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<SEC-DOCUMENT>0000950168-02-000551.txt : 20020415
<SEC-HEADER>0000950168-02-000551.hdr.sgml : 20020415
ACCESSION NUMBER: 0000950168-02-000551
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 20
CONFORMED PERIOD OF REPORT: 20011231
FILED AS OF DATE: 20020327
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: BANK OF AMERICA 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: 1934 Act
SEC FILE NUMBER: 001-06523
FILM NUMBER: 02589336
BUSINESS ADDRESS:
STREET 1: NATIONSBANK CORPORATE CENTER
STREET 2: 100 N TRYON ST
CITY: CHARLOTTE
STATE: NC
ZIP: 28255
BUSINESS PHONE: 8882793457
MAIL ADDRESS:
STREET 1: NATIONALSBANK CORPORATE CENTER
STREET 2: NC1007 19 04
CITY: CHARLOTTE
STATE: NC
ZIP: 28255
FORMER COMPANY:
FORMER CONFORMED NAME: NCNB CORP
DATE OF NAME CHANGE: 19920107
FORMER COMPANY:
FORMER CONFORMED NAME: NATIONSBANK CORP
DATE OF NAME CHANGE: 19920703
FORMER COMPANY:
FORMER CONFORMED NAME: BANKAMERICA CORP/DE/
DATE OF NAME CHANGE: 19981022
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>d10k.txt
<DESCRIPTION>BANK OF AMERICA
<TEXT>
<PAGE>
================================================================================
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, 2001 - Commission File Number 1-6523
-----------------
Bank of America 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)
1.800.299.2265
- ------------------------------------------
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<CAPTION>
Title of each class Name of each exchange on which registered
<S> <C>
Common Stock New York Stock Exchange
London Stock Exchange
Pacific Stock Exchange
Tokyo Stock Exchange
7 3/4% Debentures, due 2002 American Stock Exchange
S&P 500 Index(R) Linked Notes, due 2003 American Stock Exchange
DIJA/SM/ Return Linked Notes, due 2005 American Stock Exchange
8 1/2% Subordinated Notes, due 2007 New York Stock Exchange
10 7/8% Subordinated Notes, due 2003 New York Stock Exchange
.25% Senior Basket-Indexed Notes, due 2006 New York Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of the Securities Exchange Act of 1934
during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No __
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or in any amendment to
this Form 10-K. [_]
The aggregate market value of the registrant's common stock ("Common Stock")
held by non-affiliates is approximately $101,953,922,043 (based on the March
14, 2002, closing price of Common Stock of $67.00 per share). As of March 14,
2002, there were 1,541,020,192 shares of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<CAPTION>
Document of the Registrant Form 10-K Reference Locations
<S> <C>
Portions of the 2001 Annual Report to Stockholders PARTS I, II and IV
Portions of the 2002 Proxy Statement PART III
</TABLE>
================================================================================
<PAGE>
PART I
Item 1. BUSINESS
General
Bank of America Corporation (the "Corporation") is a Delaware corporation, a
bank holding company and a financial holding company under the
Gramm-Leach-Bliley Act. 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 nonbanking
subsidiaries, the Corporation provides a diversified range of banking and
nonbanking 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 (Oregon and Washington) and the West
(California, Idaho and Nevada) regions of the United States and in selected
international markets. 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 7.9 percent year-to-year
through the third quarter of 2001, compared to growth of 6.4 percent in the
rest of the United States. In addition, the population in these states as a
whole rose an estimated 3.6 percent between 2000 and 2001, compared to growth
of 2.7 percent in the rest of the United States. Through December 2001, the
average rate of unemployment in these states was 5.1 percent, ranging from
Virginia's 3.0 percent to Oregon's 7.3 percent, compared to a rate of
unemployment of 4.8 percent in the rest of the United States. These states lost
0.2 million jobs in 2001, 0.5 percent below year-end 2000, compared to 0.4
percent below year-end 2000 in the rest of the United States. The number of
housing permits authorized remained at historically high levels during 2001 but
was down 1.6 percent from record high activity in 1999.
The Corporation has the leading bank deposit market share position in
California, Florida, Maryland, North Carolina and Washington. In addition, the
Corporation ranks second in terms of bank deposit market share in Arizona,
Kansas, Missouri, Nevada, New Mexico, South Carolina, Texas and the District of
Columbia; third in Arkansas, Georgia and Virginia; fourth in Idaho, Oklahoma
and Oregon; fifth in Tennessee; twelfth in Iowa; and thirteenth in Illinois.
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 financial 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 or lines of businesses. As a general rule, the
Corporation publicly announces any material acquisitions or dispositions when a
definitive agreement has been reached.
Government Supervision and Regulation
The following discussion describes elements of an extensive regulatory
framework applicable to bank holding companies, financial holding companies and
banks and specific information about the Corporation and its subsidiaries.
Federal regulation of banks, bank holding companies and financial holding
companies is intended primarily for the protection of depositors and the Bank
Insurance Fund rather than for the protection of stockholders and creditors.
General
As a registered bank holding company and financial holding company, the
Corporation is subject to the supervision of, and regular inspection by, the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board").
The Banks are organized predominantly as national banking associations, which
are subject to regulation, supervision and examination by the Office of the
Comptroller of the Currency (the "Comptroller" or "OCC"), the Federal Deposit
Insurance Corporation (the "FDIC"), the Federal Reserve
1
<PAGE>
Board 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 to stockholders.
A financial holding company, and the companies under its control, are
permitted to engage in activities considered "financial in nature" as defined
by the Gramm-Leach-Bliley Act and Federal Reserve Board interpretations
(including, without limitation, insurance and securities activities), and
therefore may engage in a broader range of activities than permitted for bank
holding companies and their subsidiaries. A financial holding company may
engage directly or indirectly in activities considered financial in nature,
either de novo or by acquisition, provided the financial holding company gives
the Federal Reserve Board after-the-fact notice of the new activities. The
Gramm-Leach-Bliley Act also permits national banks, such as the Banks, to
engage in activities considered financial in nature through a financial
subsidiary, subject to certain conditions and limitations and with the approval
of the Comptroller.
Interstate Banking
Bank holding companies (including bank holding companies that also are
financial holding companies) also are required to obtain the prior approval of
the Federal Reserve Board before acquiring more than five 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, after 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 or such lesser or greater amount
set by state law of such deposits in that state.
Subject to certain restrictions, the Interstate Banking and Branching Act
also authorizes banks to merge across state lines to create interstate
branches. The Interstate Banking and Branching Act also permits a bank to open
new branches in a state in which it does not already have banking operations if
such state enacts a law permitting de novo branching. The Corporation has
consolidated its retail subsidiary banks into a single interstate bank (Bank of
America, N.A.), headquartered in Charlotte, North Carolina, with full service
branch offices in 21 states and the District of Columbia. In addition, the
Corporation operates a limited purpose nationally chartered credit card bank
(Bank of America, N.A. (USA)), headquartered in Phoenix, Arizona, and three
nationally chartered bankers' banks: Bank of America Oregon, N.A.,
headquartered in Portland, Oregon; Bank of America California, N.A.,
headquartered in Walnut Creek, California; and Bank of America Georgia, N.A.,
headquartered in Atlanta, Georgia.
Changes in Regulations
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. The likelihood and timing of any 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 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,
2
<PAGE>
has an original maturity of at least two years, is not redeemable before
maturity without prior approval by the Federal Reserve Board 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 the Corporation's
qualifying total 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 four
percent and the minimum total capital ratio is eight percent. The Corporation's
Tier 1 and total risk-based capital ratios under these guidelines at December
31, 2001 were 8.30 percent and 12.67 percent, respectively. At December 31,
2001, 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 100 to 200 basis
points above three percent, banking organizations are required to maintain a
ratio of at least five percent to be classified as well capitalized. The
Corporation's leverage ratio at December 31, 2001 was 6.56 percent. 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 five 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 risk-based capital ratio of at least six percent, a total
risk-based capital ratio of at least ten percent and a leverage ratio of at
least five percent and not be subject to a capital directive order. Under these
guidelines, each of the Banks was considered well capitalized as of December
31, 2001.
Regulators also must take into consideration (a) concentrations of credit
risk; (b) 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 (c) 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. This evaluation will be made as a part of
the institution's regular safety and soundness examination. In addition, the
Corporation, and any Bank with significant trading activity, must incorporate a
measure for market risk in their regulatory capital calculations.
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, and funds used to pay principal and interest
on its indebtedness, 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
3
<PAGE>
is authorized to determine under certain circumstances relating to the
financial condition of a bank or bank holding company that the payment of
dividends would be an unsafe or unsound practice and to prohibit payment
thereof.
In addition, 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 subsidiary 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 business segments
(Consumer and Commercial Banking, Asset Management, Global Corporate and
Investment Banking, and Equity Investments) engage are highly competitive.
Generally, the lines of activity and markets served involve competition with
other banks, thrifts, credit unions and other nonbank financial institutions,
such as investment banking firms, investment advisory firms, brokerage firms,
investment companies and insurance companies. The Corporation also competes
against banks and thrifts owned by nonregulated diversified corporations and
other entities which offer financial services, located both domestically and
internationally and through alternative delivery channels such as the Internet.
The methods of competition center around various factors, such as customer
services, interest rates on loans and deposits, lending limits and customer
convenience, such as location of offices.
The commercial banking business in the various local markets served by the
Corporation's business segments is highly competitive. The four business
segments compete with other 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 nonbank financial organizations, some of which are larger than
certain of the Corporation's nonbanking subsidiaries and the Banks. In its
consumer lending operations, the competitors of the business segments include
other banks, thrifts, credit unions, finance companies and other nonbank
organizations offering financial services. In the investment banking,
investment advisory and brokerage business, the Corporation's nonbanking
subsidiaries compete with other banking and investment banking firms,
investment advisory firms, brokerage firms, investment companies, other
organizations offering similar services and other investment alternatives
available to investors. The Corporation's mortgage banking units compete with
banks, thrifts, government agencies, mortgage brokers and other nonbank
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 insurance agents, thrifts,
financial counselors and other fiduciaries for personal trust business. The
Corporation and its four business segments 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 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, 2001, there were 142,670 full-time equivalent employees
within the Corporation and its subsidiaries. Of the foregoing employees, 85,147
were employed within Consumer and Commercial
4
<PAGE>
Banking, 6,214 were employed within Asset Management, 7,623 were employed
within Global Corporate and Investment Banking and 226 were employed within
Equity Investments. The remainder were employed elsewhere within the
Corporation and its subsidiaries.
None of the domestic employees within the Corporation is subject to a
collective bargaining agreement. Management considers its employee relations to
be good.
Additional Information
The following information set forth in the Corporation's 2001 Annual Report
to Stockholders (the "2001 Annual Report") is incorporated herein by reference:
Business Segment Operations (pages 36 through 43, pages 46 through 48 and pages
115 through 117), Net Interest Income (pages 43 through 46), Securities (page
50, page 84 and pages 89 through 90), Loans and Leases (page 49, pages 50
through 51, pages 54 through 64, pages 84 through 85 and pages 94 through 95),
Deposits (page 51 and page 98), Short-Term Borrowings (pages 51 through 52 and
pages 99 through 100), Trading Liabilities (page 91), Market Risk Management
(pages 64 through 70) and Liquidity Risk Management (page 70).
Item 2. PROPERTIES
As of December 31, 2001, the principal offices of the Corporation and each
of its 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 530,000 square feet and
leases approximately 620,000 square feet to third parties at market rates,
which represents substantially all of the space in this facility. In addition
to this facility, the Corporation also leases or owns a significant amount of
space worldwide. As of December 31, 2001, the Corporation and its subsidiaries
owned or leased approximately 11,071 locations in 40 states, the District of
Columbia and 33 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, claims for
substantial monetary 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.
In view of the inherent difficulty of predicting the outcome of such
matters, the Corporation cannot state what the eventual outcome of pending
matters will be. However, based on current knowledge, management does not
believe that liabilities arising from pending litigation, if any, will have a
material adverse effect on the consolidated financial position, operations or
liquidity of the Corporation.
The Corporation and certain present and former officers and directors have
been named as defendants in a number of actions filed in several federal courts
that have been consolidated for pretrial purposes before a Missouri federal
court. The amended complaint in the consolidated actions alleges, among other
things, that the defendants failed to disclose material facts about the losses
of the former BankAmerica Corporation ("BankAmerica") relating to D.E. Shaw
Securities Group, L.P. ("D.E. Shaw") and related entities until mid-October
1998, in violation of various provisions of federal and state laws. The amended
complaint also alleges that the proxy statement-prospectus of August 4, 1998
(the "Proxy Statement"), falsely stated that the merger between NationsBank
Corporation ("NationsBank") and BankAmerica would be one of equals and alleges
a scheme to have NationsBank gain control over the newly merged entity. The
Missouri federal court has certified classes (the "Classes") consisting
generally of persons who were stockholders of NationsBank or BankAmerica on
September 30, 1998, or were entitled to vote on the merger, or who purchased or
acquired securities of the Corporation or its predecessors between August 4,
1998 and October 13, 1998. The amended complaint substantially survived a
motion to dismiss. Discovery has been completed. A former NationsBank
stockholder who opted out of the NationsBank shareholder Class has commenced an
action in the Missouri federal court (the "Opt-Out Action") asserting claims
substantially similar to the claims related to D.E. Shaw set forth in the
consolidated action. Similar class actions have been filed in California state
courts. Plaintiffs in one such class action, brought on behalf of California
residents who
5
<PAGE>
owned BankAmerica stock, claim that the Proxy Statement falsely stated that the
merger would be one of equals. Plaintiffs in that matter have recently been
included in the federal action as part of the BankAmerica shareholder Class and
will not be proceeding in California state court. Other California state court
class actions (the "Other Actions") were consolidated, but have not been
certified as class actions. The Missouri federal court enjoined prosecution of
those consolidated cases as a class action. The plaintiffs who were enjoined
appealed to the United States Court of Appeals for the Eighth Circuit, which
upheld the district court's injunction. Those plaintiffs have sought review in
the United States Supreme Court.
Subsequent to December 31, 2001, the Corporation announced that it had
reached an agreement in principle to settle the Class actions. The proposed
settlement provides for payment of $333 million to the NationsBank Classes and
$157 million to the BankAmerica Classes. The proposed settlement is subject to
a number of conditions, including judicial approval. The Corporation agreed to
the proposed settlement without admitting liability. The proposed settlement
will be paid from existing litigation reserves and insurance and will not have
an impact on the Corporation's financial results.
On July 30, 2001, the Securities and Exchange Commission issued a
cease-and-desist order finding violations of Section 13(a) of the Securities
Exchange Act of 1934 and Rules 13a-1, 13a-11, 13a-13 and 12b-20 promulgated
thereunder, with respect to BankAmerica's accounting for, and the disclosures
relating to, the D.E. Shaw relationship. The Corporation consented to the order
without admitting or denying the findings. In the Matter of BankAmerica Corp.,
Exch. Act Rel. No. 44613, Acctg & Audit. Enf. Rel. No. 1249, Admin. Proc. No.
3-10541.
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, 2001.
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 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.
Amy Woods Brinkley, age 46, Chairman, Credit Policy and Deputy Corporate
Risk Management Executive. Ms. Brinkley was named to her present position in
July 2001. From August 1999 to July 2001, she served as President, Consumer
Products; and from 1993 to August 1999, she served as Marketing Group
Executive. She first became an officer in 1979. She also serves as Chairman,
Credit Policy, Deputy Corporate Risk Management Executive and a director of
Bank of America, N.A. Upon the retirement of Mr. Vandiver on March 31, 2002,
Ms. Brinkley will become Chief Risk Officer.
Edward J. Brown III, age 53, President, Global Corporate and Investment
Banking. Mr. Brown was named to his present position in August 2000. From
September 1998 to August 2000, he served as President, Global Capital Raising
and Global Capital Markets; from June 1997 to September 1998, he served as
President, Global Finance; and from 1988 to June 1997, he served as President,
Corporate Banking. He first became an officer in 1974. He also serves as
President, Global Corporate and Investment Banking and a director of Bank of
America, N.A.
Richard M. DeMartini, age 49, President, Asset Management. Mr. DeMartini was
named to his present position in February 2001. From January 1999 to February
2001, he served as Chairman, International Private Client Group, Morgan Stanley
Dean Witter; and from March 1997 to January 1999, he served as President
Individual Asset Management Group, Morgan Stanley Dean Witter. From March 1996
to January 1997, he served as President, Dean Witter Capital, Dean Witter & Co.
He first became an officer in February 2001. He also serves as President, Asset
Management of Bank of America, N.A.
Barbara J. Desoer, age 49, President, Consumer Products. Ms. Desoer was
named to her present position in July 2001. From September 1999 to July 2001,
she served as Director of Marketing; from May 1999 to September 1999, she
served as Banking Group President, California Retail Bank; and from December
1996 to May 1999, she served as Regional Executive, California Retail Bank. She
first became an officer in 1977. She also serves as President, Consumer
Products and a director of Bank of America, N.A.
6
<PAGE>
James H. Hance, Jr., age 57, 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
a director of the Corporation and as Vice Chairman and a director of Bank of
America, N.A.
Kenneth D. Lewis, age 54, Chairman, President and Chief Executive Officer.
Mr. Lewis was named Chairman and Chief Executive Officer in April 2001 and
President in January 1999. From October 1998 to January 1999, he served as
President, Consumer and Commercial Banking; from 1993 to October 1998, he
served as President; and from October 1999 to April 2001, he served as Chief
Operating Officer. He first became an officer in 1971. Mr. Lewis also serves as
a director of the Corporation and as Chairman, President, Chief Executive
Officer and a director of Bank of America, N.A.
R. Eugene Taylor, age 54, President, Consumer and Commercial Banking. Mr.
Taylor was named to his present position in June 2000. From February 2000 to
June 2000, he served as President, Central Region; from October 1998 to June
2000, he served as President, West Region; from December 1997 to October 1998,
he served as President, Florida; and from 1993 to December 1997, he served as
President, Mid-Atlantic. He first became an officer in 1970. He also serves as
President, Consumer and Commercial Banking and a director of Bank of America,
N.A.
F. William Vandiver, Jr., age 59, 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; and from January
1996 to June 1997, he served as President, Global Finance. He first became an
officer in 1968. He also serves as Vice Chairman and a director of Bank of
America, N.A. Mr. Vandiver will retire March 31, 2002.
7
<PAGE>
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 for the periods indicated:
<TABLE>
<CAPTION>
Quarter High Low
<S> <C> <C> <C>
------ ------ ------
2000 first $55.19 $42.31
second 61.00 42.98
third 57.63 43.63
fourth 54.75 36.31
2001 first 55.94 45.00
second 62.18 48.65
third 65.54 50.25
fourth 64.99 52.10
</TABLE>
As of March 1, 2002, there were 244,009 record holders of Common Stock.
During 2000 and 2001, the Corporation paid dividends on the Common Stock on a
quarterly basis. The following table sets forth dividends declared per share of
Common Stock for the periods indicated:
<TABLE>
<CAPTION>
Quarter Dividend
------- --------
<S> <C> <C>
2000 first $.50
second .50
third .50
fourth .56
2001 first .56
second .56
third .56
fourth .60
</TABLE>
For additional information regarding the Corporation's ability to pay
dividends, see "Government Supervision and Regulation - Distributions". In
addition, Note 14 (page 106) of the Notes to Consolidated Financial Statements
in the 2001 Annual Report is incorporated herein by reference.
Item 6. SELECTED FINANCIAL DATA
The information set forth in Table 1 (page 35) and Table 25 (page 71) of the
2001 Annual Report is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information set forth under the captions "Management's Discussion and
Analysis of Results of Operations and Financial Condition" (pages 33 through
75) and "Report of Management" (page 76) in the 2001 Annual Report is
incorporated herein by reference.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information set forth under the caption "Management's Discussion and
Analysis of Results of Operations and Financial Condition-Market Risk
Management" (pages 64 through 70) in the 2001 Annual Report is incorporated
herein by reference.
8
<PAGE>
Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following information set forth in the 2001 Annual Report is
incorporated herein by reference: the Consolidated Financial Statements and
Notes to Consolidated Financial Statements of Bank of America Corporation and
Subsidiaries, together with the report thereon of PricewaterhouseCoopers
LLP dated January 18, 2002 (pages 77 through 119).
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 included under the following captions in the Corporation's proxy
statement relating to its 2002 annual meeting of stockholders (the "2002 Proxy
Statement") is incorporated herein by reference:
. "The Nominees" on pages 2 through 5;
. "Section 16(a) Beneficial Ownership Reporting Compliance" on page 8; and
. "Special Compensation Arrangements-Employment Agreements with Certain
Executive Officers" and "- Consulting Agreement with Mr. McColl" on pages 14
and 15.
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 included under the following captions in the 2002 Proxy
Statement is incorporated herein by reference:
. "Director Compensation" on pages 8 and 9;
. "Executive Compensation" on pages 9 through 14;
. "Special Compensation Arrangements" on pages 14 and 15;
. "Compensation Committee Interlocks and Insider Participation" on page 20; and
. "Certain Transactions" on page 20.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information included under the following caption in the 2002 Proxy Statement
is incorporated herein by reference:.
. "Stock Ownership" on pages 6 through 8.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information included under the following captions in the 2002 Proxy
Statement is incorporated herein by reference:
. "Compensation Committee Interlocks and Insider Participation" on page 20; and
. "Certain Transactions" on page 20.
9
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
<TABLE>
<C> <S> <C>
a. The following documents are filed as part of this report:
Pages in
Annual
Report*
--------
(1) Financial Statements:
Report of Independent Accountants...................................................... 77
Consolidated Statement of Income for the years ended December 31, 2001, 2000 and
1999................................................................................. 78
Consolidated Balance Sheet at December 31, 2001 and 2000............................... 79
Consolidated Statement of Changes in Shareholders' Equity for the years ended
December 31, 2001, 2000 and 1999..................................................... 80
Consolidated Statement of Cash Flows for the years ended December 31, 2001, 2000 and
1999................................................................................. 81
Notes to Consolidated Financial Statements............................................. 82-119
*Incorporated by reference from the indicated pages of the 2001 Annual Report.
