, if any, or otherwise by the Plan Sponsor. ARTICLE XIII Amendment or Termination of Plan 13.1 Amendment or Termination of the Plan. 13.1(a) The Plan may be terminated at any time by the Board. The Plan may be amended in whole or in part from time to time by the Board effective as of any date specified. No amendment or termination shall operate or decrease a Participant's Deferral Benefit, Deferral Account balance or Death Benefit determined as of the earlier of the date on which the amendment or 21 termination is approved by the Board or the date on which an instrument of amendment or termination is signed on behalf of the Plan Sponsor. 13.1(b) The Board hereby delegates to the Employee Benefits Committee of the Plan Sponsor the right to modify, alter, or amend the Plan in whole or in part to make any technical modification, alteration or amendment which in the opinion of counsel for the Plan Sponsor is required by law and is deemed advisable by such Committee and the Administrator, and to make any other modification, alteration or amendment which does not, in such Committee's view, substantially increase costs, contributions or benefits and does not materially affect the eligibility, vesting or benefit accrual or allocation provisions of the Plan. ARTICLE XIV Miscellaneous 14.1 Non-assignability. The interests of each Participant under the Plan are not subject to claims of the Participant's creditors; and neither the Participant, nor his Beneficiary, shall have any right to sell, assign, transfer or otherwise convey the right to receive any payments or any interest under the Plan, which payments and interest are expressly declared to be non-assignable and non-transferable. 14.2 Right to Require Information and Reliance Thereon. The Plan Sponsor, the Corporation and the Administrator shall have the right to require any Participant, Beneficiary or other person receiving benefit payments to provide it with such information, in writing, and in such form as it may deem necessary to the administration of the Plan, including but not limited to the completion of a medical information survey or other health questionnaire where it deems appropriate (including any physical examination in connection therewith). The Plan Sponsor may rely on such information in carrying out its duties hereunder. Any payment to or on behalf of a Participant or Beneficiary in accordance with the provisions of the Plan in good faith reliance upon any such written information provided by a Participant or any other person to whom such payment is made shall be in full satisfaction of all claims by such Participant and his Beneficiary; and any payment to or on behalf of a Beneficiary in accordance with a provision of the Plan in good faith reliance upon such written information provided by such Beneficiary or any other person to whom such payment is made shall be in full satisfaction of all claims by such Beneficiary. 14.3 Notices and Elections. All notices required to be given in writing and all elections required to be made in writing under any provision of the Plan shall be invalid unless made on such forms as may be provided or approved by the Administrator and, in the case of a notice or election by a Participant or Beneficiary, unless executed by the Participant or Beneficiary giving such notice or making such election. 14.4 Delegation of Authority. Whenever the Plan Sponsor or any other participating employer is permitted or required to perform any act, such act may be performed by its President or Chief Executive Officer or other person duly authorized by its President or Chief Executive Officer or its Board. 22 14.5 Service of Process. The Administrator shall be the agent for service of process on the Plan. 14.6 Governing Law. The Plan shall be construed, enforced and administered in accordance with the laws of the State of Florida. 14.7 Binding Effect. The Plan shall be binding upon and inure to the benefit of the Corporation, its successors and assigns, and the Participant and his heirs, executors, administrators and legal representatives. 14.8 Severability. If any provision of the Plan should for any reason be declared invalid or unenforceable by a court of competent jurisdiction, the remaining provisions shall nevertheless remain in full force and effect. 14.9 No Effect on Employment Agreement. The Plan shall not be considered or construed to modify, amend or supersede any employment or other agreement between the Corporation and the Participant heretofore or hereafter entered into unless so specifically provided. 14.10 Gender and Number. In the construction of the Plan, the masculine shall include the feminine or neuter and the singular shall include the plural and vice-versa in all cases where such meanings would be appropriate. 14.11 Titles and Captions. Titles and captions and headings herein have been inserted for convenience of reference only and are to be ignored in any construction of the provisions hereof. ARTICLE XV Adoption by Additional Corporations 15.1 Adoption by Additional Corporations. Any Affiliate of the Plan Sponsor may adopt the Plan with the consent of the Administrator and approval by the Board of such Affiliate. IN WITNESS WHEREOF, the undersigned Chairman or Secretary of the Employee Benefits Committee of the Plan Sponsor has signed his name hereto to evidence the adoption of this amendment and restatement of the Plan by the Employee Benefits Committee as of the 1 day of January, 1996. EMPLOYEE BENEFITS COMMITTEE OF BARNETT BANKS, INC. By: /s/ Donna Lange ------------------------------ Its: Secretary ----------------------------- Attest: Its 23 EX-10 23 EXHIBIT 10(P) BARNETT BANKS, INC. TRUST OWNED LIFE INSURANCE TRUST FOR MANAGEMENT AND DIRECTORS DEFERRAL PLANS (As Adopted Effective January 1, 1997)
TABLE OF CONTENTS ARTICLE I Definition of Terms ------------------- Page ---- 1.1 ACT.........................................................................1 1.2 ADMINISTRATOR...............................................................2 1.3 BENEFICIARY.................................................................2 1.4 BOARD.......................................................................2 1.5 CHANGE IN CONTROL...........................................................2 1.6 CODE........................................................................3 1.7 CORPORATION.................................................................3 1.8 EFFECTIVE DATE..............................................................3 1.9 EMPLOYEE BENEFITS COMMITTEE.................................................3 1.10 FUND........................................................................3 1.11 INCLUDED PLAN(S)............................................................3 1.12 INSURER.....................................................................4 1.13 INSOLVENCY OR INSOLVENT.....................................................4 1.14 PARTICIPANT.................................................................4 1.15 POLICY OR POLICIES..........................................................4 1.16 POTENTIAL CHANGE IN CONTROL.................................................4 1.17 TRUST.......................................................................5 1.18 TRUSTEE.....................................................................5 1.19 TRUSTEE'S CONTRACTOR........................................................5 1.20 TRUST SPONSOR...............................................................5 1.21 TRUST YEAR..................................................................5 ARTICLE II Establishment of Trust ---------------------- 2.1 TRUST ESTABLISHED.............................................................5 2.2 IRREVOCABILITY OF TRUST.......................................................5 2.3 TRUST AS GRANTOR TRUST........................................................5 2.4 PURPOSE OF TRUST..............................................................5 2.5 ADDITIONAL CONTRIBUTIONS BY CORPORATION.......................................5 2.6 DUTY TO ENFORCE CONTRIBUTIONS.................................................6 2.7 FUND AND INCLUDED PLAN EXPENSES...............................................5 ARTICLE III Trustee's Responsibility If Change in Control and/or Failure or Refusal to Pay Occurs ------------------------------------------------------------------------------------ 3.1 DUTY TO MANAGE OR SURRENDER POLICIES..........................................7 3.2 BENEFIT PAYMENTS FROM THE TRUST...............................................8 3.3 PAYMENTS TO MINORS AND INCOMPETENTS...........................................8 3.4 DISTRIBUTION OF BENEFIT WHEN DISTRIBUTEE CANNOT BE LOCATED....................9
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ARTICLE IV Trustee's Responsibility If Insolvency Occurs --------------------------------------------- 4.1 DUTY OF CORPORATION AND OFFICERS..............................................9 4.2 FUND SUBJECT TO CREDITORS OF CORPORATION......................................9 4.3 DISCONTINUANCE OF PAYMENTS UPON NOTICE OF INSOLVENCY..........................9 4.4 RESUMPTION OF PAYMENTS AFTER INSOLVENCY......................................10 ARTICLE V Powers and Duties of Trustee ----------------------------- 5.1 TRUSTEE POWERS AND DUTIES....................................................10 5.2 INCLUDED PLANS EXEMPT OR NOT COVERED BY THE ACT..............................13 5.3 ACCOUNTS.....................................................................14 5.4 JUDICIAL SETTLEMENT OF ACCOUNTS..............................................14 5.5 ENFORCEMENT OF TRUST-LEGAL PROCEEDINGS.......................................14 5.6 TRUSTEE COMPENSATION AND EXPENSES............................................14 5.7 TRUSTEE RESIGNATION, REMOVAL OR DEATH AND APPOINTMENT OF SUCCESSOR OR ADDITIONAL TRUSTEE...........................................................14 5.8 STANDARD OF CONDUCT..........................................................15 ARTICLE VI Employee Benefits Committee ---------------------------- 6.1 MAKEUP AND APPOINTMENT OF EMPLOYEE BENEFITS COMMITTEE........................16 6.2 EMPLOYEE BENEFITS COMMITTEE PROCEDURES.......................................16 6.3 POWER AND AUTHORITY, COSTS AND EXPENSES......................................16 6.4 RECORDS......................................................................17 6.5 NECESSARY INFORMATION........................................................17 6.6 FUNDING POLICY...............................................................17 6.7 SCOPE OF EMPLOYEE BENEFITS COMMITTEE'S DIRECT INVESTMENT AUTHORITY...........17 ARTICLE VII Trustee's Contractor -------------------- 7.1 APPOINTMENT OF TRUSTEE'S CONTRACTOR..........................................17 7.2 REMOVAL OF TRUSTEE'S CONTRACTOR..............................................18 7.3 DUTIES OF TRUSTEE'S CONTRACTOR...............................................18 7.4 INDEMNIFICATION OF TRUSTEE'S CONTRACTOR......................................19 7.5 COMPENSATION AND EXPENSES....................................................19 7.6 SCOPE OF RESPONSIBILITY......................................................19
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ARTICLE VIII Amendment and Termination ------------------------- 8.1 AMENDMENT....................................................................20 8.2 TERMINATION..................................................................20 ARTICLE IX Miscellaneous ------------- 9.1 HEADINGS.....................................................................20 9.2 GENDER AND NUMBER............................................................21 9.3 GOVERNING LAW................................................................21 9.4 SEVERABILITY.................................................................21 9.5 EMPLOYMENT RIGHTS............................................................21 9.6 ALIENATION AND ASSIGNMENT....................................................21 9.7 DELEGATION OF AUTHORITY......................................................21 9.8 SERVICE OF PROCESS...........................................................21 9.9 CONSTRUCTION.................................................................21 ARTICLE X Adoption of the Trust and Designation of Included Plans ------------------------------------------------------- 10.1 DESIGNATION OF ADDITIONAL INCLUDED PLANS.....................................21 10.2 TERMINATION OF DESIGNATION OF A PLAN AS AN INCLUDED PLAN.....................22 10.3 WITHDRAWAL FROM TRUST ON INCLUDED PLAN FAILURE TO QUALITY FOR EXEMPTION UNDER THE ACT................................................................22
Appendix A - List of Included Plans -iii- This TRUST AGREEMENT, made and entered into as of the 28th day of March, 1997 and between Barnett Banks, Inc., a Florida corporation (the "Trust Sponsor"), and U.S. Trust Company of California, a California corporation whose principal place of business is Los Angeles, California (the "Trustee"). W I T N E S S E T H: WHEREAS, the Trust Sponsor by due corporate action has approved and authorized the execution of this Trust Agreement; and WHEREAS, the Corporation has incurred and expects to incur liability under the terms of its unfunded and nonqualified deferred compensation plans (the "Included Plans") maintained by it for certain employees and directors; and WHEREAS, the Corporation wishes to establish a trust (the "Trust") and to contribute to the Trust assets that shall be held therein, subject to the claims of the Corporation's creditors in the event of the Corporation's Insolvency, as herein defined, until paid to Participants in the Included Plans and their Beneficiaries in such manner and at such times as specified in the Included Plans; WHEREAS, it is the intention of the parties that this Trust shall constitute an unfunded arrangement and shall not affect the status of the Included Plans as unfunded plans maintained for the purpose of providing deferred compensation for a select group of management or highly compensated employees for purposes of Title I of the Act and for directors; WHEREAS, it is the intention of the Corporation to make contributions to the Trust to provide itself with a source of funds to assist it in the meeting of its liabilities under the Included Plans; NOW, THEREFORE, the parties do hereby establish the Trust and agree that the Trust shall be comprised, held and disposed of as follows: ARTICLE I DEFINITION OF TERMS ------------------- The following words and terms as used herein shall have the meaning set forth below, unless a different meaning is clearly required by the context: 1.1 "ACT": The Employee Retirement Income Security Act of 1974, as the same may be amended from time to time, or the corresponding sections of any subsequent legislation which replaces it, and, to the extent not inconsistent therewith, the regulations issued thereunder. 1.2 "ADMINISTRATOR": The Plan Administrator of the Included Plan(s) described herein and as provided for in the respective Included Plan documents. 1.3 "BENEFICIARY": The beneficiary or beneficiaries of a Participant entitled under the Included Plan(s). 1.4 "BOARD": The present and any succeeding Board of Directors of the Trust Sponsor. 1.5 "CHANGE IN CONTROL": For purposes of this Trust Agreement, a "Change in Control" shall be deemed to have occurred if the conditions set forth in any one of the following subparagraphs shall have been satisfied: (i) Any person, as defined in Section 3(a)(9) of the Securities and Exchange Act of 1934 (Exchange Act), as such term is modified in Sections 13(d) and 14(d) of the Exchange Act (other than (A) any employee plan established by any Employer, (B) the Trust Sponsor or any of its affiliates (as defined in Rule 12b-2 issued under the Exchange Act), (C) an underwriter temporarily holding securities pursuant to an offering of such securities, or (D) a corporation owned, directly or indirectly, by stockholders of the Trust Sponsor in substantially the same proportions as their ownership of the Trust Sponsor) (a "Person") is or becomes the beneficial owner (as defined in Rules l3d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Trust Sponsor (not including the securities beneficially owned by such Person any securities acquired directly from the Trust Sponsor) representing twenty-five percent (25%) or more of the combined voting power of the Trust Sponsor's then outstanding voting securities; (ii) During any period of up to two consecutive years (not including any period prior to the Effective Date) individuals who, at the beginning of such period, constitute the Board cease for any reason to constitute at least a majority thereof, provided that any person who becomes a director subsequent to the beginning of such period and whose nomination for election is approved by at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination was previously approved (other than a director (A) whose initial assumption of office is in connection with an actual or threatened contest relating to the election of directors of the Trust Sponsor, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act or (B) who was designated by a Person who has entered into an agreement with the Trust Sponsor to effect a transaction described in clause (i), (iii), or (iv) of this paragraph), will be deemed a director as of the beginning of the period; (iii) The stockholders of the Trust Sponsor approve a merger or consolidation of the Trust Sponsor with any other corporation (other than (A) a merger or consolidation that would result in the voting securities of the Trust Sponsor outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustees or other fiduciary holding securities under an employee benefit plan of an Employer, at least fifty-one percent (51%) of the combined voting power of the voting securities of the Trust Sponsor or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of the Trust Sponsor (or similar transaction) in which no Person is or becomes the beneficial owner (as defined in clause (1) of this paragraph), directly or indirectly, of securities of the Trust Sponsor (not including in the securities beneficially owned by such Person any securities acquired directly from the Trust Sponsor) representing twenty-five percent (25%) or more of the combined voting power of the Trust Sponsor's then outstanding voting securities); or (iv) The stockholders of the Trust Sponsor approve a plan of complete liquidation of the Trust Sponsor or any agreement for the sale or disposition by the Trust Sponsor of all or substantially all of the Trust Sponsor's assets, other than a sale or disposition by the Trust Sponsor of all or substantially all of the Trust Sponsor's assets to an entity, at least seventy-five percent (75%) of the combined voting securities of which are owned by persons in substantially the same proportion as their ownership in the Trust Sponsor immediately prior to the sale. All references to provisions of the federal securities laws are to such provisions as in effect on the Effective Date without regard to any subsequent amendments of, changes to or revocation of such provisions. -2- 1.6 "CODE": The Internal Revenue Code of 1986, as the same may be amended from time to time, or the corresponding section of any subsequent Internal Revenue Code, and, to the extent not inconsistent therewith, regulations issued thereunder. 1.7 "CORPORATION": The Trust Sponsor. 1.8 "EFFECTIVE DATE": January 1, 1997, except that with respect to any plan which is subsequently designated as an Included Plan thereafter, such date as may be set forth in its designation agreement or in the Trust. The Administrator shall maintain as Appendix A to the Trust a list of the Effective Dates of participation of all Included Plans for which benefits are provided through the Trust. 1.9 "EMPLOYEE BENEFITS COMMITTEE": The committee appointed or serving pursuant to ARTICLE VI. 1.10 "FUND": The trust fund created under and subject to the Trust, which shall be known as the "Barnett Banks, Inc. Trust Owned Life Insurance Trust for Management and Directors Deferral Plans". 1.11 "INCLUDED PLAN(S)": The unfunded, non-qualified deferred compensation plans listed in Appendix A sponsored by the Corporation and intended to be maintained as unfunded plans for the benefit of a select group of management and highly compensated employees as those terms are used for the purposes of the exemption from the participation and vesting, funding and fiduciary requirements of the Act and for the benefit of non-employee directors, as designated by the Trust Sponsor or the Administrator. When used herein, the term "Included Plan" shall be construed as referring to a particular plan unless the context indicates otherwise. The Administrator shall maintain as Appendix A to the Trust a list of all such plans which are, from time to time, Included Plan(s) in the Trust. 1.12 "INSURER": Any insurance company which issues a Policy to provide for the accumulation of funds hereunder. 1.13 "INSOLVENCY" OR "INSOLVENT": (i) The Corporation's inability to pay its debts as they become due, (ii) The Corporation is determined to be insolvent by its federal or state bank supervisor, or (iii) The voluntary commencement by the Corporation of any proceeding under Title 11 of the United States Code or any other law of any jurisdiction for the relief, liquidation or rehabilitation of debtors (all of which shall be referred to herein collectively as "Insolvency Proceedings"), or the involuntary commencement of an Insolvency Proceeding against the Corporation which is not fully stayed, timely controverted or dismissed within one hundred twenty (120) days after filing thereof. 1.14 "PARTICIPANT": A person who is a "participant" in an Included Plan (as that term is defined in the Included Plan). 1.15 "POLICY" OR "POLICIES": A group or individual policy or policies, contract(s) or other agreement(s) (including a certificate) issued by an Insurer providing for the accumulation of funds hereunder. -3- 1.16 "POTENTIAL CHANGE IN CONTROL": For purposes of this Trust Agreement, a "Potential Change in Control" shall be deemed to have occurred if the conditions set forth in any one of the following subparagraphs shall have been satisfied: (i) The Corporation enters into a definitive written agreement, the consumption of which would result in a Change in Control; (ii) The Corporation or any Person (as defined in clause (i) of paragraph 1.5) publicly announces an intention to take or to consider taking actions which, if consummated would constitute a Change in Control; or (iii) Any Person becomes the beneficial owner (as defined in Rule l3d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Corporation representing 15% or more of the combined voting power of the Corporation's then outstanding securities. 1.17 "TRUST": This agreement by and between the Trust Sponsor and the Trustee under which the Fund is maintained, which agreement is known as the "Barnett Banks, Inc. Trust Owned Life Insurance Trust for Management and Directors Deferral Plans." 1.18 "TRUSTEE": U.S. Trust Company of California, a California corporation and any successor Trustee or Trustees including any Co-Trustee, appointed and serving in accordance herewith. 1.19 "TRUSTEE'S CONTRACTOR": The third party administrator appointed and serving pursuant to ARTICLE VII. 1.20 "TRUST SPONSOR": Barnett Banks, Inc., a Florida corporation (or its corporate successor). 1.21 "TRUST YEAR": The twelve month period beginning on January 1. ARTICLE II ESTABLISHMENT OF TRUST ---------------------- 2.1 TRUST ESTABLISHED. The Trust Sponsor hereby deposits with the Trustee in trust such money or property (including Policies) as it deems appropriate, which shall become the principal of the Trust to be held, administered and disposed of by the Trustee as provided in this Trust Agreement. 2.2 IRREVOCABILITY OF TRUST. The Trust hereby established shall be irrevocable. 2.3 TRUST AS GRANTOR TRUST. The Trust is intended to be a grantor trust, of which the Trust Sponsor is the grantor, within the meaning of subpart E, part 1, subchapter J, chapter 1, subtitle A of the Code, and shall be construed accordingly. 2.4 PURPOSE OF TRUST. The principal of the Trust, and any earnings thereon shall be held separate and apart from other funds of the Corporation and shall be used exclusively for the uses and purposes of Participants and general creditors as herein set forth. Participants and their Beneficiaries shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Included Plans and this Trust Agreement shall be mere unsecured contractual rights of Participants and their Beneficiaries against the Corporation. Any assets held by the -4- Trust will be subject to the claims of the Corporation's general creditors under federal and state law in the event of Insolvency. 2.5 ADDITIONAL CONTRIBUTIONS BY CORPORATION. 2.5(a) The Corporation, in its sole discretion, may at any time, or from time to time, make additional deposits of cash or other property in trust with the Trustee to augment the principal to be held, administered and disposed of by the Trustee as provided in this Trust Agreement. 2.5(b) Upon the occurrence of a Potential Change in Control, the Corporation shall, as soon as possible, but in no event later than 15 days following the occurrence of Potential Change in Control, make an irrevocable contribution to the Fund in an amount that is sufficient to pay any remaining scheduled premiums on the Policies held by the Trust on the date the Potential Change in Control occurred. Sufficiency shall be determined by the Administrator, or by the Trustee's Contractor, if one has been appointed, based on the present value of the unpaid premiums determined using the interest rate on the one year U.S. Treasury Bill quoted in the Wall Street Journal for the week ending immediately prior to the date on which the Potential Change of Control occurs. 2.6 DUTY TO ENFORCE CONTRIBUTIONS. Except as otherwise provided in this Trust Agreement, the Trustee shall not be required to determine the amount of any contribution for any Trust Year. However, the Trustee shall have the duty to enforce the duty of the Corporation to make or pay over the contributions required under subparagraph 2.5(b) upon the occurrence of a Potential Change in Control of the Corporation. The Trustee shall be notified of the occurrence of a Potential Change in Control by the Executive Compensation and Management Development Committee of the Board or by a Participant. The Trustee shall have no responsibility to independently determine or inquire about the occurrence of this event. If the notification is received from a Participant who represents to the Trustee that he or she is not acting in his capacity as a member of the Executive Compensation and Management Development Committee of the Board, then the Trustee shall request verification from the Corporation as to the occurrence of the described event. If the Corporation fails or refuses to provide verification of such the event or if the Participant and the Corporation fail to reach an agreement as to whether or not such event has occurred, then the dispute shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association, and the resolution by the arbitrator of the dispute shall be binding and final and may be entered in any court having jurisdiction. The expenses of the arbitration shall be borne by the Corporation, unless the arbitrator determines that the claim by the Participant is frivolous, in which case the expenses shall be borne by the Participant. The Trustee's duties under this paragraph shall be subject to sufficient liquid assets being available to the Trustee to pay the costs reasonably anticipated to be associated with any enforcement action. Such liquid assets may be in the Trust or held in a contingency trust established for the purpose of paying legal fees associated with this and other grantor trusts established for the benefit of participants and beneficiaries under the Included Plans and similar plans of the Corporation. 2.7 FUND AND INCLUDED PLAN EXPENSES. 2.7(a) Unless paid by the Corporation without being advanced subject to reimbursement (which shall be directed by the Trust Sponsor), all expenses of the Fund and the Included Plan(s), including reasonable legal, accounting, custodial, brokerage, actuarial, consulting and other fees and expenses incurred in the establishment, amendment, administration and termination of the Fund and the Included Plan(s) and/or the compensation of the Trustee and other fiduciaries of the Fund and the Included Plan(s) to the extent provided under the Trust and the Included Plan(s), and all taxes of any nature whatsoever, including interest and penalties, assessed against or imposed upon the Fund or the income thereof shall be paid out of the Fund and shall constitute a charge upon the Fund. The Trust Sponsor may cause the Corporation to advance any -5- or all such expenses and/or taxes on behalf of the Fund, subject to the Corporation's right of reimbursement from the Fund if so directed by the Trust Sponsor. 2.7(b) If the Trustee undertakes or defends any litigation arising in connection with the Trust (including without limitation any action to compel the Corporation to take any action under the Trust or the Included Plans, or to determine the Trustee's obligations hereunder), the Trust Sponsor agrees to indemnify Trustee against Trustee's costs, expenses and liabilities (including without limitation attorney's fees and expenses) relating thereto and to be primarily liable for such payments. The Trust Sponsor will, upon notice, pay monthly in arrears to or on behalf of the Trustee, all reasonable attorney's fees and expenses incurred by the Trustee. If the Trust Sponsor does not pay such costs, expenses and liabilities in a reasonably timely manner, Trustee shall obtain payment from the Trust. In the event that the Trustee is determined to have incurred any liability as a result of the Trustee's negligence or willful misconduct, the Trustee will promptly reimburse the Trust Sponsor for all such legal fees and expenses paid by the Trust Sponsor to or on behalf of the Trustee. ARTICLE III TRUSTEE'S RESPONSIBILITY IF CHANGE IN CONTROL AND/OR FAILURE OR REFUSAL TO PAY OCCURS 3.1 DUTY TO MANAGE OR SURRENDER POLICIES. 3.1(a) Upon the occurrence of a Change in Control and/or upon the failure or refusal by the Corporation to pay benefits in accordance with the Included Plans and paragraph 3.2 hereof, the Trustee shall be required to manage (including the surrender of or borrowing from), any Policies then held by the Trustee in order to maximize the value of the Policies to the extent required to pay benefit liabilities under the Included Plans. In exercising its duty to surrender the Policies, the Trustee shall rely on the direction of the Trustee's Contractor to borrow against the Policies or to delay surrender in order to maximize the accumulation under such Policies if the borrowing or delay does not have the potential to interfere with the Trustee's ability to later surrender such Policies or to cause the Trustee to have insufficient funds to make benefit payments then due. 3.1(b) The Trustee shall be notified of such Change in Control or failure or refusal to pay benefits by the Executive Compensation and Management Development Committee of the Board or by a Participant. The Trustee shall have no responsibility to independently determine or inquire about the occurrence of either of these events. If the notification is received from a Participant who represents to the Trustee that he or she is not acting in his capacity as a member of the Executive Compensation and Management Development Committee of the Board, then the Trustee shall request verification from the Corporation as to the occurrence of the described event. If the Corporation fails or refuses to provide verification of such an event or if the Participant and the Corporation fail to reach an agreement as to whether or not such event has occurred, then the dispute shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association, and the resolution by the arbitrator of the dispute shall be binding and final and may be entered in any court having jurisdiction. The expenses of the arbitration shall be borne by the Corporation, unless the arbitrator determines that the claim by the Participant is frivolous, in which case the expenses shall be borne by the Participant. The Trustee's duties under this paragraph shall be subject to sufficient liquid assets being available to the Trustee to pay the costs reasonably anticipated to be associated with any enforcement action. Such liquid assets may be in the Trust or held in a contingency trust established for the purpose of paying legal fees associated with this and other grantor trusts established for the benefit of participants and beneficiaries under the Included Plans and similar plans of the Corporation. -6- 3.1(c) If arbitration is required, the Trustee shall, upon the direction of the Trustee's Contractor borrow from or surrender the Policies, but only to the extent that failure to act promptly would interfere with the Trustee's ability to later maximize the value of the Policies, to the extent required pursuant to subparagraph 3.1(a) and shall hold such amount until the resolution of the issues in arbitration. If the arbitrator determines that no Change in Control or failure or refusal to pay benefits has occurred, the Trustee shall return the amount to the Trust Sponsor. 