(2) Schedules:
None
b. The following reports on Form 8-K were filed by the registrant during the quarter ended
December 31, 2001:
Current Report on Form 8-K dated October 3, 2001 and filed October 10, 2001, Items 5 and
7.
Current Report on Form 8-K dated and filed October 15, 2001, Items 5, 7 and 9.
Current Report on Form 8-K dated and filed November 28, 2001, Item 7.
Current Report on Form 8-K dated December 6, 2001 and filed December 14, 2001, 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).
</TABLE>
With the exception of the information expressly incorporated herein by
reference, the 2001 Annual Report and the 2002 Proxy Statement are not to be
deemed filed as part of this Annual Report on Form 10-K.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Date: March 27, 2002
BANK OF AMERICA CORPORATION
By: */s/ KENNETH D. LEWIS
-----------------------------
Kenneth D. Lewis
Chairman, President 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/ KENNETH D. LEWIS Chairman, President, Chief March 27, 2002
- ----------------------------- Executive Officer and
Kenneth D. Lewis Director (Principal
Executive Officer)
*/s/ JAMES H. HANCE, JR. Vice Chairman, Chief March 27, 2002
- ----------------------------- Financial Officer and
James H. Hance, Jr. Director (Principal
Financial Officer)
*/s/ MARC D. OKEN Executive Vice President and March 27, 2002
- ----------------------------- Principal Financial
Marc D. Oken Executive (Principal
Accounting Officer)
*/s/ JOHN R. BELK Director March 27, 2002
- -----------------------------
John R. Belk
*/s/ CHARLES W. COKER Director March 27, 2002
- -----------------------------
Charles W. Coker
*/s/ FRANK DOWD, IV Director March 27, 2002
- -----------------------------
Frank Dowd, IV
*/s/ KATHLEEN F. FELDSTEIN Director March 27, 2002
- -----------------------------
Kathleen F. Feldstein
*/s/ PAUL FULTON Director March 27, 2002
- -----------------------------
Paul Fulton
*/s/ DONALD E. GUINN Director March 27, 2002
- -----------------------------
Donald E. Guinn
*/s/ C. RAY HOLMAN Director March 27, 2002
- -----------------------------
C. Ray Holman
*/s/ WALTER E. MASSEY Director March 27, 2002
- -----------------------------
Walter E. Massey
11
<PAGE>
Signature Title Date
--------- ----- ----
*/s/ C. STEVEN MCMILLAN Director March 27, 2002
- -----------------------------
C. Steven McMillan
*/s/ PATRICIA E. MITCHELL Director March 27, 2002
- -----------------------------
Patricia E. Mitchell
*/s/ O. TEMPLE SLOAN, JR. Director March 27, 2002
- -----------------------------
O. Temple Sloan, Jr.
*/s/ MEREDITH R. SPANGLER Director March 27, 2002
- -----------------------------
Meredith R. Spangler
*/s/ RONALD TOWNSEND Director March 27, 2002
- -----------------------------
Ronald Townsend
- ----------------------------- Director March , 2002
Peter V. Ueberroth
*/s/ JACKIE M. WARD Director March 27, 2002
- -----------------------------
Jackie M. Ward
*/s/ VIRGIL R. WILLIAMS Director March 27, 2002
- -----------------------------
Virgil R. Williams
*By: /s/ CHARLES M. BERGER
- -----------------------------
Charles M. Berger
Attorney-in-Fact
12
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- --------------------------------------------------------------------------------
<C> <S>
3(a) Amended and Restated Certificate of Incorporation of registrant, as in effect
on the date hereof, incorporated by reference to Exhibit 99.1 of registrant's
Current Report on Form 8-K filed May 7, 1999.
(b) Amended and Restated Bylaws of registrant, as in effect on the date hereof,
incorporated by reference to Exhibit 99.2 of registrant's Current Report on
Form 8-K filed May 7, 1999.
4(a) Specimen certificate of registrant's Common Stock, incorporated by reference
to Exhibit 4.13 of registrant's Registration No. 333-83503.
(b) Specimen certificate of registrant's ESOP Convertible Preferred Stock, Series
C, incorporated by reference to Exhibit 4(c) of registrant's 1991 Annual
Report on Form 10-K (the "1991 10-K").
(c) Specimen certificate of registrant's 7% Cumulative Redeemable Preferred
Stock, Series B, incorporated by reference to Exhibit 4(c) of registrant's 1998
Annual Report on Form 10-K (the "1998 10-K").
(d) Indenture dated as of August 1, 1982 between registrant (successor to
NationsBank Corporation, formerly known as NCNB Corporation) and U.S.
Bank Trust National Association (successor to 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; First Supplemental Indenture thereto dated as of
September 18, 1998, incorporated by reference to Exhibit 4(e) of the 1998 10-
K; and Second Supplemental Indenture thereto dated as of July 16, 2001
between registrant, U.S. Bank Trust National Association, as Prior Trustee,
and the Bank of New York, as Successor Trustee.
(e) Indenture dated as of September 1, 1989 between registrant (successor to
NationsBank Corporation, formerly known as NCNB Corporation) 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; 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, incorporated by reference to
Exhibit 4(f) of the 1998 10-K.
(f) Indenture dated as of November 1, 1992 between registrant (successor to
NationsBank Corporation) 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-K dated March 1, 1993; First Supplemental Indenture thereto
dated as of July 1, 1993 pursuant to which registrant issued its Subordinated
Medium-Term Notes; 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, incorporated by
reference to Exhibit 4(i) of the 1998 10-K.
(g) Indenture dated as of January 1, 1995 between registrant (successor to
NationsBank Corporation) and U.S. Bank Trust National Association
(successor to BankAmerica National Trust Company), pursuant to which
registrant issued its 7% Senior Notes, due 2003; its 6 3/8% Senior Notes, due
2005; its 6 1/8% Senior Notes, due 2004; its 5 7/8% Senior Notes, due 2009; its
6 5/8% Senior Notes, due 2004; its 7 7/8% Senior Notes, due 2005; its 7 1/8%
Senior Notes, due 2006; its 4 3/4% Senior Notes, due 2006; its 5 1/4% Senior
Notes, due 2007; and its Senior Medium-Term Notes, Series D, E, F, G, H
and I, incorporated by reference to Exhibit 4.1 of registrant's Registration No.
33-57533; 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; and Second Supplemental Indenture
thereto dated as of May 7, 2000 between registrant, U.S. Bank Trust
National Association, as Prior Trustee, and the Bank of New York, as
Successor Trustee, incorporated by reference to Exhibit 4.4 of registrant's
Current Report on Form 8-K dated June 5, 2001.
</TABLE>
E-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -------------------------------------------------------------------------------
<C> <S>
(h) Indenture dated as of January 1, 1995 between registrant (successor to
NationsBank Corporation) 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 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; its 7.80% Subordinated Notes due 2010; its 7.40% Subordinated
Notes, due 2011; and its Subordinated Medium-Term Notes, Series D, E, F,
G, H and I, 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.
(i) Amended and Restated Agency Agreement dated as of July 27, 2001 between
registrant, Bank of America, N.A., The Chase Manhattan Bank, London
Branch, and The Chase Manhattan Bank Luxembourg S.A.
(j) Issuing and Paying Agency Agreement dated as of August 1, 2000 between
Bank of America, N.A., as Issuer, and Bankers Trust Company, as Issuing
and Paying Agent, incorporated by reference to Exhibit 4(m) of registrant's
2000 Annual Report on Form 10-K (the ''2000 10-K").
(k) Indenture dated as of November 27, 1996 between registrant (successor to
NationsBank Corporation) and The Bank of New York, incorporated by
reference to Exhibit 4.10 of registrant's Registration No. 333-15375.
(l) First Supplemental Indenture dated as of December 4, 1996 to the Indenture
dated as of November 27, 1996 between registrant (successor to NationsBank
Corporation) 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.
(m) Second Supplemental Indenture dated as of December 17, 1996 to the
Indenture dated as of November 27, 1996 between registrant (successor to
NationsBank Corporation) 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.
(n) Third Supplemental Indenture dated as of February 3, 1997 to the Indenture
dated as of November 27, 1996 between registrant (successor to NationsBank
Corporation) 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.
(o) Fourth Supplemental Indenture dated as of April 22, 1997 to the Indenture
dated as of November 27, 1996 between registrant (successor to NationsBank
Corporation) 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.
(p) 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, incorporated by reference to Exhibit 4(t) of the 1998 10-K.
(q) Indenture dated as of November 27, 1996, between Barnett Banks, Inc. and
Bank One (successor to The First National Bank of Chicago), as Trustee, and
First Supplemental Indenture dated as of January 9, 1998, among
NationsBank Corporation, NB Holdings Corporation, Barnett Banks, Inc.
and The First National Bank of Chicago (predecessor to Bank One), as
Trustee, pursuant to which registrant (as successor to NationsBank
Corporation) issued its 8.06% Junior Subordinated Debentures, due 2026,
incorporated by reference to Exhibit 4(u) of registrant's 1997 Annual Report
on Form 10-K (the "1997 10-K").
</TABLE>
E-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- ---------------------------------------------------------------------------
<C> <S>
(r) 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 10.00% Subordinated Notes due 2003 and its 9.20% Subordinated
Notes due 2003; and First Supplemental Indenture thereto dated as of
September 15, 1998, incorporated by reference to Exhibit 4(v) of the 1998
10-K.
(s) 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 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,
incorporated by reference to Exhibit 4(w) of the 1998 10-K.
(t) 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 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, incorporated by reference to Exhibit 4(x) of the 1998 10-K.
(u) Second Amended and Restated Agency Agreement dated as of November 15,
1996 between the former BankAmerica Corporation and U.S. Bank Trust
National Association (successor to 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, incorporated by reference to Exhibit 4(y) of the 1998 10-K.
(v) 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% Junior Subordinated Debentures Series A due 2026; and its
7.70% Junior Subordinated Debentures Series B due 2026; and First
Supplemental Indenture thereto dated as of September 15, 1998,
incorporated by reference to Exhibit 4(z) of the 1998 10-K.
(w) 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% Junior Subordinated Deferrable Interest Debentures,
Series 1 due 2026; its 8.00% Junior Subordinated Deferrable Interest
Debentures, Series 2 due 2026; its Floating Rate Junior Subordinated
Deferrable Interest Debentures, Series 3 due 2027; and its 7.00% Junior
Subordinated Deferrable Interest Debentures, Series 4 due 2028; and First
Supplemental Indenture thereto dated as of September 15, 1998,
incorporated by reference to Exhibit 4(aa) of the 1998 10-K.
</TABLE>
E-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- -------------- --------------------------------------------------------------------------------
<C> <S> <C>
(x) Restated Senior Indenture dated as of January 1, 2001 between registrant
and The Bank of New York, pursuant to which registrant issued its Senior
InterNotes/SM/, incorporated by reference to Exhibit 4.1 of registrant's
Registration No. 333-47222.
(y) Restated Subordinated Indenture dated as of January 1, 2001 between
registrant and The Bank of New York, pursuant to which registrant issued
its Subordinated InterNotes/SM/, incorporated by reference to Exhibit 4.2 of
registrant's Registration No. 333-47222.
(z) Amended and Restated Senior Indenture dated as of July 1, 2001 between
registrant and The Bank of New York, pursuant to which registrant issued
its Senior InterNotes/SM/, incorporated by reference to Exhibit 4.1 of
registrant's Registration No. 333-65750.
(aa) Amended and Restated Subordinated Indenture dated as of July 1, 2001
between registrant and The Bank of New York, pursuant to which registrant
issued its Subordinated InterNotes/SM/, incorporated by reference to
Exhibit 4.2 of registrant's Registration No. 333-65750.
(bb) Restated Indenture dated as of November 1, 2001 between registrant and
The Bank of New York, incorporated by reference to Exhibit 4.10 of
registrant's Registration No. 333-70984.
(cc) First Supplemental Indenture dated as of December 14, 2001 to the Restated
Indenture dated as of November 1, 2001 between registrant and The Bank of
New York pursuant to which registrant issued its 7% Junior Subordinated
Notes due 2031, incorporated by reference to Exhibit 4.3 of registrant's
Current Report on Form 8-K dated December 6, 2001.
(dd) Second Supplemental Indenture dated as of January 31, 2002 to the Restated
Indenture dated as of November 1, 2001 between registrant and The Bank of
New York pursuant to which registrant issued its 7% Junior Subordinated
Notes due 2032, incorporated by reference to Exhibit 4.3 of registrant's
Current Report on Form 8-K dated January 24, 2002.
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 1990 Annual
Report on Form 10-K (the "1990 10-K"); Amendment thereto dated as of
September 28, 1994, incorporated by reference to Exhibit 10(i) of registrant's
1994 Annual Report on Form 10-K (the "1994 10-K); and Amendment thereto
dated as of April 24, 1996, incorporated by reference to Exhibit 10(g) of
registrant's 1996 Annual Report on Form 10-K (the "1996 10-K").
(b) NationsBank Corporation and Designated Subsidiaries Supplemental *
Executive Retirement Plan, incorporated by reference to Exhibit 10(j) of the
1994 10-K; Amendment thereto dated as of June 28, 1989, incorporated by
reference to Exhibit 10(g) of registrant's 1989 Annual Report on Form 10-K
(the "1989 10-K"); Amendment thereto dated as of June 27, 1990,
incorporated by reference to Exhibit 10(g) of the 1990 10-K; Amendment
thereto dated as of July 21, 1991, incorporated by reference to Exhibit 10(bb)
of the 1991 10-K; Amendments thereto dated as of December 3, 1992 and
December 15, 1992, incorporated by reference to Exhibit 10(l) of registrant's
1992 Annual Report on Form 10-K (the "1992 10-K"); Amendment thereto
dated as of September 28, 1994, incorporated by reference to Exhibit 10(j) of
the 1994 10-K; Amendments thereto dated March 27, 1996 and June 25,
1997, incorporated by reference to Exhibit 10(c) of the 1997 10-K;
Amendments thereto dated April 10, 1998, June 24, 1998 and October 1,
1998, incorporated by reference to Exhibit 10(b) of the 1998 10-K;
Amendment thereto dated December 14, 1999, incorporated by reference to
Exhibit 10(b) of registrant's 1999 Annual Report on Form 10-K (the "1999
10-K"); and Amendment thereto dated as of March 28, 2001.
</TABLE>
E-4
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -------------------------------------------------------------------------------
<C> <S> <C>
(c) NationsBank Corporation and Designated Subsidiaries Deferred *
Compensation Plan for Key Employees, incorporated by reference to Exhibit
10(k) of the 1994 10-K; Amendment thereto dated as of June 28, 1989,
incorporated by reference to Exhibit 10(h) of the 1989 10-K; Amendment
thereto dated as of June 27, 1990, incorporated by reference to Exhibit 10(h)
of the 1990 10-K; Amendment thereto dated as of July 21, 1991, incorporated
by reference to Exhibit 10(bb) of the 1991 10-K; Amendment thereto dated as
of December 3, 1992, incorporated by reference to Exhibit 10(m) of the 1992
10-K; and Amendments thereto dated April 10, 1998 and October 1, 1998,
incorporated by reference to Exhibit 10(b) of the 1998 10-K.
(d) Bank of America Pension Restoration Plan, as amended and restated *
effective July 1, 1998.
(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 the 1990 10-K.
(f) NationsBank Corporation Benefit Security Trust dated as of June 27, 1990, *
incorporated by reference to Exhibit 10(t) of the 1990 10-K; First Supplement
thereto dated as of November 30, 1992, incorporated by reference to Exhibit
10(v) of the 1992 10-K; and Trustee Removal/Appointment Agreement dated
as of December 19, 1995, incorporated by reference to Exhibit 10(o) of
registrant's 1995 Annual Report on Form 10-K.
(g) Bank of America 401(k) Restoration Plan, as amended and restated effective *
July 1, 2000.
(h) Bank of America Executive Incentive Compensation Plan, as amended and *
restated effective April 1, 1998, incorporated by reference to Exhibit 10(h) of
the 1998 10-K.
(i) Bank of America Director Deferral Plan, as amended and restated effective *
January 27, 1999, incorporated by reference to Exhibit 10(i) of the 1998 10-K.
(j) Bank of America Corporation Directors' Stock Plan, as amended and restated *
effective January 1, 2002.
(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) 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 10-Q").
(m) 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
10-Q.
(n) Split Dollar Life Insurance Agreement dated as of October 15, 1998 between *
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, incorporated by reference to
Exhibit 10(cc) of the 1998 10-K; and Amendment thereto dated January 24,
2002.
(o) Split Dollar Life Insurance Agreement dated as of October 16, 1998 between *
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, incorporated by
reference to Exhibit 10(dd) of the 1998 10-K; and Amendment thereto dated
January 24, 2002.
(p) Split Dollar Life Insurance Agreement dated as of September 28, 1998 *
between 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, incorporated by
reference to Exhibit 10(ee) of the 1998 10-K; and Amendment thereto dated
January 24, 2002.
</TABLE>
E-5
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- ------------------------------------------------------------------------------
<C> <S> <C>
(q) Employment Agreement dated as of April 10, 1998 between registrant and *
James H. Hance, Jr., incorporated by reference to Exhibit 10.4 of registrant's
Registration No. 333-60553; and Amendment thereto dated January 24,
2001, incorporated by reference to Exhibit 10(q) of the 2000 10-K.
(r) Employment Agreement dated as of April 10, 1998 between registrant and *
Kenneth D. Lewis, incorporated by reference to Exhibit 10.5 of registrant's
Registration No. 333-60553; and Amendment thereto dated January 24,
2001, incorporated by reference to Exhibit 10(r) of the 2000 10-K.
(s) Split Dollar Life Insurance Agreement dated as of August, 1999 between *
registrant and Bank of America, N.A., as Trustee under The Vandiver Family
Trust Dated August 12, 1999, incorporated by reference to Exhibit 10(dd) of
the 1999 10-K; and Amendment thereto dated January 24, 2002.
(t) Global Corporate and Investment Banking Equity Incentive Plan, as *
established effective January 1, 2000, incorporated by reference to Exhibit
10(t) of the 2000 10-K.
(u) Consulting Agreement dated January 24, 2001 between registrant and Hugh *
L. McColl, Jr., incorporated by reference to Exhibit 10(u) of the 2000 10-K.
(v) Summary of the Corporate Management Incentive Plan. *
(w) Relocation Agreement dated October 5, 1998 between registrant and Edward *
J. Brown III, incorporated by reference to Exhibit 10(w) of the 2000 10-K.
(x) Employment Agreement dated April 24, 2001 between registrant and Richard *
M. DeMartini.
12(a) Ratio of Earnings to Fixed Charges.
(b) Ratio of Earnings to Fixed Charges and Preferred Dividends.
13 2001 Annual Report to Stockholders. This exhibit contains only those
portions of the 2001 Annual Report that are incorporated by reference herein.
21 List of Subsidiaries.
23 Consent of PricewaterhouseCoopers LLP.
24(a) Power of Attorney.
(b) Corporate Resolution.
</TABLE>
- ----------
* Denotes executive compensation plan or arrangement.
E-6
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.(D)
<SEQUENCE>3
<FILENAME>dex4d.txt
<DESCRIPTION>SUPPLEMENTAL INDENTURE
<TEXT>
<PAGE>
Exhibit 4(d)
Bank of America Corporation
- --------------------------------------------------------------------------------
SECOND SUPPLEMENTAL INDENTURE
Dated as of July 16, 2001
Supplementing the Indenture, dated
as of August 1, 1982, between
Bank of America Corporation (successor to NationsBank Corporation,
formerly known as NCNB Corporation) and
U.S. Bank Trust National Association (successor to
Morgan Guaranty Trust Company of New York), as Trustee,
as supplemented by a
First Supplemental Indenture dated as of September 18, 1998 thereto
<PAGE>
THIS SECOND SUPPLEMENTAL INDENTURE, dated as of July 16, 2001 (the
"Second Supplemental Indenture"), is made by and among BANK OF AMERICA
CORPORATION, a Delaware Corporation (the "Company"), U.S. BANK TRUST NATIONAL
ASSOCIATION, a national banking association, successor to Morgan Guaranty Trust
Company of New York, as Prior Trustee (the "Prior Trustee") and THE BANK OF NEW
YORK, a New York banking corporation (the "Successor Trustee") under the
Indenture referred to herein.
W I T N E S S E T H:
--------------------
WHEREAS, the Company and the Prior Trustee heretofore executed and
delivered an Indenture, dated as of August 1, 1982, as supplemented by a First
Supplemental Indenture dated as of September 18, 1998 thereto (the "Indenture");
and
WHEREAS, pursuant to the Indenture, the Company issued and the Trustee
authenticated and delivered one or more series of the Company's notes (the
"Securities"); and
WHEREAS, Section 9.01(3) of the Indenture provides that the Company,
when authorized by a resolution of the Board of Directors of the Company, the
Prior Trustee and the Successor Trustee may amend the Indenture without notice
to or consent of the holders of the Securities in order to supplement any
provision contained in the Indenture; and
WHEREAS, by resolutions adopted by the Board of Directors the Company
at a meeting duly called and held on June 27, 2001, the Company was authorized
to amend the Indenture; and
WHEREAS, the Company, the Prior Trustee and the Successor Trustee
desire to amend the Indenture and the Securities in order to evidence and
provide for the acceptance and appointment by a successor trustee with respect
to the Securities of one or more series and to add or change any provisions of
this Indenture as shall be necessary to provide for or facilitate the
administrations of the trusts hereunder; and
WHEREAS, the Company, the Prior Trustee and the Successor Trustee have
entered into an Agreement of Resignation, Appointment and Acceptance dated the
date hereof, pursuant to which (i) the Prior Trustee resigns as trustee under
the Indenture, (ii) the Company accepts the Prior Trustee's resignation, (iii)
the Company appoints the Successor Trustee as trustee under the Indenture and
(iv) the Successor Trustee accepts the Company's appointment as trustee under
the Indenture with respect to the Securities; and
WHEREAS, this Second Supplemental Indenture has been duly authorized by
all necessary corporate action on the part of the Company.