3.2 BENEFIT PAYMENTS FROM THE TRUST. 3.2(a) Unless a Change in Control and/or a failure or refusal by the Corporation to pay benefits under the Included Plans as described in paragraph 3.1 has occurred, the Trustee shall make payments of benefits under the Included Plans to the Participants and Beneficiaries only at such times and in such manner as directed by the Administrator or by the Trustee's Contractor, if one has been appointed, to the extent that the Fund is sufficient to make such payments. 3.2(b) After a Change in Control and unless notified in writing by the Corporation that payments are being made by it when due under the Included Plans and/or upon the failure or refusal by the Corporation to pay benefits in accordance with the Included Plans, to the extent that the Fund is sufficient to make such payments, the Trustee shall make all payments of benefits under the Included Plans out of the Fund to the Participants or their Beneficiaries in such manner and in such amounts as required under the Included Plans as determined by the Trustee's Contractor. 3.2(c) If the Fund is not sufficient to make payments when due to be made by the Trustee under the Included Plan to the Participants or their Beneficiaries, except as otherwise expressly provided herein, the Trustee shall undertake to collect from the Trust Sponsor sufficient assets to make such payment. The Trustee's duties under this paragraph shall be subject to sufficient liquid assets being available to the Trustee to pay the costs reasonably anticipated to be associated with any enforcement action. Such liquid assets may be in the Trust or held in a contingency trust established for the purpose of paying legal fees associated with this and other grantor trusts established for the benefit of participants and beneficiaries under the Included Plans and similar plans of the Corporation. 3.3 PAYMENTS TO MINORS AND INCOMPETENTS. If a Participant or Beneficiary entitled to receive any benefits hereunder is a minor or is adjudged to be legally incapable of giving valid receipt and discharge for such benefits, or is deemed so by the Administrator, or by the Trustee's Contractor, if one has been appointed, benefits will be paid to such person as the Administrator, or by the Trustee's Contractor, if one has been appointed, may designate for the benefit of such Participant or Beneficiary. Such payments shall be considered a payment to such Participant or Beneficiary and shall, to the extent made, be deemed a complete discharge of any liability for such payments under the Trust. 3.4 DISTRIBUTION OF BENEFIT WHEN DISTRIBUTEE CANNOT BE LOCATED. The Administrator or the Trustee's Contractor, if one has been appointed, shall make all reasonable attempts to determine the identity and/or whereabouts of a Participant or Beneficiary entitled to benefits under the Trust and Included Plan(s), including the mailing by certified mail of a notice to the last known address shown on the Corporation's, the Administrator's, the Trustee's Contractor's or the Trustee's records. If the Administrator or the Trustee's Contractor, if one has been appointed, is unable to locate such a person entitled to benefits hereunder, or if there has been no claim made for such benefits, the Trustee shall continue to hold the benefit due such person, subject to any other disposition directed by the Administrator, or by the Trustee's Contractor, if one has been appointed, to provide for the payment of benefits. -7- ARTICLE IV TRUSTEE'S RESPONSIBILITY IF INSOLVENCY OCCURS 4.1 DUTY OF CORPORATION AND OFFICERS. The Board and the President and Chief Executive Officer of the Corporation shall have the duty to inform the Trustee in writing of the Corporation's Insolvency. 4.2 FUND SUBJECT TO CREDITORS OF CORPORATION. 4.2(a) Notwithstanding the other provisions hereof, all the assets of the Fund shall be subject to the respective claims of the general creditors of the Corporation but only in the event that the Trustee receives proper notice of the Insolvency of a Corporation. 4.2(b) Proper notice of Insolvency shall be actual written notice of the Insolvency from the Board or the President and Chief Executive Officer of the Trust Sponsor or such Corporation or from a court of competent jurisdiction in which event the Trustee shall have no duty or obligation to determine whether Insolvency exists. Proper notice shall also include notice from a person claiming to be a creditor of the Corporation alleging in writing that the Corporation is Insolvent in which event the Trustee has a duty to determine whether the Corporation is Insolvent. The Trustee may rely on such evidence concerning the Corporation's solvency as may be provided to the Trustee and which provides the Trustee with a reasonable basis for making such a determination. 4.3 DISCONTINUANCE OF PAYMENTS UPON NOTICE OF INSOLVENCY. In the event of the Insolvency of the Corporation and proper notice to the Trustee (and pending the determination of whether the Corporation is Insolvent), the Trustee shall discontinue the payment of benefits under the Included Plans attributable to such Corporation and shall hold the assets attributable to such Corporation for the benefit of the general creditors of such Corporation, after deduction of any fees, expenses or taxes properly due and payable from the Fund. The Trustee shall deliver the assets of the Fund attributable to such Corporation to satisfy claims of the creditors of such Corporation as directed by a court of competent jurisdiction. 4.4 RESUMPTION OF PAYMENTS AFTER INSOLVENCY. The Trustee shall resume payment of benefits under the Included Plans only after the Trustee has been notified in writing by the Board, the President and Chief Executive Officer of the Trust Sponsor or a court of competent jurisdiction that the Insolvency no longer exists. The first payment made to any Participant upon resumption of payments shall include the aggregate amount of all benefits due to the Participant under the Included Plans which would have been paid to the Participant during the period of such discontinuance, less the aggregate amount of the payments made to such Participant directly by the Corporation, in lieu of payments from the Fund, during any such period of discontinuance. ARTICLE V POWERS AND DUTIES OF TRUSTEE 5.1 TRUSTEE POWERS AND DUTIES. Subject to the following provisions of this ARTICLE V, the Trustee shall commingle and jointly invest, or where specifically provided herein shall segregate and separately invest, the assets of the Fund, without distinction between corpus and income. 5.1(a) The Trustee shall hold the Fund in trust, shall have the following general powers granted in this paragraph, subject to the directions, limitations, restrictions or prohibitions imposed hereunder, and, except as otherwise specifically provided herein, shall have exclusive authority and discretion in its management and control of the Trust. -8- (i) The Trustee shall invest and reinvest the Fund in such stocks, stock options (whether or not covered), warrants and rights, puts, calls, stock-index futures, bonds, securities, commodities, commodity futures and options, loans to Participants if and subject to conditions expressly authorized in the Included Plan(s), real estate mortgages, real estate investment trusts or funds, real estate, partnership interests, mutual funds, closed-end investment companies, regulated investment companies or trusts, common, collective or group trust funds (except as otherwise limited hereunder) and other investments, and in such proportion, as may be deemed suitable for the purposes and the funding policy hereof. (ii) Such investments shall be restricted to property and securities of the character authorized for investment by trustees under any present or future laws. (iii) To the extent permitted by law, the Trustee is expressly authorized to invest and reinvest the Fund and to execute any joinder or similar agreement therefor on behalf of the Trust: (A) In any general common trust fund qualifying under Section 584 of the Code and maintained by any person, including but not limited to the Trustee or any affiliate of the Trustee in the same bank holding system affiliated group, as defined in Section 1504 of the Code, as the Trustee (if the Trustee and any such affiliate are banks or trust companies supervised by a state or federal agency); or (B) In any other collective or group trust fund maintained by any person, including but not limited to any such bank or trust company, as the Trustee (whether or not the Trustee is such a bank or trust company), provided such collective or group trust is so qualified and exempt under the Code; or (C) In Policies of insurance on the lives of Participants, (whether or not the Insurer is the Trust Sponsor or any affiliate of the Trust Sponsor); or (D) In whole or in part in deposits with any bank or similar financial institution supervised by the United States or a State, regardless of whether such bank or other institution is a Trustee or other fiduciary hereunder, provided such deposits shall bear a reasonable rate of interest, except that funds may be deposited in non-interest bearing accounts to such extent and for such time as may be reasonably required for the orderly administration of the Trust. (iv) If an investment is made in a common, collective or group trust, the Trustee is expressly authorized to incorporate the terms thereof as an investment medium under and as a part of the Trust, and the terms of such trust shall govern the investment, disposition and distribution of the assets of such trust. 5.1(b) Subject to the requirements imposed by law, and in furtherance and not in limitation of the Trustee's investment authority, the Trustee shall have all powers and authority necessary or advisable to carry out the provisions of the Trust, and all inherent, implied and statutory powers now or subsequently provided by law including specifically the power to do any of the following: (i) To deal with all or any part of the Fund, including, without limitation, to invest, reinvest and change investment; (ii) To acquire any property by purchase, subscription, lease or other means; -9- (iii) To sell for cash or on credit, convey, lease for long or short terms, or convert, redeem or exchange all or any part of the Fund; (iv) To borrow money for the purpose of the Fund, and for any sum so borrowed to issue its promissory note as Trustee and to secure the repayment thereof by pledging all or any part of the Fund; (v) To enforce by suit or otherwise, or to waive its rights on behalf of the Fund and to defend claims asserted against him or the Fund; (vi) To compromise, adjust and settle any and all claims against or in favor of it or the Fund; (vii) To renew, extend or foreclose any mortgage or other security; (viii) To bid in property on foreclosure; (ix) To take deeds in lieu of foreclosure, with or without paying a consideration therefor; (x) To vote, or give proxies to vote, any stock or other security, and to oppose, participate in and consent to the reorganization, merger, consolidation or readjustment of the finances of any enterprise, to pay assessments and expenses in connection therewith, and to deposit securities under deposit agreements; (xi) To hold Trust assets unregistered (including in bearer form), or to register them in its own name, in street name or in the names of nominees who are within the jurisdiction of the district courts of the United States and are either banks or trust companies that are subject to supervision by the United States or a state thereof, brokers or dealers registered under the Securities Exchange Act of 1934, clearing agencies as defined in Section 3(a)(23) of the Securities Exchange Act of 1934, permissible nominees of any of the foregoing, or any other persons or entities permitted to act as nominee for the Trustee under Section 403 of the Act, provided the books and records of the Fund shall at all times reflect that the Fund is the beneficial owner of such securities; (xii) To make, execute, acknowledge and deliver any and all instruments that it shall deem necessary or appropriate to carry out the powers herein granted, and generally to exercise any of the powers of an owner with respect to all or any part of the Fund; and (xiii) Generally to exercise any of the powers of an owner with respect to all or any portion of the Fund. Except as provided in the Act, no person dealing with the Trustee shall be bound to see to the application of any money or property paid or delivered to the Trustee or to inquire into the validity or propriety of any transaction. 5.1(c) In limitation of the Trustee's investment authority under the Trust and prior to a Change in Control and/or a failure or refusal by the Corporation to pay benefits in accordance with the Included Plans and paragraph 3.2 hereof, the Employee Benefits Committee shall have full power and authority to procure, renew and name the beneficiary(ies) under the Policies (including naming the Trust Sponsor or Employer). The Employee Benefits Committee may substitute cash or other property for the Policies at their cash value. The Employee Benefits Committee shall direct the Trustee to continue in effect, with such changes as it may determine, any Policy or Policies heretofore issued to the Trust Sponsor providing insurance. The Employee Benefits Committee shall agree with each Insurer upon all provisions to be contained in each Policy. Except as otherwise expressly stated, all rights and privileges granted to the policyholder by a Policy or allowed by the insurer shall be vested in the Trustee who may take action with respect to each Policy or the insurance provided -10- thereunder permitted by the Insurer and in accordance with the terms of the Trust and where directed by the Employee Benefits Committee. 5.1(d) Subject to subparagraph 5.1(e), all rights and privileges granted to the policyholder by a Policy or allowed by the Insurer shall be vested in the Trustee who may take action with respect to each Policy or the insurance provided thereunder permitted by the Insurer and in accordance with the terms of the Trust, and the Trustee may cancel, surrender or borrow against such Policies. 5.1(e) In further limitation of the Trustee's investment authority under the Trust, prior to a Change in Control and/or a failure or refusal by the Corporation to pay benefits in accordance with the Included Plans and paragraph 3.2 hereof, the Employee Benefits Committee shall have full power and authority to direct the Trustee as to the investment of all of the assets of the Fund. Following a Change in Control and/or upon the failure or refusal by the Corporation to pay benefits in accordance with the Included Plans and paragraph 3.2 hereof, the Trustee's Contractor shall have full power and authority to direct the Trustee as to the management and disposition of the Policies (including the naming of the beneficiaries under the Policies) and to direct the Trustee as to the investment of all of the assets of the Fund. 5.1(f) Notwithstanding any contrary provision, the Trustee shall not invest any portion of the Fund in any stock, securities or other obligations of the Corporation and its affiliates or otherwise lend any money or lease any property to the Corporation or any of its affiliates. 5.1(g) Notwithstanding any powers granted to the Trustee pursuant to this Trust Agreement or to applicable law, the Trustee shall not have any power that could give the Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of Section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Code. 5.2 INCLUDED PLANS EXEMPT OR NOT COVERED BY THE ACT. The Trust Sponsor represents to the Trustee that each Included Plan either is exempt from Part 4 of Title I of the Act as (i) an "excess benefit" plan within the meaning of Section 4(b) of the Act or (ii) a "top hat" plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees or is not covered by the Act because no Employees are covered by the Included Plan. The Trustee is entering into this Agreement in reliance on the Trust Sponsor's representation. Accordingly, in the event that any Included Plan fails to qualify for the exemption from Part 4 of Title I of the Act or is covered by the Act, then notwithstanding any other provision of the Agreement to the contrary, the Trust Sponsor will indemnify and hold the Trustee harmless from all liabilities, damages, costs and expenses (including, without limitation, reasonable attorney's fees and expenses) that the Trustee incurs as a result of the breach of fiduciary duty under the Act arising from any action taken or omitted to be taken, by the Trustee in good faith in accordance with this Agreement. The Trust Sponsor will, upon notice, pay monthly, in arrears, to or on behalf of the Trustee, all reasonable attorney's fees and expenses incurred by the Trustee in connection with such breach. In the event the Trustee is determined to have incurred any liability as a result of the Trustee's negligence or willful misconduct, the Trustee will promptly reimburse the Trust Sponsor for all legal fees and expenses paid by the Trust Sponsor on behalf of the Trustee. 5.3 ACCOUNTS. The Trustee shall keep true and accurate accounts of all investments, receipts, and disbursements and other transactions hereunder, and all accounts, books and records relating thereto shall be open to inspection and audit at all reasonable times by any person or persons designated by the Administrator, Employee Benefits Committee or the Trust Sponsor. Within forty-five (45) days after the close of the Trust Year and within forty-five (45) days after the removal or resignation of the Trustee, the Trustee shall file with the Employee Benefits Committee a valuation of the assets of the Fund, and an accounting of its transactions since the last previous such accounting. In addition, the Employee Benefits Committee or the Trust Sponsor may require an accounting from the Trustee at any other reasonable -11- time. No Employee and no person other than those designated by the Administrator, Employee Benefits Committee or the Trust Sponsor shall have the right to demand or be entitled to any accounting by the Trustee except as otherwise provided by law. 5.4 JUDICIAL SETTLEMENT OF ACCOUNTS. The Trustee, the Administrator, the Trust Sponsor and/or the Employee Benefits Committee shall have the right to apply at any time to a court of competent jurisdiction for the judicial settlement of its accounts. 5.5 ENFORCEMENT OF TRUST-LEGAL PROCEEDINGS. The Trust Sponsor and/or the Administrator shall have authority to enforce the trust hereby created on behalf of all persons having or claiming any interest in the Trust under the Included Plan(s). 5.6 TRUSTEE COMPENSATION AND EXPENSES. The Trustee shall be paid such reasonable compensation and shall be reimbursed for its reasonable expenses as shall from time to time be agreed upon by the Trust Sponsor or the Employee Benefits Committee and the Trustee provided, however, that no compensation shall be paid to a Trustee who is an employee of the Corporation or any affiliate unless authorized by the Trust Sponsor or Employee Benefits Committee. By agreement between the Trust Sponsor or Employee Benefits Committee and the Trustee, the Trustee may be authorized to Withdraw such compensation and expense from the Trust prior to a determination as to whether the Corporation shall pay such amounts, and in the event that the Corporation is to pay such amounts, the Corporation shall reimburse the Trust therefor. 5.7 TRUSTEE RESIGNATION, REMOVAL OR DEATH AND APPOINTMENT OF SUCCESSOR OR ADDITIONAL TRUSTEE. 5.7(a) In the event the Trustee or Trustees serving hereunder have been named Trustee by virtue of any office they may hold in connection with their employment by the Trust Sponsor or any other Corporation, upon leaving any such office, such Trustee shall at once cease to be a Trustee and shall be discharged from all further duties and responsibilities as Trustee. Upon acceptance in writing of its status as Trustee hereunder by the successor in office of any such Trustee, he shall become a Trustee hereunder. 5.7(b) The Trustee may resign at any time upon delivering to the Employee Benefits Committee a written notice of such resignation to take effect not less than sixty (60) days after the delivery thereof unless the Employee Benefits Committee shall accept as adequate a shorter notice. 5.7(c) The Trustee may be removed by the Employee Benefits Committee by mailing notice by registered mail addressed to the Trustee at its last known address, or by delivery of same to the Trustee to take effect not less than sixty (60) days after mailing or delivery of such notification unless notice of a shorter duration shall be accepted as adequate. The Administrator and the Trust Sponsor shall be notified by the Employee Benefits Committee of any such resignation or removal. However, the Trustee may not be removed by the Employee Benefits Committee for two (2) years following a Change in Control. 5.7(d) In case of the resignation or removal of a Trustee, such Trustee shall transfer, assign, convey and deliver to the successor or other Trustee the trust estate as it may then be constituted and shall execute all documents necessary for transferring the trust estate. 5.7(e) The Employee Benefits Committee shall forthwith appoint a successor Trustee in case of resignation or removal of the Trustee appointed and then serving. However, if the resignation or removal of the Trustee occurs within two (2) years following a Change in Control, the Trustee shall select a successor Trustee. -12- 5.7(f) Any successor Trustee shall qualify as such by executing, acknowledging, and delivering to the Employee Benefits Committee an instrument accepting such appointment hereunder in such form as may be satisfactory to the Employee Benefits Committee, which form shall become a part of this Trust document, and thereupon such successor Trustee shall become vested with the rights, powers, discretion, duties and obligation of its predecessor Trustee. The Administrator and the Trust Sponsor shall be notified by the Employee Benefits Committee of any such successor Trustee. Except as may be required by the Act or the Code, in no event shall any successor Trustee be liable on account of any act or omission of any predecessor Trustee. 5.7(g) If any corporate Trustee at any time shall be merged, or consolidated with, or shall sell or transfer substantially all of its assets and business to another employer, domestic or foreign, or shall be in any manner reorganized or reincorporated, then the resulting or acquiring employer shall be substituted ipso facto for such corporate Trustee without the execution of any instrument and without any action upon the part of the Employee Benefits Committee any Participant or Beneficiary, or any other person having or claiming to have an interest in the Fund. 5.8 STANDARD OF CONDUCT. The Trustee shall discharge its duties with respect to the Trust solely in the interest of the Participants and Beneficiaries: (i) For the exclusive purpose of providing benefits to Participants and Beneficiaries, and defraying reasonable expenses of administering the Trust and Included Plan(s) to the extent permitted by the Trust and Included Plan(s); (ii) With the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; (iii) By diversifying any cash investments of the Fund so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and (iv) In accordance with the terms of the Trust and Included Plan(s). ARTICLE VI EMPLOYEE BENEFITS COMMITTEE 6.1 MAKEUP AND APPOINTMENT OF EMPLOYEE BENEFITS COMMITTEE. 6.1(a) The Trust Sponsor shall appoint a Employee Benefits Committee to review and supervise the investment and management of the Fund consisting of one or more persons who shall serve at the pleasure of the Board and without compensation for service on the Employee Benefits Committee. Vacancies shall be filled by the Trust Sponsor. A person shall not be ineligible to be a member of the Employee Benefits Committee because he is or may be a Participant or a participant in the Included Plan(s). 6.1(b) The Trustee and the Administrator shall be notified by the Trust Sponsor of the persons constituting the membership of the Employee Benefits Committee (including its Chairman and Secretary) and may assume that any person appointed (or holding the position of its Chairman or Secretary) continues to be a member thereof (or to hold such position) until notified by the Trust Sponsor. -13- 6.1(c) Unless otherwise determined by the Trust Sponsor, the Plan Investment subcommittee of the Employee Benefits Committee of the Trust Sponsor in existence on the Effective Date of the Trust shall be the Employee Benefits Committee. 6.2 EMPLOYEE BENEFITS COMMITTEE PROCEDURES. The Employee Benefits Committee shall adopt rules for the conduct of its business and performance of its duties with respect to the Fund as it considers desirable, provided they do not conflict with the Trust or Included Plan(s). The Employee Benefits Committee shall hold meetings upon such notice, at such place or places, and at such intervals as it may from time to time determine. 6.3 POWER AND AUTHORITY, COSTS AND EXPENSES. The Employee Benefits Committee is hereby vested with all power and authority necessary in order to carry out its duties and responsibilities in connection with the Trust. The Employee Benefits Committee may authorize one or more of its members or any agent to act on its behalf and may contract for legal, accounting, clerical and other services to carry out its duties under the Trust. The costs of such services and expenses and of any and all other necessary expenses incurred by the Employee Benefits Committee shall be paid or reimbursed by the Trust. 6.4 RECORDS. The Employee Benefits Committee shall keep records reflecting its deliberations and decisions with respect to the Trust which shall be subject to inspection by the Trust Sponsor. 6.5 NECESSARY INFORMATION. The Corporation, the Trustee and the Administrator shall supply full and timely information to the Employee Benefits Committee of all matters relating to Participants and Beneficiaries, the Trust and Included Plan(s) which the Employee Benefits Committee may require for the effective discharge of its duties. 6.6 FUNDING POLICY. The Employee Benefits Committee shall establish a funding policy consistent with the current and long-term financial needs of the Trust and Included Plans with respect to the ages of Participants in the Plan and other relevant information. 6.7 SCOPE OF EMPLOYEE BENEFITS COMMITTEE'S DIRECT INVESTMENT AUTHORITY. The exercise by the Employee Benefits Committee of its authority granted under subparagraph 5.1(e) is not limited to any specific investments or classes of investments. The Employee Benefits Committee shall exercise its authority based on the standards of a reasonable investor having knowledge of such matters. ARTICLE VII TRUSTEE'S CONTRACTOR 7.1 APPOINTMENT OF TRUSTEE'S CONTRACTOR. 7.1(a) The Corporation may engage a third party administrator as a Trustee's Contractor, who shall not be a Plan Participant or Beneficiary (but who may be the Trustee), to perform functions described in this ARTICLE and elsewhere in this Trust Agreement which would otherwise be performed by the Corporation. 7.1(b) Upon engagement of a Trustee's Contractor, as soon as practicable but in no event longer than thirty (30) days thereafter, the Corporation shall furnish to the Trustee's Contractor copies of the Plan documents and other information necessary to determine the benefits which are or may become payable by the Corporation to or with respect to each Participant in the Included Plans, including any benefits payable after the Participant's death, and the recipient of -14- same and the procedures which the Corporation has adopted to calculate such benefit payments. The Corporation shall regularly, at least annually, and upon each benefit change under the Included Plans, furnish revised, updated information to the Trustee's Contractor. In the event the Corporation fails or refuses to provide updated Participant information as contemplated herein, the Trustee's Contractor shall be entitled to rely on the most recent information furnished to it by the Corporation. 7.1(c) In the event of a Change in Control and/or upon the failure or refusal by the Corporation to pay benefits in accordance with the Included Plans and paragraph 3.2 hereof, the Corporation shall have the duty to engage, as soon as practicable thereafter, a Trustee's Contractor reasonably acceptable to the Trustee if there shall at that time be no Trustee's Contractor then serving. In the event that the Corporation fails to engage a Trustee's contractor, the Trustee shall have the power and authority to do so. After a Change in Control and/or a failure or refusal by the Corporation to pay benefits in accordance with the Included Plans and paragraph 3.2 hereof, the Corporation shall not have any control or authority with respect to the Trustee's Contractor so engaged or then serving, or any successor Trustee's Contractor, including without limitation any rights with respect to the removal or replacement of any such Trustee's Contractor or its duties pursuant to this Trust Agreement. 7.2 REMOVAL OF TRUSTEE'S CONTRACTOR. 7.2(a) The Corporation may replace or remove its Trustee's Contractor from time to time serving hereunder, in its sole discretion, prior to the occurrence of a Change in Control and/or a failure or refusal by the Corporation to pay benefits in accordance with the Included Plans and paragraph 3.2 hereof. Following a Change in Control and/or a failure or refusal by the Corporation to pay benefits in accordance with the Included Plans and paragraph 3.2 hereof, the Trustee, in its sole discretion, may remove a Trustee's Contractor engaged by the Corporation or any successor Trustee's Contractor and shall engage a successor to such person if Trustee deems such person's performance as a Trustee's Contractor unsatisfactory. 7.2(b) At all times following a Change in Control and/or a failure or refusal by the Corporation to pay benefits in accordance with the Included Plans and paragraph 3.2 hereof, upon any such removal, or the voluntary resignation of any such Trustee's Contractor or the occurrence of any other event which shall result in the cessation of performance of the Trustee's Contractor's duties hereunder, Trustee shall use its best efforts to engage a new Trustee's Contractor (which may be Trustee), provided, however, Trustee shall perform the duties of the Trustee's Contractor during any period for which Trustee is unable to find a new Trustee's Contractor (so that there will be no default in payments under the Plan as a result of the absence of a Trustee's Contractor), and any person engaged as a Trustee's Contractor shall in the judgment of Trustee be independent of the Corporation. The person who removes or replaces a Trustee's Contractor shall be responsible for assuring that there is a timely and complete transfer of records from such Trustee's Contractor to such person's successor. 7.3 DUTIES OF TRUSTEE'S CONTRACTOR. 7.3(a) Except for the records dealing solely with the assets of the Trust and investment of those assets, which shall be maintained by the Trustee, if a Trustee's Contractor is engaged, the Trustee's Contractor shall maintain all Participant records contemplated by this Trust Agreement, including the payment schedule. All such records and copies of the Included Plan documents and employment records of the Participants in the possession of the Trustee's Contractor shall be made available promptly upon request of Trustee or the Corporation. The Trustee's Contractor shall also prepare and distribute Participant statements to Participants and Beneficiaries and shall perform such other duties and responsibilities contemplated under the terms of this Trust Agreement as the Corporation or Trustee, as the case may be, determines is necessary or advisable to achieve the objectives of this Trust Agreement. -15- 7.3(b) Following a Change in Control and/or a failure or refusal by the Corporation to pay benefits in accordance with the Included Plans and paragraph 3.2 hereof, the Trustee's Contractor shall have the duties described in this Trust Agreement in connection with the management of the Policies and assets of the Trust. 7.4 INDEMNIFICATION OF TRUSTEE'S CONTRACTOR. The Corporation shall indemnify and hold harmless the Trustee's Contractor for any liability or expenses, including without limitation advances for or prompt reimbursement of reasonable fees and expenses of counsel and other agents retained by it, incurred by the Trustee's Contractor with respect to keeping the records for participants, benefits, reporting thereon to participants and beneficiaries, certifying benefit information to Trustee, determining the status of benefits hereunder and otherwise carrying out its obligations under this Trust Agreement, other than those resulting from Trustee's Contractor's negligence or willful misconduct or its failure to reasonably calculate and certify the amount of benefits based on the applicable terms of the Plan documents and other information and procedures furnished by the Corporation to the Trustee's Contractor in accordance with this Trust Agreement. 7.5 COMPENSATION AND EXPENSES. The Trustee's Contractor shall be entitled to reasonable compensation for services hereunder, the amount of which shall be agreed upon from time to time by the Corporation or, following a Change in Control and/or a failure or refusal by the Corporation to pay benefits in accordance with the Included Plans and paragraph 3.2 hereof, the Trustee, and the Trustee's Contractor in writing, and reimbursement for reasonable expenses incurred in connection with its performance of such services. Following a Change in Control and/or a failure or refusal by the Corporation to pay benefits in accordance with the Included Plans and paragraph 3.2 hereof, Trustee's good faith determination of compensation to be paid to a Trustee's Contractor (including Trustee when it acts in such capacity) shall be binding on the Corporation and each other person having an interest in the Trust. All such compensation and expenses shall be paid by the Corporation. If not so paid, such compensation and expenses shall be paid by the Trustee from the assets of the Trust. 7.6 SCOPE OF RESPONSIBILITY. 7.6(a) Unless Trustee agrees to perform the functions of the Trustee's Contractor described herein, Trustee shall have no responsibility hereunder for any obligation assigned to a Trustee's Contractor or (subject to paragraph 7.2) for the performance of a Trustee's Contractor's duties and responsibilities under this Trust Agreement. 7.6(b) Except as may be otherwise agreed by the Trustee's Contractor and the Corporation, or Trustee following a Change in Control and/or a failure or refusal by the Corporation to pay benefits in accordance with the Included Plans and paragraph 3.2 hereof, the Trustee's Contractor's obligations are limited solely to those explicitly set forth herein and the Trustee's Contractor shall have no responsibility, authority or control, direct or indirect, over the maintenance or investment of the Trust and shall have no obligation in respect of Trustee. ARTICLE VIII AMENDMENT AND TERMINATION 8.1 AMENDMENT. 8.1(a) The Trust Sponsor reserves the right to itself to modify, alter, or amend the Trust in whole or in part; provided, however, that: -16- (i) The duties and obligations of the Trustee hereunder shall not be increased nor its compensation decreased without its written consent; (ii) No amendment shall affect the terms of the Policy or Policies issued by an Insurer without a written consent of the Insurer; and (iii) Except as otherwise expressly required or permitted herein, no such amendment shall have the effect of revesting in the Corporation any part of the corpus or income of the Fund, of reducing the benefits payable from the Trust to Participants or their Beneficiaries, or of making the Trust revocable. Nothing in the foregoing shall prevent any amendment which accelerates the time of payment of benefits under the Included Plan or the Trust or any amendment which is agreed to in writing by the affected Participant(s). 8.1(b) Subject to the limitations on amendment contained in subparagraph 8.1(a)), the Executive Compensation and Management Development Committee of the Board and the Administrator shall be and are hereby authorized to adopt on behalf of the Trust Sponsor and to execute any technical amendment or amendments to the Trust which in the opinion of counsel for the Trust Sponsor are required by law and are deemed advisable by such persons, or either of them, and to so adopt and execute any other discretionary amendment or amendments to the Trust which do not in view of such persons, or either of them, materially affect costs or the benefit protection provisions of the Trust and which in the opinion of such persons, or either of them, are deemed advisable. 8.2 TERMINATION. Except as otherwise expressly provided herein, the Trust shall be irrevocable and the Trust Sponsor shall have no power or authority to terminate the Trust until such time as no Participant is entitled to any payment (currently or in the future) under the Trust or any Included Plan. Upon such termination of the Trust, any assets remaining in the Trust shall be returned to the Corporation as directed by the Administrator or the Trust Sponsor. ARTICLE IX MISCELLANEOUS 9.1 HEADINGS. The headings in the Trust have been inserted for convenience of reference only and are to be ignored in any construction of the provisions hereof. 9.2 GENDER AND NUMBER. In the construction of the Trust, the masculine shall include the feminine or neuter and the singular shall include the plural and vice-versa in all cases where such meanings would be appropriate. 9.3 GOVERNING LAW. The Trust created hereunder shall be construed, enforced and administered in accordance with the laws of the State of Florida. 9.4 SEVERABILITY. If any provision of the Plan should for any reason be declared invalid or unenforceable by a court of competent jurisdiction, the remaining provisions shall nevertheless remain in full force and effect. 9.5 EMPLOYMENT RIGHTS. Neither status as a Participant of the Included Plans nor any rights hereunder shall give any Employee the right to be retained in the Corporation's employ nor, upon dismissal or upon his voluntary termination of employment, to have any right or interest in the fund other than as herein provided. -17- 9.6 ALIENATION AND ASSIGNMENT. No amount payable to or with respect of any Participant hereunder shall be subject in any manner to alienation, sale, anticipation, transfer, assignment, pledge, encumbrance, garnishment, attachment, execution or levy of any kind or other legal or equitable process. 9.7 DELEGATION OF AUTHORITY. Whenever the Trust Sponsor or any Corporation is permitted or required to perform any act, such act may be performed by the Executive Compensation and Management Development Committee of the Board or the Chairman of such committee. 9.8 SERVICE OF PROCESS. The Trustee shall be the agent for service of process on the Trust. 9.9 CONSTRUCTION. This Trust is created for the exclusive benefit of Participants in the Included Plans and shall be interpreted in a manner consistent with its being a trust fund for non-qualified deferred compensation plans which are subject to the claims of the general creditors of the Employer and treated for federal income tax purposes as a grantor trust within the meaning of Section 671 of the Code. ARTICLE X ADOPTION OF THE TRUST AND DESIGNATION OF INCLUDED PLANS 10.1 DESIGNATION OF ADDITIONAL INCLUDED PLANS. 10.1(a) The Trust Sponsor may from time to time designate one or more additional plans as Included Plans by executing a designation agreement or adopting an amendment to the Trust. The assets or any portion thereof held by such plan may then be paid over to the Trustee to be administered as part of the Fund pursuant to the provisions of this Trust if so directed by the Trust Sponsor or if so provided in the designation agreement or amendment to the Trust. 10.1(b) In addition, and as an alternative, to designation of additional Included Plans by action of the Board, but. subject to the limitations contained in this subparagraph, the Chairman of the Board of Directors of the Trust Sponsor, the President of the Trust Sponsor and the Administrator, or any of them, shall be and are hereby authorized to designate additional Included Plans and determine what assets, if any, of such plans should be paid over to the Trustee. 10.1(c) No plan shall be designated as an Included Plan unless the plan is an unfunded deferred compensation plan for a select group of management and highly compensated employees and exempt from the participation and vesting, funding and fiduciary requirements of the Act or an unfunded employee welfare benefit plan. 10.2 TERMINATION OF DESIGNATION OF A PLAN AS AN INCLUDED PLAN. 10.2(a) Prior to a Change in Control, the Trust Sponsor may from time to time terminate the designation of one or more plans as Included Plans by executing a document to that effect or adopting an amendment to the Trust. The assets of such formerly Included Plan shall be disposed of in the manner directed by the Trust Sponsor consistent with the purpose of the Trust. 10.2(b) In addition, and as an alternative, to the termination of the designation of a plan as an Included Plan by action of the Board, Executive Compensation and Management Development Committee of the Board or the Chairman of such committee shall be and are hereby authorized to terminate any such designation and determine the disposition of the assets, if any, of such plan held in the Fund in a manner consistent with the purpose of the Trust. -18- 10.2(c) Notwithstanding the foregoing provisions of this paragraph, if an Included Plan is sponsored by an affiliate or former affiliate (as opposed to the Trust Sponsor), such affiliate or former affiliate may terminate the designation of one or more plans sponsored by it as Included Plans by executing a document to that effect and delivering the same to the Trust Sponsor, with a copy to the Trustee and the Employee Benefits Committee. The assets of such formerly Included Plan shall be disposed of in the manner directed by the Trust Sponsor consistent with the purpose of the Trust. 10.3 WITHDRAWAL FROM TRUST ON INCLUDED PLAN FAILURE TO QUALITY FOR EXEMPTION UNDER THE ACT. In the event that any Included Plan is subject to the Act and does not qualify for an exemption from the participation, vesting, funding and fiduciary requirements of the Act, the assets held in the Fund attributable to such Included Plan shall be immediately withdrawn from the Fund and paid over to such successor funding medium or other entity (to the extent permitted under the Included Plan or the Trust) consistent with the requirements of the Act and/or distributed to Participants and Beneficiaries as the Trust Sponsor may direct the Trustee in writing. IN WITNESS WHEREOF, the Trust Sponsor has caused the Trust to be established and signed on its behalf by its duty authorized officer or member of its Board of Directors on the day, month and year aforesaid and the Trustee has caused its name to be signed on its behalf by its duly authorized officers. BARNETT BANKS, INC., Trust Sponsor By: /s/ Deborah Carroll ------------------------------------- Its Sec., Employee Benefits Committee --------------------------------- Attest /s/ Elizabeth Nana --------------------------------------- Its Manager, Benefits Finance & Compliance --------------------------------------- U.S. TRUST COMPANY OF CALIFORNIA, Trustee By: /s/ Dennis M. Kunisaki ----------------------------- Its Vice President -------------------------- Attest /s/ Miriam delaBosa ---------------------- Its Financial Officer --------------------- -19-
BARNETT BANKS, INC. TRUST OWNED LIFE INSURANCE TRUST FOR MANAGEMENT AND DIRECTORS DEFERRAL PLANS APPENDIX A (AS OF JANUARY 1, 1997) LIST OF INCLUDED PLANS Effective Date Effective Date of Inclusion as of Termination as Included Plan Name Plan Sponsor Included Plan Included Plan Barnett Banks, Inc. Barnett Banks, Inc. January 1, 1997 The Management Deferral Plan Barnett Banks, Inc. Barnett Banks, Inc. January 1, 1997 The Directors Deferral Plan
-A-1- EX-10 24 EXHIBIT 10(Q) BARNETT BANKS, INC. TRUST UNDER EXECUTIVE BENEFIT PLAN ----------------------------------
TABLE OF CONTENTS PAGE NO. ------- SECTION 1. ESTABLISHMENT OF TRUST........................................................1 SECTION 2. PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES...........................................................2 SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY WHEN COMPANY IS INSOLVENT..........................................................5 SECTION 4. PAYMENTS TO COMPANY...........................................................6 SECTION 5. INVESTMENT AUTHORITY..........................................................6 SECTION 5A. SALE OF COMPANY STOCK BY TRUSTEE.............................................10 SECTION 6. DISPOSITION OF INCOME........................................................12 SECTION 7. ACCOUNTING BY TRUSTEE........................................................12 SECTION 8. RESPONSIBILITY OF TRUSTEE....................................................13 SECTION 9. COMPENSATION AND EXPENSES OF TRUSTEE.........................................14 SECTION 10. RESIGNATION AND REMOVAL OF TRUSTEE...........................................14 SECTION 11. APPOINTMENT OF SUCCESSOR.....................................................15 SECTION 12. AMENDMENT OR TERMINATION.....................................................15 SECTION 13. MISCELLANEOUS................................................................17 SECTION 14. EFFECTIVE DATE...............................................................21
BARNETT BANKS, INC. TRUST UNDER EXECUTIVE BENEFIT PLAN THIS AGREEMENT made this 5th day of December, 1996, by and between BARNETT BANKS, INC., a Florida corporation, as grantor hereunder ("Company"), and U.S. TRUST COMPANY OF CALIFORNIA, N.A., a national banking association ("Trustee"); (a) WHEREAS, Company has adopted the nonqualified deferred compensation plans as listed in Appendix A ("Plans"); (b) WHEREAS, Company has incurred or expects to incur liability under the terms of such Plans with respect to the individuals participating in such Plans; (c) WHEREAS, Company wishes to establish a trust ("Trust") for the benefit of certain officers and certain key managers of Company and Company's affiliates who participate in the Plans and to contribute to the Trust assets that shall be held therein, subject to the claims of Company's creditors in the event of Company's Insolvency (as herein defined) until full payment has been made in respect of such obligations of Company to Plan participants and their beneficiaries in such manner and at such time as specified in the Plans; (d) WHEREAS, it is the intention of the parties that this Trust shall constitute an unfunded arrangement and shall not affect the status of the Plans as an unfunded plan maintained for the purpose of providing deferred compensation for a select group of management or highly compensated employees or as an excess benefit plan for purposes of Title I of the Employee Retirement Income Security Act of 1974; and (e) WHEREAS, it is the intention of Company to make contributions to the Trust to provide itself with a source of funds to assist it in meeting its liabilities under the Plans; NOW, THEREFORE, the parties do hereby establish the Trust and agree that the Trust shall be comprised, held and disposed of as follows: SECTION 1. ESTABLISHMENT OF TRUST. (a) Company hereby deposits with Trustee 8,000,000 shares of common stock of Company, par value $2.00 per share ("Company Stock"), which shall become the principal of the Trust to be held, administered and disposed of by Trustee as provided in this Trust Agreement. (b) The Trust hereby established shall be irrevocable. (c) The Trust is intended to be a grantor trust, of which Company is the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be construed accordingly. (d) The principal of the Trust, and any earnings thereon shall be held separate and apart from other funds of Company and shall be used exclusively for the uses and purposes of Plan participants and general creditors as herein set forth. Plan participants and their beneficiaries shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Plans and this Trust Agreement shall be mere unsecured contractual rights of Plan participants and their beneficiaries against Company. Any assets held by the Trust will be subject to the claims of Company's general creditors under federal and state law in the event of Insolvency, as defined in Section 3(a) herein. (e) Company, in its sole discretion, may at any time, or from time to time, make additional deposits of cash or other property acceptable to Trustee in trust with Trustee to augment the principal to be held, administered and disposed of by Trustee as provided in this Trust Agreement. Neither Trustee nor any Plan participant or beneficiary shall have any right to compel any such additional deposits under this subsection (e). SECTION 2. PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES. (a) Company, or the Trustee's Contractor (as hereinafter defined) if one shall have been engaged, shall deliver to Trustee a schedule (a "Payment Schedule") that indicates the amounts payable by Company in accordance with the terms and conditions of the Plans in respect of each Plan participant (and his or her beneficiaries), that provides a formula or other instructions acceptable to Trustee for determining the amounts so payable, the form in which such amount is to be paid (as provided for or available under the Plans), and the time of commencement for payment of such amounts. Except as otherwise provided herein, Trustee shall make payments to the Plan participants and their beneficiaries in accordance with such Payment Schedule (to the extent such payments are not made by Company pursuant to subsection (c) of this Section 2). Notwithstanding the foregoing, if a benefit which is distributable in the form of Company Stock under the terms of a Plan becomes payable at a time when there is no (or insufficient) Company Stock in the Trust with which to satisfy such benefit obligation and if the Company fails or refuses to pay such benefit within a reasonable time after notice from Trustee that it has become so payable, Trustee shall use other assets of the Trust to acquire Company Stock, on the open market or otherwise in its discretion, sufficient to satisfy such benefit obligation. (b) The entitlement of a Plan participant or his or her beneficiaries to benefits payable by Company under the Plans shall be determined in accordance with the terms of the Plans by Company or such party as it shall designate under the Plans, or the Trustee's Contractor if one shall have been engaged, and any claim for such benefits shall be considered and reviewed and paid or not paid under the procedures set out in the Plans. Neither Trustee nor Trustee's Contractor shall have any obligation for determining whether any Plan participant or beneficiary has died and shall be entitled to rely upon any information in this regard furnished by Company. -2- (c) Company may make payment of benefits directly to Plan participants or their beneficiaries as they become due under the terms of the Plans. Company shall notify Trustee of its decision to make payment of benefits directly prior to the time amounts are payable to participants or their beneficiaries. In addition, if the principal of the Trust, and any earnings thereon are not sufficient to make payments of benefits payable by Company in accordance with the terms of the Plans, Company shall make the balance of each such payment as it falls due. Trustee shall notify Company where principal and earnings are not sufficient. (d) Company may engage a third party administrator as a contractor of the Trustee (a "Trustee's Contractor"), who shall not be a Plan participant or beneficiary (but who may be the Trustee), to perform functions described in this Section 2(d) and elsewhere in this Trust Agreement which would otherwise be performed by Company. (1) Upon engagement of a Trustee's Contractor, as soon as practicable but in no event longer than thirty (30) days thereafter, Company shall furnish to the Trustee's Contractor copies of the Plan documents and other information necessary to determine the benefits which are or may become payable by Company to or with respect to each participant in each Plan, including any benefits payable after the participant's death, and the recipient of same and the procedures which Company has adopted to calculate such benefit payments. Company shall regularly, at least annually, and upon each benefit change under the Plans, furnish revised, updated information to the Trustee's Contractor. In the event Company refuses or neglects to provide updated participant information as contemplated herein, the Trustee' Contractor shall be entitled to rely on the most recent information furnished to it by Company. (2) In the event of a Potential Change in Control (as hereinafter defined), Company shall have the duty to engage, as soon as practicable thereafter, a Trustee's Contractor reasonably acceptable to the Trustee if there shall at that time be no Trustee's Contractor then serving. After a Change in Control, Company shall not have any control or authority with respect to the Trustee's Contractor so engaged or then serving, or any successor Trustee's Contractor, including without limitation any rights with respect to the removal or replacement of any such Trustee's Contractor or its duties pursuant to this Trust Agreement. (3) Unless Trustee agrees to perform the functions of the Trustee's Contractor described herein, Trustee shall have no responsibility hereunder for any obligation assigned to a Trustee's Contractor or (subject to subsection (4) below) for the performance of a Trustee's Contractor's duties and responsibilities under this Trust Agreement. (4) Company may replace or remove its Trustee's Contractor from time to time serving hereunder, in its sole discretion, prior to the occurrence of a Change in -3- Control. Following a Change in Control, Trustee, in its sole discretion, may remove a Trustee's Contractor engaged by Company or any successor Trustee's Contractor and shall remove any such person and engage a successor to such person if Trustee deems such person's performance as a Trustee's Contractor unsatisfactory. At all times following a Change in Control, upon any such removal, or the voluntary resignation of any such Trustee's Contractor or the occurrence of any other event which shall result in the cessation of performance of the Trustee's Contractor's duties hereunder, Trustee shall use its best efforts to engage a new Trustee's Contractor (which may be Trustee); provided, however, Trustee shall perform the duties of the Trustee's Contractor during any period for which Trustee is unable to find a new Trustee's Contractor (so that there will be no default in payments under the Plans as a result of the absence of a Trustee's Contractor), and any person engaged as a Trustee's Contractor shall in the judgment of Trustee be independent of Company. The person who removes or replaces a Trustee's Contractor shall be responsible for assuring that there is a timely and complete transfer of records from such Trustee's Contractor to such person's successor. (5) Except for the records dealing solely with the assets of the Trust and investment of those assets, which shall be maintained by the Trustee, if a Trustee's Contractor shall be engaged, the Trustee's Contractor shall maintain all Plan participant records contemplated by this Agreement, including the Payment Schedule. All such records and copies of the Plan documents and employment records of the participants in the possession of the Trustee's Contractor shall be made available promptly upon request of Trustee or Company. The Trustee's Contractor shall also prepare and distribute participant statements to participants and beneficiaries and shall perform such other duties and responsibilities contemplated under the terms of this Trust Agreement as Company or Trustee, as the case may be, determines is necessary or advisable to achieve the objectives of this Trust Agreement. (6) Company shall indemnify and hold harmless its Trustee's Contractor for any liability or expenses, including without limitation advances for or prompt reimbursement of reasonable fees and expenses of counsel and other agents retained by it, incurred by the Trustee's Contractor with respect to keeping the records for participants, benefits, reporting thereon to participants and beneficiaries, certifying benefit information to Trustee, determining the status of benefits hereunder and otherwise carrying out its obligations under this Trust Agreement, other than those resulting from Trustee's Contractor's negligence or willful misconduct or its failure to reasonably calculate and certify the amount of benefits based on the applicable terms of the Plan documents and other information and procedures furnished by Company to the Trustee's Contractor in accordance with this Trust Agreement. The Trustee's Contractor shall be entitled to reasonable compensation for services hereunder, the amount of which shall be agreed upon from time to time by Company or, following a Change in Control, the Trustee, and the Trustee's Contractor in writing, and -4- reimbursement for reasonable expenses incurred in connection with its performance of such services. Following a Change in Control, Trustee's good faith determination of compensation to be paid to a Trustee's Contractor (including Trustee when it acts in such capacity) shall be binding on the Company and each other person having an interest in the Trust. All such compensation and expenses shall be paid by the Company. If not so paid, such compensation and expenses shall be paid by the Trustee from the assets of the Trust. (7) Except as may be otherwise agreed by the Trustee's Contractor and Company, or Trustee following a Change in Control, the Trustee's Contractor's obligations are limited solely to those explicitly set forth herein and the Trustee's Contractor shall have no responsibility, authority or control, direct or indirect, over the maintenance or investment of the Trust and shall have no obligation in respect of Trustee or the Trustee's compliance with the Trustee's Contractor's certifications to Trustee. SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY WHEN COMPANY IS INSOLVENT. (a) Trustee shall cease payment of benefits to Plan participants and their beneficiaries if the Company is Insolvent. Company shall be considered "Insolvent" for purposes of this Trust Agreement if (i) Company is unable to pay its debts as they become due, or (ii) Company is subject to a pending proceeding as a debtor under the United States Bankruptcy Code. (b) At all times during the continuance of this Trust, as provided in Section 1(d) hereof, the principal and income of the Trust shall be subject to claims of general creditors of Company under federal and state law as set forth below. (1) The Board of Directors and the Chief Executive Officer of Company shall have the duty to inform Trustee in writing of Company's Insolvency. If a person claiming to be a creditor of Company alleges in writing to Trustee that Company has become Insolvent, Trustee shall determine whether Company is Insolvent and, pending such determination, Trustee shall discontinue payment of benefits to Plan participants or their beneficiaries. (2) Unless Trustee has actual knowledge of Company's Insolvency, or has received notice from Company or a person claiming to be a creditor alleging that Company is Insolvent, Trustee shall have no duty to inquire whether Company is Insolvent. Trustee may in all events rely on such evidence concerning Company's solvency as may be furnished to Trustee and that provides Trustee with a reasonable basis for making a determination concerning Company's solvency. -5- (3) If at any time Trustee has determined that Company is Insolvent, Trustee shall discontinue payments to Plan participants or their beneficiaries and shall hold the assets of the Trust for the benefit of Company's general creditors. Nothing in this Trust Agreement shall in any way diminish any rights of Plan participants or their beneficiaries to pursue their rights as general creditors of Company with respect to benefits due under the Plans or otherwise. (4) Trustee shall resume the payment of benefits to Plan participants or their beneficiaries in accordance with Section 2 of this Trust Agreement only after Trustee has determined that Company is not Insolvent (or is no longer Insolvent). (c) Provided that there are sufficient assets, if Trustee discontinues the payment of benefits from the Trust pursuant to Section 3(b) hereof and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due from Company to Plan participants or their beneficiaries under the terms of the Plans for the period of such discontinuance, less the aggregate amount of any payments made to Plan participants or their beneficiaries by Company in lieu of the payments provided for hereunder during any such period of discontinuance. SECTION 4. PAYMENTS TO COMPANY. (a) Except as provided in Sections 3, 4(b), 4(c), 5(b) and 12(c) hereof, Company shall have no right or power to direct Trustee to return to Company or to divert to others any of the Trust assets before all payment of benefits have been made to Plan participants and their beneficiaries pursuant to the terms of the Plans to the extent such benefits are obligations of Company. (b) Prior to a Change in Control, Trustee shall, if so instructed by Company in writing within thirty (30) days after the actual filing of Company's federal income tax return for a year, reimburse Company from the assets of the Trust for federal, state or local income taxes, or any part thereof, which Company certifies that it has paid, attributable to income of the Trust for such year, as determined by Company, within thirty (30) days after receipt of such request. No reimbursement for taxes pursuant to this Section 4(b) may be made following a Change in Control. (c) Notwithstanding any other provision of this Trust Agreement, including without limitation Section 1(b) hereof, prior to a Change in Control Company shall have the right with respect to each contribution to the Trust to cause Trustee to return all or any portion of a contribution and any and all income on such contribution to Company. Such right shall be exercised by giving written notice to Trustee and shall be exercisable in a nonfiduciary capacity without the approval or consent of Trustee or any other person. Such right shall expire with respect to each contribution to the Trust upon the earlier of (i) thirty days following the date -6- on which the contribution is made, (ii) the last day of the taxable year of Company in which the contribution is made or (iii) a Change in Control. Company's right under this Section 4(c) shall expire upon a Change in Control. SECTION 5. INVESTMENT AUTHORITY. (a). Except as otherwise provided in subsections (c), (d), (e) and (g) of this Section 5 and in Section 5A hereof, the assets of the Trust shall be invested and reinvested by Trustee, without distinction between principal and income, at such time or times in such investments and pursuant to such investment strategies or courses of action and in such shares and proportions, as Trustee, in its sole discretion, shall deem advisable. Except as otherwise provided herein, Trustee may invest in securities (including stock or rights to acquire stock) or obligations issued by Company. All rights associated with assets of the Trust shall be exercised by Trustee or the person designated by Trustee, and shall in no event be exercisable by, or rest with Plan participants, except that (i) the Trustee shall vote Company Stock in the same proportion that all other Company shareholders vote their shares of Company Stock and voting rights with respect to all other Trust assets will be exercised by Company and; (ii) Trustee shall waive dividend rights with respect to Company Stock and all other dividend rights with respect to Trust assets will rest with Company. Notwithstanding anything to the contrary contained herein, in the case of a tender offer for Company Stock, the Trustee shall have no right to tender shares of Company Stock held by the Trust. (b) Company shall have the right at any time, and from time to time in its sole discretion, to substitute assets of equal fair market value for any asset held by the Trust. This right is exercisable by Company in a nonfiduciary capacity without the approval or consent of any person in a fiduciary capacity. In connection with any substitution of assets described in this Section 5(b), Company Stock may not revert to Company in kind at any time following a voting record date for any meeting of Company stockholders and before such meeting, unless Trustee shall have voted such shares by proxy. Such reversion may occur immediately following the stockholders meeting to which such record date relates. Further, any such substitution may be made only out of property available to the Company for the purchase of shares of stock under applicable state law, as determined by Company. (c) Subject to the provisions of Section 5A, investment authority over the Trust's assets, or any portion thereof may be reserved by Company to itself from time to time in its absolute discretion, prior to a Change in Control. Any such reservation of discretionary authority by Company shall be communicated to Trustee in writing. In this regard, unless Company notifies Trustee to the contrary, Company shall act through its Management Development and Compensation Committee of Company's Board of Directors or any other person who is authorized to act on Company's behalf by a resolution of Company's Board of Directors. Company shall furnish Trustee from time to time with a list of the names and signatures of all persons authorized to so act. Notwithstanding anything to the contrary -7- contained herein, following a Change in Control, Company may not reserve discretionary authority for the management and control of any assets of the Trust and any prior reservation then in effect shall immediately be nullified. (d) Trustee