NOW, THEREFORE, the Company, the Prior Trustee and the Successor
Trustee agree as follows for the equal and ratable benefit of the holders of the
Securities:
<PAGE>
ARTICLE I
ASSUMPTION OF DUTIES AS TRUSTEE UNDER THE INDENTURE
SECTION 1.1 Assumption of Duties by Successor Trustee. The Successor
Trustee hereby expressly assumes and accepts the rights, powers, duties and
obligations of the Prior Trustee as Trustee under the Indenture, upon the terms
and conditions set forth therein, with like effect as if originally named as
Trustee under the Indenture.
SECTION 1.2 Definition. The definition of "Principal Corporate Trust
Office" is hereby deleted in its entirely and inserted in lieu thereof the
following:
"'Principal Corporate Trust Office' means the corporate trust office of
the Trustee in the Borough of Manhattan, the City of New York, where Debentures
may be presented for payment, for registration of transfer and for exchange as
in this Indenture provided and where notices and demands to or upon the Company
in respect of the Debentures or of this Indenture may be served."
SECTION 1.3 Supplemental Provisions. Any other terms or provisions of
the Indenture specifically referencing the Prior Trustee shall hereafter
reference the Successor Trustee.
ARTICLE II
MISCELLANEOUS
SECTION 2.1 Indenture Remains in Full Force and Effect. Except as
supplemented hereby, all provisions in the Indenture shall remain in full force
and effect.
SECTION 2.2 Indenture and Supplemental Indentures 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 2.3 Confirmation and Preservation of Indenture. The Indenture
as supplemented by this Second Supplemental Indenture is in all respects
confirmed and preserved.
SECTION 2.4 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 2.5 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.
<PAGE>
SECTION 2.6 Terms Defined in the Indenture. All capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the
Indenture.
SECTION 2.7 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 Second Supplemental Indenture and shall in no
way modify or restrict any of the terms or provisions hereof.
SECTION 2.8 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 2.9 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 2.10 Counterparts. 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.
SECTION 2.11 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.
IN WITNESS WHEREOF, the parties have caused this Second Supplemental
Indenture to be duly executed as of the date first written above.
BANK OF AMERICA CORPORATION U.S. BANK TRUST NATIONAL
ASSOCIATION
as Prior Trustee
/s/ Karen A. Gosnell
- -------------------------------------
Name: Karen A. Gosnell /s/ Barbara Nastro
-------------------------
Title: Senior Vice President Name: Barbara Nastro
Title: Vice President
THE BANK OF NEW YORK
as Successor Trustee
/s/ Sandra Carreker
--------------------------
Name: Sandra Carreker
Title: Agent
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.(I)
<SEQUENCE>4
<FILENAME>dex4i.txt
<DESCRIPTION>AMENDED AGENCY AGREEMENT
<TEXT>
<PAGE>
Exhibit 4(i)
AMENDED AND RESTATED
AGENCY AGREEMENT
relating to
BANK OF AMERICA CORPORATION
and
BANK OF AMERICA, N.A.
U.S. $25,000,000,000
Euro Medium-Term Note Program
among
BANK OF AMERICA CORPORATION
and
BANK OF AMERICA, 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 JULY 27, 2001
<PAGE>
INDEX
-----
<TABLE>
<CAPTION>
Clause Page
- ------ ----
<S> <C>
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............................................. 5
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............................................... 14
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.............................................. 17
21. Notification of Changes to Paying Agents.............................. 17
22. Change of Specified Office............................................ 18
23. Notices............................................................... 18
24. Taxes and Stamp Duties................................................ 20
25. Commissions, Fees and Expenses........................................ 20
26. Indemnity............................................................. 20
27. Reporting............................................................. 20
28. Governing Law......................................................... 21
29. Amendments............................................................ 21
30. Descriptive Headings.................................................. 22
31. Counterparts.......................................................... 22
</TABLE>
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
- ----------
Clearstream, Luxembourg
Schedule 6 - Form of Certificate of Beneficial Owner
- ----------
Schedule 7 - Provision for Meetings of Noteholders
- ----------
Schedule 8 - Form of Put Notice
- ----------
Schedule 9 - Form of Calculation Agency Agreement
- ----------
i
<PAGE>
THIS AMENDED AND RESTATED AGENCY AGREEMENT (this "Agreement") dated as of July
27, 2001 is made by and among:
(i) Bank of America Corporation, a Delaware corporation (the
"Corporation"), and Bank of America, N.A., a national banking
association (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 Bank, 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 August 1, 2000
(the "Original Agency Agreement");
WHEREAS, the Issuers propose to issue up to U.S. $15,000,000,000 with
respect to the Corporation and U.S. $10,000,000,000 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
Arranger 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
applicable Pricing Supplement issued in connection with each Series and each
Tranche of Notes; and
WHEREAS, unless otherwise determined by an Issuer and specified in the
applicable Pricing Supplement, beneficial interests in each Tranche of Notes
initially will 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.
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 redemption date in
accordance with the Terms and Conditions has occurred and the redemption moneys
(including all interest accrued on such Notes to the date for such redemption
and any interest or other amounts payable under the Terms and Conditions after
such date) have been duly paid to the Agent as provided in this Agreement and
remain available for payment against presentation and surrender of Notes and/or
Receipts and/or Coupons, as the case may be, (c) those which have become void
under Condition 8, (d) those which have been purchased and canceled as provided
in Condition 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 10, (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 10, (g) any
Temporary Global Note to the extent that it shall have been exchanged for a
Permanent Global Note, in each case pursuant to their respective provisions;
provided that for the purposes of (i) ascertaining the right to attend and vote
1
<PAGE>
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
Temporary Global Note and the Permanent Global Note, Definitive Notes and
Coupons. 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, while the Notes are represented by a Global Note, shall 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 a common depositary on
behalf of Euroclear Bank S.A./NV, as operator of the Euroclear System
("Euroclear or Clearstream Banking, societe anonyme ("Clearstream, Luxembourg")
(other than Clearstream, Luxembourg, if Clearstream, Luxembourg shall be an
accountholder of Euroclear, and Euroclear, if Euroclear shall be an
accountholder of Clearstream, Luxembourg) as the Noteholders of particular
principal amounts of Notes (in which regard any certificate or other document
issued by Euroclear or Clearstream, Luxembourg 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 Clearstream,
Luxembourg shall be deemed to include, whenever the context permits, 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 continue the appointment of The Chase
Manhattan Bank, London Branch, as agent, and The Chase Manhattan Bank, London
Branch, hereby acknowledges its continued acceptance of such appointment as
agent of the Issuers, upon the terms and subject to the conditions set out
below, for the purposes of:
2
<PAGE>
(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 any required periodic reports to
the Ministry of Finance of Japan (the "MoF"), the Bank of England or
other appropriate authority 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
appropriate stock exchange such number of copies of each
Pricing Supplement which relates to Notes which are to be
listed on that stock exchange as it may reasonably require;
(j) receiving notice from Euroclear and/or Clearstream,
Luxembourg relating to the certificates of non-United States
beneficial ownership of the Notes; and
(k) performing all other obligations and duties imposed upon
it by the Terms and Conditions, this Agreement or as may be agreed
between the relevant Issuer and the Agent in connection with a
particular Series or Tranche of Notes.
(2) The relevant Issuer may, in its discretion, appoint (or remove)
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. Upon its written acceptance of such appointment or execution of a
copy of this Agreement, 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
<PAGE>
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 Clearstream, Luxembourg 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 Clearstream, Luxembourg and to instruct Euroclear or
Clearstream, Luxembourg 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 pursuant to the relevant Issuer's order; and
(d) to ensure that the Notes of each Tranche are assigned a
common code ("Common Code") and International Security Identification
Number ("ISIN") by Euroclear and Clearstream, Luxembourg 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 3(1)(a); 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 Clearstream, Luxembourg
with the notifications, instructions or other information to be given by the
Agent to Euroclear and/or Clearstream, Luxembourg in accordance with the
standard procedures of Euroclear and/or Clearstream, Luxembourg.
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
Clearstream, Luxembourg.
(b) The Agent shall deliver, upon notice from Euroclear or
Clearstream, Luxembourg, a Permanent Global Note or Definitive
Notes, as the case may be, in accordance
4
<PAGE>
with the terms of the Temporary Global Note in each case against
certification of non-U.S. beneficial ownership as required by U.S.
Treasury Regulations unless such Certification has already been given.
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
Clearstream, Luxembourg 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 Clearstream,
Luxembourg; 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 fortieth day following the latest of the
dates certified by all the relevant Dealers to the Agent as
being the respective dates as of which distribution of the
Notes of that Tranche purchased by each such dealer was
completed.
(c) 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 fortieth day following the date certified
by the Lead Manager to the Agent as being the date as of which
distribution of the Notes of that Tranche was completed.
(d) Forthwith upon determining the end of the Restricted
Period in respect of any Tranche, the Agent shall notify such
determination to the 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 Clearstream, Luxembourg 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
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clearance system approved by the Noteholders is available, or
(iii) the relevant Issuer, after notice to the Agent, determines to issue Notes
in Definitive form. Upon the occurrence of these events, the Agent shall
deliver the relevant Definitive Note(s) in accordance with the terms of the
relevant Global Note. For this purpose the Agent is hereby authorized on behalf
of the 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 Clearstream, Luxembourg in exchange for such
Global Note.
The Agent shall notify the relevant Issuer forthwith upon receipt of a request
for issue of 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) If 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 be, unless notified as aforesaid, 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 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 Clearstream, Luxembourg) after such Issue Date,
the Agent will continue to hold the Defaulted Note pursuant to the order of the
relevant Issuer. The
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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 10
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 Charlotte, North Carolina and any additional business
center specified in the applicable Pricing Supplement; and
(b) either (1) for any sum payable in a Specified Currency,
a day on which commercial banks and foreign exchange markets settle
payments in the principal financial center (the "Principal
Financial Center") of the country of the relevant Specified
Currency (if other than London) or (2) for any sum payable in
euro, a day on which the Trans-European Automated Real-Time
Gross Settlement Express Transfer ("TARGET") is open. Unless
otherwise specified in the applicable Pricing Supplement, the
Principal Financial Center of any country for the purposes of
the Terms and Conditions shall be as provided in the ISDA
Definitions.
(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 Clearstream,
Luxembourg 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 sub-clause (l),
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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 a corresponding payment
by the relevant Issuer has been or will be made and such payment has in fact
not been 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. 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 gross 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 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.
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(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 (other than Indexed Redemption Amount Notes) shall be
calculated in the manner specified above by reference to the original
nominal amount of such Notes;
(c) the U.S. Dollar equivalent of Zero Coupon Notes, other
Notes issued at a discount or premium and Indexed Redemption Amount
Notes 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,
subject as provided below, will be either:
(a) the offered quotation (if there is only one quotation on
the relevant screen page (the "Relevant Screen Page"), whatever its
designation; or
(b) the arithmetic mean (rounded if necessary to the fifth
decimal place, with 0.000005 being rounded upwards) of the offered
quotations,
(expressed as a percentage rate per annum), for the rate (the "Reference Rate")
by reference to the Rate of Interest which appears or appear, as the case may
be, on the Relevant Screen Page on which the Reference Rate is for the time
being displayed on the Reuter Monitor Money Rates Service or the appropriate
display on Bridge Telerate Inc. (or such service as is specified in the
applicable Pricing Supplement) at 11:00 a.m. (London time in the case of
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Libor, or Brussels time in the case of Euribor) on the dates on which the Rate
of Interest is to be determined (each, an "Interest Determination Date") plus or
minus 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 and the lowest shall be disregarded by the Calculation Agent for
purposes of determining the arithmetic mean 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 interbank market at approximately 11:00
a.m. (London time in the case of LIBOR or Brussels time in the case of Euribor)
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 only one 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 to be 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 any two or more of the
Reference Banks, at which such banks were offered, at approximately 11:00 a.
m. (London time in the case of LIBOR, or Brussels time in the case of Euribor)
on the relevant Interest Determination Date, deposits in the Specified
Currency for the relevant Interest Period by leading banks in the London
interbank market in the case of LIBOR, or leading banks in the Euro-Zone inter-
bank market in the case of Euribor, 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 in the case of
LIBOR, or Brussels time in the case of Euribor) on the relevant Interest
Determination Date, any one or more banks informs the Calculation Agent it is
quoting to leading banks in the London interbank market in the case of LIBOR,
or leading banks in the EuroZone interbank market in the case of Euribor, 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 LIBOR or Euribor, the Rate of Interest in respect of such Notes will be
determined as provided in the applicable Pricing Supplement.
In this Clause 3, 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.
The expression "Euro-Zone" means, the region comprised of member states of the
European Union that have adopted the euro as the single currency in accordance
with the Treaty establishing the European Community, as amended by the Treaty
on European Union, as amended by the Treaty of Amsterdam.
9. Notice of any Withholding or Deduction
--------------------------------------
If the relevant Issuer, in respect of any payment, is compelled to
withhold or deduct any amount for or on account of taxes, duties, assessments
or governmental charges as specifically contemplated under the
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Terms and Conditions, the relevant Issuer shall give notice thereof to the Agent
as soon as it becomes aware of the requirement to make such withholding or
deduction and shall give to the Agent such information as it shall require to
enable it to comply with such requirement.
10. Duties of the Agent in Connection with Early Redemption
-------------------------------------------------------
(1) If the 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 of such
redemption to the Noteholders in accordance with the Terms and Conditions 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 Clearstream, Luxembourg.
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) On behalf of and at the expense of the relevant Issuer, 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 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 also will 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 Noteholders, the Terms and Conditions of which provide
for redemption at the option of Noteholders. Upon receipt of any Note
deposited in the exercise of such option in accordance with the Terms and
Conditions, the Paying Agent with which such Note is deposited shall hold such
Note (together with any Coupons, if any, relating to it and deposited with it)
on behalf of the depositing Noteholder (but shall not, save as provided below,
release it) until the due date for redemption of the relevant Note consequent
upon the exercise of such option, when, subject as provided below, it shall
present such Note (and any such Coupons, if any) to itself for payment of the
amount due thereon together with any interest due on such date in accordance
with the Terms and Conditions and shall pay such moneys in accordance with the
directions of the Noteholder contained in the Put Notice. If, prior to such
due date for its redemption, such Note becomes immediately due and payable or
if upon due presentation payment of such redemption moneys is improperly
withheld or refused, the Paying Agent concerned shall post such Note (together
with any such Coupons, if any) by uninsured post to, and at the risk of, the
relevant Noteholder unless the Noteholder has otherwise requested and paid the
costs of such insurance to the relevant Paying Agent at the time of depositing
the Notes at such address as may have been given by the Noteholder in the Put
Notice. At the end of each period for the exercise of such option, each Paying
Agent shall promptly notify the Agent of the principal amount of the Notes in
respect of which such option has been exercised with it together with their
serial numbers and the Agent shall promptly notify such details to the
relevant Issuer.
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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 9 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, which 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 10) and of all
replacement Notes, Receipts, Coupons or Talons issued in substitution for
mutilated, defaced, destroyed, lost or stolen Notes, Receipts, Coupons or
Talons. The Agent shall at all reasonable times make such record available to
the relevant Issuer and any persons authorized by it for inspection and for
the taking of copies thereof or extracts therefrom.
(5) All records and certificates made or given pursuant to this
Clause 12 and Clause 13 shall make a distinction between Notes, Receipts,
Coupons and Talons of each Series.
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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.
(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.
13
<PAGE>
14. Copies of Documents Available for Inspection
--------------------------------------------
The Agent and the Paying Agents shall hold available for inspection
copies of:
(1) the organizational documents of the Issuers;
(2) the latest available audited consolidated financial statements
of the Corporation and its consolidated subsidiaries, beginning with such
financial statements for the fiscal years ended December 31, 2000 and the
publicly available portions of the Call Reports with respect to the Bank
beginning with the period ending December 31, 2000;
(3) the Program Agreement and this Agreement;
(4) the Offering Circular; and
(5) 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, not less than 24 hours before the
time appointed for holding a meeting or adjourned meeting, will 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
-------------------------
(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; and
(b) as provided in sub-clause (2) below; and
14
<PAGE>
(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, 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
----------------------------------
(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;
15
<PAGE>
(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
only shall 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 expiration 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
(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.
16
<PAGE>
(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, without further act, deed or conveyance, shall 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 entity into which the Agent or any Paying Agent may be merged or
converted, or any entity with which the Agent or any of the Paying Agents may
be consolidated or any entity resulting from any merger, conversion or
consolidation to which the Agent or any of the Paying Agents shall be a party,
or any entity 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 entity. Written notice of any such merger, conversion, consolidation or
transfer forthwith shall 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, 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 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:
17
<PAGE>
Address
-------
The Corporation: Bank of America Corporation
Bank of America Corporate Center
100 North Tryon Street
NC1-007-23-01
Charlotte, North Carolina 28255-0065
Attn: Corporate Treasury
Telecopy: (704) 386-0270
with a copy to:
Bank of America Corporation
Bank of America Corporate Center
100 North Tryon Street
Legal Department
NC1-007-56-11
Charlotte, North Carolina 28255
Attn: Paul J. Polking, Esq.
General Counsel
Telecopy: (704) 370-3515
The Bank: Bank of America, N.A.
Bank of America Corporate Center
100 North Tryon Street
NC1-007-23-01
Charlotte, North Carolina 28255
Attn: Corporate Treasury
Telecopy: (704) 386-0270
18
<PAGE>
with a copy to:
Bank of America Corporation
Bank of America Corporate Center
100 North Tryon Street
Legal Department
NC1-007-56-11
Charlotte, North Carolina 28255
Attn: Paul J. Polking, Esq.
General Counsel
Telecopy: (704) 370-3515
The Agent: The Chase Manhattan Bank
Trinity Tower
9 Thomas More Street
London E1W 1YT
United Kingdom
Attn: Manager, Institutional Trust Services
Telecopy: 44-1202-34-7601
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
with a copy to:
Bank of America Corporation
Bank of America Corporate Center
100 North Tryon Street
Legal Department
NC1-007-56-11
Charlotte, North Carolina 28255
Attn: Paul J. Polking, Esq.
General Counsel
Telecopy: (704) 370-3515
or at any other address of which any of the foregoing shall have notified the
others in writing.
(1) 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
(2) 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).
19
<PAGE>
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 reasonable 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) undertakes
to indemnify and hold harmless each of the Agent and the Paying Agents against
all losses, liabilities, costs (including, without limitation, legal fees and
expenses), expenses, claims, actions or demands which the Agent or any Paying
Agent, as the case may be, may reasonably incur or which may be made against
the Agent or any Paying Agent, as a result of or in connection with the
appointment or the exercise of or performance of the powers, discretions,
authorities and duties of the Agent or any Paying Agent under this Agreement
except such as may result from its own gross negligence, bad faith or failure
to comply with its obligations hereunder or that of its officers, employees or
agents.
(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 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
20
<PAGE>
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 of such details
relating to 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 (3) 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 Issuer 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.
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:
(A) to evidence the succession of another entity to an Issuer and
the assumption by any such successor of the covenants of such Issuer in this
Agreement, the Notes, Receipts or Coupons;
(B) 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;
21
<PAGE>
(C) 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;
(D) to cure any ambiguity, to correct or supplement any defective
provision herein or any provision which may be inconsistent with any other
provision herein;
(E) 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 (E) shall not adversely affect
the interests of the Noteholders, the Receiptholders or the Couponholders;
(F) to authorize or facilitate the issuance of Notes in registered
form;
(G) to facilitate the issuance of Notes in accordance with the laws
of a particular country; and
(H) to 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 13 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.
22
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their respective corporate names by their respective officers
thereunder duly authorized as of the date and year first above written.
BANK OF AMERICA CORPORATION
as Issuer
By /s/ James T. Houghton
-----------------------------------------------
Name: James T. Houghton
Title: Senior Vice President
BANK OF AMERICA, N.A.
as Issuer
By /s/ James T. Houghton
-----------------------------------------------
Name: James T. Houghton
Title: Senior Vice President
THE CHASE MANHATTAN BANK,
LONDON BRANCH
as Agent and
Principal Paying Agent
By /s/ J. Pennell
-----------------------------------------------
Name: J. Pennell
Title: Authorized Signatory
CHASE MANHATTAN BANK LUXEMBOURG S.A.
as Paying Agent
By /s/ J. Pennell
-----------------------------------------------
Name: J. Pennell
Title: Authorized Signatory
23
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(B)
<SEQUENCE>5
<FILENAME>dex10b.txt
<DESCRIPTION>SUPPLEMENTAL RETIREMENT
<TEXT>
<PAGE>
Exhibit 10(b)
TWELFTH AMENDMENT TO THE
BANK OF AMERICA CORPORATION AND DESIGNATED SUBSIDIARIES
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
WHEREAS, Bank of America Corporation ("Bank of America") and certain of its
subsidiary corporations (collectively with Bank of America, the "Participating
Employers") maintain the Bank of America Corporation and Designated Subsidiaries
Supplemental Executive Retirement Plan (the "Plan"); and
WHEREAS, Bank of America desires to amend the Plan to provide that (i)
compensation earned from and after attainment of age 65 shall be included in
determining the amount of Plan benefits and (ii) no new participants shall be
added to the Plan from and after June 1, 2001; and
WHEREAS, the Compensation Committee of the Board of Directors of Bank of
America has authorized and approved said amendments to the Plan in accordance
with the provisions of Article VI of the Plan;
NOW, THEREFORE, Bank of America does hereby declare that the Plan is hereby
amended effective as of March 28, 2001 as follows:
1. Section 2.1(c)(13) of the Plan is amended to read as follows:
"(13) Delayed Retirement Benefit means, with respect to a
--------------------------
Participant, an annual amount equal to (A) minus (B) where:
(A) is such Participant's Target Retirement Benefit;
and
(B) is the sum of such Participant's (i) Assumed
Retirement Benefit and (ii) Social Security Benefit."
2. Section 2.1(c)(24) of the Plan is amended to read as follows:
"(24) Final Average Compensation means, with respect to a
--------------------------
Participant as of any determination date, the average of the annual
Compensation paid to such Participant during the five (5) calendar
years of highest Compensation (which calendar years need not be
consecutive) during the ten (10) calendar years next preceding the
Participant's separation from Service, to be determined by dividing
the aggregate Compensation received by the Participant during the
appropriate five (5) calendar years by five (5). If a Participant has
completed less than five (5) calendar years of Service as hereinabove
provided, such Participant's Final Average Compensation shall be
determined by dividing the aggregate Compensation received by the
Participant during said calendar years by the number of such calendar
years."
<PAGE>
3. Notwithstanding any provision of the Plan to the contrary, no
new participants shall be added to the Plan from and after June 1,
2001.
4. Except as expressly or by necessary implication amended
hereby, the Plan shall continue in full force and effect.
IN WITNESS WHEREOF, Bank of America has caused this instrument to be
executed by its duly authorized officer as of the 28th day of March,
2001.
BANK OF AMERICA CORPORATION
By: /s/ C. J. Cooley
----------------------------------------
Name: C. J. Cooley
-----------------------------------
Title: Corporate Personnel Executive
-----------------------------------
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(D)
<SEQUENCE>6
<FILENAME>dex10d.txt
<DESCRIPTION>PENSION RESTORATION
<TEXT>
<PAGE>
Exhibit 10(d)
BANK OF AMERICA PENSION RESTORATION PLAN
(as amended and restated effective July 1, 1998)
<PAGE>
BANK OF AMERICA PENSION RESTORATION PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS..................................................... 1
Section 1.1 Definitions.......................................... 1
-----------
ARTICLE II PLAN ADMINISTRATION............................................ 6
Section 2.1 Committee............................................ 6
---------
ARTICLE III PENSION RESTORATION BENEFITS.................................. 6
Section 3.1 Eligibility for Benefits............................. 6
------------------------
Section 3.2 Restoration Accounts................................. 6
--------------------
Section 3.3 Account Adjustments.................................. 7
-------------------
Section 3.4 Time and Method of Benefit Payments.................. 8
-----------------------------------
Section 3.5 Minimum and Special Benefits......................... 13
----------------------------
Section 3.6 Participants Without Restoration Accounts............ 14
-----------------------------------------
Section 3.7 Coordination with SERP Payments...................... 14
-------------------------------
ARTICLE IV AMENDMENT AND TERMINATION...................................... 14
Section 4.1 Amendment and Termination............................ 14
-------------------------
Section 4.2 Change of Control.................................... 15
-----------------
ARTICLE V MISCELLANEOUS PROVISIONS........................................ 15
Section 5.1 Nature of Plan and Rights............................ 15
-------------------------
Section 5.2 Termination of Employment............................ 15
-------------------------
Section 5.3 Spendthrift Provision................................ 16
---------------------
Section 5.4 Employment Noncontractual............................ 16
-------------------------
Section 5.5 Adoption by Other Participating Employers............ 16
-----------------------------------------
Section 5.6 Applicable Law....................................... 16
--------------
Section 5.7 Merged Plans......................................... 16
------------
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 5.8 Status Under the Act................................. 17
--------------------
Section 5.9 Claims Procedure..................................... 17
----------------
Section 5.10 Limited Effect of Restatement........................ 17
-----------------------------
Section 5.11 Binding Effect....................................... 17
--------------
</TABLE>
ii
<PAGE>
BANK OF AMERICA PENSION RESTORATION PLAN
(as amended and restated effective July 1, 1998)
THIS INSTRUMENT OF AMENDMENT AND RESTATEMENT is executed effective as of
the 1st day of July, 1998, by BANK OF AMERICA CORPORATION, a Delaware
corporation (the "Corporation");
Statement of Purpose
--------------------
Prior to July 1, 1998, the Corporation and certain of its affiliates
(collectively with the Corporation, the "Participating Employers") maintained
the NationsBank Corporation and Designated Subsidiaries Supplemental Retirement
Plan (the "Restoration Plan"). The Restoration Plan provided benefits which
would have accrued to participants in The NationsBank Pension Plan (the
"Pension Plan") but for certain benefit limitations imposed by the Internal
Revenue Code.
Effective July 1, 1998, the Pension Plan was amended to convert it to a
defined benefit cash balance plan, and the Participating Employers desire to
amend and restate the Restoration Plan in its entirety effective as of that
date to reflect the amendments to the Pension Plan and to meet other current
needs.
In addition, effective July 1, 2000, a number of changes were made to the
Corporation's employee benefit plans in connection with the combination of the
former NationsBank and BankAmerica benefit programs. The Participating
Employers desire to further provide herein for a number of design changes to
the Restoration Plan in connection with those benefit program changes, as well
as to rename the Restoration Plan as the "Bank of America Pension Restoration
Plan".
The Participating Employers have reserved the right to amend the Plan at
any time and have delegated to the Corporation the right to amend the Plan on
behalf of all Participating Employers.
NOW, THEREFORE, for the purposes aforesaid, the Corporation, on behalf of
the Participating Employers, hereby amends and restates the Restoration Plan
effective July 1, 1998 to consist of the following Articles I through V:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Unless the context clearly indicates otherwise,
-----------
when used in the Restoration Plan:
<PAGE>
Amendment or Termination Date means the date on which an amendment to
-----------------------------
or termination of the Restoration Plan is adopted by the Corporation or,
if later, the effective date of such amendment or termination.
Applicable Minimum Benefits Provisions means:
--------------------------------------
(A) for the period from July 1, 1998 through June 30, 2000,
Section 6.4(b) of the Pension Plan; and
(B) for periods from and after July 1, 2000, (i) if Pension Plan
benefits are payable in a single cash payment, Section 6.5(b)(1) of the
Pension Plan, and (ii) if Pension Plan benefits are payable in an
annuity method, Section 6.5(b)(2) of the Pension Plan.
Beneficiary means the "Beneficiary" of a Participant under the Pension
-----------
Plan.
Change of Control means, and shall be deemed to have occurred upon,
-----------------
any of the following events:
(A) The acquisition by any person, individual, entity or "group"
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (collectively,
a "Person") of Beneficial Ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of twenty-five percent (25%) or
more of either:
(i) The then-outstanding shares of common stock of the
Corporation (the "Outstanding Shares"); or
(ii) The combined votifg power of the then-outstanding
voting securities of the Corporation entitled to vote
generally in the election of directors of the Corporation (the
"Outstanding Voting Securities");
provided, however, that the following acquisitions shall not
--------- -------
constitute a Change of Control for purposes of this subparagraph (A):
(a) any acquisition directly from the Corporation, (b) any acquisition
by the Corporation or any of its subsidiaries, (c) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained
by the Corporation or any of its subsidiaries, or (d) any acquisition
by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subparagraph (C) below; or
(B) Individuals who, as of September 30, 1998, constitute the
Board of Directors of the Corporation (the "Incumbent Board") cease
for
2
<PAGE>
any reason to constitute at least a majority of the Board of
Directors of the Corporation; provided, however, that any individual
-------- -------
who becomes a director subsequent to September 30, 1998 and whose
election, or whose nomination for election by the Corporation's
shareholders, to the Board of Directors of the Corporation was either
(i) approved by a vote of at least a majority of the directors then
comprising the Incumbent Board or (ii) 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
(C) 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, (i) all or substantially all of the Persons who were the
Beneficial Owners (within the meaning of Rule 13d-3 promulgated under
the Exchange Act), 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 (i), any
shares of common stock or voting securities of such resulting
corporation received by such Beneficial Owners in such Business
Combination other than as the result of such Beneficial Owners'
ownership of Outstanding 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), (ii) 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
3
<PAGE>
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, respectively, the
Outstanding Shares or Outstanding Voting Securities immediately prior
to the Business Combination and (iii) at least a majority of the
members of the board of directors of the corporation resulting from
such Business Combination were members of the Incumbent Board at the
time of the execution of the initial agreement, or the action of the
Board of Directors of the Corporation, providing for such Business
Combination; or
(D) Approval by the Corporation's shareholders of a complete
liquidation or dissolution of the Corporation.
Notwithstanding the foregoing, a Change of Control shall not be deemed
to have occurred for purposes of this Plan as a result of the transactions
contemplated by that certain Agreement and Plan of Reorganization between
the Corporation and BankAmerica Corporation dated April 10, 1998.
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) and 415 of the Code place on the
accrual of benefits under the Pension Plan.
Committee means the committee designated pursuant to Section 2.1
---------
of the Restoration Plan.
Conversion Date means July 1, 1998.
---------------
Corporation means Bank of America Corporation, a Delaware
-----------
corporation, and any successor thereto. Prior to September 30, 1998, the
Corporation was named "NationsBank Corporation", and from September 30,
1998 through April 28, 1999 the Corporation was named "BankAmerica
Corporation".
Lump Sum Benefit of a Participant means the Participant's
----------------
Restoration Plan benefits expressed as a single lump sum amount. If a
Participant's Restoration Plan benefits are not determined under Section
3.5, then the Participant's Lump Sum Benefit shall equal the amount
credited to the Participant's Restoration Account from time to time.
However, if a Participant's Restoration Plan benefits are determined under
Section 3.5, then the Participant's Lump Sum Benefit shall equal the
Actuarial Equivalent lump sum value of the Participant's Restoration Plan
benefits determined under Section 3.5.
4
<PAGE>
Participant means a "Participant" as defined in the Pension Plan.
-----------
Participating Employer means each "Participating Employer" under
----------------------
(and as defined in) the Pension Plan which have adopted the Restoration
Plan. In addition, the Personnel Group, in its sole and exclusive
discretion, may designate certain other entities as "Participating
Employers" under the Restoration Plan for such purposes as the Personnel
Group may determine from time to time.
Pension Plan means The Bank of America Pension Plan, as in effect
------------
from time to time. From July 1, 1998 through July 1, 2000 the Pension
Plan was named "The NationsBank Cash Balance Plan", and prior to July 1,
1998 the Pension Plan was named "The NationsBank Pension Plan."
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 Account means the bookkeeping account established and
-------------------
maintained on the books and records of the Restoration Plan for a
Participant pursuant to Article III.
Restoration Credit means the amount credited to a Participant's
------------------
Restoration Account as of the end of a pay period pursuant to Section
3.2(c).
Restoration Plan means this plan: the Bank of America Pension
----------------
Restoration Plan as in effect from time to time. From July 1, 1998
through June 30, 2000, the Restoration Plan was named "The NationsBank
Cash Balance Restoration Plan", and prior to July 1, 1998 the Restoration
Plan was named the "NationsBank Corporation and Designated Subsidiaries
Supplemental Retirement Plan".
SERP means either the Bank of America Supplemental Executive
----
Retirement Plan (sometimes more commonly referred to as "SERP I") or the
Bank of America Supplemental Executive Retirement Plan for Senior
Management Employees (sometimes more commonly referred to as "SERP II").
SRP means the BankAmerica Supplemental Retirement Plan, but only
---
to the extent that the SRP restored benefits under the BankAmerica Pension
Plan.
Any capitalized terms used in the Restoration Plan that are defined in the
documents comprising the Pension Plan have the meanings assigned to them in the
Pension Plan, unless such terms are otherwise defined above in this Article or
unless the context clearly indicates otherwise.
5
<PAGE>
ARTICLE II
PLAN ADMINISTRATION
Section 2.1 Committee. The Restoration Plan shall be administered by the
---------
"Committee" under (and as defined in) the Pension 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
PENSION RESTORATION BENEFITS
Section 3.1 Eligibility for Benefits. Subject to Section 5.10, any
------------------------
Participant who is paid a benefit under the Pension Plan on or after the
Conversion Date shall be eligible to receive benefits under this Restoration
Plan. Subject to Sections 3.5 and 3.6 below, the amount of a Participant's
Restoration Plan benefits shall equal the amount (if any) credited to the
Participant's Restoration Account from time to time, which such benefits shall
become payable as provided in Section 3.4 below.
Section 3.2 Restoration Accounts.
--------------------
(a) General. A Restoration Account shall be established and maintained
-------
on the books and records of the Restoration Plan for each Participant who has an
amount credited in accordance with the provisions of this Section 3.2.
(b) Initial Restoration Account Balance. The Restoration Account
-----------------------------------
established for a Participant shall be credited with an initial balance equal
to the excess (if any) of Amount A over Amount B, where:
-------- --------
Amount A equals the initial balance that would have been credited to the
--------
Participant's pension account under the Pension Plan as of the Conversion
Date if (i) the Code Limitations did not apply to the Pension Plan and
(ii) the Participant's compensation under the Pension Plan included any
amounts which were disregarded because of the Participant's deferral of
such amounts pursuant to an election under
6
<PAGE>
the Bank of America 401(k) Restoration Plan or any other nonqualified
deferred compensation plan designated by the Personnel Group; and
Amount B equals the initial balance actually credited to the
-------
Participant's pension account under the Pension Plan as of the Conversion
Date.
(c) Restoration Credits. At the end of each pay period, the Restoration
-------------------
Account of each Participant shall be credited with a Restoration Credit the
amount of which shall be equal to the excess (if any) of Amount A over Amount B,
-------- ------ -
where:
Amount A equals the compensation credit that would have been allocated to
--------
the Participant's pension account under the Pension Plan as of such date
af (i) the Code Limitations did fot apply to the Pension Plan and (ii) the
Participant's compensation under the Pension Plan included the amounts, if
any, deferred by the Participant under the Bank of America 401(k)
Restoration Plan or any other nonqualified deferred compensation plan
designated by the Personnel Group; and
Amount B equals the compensation credit actually allocated to the
--------
Participant's pension account under the Pension Plan as of such date.
(d) Limit on Certain Incentive Compensation. Notwithstanding any
---------------------------------------
provision of the Restoration Plan to the contrary, in no event shall an amount
be credited to a Participant's Restoration Account or otherwise accrued
hereunder with respect to any portion of the Participant's bonuses, commissions
or other incentive compensation payable for a Plan Year (regardless of the year
earned and regardless of whether such bonus, commission or other incentive
compensation is paid currently to the Participant or deferred pursuant to the
Bank of America 401(k) Restoration Plan or any other non-qualified deferred
compensation plan) in excess of One Million Dollars ($1,000,000).
Section 3.3 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
Restoration Accounts of Participants 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 "Investment Measures" under the Pension Plan). Each Participant shall
designate the investment vehicle(s) in which his or her Restoration 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 the Participating Employer
and shall remain the sole property of the Participating Employer. Effective
July 1, 2000, 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 designatang investments) the following:
7
<PAGE>
(i) Nations LifeGgal Income & Growth Portfolio;
(ii) Nations LifeGoal Balanced Growth Portfolio;
(iii) Nations LifeGoal Growth Portfolio;
(iv) Nations LargeCap Index Fund;
(v) Nations MidCap Index Fund;
(vi) Nations SmallCap Index Fund;
(vii) Stable Capital Fund;
(viii) Nations Bond Fund;
(ix) Nations Value Fund;
(x) Nations International Equity Fund;
(xi) Nations Marsico Focused Equities Fund; and
(xii) Bank of America Corporation Common Stock Fund.
The Committee shall also establish from time to time a default fund into which
a Participant's Restoration Account shall be deemed to be invested if the
Participant fails to provide investment instructions pursuant to this Section
3.3(a). Effective July 1, 2000, such default fund shall be the Stable Capital
Fund.
(b) Periodic Account Adjustments. Each Restoration 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 Participant's Restoration Account wguld have earned (or
lost) for the period since the last adjustment had the Restoration Account
actually been invested in the Pension Plan in the deemed investment vehicle(s)
designated by the Participant for such period pursuant to Section 3.3(a).
(c) Account Adjustments in Connection With Benefit Commencement Date.
----------------------------------------------------------------
Notwithstanding any provision of the Restoration Plan to the contrary, the
Personnel Group may cause a Participant's Restoration Account to be adjusted in
a manner other than based on the Participant's investment election as the
Personnel Group may in its discretion determine from time to time in order to
calculate the amount of the Participant's Restoration Plan benefits that become
payable on or after the Participant's Benefit Commencement Date (including in
connection with determining the amount of installment payments as provided
under Section 3.4(e) below).
Section 3.4 Time and Method of Benefit Payments.
-----------------------------------
(a) Applicable Provisions. The provisions of this Section 3.4 shall apply
---------------------
to the payment of Restoration Plan benefits for Benefit Commencement Dates from
and after July 1, 2000. Exhibit A attached hereto and made a part hereof
---------
contains the applicable payment provisions that apply to the payment of
Restoration Plan benefits for Benefit Commencement Dates from July 1, 1998
through June 30, 2000.
(b) Coordination with Pension Plan Payments. Except as otherwise provided
---------------------------------------
for in this Section 3.4 or in Section 3.6 below, a Participant's vested
Restoration Plan benefits shall be payable at the same time and in the same
form as the Participant's Pension Plan benefits. If a
8
<PAGE>
Participant's Pension Plan benefits are payable in part as an annuity and in
part as a lump sum or other non-annuity form, then the Participant's entire
Restoration Plan benefits shall be payable as an annuity (in the same annuity
form as applicable in part to the Participant's Pension Plan benefits). Any
payment of Restoration Plan benefits in a form different than the form in which
such benefits are otherwise stated shall be determined by the Personnel Group
based on the applicable actuarial equivalency factors in effect from time to
time under the Pension Plan. Notwithstanding any provision of the Restoration
Plan to the contrary, if the amount of a Participant's vested Lump Sum Benefit
is less than or equal to Fifty Thousand Dollars ($50,000) as of the
Participant's Benefit Commencement Date, then such vested Restoration Plan
benefits shall be payable to the Participant as soon as administratively
practicable after the Benefit Commencement Date in a single cash payment
(consistent with the provisions of Section 3.4(d)(i) below). In addition and
notwithstanding any provision of the Restoration Plan to the contrary, if a
Participant's Pension Plan benefits are payable pursuant to a non-annuity
installment payment method (e.g., as a result of having transferred amounts to
the Pension Plan from the Bank of America 401(k) Plan), then the Participant's
vested Restoration Plan benefits shall be payable in a single cash payment in
accordance with the provisions of Section 3.4(d) below.
(c) Other Payment Methods. Notwithstanding the provisions of Section
---------------------
3.4(b) to the contrary, if a Participant's entire Pension Plan benefits are
payable in a single cash payment, then the Participant's vested Restoration
Plan benefits shall be payable in a payment method described in this Section
3.4(c) if elected in accordance with, and subject to, the following terms and
provisions (except to the extent that the provisions of Section 3.4(h) may
apply):
(i) Timing of Elections. A Participant who is in active service may
-------------------
make or change a payment option election among any of the payment options
described in subparagraph (ii) below, subject to the provisions of
subparagraph (iii) below. The election shall not become effective until
the later of (A) the date that is twelve (12) months after the date that
the election is made if the Participant remains in active service
throughout that period (as determined by the Personnel Group in its
discretion) or (B) the date the Participant attains age fifty-five (55).
(ii) Payment Methods. The payment options from which a
---------------
Participant 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.
(iii) Form of Elections. Any election made under this Section
-----------------
3.4(c) 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. A Participant may not have more than two (2) payment
elections pending under this Section 3.4(c) at any one time.
(iv) Failure to Elect. For a Participant who does not yet have
----------------
an election in effect under this Section 3.4(c) or for a Participant who
fails to elect a payment option under this Section 3.4(c) (and assuming
the Participant's entire
9
<PAGE>
Pension Plan benefits are otherwise payable in a single cash payment), the
method of payment shall be the single cash payment.
(d) Single Cash Payments. The following provisions shall apply with
--------------------
respect to single cash payments under the Restoration Plan for a Participant
whose entire Pension Plan benefits are payable in a single cash payment:
(i) Pre-Age 55 or Lump Sum Benefit Under $50,000. If a Participant
--------------------------------------------
terminates employment with the Participating Employers either (A) before
attainment of age fifty-five (55) or (B) with a vested Lump Sum Benefit
(determined as of the Participant's Benefit Commencement Date) that is
Fifty Thousand Dollars ($50,000) or less (even if the Participant has
elected and is otherwise eligible for installment payments), then the
Participant's vested Lump Sum Benefit shall be determined as of the
Participant's Benefit Commencement Date, and such final vested Lump Sum
Benefit shall be paid in a single cash payment to the Participant (or to
the Participant's Beneficiary in the case of the Participant's death) as
soon as administratively practicable after the Benefit Commencement Date.
(ii) After Age 55 and Lump Sum Benefit Over $50,000. If a
----------------------------------------------
Participant terminates employment with the Participating Employers after
attainment of age fifty-five (55) with a vested Lump Sum Benefit
(determined as of the Participant's Benefit Commencement Date) exceeding
Fifty Thousand Dollars ($50,000) and with a single cash payment election
in effect under Section 3.4(c), then such Participant's vested Lump Sum
Benefit shall be paid in a single cash payment to the Participant (or to
the Participant's Beneficiary in the case of the Participant's death)
either (A) within ninety (90) days following the end of the Plan Year in
which the termination of employment occurs if the Benefit Commencement
Date is in the same Plan Year or (B) as soon as administratively
practicable after the Benefit Commencement Date if the Benefit
Commencement Date is in any subsequent Plan Year. In the case of payment
in accordance with clause (A), the Personnel Group shall in its discretion
establish procedures from time to time to cause the amount of such Lump
Sum Benefit to be adjusted for the period between the Benefit Commencement
Date and the applicable payment date.