shall be under no duty or obligation to review or to question any direction of Company pursuant to authority reserved under subsection (c) of this Section 5, or to review securities or any other property so held with respect to prudence or proper diversification, or to make any suggestions or recommendation to Company with respect to the retention or investment of any such assets and shall have no authority to take any action or to refrain from taking any action with respect to any such assets unless and until it is directed to do so by Company. Notwithstanding anything to the contrary in this Trust Agreement, Company does hereby discharge, indemnify and hold harmless Trustee, its directors, officers, employees, and agents, from and against any and all losses, costs, damages, claims, penalties, expenses (including reasonable attorneys, fees and expenses) or liabilities arising in connection with Trustee's administration of the Trust consistent with Section 5(c). (e) Trustee shall be responsible for assuring the daily investment of cash balances, if any, unless directed otherwise by the Company pursuant to authority reserved in subsection (c) of this Section 5, so as to maintain uninvested cash balances at a minimum. (f) Without in any way limiting the powers and discretions conferred upon Trustee by the other provisions of this Trust Agreement, Trustee (and Company acting pursuant to authority reserved under subsection (c) of this Section 5) shall be vested with the following powers and discretions (to be exercised in light of the nature and purpose of this Trust) with respect to the assets of the Trust subject to its management and control: (1) To invest and reinvest in any property, real, personal or mixed, wherever situated and whether or not productive of income or consisting of wasting assets, including without limitation, common and preferred stocks, bonds, notes, debentures (including convertible stocks and securities), leaseholds, mortgages, certificates of deposit or demand or time deposits (including any such deposits with Trustee), shares of investment companies and mutual funds, interests in partnerships and trusts, insurance policies and annuity contracts, and oil, mineral or gas properties, royalties, interests or rights, without being limited to the classes of property in which trustees are authorized to invest by any law or any rule of court of any state and without regard to the proportion any such property may bear to the entire amount of the Trust; (2) To invest and reinvest all or any portion of the Trust collectively through the medium of any common, collective or commingled trust fund that may be established and maintained by Trustee, to be held and invested subject to all of the terms and conditions thereof, and such trust shall be deemed adopted as a part of the Trust to the extent that assets of the Trust are invested therein; -8- (3) To retain any property at any time received by the Trustee; (4) To sell or exchange any property held by it at public or private. sale, for cash or on credit, to grant and exercise options for the purchase or exchange thereof, to exercise all conversion or subscription rights pertaining to any such property and to enter into any covenant or agreement to purchase any property in the future; (5) To participate in any plan of reorganization, consolidation, merger, combination, liquidation or other similar plan relating to property held by it and to consent to or oppose any such plan or any action thereunder or any contract, lease, mortgage, purchase, sale or other action by any person; (6) To deposit any property held by it with any protective, reorganization or similar committee, to delegate discretionary power, thereto, and to pay part of the expenses and compensation thereof and any assessments levied with respect to any such property so deposited; (7) To extend the time of payment of any obligation held by it; (8) To hold uninvested any monies received by it, without liability for interest thereon until such monies shall be invested, reinvested or disbursed; (9) To exercise all voting or other rights with respect to any property held by it and to grant proxies, discretionary or otherwise; (10) For the purposes of the Trust, to borrow money from others, to issue its promissory note or notes therefor, and to secure the repayment thereof by pledging any property held by it; (11) To manage, administer, operate, insure, repair, improve, develop, preserve, mortgage, lease or otherwise deal with, for any period, any real property or any oil, mineral or gas properties, royalties, interests, or rights held by joining with others, using other Trust assets for any such purposes, to modify, extend, renew, waive or otherwise adjust any provision for amortization of the investment in or depreciation of the value of such property; (12) To employ suitable agents (including but not limited to actuarial and employee benefit consulting firms) and counsel, who may be counsel to Company or Trustee, and to pay their reasonable expenses and compensation from the Trust to the extent not paid by Company; -9- (13) To register any securities held in the Trust in the name of a nominee and to hold any investment in bearer form, and to combine certificates representing such investments with certificates of the same issue held by the Trustee in other fiduciary capacities or to deposit or arrange for the deposit of such securities in a qualified central depository even though, when so deposited, such securities may be merged and held in bulk in the name of the nominee of such depository with other securities deposited therein by any other person, or to deposit or arrange for the deposit of any securities issued by the United States Government, or an agency or instrumentality thereof, with a federal reserve bank, but the books and records of Trustee shall at all times show that all such investments are part of the Trust; (14) To settle, compromise, or submit to arbitration any claims, debts, or damages due or owing to or from the Trust, respectively, to commence or defend suits or legal proceedings to protect any interest of the Trust, and to represent the Trust in all suits or legal proceedings in any court or before any other body or tribunal; provided, however, Trustee shall not be required to take any such action unless it shall have been indemnified by Company or the Trust to its reasonable satisfaction against liability and expense it might incur therefrom; (15) To organize under laws of any state a corporation or. trust for the purpose of acquiring and holding title to any property which it is authorized to acquire hereunder and to exercise with respect thereto any or all of the powers set forth herein; and (16) Generally, to do all acts consistent with its duties hereunder, whether or not expressly authorized, that Trustee may deem necessary or desirable for the protection of the Trust. (g) Notwithstanding anything to the contrary contained herein (other than the provisions of Section 5A hereof), unless and until directed otherwise by Company, or the occurrence of a Change in Control, the assets of the Trust shall be invested exclusively in the Company Stock except to the extent that Company directs otherwise with respect to a portion of the assets in anticipation of reasonable liquidity needs of the Trust. With respect to assets of the Trust invested in Company Stock, Trustee shall have no obligation to diversify investments in the Trust, and shall not be subject to any rule of applicable law which might otherwise make necessary, require, or in any way deem appropriate diversification of investments in the Trust, all such rules being hereby expressly waived. Notwithstanding anything to the contrary in this Trust Agreement, Company does hereby discharge, indemnify and hold harmless Trustee, its directors, officers, employees and agents, from and against any and all losses, costs, damages, claims, penalties, expenses (including reasonable attorneys' fees and expenses) or liabilities arising in connection with such Trustee's administration of the Trust consistent with this Section 5(g). -10- (h) Following a Change in Control, Trustee may no longer invest in Company Stock or any other securities or obligations issued by Company, and Section 5(g) shall no longer apply. After a Change in Control, Trustee shall have and exercise all discretionary authority for the management and control of Trust assets and shall commence the orderly disposition of Company Stock, subject to the provisions of Section 5A hereof to the extent applicable. Trustee may, in its sole discretion, retain Company Stock acquired prior to a Change in Control for such period of time as Trustee deems appropriate and in the best interest of participants and beneficiaries in the Plans. In no event may Trustee make additional investments in Company Stock on behalf of the Trust after a Change in Control, other than (i) amounts held in diversified common investment vehicles in which Trustee invests, and (ii) through the exercise of rights to acquire Company Stock attributable to shares held at the time of the Change in Control, in the Trustee's sole discretion, if the Trustee deems such exercise appropriate and in best interest of the participants and beneficiaries in the Plans. SECTION 5A. SALE OF COMPANY STOCK BY TRUSTEE. (a) Except as otherwise specifically permitted herein, Trustee may not sell Company Stock except: (1) as necessary from time to time to satisfy benefit obligations under the Plans which are required to be paid by Trustee under this Trust; or (2) following a Change in Control; and then only as specifically permitted herein. (b) Trustee shall provide Company with not less than thirty (30) days prior notice that it proposes to sell any Company Stock, unless Trustee determines in good faith that such delay would cause irreparable harm to Trustee or to the Trust, in which event Trustee shall provide reasonable notice of such proposed sale. Notice shall be given by telephone, confirmed promptly by facsimile or first class mail, postage prepaid. Trustee shall specify in any event the number of shares proposed to be sold. (c) Trustee shall make sales of Company Stock pursuant to an effective registration statement under, or an exemption (including but not limited to Rule 144) from, the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), and in compliance with applicable state securities laws. (d) In the event the Company Stock has been registered pursuant to the Securities Act, Company shall: (1) from time to time within the period of effectiveness of the registration statement (i) immediately advise Trustee of any event or development, including a material adverse change in the financial condition, business or affairs of Company, known to Company (other than events or developments affecting market or economic conditions generally), which may have a material adverse impact on the proposed offering; and (y) within the period of effectiveness of such registration statement, advise -11- Trustee of any event or development requiring amendment or supplement (which amendment or supplement shall be prepared with reasonable promptness by Company) of the registration statement or prospectus used in connection therewith or rendering it inadvisable to use the prospectus until it is supplemented or amended; and (2) furnish to Trustee such number of copies of any preliminary and final prospectuses and any amendments and supplements thereto as Trustee may reasonably request. (e) With respect to such registration, Trustee and Company may negotiate with an underwriter selected or approved by Company with regard to the underwriting of such requested registration. Company shall enter into an underwriting agreement in customary form with the underwriter(s) and Trustee in which Company and Trustee (to the extent applicable based only on such information as is provided in writing by Trustee) shall provide customary indemnification to such underwriter(s) and each other. (f) Trustee shall provide all such information and materials and take all such actions, furnish all such information, execute all such documents and cooperate with Company in good faith, all as may be reasonably required in order to permit Company to comply with all applicable requirements of the Commission and all other applicable laws or regulations and to obtain acceleration of the effective date of any registration statement. (g) All expenses incurred in connection with any registration, qualification or compliance pursuant to this Trust Agreement, including without limitation, all registration, filing and qualification fees, printing and engraving expenses, fees and disbursements of counsel for Company, and expenses of any special audits or comfort letters incidental to or required by such registration, shall be borne by Company. (h) Notwithstanding any contrary provision of this Agreement, if a delay in filing or effectiveness of a registration statement under the Securities Act would prevent the Trustee from selling Company Stock expeditiously enough to meet the Trustee's good faith needs, or if a registered sale would not permit Trustee to sell Company Stock expeditiously enough to meet Trustee's good faith needs, and Company determines, upon written advice of counsel, that a proposed sale of Company Stock could not reasonably be made pursuant to an exemption from the Securities Act, then Trustee may demand that Company purchase the Company Stock desired to be sold at fair market value, which shall be the volume weighted average trading price (including only trades which would meet the time of purchases conditions under Rule 10b-18 ("Rule 10b-18") under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), of a share of such security on the New York Stock Exchange on the day that Company receives such demand. Company and Trustee shall use their reasonable best efforts to agree as to the prompt execution, closing and delivery of shares and proceeds therefor. -12- (i) Until a Change in Control, Company may, on notice of a proposed sale by Trustee, whether or not exempt, elect to purchase such Company Stock from Trustee at fair market value, as defined in Section 5A(h), and with the manner, conditions. and closing of such sale to be agreed upon by Company and Trustee. (j) Company shall be entitled to postpone the filing of any registration statement and any amendment or supplement thereto, or to direct that Trustee postpone any sale or put if (i) company determines, in its reasonable business judgment, that such filing, registration and offering, or sale or put, would materially interfere with the likely success of a proposed purchase or sale of securities by Company; or (ii) counsel for Company opines in writing that the filing of such registration statement, amendment or supplement, or sale or put would have a material adverse impact on any material ongoing or pending transaction or program of Company or any of its subsidiaries or any other circumstances; provided, that should such delays adversely affect the Trustee's ability to pay benefits as contemplated by this Trust Agreement, then Company shall advance such funds as may be reasonably needed by Trustee for such proposed pending sale. (k) Company and Trustee shall each cooperate in good faith and employ their reasonable best efforts in permitting and effecting any purchase or sale of Company Stock as contemplated in this Section 5A and each shall comply with all applicable laws and regulations relating to the foregoing including, without limitation, federal and state securities laws, rules and regulations issued thereunder, and any other governmental or stock exchange requirements or regulations relating thereto. SECTION 6. DISPOSITION OF INCOME. During the term of this Trust, all income received by the Trust, net of expenses and taxes, shall be accumulated and reinvested. SECTION 7. ACCOUNTING BY TRUSTEE. Trustee shall keep accurate and detailed records of all investments, receipts, disbursements, and all other transactions required to be made, including such specific records as shall be agreed upon in writing between Company and Trustee. Within forty-five (45) days following the close of each calendar year and within forty-five (45) days after the removal or resignation of Trustee, Trustee shall deliver to Company a written account of its administration of the Trust during such year or during the period from the close of the last preceding year to the date of such removal or resignation, setting forth all investments, receipts, disbursements and other transactions effected by it, including a description of all securities and investments purchased and sold with the cost or net proceeds of such purchases or sales (accrued interest paid or receivable being shown separately), and showing all cash, securities and other property held in the Trust at the end of such year or as of the date of such removal or resignation, as the case may be. In addition, as of the end of each calendar month (referred to in this Trust as a valuation date, within ten (10) days after each such month-end, Trustee shall deliver to Company a written account -13- setting forth the value of the Trust's assets, together with such other information as shall be agreed upon between Company and Trustee. SECTION 8. RESPONSIBILITY OF TRUSTEE. (a) Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, provided, however, that Trustee shall incur no liability to any person for (i) any action taken pursuant to a direction, request or approval given by Company or a Trustee's Contractor which is contemplated by, and in conformity with, the terms of the Plans or this Trust and is given in writing by Company or a Trustee's Contractor (other than Trustee when it acts as Trustee's Contractor), or (ii) the investment in, or retention of, Company Stock pursuant to the terms of this Agreement, and no such action shall be considered a breach of the fiduciary standard herein set forth. In the event of a dispute between Company or a Trustee's Contractor and a party, Trustee may apply to a court of competent jurisdiction to resolve the dispute. (b) If Trustee undertakes or defends any litigation arising in connection with this Trust or the Plans (including without limitation any action to compel Company to take any action under the Trust or the Plans, or to determine Trustee's obligations hereunder), Trustee shall be indemnified by Company against Trustee's costs, expenses and liabilities (including, without limitation, reasonable attorneys, fees and expenses) relating thereto and Company shall be primarily liable for such payments, other than those arising from Trustee's negligence or willful misconduct. The Company will, upon notice, pay monthly in arrears to or on behalf of the Trustee, all reasonable attorneys' fees and expenses incurred by the Trustee. In the event that the Trustee is determined to have incurred any liability as a result of the Trustee's negligence or willful misconduct, the Trustee will promptly reimburse the Company for all legal fees and expenses paid by the Company to or on behalf of the Trustee. (c) Trustee may consult with legal counsel (who may also be counsel for Company generally) with respect to any of its duties or obligations hereunder. (d) Trustee may hire agents, accountants, actuaries, investment advisors, financial consultants or other professionals (who may also serve the same roles for the Company generally) to assist it in performing any of its duties or obligations hereunder. (e) Trustee shall have, without exclusion, all powers consistent with the terms hereof conferred on trustees by applicable law, unless expressly provided otherwise herein, provided, however, that if an insurance policy is held as an asset of the Trust, Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor Trustee, or to loan to any person the proceeds of any borrowing against such policy. -14- (f) Notwithstanding any powers granted to Trustee pursuant to this Trust Agreement or to applicable law, Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Internal Revenue Code. (g) The Company has represented to the Trustee that each Plan qualifies as either (i) an excess benefit plan within the meaning of Section 4(b) of ERISA or (ii) a "top-hat" plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees, which is exempt from the provisions of Part 4 of Title I of ERISA. The Trustee is entering into this Agreement in reliance upon the Company's representation. Accordingly, in the event that any Plan fails to qualify as an excess benefit plan or a top-hat plan exempt from ERISA, then notwithstanding any other provision of this Agreement to the contrary, the Company will indemnify and hold the Trustee harmless from all liabilities, damages, costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) that the Trustee incurs as a result of a breach of fiduciary duty under ERISA arising from any action taken, or omitted to be taken, by the Trustee in good faith in accordance with this Agreement. The Company will, upon notice, pay monthly in arrears to or on behalf of the Trustee, all reasonable attorneys' fees and expenses incurred by the Trustee. In the event that the Trustee is determined to have incurred any liability as a result of the Trustee's negligence or willful misconduct, the Trustee will promptly reimburse the Company for all legal fees and expenses paid by the Company to or on behalf of the Trustee. SECTION 9. COMPENSATION AND EXPENSES OF TRUSTEE. All administrative and Trustee's fees as agreed upon between Trustee and Company and reasonable expenses actually incurred by the Trustee in performing its duties hereunder shall be paid by Company. If not so paid, the fees and expenses shall be paid by Trustee from the assets of the Trust and, until so paid, shall constitute a lien on the assets of the Trust. SECTION 10. RESIGNATION AND REMOVAL OF TRUSTEE. (a) Trustee may resign at any time by written notice to Company, which shall be effective sixty (60) days after receipt of such notice unless Company and Trustee agree otherwise; provided that in no event shall any such resignation take effect prior to the appointment of a successor Trustee. (b) Trustee may be removed by Company on sixty (60) days notice or upon shorter notice accepted by Trustee. (c) Upon a Change in Control, as defined herein, Trustee may not be removed by Company for two (2) years. -15- (d) If Trustee resigns or is removed within two (2) years of a Change in Control, as defined herein, Trustee shall select a successor Trustee in accordance with the provisions of Section 11(b) hereof prior to the effective date of Trustee's resignation or removal. Upon the appointment and acceptance by, and transfer of assets to, a successor Trustee, Trustee shall have no further responsibilities under this Trust Agreement. (e) Upon resignation or removal of Trustee and appointment of a successor Trustee, all assets shall subsequently be transferred to the successor Trustee. The transfer shall be completed within sixty (60) days after receipt of notice of resignation, removal or transfer, unless Company extends the time limit. (f) If Trustee resigns or is removed, a successor shall be appointed, in accordance with Section 11 hereof, by the effective date of resignation or removal under paragraphs (a) or (b) of this section. If no such appointment has been made, Trustee may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All expenses of Trustee in connection with the proceeding shall be allowed as administrative expenses of the Trust. SECTION 11. APPOINTMENT OF SUCCESSOR. (a) If Trustee resigns or is removed in accordance with Section 10(a) or (b) or (c) hereof, Company may, subject to Section 10(d), appoint any third party, such as a bank trust department or other party that may be granted corporate trustee powers under state or federal law, as a successor to replace Trustee upon resignation or removal. The appointment shall be effective when accepted in writing by the new Trustee, who shall have all the rights and powers of the former Trustee, including ownership rights in the Trust assets. The former Trustee shall execute any instrument necessary or reasonably requested by Company or the successor Trustee to evidence the transfer. (b) If Trustee resigns or is removed pursuant to the provisions of Section 10(a), (b), (c) or (d) hereof and selects a successor Trustee pursuant to Section 10(d) hereof, Trustee may appoint any third party such as a bank trust department or other party that may be granted corporate trustee powers under state or federal law. The appointment of a successor Trustee shall be effective when accepted in writing by the new Trustee. The new Trustee shall have all the rights and powers of the former Trustee, including ownership rights in Trust assets. The former Trustee shall execute any instrument necessary or reasonably requested by the successor Trustee to evidence the transfer. (c) A former Trustee shall prepare and deliver to Company and to the successor Trustee a final accounting unless Company waives Company's right to such accounting, and such accounting shall be effective through the date of the former Trustee's transfer of all assets to its successor. The successor Trustee need not examine the records and acts of any prior -16- Trustee unless requested to do so by Company (and, after a Change in Control, unless the successor Trustee in addition concludes that there is a reasonable basis for such request by Company) and may retain or dispose of existing Trust assets, subject to Sections 5A, 7 and 8 hereof. Subject to the foregoing, the successor Trustee shall not be responsible for and Company shall indemnify and defend the successor Trustee from any claim or liability resulting from any action or inaction of any prior Trustee or from any other past event, or any condition existing at the time it becomes successor Trustee. The compensation arrangement for the successor Trustee shall be reasonable in relation to the services to be performed by the successor Trustee. SECTION 12. AMENDMENT OR TERMINATION. (a) This Trust Agreement (including Appendix A hereto) may be amended by a written instrument executed by Trustee and Company. Notwithstanding the foregoing, no such amendment shall conflict with the terms of the Plans as then in effect or shall make the Trust revocable after it has become irrevocable in accordance with Section 1(b) hereof. (1) Furthermore, notwithstanding anything to the contrary in this Trust Agreement (except as otherwise provided in this Section 12), (i) prior to a Change in Control, no amendment shall be made to Section 1(d) and Section 1(e), Section 2, Section 4, Section 5(h), Section 10(c), Section 10(d), this Section 12(a), Section 13(d), Section 13(g), Section 13(j), and Section 13(k), and no deletion shall be made in Appendix A, unless such amendment would not, in the opinion of counsel, have a material and adverse effect on the rights or interests of adversely affected participants; and (ii) following a Change in Control, no amendment shall be made to any provision of this Trust Agreement (including Appendix A hereto) unless such amendment would not, in the opinion of counsel, have a material and adverse effect on the rights or interests of adversely affected participants. (2) The limitations contained in Section 12 (a) (1) shall not apply with respect to any amendment which is reasonably necessary, in the opinion of counsel, to preserve the status of the Trust as a grantor trust and the status of the Plans as unfunded for federal income tax purposes and for purposes of the Employee Retirement Income Security Act of 1974, as amended, or to guard against an adverse impact on Plan participants or beneficiaries and which, in the opinion of counsel, is drafted primarily to preserve such status or to reduce or eliminate such adverse impact on such person or persons. (3) In each instance in which an opinion of counsel is contemplated in this Section 12(a) prior to a Change in Control, such opinion shall be in writing and delivered to Trustee, rendered by a nationally recognized law firm selected by Company, and in each instance in which an opinion of counsel is contemplated in this -17- Section 12(a) after a Change in Control, such opinion shall be in writing and delivered to Trustee, rendered by a nationally recognized law firm selected by the Trustee's Contractor. Trustee may rely on all such opinions and determinations. (b) The Trust shall not terminate until the date on which Plan participants and their beneficiaries are no longer entitled to benefits from Company pursuant to the terms of the Plans. Upon termination of the Trust any as assets remaining in the Trust shall be returned to Company. (c) Upon written approval of participants or beneficiaries entitled, to payment of benefits pursuant to the terms of the Plans, Company may terminate this Trust prior to the time all benefit payments under the Plans have been made. All assets in the Trust at termination shall be returned to Company. (d) Trustee may rely for purposes of this Section 12 on a certificate furnished by Company prior to a Change in Control, and by the Trustee's Contractor after a Change in Control, (i) with respect to subsection (b) of this Section 12, that Plan participants and their beneficiaries are no longer entitled to benefits pursuant to the terms of the Plans, and (ii) with respect to subsection (c) of this Section 12, that the written approval of participants or beneficiaries entitled to payment of benefits pursuant to the terms of the Plans has been obtained. SECTION 13. MISCELLANEOUS. (a) Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions hereof. (b) Benefits payable to Plan participants and their beneficiaries under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subject to attachment, garnishment, levy, execution or other legal or equitable process. (c) This Trust Agreement shall be governed by and construed in accordance with the laws of California. (d) For purposes of this Trust, a "Change in Control" shall be deemed to have occurred if any one of the following conditions shall have been satisfied: (i) any person, as defined in Section 3(a)(9) of the Exchange Act, as such term is modified in Sections 13(d) and 14(d) of the Exchange Act (other than (A) Company or any of its affiliates (as defined in Rule l2b-2 promulgated under the Exchange Act), or any employee benefit plan established by any of the -18- foregoing (collectively, an "Employee Benefit Plan"), (B) an underwriter temporarily holding securities pursuant to an offering of such securities, or (C) a corporation owned, directly or indirectly, by stockholders of Company in substantially the same proportions as their ownership of Company) (a "Person"), is or becomes the beneficial owner (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of Company (not including in the securities beneficially owned by such Person any securities acquired directly from Company) representing twenty-five percent (25%) or more of the combined voting power of Company's then outstanding voting securities; (ii) during any period of up to two consecutive years (not including any period prior to the Effective Date) individuals who, at the beginning of such period, constitute the Board of Directors of Company cease for any reason to constitute at least a majority thereof, provided that any person who becomes a director subsequent to the beginning of such period and whose nomination for election is approved by at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved (other than a director (A) whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of Company, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act, or (B) who was designated by a Person who has entered into an agreement with Company to effect a transaction described in paragraphs (i), (iii) or (iv) of this Subsection (d)), will be deemed a director as of the beginning of such period; (iii) the stockholders of Company approve a merger or consolidation of Company with any other corporation (other than (A) a merger or consolidation that would result in the voting securities of Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an Employee Benefit Plan, at least fifty-one percent (51%) of the combined voting power of the voting securities of Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of Company (or similar transaction) in which no Person is or becomes the beneficial owner (as defined in paragraph (i) of this Subsection (d)), directly or indirectly, of securities of Company (not including in the securities beneficially owned by such Person any securities acquired directly from Company) representing twenty-five percent (25%) or more of the combined voting power of Company's then outstanding voting securities); or -19- (iv) the stockholders of Company approve a plan of complete liquidation of Company or any agreement for the sale or disposition by Company of all or substantially all of Company's assets, other than a sale or disposition by Company of all or substantially all of Company's assets to an entity, at least seventy-five percent (75%) of the combined voting power of the voting securities of which are owned by persons in substantially the same proportions as their ownership of Company immediately prior to such sale. All references to provisions of the federal securities laws are to such provisions as in effect on the Effective Date without regard to any subsequent amendments of, changes to or revocation of such provisions. (e) For purposes of this Trust Agreement, a "Potential Change in Control" shall be deemed to have occurred if any one of the following conditions shall have been satisfied: (i) the Company enters into a definitive written agreement, the consummation of which would result in the occurrence of a Change in Control; (ii) the Company or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control; or (iii) any Person becomes the beneficial owner (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Company representing 15% or more of the combined voting power of the Company's then outstanding securities. (f) Upon the occurrence of a Change in Control or a Potential Change in Control, the Company shall promptly give notice thereof to the Trustee. (g) (1) After the execution of this Trust Agreement, Company shall promptly file with Trustee, and following the appointment of a Trustee's Contractor, Company shall promptly file with the Trustee's Contractor, a certified list of the names and specimen signatures of the officers of Company and any delegate authorized to act for it. Unless Company notifies Trustee to the contrary, Company shall act through its Treasurer or any person who such Treasurer authorizes in writing to act on his behalf or any other person who is authorized to act on Company's behalf by a resolution of Company's Board of Directors. Company shall promptly notify Trustee and the Trustee's Contractor, if applicable, of the addition or deletion of any person's name to or from such list, respectively. Until receipt by Trustee and/or the Trustee's Contractor of notice that any person is no longer authorized so to act, Trustee or the Trustee's Contractor may continue to rely on the authority of the person. All certifications, notices and directions by any such person or persons to Trustee or the -20- Trustee's Contractor shall be in writing signed by such person or persons. Trustee and the Trustee's Contractor may rely on any certification. notice or direction of Company that the Trustee or the Trustee's Contractor reasonably believes to have been signed by a duly authorized officer or agent of Company. Trustee and the Trustee's Contractor shall have no responsibility for acting or not acting in reliance upon any notification reasonably believed by Trustee or the Trustee's Contractor to have been signed by a duly authorized officer or agent of Company. (g) (2) After the engagement of a Trustee's Contractor (other than Trustee), the Trustee's Contractor shall promptly file with Trustee a certified list of the names and specimen signatures of the officers of the Trustee's Contractor and any delegate authorized to act for it. Trustee's Contractor shall promptly notify Trustee of the addition or deletion of any person's name to or from such list. Until receipt by Trustee of notice that any person is no longer authorized so to act, Trustee may continue to rely on the authority of the person. All certifications, notices and directions by any such person or persons to Trustee shall be in writing signed by such person or persons. Trustee may rely on any such certification, notice or direction of the Trustee's Contractor that Trustee reasonably believes to have been signed by or on behalf of a duly authorized officer or agent of the Trustee's Contractor. Trustee shall have no responsibility for acting or not acting in reliance upon any notification reasonably believed by the Trustee to have been signed by a duly authorized officer or agent of the Trustee's Contractor. (h) Neither the gender nor the number (singular or plural) of any word shall be construed to exclude another gender or number when a different gender or number would be appropriate. (i) This Trust Agreement shall be binding upon and inure to the benefit of any successor(s) to Company and Trustee. (j) This Trust Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which shall together constitute only one Agreement. (k) Communications to Trustee shall be sent to Dennis Kunisaki, or to such other address as Trustee may specify in writing. No communication shall be binding upon Trustee until it is received by Trustee. Communications to Company and the Trustee's Contractor shall be sent to the principal offices of Company or the Trustee's Contractor, as the case may be, or to such other address as Company or the Trustee's Contractor, as applicable, may specify in writing. (l) In the event the participants and beneficiaries in the Plans are determined generally to be subject to federal income tax on any amount in the Trust prior to the time of payment -21- hereunder, the entire amount determined to be so taxable shall be distributed by Trustee to each affected participant or beneficiary. Company may, at its option, make such payments directly to affected participants and beneficiaries. An amount shall be determined to be subject to federal income tax upon the earliest of: (a) a final determination by the United States Internal Revenue Service addressed to a participant or beneficiary which is not appealed to the courts; (b) a final determination by the United States Tax Court or any other federal court affirming any such determination by the Internal Revenue Service; or (c) an opinion by counsel for Company reasonably acceptable to Trustee addressed to Company and Trustee, that, by reason of the Treasury Regulations, amendments to the Internal Revenue Code, published Internal Revenue Service rulings, court decision or other substantial precedent, amounts hereunder are generally subject to federal income tax prior to payment; provided, that following a Change in Control, only an opinion by counsel selected by the Trustee's Contractor may be accepted by Trustee for purposes of (c). Company shall undertake at its sole expense to defend any tax claims described herein which are asserted by the Internal Revenue Service against any participant or beneficiary and which it determines would affect participants or beneficiaries generally, including attorneys' fees and costs of appeal, and shall have the sole authority to determine whether or not to appeal any determination made by the Internal Revenue Service or by a lower court. Company also agrees to reimburse any participant or beneficiary, for any interest or penalties in respect of tax claims hereunder which it determines would affect participants or beneficiaries generally, upon receipt of documentation of same. Any distributions from the Trust to a participant or beneficiary under this Section 13(j) (other than reimbursements of interest or penalties referred to in the preceding sentence) shall reduce the benefits payable to such participant and/or beneficiary under the Plans. (m) In the event that Company shall fail to satisfy any obligation of Company to a Plan participant or beneficiary under this Trust Agreement, after reasonable notice and demand with respect thereto, and one or more participants or beneficiaries obtains a final determination by a court of competent jurisdiction that Company has so failed, such participant(s) or beneficiary(ies) shall be indemnified by the Company against reasonable and appropriate costs and expenses (including without limitation reasonable attorneys' fees and expenses) relating thereto and the Company shall be primarily liable for such payments. Interest on any Plan benefit payments which such court determines have been delayed to the extent interest or similar payments in an equal or greater amount are not provided in the Plans or by the court or otherwise shall also be paid by the Company. Such interest shall be calculated using a rate of interest equal to the rate of interest on ten (10) year United States Treasury obligations, as determined on the first day of each calendar quarter, compounded quarterly. If such costs, expenses and interest are not paid by the Company in a reasonably timely manner, such participant(s) or beneficiaries may obtain payment from the Trust. (n) In the event that Trustee or Company make payments of benefits to Plan participants as described herein, the respective payor shall make provision for the reporting and withholding of any federal, state or local taxes that may be required to be withheld with respect to the -22- payment of benefits pursuant to the terms of the Plans and shall pay amounts withheld to the appropriate taxing authorities. (o) Nothing herein shall be construed as restricting or limiting in any way amendment of the Plans in accordance with the terms of the Plans. SECTION 14. EFFECTIVE DATE. The effective date of this Trust Agreement shall be the date of its execution set forth on page 1 of the Trust Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be duly executed and their respective corporate seals to be hereto affixed on the date set forth on page 1 of this Trust Agreement. BARNETT BANKS, INC. By: /s/ Donna D. Lange ------------------------------- (CORPORATE SEAL) Title: Secretary, Employee Benefits Committee ATTEST: /s/ Elizabeth Nana ----------------------------- Title: Manager, Corporate Benefits ------------------------------ U.S. TRUST COMPANY OF CALIFORNIA, N.A., as Trustee By: /s/ Robert S. Cummings -------------------------------- (CORPORATE SEAL) Title: Senior Vice President --------------------------- ATTEST: /s/ Terry J. Colberg ------------------------ Title: Vice President ------------------------- -23- APPENDIX A Supplemental Executive Retirement Plan Severance and Supplemental Tax Payments under the Company's Employment Agreements Supplemental Tax Payments Provided by Executive Option Agreements under the Company's Long Term Incentive Plan Management Security Plan -24- EX-10 25 EXHIBIT 10(R) TRUST AGREEMENT (as amended and restated effective December 31, 1998) THIS TRUST AGREEMENT is made and entered into this 31st day of December, 1998, by and between BANKAMERICA CORPORATION ("Company"), and NationsBank, N.A. ("Trustee"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, NB Holdings Corporation, as successor to Barnett Banks, Inc. sponsors the Management Excess Savings Plan of Barnett Banks, Inc. and Its Affiliates (a nonqualified deferred compensation plan) (the "MESP Plan"); and WHEREAS, Trustee currently serves as Trustee of the grantor trust (the "Trust") established and maintained for the MESP Plan pursuant to the Management Excess Savings Plan of Barnett Banks, Inc. and Its Affiliates Trust Agreement dated November 10, 1993 (the "Trust Agreement"); and WHEREAS, the MESP Plan is being merged with and into the NationsBank 401(k) Restoration Plan (the "NationsBank Plan") effective as of December 31, 1998, and as a result thereof Company is succeeding to NB Holdings Corporation as the obligor to the liabilities of the MESP Plan; and WHEREAS, in the opinion of Company, the Trust Agreement should be amended and restated in its entirety to provide for the administration of the Trust following the merger of the MESP Plan with and into the NationsBank Plan; and WHEREAS, in Section 11.1 of the Trust Agreement, Company (as successor to NB Holdings Corporation as to the liabilities of the MESP Plan) has reserved the right to amend the Trust Agreement at any time for any reason, so long as such amendment does not make the Trust revocable; NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, Company and Trustee do mutually covenant and agree that the Trust Agreement is hereby amended and restated in its entirety effective as of December 31, 1998 as follows: SECTION 1 Establishment of Trust ---------------------- (a) All of the assets held in the Trust immediately prior to this amendment and restatement shall be held, invested and disposed of pursuant to the terms and provisions of this amendment and restatement, as the same may be amended from time to time. Company and Trustee acknowledge that at the effective time of this amendment and restatement, the total assets of the Trust equal the total deferred compensation liabilities under the MESP Plan immediately prior to its merger into the NationsBank Plan. (b) The Trust shall be irrevocable. (c) The Trust is intended to be a grantor trust, of which Company is the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended (the "Code"), and this Trust Agreement shall be construed accordingly. (d) The principal of the Trust and any earnings thereon shall be held separate and apart from other funds of Company and shall be used exclusively for the uses and purposes of (i) NationsBank Plan participants who had MESP Plan account balances transferred to the NationsBank Plan on December 31, 1998 ("MESP Participants") and (ii) general creditors, all as herein set forth. MESP Participants and their beneficiaries shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the NationsBank Plan and this Trust Agreement shall be mere unsecured contractual rights of the MESP Participants and their beneficiaries against Company. Any assets held in the Trust shall be subject to the claims of Company's general creditors under federal and state law in the event Company becomes Insolvent, as defined in Section 3(a) herein. (e) Company, in its sole discretion, may at any time, or from time to time, make additional deposits of cash or other property in trust with Trustee to augment the principal to be held, administered and disposed of by Trustee as provided in this Trust Agreement. Neither Trustee nor any MESP Participant or their beneficiary shall have any right to compel such additional deposits. SECTION 2 Payments to MESP Participants and Their Beneficiaries ----------------------------------------------------- (a) Company shall deliver to Trustee a schedule (the "Payment Schedule") that indicates known, as well as reasonably estimated, amounts payable in respect of each MESP Participant, that provides a formula or other instructions acceptable to Trustee for determining the amounts so payable, the form in which such amount is to be paid (as provided by or available under the NationsBank Plan), and the time of commencement for payment of such amounts, and Company shall update and amend the Payment Schedule promptly after any change in the information set forth therein. Except as otherwise provided herein, Trustee shall make payments to MESP Participants and their beneficiaries in accordance with such Payment Schedule. Trustee shall make provision for the reporting and withholding of any federal, state or local taxes that may be required to be withheld with respect to the payment of benefits pursuant to the terms of the NationsBank Plan and shall pay amounts withheld to the appropriate taxing authorities or determine that such amounts have been reported, withheld and paid by Company. (b) The entitlement of a MESP Participant or their beneficiary to benefits under the NationsBank Plan shall be determined by Company or such party as it shall designate under the 2 NationsBank Plan, and any claim for such benefits shall be considered and reviewed under the procedures set forth in the NationsBank Plan. (c) Company may make payment of benefits directly to MESP Participants or their beneficiaries as they become due under the terms of the NationsBank Plan. Company shall be entitled to be reimbursed from the Trust for any such payment by providing Trustee with reasonable evidence of such payment having been made. In addition, if the principal of the Trust, and any earnings thereon, are not sufficient to make payments of benefits in accordance with the terms of the NationsBank Plan, Company shall make the balance of each such payment as it falls due. Trustee shall notify Company when principal and earnings are not sufficient. SECTION 3 Trustee Responsibility Regarding Payments to Trust -------------------------------------------------- Beneficiary When Company is Insolvent ------------------------------------- (a) Trustee shall cease payment of benefits to MESP Participants and their beneficiaries if Company is Insolvent. Company shall be considered "Insolvent" for purposes of this Trust Agreement if (i) Company is unable to pay its debts as they become due or (ii) Company is subject to a pending proceeding as a debtor under the United States Bankruptcy Code. (b) At all times during the continuance of this Trust, the principal and income of the Trust shall be subject to claims of general creditors of Company under federal and state law as set forth below. (1) The Principal Corporate Personnel Officer of Company shall have the duty to inform Trustee in writing if Company becomes Insolvent. If a person claiming to be a creditor of Company alleges in writing to Trustee that Company has become Insolvent, Trustee shall determine whether Company is Insolvent and, pending such determination, Trustee shall discontinue payment of benefits to MESP Participants and their beneficiaries. (2) Unless Trustee has actual knowledge of Company becoming Insolvent, or has received notice from Company or a person claiming to be a creditor alleging that Company is Insolvent, Trustee shall have no duty to inquire whether Company is Insolvent. Trustee may in all events rely on such evidence concerning Company's solvency as may be furnished to Trustee and that provides Trustee with a reasonable basis for making a determination concerning Company's solvency. (3) If at any time Trustee has determined that Company is Insolvent, Trustee shall discontinue payments to MESP Participants and their beneficiaries and shall hold the assets of the Trust for the benefit of Company's general creditors. Nothing in this Trust Agreement shall in any way diminish any rights of MESP Participants or their beneficiaries to pursue their rights as general creditors of Company with respect to benefits due under the NationsBank Plan or otherwise. 3 (4) Trustee shall resume the payment of benefits to MESP Participants and their beneficiaries in accordance with Section 2 of this Trust Agreement only after Trustee has determined that Company is not Insolvent (or is no longer Insolvent). (c) Provided that there are sufficient assets, if Trustee discontinues the payment of benefits from the Trust pursuant to Section 3(b) hereof and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to MESP Participants or their beneficiaries under the terms of the NationsBank Plan for the period of such discontinuance, less the aggregate amount of any payments made to MESP Participants or their beneficiaries by Company in lieu of the payments provided for hereunder during any such period of discontinuance. SECTION 4 Payments to Company ------------------- Except as provided in Section 3 hereof, Company shall have no right or power to direct Trustee to return to Company or to divert to others any of the Trust assets before all payment of benefits have been made to MESP Participants and their beneficiaries pursuant to the terms of the NationsBank Plan. SECTION 5 Investment Authority and Voting Rights -------------------------------------- (a) Trustee shall have the discretion to invest the assets of the Trust in such manner and in such investments as the Trustee shall determine, from time to time, to be appropriate and consistent with the purposes of the Trust, including without limitation shares of Company common stock ("Shares") or rights to acquire Shares or other equity or debt obligations issued by Company. (b) All rights associated with assets of the Trust shall be exercised by Trustee or the person designated by Trustee, and shall in no event be exercisable by or rest with the any MESP Participant; provided, however, that voting rights with respect to all Shares held as Trust assets, and any decision to accept or reject a tender offer made for such Shares, will be exercised by Trustee in accordance with instructions received from the NationsBank Plan administrator. SECTION 6 Disposition of Income --------------------- During the term of this Trust, all income received by the Trust, net of expenses and taxes, shall be accumulated and reinvested and used for the purposes set forth herein. 4 SECTION 7 Accounting by Trustee ---------------------- Trustee shall keep accurate and detailed records of all investments, receipts, disbursements, and all other transactions required to be made, including such specific records as shall be agreed upon in writing between Company and Trustee. Within thirty (30) days following the close of each calendar year and within thirty (30) days after the removal or resignation of Trustee, Trustee shall deliver to Company a written account of its administration of the Trust during such year or during the period from the close of the last preceding year to the date of such removal or resignation, setting forth all investments, receipts, disbursements and other transactions effected by it, including a description of all securities and investments purchased and sold with the cost or net proceeds of such purchases or sales (accrued interest paid or receivable being shown separately), and showing all cash, securities and other property held in the Trust at the end of such year or as of the date of such removal or resignation, as the case may be. SECTION 8 Responsibility of Trustee ------------------------- (a) Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, provided, however, that Trustee shall incur no liability to any person for any action taken pursuant to a direction, request or approval given by Company which is contemplated by, and in conformity with, the terms of the NationsBank Plan or this Trust and is given in writing by Company. In the event of a dispute between Company and a party, Trustee may apply to a court of competent jurisdiction to resolve the dispute. (b) If Trustee undertakes or defends any litigation arising in connection with this Trust, Company agrees to indemnify Trustee against Trustee's costs, expenses and liabilities (including, without limitation, attorneys' fees and expenses) relating thereto and to be primarily liable for such payments. If Company does not pay such costs, expenses and liabilities in a reasonably timely manner, Trustee may obtain payment from the Trust. (c) Trustee may consult with legal counsel (who may also be counsel for Company generally) with respect to any of its duties or obligations hereunder. (d) Trustee may hire agents, accountants, actuaries, investment advisors, financial consultants or other professionals to assist it in performing any of its duties or obligations hereunder. (e) Trustee shall have, without exclusion, all powers conferred on trustees by applicable law, unless expressly provided otherwise herein, provided, however, that if an insurance policy is held as an asset of the Trust, Trustee shall have no power to name a 5 beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor Trustee, or to loan to any person the proceeds of any borrowing against such policy. (f) Notwithstanding any powers granted to Trustee pursuant to this Trust Agreement or to applicable law, Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Code. SECTION 9 Compensation and Expenses of Trustee ------------------------------------- Company shall pay all reasonable administrative and Trustee's fees and expenses. If not so paid, the fees and expenses shall be paid from the Trust. SECTION 10 Resignation and Removal of Trustee ---------------------------------- (a) Trustee may resign at any time by written notice to Company, which shall be effective sixty (60) days after receipt of such notice unless Company and Trustee agree otherwise. (b) Trustee may be removed by Company on sixty (60) days notice or upon shorter notice accepted by Trustee. (c) Upon resignation or removal of Trustee and appointment of a successor Trustee, all assets shall subsequently be transferred to the successor Trustee. The transfer shall be completed within ninety (90) days after receipt of notice of resignation, removal or transfer, unless Company extends the time limit. (d) If Trustee resigns or is removed, a successor shall be appointed, in accordance with Section 11 hereof, by the effective date of the resignation or removal under Section 10(a) or (b) hereof. If no such appointment has been made, Trustee may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All expenses of Trustee in connection with the proceeding shall be allowed as administrative expenses of the Trust. 6 SECTION 11 Appointment of Successor ------------------------ (a) If Trustee resigns or is removed in accordance with Section 10(a) or (b) hereof, Company may appoint any third party, such as a bank trust department, that may be granted corporate trustee powers under state law, as a successor to replace Trustee upon resignation or removal. The appointment shall be effective when accepted in writing by the new Trustee, who shall have all of the rights and powers of the former Trustee, including ownership rights in the Trust assets. The former Trustee shall execute any instrument necessary or reasonably requested by Company or the successor Trustee to evidence the transfer. (b) The successor Trustee need not examine the records and acts of any prior Trustee and may retain or dispose of existing Trust assets, subject to Sections 7 and 8 hereof. The successor Trustee shall not be responsible for, and Company shall indemnify and defend the successor Trustee from, any claim or liability resulting from any action or inaction of any prior Trustee or from any other past event, or any condition existing at the time it becomes successor Trustee. (c) Any successor Trustee hereunder shall succeed to all of the rights, powers, authority, duties and responsibilities of the original Trustee. Following the appointment and acceptance of a successor Trustee hereunder, the former Trustee shall not be liable for any acts or omissions of such successor. SECTION 12 Amendment or Termination ------------------------ (a) This Trust Agreement may be amended by a written instrument executed by Trustee and Company. Notwithstanding the foregoing, no such amendment shall conflict with the terms of the NationsBank Plan or shall make the Trust revocable. (b) The Trust shall not terminate until the date on which the MESP Participants and their beneficiaries who may receive payments from the Trust are no longer entitled to benefits pursuant to the terms of the NationsBank Plan. Upon termination of the Trust any assets remaining in the Trust at such time shall be returned to Company. SECTION 13 Miscellaneous -------------- (a) Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions hereof. (b) Benefits payable to MESP Participants and their beneficiaries under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, 7 encumbered or subjected to attachment, garnishment, levy, execution or other legal or equitable process. (c) This Trust Agreement shall be governed by and construed in accordance with the laws of the State of North Carolina. SECTION 14 Effective Date --------------- The effective date of this Trust Agreement shall be the date of the execution hereof as set forth on page 1 of this Trust Agreement. IN WITNESS WHEREOF, Company and Trustee have caused this instrument to be executed all as of the day and year first above written. BANKAMERICA CORPORATION By: /s/ Ann P. West -------------------------------- Name: Ann P. West Title: Senior Vice President "Company" NationsBank, N.A. By: /s/ Tom Hortenstine -------------------------------- Name: Tom Hortenstine Title: Senior Vice President "Trustee" 8 EX-10 26 EXHIBIT 10(CC) SPLIT DOLLAR LIFE INSURANCE AGREEMENT THIS SPLIT DOLLAR LIFE INSURANCE AGREEMENT (the "Agreement") is made and entered into as of the 15th day of October, 1998, by and between BANKAMERICA CORPORATION, a Delaware corporation (the "Corporation"), and NATIONSBANK, N.A. of Charlotte, North Carolina, as Trustee under that certain Irrevocable Trust Agreement dated October 2, 1998, by and between Hugh L. McColl, Jr., as Grantor, and NationsBank, N.A., as Trustee (the "Owner"). Statement of Purpose Hugh L. McColl, Jr. (the "Executive") is employed by the Corporation as its Chief Executive Officer. The Corporation, the Owner and Executive desire to insure the lives of Executive and Executive's spouse, Jane S. McColl (the "Executive's Spouse"), for the benefit and protection of both the Corporation and the Executive's family under a Variable Survivorship Life Insurance Policy (the "Policy") to be issued by John Hancock Variable Life Insurance Company (the "Insurer"). The Corporation, as the employer of Executive, is willing to pay a portion of the premiums due on the Policy as an additional employment benefit for Executive on the terms and conditions hereinafter set forth. The Corporation desires to have the Policy collaterally assigned to it by the Owner in order to secure repayment of the portion of the premiums paid by the Corporation on the Policy. NOW, THEREFORE, in consideration of the Statement of Purpose aforesaid and of the mutual promises contained herein, the parties hereto agree as follows: 1. Definitions. Whenever used in this Agreement, the following terms shall have the meanings set forth below: (a) "Beneficial Owner" or "Beneficial Ownership" shall have the meaning ascribed to such term in Rule 13d-3 of the general rules and regulations under the Exchange Act. (b) "Board of Directors" means the Board of Directors of the Corporation. (c) "Change in Control" of the Corporation means, and shall be deemed to have occurred upon, any of the following events: (i) The acquisition by any Person of Beneficial Ownership of twenty-five percent (25%) or more of either: (A) The then-outstanding shares of common stock of the Corporation (the "Outstanding Shares"); or (B) The combined voting power of the then-outstanding voting securities of the Corporation entitled to vote generally in the election of Directors (the "Outstanding Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change in Control for purposes of this subparagraph (i): (1) any acquisition directly from the Corporation, (2) any acquisition by the Corporation or any of its Subsidiaries, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any of its Subsidiaries, or (4) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subparagraph (iii) below; or (ii) Individuals who, as of the date of this Agreement, constitute the Board of Directors (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual who becomes a Director subsequent to the date of this Agreement and whose election, or whose nomination for election by the Corporation's shareholders, to the Board of Directors was either (A) approved by a vote of at least a majority of the Directors then comprising the Incumbent Board or (B) recommended by a Nominating Committee comprised entirely of Directors who are then Incumbent Board members shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act), other actual or threatened solicitation of proxies or consents or an actual or threatened tender offer; or (iii) Approval by the Corporation's shareholders of a reorganization, merger, or consolidation or sale or other disposition of all or substantially all of the assets of the Corporation (a "Business Combination"), in each case, unless following such Business Combination, (A) all or substantially all of the Persons who were the Beneficial Owners, respectively, of the Outstanding Shares and Outstanding Voting Securities immediately prior to such Business Combination own, directly or indirectly, more than fifty percent (50%) of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from the Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Corporation or all or substantially all of the Corporation's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Shares and Outstanding Voting Securities, as the case may be (provided, however, that for purposes of this clause (A), any shares of common stock or voting securities of such resulting corporation received by such Beneficial Owners in such Business Combination other than as the result of such Beneficial Owners' ownership of Outstanding Shares or Outstanding Voting Securities immediately prior to such Business Combination shall not be considered to be owned by such Beneficial Owners for the purposes of calculating their percentage of ownership of the outstanding common stock and voting power 2 of the resulting corporation), (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Corporation or such corporation resulting from the Business Combination) beneficially owns, directly or indirectly, twenty-five percent (25%) or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from the Business Combination or the combined voting power of the then outstanding voting securities of such corporation unless such Person owned twenty-five percent (25%) or more of the Outstanding Shares or Outstanding Voting Securities immediately prior to the Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or the action of the Board, providing for such Business Combination; or (iv) Approval by the Corporation's shareholders of a complete liquidation or dissolution of the Corporation. (d) "Director" means any individual who is a member of the Board of Directors of the Corporation. (e) "Disability" means "disability" as such term is defined from time to time under any long-term disability plan of the Corporation covering the Executive. (f) "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time or any successor act thereto. (g) "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including "group" as defined in Section 13(d) thereof. (h) "Subsidiary" means any corporation, partnership, joint venture, affiliate or other entity in which the Corporation owns more than fifty percent (50%) of the voting stock or voting ownership interest, as applicable, or any other business entity designated by the Corporation as a Subsidiary for purposes of this Agreement. 