(e) Annual Installments. If a Participant (whose entire Pension Plan
-------------------
benefits are payable in a single cash payment) terminates employment with the
Participating Employers after attainment of age fifty-five (55) with a vested
Lump Sum Benefit (determined as of the Participant's Benefit Commencement Date)
exceeding Fifty Thousand Dollars ($50,000) and with an installment payment
election in effect under Section 3.4(c), then the amount of the annual
installments shall be calculated and paid pursuant to the following provisions:
(i) Timing of Payments. If the Participant's Benefit Commencement
------------------
Date occurs in the same Plan Year as the Participant's termination of
employment, then the first installment shall be paid within ninety (90)
days
10
<PAGE>
following the end of the Plan Year in which the Participant's Benefit
Commencement Date occurs, and each subsequent installment shall be paid
within ninety (90) days following the end of each subsequent Plan Year
during the selected payment period. If, however, the Participant's Benefit
Commencement Date occurs in a Plan Year after the Plan Year in which the
Participant's termination of employment occurs, then the first installment
shall be paid as soon as administratively practicable after the Benefit
Commencement Date, the second installment shall be paid within ninety (90)
days following the end of the Plan Year in which the Participant's Benefit
Commencement Date occurs, and each subsequent installment shall be paid
within ninety (90) days following the end of each subsequent Plan Year
during the selected payment period.
(ii) Special Adjustment to Restoration Account. If a Participant's
-----------------------------------------
Lump Sum Benefit to be payable as annual installments is determined under
the provisions of Section 3.5 (rather than based on the amount credited to
the Participant's Restoration Account), then in order to administer the
payment of annual installments of such Lump Sum Benefit the Participant's
Restoration Account shall be adjusted (either up or down, as applicable)
as of the Benefit Commencement Date to equal the amount of such Lump Sum
Benefit.
(iii) Amount of Installments. The amount payable for each
----------------------
installment shall equal the Restoration Account balance as of either:
(A) the Benefit Commencement Date (in the case of the first
installment payment made for a Benefit Commencement Date that
occurs in a Plan Year after the Plan Year in which the Participant's
termination of employment occurs), or
(B) the end of the applicable Plan Year (in the case of any
other installment payment made within ninety (90) days following
the end of a Plan Year)
divided by the number of remaining installments (including the
installment then payable).
(iv) Investment of Account During Payment Period. The Participant's
-------------------------------------------
Restoration Account, to the extent vested, shall continue to be credited
with adjustments under Section 3.3 during the installment payment period
as follows:
(A) if the Participant has elected to receive payment through
five (5) annual installments, then the Participant shall be
permitted to continue to direct the investment of the Participant's
unpaid Restoration Account balance in accordance with Section 3.3
during the payment period (i.e., from the Participant's Benefit
Commencement Date through the last day of the Plan Year preceding
the last installment payment); and
11
<PAGE>
(B) if the Participant has elected to receive payment through
ten (10) annual installments, then the Participant's unpaid
Restoration Account balance shall be deemed invested in the Stable
Capital Fund during the payment period (i.e., from the Participant's
Benefit Commencement Date through the last day of the Plan Year
preceding the last installment payment).
(v) Death of Participant. If a Participant covered by this Section
--------------------
3.4(e) dies, then the annual installments (or remaining annual
installments in the case of death after commencement of payment) shall be
paid to the Participant's Beneficiary as and when such installments would
have otherwise been paid to the Participant had the Participant not died.
(f) Vesting of Restoration Accounts. Notwithstanding any provision of the
-------------------------------
Restoration Plan to the contrary, a Participant's Restoration Plan benefits
shall be vested if, and to the same extent, that the Participant's Pension Plan
benefits are vested. If, and to the extent that, a Participant's Restoration
Plan benefits are not vested on the date that the Participant terminates
employment with the Participating Employers, such benefits shall be forfeited
as of such date. However, if a Participant whose Restoration Plan benefits are
forfeited subsequently returns to service with any Participating Employer, any
such forfeitures shall be restored (adjusted for earnings on the same basis as
restored forfeitures under the Pension Plan) as soon as administratively
practicable after the date of such return to service (such restored benefits
shall remain subject to the vesting requirements of this Section 3.4(f)).
(g) Other Payment Provisions. A Participant shall not be paid any portion
------------------------
of the Participant's Restoration Account prior to the Participant's termination
of employment with the Participating Employers. Any Restoration Plan benefit or
payment hereunder shall be subject to applicable payroll and withholding taxes.
In the event any amount becomes payable under the provisions of the Restoration
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 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.
(h) Former SRP Participants. Notwithstanding any other provisions in this
-----------------------
Restoration Plan to the contrary, the following provisions shall apply to a
Participant who was participating in the SRP as of June 30, 2000:
(i) SRP Installment Elections. If (A) the Participant has in
-------------------------
effect as of June 30, 2000 an installment payment election (but not
including an annuity payment election based on the Participant's life or
the joint life of the Participant and his or her Beneficiary) under the
SRP (an "SRP Installment Election") and (B) the Participant's entire
Pension Plan benefits are payable in a single cash payment, then the
Participant's vested Restoration Plan benefits shall be payable
12
<PAGE>
in the number of installments provided by such SRP Installment Election
(even if the Participant has not attained age fifty-five (55) upon
termination of employment) unless either (X) the Participant changes such
election in accordance with the provisions of Section 3.4(c)(i) above or
this Section 3.4(h) or (Y) the Participant's vested Lump Sum Benefit is
Fifty Thousand Dollars ($50,000) or less as of the Participant's Benefit
Commencement Date (in which case payment of such Lump Sum Benefit shall be
in the form of a single cash payment in accordance with the provisions of
Section 3.4(d)(i) above).
(ii) Timing and Amount of Installment Payments. Notwithstanding any
-----------------------------------------
provision of the SRP Installment Election to the contrary, the timing of
the installment payments and the method for determining the amount of each
installment payment shall be determined in accordance with the provisions
of Section 3.4(e)(i), (ii) and (iii) above.
(iii) Investments During Installment Payment Period.
---------------------------------------------
Notwithstanding any provision of the SRP Installment Election to the
contrary, if the SRP Installment Election had a payment period of five (5)
years or less, then the Restoration Account may continue to be invested
during the payment period in accordance with the Participant's investment
election as provided in Section 3.3 (consistent with the provisions of
Section 3.4(e)(iv) applicable to five (5) annual installments). However,
if the SRP Installment Election had a payment period in excess of five (5)
years, then the Restoration Account shall be deemed invested in the Stable
Capital Fund during the payment period (consistent with the provisions of
Section 3.4(e)(iv) applicable to ten (10) annual installments).
(iv) Special Right to Change Election. If a Participant to which
--------------------------------
this Section 3.4(h) applies is under age fifty-five (55), then (A) the
Participant may at any time elect to change the method of payment to a
single cash payment (in accordance with Section 3.4(d) above) and (B) the
Participant may elect on or before August 31, 2000 to change the method of
payment to either five (5) or ten (10) year annual installments. In either
case, such election shall not become effective until the date that is
twelve (12) months after the date that the election is made if the
Participant remains in active service throughout that period (as
determined by the Personnel Group in its discretion).
Section 3.5 Minimum and Special Benefits. Notwithstanding any provision
----------------------------
of the Restoration Plan to the contrary, if the Actuarial Equivalent single sum
value of Amount A described below as of a Participant's Benefit Commencement
--------
Date exceeds the sum of the Participant's Restoration Account and Pension Plan
Accounts as of such date, then the Participant's Restoration Plan benefits
shall equal the excess (if any) of Amount A over Amount B, where:
-------- --------
Amount A equals the Pension Plan benefits determined in accordance with
--------
the Applicable Minimum Benefits Provisions of the Pension Plan if (i) the
Code Limitations did not apply to the Pension Plan and (ii) the
Participant's compensation
13
<PAGE>
under the Pension Plan included any amounts which were disregarded because
of the Participant's deferral of such amounts pursuant to an election under
the Bank of America 401(k) Restoration Plan or any other nonqualified
deferred compensation plan designated by the Personnel Group; and
Amount B equals the Participant's actual Pension Plan benefits.
--------
Restoration Plan benefits determined in accordance with the provisions of this
Section 3.5 are subject to the limitation on certain incentive compensation set
forth in Section 3.2(d) and shall be payable in accordance with the provisions
of Section 3.4.
Section 3.6 Participants Without Restoration Accounts. Notwithstanding
----------------------------------------
any provision of the Restoration Plan to the contrary, if a Participant does
not have a Restoration Account (for example, because the Participant commenced
benefit payments under the Restoration Plan prior to conversion of the Pension
Plan to a cash balance plan, because the Participant was in a "deferred vested"
status prior to such date, or because the Participant was in pay status or was
a deferred vested participant under a prior plan that was merged into the
Restoration Plan as described in Section 5.7 below), the Participant's
Restoration Plan benefits shall be determined and paid in accordance with the
provisions of the Restoration Plan as in effect prior to July 1, 1998 (or the
provisions of any prior plan, if applicable); provided, however, that the
-------- -------
Personnel Group may in its discretion (i) determine to pay out in a single cash
payment any such benefits that as of a given determination date have an
Actuarial Equivalent single sum value less than or equal to Fifty Thousand
Dollars ($50,000), or (ii) otherwise modify the date(s) and/or form(s) of
payment so long as the effect of any such modification does not further defer
the date of payment(s).
Section 3.7 Coordination with SERP Payments. In the event that a Covered
-------------------------------
Associate is eligible to receive SERP benefits, the Personnel Group may make
such changes as it deems necessary or advisable to the payment and benefit
calculation procedures described in this Article III in order to have the
Covered Associate's vested Restoration Plan benefits paid at the same time(s)
and in the same form as the Covered Associate's SERP benefits, so long as any
such change does not otherwise reduce the Actuarial Equivalent amount of the
Covered Associate's vested Restoration Plan benefits.
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 of a Participant's Restoration Plan benefits on the date of
such amendment or termination, or further defer the due dates for the payment
of such benefits, without the consent of the affected person. In connection
with any termination of the Restoration Plan, the Corporation shall have the
authority to cause the Restoration Plan benefits of all current and former
Participants (and Beneficiary of any deceased Participants) to be paid in a
single sum
14
<PAGE>
payment as of a date determined by the Corporation or to otherwise accelerate
the payment of all Restoration Plan benefits in such manner as the Corporation
shall determine in its discretion.
Section 4.2 Change of Control.
-----------------
(a) General. Notwithstanding any provisions of the Restoration Plan to
-------
the contrary, on and after the date of a Change of Control (i) the provisions
of the Restoration Plan may not be terminated, amended or modified if the
Amendment or Termination Date is prior to the date immediately following the
date of the Change of Control and (ii) with respect to any amendment to the
Restoration Plan otherwise permissible under clause (i), the provisions of the
Restoration Plan may not be terminated, amended or modified to reduce,
eliminate or otherwise adversely affect in any manner the total amount of
benefits that would have been payable to a Participant, or the method and
timing by which such benefits would have been payable to the Participant, from
time to time under the Restoration Plan, assuming for this purpose that the
Participant had separated from service (as such term is defined in the Pension
Plan) on the date immediately preceding the Amendment or Termination Date of
any such amendment or termination; provided, however, the Corporation may
-------- -------
terminate, amend or modify the Restoration Plan at any time prior to the date
of a Change of Control in accordance with, and subject to, the provisions of
Section 4.1.
(b) Certain Benefits Disregarded. In determining after a Change of
----------------------------
Control the total amount of benefits payable under the Restoration Plan to or
with respect to a Participant who is also a participant in either the
NationsBank Supplemental Executive Retirement Plan or the NationsBank
Supplemental Executive Retirement Plan for Senior Management Employees, the
Participating Employers shall disregard the effect of any increase in the
accrued benefit (as such term is defined in the Pension Plan) of such
Participant as a result of Section 17.3 of the Pension Plan.
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 cgmpensation 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 Restoration
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 Participant, designated beneficiary or estate. The amounts
credited by a Participating Employer to such Restoration 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 a Participant, 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, a Participant's employment with a Participating Employer
shall not be considered to have
15
<PAGE>
terminated so long as the Participant is in the employ of any Participating
Employer, other member of the Affiliated Group or any other entity as the
Personnel Group may designate.
Section 5.3 Spendthrift Provision. No Restoration Plan benefits or other
---------------------
right or interest under the Restoration Plan of a Participant or Beneficiary
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 Participant or
Beneficiary. Notwithstanding the foregoing, the Participating Employers shall
have the right to offset from a Participant's unpaid benefits under the
Restoration Plan any amounts due and owing from the Participant to the extent
permitted by law.
Section 5.4 Employment Noncontractual. The establishment of the
-------------------------
Restoration Plan shall not enlarge or otherwise affect the terms of any
Participant's employment with his Participating Employer, and such
Participating Employer may terminate the employment of the Participant 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
Pension Plan, such adoption to be effective as of the date specified by such
Participating Employer at the time of adoption.
Section 5.6 Applicable Law. The Restoration Plan shall be governed and
--------------
construed in accordance with the laws of the State of North Carolina, except to
the extent such laws are preempted by the laws of the United States of America.
Section 5.7 Merged Plans. From time to time the Participating Employers
------------
may cause other nonqualified plans to be merged into the Restoration Plan.
Schedule 5.7 attached hereto sets forth the names of the plans that merged into
the Restoration Plan by July 1, 2000 and their respective merger dates.
Schedule 5.7 shall be updated from time to time to reflect mergers after July
1, 2000.
Upon such a merger, the accrued benefits 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 a Restoration Account 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, the Restoration Account established for the participant as a result
of the merger shall be periodically adjusted when and as provided in Section
3.3 hereof as in effect from time to time and shall be paid at such time and in
such manner as provided in Section 3.4 hereof, except to the extent otherwise
provided on Schedule 5.7. Notwithstanding any provision of this Section 5.7 to
the contrary and subject to the provisions of Section 3.6, a participant in a
merged plan that is in pay status or is a terminated employee in a deferred
vested status as of the plan merger date shall continue to be eligible to
receive benefits as and when provided under the terms of the merged plan as in
effect immediately prior to such merger. The Personnel Group shall, in its
discretion, establish any procedures it deems necessary or advisable in order
to administer any such plan mergers,
16
<PAGE>
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.
Section 5.8 Status Under the Act. The Restoration Plan is maintained for
--------------------
purposes of providing deferred compensation for a select group of management or
highly compensated employees. In addition, to the extent that the Restoration
Plan makes up benefits limited under the Pension Plan as a result of Section
415 of the Code, the Restoration Plan shall be considered an "excess benefit
plan" within the meaning of the Act.
Section 5.9 Claims Procedure. Any claim for benefits under the
----------------
Restoration Plan by a Participant or Beneficiary shall be made in accordance
with the claims procedures set forth in the Pension Plan.
Section 5.10 Limited Effect of Restatement. Notwithstanding anything to
-----------------------------
the contrary contained in the Plan, to the extent permitted by the Act and the
Code, this instrument shall not affect the availability, amount, form or method
of payment of benefits being paid before the Conversion Date, or to be paid on
or after the Conversion Date, to any Participant or former Participant (or a
Beneficiary of either) in the Restoration Plan who is not an active Participant
on or after the Conversion Date, said availability, amount, form or method of
payment of benefits, if any, to be determined in accordance with the applicable
provisions of the Restoration Plan as in effect prior to the Conversion Date.
Section 5.11 Binding Effect. The Restoration Plan (including any and all
--------------
amendments thereto) shall be binding upon the Participating Employers, their
respective successors and assigns, and upon the Participants and their
Beneficiaries and their respective heirs, executors, administrators, personal
representatives and all other persons claiming by, under or through any of them.
IN WITNESS WHEREOF, this instrument has been executed by the Corporation
effective as of July 1, 1998.
BANK OF AMERICA CORPORATION
By: /s/ J. Steele Alphin
----------------------------------------
Title: Corporate Personnel Executive
` ----------------------------------
17
<PAGE>
SCHEDULE 5.7
MERGED PLANS AS OF JULY 1, 2000
-------------------------------
Plan Name Date of Merger
- --------- --------------
BankAmerica Supplemental Retirement Plan July 1, 2000
(but only as to BankAmerica Pension Plan
restored benefits)
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(G)
<SEQUENCE>7
<FILENAME>dex10g.txt
<DESCRIPTION>401-K RESTORATION PLAN
<TEXT>
<PAGE>
Exhibit 10(g)
BANK OF AMERICA 401(k) RESTORATION PLAN
(as amended and restated effective July 1, 2000)
<PAGE>
BANK OF AMERICA 401(k) RESTORATION PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS........................................................ 1
Section 1.1 Definitions............................................. 1
-----------
ARTICLE II PLAN ADMINISTRATION............................................... 4
Section 2.1 Committee............................................... 4
---------
ARTICLE III DEFERRED COMPENSATION PROVISIONS................................. 4
Section 3.1 Form and Time of Elections.............................. 4
--------------------------
Section 3.2 Deferrals by Highly Compensated Associates.............. 4
------------------------------------------
Section 3.3 Matching Contributions for Highly Compensated Associates 5
--------------------------------------------------------
Section 3.4 Deferrals by Key Associates............................. 6
---------------------------
Section 3.6 Account Adjustments..................................... 7
-------------------
Section 3.7 Account Payments Following Termination of Employment.... 8
----------------------------------------------------
Section 3.8 In-Service Withdrawals.................................. 12
----------------------
Section 3.9 Other Contributions..................................... 13
-------------------
ARTICLE IV AMENDMENT AND TERMINATION......................................... 13
Section 4.1 Amendment and Termination............................... 13
-------------------------
ARTICLE V MISCELLANEOUS PROVISIONS........................................... 13
Section 5.1 Nature of Plan and Rights............................... 13
-------------------------
Section 5.2 Termination of Employment............................... 14
-------------------------
Section 5.3 Spendthrift Provision................................... 14
---------------------
Section 5.4 Employment Noncontractual............................... 14
-------------------------
Section 5.5 Adoption by Other Participating Employers............... 14
-----------------------------------------
Section 5.6 Applicable Law.......................................... 14
--------------
Section 5.7 Merged Plans............................................ 14
------------
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 5.8 Status Under the Act.................................... 15
--------------------
Section 5.9 Claims Procedure........................................ 15
----------------
</TABLE>
ii
<PAGE>
BANK OF AMERICA 401(k) RESTORATION PLAN
(as amended and restated effective July 1, 2000)
THIS INSTRUMENT OF AMENDMENT AND RESTATEMENT is executed effective as of
the 1st day of July, 2000, by BANK OF AMERICA CORPORATION, a Delaware
corporation (the "Corporation");
Statement of Purpose
--------------------
The Corporation sponsors The NationsBank Corporation 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 associates
whose benefits under The NationsBank 401(k) Plan (the "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.
Effective July 1, 2000, a number of changes are being made to the
Corporation's employee benefit plans in connection with the combination of the
former NationsBank and BankAmerica benefit programs. By this Instrument, the
Corporation is amending and restating the Restoration Plan effective July 1,
2000 to (i) make a number of design changes to the Restoration Plan in
connection with those benefit program changes, (ii) rename the Restoration Plan
as the "Bank of America 401(k) Restoration Plan", and (iii) otherwise meet
current needs.
NOW, THEREFORE, for the purposes aforesaid, the Corporation hereby amends
and restates the Restoration Plan effective July 1, 2000 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.
Annual Incentive Award means, with respect to a Key Associate, any
----------------------
annual incentive award payable to such Key Associate pursuant to (i) the
Bank of America Executive Incentive Compensation Plan or (ii) 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
<PAGE>
payable annually, quarterly, or on such other basis as provided by the
applicable plan.
Associate means a common law employee of a Participating Employer
---------
who is identified as an employee in the personnel records of the
Participating Employer.
Beneficiary means the "Beneficiary" of a Covered Associate under the
-----------
401(k) Plan, unless the Covered Associate elects a different Beneficiary
for purposes of the Restoration Plan in accordance with such procedures as
the Personnel Group may establish from time to time. If there is no
Beneficiary election in effect under the 401(k) Plan or the Restoration
Plan at the time of a Covered Associate's death, or if the designated
Beneficiary fails to survive the Covered Associate, then the Beneficiary
shall be the Covered Associate's surviving spouse, or if there is no
surviving spouse, the Covered Associate's estate.
Benefit Determination Date means the last day of the calendar month
--------------------------
following the calendar month in which a Covered Associate's employment
with the Participating Employers terminates, or the last day of a
subsequent calendar month if the Personnel Group determines to be
administratively necessary or appropriate (e.g., as a result of the timing
of notification to the Personnel Group of such termination of employment).
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 Associate 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 Bank of America Corporation, a Delaware
-----------
corporation, and any successor thereto.
Covered Associate means either a Highly Compensated Associate or a
-----------------
Key Associate.
DCP means the BankAmerica Corporation Deferred Compensation Plan.
---
2
<PAGE>
Deferral Account means the account established and maintained on the
----------------
books of a Participating Employer to record a Covered Associate's interest
under the Restoration Plan attributable to amounts credited to the Covered
Associate pursuant to Section 3.2 or Section 3.4 of the Restoration Plan.
401(k) Plan means The Bank of America 401(k) Plan, as in effect from
-----------
time to time.
Highly Compensated Associate means an Associate eligible to
----------------------------
participate in the 401(k) Plan who the Personnel Group determines to be a
"highly compensated employee" (within the meaning of Section 414(q) of the
Code) under the 401(k) Plan for a Plan Year, but shall not include a Key
Associate.
Key Associate means a Covered Associate who is in Band 0, 1, 2 or 3,
-------------
or who has annual base compensation of $100,000 or more as determined by
the Personnel Group in its discretion at such time or times as it may
select.
Matching Contribution Restoration Account means the account
-----------------------------------------
established and maintained on the books of a Participating Employer to
record a Covered Associate's interest under the Restoration Plan
attributable to amounts credited to the Covered Associate pursuant to
Section 3.3 or Section 3.5 of the Restoration Plan.
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. In addition, the Personnel Group, in its sole and
exclusive discretion, may designate certain other entities as
"Participating Employers" under the Restoration Plan for such purposes as
the Personnel Group may determine from time to time.
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 Bank of America 401(k)
----------------
Restoration Plan as in effect from time to time.
SRP means the BankAmerica Supplemental Retirement Plan, other than
---
the portion of the SRP that restored benefits under the BankAmerica
Pension Plan.
3
<PAGE>
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 an 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 Form and Time of Elections. Prior to January 1 of a Plan
--------------------------
Year, or at such other times as may be established by the Personnel Group, a
Covered Associate for the Plan Year may elect to defer under the Restoration
Plan such amounts as provided by this Article III in accordance with the
procedures set forth in this Section 3.1. 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 Associate
under this Section 3.1 shall continue in effect for all subsequent Plan Years
(during which the Covered Associate is a highly compensated employee) unless
and until changed or terminated by the Covered Associate 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.
Section 3.2 Deferrals by Highly Compensated Associates. If a Highly
------------------------------------------
Compensated Associate makes an election to defer in accordance with Section 3.1
above for a Plan Year, the amount attributable to any Pre-Tax Employee
Contribution for a particular pay period during the Plan Year which cannot be
credited to the Highly Compensated Associate under the 401(k) Plan because of
the Code Limitations shall be credited to a Deferral Account established and
4
<PAGE>
maintained in the name of the Highly Compensated Associate on the books and
records of his or her Participating Employer. Such amount shall be credited to
the Deferral Account as of the date the amount would have otherwise been paid
to the Highly Compensated Associate.
Section 3.3 Matching Contributions for Highly Compensated Associates.
--------------------------------------------------------
A Participating Employer shall establish and maintain on its books a Matching
Contribution Restoration Account for each Highly Compensated Associate 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. If a Highly Compensated Associate is a Match-Eligible
Participant for the Plan Year under the 401(k) Plan, the Highly Compensated
Associate'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 one hundred percent (100%) of the sum of the portions (if any)
--------
of the amounts credited to the Highly Compensated Associate's Deferral
Account for the Plan Year pursuant to Section 3.2 above 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 Highly Compensated Associate and
the Code Limitations not applied to the 401(k) Plan.
Amount B is one hundred percent (100%) of the portion (if any) of the
--------
actual Matchable Pre-Tax Employee Contributions made to the 401(k) Plan
for the Highly Compensated Associate for the Plan Year with respect to
which Matching Contribution allocations were not made under Section 5.4 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, no amount shall be credited to the Matching
Contribution Restoration Account of a Highly Compensated Associate for a Plan
Year to the extent it relates to bonus, incentive or commission compensation
payable to the Highly Compensated Associate for the Plan Year in excess of One
Million Dollars ($1,000,000); provided, however, that for a Highly Compensated
-------- -------
Associate who first becomes eligible to participate in the Restoration Plan on
July 1, 2000 as a result of the merger of the DCP or SRP into the Restoration
Plan on that date, the foregoing limit shall apply only with respect to
bonuses, incentives or commissions earned and paid following July 1, 2000. In
addition, the Plan Administrator may determine, in its sole and exclusive
discretion, to deduct from the amount otherwise to be credited to the Matching
Contribution Restoration Account of a Highly Compensated Associate for a Plan
Year an amount necessary to pay any related payroll taxes.
5
<PAGE>
Section 3.4 Deferrals by Key Associates.
---------------------------
(a) Deferral Accounts for Key Associates. A Participating Employer
------------------------------------
shall establish and maintain on its books a Deferral Account for each Key
Associate employed by such Participating Employer who elects pursuant to
Section 3.1 to defer the receipt of any amount of the Restoration Plan. Such
Deferral Account shall be designated by the name of the Key Associate for whom
established. The amount to be deferred under this Section 3.4 for a payroll
period shall be credited to such Deferral Account as of the date such amount
would have otherwise been paid to the Key Associate.
(b) Election to Defer Base Salary. A Key Associate may elect to defer,
-----------------------------
on a combined basis with the 401(k) Plan as hereinafter provided, up to thirty
percent (30%) of the Key Associate's base salary for a Plan Year; provided,
--------
however, that the Key Associate has elected to defer no less than the maximum
- -------
percentage amount permissible under the 401(k) Plan for the Plan Year.
Deferrals shall be made on a payroll period basis. The deferral of base salary
for a payroll period shall be made after any Pre-Tax Employee Contributions
under the 401(k) Plan for the payroll period related to such base salary such
that the total percentage of base salary deferred for the payroll period on a
combined basis with the percentage of base salary deferred under the 401(k)
Plan for the payroll period shall equal the percentage elected by the Key
Associate without any regard to the Code Limitations.
(c) Election to Defer Covered Annual Incentive Award. Each Key
------------------------------------------------
Associate for a Plan Year may elect pursuant to Section 3.1 above to defer for
the Plan Year up to ninety percent (90%) of any Annual Incentive Award
otherwise payable to the Key Associate for the Plan Year. Such deferral shall
be made without regard to the Code Limitations. Any portion of an Annual
Incentive Award not deferred under the Restoration Plan shall be excluded from
the Key Associate's Compensation in accordance with, and subject to, the terms
and provisions of the 401(k) Plan (and therefore shall not be included in
determining the amount of the Key Associate's Pre-Tax Employee Contributions
under the 401(k) Plan).
Section 3.5 Matching Contributions for Key Associates.
-----------------------------------------
(a) Matching Contribution Restoration Account for Key Associates. A
------------------------------------------------------------
Participating Employer shall establish and maiftain on its books a Matching
Cgntribution Restoration Account for each Key Associate employed by such
Participating Employer who is credited with a matching contribution under this
Section 3.5. Such Matching Contribution Restoration Account shall be designated
by the name of the Key Associate for whom established.
(b) Matching Contributions for Base Salary Deferrals. If a Key
------------------------------------------------
Associate is a Match-Eligible Participant for the Plan Year under the 401(k)
Plan, the Key Associate'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 determined consistent with the provisions
of Section 3.3 above with respect to any base salary deferrals for the Plan
Year pursuant to Section 3.4(b) above.
6
<PAGE>
(c) Matching Contributions for Annual Incentive Awards. If a Key
--------------------------------------------------
Associate is a Match-Eligible Participant for a Plan Year under the 401(k) Plan
and has deferred any portion of the Key Associate's Annual Incentive Award
under Section 3.4(c) that would have otherwise been paid during the Plan Year,
then the Matching Contribution Restoration Account of the Key Associate 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 the amount of
the Annual Incentive Award otherwise payable during the Plan Year that is
deferred by the Key Associate pursuant to Section 3.4(c) above, but excluding
any such deferrals that exceed five percent (5%) of the Key Associate's total
Annual Incentive Award. Notwithstanding the foregoing, the maximum amount of
such matching contribution for a Plan Year shall equal Fifty Thousand Dollars
($50,000) (i.e., the matching contribution shall not be based on the portion of
an Annual Incentive Award exceeding $1,000,000).
(d) Payroll Taxes. The Plan Administrator may determine, in its sole
-------------
and exclusive discretion, to deduct from the amount otherwise to be credited to
the Matching Contribution Restoration Account of a Key Associate for a Plan
Year an amount necessary to pay any related payroll taxes.
Section 3.6 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 Associates 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 Associate 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 the
Participating Employer and shall remain the sole property of the Participating
Employer. Effective July 1, 2000, 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) Nations LifeGoal Income & Growth Portfolio;
(ii) Nations LifeGoal Balanced Growth Portfolio;
(iii) Nations LifeGoal Growth Portfolio;
(iv) Nations LargeCap Index;
(v) Nations MidCap Index Fund;
(vi) Nations SmallCap Index Fund;
(vii) Stable Capital Fund;
(viii) Nations Bond Fund;
(ix) Nations Value Fund;
(x) Nations Interfational Equity Fund;
(xi) Nations Marsico Focused Equities Fund; and
7
<PAGE>
(xii) Bank of America Corporation Common Stock Fund.
The Committee shall also establish from time to time a default Fund into which
a Covered Associate's Account shall be deemed to be invested if the Covered
Associate fails to provide investment instructions pursuant to this Section
3.6(a). Effective July 1, 2000, such default Fund shall be the 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 Associate's Account would have earned (or lost) for the
period since the last adjustment had the Account actually been invested in the
401(k) Plan in the deemed investment vehicle(s) designated by the Covered
Associate for such period pursuant to Section 3.6(a).
Section 3.7 Account Payments Following Termination of Employment.
----------------------------------------------------
(a) Payment Options.
---------------
(i) A Covered Associate may make or change a payment option
election among any of the payment options described in subparagraph (ii)
below, subject to the provisions of subparagraph (iii) below. The election
shall not become effective until the later of (A) the date that is twelve
(12) months after the date that the election is made (as determined by the
Personnel Group in its discretion) or (B) the date the Covered Associate
attains age fifty-five (55).
(ii) The payment options from which a Covered Associate 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.
(iii) Any election made under this Section 3.7(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. A Covered
Associate may not have more than two (2) payment elections pending under
this Section 3.7(a) at any one time.
(iv) For a Covered Associate who dges not yet have an election
in effect under this Section 3.7(a) or for a Covered Associate who fails
to elect a payment option under this Section 3.7(a), 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) If a Covered Associate terminates employment with the
Participating Employers either (A) before attainment of age fifty-five
(55) or (B)
8
<PAGE>
with a vested Account balance (determined as of the Benefit Determination
Date) that is Fifty Thousand Dollars ($50,000) or less (even if the
Covered Associate has elected and is otherwise eligible for installment
payments), then the Covered Associate's Account, to the extent vested,
shall be determined as of the Benefit Determination Date, and such final
vested Account balance shall be paid in a single cash payment to the
Covered Associate (or to the Covered Associate's Beneficiary in the case
of the Covered Associate's death) as soon as administratively practicable
after the Benefit Determination Date.
(ii) If a Covered Associate terminates employment with the
Participating Employers after attainment of age fifty-five (55) with a
vested Account balance (determined as of the Benefit Determination Date)
exceeding Fifty Thousand Dollars ($50,000) and with a single cash payment
election in effect under Section 3.7(a), then such Covered Associate's
Account, to the extent vested, shall continue to be credited with
adjustments under Section 3.6 through the last day of the Plan Year in
which such termination of employment occurs. The final vested Account
balance as of the last day of such Plan Year shall be paid in a single
cash payment to the Covered Associate (or to the Covered Associate's
Beneficiary in the case of the Covered Associate's death) within ninety
(90) days following the end of such Plan Year. Notwithstanding the
foregoing, if the applicable Benefit Determination Date occurs in the Plan
Year after the Plan Year in which termination of employment occurs, then
the single cash payment shall be in the amount of the Account Balance
determined as of the Benefit Determination Date and shall be payable as
soon as administratively practicable after the Benefit Determination Date.
(c) Annual Installments. If a Covered Associate terminates employment
-------------------
with the Participating Employers after attainment of age fifty-five (55) with a
vested Account balance (determined as of the Benefit Determination Date)
exceeding Fifty Thousand Dollars ($50,000) and with an installment payment
election in effect under Section 3.7(a), then the amount of the annual
installments shall be calculated and paid pursuant to the following provisions:
(i) Timing of Payments. The first installment shall be paid
------------------
within ninety (90) days following the end of the Plan Year in which the
Covered Associate's employment with the Participating Employers
terminates; provided, however, that if the applicable Benefit
-------- -------
Determination Date occurs in the Plan Year after the Plan Year in which
termination of employment occurs, then the first installment shall be paid
as soon as administratively practicable after the Benefit Determination
Date. Each subsequent installment shall be paid within ninety (90) days
following the end of each subsequent Plan Year during the selected payment
period.
(ii) Amount of Installments. The amount payable for each
----------------------
installment shall equal the Account balance as of the end of the
applicable Plan Year divided by the number of remaining installments
(including the installment then payable); provided, however, that if the
-------- -------
applicable Benefit Determination Date occurs in the
9
<PAGE>
Plan Year after the Plan Year in which termination of employment occurs,
then the amount of the first installment shall be based on the amount of
the Account balance as of such Benefit Determination Date.
(iii) Investment of Account During Payment Period. The Covered
-------------------------------------------
Associate's Account, to the extent vested, shall continue to be credited
with adjustments under Section 3.6 through the end of the Plan Year in
which the Covered Associate's employment with the Participating Employers
terminates (or through the applicable Benefit Determination Date if the
Benefit Determination Date occurs in the Plan Year after the Plan Year in
which termination of employment occurs). If the Covered Associate has
elected to receive payment through five (5) annual installments, then the
Covered Associate shall be permitted to continue to direct the investment
of the Covered Associate's unpaid Account balance in accordance with
Section 3.6 during the payment period (i.e., through the last day of the
fourth Plan Year after the Plan Year in which the Covered Associate's
employment with the Participating Employers terminates). If the Covered
Associate has elected to receive payment through ten (10) annual
installments, then the Covered Associate's unpaid Account balance shall be
deemed invested in the Stable Capital Fund during the payment period
(i.e., through the last day of the ninth Plan Year after the Plan Year in
which the Covered Associate's employment with the Participating Employers
terminates).
(iv) Death of Covered Associate. If a Covered Associate covered
--------------------------
by this Section 3.7(c) dies, then the annual installments (or remaining
annual installments in the case of death after commencement of payment)
shall be paid to the Covered Associate's Beneficiary as and when such
installments would have otherwise been paid to the Covered Associate had
the Covered Associate not died.
(d) Vesting of Matching Accounts. Notwithstanding any provision of the
----------------------------
Restoration Plan to the contrary, if a Covered Associate is not fully (100%)
vested in the amount credited tg the Associate's Matching Contribution Account
under the 401(k) Plan at the time of the Associate's termination of employment
with the Participating Employers, then the amount credited to the Covered
Associate's Matching Contribution Restoration Account shall be reduced as of
the applicable Benefit Determination Date 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 Associate'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 Associate's Matching Contribution Restoration Account
is reduced by application of the preceding sentence shall be forfeited as of
the applicable Benefit Determination Date.
(e) Other Payment Provisions. Subject to the provisions of Section
------------------------
3.8, a Covered Associate shall not be paid any portion of the Associate's
Account prior to the Associate'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 Associate shall be deemed to have terminated employment with the
10
<PAGE>
Participating Employers upon eligibility for benefits under the Long-Term
Disability Plan in which the Covered Associate participates as in effect from
time to time; provided, however, that the Personnel Group may in its discretion
-------- -------
determine that a Covered Associate who is eligible to receive Long-Term
Disability Plan benefits has not terminated employment if the Personnel Group
concludes that the Covered Associate is likely to return to work. In the event
any amount becomes payable under the provisions of the Restoration Plan to a
Covered Associate, 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.
(f) Former DCP and SRP Participants. Notwithstanding any other
-------------------------------
provisions in this Restoration Plan to the contrary, the following provisions
shall apply to a Covered Associate who was participating in the DCP or SRP as
of June 30, 2000:
(i) If the Covered Associate has in effect as of June 30, 2000
an installment payment election (but not including an annuity payment
election based on the Covered Associate's life or the joint life of the
Covered Associate and his or her Beneficiary) under the DCP or (if no
installment payment election is in effect under the DCP) the SRP (a "Prior
Plan Installment Election"), then the Covered Associate's vested Account
balance shall be payable in the number of installments provided by such
Prior Plan Installment Election (even if the Covered Associate has not
attained age fifty-five (55) upon termination of employment) unless either
(A) the Covered Associate changes such election in accordance with the
provisions of Section 3.7(a)(ii) above or this Section 3.7(f) or (B) the
Covered Associate's vested Account balance is Fifty Thousand Dollars
($50,000) or less as of the applicable Benefit Determination Date (in
which case the Account shall be payable in a single cash payment in
accordance with Section 3.7(b)(i) above).
(ii) Notwithstanding any provision of the Prior Plan
Installment Election to the contrary, the timing of the installment
payments and the method for determining the amount of each installment
payment shall be determined in accordance with the provisions of Section
3.7(c)(i) and (ii) above.
(iii) Notwithstanding any provision of the Prior Plan
Installment Election to the contrary, if the Prior Plan Installment
Election had been made under the SRP with a payment period of five (5)
years or less or under the DCP (regardless of the payment period), then
the Account may continue to be invested during the payment period in
accordance with the Covered Associate's investment election as provided in
Section 3.6 (consistent with the provisions of Section 3.7(c)(iii)
applicable to five (5) annual installments). However, if the Prior Plan
Installment Election had been made under the SRP with a payment period in
excess of five (5) years, then the Account shall be deemed invested in the
Stable
11
<PAGE>
Capital Fund during the payment period (consistent with the provisions of
Section 3.7(c)(iii) applicable to ten (10) annual installments).
(iv) If a Covered Associate to which this Section 3.7(f)
applies is under age fifty-five (55), then (A) the Covered Associate may
at any time elect to change the method of payment to a single cash payment
and (B) the Covered Associate may elect on or before August 31, 2000 to
change the method of payment to either a single cash payment or five (5)
or ten (10) year annual installments. In either case, such election shall
not become effective until the date that is twelve (12) months after the
date that the election is made (as determined by the Personnel Group in
its discretion).
(v) In the case of a former DCP or SRP participant who is not
employed by the Participating Employers as of July 1, 2000, payments of
DCP and SRP balances shall be made in accordance with the provisions of
the DCP and SRP, as applicable, except that any participant-directed
investment of DCP accounts shall be made in accordance with the provisions
of Section 3.6 above.
Section 3.8 In-Service Withdrawals.
----------------------
(a) Withdrawals on Demand. A Covered Associate who is in the active
---------------------
service of a Participating Employer may elect to receive an unscheduled payment
of up to one hundred percent (100%) of his or her vested Account balance at any
time; provided, however, that (i) ten percent (10%) of the amount requested
-------- -------
shall be forfeited from the Covered Associate's Account and (ii) the Covered
Associate shall be ineligible to participate in the Restoration Plan for the
remainder of the Plan Year in which the withdrawal is made and one (1) Plan
Year thereafter.
(b) Withdrawals on Account of an Unforeseeable Emergency. A Covered
----------------------------------------------------
Associate 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 Associate's Accounts (to the extent vested)
in the case of an "unforeseeable emergency". A Covered Associate 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 Associate 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 Associate 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 Associate's
Accounts. As used herein, the term "unforeseeable emergency" means a severe
financial hardship to a Covered Associate resulting from a sudden and unexpected
illness or accident of the Covered Associate or of a dependent of the Covered
Associate, loss of the Covered Associate's property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Covered Associate. 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
12
<PAGE>
that such hardship is or may be relieved (i) through reimbursement or
compensation by insurance or otherwise, or (ii) by liquidation of the Covered
Associate'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 Associate'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.
Section 3.9 Other Contributions. The Participating Employers may from
-------------------
time to time, in their sole and exclusive discretion, elect to credit a Covered
Associate's Account with additional amounts not otherwise contemplated by this
Article III.
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 Associate (or beneficiary of a deceased Covered Associate) 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. In
connection with any termination of the Restoration Plan the Corporation shall
have the authority to cause the Accounts of all current and former Covered
Associates (and beneficiary of any deceased Covered Associates) to be paid in a
single sum payment as of a date determined by the Corporation or to otherwise
accelerate the payment of all Accounts in such manner as the Corporation shall
determine in its discretion.
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 Associate, 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 Associate, beneficiary or estate acquires a right to receive
payments from such Participating Employer pursuant to the
13
<PAGE>
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 Associate's employment with a Participating Employer shall
not be considered to have terminated so long as the Associate is in the employ
of any Participating Employer, other member of the Controlled Group or any
other entity as the Personnel Group may designate.
Section 5.3 Spendthrift Provision. No Account balance or other right
---------------------
or interest under the Restoration Plan of an Associate, 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 Associate,
designated beneficiary or estate. Notwithstanding the foregoing, the
Participating Employers shall have the right to offset from a Covered
Associate's unpaid benefits under the Restoration Plan any amounts due and
owing from the Covered Associate to the extent permitted by law.
Section 5.4 Employment Noncontractual. The establishment of the
-------------------------
Restoration Plan shall not enlarge or otherwise affect the terms of any
Associate's employment with his Participating Employer, and such Participating
Employer may terminate the employment of the Associate 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 sets forth the names of the plans that
merged into the Restoration Plan by July 1, 2000 and their respective merger
dates. Schedule 5.7 shall be updated from time to time to reflect mergers after
July 1, 2000.
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 3.6 hereof as in effect from time to time and shall be paid at such
time and in such manner as provided in Section 3.7 and Section 3.8 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
14
<PAGE>
limitation procedures for transitioning from the method of account adjustments
under the prior plan to the methods provided for under the Restoration Plan.
Section 5.8 Status Under the Act. The Restoration Plan is maintained
--------------------
for purposes of providing deferred compensation for a select group of
management or highly compensated employees. In addition, to the extent that the
Restoration Plan makes up benefits limited under the 401(k) Plan as a result of
Section 415 of the Code, the Restoration Plan shall be considered an "excess
benefit plan" within the meaning of the Act.
Section 5.9 Claims Procedure. Any claim for benefits under the
----------------
Restoration Plan by a Covered Associate or Beneficiary shall be made in
accordance with the claims procedures set forth in the 401(k) Plan.
IN WITNESS WHEREOF, this instrument has been executed by the Corporation
as of the day and year first above written.