2. Purchase of the Policy. The Owner has made application for and has purchased a Variable Survivorship Life Insurance Policy issued by John Hancock Variable Life Insurance Company in the initial face amount of Twenty-Six Million Five Hundred Fifty Thousand Twenty-Eight Dollars ($26,550,028) insuring the lives of Executive and Executive's Spouse, a copy of which shall be attached hereto as Exhibit 1 as soon as practicable after issuance by the Insurer. A complete hypothetical illustration of the Policy assuming a eight percent (8%) gross rate of return on the premiums over the life of the contract based on a level death benefit of Twenty-Five Million Dollars ($25,000,000) for the Owner is attached hereto as Exhibit 2. The parties hereto have taken all necessary action to cause Insurer to issue the Policy and shall take any further action which may be necessary to cause the Policy to conform to the 3 provisions of this Agreement. The parties hereto further agree that the Policy shall be subject to the terms and conditions of this Agreement and the Collateral Assignment referred to in Paragraph 5 below. 3. Ownership of the Policy. Subject to the provisions of this Agreement and the Collateral Assignment, the Owner shall be the sole and absolute owner of the Policy and may and shall exercise all ownership rights granted to the owner thereof by the terms of the Policy. It is the intention of the parties that the Owner shall retain all rights which the Policy grants to the owner of the Policy, except the right of the Corporation to recover the amount due to the Corporation under this Agreement. Specifically, without limitation, the Corporation shall neither have nor exercise any right as the collateral assignee of the Policy which could in any way defeat or impair the Owner's right to receive the cash surrender value or the death proceeds of the Policy in excess of the Corporation's Interest (as hereinafter defined). All provisions of this Agreement and the Collateral Assignment shall be construed so as to carry out such intention. 4. Payment of Premiums. As a convenience to the parties, the Corporation shall pay all premiums under the Policy to the Insurer as and when such premiums become due. During the six (6) year period following the effective date of the Policy, the Corporation shall pay the full amount of the premiums to the Insurer as set forth on Exhibit 2 attached hereto. Within thirty (30) days of each such premium payment by the Corporation during the six (6) year period following the effective date of the Policy and within thirty (30) days of each anniversary of the effective date of the Policy thereafter, the Owner shall pay to the Corporation the economic value of the death benefit under the Policy as determined by the Insurer from time to time while the Policy remains in effect. A schedule of the premiums to be paid by the Owner based on the Insurer's current rates is set forth on Exhibit 2. Should actual investment returns vary from those assumed in Exhibit 2, the Corporation's share of the premiums shall continue to be equal to the amounts set forth on Exhibit 2 as if no such variation occurred. Any increase or decrease in the premiums required to provide the total death benefits described on Exhibit 2 resulting from a variation in investment returns shall affect only the Owner's share of the premiums. Upon request by the Owner, the Corporation shall promptly furnish evidence of timely payment to the Owner. The Corporation shall annually furnish to the Owner a statement of the amount of income reportable by the Executive for federal and state income tax purposes, if any, as determined in accordance with applicable Internal Revenue Service rules and regulations, as a result of the Corporation's payment of a portion of the premiums hereunder. 5. Collateral Assignment. The total amount of the Corporation's share of the Policy premium payments paid by the Corporation pursuant to this Agreement, less any amounts previously paid to the Corporation by the Owner pursuant to this Agreement, shall constitute the total indebtedness of the Owner to the Corporation, which amount shall accrue no interest (the "Corporation's Interest"). As security for and to secure the repayment of the Corporation's Interest, as it may exist from time to time pursuant to the terms of this Agreement, the Owner has, contemporaneously herewith, executed and delivered to the Corporation a collateral assignment of the Policy substantially in the form as set forth in Exhibit 3 attached hereto (the 4 "Collateral Assignment"). Repayment of the Corporation's Interest shall be made (i) from the cash surrender value of the Policy if this Agreement is terminated or the Owner surrenders or cancels the Policy prior to the death of the survivor of Executive or Executive's Spouse, or (ii) from the death proceeds of the Policy if Executive and Executive's Spouse should die while the Policy and this Agreement remain in effect. The Collateral Assignment shall not be terminated, altered or amended by the Owner without the express written consent of the Corporation. The parties hereto agree to take all action necessary to cause the Collateral Assignment to conform to the provisions of this Agreement. 6. Exercise of Owner's Rights While Collateral Assignment is in Effect. Under the terms of the Policy, the Owner has the right to make certain asset allocation decisions among various investment funds. While the Collateral Assignment is in effect, any such asset allocation decisions by the Owner shall be subject to the approval of the Corporation. Notwithstanding the foregoing, the Owner shall have the sole right to surrender or cancel the Policy for its cash surrender value; provided, however, upon such surrender or cancellation of the Policy the Corporation shall have the unqualified right to receive a portion of the cash surrender value from the Insurer equal to the Corporation's Interest. 7. Compliance with Internal Revenue Code. Notwithstanding anything in this Agreement to the contrary, the parties intend for the Policy to be classified as a "life insurance contract" as defined in Section 7702(a) of the Internal Revenue Code (the "Code") and not as a "modified endowment contract" as defined in Section 7702A(a) of the Code. If at any time during the term of this Agreement either the Corporation or the Owner determines that, based on the schedule of anticipated premium payments and withdrawals set forth in Exhibit 2, the Policy would not constitute a "life insurance contract" under Section 7702(a) of the Code or would constitute a "modified endowment contract" under Section 7702A(a) of the Code, the parties agree to restructure the premium payments and withdrawals to cause the Policy at all times to constitute a "life insurance contract" under Section 7702(a) of the Code and not a "modified endowment contract" under Section 7702A(a) of the Code. 8. Death of Executive and Executive's Spouse. If this Agreement is still in effect upon the death of the survivor of Executive and Executive's Spouse, the Corporation and the Owner shall promptly take all action necessary to obtain the death benefits provided under the Policy. The Owner agrees that the Corporation shall have the unqualified right to receive a portion of such death benefits from the Insurer equal to the Corporation's Interest and that no beneficiary under the Policy shall have the right to receive any portion of the Policy proceeds prior to the repayment of the full amount of the Corporation's Interest. The balance of the death benefits provided under the Policy, if any, shall be paid directly to the beneficiary or beneficiaries designated by the Owner in the manner and in the amount or amounts provided in the beneficiary designation provision of the Policy. In no event shall the amount payable to the Corporation hereunder exceed the Policy death benefits. The parties hereto agree that the beneficiary designation provision of the Policy shall conform to the provisions hereof. 9. Termination of the Agreement. This Agreement shall terminate prior to the death of the survivor of Executive and Executive's Spouse upon the occurrence of any of the following: 5 (a) either party may terminate this Agreement effective as of a Policy anniversary date by providing thirty (30) days' advance written notice of such election to terminate to the other party; (b) the total cessation of the business of the Corporation; (c) the bankruptcy, receivership or dissolution of the Corporation; (d) the termination of Executive's employment with the Corporation other than (i) by reason of Executive's death or "Disability," (ii) by reason of Executive's retirement from employment with the Corporation with the consent of the Corporation, or (iii) following a "Change in Control;" (e) if either the Corporation or the Owner fails to comply with any of the terms and conditions of this Agreement, the other party may elect to terminate this Agreement by providing written notice of such election to the other party; provided, however, that any such election must be made within sixty (60) days after such failure to comply; (f) payment in full by the Owner to the Corporation of the Corporation's Interest in the Policy; or (g) the mutual written agreement of the Owner and the Corporation. 10. Disposition of the Policy Upon Termination of the Agreement. If this Agreement is terminated pursuant to the provisions of Paragraph 9, the Owner shall be required, within sixty (60) days after such termination, to repay the Corporation the entire amount of the Corporation's Interest in the Policy. Upon receipt by the Corporation of the entire amount of the Corporation's Interest in the Policy, the Corporation shall release the Collateral Assignment. If the Owner does not repay the entire amount of the Corporation's Interest in the Policy within such sixty (60) day time period, the Corporation may enforce its rights under the Collateral Assignment; provided, however, the Owner shall not be liable for any deficiency realized by the Corporation upon the exercise of the Corporation's rights under the Collateral Assignment. 11. Discharge of the Insurer. The Insurer shall be fully discharged from its obligations under the Policy by payment of the Policy death benefits to the beneficiary or beneficiaries named in the Policy subject to the terms and conditions of the Policy and the Collateral Assignment. In no event shall the Insurer be considered a party to this Agreement or to any modification or amendment hereof. No provision of this Agreement, nor any modification or amendment hereof, shall in any way be construed as enlarging, changing, varying or in any other way affecting the obligations of the Insurer as expressly provided in the Policy except insofar as the provisions hereof are made a part of the Policy by the Collateral Assignment. 12. ERISA Information. The following provisions are part of this Agreement and are intended to meet the requirements of the Employee Retirement Income Security Act of 1974: 6 (a) The named fiduciary under this Agreement is the Corporation. (b) The funding policy under this Agreement is that all premiums on the Policy be remitted to the Insurer when due. (c) Direct payment by the Insurer is the basis of payment of benefits under this Agreement, with those benefits in turn being based on the payment of premiums as provided in this Agreement. (d) For claims procedure purposes, the "Claims Manager" shall be the Corporate Personnel Group of the Corporation or its delegee. (i) If for any reason a claim for benefits under this Agreement is denied by the Corporation, the Claims Manager shall deliver to the claimant a written explanation setting forth the specific reasons for the denial, specific references to the pertinent Agreement provisions on which the denial is based, such other data as may be pertinent and information on the procedures to be followed by the claimant in obtaining a review of his claim, all written in a manner calculated to be understood by the claimant. For this purpose: (A) The claimant's claim shall be deemed filed when presented orally or in writing to the Claims Manager. (B) The Claims Manager's explanation shall be in writing delivered to the claimant within ninety (90) days of the date the claim is filed. (ii) The claimant shall have sixty (60) days following his receipt of the denial of the claim to file with the Claims Manager a written request for review of the denial. For such review, the claimant or his representative may submit pertinent documents and written issues and comments. (iii) The Claims Manager shall decide the issue on review and furnish the claimant with a copy within sixty (60) days of receipt of the claimant's request for review of his claim. The decision on review shall be in writing and shall include specific reasons for the decision, written in a manner calculated to be understood by the claimant, as well as specific references to the pertinent Agreement provisions on which the decision is based. If a copy of the decision is not so furnished to the claimant within such sixty (60) days, the claim shall be deemed denied on review. 7 13. Miscellaneous. (a) This Agreement may not be amended, altered or modified except by a written instrument signed by the parties hereto or their respective successors or assigns and may not be otherwise terminated except as provided herein. (b) This Agreement shall be binding upon the parties hereto, their heirs, legal representatives, successors and assigns. (c) This Agreement and the rights of the parties hereunder shall be governed by and construed in accordance with the laws of the State of North Carolina except to the extent (if any) superceded by the laws of the United States. (d) Headings in this Agreement are provided for purposes of convenience only and shall not affect the interpretation of the terms hereof. (e) All notices and other communications hereunder must be in writing and shall be deemed to have been duly given when either personally delivered or placed in the United States mails by Certified Mail, return receipt requested, postage prepaid, addressed to the party to whom such notice is being given as follows: As to the Corporation: BankAmerica Corporation NationsBank Corporate Center 100 N. Tryon Street Charlotte, North Carolina 28255 Attention:Corporate Personnel Group Executive As to the Owner: Hugh L. McColl, Jr. Irrevocable Trust dated October 2, 1998 c/o NationsBank, N.A. NationsBank Plaza, NC1-002-07-13 101 South Tryon Street Charlotte, North Carolina 28255 Attention:Karen M. Morris Either party may change its address (or the name of the person to whose attention communications hereunder shall be directed) from time to time by serving notice thereof upon the other party as provided herein. 8 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. NATIONSBANK, N.A., Trustee under the Irrevocable Trust Agreement dated October 2, 1998, by and between Hugh L. McColl, Jr., as Grantor, and NationsBank, N.A., as Trustee By: /s/ Karen M. Morris ---------------------------- Name: Karen M. Morris ----------------------- Title: Vice President ---------------------- "Owner" BANKAMERICA CORPORATION By: /s/ Ann P. West ------------------------------ Name: Ann P. West ------------------------- Title: Senior Vice President ------------------------- "Corporation" 9 EX-10 27 EXHIBIT 10(DD) SPLIT DOLLAR LIFE INSURANCE AGREEMENT THIS SPLIT DOLLAR LIFE INSURANCE AGREEMENT (the "Agreement") is made and entered into as of the 16th day of October, 1998, by and between BANKAMERICA CORPORATION, a Delaware corporation (the "Corporation"), and NATIONSBANK, N.A., as Trustee under that certain Irrevocable Trust Agreement No. 2 dated October 1, 1998, by and between James H. Hance, Jr., as Grantor, and NationsBank, N.A., as Trustee (the "Owner"). Statement of Purpose James H. Hance, Jr. (the "Executive") is employed by the Corporation as its Chief Financial Officer. The Corporation, the Owner and Executive desire to insure the lives of Executive and Executive's spouse, Beverly S. Hance (the "Executive's Spouse"), for the benefit and protection of both the Corporation and the Executive's family under a Last Survivor Flexible Premium Variable Life Insurance Policy (the "Policy") to be issued by Pacific Life Insurance Co. (the "Insurer"). The Corporation, as the employer of Executive, is willing to pay a portion of the premiums due on the Policy as an additional employment benefit for Executive on the terms and conditions hereinafter set forth. The Corporation desires to have the Policy collaterally assigned to it by the Owner in order to secure repayment of the portion of the premiums paid by the Corporation on the Policy. NOW, THEREFORE, in consideration of the Statement of Purpose aforesaid and of the mutual promises contained herein, the parties hereto agree as follows: 1. Definitions. Whenever used in this Agreement, the following terms shall have the meanings set forth below: (a) "Beneficial Owner" or "Beneficial Ownership" shall have the meaning ascribed to such term in Rule 13d-3 of the general rules and regulations under the Exchange Act. (b) "Board of Directors" means the Board of Directors of the Corporation. (c) "Change in Control" of the Corporation means, and shall be deemed to have occurred upon, any of the following events: (i) The acquisition by any Person of Beneficial Ownership of twenty-five percent (25%) or more of either: (A) The then-outstanding shares of common stock of the Corporation (the "Outstanding Shares"); or (B) The combined voting power of the then-outstanding voting securities of the Corporation entitled to vote generally in the election of Directors (the "Outstanding Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change in Control for purposes of this subparagraph (i): (1) any acquisition directly from the Corporation, (2) any acquisition by the Corporation or any of its Subsidiaries, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any of its Subsidiaries, or (4) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subparagraph (iii) below; or (ii) Individuals who, as of the date of this Agreement, constitute the Board of Directors (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual who becomes a Director subsequent to the date of this Agreement and whose election, or whose nomination for election by the Corporation's shareholders, to the Board of Directors was either (A) approved by a vote of at least a majority of the Directors then comprising the Incumbent Board or (B) recommended by a Nominating Committee comprised entirely of Directors who are then Incumbent Board members shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act), other actual or threatened solicitation of proxies or consents or an actual or threatened tender offer; or (iii) Approval by the Corporation's shareholders of a reorganization, merger, or consolidation or sale or other disposition of all or substantially all of the assets of the Corporation (a "Business Combination"), in each case, unless following such Business Combination, (A) all or substantially all of the Persons who were the Beneficial Owners, respectively, of the Outstanding Shares and Outstanding Voting Securities immediately prior to such Business Combination own, directly or indirectly, more than fifty percent (50%) of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from the Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Corporation or all or substantially all of the Corporation's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Shares and Outstanding Voting Securities, as the case may be (provided, however, that for purposes of this clause (A), any shares of common stock or voting securities of such resulting corporation received by such Beneficial Owners in such Business Combination other than as the result of such Beneficial Owners' ownership of Outstanding Shares or Outstanding Voting Securities immediately prior to such Business Combination shall not be considered to be owned by such Beneficial Owners for the purposes of calculating their percentage of ownership of the outstanding common stock and voting power of the resulting corporation), (B) no Person (excluding any corporation resulting 2 from such Business Combination or any employee benefit plan (or related trust) of the Corporation or such corporation resulting from the Business Combination) beneficially owns, directly or indirectly, twenty-five percent (25%) or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from the Business Combination or the combined voting power of the then outstanding voting securities of such corporation unless such Person owned twenty-five percent (25%) or more of the Outstanding Shares or Outstanding Voting Securities immediately prior to the Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or the action of the Board, providing for such Business Combination; or (iv) Approval by the Corporation's shareholders of a complete liquidation or dissolution of the Corporation. (d) "Director" means any individual who is a member of the Board of Directors of the Corporation. (e) "Disability" means "disability" as such term is defined from time to time under any long-term disability plan of the Corporation covering the Executive. (f) "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time or any successor act thereto. (g) "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including "group" as defined in Section 13(d) thereof. (h) "Subsidiary" means any corporation, partnership, joint venture, affiliate or other entity in which the Corporation owns more than fifty percent (50%) of the voting stock or voting ownership interest, as applicable, or any other business entity designated by the Corporation as a Subsidiary for purposes of this Agreement. 2. Purchase of the Policy. The Owner has made application for and has purchased a Last Survivor Flexible Premium Variable Life Insurance Policy issued by Pacific Life Insurance Co. in the initial face amount of Ten Million Four Hundred Thirty-One Thousand Five Hundred Dollars ($10,431,500) insuring the lives of Executive and Executive's Spouse, a copy of which shall be attached hereto as Exhibit 1 as soon as practicable after issuance by the Insurer. A complete hypothetical illustration of the Policy assuming a eight percent (8%) gross rate of return on the premiums over the life of the contract based on a level death benefit of Ten Million Dollars ($10,000,000) for the Owner is attached hereto as Exhibit 2. The parties hereto have taken all necessary action to cause Insurer to issue the Policy and shall take any further action which may be necessary to cause the Policy to conform to the provisions of this Agreement. The parties hereto further agree that the Policy shall be subject to 3 the terms and conditions of this Agreement and the Collateral Assignment referred to in Paragraph 5 below. 3. Ownership of the Policy. Subject to the provisions of this Agreement and the Collateral Assignment, the Owner shall be the sole and absolute owner of the Policy and may and shall exercise all ownership rights granted to the owner thereof by the terms of the Policy. It is the intention of the parties that the Owner shall retain all rights which the Policy grants to the owner of the Policy, except the right of the Corporation to recover the amount due to the Corporation under this Agreement. Specifically, without limitation, the Corporation shall neither have nor exercise any right as the collateral assignee of the Policy which could in any way defeat or impair the Owner's right to receive the cash surrender value or the death proceeds of the Policy in excess of the Corporation's Interest (as hereinafter defined). All provisions of this Agreement and the Collateral Assignment shall be construed so as to carry out such intention. 4. Payment of Premiums. As a convenience to the parties, the Corporation shall pay all premiums under the Policy to the Insurer as and when such premiums become due. During the five (5) year period following the effective date of the Policy, the Corporation shall pay the full amount of the premiums to the Insurer as set forth on Exhibit 2 attached hereto. Within thirty (30) days of each such premium payment by the Corporation during the five (5) year period following the effective date of the Policy and within thirty (30) days of each anniversary of the effective date of the Policy thereafter, the Owner shall pay to the Corporation the economic value of the death benefit under the Policy as determined by the Insurer from time to time while the Policy remains in effect. A schedule of the premiums to be paid by the Owner based on the Insurer's current rates is set forth on Exhibit 2. Should actual investment returns vary from those assumed in Exhibit 2, the Corporation's share of the premiums shall continue to be equal to the amounts set forth on Exhibit 2 as if no such variation occurred. Any increase or decrease in the premiums required to provide the total death benefits described on Exhibit 2 resulting from a variation in investment returns shall affect only the Owner's share of the premiums. Upon request by the Owner, the Corporation shall promptly furnish evidence of timely payment to the Owner. The Corporation shall annually furnish to the Owner a statement of the amount of income reportable by the Executive for federal and state income tax purposes, if any, as determined in accordance with applicable Internal Revenue Service rules and regulations, as a result of the Corporation's payment of a portion of the premiums hereunder. 5. Collateral Assignment. The total amount of the Corporation's share of the Policy premium payments paid by the Corporation pursuant to this Agreement, less any amounts previously paid to the Corporation by the Owner pursuant to this Agreement, shall constitute the total indebtedness of the Owner to the Corporation, which amount shall accrue no interest (the "Corporation's Interest"). As security for and to secure the repayment of the Corporation's Interest, as it may exist from time to time pursuant to the terms of this Agreement, the Owner has, contemporaneously herewith, executed and delivered to the Corporation a collateral assignment of the Policy substantially in the form as set forth in Exhibit 3 attached hereto (the "Collateral Assignment"). Repayment of the Corporation's Interest shall be made (i) from the 4 cash surrender value of the Policy if this Agreement is terminated or the Owner surrenders or cancels the Policy prior to the death of the survivor of Executive or Executive's Spouse, or (ii) from the death proceeds of the Policy if Executive and Executive's Spouse should die while the Policy and this Agreement remain in effect. The Collateral Assignment shall not be terminated, altered or amended by the Owner without the express written consent of the Corporation. The parties hereto agree to take all action necessary to cause the Collateral Assignment to conform to the provisions of this Agreement. 6. Exercise of Owner's Rights While Collateral Assignment is in Effect. Under the terms of the Policy, the Owner has the right to make certain asset allocation decisions among various investment funds. While the Collateral Assignment is in effect, any such asset allocation decisions by the Owner shall be subject to the approval of the Corporation. Notwithstanding the foregoing, the Owner shall have the sole right to surrender or cancel the Policy for its cash surrender value; provided, however, upon such surrender or cancellation of the Policy the Corporation shall have the unqualified right to receive a portion of the cash surrender value from the Insurer equal to the Corporation's Interest. 7. Compliance with Internal Revenue Code. Notwithstanding anything in this Agreement to the contrary, the parties intend for the Policy to be classified as a "life insurance contract" as defined in Section 7702(a) of the Internal Revenue Code (the "Code") and not as a "modified endowment contract" as defined in Section 7702A(a) of the Code. If at any time during the term of this Agreement either the Corporation or the Owner determines that, based on the schedule of anticipated premium payments and withdrawals set forth in Exhibit 2, the Policy would not constitute a "life insurance contract" under Section 7702(a) of the Code or would constitute a "modified endowment contract" under Section 7702A(a) of the Code, the parties agree to restructure the premium payments and withdrawals to cause the Policy at all times to constitute a "life insurance contract" under Section 7702(a) of the Code and not a "modified endowment contract" under Section 7702A(a) of the Code. 8. Death of Executive and Executive's Spouse. If this Agreement is still in effect upon the death of the survivor of Executive and Executive's Spouse, the Corporation and the Owner shall promptly take all action necessary to obtain the death benefits provided under the Policy. The Owner agrees that the Corporation shall have the unqualified right to receive a portion of such death benefits from the Insurer equal to the Corporation's Interest and that no beneficiary under the Policy shall have the right to receive any portion of the Policy proceeds prior to the repayment of the full amount of the Corporation's Interest. The balance of the death benefits provided under the Policy, if any, shall be paid directly to the beneficiary or beneficiaries designated by the Owner in the manner and in the amount or amounts provided in the beneficiary designation provision of the Policy. In no event shall the amount payable to the Corporation hereunder exceed the Policy death benefits. The parties hereto agree that the beneficiary designation provision of the Policy shall conform to the provisions hereof. 9. Termination of the Agreement. This Agreement shall terminate prior to the death of the survivor of Executive and Executive's Spouse upon the occurrence of any of the following: 5 (a) either party may terminate this Agreement effective as of a Policy anniversary date by providing thirty (30) days' advance written notice of such election to terminate to the other party; (b) the total cessation of the business of the Corporation; (c) the bankruptcy, receivership or dissolution of the Corporation; (d) the termination of Executive's employment with the Corporation other than (i) by reason of Executive's death or "Disability," (ii) by reason of Executive's retirement from employment with the Corporation with the consent of the Corporation, or (iii) following a "Change in Control;" (e) if either the Corporation or the Owner fails to comply with any of the terms and conditions of this Agreement, the other party may elect to terminate this Agreement by providing written notice of such election to the other party; provided, however, that any such election must be made within sixty (60) days after such failure to comply; (f) payment in full by the Owner to the Corporation of the Corporation's Interest in the Policy; or (g) the mutual written agreement of the Owner and the Corporation. 10. Disposition of the Policy Upon Termination of the Agreement. If this Agreement is terminated pursuant to the provisions of Paragraph 9, the Owner shall be required, within sixty (60) days after such termination, to repay the Corporation the entire amount of the Corporation's Interest in the Policy. Upon receipt by the Corporation of the entire amount of the Corporation's Interest in the Policy, the Corporation shall release the Collateral Assignment. If the Owner does not repay the entire amount of the Corporation's Interest in the Policy within such sixty (60) day time period, the Corporation may enforce its rights under the Collateral Assignment; provided, however, the Owner shall not be liable for any deficiency realized by the Corporation upon the exercise of the Corporation's rights under the Collateral Assignment. 11. Discharge of the Insurer. The Insurer shall be fully discharged from its obligations under the Policy by payment of the Policy death benefits to the beneficiary or beneficiaries named in the Policy subject to the terms and conditions of the Policy and the Collateral Assignment. In no event shall the Insurer be considered a party to this Agreement or to any modification or amendment hereof. No provision of this Agreement, nor any modification or amendment hereof, shall in any way be construed as enlarging, changing, varying or in any other way affecting the obligations of the Insurer as expressly provided in the Policy except insofar as the provisions hereof are made a part of the Policy by the Collateral Assignment. 12. ERISA Information. The following provisions are part of this Agreement and are intended to meet the requirements of the Employee Retirement Income Security Act of 1974: (a) The named fiduciary under this Agreement is the Corporation. 6 (b) The funding policy under this Agreement is that all premiums on the Policy be remitted to the Insurer when due. (c) Direct payment by the Insurer is the basis of payment of benefits under this Agreement, with those benefits in turn being based on the payment of premiums as provided in this Agreement. (d) For claims procedure purposes, the "Claims Manager" shall be the Corporate Personnel Group of the Corporation or its delegee. (i) If for any reason a claim for benefits under this Agreement is denied by the Corporation, the Claims Manager shall deliver to the claimant a written explanation setting forth the specific reasons for the denial, specific references to the pertinent Agreement provisions on which the denial is based, such other data as may be pertinent and information on the procedures to be followed by the claimant in obtaining a review of his claim, all written in a manner calculated to be understood by the claimant. For this purpose: (A) The claimant's claim shall be deemed filed when presented orally or in writing to the Claims Manager. (B) The Claims Manager's explanation shall be in writing delivered to the claimant within ninety (90) days of the date the claim is filed. (ii) The claimant shall have sixty (60) days following his receipt of the denial of the claim to file with the Claims Manager a written request for review of the denial. For such review, the claimant or his representative may submit pertinent documents and written issues and comments. (iii) The Claims Manager shall decide the issue on review and furnish the claimant with a copy within sixty (60) days of receipt of the claimant's request for review of his claim. The decision on review shall be in writing and shall include specific reasons for the decision, written in a manner calculated to be understood by the claimant, as well as specific references to the pertinent Agreement provisions on which the decision is based. If a copy of the decision is not so furnished to the claimant within such sixty (60) days, the claim shall be deemed denied on review. 13. Miscellaneous. (a) This Agreement may not be amended, altered or modified except by a written instrument signed by the parties hereto or their respective successors or assigns and may not be otherwise terminated except as provided herein. 7 (b) This Agreement shall be binding upon the parties hereto, their heirs, legal representatives, successors and assigns. (c) This Agreement and the rights of the parties hereunder shall be governed by and construed in accordance with the laws of the State of North Carolina except to the extent (if any) superceded by the laws of the United States. (d) Headings in this Agreement are provided for purposes of convenience only and shall not affect the interpretation of the terms hereof. (e) All notices and other communications hereunder must be in writing and shall be deemed to have been duly given when either personally delivered or placed in the United States mails by Certified Mail, return receipt requested, postage prepaid, addressed to the party to whom such notice is being given as follows: As to the Corporation: BankAmerica Corporation NationsBank Corporate Center 100 N. Tryon Street Charlotte, North Carolina 28255 Attention: Corporate Personnel Group Executive As to the Owner: James H. Hance, Jr. Irrevocable Trust No. 2 dated October 1, 1998 c/o NationsBank, N.A. NationsBank Plaza, NC1-002-07-13 101 South Tryon Street Charlotte, North Carolina 28255 Attention: Sara McDonnell Either party may change its address (or the name of the person to whose attention communications hereunder shall be directed) from time to time by serving notice thereof upon the other party as provided herein. 8 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. NATIONSBANK, N.A., Trustee under the Irrevocable Trust Agreement No. 2 dated October 1, 1998, by and between James H. Hance, Jr., as Grantor, and NationsBank, N.A., as Trustee By: /s/ Sara McDonnell -------------------------------- Name: Sara McDonnell ------------------------------ Title: Senior Vice President ----------------------------- "Owner" BANKAMERICA CORPORATION By: /s/ Ann P. West -------------------------------- Name: Ann P. West ------------------------------ Title: Senior Vice President ----------------------------- "Corporation" 9 EX-10 28 EXHIBIT 10(EE) SPLIT DOLLAR LIFE INSURANCE AGREEMENT THIS SPLIT DOLLAR LIFE INSURANCE AGREEMENT (the "Agreement") is made and entered into as of the 28th day of September, 1998, by and between NATIONSBANK CORPORATION, a North Carolina corporation (the "Corporation"), and J. STEELE ALPHIN, as Trustee under that certain Irrevocable Trust Agreement dated June 23, 1998, by and between Kenneth D. Lewis, as Grantor, and J. Steele Alphin, as Trustee (the "Owner"). Statement of Purpose Kenneth D. Lewis (the "Executive") is employed by the Corporation as its President. The Corporation, the Owner and Executive desire to insure the lives of Executive and Executive's spouse, Donna C. Lewis (the "Executive's Spouse"), for the benefit and protection of both the Corporation and the Executive's family under a Variable Survivorship Life Insurance Policy (the "Policy") to be issued by John Hancock Variable Life Insurance Company (the "Insurer"). The Corporation, as the employer of Executive, is willing to pay a portion of the premiums due on the Policy as an additional employment benefit for Executive on the terms and conditions hereinafter set forth. The Corporation desires to have the Policy collaterally assigned to it by the Owner in order to secure repayment of the portion of the premiums paid by the Corporation on the Policy. NOW, THEREFORE, in consideration of the Statement of Purpose aforesaid and of the mutual promises contained herein, the parties hereto agree as follows: 1. Definitions. Whenever used in this Agreement, the following terms shall have the meanings set forth below: (a) "Beneficial Owner" or "Beneficial Ownership" shall have the meaning ascribed to such term in Rule 13d-3 of the general rules and regulations under the Exchange Act. (b) "Board of Directors" means the Board of Directors of the Corporation. (c) "Change in Control" of the Corporation means, and shall be deemed to have occurred upon, any of the following events: (i) The acquisition by any Person of Beneficial Ownership of twenty-five percent (25%) or more of either: (A) The then-outstanding shares of common stock of the Corporation (the "Outstanding Shares"); or (B) The combined voting power of the then-outstanding voting securities of the Corporation entitled to vote generally in the election of Directors (the "Outstanding Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change in Control for purposes of this subparagraph (i): (1) any acquisition directly from the Corporation, (2) any acquisition by the Corporation or any of its Subsidiaries, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any of its Subsidiaries, or (4) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subparagraph (iii) below; or (ii) Individuals who, as of the date of this Agreement, constitute the Board of Directors (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual who becomes a Director subsequent to the date of this Agreement and whose election, or whose nomination for election by the Corporation's shareholders, to the Board of Directors was either (A) approved by a vote of at least a majority of the Directors then comprising the Incumbent Board or (B) recommended by a Nominating Committee comprised entirely of Directors who are then Incumbent Board members shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act), other actual or threatened solicitation of proxies or consents or an actual or threatened tender offer; or (iii) Approval by the Corporation's shareholders of a reorganization, merger, or consolidation or sale or other disposition of all or substantially all of the assets of the Corporation (a "Business Combination"), in each case, unless following such Business Combination, (A) all or substantially all of the Persons who were the Beneficial Owners, respectively, of the Outstanding Shares and Outstanding Voting Securities immediately prior to such Business Combination own, directly or indirectly, more than fifty percent (50%) of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from the Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Corporation or all or substantially all of the Corporation's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Shares and Outstanding Voting Securities, as the case may be (provided, however, that for purposes of this clause (A), any shares of common stock or voting securities of such resulting corporation received by such Beneficial Owners in such Business Combination other than as the result of such Beneficial Owners' ownership of Outstanding Shares or Outstanding Voting Securities immediately prior to such Business Combination shall not be considered to be owned by such Beneficial Owners for the purposes of calculating their percentage of ownership of the outstanding common stock and voting power of the resulting corporation), (B) no Person (excluding any corporation resulting 2 from such Business Combination or any employee benefit plan (or related trust) of the Corporation or such corporation resulting from the Business Combination) beneficially owns, directly or indirectly, twenty-five percent (25%) or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from the Business Combination or the combined voting power of the then outstanding voting securities of such corporation unless such Person owned twenty-five percent (25%) or more of the Outstanding Shares or Outstanding Voting Securities immediately prior to the Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or the action of the Board, providing for such Business Combination; or (iv) Approval by the Corporation's shareholders of a complete liquidation or dissolution of the Corporation. Notwithstanding the foregoing, a Change in Control shall not be deemed to have occurred for purposes of this Agreement as a result of the transactions contemplated by the Reorganization Agreement. (d) "Director" means any individual who is a member of the Board of Directors of the Corporation. (e) "Disability" means "disability" as such term is defined from time to time under any long-term disability plan of the Corporation covering the Executive. (f) "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time or any successor act thereto. (g) "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including "group" as defined in Section 13(d) thereof. (h) "Reorganization Agreement" means the Agreement and Plan of Reorganization dated April 10, 1998 between NationsBank Corporation and BankAmerica Corporation. (i) "Subsidiary" means any corporation, partnership, joint venture, affiliate or other entity in which the Corporation owns more than fifty percent (50%) of the voting stock or voting ownership interest, as applicable, or any other business entity designated by the Corporation as a Subsidiary for purposes of this Agreement. 2. Purchase of the Policy. The Owner has made application for and has purchased a Variable Survivorship Life Insurance Policy issued by John Hancock Variable Life Insurance Company in the initial face amount of Ten Million Three Hundred Sixteen Thousand Nine Hundred Twenty-Two Dollars ($10,316,922) insuring the lives of Executive and Executive's Spouse, a copy of which shall be attached hereto as Exhibit 1 as soon as practicable after 3 issuance by the Insurer. A complete hypothetical illustration of the Policy assuming a eight percent (8%) gross rate of return on the premiums over the life of the contract based on a level death benefit of Ten Million Dollars ($10,000,000) for the Owner is attached hereto as Exhibit 2. The parties hereto have taken all necessary action to cause Insurer to issue the Policy and shall take any further action which may be necessary to cause the Policy to conform to the provisions of this Agreement. The parties hereto further agree that the Policy shall be subject to the terms and conditions of this Agreement and the Collateral Assignment referred to in Paragraph 5 below. 3. Ownership of the Policy. Subject to the provisions of this Agreement and the Collateral Assignment, the Owner shall be the sole and absolute owner of the Policy and may and shall exercise all ownership rights granted to the owner thereof by the terms of the Policy. It is the intention of the parties that the Owner shall retain all rights which the Policy grants to the owner of the Policy, except the right of the Corporation to recover the amount due to the Corporation under this Agreement. Specifically, without limitation, the Corporation shall neither have nor exercise any right as the collateral assignee of the Policy which could in any way defeat or impair the Owner's right to receive the cash surrender value or the death proceeds of the Policy in excess of the Corporation's Interest (as hereinafter defined). All provisions of this Agreement and the Collateral Assignment shall be construed so as to carry out such intention. 4. Payment of Premiums. As a convenience to the parties, the Corporation shall pay all premiums under the Policy to the Insurer as and when such premiums become due. During the five (5) year period following the effective date of the Policy, the Corporation shall pay the full amount of the premiums to the Insurer as set forth on Exhibit 2 attached hereto. Within thirty (30) days of each such premium payment by the Corporation during the five (5) year period following the effective date of the Policy and within thirty (30) days of each anniversary of the effective date of the Policy thereafter, the Owner shall pay to the Corporation the economic value of the death benefit under the Policy as determined by the Insurer from time to time while the Policy remains in effect. A schedule of the premiums to be paid by the Owner based on the Insurer's current rates is set forth on Exhibit 2. Should actual investment returns vary from those assumed in Exhibit 2, the Corporation's share of the premiums shall continue to be equal to the amounts set forth on Exhibit 2 as if no such variation occurred. Any increase or decrease in the premiums required to provide the total death benefits described on Exhibit 2 resulting from a variation in investment returns shall affect only the Owner's share of the premiums. Upon request by the Owner, the Corporation shall promptly furnish evidence of timely payment to the Owner. The Corporation shall annually furnish to the Owner a statement of the amount of income reportable by the Executive for federal and state income tax purposes, if any, as determined in accordance with applicable Internal Revenue Service rules and regulations, as a result of the Corporation's payment of a portion of the premiums hereunder. 5. Collateral Assignment. The total amount of the Corporation's share of the Policy premium payments paid by the Corporation pursuant to this Agreement, less any amounts 4 previously paid to the Corporation by the Owner pursuant to this Agreement, shall constitute the total indebtedness of the Owner to the Corporation, which amount shall accrue no interest (the "Corporation's Interest"). As security for and to secure the repayment of the Corporation's Interest, as it may exist from time to time pursuant to the terms of this Agreement, the Owner has, contemporaneously herewith, executed and delivered to the Corporation a collateral assignment of the Policy substantially in the form as set forth in Exhibit 3 attached hereto (the "Collateral Assignment"). Repayment of the Corporation's Interest shall be made (i) from the cash surrender value of the Policy if this Agreement is terminated or the Owner surrenders or cancels the Policy prior to the death of the survivor of Executive or Executive's Spouse, or (ii) from the death proceeds of the Policy if Executive and Executive's Spouse should die while the Policy and this Agreement remain in effect. The Collateral Assignment shall not be terminated, altered or amended by the Owner without the express written consent of the Corporation. The parties hereto agree to take all action necessary to cause the Collateral Assignment to conform to the provisions of this Agreement. 6. Exercise of Owner's Rights While Collateral Assignment is in Effect. Under the terms of the Policy, the Owner has the right to make certain asset allocation decisions among various investment funds. While the Collateral Assignment is in effect, any such asset allocation decisions by the Owner shall be subject to the approval of the Corporation. Notwithstanding the foregoing, the Owner shall have the sole right to surrender or cancel the Policy for its cash surrender value; provided, however, upon such surrender or cancellation of the Policy the Corporation shall have the unqualified right to receive a portion of the cash surrender value from the Insurer equal to the Corporation's Interest. 7. Compliance with Internal Revenue Code. Notwithstanding anything in this Agreement to the contrary, the parties intend for the Policy to be classified as a "life insurance contract" as defined in Section 7702(a) of the Internal Revenue Code (the "Code") and not as a "modified endowment contract" as defined in Section 7702A(a) of the Code. If at any time during the term of this Agreement either the Corporation or the Owner determines that, based on the schedule of anticipated premium payments and withdrawals set forth in Exhibit 2, the Policy would not constitute a "life insurance contract" under Section 7702(a) of the Code or would constitute a "modified endowment contract" under Section 7702A(a) of the Code, the parties agree to restructure the premium payments and withdrawals to cause the Policy at all times to constitute a "life insurance contract" under Section 7702(a) of the Code and not a "modified endowment contract" under Section 7702A(a) of the Code. 8. Death of Executive and Executive's Spouse. If this Agreement is still in effect upon the death of the survivor of Executive and Executive's Spouse, the Corporation and the Owner shall promptly take all action necessary to obtain the death benefits provided under the Policy. The Owner agrees that the Corporation shall have the unqualified right to receive a portion of such death benefits from the Insurer equal to the Corporation's Interest and that no beneficiary under the Policy shall have the right to receive any portion of the Policy proceeds prior to the repayment of the full amount of the Corporation's Interest. The balance of the death benefits provided under the Policy, if any, shall be paid directly to the beneficiary or beneficiaries designated by the Owner in the manner and in the amount or amounts provided in the beneficiary designation provision of the Policy. In no event shall the amount payable to the 5 Corporation hereunder exceed the Policy death benefits. The parties hereto agree that the beneficiary designation provision of the Policy shall conform to the provisions hereof. 9. Termination of the Agreement. This Agreement shall terminate prior to the death of the survivor of Executive and Executive's Spouse upon the occurrence of any of the following: (a) either party may terminate this Agreement effective as of a Policy anniversary date by providing thirty (30) days' advance written notice of such election to terminate to the other party; (b) the total cessation of the business of the Corporation; (c) the bankruptcy, receivership or dissolution of the Corporation; (d) the termination of Executive's employment with the Corporation other than (i) by reason of Executive's death or "Disability," (ii) by reason of Executive's retirement from employment with the Corporation with the consent of the Corporation, or (iii) following a "Change in Control;" (e) if either the Corporation or the Owner fails to comply with any of the terms and conditions of this Agreement, the other party may elect to terminate this Agreement by providing written notice of such election to the other party; provided, however, that any such election must be made within sixty (60) days after such failure to comply; (f) payment in full by the Owner to the Corporation of the Corporation's Interest in the Policy; or (g) the mutual written agreement of the Owner and the Corporation. 10. Disposition of the Policy Upon Termination of the Agreement. If this Agreement is terminated pursuant to the provisions of Paragraph 9, the Owner shall be required, within sixty (60) days after such termination, to repay the Corporation the entire amount of the Corporation's Interest in the Policy. Upon receipt by the Corporation of the entire amount of the Corporation's Interest in the Policy, the Corporation shall release the Collateral Assignment. If the Owner does not repay the entire amount of the Corporation's Interest in the Policy within such sixty (60) day time period, the Corporation may enforce its rights under the Collateral Assignment; provided, however, the Owner shall not be liable for any deficiency realized by the Corporation upon the exercise of the Corporation's rights under the Collateral Assignment. 11. Discharge of the Insurer. The Insurer shall be fully discharged from its obligations under the Policy by payment of the Policy death benefits to the beneficiary or beneficiaries named in the Policy subject to the terms and conditions of the Policy and the Collateral Assignment. In no event shall the Insurer be considered a party to this Agreement or to any modification or amendment hereof. No provision of this Agreement, nor any modification or amendment hereof, shall in any way be construed as enlarging, changing, varying or in any 6 other way affecting the obligations of the Insurer as expressly provided in the Policy except insofar as the provisions hereof are made a part of the Policy by the Collateral Assignment. 12. ERISA Information. The following provisions are part of this Agreement and are intended to meet the requirements of the Employee Retirement Income Security Act of 1974: (a) The named fiduciary under this Agreement is the Corporation. (b) The funding policy under this Agreement is that all premiums on the Policy be remitted to the Insurer when due. (c) Direct payment by the Insurer is the basis of payment of benefits under this Agreement, with those benefits in turn being based on the payment of premiums as provided in this Agreement. (d) For claims procedure purposes, the "Claims Manager" shall be the Corporate Personnel Group of the Corporation or its delegee. (i) If for any reason a claim for benefits under this Agreement is denied by the Corporation, the Claims Manager shall deliver to the claimant a written explanation setting forth the specific reasons for the denial, specific references to the pertinent Agreement provisions on which the denial is based, such other data as may be pertinent and information on the procedures to be followed by the claimant in obtaining a review of his claim, all written in a manner calculated to be understood by the claimant. For this purpose: (A) The claimant's claim shall be deemed filed when presented orally or in writing to the Claims Manager. (B) The Claims Manager's explanation shall be in writing delivered to the claimant within ninety (90) days of the date the claim is filed. (ii) The claimant shall have sixty (60) days following his receipt of the denial of the claim to file with the Claims Manager a written request for review of the denial. For such review, the claimant or his representative may submit pertinent documents and written issues and comments. (iii) The Claims Manager shall decide the issue on review and furnish the claimant with a copy within sixty (60) days of receipt of the claimant's request for review of his claim. The decision on review shall be in writing and shall include specific reasons for the decision, written in a manner calculated to be understood by the claimant, as well as specific references to the pertinent Agreement provisions on which the decision is based. If a copy of the decision is not so furnished to the claimant within such sixty (60) days, the claim shall be deemed denied on review. 7 13. Miscellaneous. (a) This Agreement may not be amended, altered or modified except by a written instrument signed by the parties hereto or their respective successors or assigns and may not be otherwise terminated except as provided herein. (b) This Agreement shall be binding upon the parties hereto, their heirs, legal representatives, successors and assigns. (c) This Agreement and the rights of the parties hereunder shall be governed by and construed in accordance with the laws of the State of North Carolina except to the extent (if any) superceded by the laws of the United States. (d) Headings in this Agreement are provided for purposes of convenience only and shall not affect the interpretation of the terms hereof. (e) All notices and other communications hereunder must be in writing and shall be deemed to have been duly given when either personally delivered or placed in the United States mails by Certified Mail, return receipt requested, postage prepaid, addressed to the party to whom such notice is being given as follows: As to the Corporation: NationsBank Corporation NationsBank Corporate Center 100 N. Tryon Street Charlotte, North Carolina 28255 Attention: Corporate Personnel Group Executive As to the Owner: Kenneth D. Lewis Irrevocable Trust of 1998 c/o J. Steele Alphin 3700 Foxcroft Road Charlotte, North Carolina 28211 Either party may change its address (or the name of the person to whose attention communications hereunder shall be directed) from time to time by serving notice thereof upon the other party as provided herein. 8 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. /s/ J. Steele Alphin [SEAL] -------------------------------------- J. Steele Alphin Trustee under the Irrevocable Trust Agreement dated June 23, 1998, by and between Kenneth D. Lewis, as Grantor, and J. Steele Alphin, as Trustee "Owner" NATIONSBANK CORPORATION By: /s/ Ann P. West -------------------------------- Name: Ann P. West --------------------------- Title: Senior Vice President -------------------------- "Corporation" 9 EX-11 29 EXHIBIT 11 Exhibit 11 Diluted Earnings Per Common Share and Diluted Average Common Shares Outstanding For diluted earnings per common share, net income available to common shareholders can be affected by the conversion of the registrant's convertible preferred stock. Where the effect of this conversion is dilutive, net income available to common shareholders is adjusted by the associated preferred dividends. This adjusted net income is divided by the weighted average number of common shares outstanding for each period plus amounts representing the dilutive effect of stock options outstanding and the dilution resulting from the conversion of the registrant's convertible preferred stock, if applicable. The effect of convertible preferred stock is excluded from the computation of diluted earnings per common share in periods in which the effect would be antidilutive. Diluted earnings per common share was determined as follows (shares in thousands, dollars in millions, except per-share information):
Year Ended December 31 -------------------------------------------- 1998 1997 1996 -------------- -------------- -------------- Average common shares outstanding ................... 1,732,057 1,733,194 1,638,382 Dilutive effect of Convertible preferred stock ........................ 3,290 3,736 6,158 Stock options ...................................... 40,413 45,242 26,086 --------- --------- --------- Total dilutive shares ............................... 1,775,760 1,782,172 1,670,626 ========= ========= ========= Income available to common shareholders ............. $ 5,140 $ 6,431 $ 5,611 Preferred dividends paid on dilutive convertible preferred stock .................................. 6 7 9 ----------- ----------- ----------- Total net income available to common shareholders adjusted for dilution ............................ $ 5,146 $ 6,438 $ 5,620 =========== =========== =========== Diluted earnings per common share ................... $ 2.90 $ 3.61 $ 3.36 =========== =========== ===========
EX-12 30 EXHIBIT 12(A) BankAmerica Corporation and Subsidiaries Ratio of Earnings to Fixed Charges Exhibit 12(a) (Dollars in Millions)
Year Ended December 31 --------------------------------------------------------------- 1998 1997 1996 1995 1994 ------------ ----------- -------------- ----------- ----------- Excluding Interest on Deposits Income before taxes .................................... $ 8,048 $10,556 $9,311 $ 8,377 $ 7,010 Less: Equity in undistributed losses (earnings) of unconsolidated subsidiaries ........................ 162 (49) (7) (19) (55) Fixed charges: Interest expense (including capitalized interest) ..... 9,479 8,219 7,082 6,354 4,572 1/3 of net rent expense ............................... 335 302 282 275 250 -------- ------- ------- ------- ------- Total fixed charges ................................. 9,814 8,521 7,364 6,629 4,822 -------- ------- ------- ------- ------- Earnings (excluding capitalized interest) .............. $ 18,024 $19,026 $16,668 $14,987 $11,774 ======== ======= ======= ======= ======= Fixed charges .......................................... $ 9,814 $ 8,521 $7,364 $ 6,629 $ 4,822 ======== ======= ======= ======= ======= Ratio of earnings to fixed charges ..................... 1.84 2.23 2.26 2.26 2.44 ========= ======== ======= ======== ======== Including Interest on Deposits Income before taxes .................................... $ 8,048 $10,556 $9,311 $ 8,377 $ 7,010 Less: Equity in undistributed losses (earnings) of unconsolidated subsidiaries ........................ 162 (49) (7) (19) (55) Fixed charges: Interest expense (including capitalized interest) ..... 20,290 18,903 16,682 16,369 11,083 1/3 of net rent expense ............................... 335 302 282 275 250 --------- -------- ------- -------- -------- Total fixed charges ................................. 20,625 19,205 16,964 16,644 11,333 Earnings (excluding capitalized interest) .............. $ 28,835 $29,710 $26,268 $25,002 $18,285 ========= ======== ======= ======== ======== Fixed charges .......................................... $ 20,625 $19,205 $16,964 $16,644 $11,333 ========= ======== ======= ======== ======== Ratio of earnings to fixed charges ..................... 1.40 1.55 1.55 1.50 1.61 ========= ======== ======= ======== ========
EX-12 31 EXHIBIT 12(B)
BankAmerica Corporation and Subsidiaries Ratio of Earnings to Fixed Charges and Preferred Dividends Exhibit 12(b) (Dollars in Millions) Year Ended December 31 ---------------------------------------------------------------- 1998 1997 1996 1995 1994 ---------- ---- ----- ---- ---- Excluding Interest on Deposits Income before taxes .................................... $ 8,048 $10,556 $9,311 $ 8,377 $ 7,010 Less: Equity in undistributed losses (earnings) of unconsolidated subsidiaries ........................ 162 (49) (7) (19) (55) Fixed charges: Interest expense (including capitalized interest) ..... 9,479 8,219 7,082 6,354 4,572 1/3 of net rent expense ............................... 335 302 282 275 250 ---------- ------- ------- ------- ------- Total fixed charges .................................. 9,814 8,521 7,364 6,629 4,822 Preferred dividend requirements ........................ 40 183 332 426 467 ---------- ------- ------- ------- ------- Earnings (excluding capitalized interest) .............. $ 18,024 $19,026 $16,668 $14,987 $11,774 ========== ======= ======= ======= ======= Fixed charges and preferred dividends .................. $ 9,854 $ 8,704 $ 7,696 $ 7,055 $ 5,289 ========== ======= ======= ======= ======= Ratio of earnings to fixed charges and preferred dividends ............................................. 1.83 2.19 2.17 2.12 2.23 ========== ======== ======== ======== ======== Including Interest on Deposits Income before taxes .................................... $ 8,048 $10,556 $9,311 $ 8,377 $ 7,010 Less: Equity in undistributed losses (earnings) of unconsolidated subsidiaries ........................ 162 (49) (7) (19) (55) Fixed charges: Interest expense (including capitalized interest) ..... 20,290 18,903 16,682 16,369 11,083 1/3 of net rent expense ............................... 335 302 282 275 250 ---------- ------- ------- ------- ------- Total fixed charges .................................. 20,625 19,205 16,964 16,644 11,333 Preferred dividend requirements ........................ 40 183 332 426 467 ---------- ------- ------- ------- ------- Earnings (excluding capitalized interest) .............. $ 28,835 $29,710 $26,268 $25,002 $18,285 ========== ======= ======= ======= ======= Fixed charges and preferred dividends .................. $ 20,665 $19,388 $17,296 $17,070 $11,800 ========== ======= ======= ======= ======= Ratio of earnings to fixed charges and preferred dividends ............................................. 1.40 1.53 1.52 1.46 1.55 ========== ======= ======= ======= =======
EX-21 32 EXHIBIT 21 EXHIBIT 21 DIRECT AND INDIRECT SUBSIDIARIES OF BANKAMERICA CORPORATION AS OF 2/28/1999