BANK OF AMERICA CORPORATION
By: /s/ J. Steele Alphin
---------------------------------------
Title: Corporate Personnel Executive
------------------------------
15
<PAGE>
SCHEDULE 5.7
MERGED PLANS AS OF JULY 1, 2000
-------------------------------
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
Management Excess Savings Plan of Barnett Banks, Inc. December 31, 1998
and its Affiliates
BankAmerica Deferred Compensation Plan June 30, 2000
BankAmerica Supplemental Retirement Plan June 30, 2000
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(J)
<SEQUENCE>8
<FILENAME>dex10j.txt
<DESCRIPTION>DIRECTOR'S STOCK PLAN
<TEXT>
<PAGE>
Exhibit 10(j)
BANK OF AMERICA CORPORATION DIRECTORS' STOCK PLAN
(as amended and restated effective January 1, 2002)
1. PURPOSE:
The purpose of the Plan is to enable the Corporation to attract and retain
persons of exceptional ability to serve as directors and to further align the
interests of directors and stockholders in enhancing the value of the Common
Stock. The Plan was originally established effective April 24, 1996 and approved
by the Corporation's stockholders to provide for (i) the payment of shares of
Common Stock to certain of the directors in connection with the partial
termination of the NationsBank Corporation and Designated Subsidiaries
Directors' Retirement Plan and (ii) the payment in Common Stock of a portion of
the Annual Retainer Fee payable to each Nonemployee Director. The Plan is being
amended and restated hereby effective as of January 1, 2002 to add provisions
regarding the annual award of Stock Options to Nonemployee Directors and to
otherwise meet current needs. The Plan shall continue in effect unless and until
terminated by the Board in accordance with Section 10 below.
2. DEFINITIONS:
For purposes of the Plan, the following terms shall have the following
meanings:
"Annual Retainer Fee" means the annual retainer fee payable to a
-------------------
Nonemployee Director under the Corporation's compensation policies for directors
in effect from time to time.
"Board" means the Board of Directors of the Corporation.
-----
"Change in Control" means "Change in Control" as defined under the Bank
-----------------
of America Corporation Key Employee Stock Plan, as the same may be amended from
time to time.
"Common Stock" means the common stock of the Corporation.
------------
"Corporation" means Bank of America Corporation, a Delaware
-----------
corporation, and its successors and assigns.
"Deferral Plan" means the Bank of America Corporation Director Deferral
-------------
Plan, as the same may be amended from time to time.
"Effective Date" means the original effective date of the Plan, April
--------------
24, 1996.
"Fair Market Value" of a share of Common Stock on any date means the
-----------------
closing price of a share 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]
-----------------------------------------
<PAGE>
or in any other publication selected by the Board; provided, however, that if
-------- -------
the shares of Common Stock are misquoted or omitted by the selected
publication(s), the Board 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 Board in such manner as it shall deem
appropriate.
"Immediate Family Member" with respect to a Nonemployee Director, means
-----------------------
(a) the Nonemployee Director's spouse and lineal descendants (limited to the
Nonemployee Director's children, stepchildren, sons-in-law, daughters-in-law and
grandchildren, including adoptive relationships), (b) a trust for the benefit of
such family members or (c) a partnership, limited liability company or similar
entity in which such family members are the sole owners.
"Nonemployee Director" means an individual who is a member of the
--------------------
Board, but who is not an employee of the Corporation or any of its subsidiaries.
"Payment Date" of an Annual Retainer Fee for a calendar year means the
------------
date of the annual meeting of the stockholders of the Corporation during such
calendar year.
"Plan" means the Bank of America Corporation Directors' Stock Plan as
----
set forth herein, as the same may be amended from time to time.
"Stock Option" means an option to purchase shares of Common Stock
------------
granted to a Nonemployee Director under Section 6 herein.
3. ADMINISTRATION:
The Board shall be responsible for administering the Plan. The Board
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 Board shall have
the power to construe and interpret the Plan and to determine all questions that
shall arise thereunder. The Board 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 Board 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 Board may
deem expedient or appropriate that are not inconsistent with the intent of the
Plan. The decision of the Board upon all matters within its scope of authority
shall be final and conclusive on all persons, except to the extent otherwise
provided by law.
4. SHARES AVAILABLE:
The maximum number of shares of Common Stock that may delivered under
the Plan shall equal 600,000 (after giving effect to the two-for-one stock split
of the shares effective February 27, 1997). Such shares shall be subject to
adjustment or substitution pursuant to Section 7 herein. If any Stock Option
awarded hereunder is canceled, lapses or is forfeited in accordance with the
provisions of Section 6 herein, then any shares of Common Stock with respect to
such Stock Option shall again be available for delivery under the Plan. In
addition, if
2
<PAGE>
the exercise price of any Stock Option is satisfied by tendering previously
owned shares of Common Stock pursuant to Section 6 herein, only the net of the
number of shares to be delivered as a result of the exercise of the Stock
Option and of those shares tendered will be deemed delivered for purposes of
determining the maximum number of shares available for delivery under the Plan.
Shares delivered under the Plan may be original issue shares, treasury stock or
shares purchased in the open market or otherwise, all as determined by the
Chief Financial Officer of the Corporation (or the Chief Financial Officer's
designee) from time to time.
5. SHARES FOR ANNUAL RETAINER FEE:
Any Annual Retainer Fee payable to a Nonemployee Director on or after
the Effective Date shall be payable sixty percent (60%) in cash and forty
percent (40%) in shares of Common Stock. The total number of shares of Common
Stock to be issued under this Section to a Nonemployee Director with respect to
an Annual Retainer Fee shall be determined by dividing the amount of such Annual
Retainer Fee payable in shares of Common Stock by the Fair Market Value of the
Common Stock on the applicable Payment Date. In no event shall the Corporation
be obligated to issue fractional shares under this Section, but instead shall
pay any such fractional share in cash based on the Fair Market Value of the
Common Stock on the Payment Date. Certificates for the shares of Common Stock
payable under this Section shall be delivered as soon as practicable after the
relevant Payment Date; provided, however, that if a Nonemployee Director has
-------- -------
elected to defer an Annual Retainer Fee pursuant to the Deferral Plan, the
shares of Common Stock otherwise issuable under this Plan in connection with
such Annual Retainer Fee shall not be issued and such Nonemployee Director shall
be credited with "Stock Units" to be paid in cash when and as provided for under
the Deferral Plan.
6. ANNUAL STOCK OPTION AWARDS:
(a) Awards at Annual Stockholders Meeting. Each Nonemployee Director
-------------------------------------
who serves as a director of the Corporation at the close of each annual
stockholders meeting of the Corporation that occurs after January 1, 2002 shall
be awarded a Stock Option effective as of the date of such annual stockholders
meeting subject to the following terms and conditions:
(i) The Stock Option shall be a "nonqualified stock option" under the
Internal Revenue Code.
(ii) The number of shares of Common Stock covered by the Stock
Option shall be four thousand (4,000) (subject to adjustment
or substitution pursuant to Section 7 herein).
(iii) The exercise price per share for the Stock Option shall equal
the Fair Market Value of a share of Common Stock as of the
date of the applicable stockholders meeting (subject to
adjustment pursuant to Section 7 herein).
(iv) The Stock Option shall have a term of ten (10) years from the
date of grant. At the end of such ten (10) year term the Stock
Option, to the extent not previously exercised, shall expire
and be canceled.
3
<PAGE>
(v) Except as otherwise provided in this subparagraph, the Stock
Option shall not become vested and exercisable until the first
anniversary of the grant date. If the Nonemployee Director
ceases to serve as a Nonemployee Director before the first
anniversary of the grant date due to the Nonemployee Director's
death, or if there is a Change in Control prior to the first
anniversary of the grant date, then the Stock Option shall
become fully vested as of the date of such death or Change in
Control, as applicable. If the Nonemployee Director ceases to
serve as a Nonemployee Director at any time for any reason
other than death before the earlier of the first anniversary of
the grant date or a Change in Control, then the Stock Option
shall become vested pro rata (based on the number of days
between the grant date and the date of cessation of services
divided by 365 days), and to the extent the Stock Option is not
thereby vested it shall be forfeited and canceled as of the
date of such cessation of services.
(vi) The Stock Option, to the extent vested, shall remain exercisable
until the end of the Stock Option term set forth in
subparagraph (iv) above regardless of any cessation of
services by the Nonemployee Director after vesting.
(vii) The Stock Option shall be exercised by the delivery of a
written notice of exercise to the Corporation, setting forth
the number of shares with respect to which the Stock Option is
to be exercised, accompanied by full payment for the shares.
The exercise price due upon exercise of the Stock Option shall
be payable to the Corporation in full either: (A) in cash or
its equivalent, or (B) by tendering previously acquired shares
of Common Stock having an aggregate Fair Market Value at the
time of exercise equal to the total exercise price (provided
that the shares which are tendered must have been held by the
Nonemployee Director for at least six (6) months prior to their
tender to satisfy the exercise price unless such shares had
been acquired by the Nonemployee Director on the open market),
or (C) by a combination of (A) and (B). As soon as practicable
after receipt of a written notification of exercise and full
payment, the Corporation shall deliver the shares of Common
Stock to the Nonemployee Director in an appropriate amount
based upon the number of shares purchased under the Stock
Option. Notwithstanding the foregoing, the Nonemployee Director
may also exercise the Stock Option pursuant to any other method
of exercise generally available to participants under the Bank
of America Corporation Key Employee Stock Plan to the extent
made available under this Plan, including without limitation
cashless exercises as permitted under Federal Reserve Board's
Regulation T, subject to applicable securities law restrictions.
(viii) Except as otherwise provided by subparagraph (ix) below, the
Stock Option may not be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated, other than by will or by
the laws of descent and distribution, and the Stock Option shall
be exercisable during his or her lifetime only by the
Nonemployee Director.
4
<PAGE>
(ix) Notwithstanding any provision herein to the contrary, the
Nonemployee Director may transfer any vested Stock Options to
Immediate Family Members pursuant to an irrevocable election
by the Nonemployee Director provided that (A) the Stock Option
will remain subject to all of the terms and conditions of the
Plan, (B) the Stock Option may not be further assigned or
transferred by the Immediate Family Member other than in
connection with the Immediate Family Member's death and (C)
the Nonemployee Director and the Immediate Family Member may
be required to sign such certificates or affidavits and must
comply with such other rules and procedures as may be required
by the Corporation consistent with any nonqualified stock
option transfer program as in effect from time to time under
the Bank of America Corporation Key Employee Stock Plan.
(x) To the extent that the Stock Option is exercisable following
the Nonemployee Director's death, the Stock Option shall be
exercisable by such person empowered to do so under the
Nonemployee Director's will, or if the Nonemployee Director
fails to make a testamentary disposition of the Stock Option
or shall have died intestate, by the Nonemployee Director's
executor or other legal representative.
(xi) The Nonemployee Director shall have no rights as a stockholder
of the Corporation with respect to the shares covered by the
Stock Option except to the extent that shares are issued to
the Nonemployee Director upon the due exercise of the Stock
Option.
(b) Mid-Year Awards. Effective after the April 2002 annual
---------------
stockholders meeting, a Nonemployee Director who first commences services as a
Nonemployee Director other than at an annual stockholders meeting shall be
awarded a Stock Option in connection with such commencement of services on the
same terms and conditions as set forth in paragraph (a) above except as follows:
(i) The grant date for the Stock Option shall be the first day of
the calendar month coincident with or next following the date
of such commencement of services as a Nonemployee Director;
(ii) The exercise price per share for the Stock Option shall equal
the Fair Market Value of a share of Common Stock on the grant
date (subject to adjustment pursuant to Section 7 herein); and
(iii) The number of shares of Common Stock covered by the Stock
Option shall be proportionately reduced based on the period
from the date of commencement of services as a Nonemployee
Director to the date of the next annual stockholders meeting.
7. ADJUSTMENTS IN AUTHORIZED SHARES:
In the event of any change in corporate capitalization, such as a stock
split, or a corporate transaction, such as any merger, consolidation,
separation, including a spin-off, or other distribution of stock or property of
the Corporation, any reorganization (whether or not such
5
<PAGE>
reorganization comes within the definition of such term in Internal Revenue
Code Section 368) or any partial or complete liquidation of the Corporation,
such adjustment shall be made in the number and class of shares of Common Stock
which may be delivered under the Plan and in the number and class of, and
exercise price for, shares of Common Stock subject to outstanding Stock
Options, as may be determined to be appropriate and equitable by the Board, in
its sole discretion, to prevent dilution or enlargement of rights; provided,
--------
however, that the number of shares of Common Stock subject to any Stock Option
- -------
shall always be a whole number.
8. RESALES OF SHARES:
The Corporation may impose such restrictions on the sale or other
disposition of shares issued under this Plan as the Board deems necessary to
comply with applicable securities laws. Certificates for shares issued under
this Plan may bear such legends as the Corporation deems necessary to give
notice of such restrictions.
9. COMPLIANCE WITH LAW AND OTHER CONDITIONS:
No shares shall be issued under this Plan prior to compliance by the
Corporation, to the satisfaction of its counsel, with any applicable laws. The
Corporation shall not be obligated to (but may in its discretion) take any
action under applicable federal or state securities laws (including registration
or qualification of the Plan or the Common Stock) necessary for compliance
therewith in order to permit the issuance of shares hereunder, except for
actions (other than registration or qualification) that may be taken by the
Corporation without unreasonable effort or expense and without the incurrence of
any material exposure to liability.
10. AMENDMENT, MODIFICATION AND TERMINATION OF THE PLAN:
The Board 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 an amendment to the Plan may be conditioned on the
-------- -------
approval of the stockholders of the Corporation if and to the extent the Board
determines that stockholder approval is necessary or appropriate. The Board
shall not have the authority to cancel outstanding Stock Options and issue
substitute Stock Options in replacement thereof. No termination, amendment, or
modification of the Plan shall adversely affect in any material way any Stock
Option previously granted under the Plan, without the written consent of the
Nonemployee Director holding such Stock Option.
11. MISCELLANEOUS:
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. The Plan shall be binding on the Corporation and any
successor in interest of the Corporation.
6
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(N)
<SEQUENCE>9
<FILENAME>dex10n.txt
<DESCRIPTION>SPLIT DOLLAR-MCCOLL
<TEXT>
<PAGE>
Exhibit 10(n)
AMENDMENT AGREEMENT
THIS AMENDMENT AGREEMENT (the "Amendment") is made and entered into by and
between BANK OF AMERICA CORPORATION, a Delaware corporation (the "Corporation"),
and BANK OF AMERICA, N.A. (formerly "NationsBank, N.A."), as Trustee under that
certain Irrevocable Trust Agreement established by Hugh L. McColl, Jr., as
Grantor, dated October 2, 1998 (the "Owner").
Statement of Purpose
--------------------
Hugh L. McColl, Jr. (the "Executive") is currently serving as a consultant
to the Corporation. The Corporation and the Owner have previously entered into
a Split Dollar Life Insurance Agreement (the "Agreement") pursuant to which the
parties have insured the lives of the Executive and the Executive's spouse, Jane
S. McColl, for the benefit and protection of both the Corporation and the
Executive's family under a Variable Survivorship Life Insurance Policy issued by
John Hancock Variable Life Insurance Company. The Internal Revenue Service, in
Internal Revenue Service Notice 2002-08, has proposed a change in the manner in
which split dollar insurance arrangements will be taxed for federal income tax
purposes effective as of January 1, 2004. However, split dollar insurance
arrangements entered into before January 28, 2002 will be eligible for certain
"grandfathered" treatment with respect to such change. The parties desire to
amend the Agreement in order to allow the Agreement to qualify under the
"grandfathering" provisions of Internal Revenue Service Notice 2002-08 and to
preserve the economic benefits which were contemplated to be delivered pursuant
to the Agreement at the time the Agreement was originally executed.
NOW, THEREFORE, in consideration of the foregoing statement of purpose
the parties hereto agree as follows:
1. The first paragraph of Section 4 of the Agreement is hereby
amended to read as follows:
"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 2B attached hereto.
----------
Beginning in the sixteenth (16th) year of the Policy, the Corporation shall
pay premiums under the Policy to the Insurer equal to the economic value of
the death benefit under the Policy as determined by the Insurer from time
to time while the Policy
<PAGE>
remains in effect. 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 2B."
----------
2. The last sentence of Section 10 of the Agreement is hereby amended
to read as follows:
"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 and,
upon exercise of the Corporation's rights under the Collateral Assignment,
the Owner shall be liable for any deficiency realized by the Corporation."
3. Exhibit 2A attached to the Agreement is hereby deleted in its
----------
entirety and replaced by Exhibit 2B attached hereto and all references in the
----------
Agreement to "Exhibit 2" or "Exhibit 2A" shall hereby refer to Exhibit 2B.
--------- ---------- ----------
4. Except as expressly or by necessary implication amended hereby,
the Agreement shall continue in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment on January
24, 2002.
BANK OF AMERICA CORPORATION BANK OF AMERICA, N.A.
By: /s/ J. Steele Alphin Trustee under the Irrevocable Trust
----------------------------
J. Steele Alphin Agreement dated October 2, 1998
Corporate Personnel Executive
By: /s/ John T. McElroy
---------------------------------
"Corporation" Name: John T. McElroy
------------------------------
Title: Assistant Vice President
------------------------------
"Owner"
2
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(O)
<SEQUENCE>10
<FILENAME>dex10o.txt
<DESCRIPTION>SPLIT DOLLAR-HANCE
<TEXT>
<PAGE>
Exhibit 10(o)
AMENDMENT AGREEMENT
THIS AMENDMENT AGREEMENT (the "Amendment") is made and entered into by
and between BANK OF AMERICA CORPORATION, a Delaware corporation (the
"Corporation"), and BANK OF AMERICA, N.A. (formerly "NationsBank, N.A."),
as Trustee under that certain Irrevocable Trust Agreement No. 2 established by
James H. Hance, Jr., as Grantor, dated October 1, 1988 (the "Owner").
Statement of Purpose
--------------------
James H. Hance, Jr. (the "Executive") is employed by the Corporation as
its Chief Financial Officer. The Corporation and the Owner have previously
entered into a Split Dollar Life Insurance Agreement (the "Agreement")
pursuant to which the parties have insured the lives of the Executive and the
Executive's spouse, Beverly S. Hance, for the benefit and protection of both
the Corporation and the Executive's family under a Last Survivor Flexible
Premium Variable Life Insurance Policy issued by Pacific Life Insurance Co. The
Internal Revenue Service, in Internal Revenue Service Notice 2002-08, has
proposed a change in the manner in which split dollar insurance arrangements
will be taxed for federal income tax purposes effective as of January 1, 2004.
However, split dollar insurance arrangements entered into before January 28,
2002 will be eligible for certain "grandfathered" treatment with respect to
such change. The parties desire to amend the Agreement in order to allow the
Agreement to qualify under the "grandfathering" provisions of Internal
Revenue Service Notice 2002-08 and to preserve the economic benefits which were
contemplated to be delivered pursuant to the Agreement at the time the
Agreement was originally executed.
NOW, THEREFORE, in consideration of the foregoing statement of purpose the
parties hereto agree as follows:
1. The first paragraph of Section 4 of the Agreement is hereby amended
to read as follows:
"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 2A attached
----------
hereto. Beginning in
<PAGE>
the sixteenth (16th) year of the Policy, the Corporation shall pay
premiums under the Policy to the Insurer equal to 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. 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
-------
2A."
--
2. The last sentence of Section 10 of the Agreement is hereby amended
to read as follows:
"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
and, upon exercise of the Corporation's rights under the Collateral
Assignment, the Owner shall be liable for any deficiency realized by the
Corporation."
3. Exhibit 2 attached to the Agreement is hereby deleted in its
--------
entirety and replaced by Exhibit 2A attached hereto and all references in the
----------
Agreement to "Exhibit 2" shall hereby refer to Exhibit 2A.
--------- ----------
4. Except as expressly or by necessary implication amended hereby, the
Agreement shall continue in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment on January
24, 2002.
BANK OF AMERICA CORPORATION BANK OF AMERICA, N.A.
By: /s/J. Steele Alphin Trustee under the Irrevocable Trust
------------------------------
J. Steele Alphin Agreement No. 2 dated October 1, 1998
Corporate Personnel Executive
By: /s/ John T. McElroy
----------------------------------
"Corporation" Name: John T. McElroy
--------------------------------
Title: Assistant Vice President
---------------------------------
"Owner"
2
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(P)
<SEQUENCE>11
<FILENAME>dex10p.txt
<DESCRIPTION>SPLIT DOLLAR-LEWIS
<TEXT>
<PAGE>
Exhibit 10(p)
AMENDMENT AGREEMENT
THIS AMENDMENT AGREEMENT (the "Amendment") is made and entered into by
and between BANK OF AMERICA CORPORATION, a Delaware corporation (the
"Corporation"), and BANK OF AMERICA, N.A., as successor Trustee under that
certain Irrevocable Trust Agreement established by Kenneth D. Lewis, as
Grantor, dated June 23, 1998 (the "Owner").
Statement of Purpose
--------------------
Kenneth D. Lewis (the "Executive") is employed by the Corporation as
its Chief Executive Officer. The Corporation and the Owner have previously
entered into a Split Dollar Life Insurance Agreement (the "Agreement") pursuant
to which the parties have insured the lives of the Executive and the
Executive's spouse, Donna C. Lewis, for the benefit and protection of both the
Corporation and the Executive's family under a Variable Survivorship Life
Insurance Policy issued by John Hancock Variable Life Insurance Company. The
Internal Revenue Service, in Internal Revenue Service Notice 2002-08, has
proposed a change in the manner in which split dollar insurance arrangements
will be taxed for federal income tax purposes effective as of January 1, 2004.
However, split dollar insurance arrangements entered into before January 28,
2002 will be eligible for certain "grandfathered" treatment with respect to
such change. The parties desire to amend the Agreement in order to allow the
Agreement to qualify under the "grandfathering" provisions of Internal Revenue
Service Notice 2002-08 and to preserve the economic benefits which were
contemplated to be delivered pursuant to the Agreement at the time the
Agreement was originally executed.
NOW, THEREFORE, in consideration of the foregoing statement of purpose
the parties hereto agree as follows:
1. The first paragraph of Section 4 of the Agreement is hereby
amended to read as follows:
"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 2B attached
----------
hereto. Beginning in the sixteenth (16th) year of the Policy, the
Corporation shall pay premiums under the Policy to the Insurer equal to
the economic value of the death benefit under
<PAGE>
the Policy as determined by the Insurer from time to time while the
Policy remains in effect. 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 2B."