NAME PRINCIPAL PLACE OF BUSINESS - --------------------------------------------------------------------------------------------------- A Abilene Park, Inc. Dallas, TX Aegina FSC, Inc. Charlotte Amalie, St. Thomas, U.S. V.I. Aegina, Inc. San Francisco, CA Aerocrane Leasing Ltd. Charlotte Amalie, St. Thomas, U.S. V.I. AF Funding (1993), Inc. Delaware AF Funding II (1993), Inc. Delaware Air France/KDHF II (NGHGI) (Grantor Trust) Delaware Air France/NationsBank (Grantor Trust) Delaware Airlease Ltd., A California Limited Partnership San Francisco, CA Airlease Management Services, Inc. San Francisco, CA Alamo Funding, Inc. Dallas, TX Alamo Funding II, Inc. Dallas, TX Alpargatas S.A.I.C. Buenos Aires, Argentina Alpha Dearborn Limited Partnership Lake Forest, IL ALS II, Inc. Wilton, CT A/M Properties, Inc. Baltimore, MD Amarillo Lane, Inc. Dallas, TX American Financial Service Group, Inc.(LEASEFIRST) Greensboro, NC American Security (Louisiana) Ltd. Washington, DC ANA II (Grantor Trust) Delaware APL, Inc. Dallas, TX Appold Holdings Limited London, U.K. Appold Leasing, Inc. San Francisco, CA Appold Limited London, U.K. Arbor National Mortgage, Inc. Uniondale, NY The Arbors, Limited Partnership Raleigh, NC Arch Reinsurance Company, Ltd. George Town, Grand Cayman, Cayman Is. Ariens Credit Corporation Alpharetta, GA Ark Direct Capital Fund, L.P. Chicago, IL Aroya Limited Partnership St. Louis, MO Arrendadora BankAmerica, S.A. Mexico City, Mexico Arrow Ridge Partners, Ltd. Maitland, FL Artloft Associates, L.P. St. Louis, MO Asset Holding Co. Inc. San Francisco, CA Asian American Merchant Bank Ltd. Singapore, Singapore Ashburn A Corp. Baltimore, MD Atico Financial Corporation dba Cavalier Properties Miami, FL Atlanta Affordable Housing Fund Limited Partnership Charlotte, NC Atlantic Equity Corporation Charlotte, NC Austin Community Development Corporation Austin, TX Austin National Realty Corporation Austin, TX B BA Asia Limited Hong Kong, PRC BA Assets Company George Town, Grand Cayman, Cayman Is. BA Australia Limited Sydney, New South Wales, Australia BA Card Services, Inc. Makati, Philippines BA Credit Corporation San Diego, CA 1 BA Equity Advisors Sp.zo.o Warsaw, Poland BA Finance (Hong Kong) Limited Hong Kong, PRC BA Finance Ireland Limited Dublin, Ireland BA Forex (Philippines), Inc. Makati, Philippines BA FSC Holdings, Inc. San Francisco, CA BA Futures, Incorporated Chicago, IL BA Futures, S.A. Paris, France BA Holding Company, S.A. Luxembourg, Luxembourg BA Interactive Services Holding Company, Inc. San Francisco, CA BA Insurance Agency, Inc. San Diego, CA BA Insurance Brokerage Inc. Taipei, Taiwan BA Investment Services, Inc. Oakland, CA BA Leasing & Capital Corporation San Francisco, CA BA LocProc Pty. Limited Sydney, New South Wales, Australia BA Merchant Services, Inc. San Francisco, CA BA Netting Limited London, U.K. BA Northwest Community Service Corporation Seattle, WA BA Properties, Inc. Los Angeles, CA BA Rescarven Holding Company George Town, Grand Cayman, Cayman Is. BA Securities Investment Advisory Limited Taipei, Taiwan BA Service Corp. Charlotte, NC BA Staff Limited Sydney, New South Wales, Australia BA Staff Superannuation Limited Sydney, New South Wales, Australia BA Swallow Business Systems Limited London, U.K. BA Swiss FSC Holdings, Inc. San Francisco, CA B.A. Insurance (Cayman) Ltd. George Town, Grand Cayman, Cayman Is. BAC Realty LLC Dallas, TX BAEC Investments, L.L.C. Chicago, IL BAEP Telecommunications Investments, L.L.C. Chicago, IL Balmoral Leasing Ltd. Charlotte Amalie, St. Thomas, U.S. VI Baltic M Corp. Baltimore, MD Bamerilease, Inc. Phoenix, AZ Bamerinvest C.A. Caracas, Chacao, Venezuela BancAmerica Commercial Corporation San Francisco, CA BancAmerica Auto Finance Corp. Las Vegas, NV Banco Liberal S.A. Rio de Janeiro, Brazil Bancshares Properties, Inc. Tampa, FL Bank IV Affordable Housing Corporation Wichita, KS Bank IV Community Development Corporation Wichita, KS Bank IV Securities, Inc. Charlotte, NC BankAmerica Acceptance Corp. San Diego, CA BankAmerica Business Credit, Inc. San Diego, CA BankAmerica Capital Advisors LLC Chicago, IL BankAmerica Capital Corporation Chicago, IL BankAmerica Capital I San Francisco, CA BankAmerica Capital II San Francisco, CA BankAmerica Capital III San Francisco, CA BankAmerica Capital IV San Francisco, CA BankAmerica Community Development Corporation Walnut Creek, CA BankAmerica Financial, Inc. San Francisco, CA BankAmerica Financial Services Ltd. St. Helier, Jersey, Channel Islands BankAmerica Foundation San Francisco, CA 2 BankAmerica Fund Management Limited George Town, Grand Cayman, Cayman Is. BankAmerica Gestion SGIIC, S.A. Madrid, Spain BankAmerica Insurance Group, Inc. San Diego, CA BankAmerica International San Francisco, CA BankAmerica International Financial Corporation San Francisco, CA BankAmerica International Investment Corporation Chicago, IL BankAmerica International Trustees (B.V.I.) Limited St. Helier, Jersey, Channel Islands BankAmerica Institutional Capital A San Francisco, CA BankAmerica Institutional Capital B San Francisco, CA BankAmerica Investment Corporation Chicago, IL BankAmerica Nominees (1993) Pte Ltd. Singapore, Singapore BankAmerica Nominees (Hong Kong) Ltd. Hong Kong, PRC BankAmerica Nominees Limited (London) London, U.K. BankAmerica Nominees (Singapore) Pte Ltd. Singapore, Singapore BankAmerica Properties (Jersey) Limited St. Helier, Jersey, Channel Islands BankAmerica Realty Finance, Inc. Los Angeles, CA BankAmerica Realty Services, Inc. San Francisco, CA BankAmerica Representacao e Servicos Limitada Sao Paulo, Brazil BankAmerica Singapore Limited Singapore, Singapore BankAmerica Special Assets Corporation San Francisco, CA BankAmerica Trust and Banking Corporation(Bahamas) Limited Nassau, Bahamas BankAmerica Trust and Banking Corporation(Cayman) Limited George Town, Grand Cayman, Cayman Is. BankAmerica Trust Company (Hong Kong) Limited Hong Kong, PRC BankAmerica Trust Company (Jersey) Limited St. Helier, Jersey, Channel Islands BankAmerica Ventures Foster City, CA Bank of America (Asia) Limited Hong Kong, PRC Bank of America Canada Toronto, Ontario, Canada Bank of America Canada Leasing Corporation Calgary, Alberta, Canada Bank of America Canada Leasing III, Inc. Calgary, Alberta, Canada Bank of America Canada Leasing IV, Inc. Calgary, Alberta, Canada Bank of America Canada Leasing VI, Inc. Calgary, Alberta, Canada Bank of America Canada Securities Corporation Toronto, Ontario, Canada Bank of America Colombia Bogota, Colombia Bank of America Community Development Bank Walnut Creek, CA Bank of America, FSB Portland, OR Bank of America-Giannini Foundation San Francisco, CA Bank of America (Jersey) Limited St. Helier, Jersey, Channel Islands Bank of America (Hawaii) Insurance Agency, Inc. Honolulu, HI Bank of America Housing Fund Limited Partnership Columbia, MD Bank of America Illinois Community Development Corporation Chicago, IL Bank of America International Limited London, U.K. Bank of America Leasing Corp. Charlotte, NC Bank of America (Macau) Limited Macau Bank of America Malaysia Berhad Kuala Lumpur, Malaysia Bank of America Mexico, S.A., Institucionde Banca Multiple Mexico City, Mexico Bank of America Mortgage Securities, Inc. San Francisco, CA Bank of America (Polska) S.A. Warsaw, Poland Bank of America, S.A. Madrid, Spain Bank of America National Association Phoenix, AZ Bank of America National Trust and Savings Association San Francisco, CA Bank of American Reinsurance Corporation Burlington, VT Bank of America Technology and Operations, Inc. Dallas, TX 3 Bank of America Texas, National Association Dallas TX The Bank of Canton (Nominees) Limited Hong Kong, PRC Bank Marketing Systems, Inc. Oklahoma City, OK Bank South Home Equity, Inc. Atlanta, GA Barnesbury, Ltd. Bermuda Barnett Auto Receivables Corp. Reno, NV Barnett Bank Premises Company - Brickell Jacksonville, FL Barnett Capital I Jacksonville, FL Barnett Capital II Jacksonville, FL Barnett Capital III Jacksonville, FL Barnett Community Development Corporation Jacksonville, FL Barnett Dealer Financial Services Corporation-Alabama Jacksonville, FL Barnett-First Data Alliance Jacksonville, FL Barnett Leasing Company Jacksonville, FL Barnett Merchant Services Corporation Jacksonville, FL Barnett Mortgage Company Charlotte, NC Barnett Office Park Condominium Association, Inc. Jacksonville, FL Barnett Southside Land, Inc. Jacksonville, FL Bartlett Park Neighborhood Redevelopment, L.C. Tampa, FL BATCO Nominees Limited Hong Kong, PRC Bay 2 Bay Leasing LLC San Francisco, CA Bay Street Limited George Town, Grand Cayman, Cayman Is. B & B Community Housing Development, L.P. Springfield, MO BBNA Technology Holdings, Inc. Reno, NV BBI Merchant Processing Company, LLC St. Louis, MO Beechnut Holdings, Inc. Houston, TX Bellevieu Manchester Limited Partnership Baltimore, MD Belmont Heights Development Company, L.C. Tampa, FL Beta Dearborn Limited Partnership Lake Forest, IL BFS Participacoes Ltda. Sao Paulo, Brazil BHP/Johnston Square Limited Partnership Baltimore, MD Binfield Ltd. Bermuda BIRMSON, L.L.C. Wilton, CT Biscayne Apartments, Inc. Atlanta, GA BJ Services Trust 1997-1 Houston, TX BJCC, Inc. Wilton, CT Blue Ridge Finance Ltd. Bermuda Blue Ridge Investments, L.L.C. Charlotte, NC BNB Auto, Inc. St. Louis, MO Boatmen's Capital Management, Inc. St. Louis, MO Boatmen's Community Development Corporation Charlotte, NC Boatmen's Financial Services, Inc. St. Louis, MO Boatmen's Foreign Investment Corporation Charlotte, NC Boatmen's Insurance Agency, Inc. St. Louis, MO BofA Capital Management, Inc. Los Angeles, CA BofA Investment Company S.A. Buenos Aires, Argentina Brandon Crossing Partners, Ltd. Maitland, FL Brazilian Financial Services, Inc. San Francisco, CA Brazilian Tourism Holdings, Inc. San Francisco, CA Bridgewood Square Limited Partnership Belhaven, NC Broad Housing Fund XXIII, A California Limited Partnership Los Angeles, CA Broadway Apartments Limited Partnership Frederick, MD 4 Broadway Court Limited Partnership Baltimore, MD Broadway Pointe Venture, LLC Campbell, CA Bunga Jambu Ltd. Hamilton, Bermuda Bunga Orkid, Ltd. Hamilton, Bermuda Bushton BCP Investment Partnership I, L.P. Wilmington, DE Bushton TRG Investment Partnership I, L.P. Wilmington, DE Bushton TRG Investment Partnership IV, L.P. Wilmington, DE C Cabot Investments London, U.K. California/EquiCredit Corporation West Covina, CA California Equity Fund 1988 Limited Partnership Chicago, IL California Equity Fund 1989 Limited Partnership Chicago, IL California Equity Fund 1990 Limited Partnership Chicago, IL California Equity Fund 1991 Limited Partnership Chicago, IL California Equity Fund 1992 Limited Partnership Chicago, IL California Equity Fund 1993 Limited Partnership Chicago, IL California Equity Fund 1994 Limited Partnership Chicago, IL California Equity Fund 1995 Limited Partnership Chicago, IL California Equity Fund 1996 Limited Partnership Chicago, IL California Street Limited George Town, Grand Cayman, Cayman Is. CalKearn, LLC Reno, NV The Can Company, LLC Baltimore, MD Canea FSC Inc. Charlotte Amalie, St. Thomas, U.S. VI Canterbury Indiana Holdings Inc. Irving, TX Cape Canterbury, Ltd. Bermuda Capital Courts Corporation Washington, DC Capital Crossing Development Corporation Suitland, MD Capitol Information Networks, Inc. Austin, TX Carlton Court CCD, Inc. Dallas, TX Carlton Court Limited Partnership Dallas, TX Carmel Ridge Limited Partnership Henderson, NC Carolina Investments Limited London Carolina Leasing Ltd. London Carolina Mountain Holding Company Charlotte, NC Carolina Pacific, Inc. Baltimore, MD Carver State Bank Savannah, GA Cash Flow, Inc. Charlotte, NC Cathay Pacific/ NationsBank Trust I (Grantor Trust) Delaware CCC Capital Corp. of N.H. Melville, NY CCFL Subordinated Debt Fund and Company, Limited Partnership Toronto, Ontario, Canada CC Plaza M Corp. Baltimore, MD Cedar Mill, LLC Raleigh, NC Cedel International S.A. Luxembourg, Luxembourg Centrex Capital Automobile Assets, Inc. Melville, NY Centrex Capital Automobile Assets (Number Two), Inc. Melville, NY Centrex Capital Automobile Assets (Number Three), Inc. Melville, NY Centrex Capital Automobile Assets (Number Four), Inc. Melville, NY Centrex Capital Corp. Melville, NY Centrex Capital Corp. of California Melville, NY Centrex Capital Corp. of Connecticut Melville, NY Centrex Capital Corp. of Delaware Melville, NY 5 Centrex Capital Corp. of Florida Melville, NY Centrex Capital Corp. of Georgia Melville, NY Centrex Capital Corp. of Illinois Melville, NY Centrex Capital Corp. of Indiana Melville, NY Centrex Capital Corp. of MA Melville, NY Centrex Capital Corp. of Maryland Melville, NY Centrex Capital Corporation of MO Melville, NY Centrex Capital Corp. of N. Carolina Melville, NY Centrex Capital Corp. of New Jersey Melville, NY Centrex Capital Corp. of New York Melville, NY Centrex Capital Corp. of PA Melville, NY Centrex Capital Corp. of Rhode Island Melville, NY Centrex Capital Corp. of S. Carolina Melville, NY Centrex Capital Corp. of Tennessee Melville, NY Centrex Capital Corp. of Texas Melville, NY Centrex Capital Corp. of Virginia Melville, NY Centrex Capital Corp. of Wisconsin Melville, NY Centrex Resources Corp. Melville, NY CFB Holding Corporation Baltimore, MD Charlotte Gateway Village, LLC Charlotte, NC The Charlotte Affordable Housing LLC Charlotte, NC Charlotte Transit Center, Inc. Charlotte, NC Charter-Colonial Securities, Inc. Houston, TX Charter-Houston Securities, Inc. Houston, TX Chase Federal Housing Corporation Baltimore, MD ChaseFed Insurance Co. Miami, FL Chase I, Inc. Miami, FL Chase/Scarborough Group, Inc. Baltimore, MD Chepstow Holding Corporation Charlotte, NC Chepstow Real Estate Investment Trust Charlotte, NC Cherry Affordable Housing Corp. Charlotte, NC Chesapeake M Corp. Baltimore, MD Cheshire Chase Limited Partnership Charlotte, NC Chicago Equity Partners Corp. Chicago, IL Church Street Crossing Associates, L.P. Washington, DC CIC Trading, S.A. Buenos Aires, Argentina C.I.N.B. Nominees (London) Limited London, U.K. Citizens Advisory Group, Inc. Jonesboro, AR Citizens Financial Securities Corporation Fort Lauderdale, FL Citizens Financial Services, Inc. Miami, FL Citizens Real Estate, Inc. Jonesboro, AR Citizens Savings Bank & Trust Co. Nashville, TN Citizens Travel, Inc. Miami, FL Clenston Ltd. Bermuda C.N. Investments, Inc. George Town, Grand Cayman, Cayman Is. Colby Crest Partners, L.P. Seattle, WA Colonial Village Partnership, L.P. St. Louis, MO Columbia Community Investment Limited Partnership Charlotte, NC Columbia Hill Partners, L.P. Atlanta, GA Columbia Mill, I, L.P. Atlanta, GA Columbia Plaza I, L.P. Atlanta, GA Commerce Place Company Nashville, TN 6 Commonwealth National Bank Mobile, AL Community Reinvestment Fund 1997 Limited Partnership Chicago, IL Community Reinvestment Group, L.C. Fort Lauderdale, FL Companhia Internacional de Participacoes Empreendimentos S.A. Sao Paulo, Brazil Concorde Solutions, Inc. Concord, CA Consolidated Asset Management Company Oklahoma City, OK Continental Finanziaria S.P.A. Milan, Italy Continental Illinois Energy Development Corporation Houston, TX Continental Illinois Property Corporation No. 3 Chicago, IL Continental Illinois Venture Corporation Chicago, IL Continental Information & Technology Services Co. S.A. Buenos Aires, Argentina Continental Investment Company S.A. Buenos Aires, Argentina Continental Servicios Corporativos, S.A. De C.V. Mexico City, Mexico Continental Partners Group, Inc. Chicago, IL Courtcom M Corp. Baltimore, MD Courtyards Apartments, Inc. Atlanta, GA Covation LLC Atlanta, GA Coventry Village Apartments, Inc. Atlanta, GA Cranberry Equities Limited Partnership Reiserstown, MD Credit Guarantee Corporation Malaysia Berhad Petaling Taya, Malaysia CreditQuick, Inc. Charlotte, NC CreditQuick, Finance Company Charlotte, NC Crockett Funding, Inc. Dallas, TX Crockett Funding II, Inc. Dallas, TX CSC Associates, L.P. Marietta, GA C&S Premises, Inc. Atlanta, GA C&S Premises-SPE, Inc. Atlanta, GA CSF Holdings, Inc. Tampa, FL CSI Holdings, Inc. Charlotte, NC D The Dana Partnership Johannesburg, South Africa Danville Community Development Corporation Danville, VA Dartford River Crossing Limited Dartford, Kent, U.K. Davis Street Limited George Town, Grand Cayman, Cayman Is. DCRS Corporation Atlanta, GA Delowe Place, L.P. Atlanta, GA Delta FSC Eight, Inc. Havensight, St. Thomas, U.S. VI Delta FSC Nine, Inc. Havensight, St. Thomas, U.S. VI Delta FSC Ten, Inc. Havensight, St. Thomas, U.S. VI Deportes Sports Holdings Limited Georgetown, Cayman Islands Devon A Corp. Baltimore, MD DFO Partnership San Francisco, CA Diamond Shoals Finance Ltd. Bermuda Dominion Pines Partners L.P. Virginia Beach, VA DPC, Inc. Dallas, TX Dulaney Valley Corporation Baltimore, MD E Eban Incorporated Dallas, TX Eban Village I, Ltd. Dallas, TX Eban Village II, Ltd. 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Oklahoma City, OK Fountain Square Corporation of Maryland Baltimore, MD Fundo 2000 de Conversao-Capital Estangeiro Sao Paulo, Brazil Fundo 2001 de Conversao-Capital Estrangeiro Sao Paulo, Brazil G Galveston Funding, Inc. Dallas, TX Galveston Funding, Inc. II Dallas, TX Gartmore Global Partners Charlotte, NC Gatwick, Inc. Dallas, TX Gatwick, Inc. II Dallas, TX General Fidelity Insurance Company San Diego, CA General Fidelity Life Insurance Company San Diego, CA GlobalNet Communicaciones Financieras, S.A. Santiago, Chile GLM Investments, Inc. Charlotte, NC Golden Gate Participacoes Ltda. Sao Paulo, Brazil Golden West/Henry Building Limited Partnership Portland, OR Gournia, Inc. San Francisco, CA Gournia FSC Inc. Charlotte Amalie, St. Thomas, U.S. VI Gravely Credit Corporation Alpharetta, GA Greater Brownsville Community Development Corporation Brownsville, TX Greenburgh Marco, Inc. Baltimore, MD Green Park, Inc. Dallas, TX Greensboro Elderly Affordable Housing I Limited Partnership Charlotte, NC Greenside Elderly Limited Partnership Reiserstown, MD H Harbilan Corporation Charlotte, NC Harbour Directors I Limited George Town, Grand Cayman, Cayman Is. Harbour Directors II Limited George Town, Grand Cayman, Cayman Is. Harbour Nominees Ltd. George Town, Grand Cayman, Cayman Is. Harbour Secretaries I Limited George Town, Grand Cayman, Cayman Is. Harper Farm M Corp. Baltimore, MD Hatteras Finance Ltd. Bermuda Hays Plaza Apartments, L.P. Hays, KS Heathrow, Inc. Dallas, TX Heathrow, Inc. II Dallas, TX Hedges S.A. Buenos, Aires, Argentina Het Loo REIT, Co. Reno, NV HICO Park M Corp. Baltimore, MD Highlandtown Cooperative Limited Partnership Baltimore, MD High Street, Inc. Dallas, TX Hillcrest House Partnership, Ltd. Dallas, TX Historic District Redevelopment Partnership Atlanta, GA Historic East Side Neighborhood Housing L.P. Charleston, SC Honfed Financial Services Corp. 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Cheyenne, WY Springfield Equity Fund Partnership Springfield, MO SFR Trading, Inc Miami, FL Stanton Road LLC Washington, DC St. Andrew's Homes Limited Partnership Charlotte, NC St. Louis Equity Fund 1988 Partnership St. Louis, MO St. Louis Equity Fund 1991 Partnership St. Louis, MO St. Louis Equity Fund 1992 Partnership St. Louis, MO St. Louis Equity Fund 1993 Partnership St. Louis, MO St. Louis Equity Fund 1994 Partnership St. Louis, MO St. Louis Equity Fund 1995, L.L.C. St. Louis, MO St. Louis Equity Fund 1996, L.L.C. St. Louis, MO St. Louis Equity Fund 1997, L.L.C. St. Louis, MO St. Louis Equity Fund 1998, L.L.C. St. Louis, MO St. Louis Investment Properties, Inc. Tampa, FL St. Wenceslaus Limited Partnership Baltimore, MD Statewide Administrative Services, Inc. Tucker, GA Steppington/Dallas, Inc. Dallas, TX Suburban Service Corporation Charlotte, NC Sully A Corp. Baltimore, MD SunAmerica Affordable Housing Partners XXXII, a Nevada Limited Partnership Los Angeles, CA SunAmerica Affordable Housing Partners XXXIII, a Nevada Limited Partnership Los Angeles, CA SunAmerica Affordable Housing Partners XL, a Nevada Limited Partnership Los Angeles, CA Sun America Missouri Partners I, A Nevada Ltd. Partnership Los Angeles, CA Suncoast Advertising Company, Inc Jacksonville, FL Sunset Hill Corporation Baltimore, MD SunStar Acceptance Corporation Atlanta, GA SunStar Acceptance Corporation (Hawaii) Atlanta, GA Swallowtail Limited St. Helier, Jersey, Channel Islands Sweet River Investments, L.L.C. Georgetown, Cayman Islands Sweitzer M Corp. Baltimore, MD Sykesville M Corp. Baltimore, MD 20 T T-Oaks Apartments, Inc. Atlanta, GA Tabono Joint Venture Dallas, TX Tabono Partnership II, Ltd. Dallas, TX Tanah Merah Leasing Ltd. Charlotte Amalie, St. Thomas, U.S. VI Tennessee Nationalease Corporation Charlotte, NC Terry Street Redevelopment Limited Liability Company Atlanta, GA Texas Housing Opportunity Fund, Ltd. Dallas, TX Texas Housing Opportunity Fund II, LTD. Austin, TX Thasos FSC, Inc. Bridgetown, Barbados Third Coast Community Development Corporation Houston, TX Three Commercial Place Associates Norfolk, VA Third Ward Committee, LLC Charlotte, NC Third Ward Neighborhood Development Association Charlotte, NC THOF III, Ltd. Austin, TX Tidewater Partners Limited Partnership Virginia Beach, VA TIM, Inc. Charlotte, NC Timber Ridge of Immokalee, Limited Partnership Immokalee, FL Tiryns FSC, Inc. Charlotte Amalie, St. Thomas, U.S. VI Titulos Rioplatenses S.A. Montevideo, Uruguay TJN Corporation Wilton, CT Tower Commercial Realty, Inc. St. Louis, MO Tower Holdings, L.P. St. Louis, MO Townsite Plaza Development, Inc. St. Louis, MO TradeStreet Investment Associates, Inc. Charlotte, NC TransAlliance LP Bellevue, WA Transit Holding, Inc. San Francisco, CA TransPacific Finance Limited Partnership Delaware TransPacific Funding (1993), Inc. Delaware Transtex Management Company Miami, FL Trexar Financial Corp. Melville, NY TriStar Communications, Inc. San Francisco, CA Tri-Tech, L.P. Baltimore, MD Troy Street Limited Liability Company Alexandria, VA Trunoms, Limited Nassau, Bahamas Tryon Assurance Company, Ltd. Bermuda Tryon Investments, LLC Charlotte, NC Tyler International Sales, Inc. Saint Thomas, VI Tyler Trading, Inc. Dallas, TX U Ulysses Beta, Inc. San Francisco, CA Ulysses Leasing Limited St. Helier, Jersey, Channel Islands Ulysses Queensland Corporation San Francisco, CA U.N. Service Corporation Little Rock, AR Unihouse Nominees Limited St. Helier, Jersey, Channel Islands The Union Modern Mortgage Corporation Little Rock, AR Union Realty and Securities Company St. Louis, MO United Mortgage Corporation Bloomington, MN United Mortgage Holding Company Bloomington, MN 21 United States Airlease Holding, Inc. San Francisco, CA UniTrusco Corporation West Covina, CA Unity National Bank Houston, TX University Fletcher Woods, Inc. Tampa, FL University Fletcher Woods, Ltd. Tampa, FL University Heights Associates, L.P. St. Louis, MO University Park Shopping Center, LLC Charlotte, NC USA Auto Mall, Inc. Melville, NY USA Auto Mall of Florida, Inc. Melville, NY USA Auto Mall of New Jersey, Inc. Melville, NY USA Auto Mall of New York, Inc. Melville, NY Uwharrie Finance Ltd. Bermuda V Vasco da Gama Licenciamentos S.A. Rio de Janeiro, Brazil Venco, B.V. George Town, Grand Cayman, Cayman Is. Vera Cruz Redevelopment Partnership, Ltd. San Antonio, TX Vernon M Corp. Baltimore, MD Vernon Park, Inc. Dallas, TX Verrington Limited George Town, Grand Cayman, Cayman Is. Villages of La Costa Southwest, L.L.C. San Diego, CA Ville Properties, L.P. St. Louis, MO Vision Achievement Limited Hong Kong, PRC VOA Eastern Avenue Limited Partnership Lanham, MD W WAC One, Inc. Baltimore, MD Walnut Woods Limited Partnership Raleigh, NC Wallace Terrace Apartments, L.P. Charlotte, NC Wanda Finance Ltd. Bermuda Washington View (H) Corporation Baltimore, MD Washington View (NH) Corporation Baltimore, MD Washington View, Inc. Baltimore, MD Wayne Plaza L.P. St. Louis, MO Wellington Land Co., Inc. Baltimore, MD Wellington Park/Lewisville, Inc. Dallas, TX Wendover Lane, Inc. Dallas, TX West Trade, LLC Charlotte, NC Westminster Place Phase IV, L.P. St. Louis, MO Westwood Manor Development, L.P. Memphis, TN White Sands Leasing Corporation San Francisco, CA Wickliffe A Corp. Baltimore, MD William Mann Jr. Community Development Corporation Fort Worth, TX Willow Pond Limited Partnership Wilmington, NC Windmill Leasing Ltd. Charlotte Amalie, St. Thomas, U.S. VI Windmill Sands Leasing Corporation San Francisco, CA Winnebago Acceptance Corporation Apharetta, GA Wingtip Finance Limited Bermuda Wolnoms, Limited Nassau, Bahamas Woods M Corp. Baltimore, MD Worthen Community Development Corporation Little Rock, AR Worthen Development Corporation, Inc. Maumelle, AR 22 Worthen Mortgage Company Buffalo, NY Wrightbrothers Ltd. Bermuda Z Zentac Productions, Inc. San Francisco, CA Zuari Agro Chemicals Ltd. Zuarinagar, Goa, India IV CB&T Tulsa Holdings, Inc. Tulsa, OK 200 Madison Ave. Realty Corp. Memphis, TN 200 Service Corp. Miami, FL 555 California Street Partners San Francisco, CA 1989 Oakland Housing Partnership Associates Oakland, CA 1991 Oakland Housing Partnership Associates Oakland, CA 2600 Kingman Partnership, L.P. Des Moines, IA 2707 Rauschenbach Associates, L.P. St. Louis, MO 3716 Limited Partnership Des Moines, IA 693327 Ontario Limited Toronto, Ontario, Canada 23
EX-23 33 EXHIBIT 23 EXHIBIT 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectuses constituting part of the Registration Statements on Form S-3 (Nos. 333-07229; 333-15375; 333-18273; 333-43137; 333-13811; 333-51367; 33-54784; 33-49881; 33-57533; 33-63097 and 33-45498); the Registration Statements on Form S-8 (Nos. 33-45279; 33-60695; 333-02875; 333-07105; 333-20913; 333-24331; 333-58657; 333-65209; 333-69849 and 2-80406); and the Post-Effective Amendments on Form S-8 to Registration Statements on Form S-4 (Nos. 33-43125; 33-55145; 33-63351; 33-62069; 33-62208; 333-16189; 333-60553; and 333-40515) of BankAmerica Corporation of our report dated January 15, 1999 appearing on page 51 of this Form 10-K. /s/PricewaterhouseCoopers LLP Charlotte, North Carolina March 22, 1999 EX-24 34 EXHIBIT 24(A) EXHIBIT 24(a) POWER OF ATTORNEY ----------------- KNOW ALL PERSONS BY THESE PRESENTS, that each of BankAmerica Corporation and the several undersigned officers and directors whose signatures appear below, hereby makes, constitutes and appoints Charles M. Berger, James W. Kiser and Paul J. Polking, and each of them acting individually, its, his and her true and lawful attorneys with power to act without any other and with full power of substitution, to prepare, execute, deliver and file in its, his and her name and on its, his and her behalf, and in each of the undersigned officer's and director's capacity or capacities as shown below, an Annual Report on Form 10-K for the year ended December 31, 1998, and all exhibits thereto and all documents in support thereof or supplemental thereto, and any and all amendments or supplements to the foregoing, hereby ratifying and confirming all acts and things which said attorneys or attorney might do or cause to be done by virtue hereof. IN WITNESS WHEREOF, BankAmerica Corporation has caused this power of attorney to be signed on its behalf, and each of the undersigned officers and directors, in the capacity or capacities noted, has hereunto set his or her hand as of the date indicated below. BANKAMERICA CORPORATION By: /s/ Hugh L. McColl, Jr. ------------------------- (Hugh L. McColl, Jr.) Chairman and Chief Executive Officer Dated: January 27, 1999
Signature Title Date - --------- ----- ---- /s/ Hugh L. McColl, Jr. Chairman of the Board, Chief January 27, 1999 - --------------------------- Executive Officer and Director (Hugh L. McColl, Jr.) (Principal Executive Officer) /s/ James H. Hance, Jr. Vice Chairman and January 27, 1999 - ----------------------------- Chief Financial Officer (James H. Hance, Jr.) (Principal Financial Officer) /s/ Marc D. Oken Executive Vice President and January 27, 1999 - ----------------------------- Principal Financial Executive (Marc D. Oken) (Principal Accounting Officer) /s/ Charles W. Coker Director January 27, 1999 - ----------------------------- (Charles W. Coker) /s/ Timm F. Crull Director January 27, 1999 - ----------------------------- (Timm F. Crull) /s/ Alan T. Dickson Director January 27, 1999 - ----------------------------- (Alan T. Dickson) /s/ Kathleen Feldstein Director January 27, 1999 - ----------------------------- (Kathleen Feldstein) /s/ Paul Fulton Director January 27, 1999 - ----------------------------- (Paul Fulton) /s/ Donald E. Guinn Director January 27, 1999 - ----------------------------- (Donald E. Guinn) /s/ C. Ray Holman Director January 27, 1999 - ----------------------------- (C. Ray Holman) /s/ W. W. Johnson Director January 27, 1999 - ----------------------------- (W. W. Johnson) /s/ Walter E. Massey Director January 27, 1999 - ----------------------------- (Walter E. Massey) /s/ Richard M. Rosenberg Director January 27, 1999 - ----------------------------- (Richard M. Rosenberg) /s/ O. Temple Sloan, Jr. Director January 27, 1999 - ----------------------------- (O. Temple Sloan, Jr.) /s/ Meredith R. Spangler Director January 27, 1999 - ----------------------------- (Meredith R. Spangler) /s/ A. Michael Spence Director January 27, 1999 - ----------------------------- (A. Michael Spence) -2- /s/ Ronald Townsend Director January 27, 1999 - ---------------------- (Ronald Townsend) /s/ Solomon D. Trujillo Director January 27, 1999 - ----------------------------- (Solomon D. Trujillo) /s/ Jackie M. Ward Director January 27, 1999 - ----------------------------- (Jackie M. Ward) /s/ Virgil R. Williams Director January 27, 1999 - ----------------------------- (Virgil R. Williams) /s/ Shirley Young Director January 27, 1999 - ----------------------------- (Shirley Young) -3-
EX-24 35 EXHIBIT 24(B) EXHIBIT 24(b) BANKAMERICA CORPORATION RESOLUTIONS OF THE BOARD OF DIRECTORS JANUARY 27, 1999 ------------------- ANNUAL REPORT ON FORM 10-K ------------------------------ WHEREAS, officers of BankAmerica Corporation (the "Corporation") have made presentations to the Board of Directors regarding the Corporation's financial results for the year ended December 31, 1998; and WHEREAS, the Board has had adequate opportunity to review and comment on such results; NOW, THEREFORE, BE IT: RESOLVED, that the proper officers of the Corporation be, and they hereby are, authorized and empowered on behalf of the Corporation to prepare, execute, deliver and file the Corporation's Annual Report on Form 10-K for the year ended December 31, 1998 (the "Form 10-K"), based upon the information presented to and considered at this meeting, in such form and with such content and attachment of exhibits as the signing officers shall approve, their approval to be conclusively evidenced by their signature thereof; and be it FURTHER RESOLVED, that the proper officers of the Corporation be, and they hereby are, authorized and empowered on behalf of the Corporation to execute the Form 10-K and file it with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, and with such other governmental agencies or instrumentalities as such officers deem necessary or desirable, and to prepare, execute, deliver and file any amendment or amendments to the Form 10-K, as they may deem necessary or appropriate; and be it FURTHER RESOLVED, that Charles M. Berger, James W. Kiser and Paul J. Polking be, and each of them with full power to act without the other hereby is, authorized and empowered to prepare, execute, deliver and file the Form 10-K and any amendment or amendments thereto on behalf of and as attorneys for the Corporation and on behalf of and as attorneys for any of the following: the principle executive officer, the principal financial officer, the principal accounting officer, and any other officer of the Corporation; and be it FURTHER RESOLVED, that, for the purposes of these resolutions, the "proper officers" of the Corporation are the members of the Policy Committee, the Secretary, any Executive Vice President, and any Senior Vice President, and that each of these officers is authorized, empowered and directed, in the name and on behalf of the Corporation to execute and deliver or cause to be executed and delivered any and all agreements, amendments, certificates, applications, notices, letters, or other documents and to do or cause to be done any and all such other acts and things as, in the opinion of any such officer, may be necessary, appropriate or desirable in order to enable the Corporation fully and promptly to carry out the intent of the foregoing resolutions, and any such action taken by such officers shall be conclusive evidence of their authority. CERTIFICATE OF SECRETARY I, ALLISON L. GILLIAM, Assistant Secretary of BankAmerica Corporation, a corporation duly organized and existing under the laws of the State of Delaware, do hereby certify that the foregoing is a true and correct copy of resolutions duly adopted by a majority of the entire Board of Directors of the corporation at a meeting of the Board of Directors held January 27, 1999, at which meeting a quorum was present and acted throughout and that the resolutions are in full force and effect and have not been amended or rescinded as of the date hereof. IN WITNESS WHEREOF, I have hereupon set my hand and affixed the seal of the corporation this 22nd day of March 1999. (CORPORATE SEAL) /s/ Allison L. Gilliam ------------------------------ (Allison L. Gilliam) Assistant Secretary EX-27 36 FDS -- BANKAMERICA CORPORATION AND SUBSIDIARIES
9 The schedule contains summary information extracted from the December 31, 1998 Form 10-K for BankAmerica Corporation and is qualified in its entirety by reference to such financial statements. 0000070858 BankAmerica Corporation and Subsidiaries YEAR DEC-31-1998 JAN-01-1998 DEC-31-1998 28,277 6,750 27,146 39,602 78,590 1,997 1,853 357,328 (7,122) 617,679 357,260 113,204 55,389 45,888 0 83 14,837 31,018 617,679 28,331 4,502 5,755 38,588 10,811 20,290 18,298 2,920 1,017 18,741 8,048 8,048 0 0 5,165 2.97 2.90 3.69 2,482 611 0 0 6,778 3,050 583 7,122 4,334 1,353 1,435
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