----------
2. The last sentence of Section 10 of the Agreement is hereby amended
to read as follows:
"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 and,
upon exercise of the Corporation's rights under the Collateral
Assignment, the Owner shall be liable for any deficiency realized by the
Corporation."
3. Exhibit 2A attached to the Agreement is hereby deleted in its
----------
entirety and replaced by Exhibit 2B attached hereto and all references in the
----------
Agreement to "Exhibit 2" or "Exhibit 2A" shall hereby refer to Exhibit 2B.
--------- ---------- ----------
4. Except as expressly or by necessary implication amended hereby, the
Agreement shall continue in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment on January
24, 2002.
BANK OF AMERICA CORPORATION BANK OF AMERICA, N.A.
By: /s/ J. Steele Alphin Trustee under the Irrevocable Trust
------------------------------ Agreement dated June 23, 1998
J. Steele Alphin
Corporate Personnel Executive
By: /s/ John T. McElroy
--------------------------------
"Corporation" Name: John T. McElroy
------------------------------
Title: Assistant Vice President
-----------------------------
"Owner"
2
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(S)
<SEQUENCE>12
<FILENAME>dex10s.txt
<DESCRIPTION>SPLIT DOLLAR-VANDIVER
<TEXT>
<PAGE>
Exhibit 10(s)
AMENDMENT AGREEMENT
THIS AMENDMENT AGREEMENT (the "Amendment") is made and entered into by
and between BANK OF AMERICA CORPORATION, a Delaware corporation (the
"Corporation"), and BANK OF AMERICA, N.A., as Trustee under The Vandiver Family
Trust dated August 12, 1999 (the "Owner").
Statement of Purpose
--------------------
F. William Vandiver, Jr. (the "Executive") is employed by the
Corporation as its Corporate Risk Management Executive. The Corporation and the
Owner have previously entered into a Split Dollar Life Insurance Agreement (the
"Agreement") pursuant to which the parties have insured the lives of the
Executive and the Executive's spouse, Virginia Rita Eldridge Vandiver, for the
benefit and protection of both the Corporation and the Executive's family under
a Variable Survivorship Life Insurance Policy issued by John Hancock Variable
Life Insurance Company. The Internal Revenue Service, in Internal Revenue
Service Notice 2002-08, has proposed a change in the manner in which split
dollar insurance arrangements will be taxed for federal income tax purposes
effective as of January 1, 2004. However, split dollar insurance arrangements
entered into before January 28, 2002 will be eligible for certain
"grandfathered" treatment with respect to such change. The parties desire to
amend the Agreement in order to allow the Agreement to qualify under the
"grandfathering" provisions of Internal Revenue Service Notice 2002-08 and to
preserve the economic benefits which were contemplated to be delivered pursuant
to the Agreement at the time the Agreement was originally executed.
NOW, THEREFORE, in consideration of the foregoing statement of purpose the
parties hereto agree as follows:
1. The first paragraph of Section 4 of the Agreement is hereby amended
to read as follows:
"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 2A
----------
attached hereto. Beginning in the sixteenth (16th) year of the Policy,
the Corporation shall pay premiums under the Policy to the Insurer equal
to the economic value of the death benefit under
<PAGE>
the Policy as determined by the Insurer from time to time while the
Policy remains in effect. 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 2A."
----------
2. The last sentence of Section 10 of the Agreement is hereby amended
to read as follows:
"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 and,
upon exercise of the Corporation's rights under the Collateral
Assignment, the Owner shall be liable for any deficiency realized by the
Corporation."
3. Exhibit 2 attached to the Agreement is hereby deleted in its
---------
entirety and replaced by Exhibit 2A attached hereto and all references in the
----------
Agreement to "Exhibit 2" shall hereby refer to Exhibit 2A.
----------
4. Except as expressly or by necessary implication amended hereby,
the Agreement shall continue in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment on January
24, 2002.
BANK OF AMERICA CORPORATION BANK OF AMERICA, N.A.
By: /s/ J. Steele Alphin Trustee under the Irrevocable Trust
------------------------------ dated August 12, 1999
J. Steele Alphin
Corporate Personnel Executive
By: /s/ John T. McElroy
--------------------------------
"Corporation" Name: John T. McElroy
------------------------------
Title: Assistant Vice President
-----------------------------
"Owner"
2
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(V)
<SEQUENCE>13
<FILENAME>dex10v.txt
<DESCRIPTION>SUMMARY INCENTIVE PLAN
<TEXT>
<PAGE>
Exhibit 10(v)
BANK OF AMERICA CORPORATION
SUMMARY OF CORPORATE MANAGEMENT INCENTIVE PLAN
I. Objective of the Plan
---------------------
The purposes of this plan is to retain key management of the
Corporation and to motivate them to increase shareholders' wealth.
II. Participants
------------
Participants are approved by the Management Compensation Committee.
Participants whose employment is terminated (either by Bank of America
or the participant) prior to the receipt of payment will not be
eligible to receive the award. This rule does not apply in cases
related to death, retirement or disability.
III. Determination of the Annual Fund
--------------------------------
Funding will be based on a target incentive award and the achievement
of goals or objectives as determined at the beginning of the year.
Preliminary funding of the pool will be based primarily on the
Corporation's achievement of its financial goals such as EPS growth,
Revenue growth, SVA.
. If the Corporation achieves a minimum performance level, the
funding level will be adjusted accordingly. If this minimum level
of performance is not achieved, a pool will not be funded.
. Upon achievement of the target performance level, a pool will be
funded based on the targeted incentive award for all participants
in the plan.
. The pool funding for achievement above target performance will be
determined by the Management Compensation Committee.
The pool as determined above may be adjusted up or down based on the
Corporation's financial performance and achievement of goals or
objectives as determined by the Management Compensation Committee.
IV. Funding Allocation/Award Determination
--------------------------------------
Participants will be evaluated on the achievement of specific
performance goals. The Management Compensation Committee has the
authority to:
A. Determine the award amount, if any, to eligible participants based
on guidelines or rules deemed appropriate.
B. Allocate among the eligible participants all or any portion of the
pool funded.
C. Reduce or eliminate awards based on a less than acceptable level of
performance.
V. Plan Year
---------
The plan year shall be from January 1 to December 31.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(X)
<SEQUENCE>14
<FILENAME>dex10x.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT-DEMARTINI
<TEXT>
<PAGE>
Exhibit 10(x)
April 23, 2001
Mr. Richard M. DeMartini
42 Masterton Road
Bronxville, NY 10708
Dear Rich:
This letter (the "Agreement") confirms the terms and conditions of your
employment with Bank of America Corporation (the "Company") for the two-year
period (the "Term") beginning on your start date, February 26, 2001 (the "Start
Date"), and ending on February 26, 2003. This Agreement is not intended to
describe the terms and conditions that would apply to your employment with the
Company for periods after February 26, 2003.
. Your corporate title will be Executive Vice President. You will hold
the position of President of the Asset Management Group reporting
directly to Mr. Ken Lewis. For purposes of this Agreement, references
to the Asset Management Group include the businesses currently
denominated as Private Banking, BACAP and BAISI. You will perform your
duties hereunder at the Company's offices in the Borough of Manhattan
in the City of New York, New York, with such business travel to other
locations as may be necessary in connection with the performance of
your responsibilities.
. You will receive a salary of $41,666.66 per month ($500,000.00
annualized), less appropriate taxes.
. You will be eligible for an annual target cash incentive award for
each calendar year during the Term of $5,000,000, payable each
February after the applicable year, less appropriate taxes. Your cash
incentive awards will be paid under the terms of our Bank of America
Equity Incentive Plan 2000 (the "Equity Incentive Plan"), which pays a
portion of any annual incentive awards in the form of restricted stock
units ("RSUs"). If you terminate for any reason other than cause,
these shares will be fully vested.
. You will receive options to purchase 310,000 shares of the Company's
Common Stock ("Common Stock") on March 1, 2001 (the "Grant Date"),
one-third of which will vest on each of the first, second and third
anniversaries of the Grant Date.
. Your target stock option award for 2001 performance (to be granted in
February 2002) is 210,000 shares. All stock and options awarded to you
will provide that you will be treated as a retiree if you terminate
employment with the Company (other than for "Cause" as defined below)
after having completed at least 5 years of service with the Company.
<PAGE>
. Subject to the terms of this paragraph, the Company will pay you an
amount sufficient to compensate you for any reasonable losses incurred
by you as a result of the forfeiture of any options or restricted
stock units that occur in connection with the termination of your
employment with your former employer (such amounts being referred to
herein as "Loss Amounts"). You will use reasonable best efforts to
limit the Loss Amounts. The loss amounts will be paid to you on the
earlier to occur of (1) the end of the Term or (2) the date your
employment is terminated by the Company other than for Cause or by you
for Good Reason.
OTHER TERMS AND CONDITIONS
. If your employment is terminated during the Term (i) by the Company
without Cause or (ii) by you for "Good Reason" (as defined below),
then: (A) you will receive a lump sum payment equal to your base
salary for the remainder of the term; (B) your target annual cash
incentive award for the year of termination and (C) an amount equal to
the difference between the exercise price and the fair market value of
any unvested options as of the date of your termination, less
appropriate taxes. If your employment is terminated within one year
after the term, for the reasons outlined above, you will receive a
lump sum payment of the amount described in (C).
. For purposes of this Agreement, "Cause" shall mean: (I) the commission
of an act of fraud or dishonesty in the course of your employment;
(ii) conviction of (or a plea of no contest with respect to) a crime
constituting a felony; or (iii) conviction of (or a plea of no contest
with respect to) a crime involving any act of fraud, dishonesty or
moral turpitude materially injurious to the Company or any of its
subsidiaries.
. For purposes of this Agreement, "Good Reason" shall mean (i) any
material breach by the Company of its obligations under this
Agreement, which breach is not cured by the Company within ten days
after you give the Company written notice of such breach, (ii) any
material diminution of your responsibilities or authority as an
officer of the Company or as President of the Asset Management Group
reporting directly to Mr. Lewis, or any reorganization or
restructuring of the Asset Management Group that materially reduces
the businesses operating under your authority, or (iii) any
requirement that you perform your duties under this Agreement
principally in an office located outside of the Borough of Manhattan
in the City of New York, New York.
. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
. This Agreement constitute the entire and final expression of the
agreement of the parties with respect to the subject matter hereof and
supersede all prior agreements, oral and written, between the parties
hereto with respect to the subject matter hereof This Agreement may
only be modified or amended by an instrument in writing signed by both
parties hereto.
<PAGE>
If you have any questions or if there is any way I can help you further, please
do not hesitate to call. Please indicate your agreement to the foregoing terms
by signing and returning the enclosed counterpart of this Agreement, whereupon
this Agreement shall be a binding agreement between the company and you.
Sincerely,
BANK OF AMERICA CORPORATION
By: /s/ Charles D. Loring
-------------------------------
Charles D. Loring
Personnel Executive
Bank of America
Acknowledged and Agreed:
/s/ Richard M. DeMartini 4/24/01
- ---------------------------------- -----------------------------------
Richard M. DeMartini Date
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12.(A)
<SEQUENCE>15
<FILENAME>dex12a.txt
<DESCRIPTION>FIXED CHARGES
<TEXT>
<PAGE>
Exhibit 12(a)
BANK OF AMERICA CORPORATION AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
December 31
--------------------------------------------------------
(Dollars in millions) 2001 2000 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Excluding Interest on Deposits
Income before income taxes $10,117 $11,788 $12,215 $ 8,048 $10,556
Less: Equity in undistributed earnings of
unconsolidated subsidiaries (6) (27) (167) 162 (49)
Fixed charges:
Interest expense (including capitalized interest) 9,117 13,806 10,084 9,479 8,219
1/3 of net rent expense 379 368 342 335 302
- ---------------------------------------------------------------------------------------------------------------------------
Total fixed charges 9,496 14,174 10,426 9,814 8,521
- ---------------------------------------------------------------------------------------------------------------------------
Earnings (excluding capitalized interest) $19,607 $25,935 $22,474 $18,024 $19,028
- ---------------------------------------------------------------------------------------------------------------------------
Fixed charges $ 9,496 $14,174 $10,426 $ 9,814 $ 8,521
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of earnings to fixed charges 2.06 1.83 2.16 1.84 2.23
===========================================================================================================================
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
December 31
--------------------------------------------------------
(Dollars in millions) 2001 2000 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Including Interest on Deposits
Income before income taxes $10,117 $11,788 $12,215 $ 8,048 $10,556
Less: Equity in undistributed earnings of
unconsolidated subsidiaries (6) (27) (167) 162 (49)
Fixed charges:
Interest expense (including capitalized interest) 18,003 24,816 19,086 20,290 18,903
1/3 of net rent expense 379 368 342 335 302
- ---------------------------------------------------------------------------------------------------------------------------
Total fixed charges 18,382 25,184 19,428 20,625 19,205
- ---------------------------------------------------------------------------------------------------------------------------
Earnings (excluding capitalized interest) $28,493 $36,945 $31,476 $28,835 $29,712
- ---------------------------------------------------------------------------------------------------------------------------
Fixed charges $18,382 $25,184 $19,428 $20,625 $19,205
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of earnings to fixed charges 1.55 1.47 1.62 1.40 1.55
===========================================================================================================================
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12.(B)
<SEQUENCE>16
<FILENAME>dex12b.txt
<DESCRIPTION>FIXED CHARGES AND DIVIDENDS
<TEXT>
<PAGE>
Exhibit 12(b)
BANK OF AMERICA CORPORATION AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
December 31
-----------------------------------------------------------
(Dollars in millions) 2001 2000 1999 1998 1997
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Excluding Interest on Deposits
Income before income taxes $10,117 $11,788 $12,215 $ 8,048 $10,556
Less: Equity in undistributed earnings of
Unconsolidated subsidiaries (6) (27) (167) 162 (49)
Fixed charges:
Interest expense (including capitalized interest) 9,117 13,806 10,084 9,479 8,219
1/3 of net rent expense 379 368 342 335 302
- --------------------------------------------------------------------------------------------------------------------------
Total fixed charges 9,496 14,174 10,426 9,814 8,521
- --------------------------------------------------------------------------------------------------------------------------
Preferred dividend requirements 7 9 10 40 183
- --------------------------------------------------------------------------------------------------------------------------
Earnings (excluding capitalized interest) $19,607 $25,935 $22,474 $18,024 $19,028
- --------------------------------------------------------------------------------------------------------------------------
Fixed charges and preferred dividends $ 9,503 $14,183 $10,436 $ 9,854 $8,704
- --------------------------------------------------------------------------------------------------------------------------
Ratio of earnings to fixed charges and preferred dividends 2.06 1.83 2.15 1.83 2.19
==========================================================================================================================
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
December 31
(Dollars in millions) 2001 2000 1999 1998 1997
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Including Interest on Deposits
Income before income taxes $10,117 $11,788 $12,215 $ 8,048 $10,556
Less: Equity in undistributed earnings of
unconsolidated subsidiaries (6) (27) (167) 162 (49)
Fixed charges:
Interest expense (including capitalized interest) 18,003 24,816 19,086 20,290 18,903
1/3 of net rent expense 379 368 342 335 302
- --------------------------------------------------------------------------------------------------------------------------
Total fixed charges 18,382 25,184 19,428 20,625 19,205
- --------------------------------------------------------------------------------------------------------------------------
Preferred dividend requirements 7 9 10 40 183
- --------------------------------------------------------------------------------------------------------------------------
Earnings (excluding capitalized interest) $28,493 $36,945 $31,476 $28,835 $29,712
- --------------------------------------------------------------------------------------------------------------------------
Fixed charges and preferred dividends $18,389 $25,193 $19,438 $20,665 $19,388
- --------------------------------------------------------------------------------------------------------------------------
Ratio of earnings to fixed charges and preferred dividends 1.55 1.47 1.62 1.40 1.53
==========================================================================================================================
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>17
<FILENAME>dex13.txt
<DESCRIPTION>PORTIONS OF ANNUAL REPORT
<TEXT>
<PAGE>
Management's Discussion and Analysis of Results of Operations and Financial
Condition
This Annual 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 Bank of America Corporation (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 the
Corporation's Annual 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 general 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; and the management of borrower, industry, product
and geographic concentrations and the mix of the loan portfolio. The level of
nonperforming assets, charge-offs and provision expense can be affected by
local, regional and international economic and market conditions, including the
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. 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. The Corporation is
also exposed to potential litigation liabilities, including costs, expenses,
settlements and judgments, that may adversely affect the Corporation.
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 Currency, the Federal
Deposit Insurance Corporation, state regulators and the Office of Thrift
Supervision, whose policies and regulations could affect the Corporation's
results. Other factors that may cause actual results to differ from the
forward-looking statements include the following: projected business increases
following process changes and productivity and investment initiatives are lower
than expected or do not pay for severance or other related costs as quickly as
anticipated; competition with other local, regional and international banks,
thrifts, credit unions and other nonbank financial institutions, such as
investment banking firms, investment advisory firms, brokerage firms, investment
companies and insurance companies, as well as other entities which offer
financial services, located both within and outside the United States and
through alternative delivery channels such as the Internet; 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.
Overview
The Corporation is a Delaware corporation, a bank holding company and a
financial holding company, and is headquartered in Charlotte, North Carolina.
The Corporation operates in 21 states and the District of Columbia and has
offices located in 34 countries. The Corporation provides a diversified range of
banking and certain nonbanking financial services and products both domestically
and internationally through four business segments:
Consumer and Commercial Banking, Asset Management, Global Corporate and
Investment Banking and Equity Investments. A customer-centered strategic focus
is changing the way the Corporation is managing its business. In addition to
existing financial reporting, the Corporation has begun preparing customer
segment-based financial operating information. At December 31, 2001, the
Corporation had $622 billion in assets and approximately 143,000 full-time
equivalent employees. Refer to Table One and Table Twenty-Five for annual and
quarterly selected financial data, respectively.
Key performance highlights for 2001 compared to 2000:
o Net income totaled $6.8 billion, or $4.18 per common share (diluted),
compared to $7.5 billion, or $4.52 per common share (diluted). The return on
average common shareholders' equity was 13.96 percent.
o Operating earnings, which excluded charges related to the Corporation's
strategic decision to exit certain consumer finance businesses in 2001 and
related to restructuring in 2000, totaled $8.0 billion, or $4.95 per common
share (diluted), compared to $7.9 billion, or $4.72 per common share
(diluted). Excluding exit charges, the return on average common
shareholders' equity was 16.53 percent in 2001. Shareholder value added
(SVA), excluding exit and restructuring charges, remained essentially
unchanged at $3.1 billion.
B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T
33
<PAGE>
o Total revenue includes net interest income on a taxable-equivalent basis and
noninterest income. Total revenue was $35.0 billion, an increase of $1.7
billion.
o Net interest income increased $2.0 billion to $20.6 billion. The
increase was primarily due to the effects of changes in interest rates
on the Corporation's asset and liability positions and investment
portfolio repositioning, an increased trading-related contribution,
higher deposit and equity levels and a favorable shift in loan mix.
These factors were partially offset by the impact of the money market
deposit pricing initiative and a decrease in auto lease financing
contributions. Average managed loans and leases were $378.7 billion, a
$1.2 billion decrease, primarily due to an eight percent decrease in
commercial loans and leases, partially offset by an eight percent
increase in consumer loans and leases. Average customer-based deposits
grew to $306.9 billion, a $14.9 billion increase. The net interest yield
was 3.68 percent, a 48 basis point increase. The increase in the net
interest yield was primarily due to the effect of changes in interest
rates and investment portfolio repositioning.
o Noninterest income was $14.3 billion, a $234 million decrease. Consumer
and Commercial Banking experienced a $321 million, or nine percent,
increase in service charges driven by higher business volumes. A $192
million, or nine percent, increase in card income was primarily due to
both new account growth in both credit and debit card and increased
purchase volume on existing accounts. Revenue in the mortgage banking
business increased 48 percent primarily reflecting higher origination
activity, increased gains from higher loan sales to the secondary market
and the favorable mark-to-market adjustments on certain mortgage banking
assets and related derivative instruments, partially offset by increased
prepayments on mortgage loans as a result of the declining interest rate
environment. Income from investment and brokerage services increased $45
million in the Asset Management segment largely due to new asset
management business and the completed acquisition of Marsico Capital
Management LLC (Marsico), partially offset by lower broker activity due
to decreased trade volume. The noninterest income component of
trading-related revenue within Global Corporate and Investment Banking
increased $77 million, as increased revenues from trading-related
activities in interest rate, fixed income and commodities contracts more
than offset a decrease in equities and equity derivatives trading.
Investment banking income increased $67 million, as strong growth in
fixed income origination was partially offset by weaker demand for
syndications, equity underwriting and advisory services. Equity
Investments had equity investment gains of $230 million, reflecting a
sharp decline of $763 million.
o On August 15, 2001, the Corporation announced that it was exiting its auto
leasing and subprime real estate lending businesses. As a result of exiting
these consumer finance businesses, the Corporation recorded pre-tax charges
of $1.7 billion ($1.3 billion after-tax), consisting of provision for credit
losses of $395 million and business exit costs, the noninterest expense
component, of $1.3 billion.
o Including the exit charge, the provision for credit losses was $4.3 billion.
Excluding the exit charge, the provision for credit losses was $3.9 billion,
an increase of $1.4 billion from 2000. Excluding exit-related charge-offs of
$635 million, net charge-offs were $3.6 billion, or 0.99 percent of average
loans and leases, an increase of 38 basis points from 2000. This increase in
net charge-offs of $1.2 billion from 2000 was primarily due to credit
quality deterioration in the commercial-domestic portfolio and an increase
in bankcard charge-offs. As a matter of corporate practice, we do not
discuss specific client relationships; however, due to the publicity and
interest surrounding Enron Corporation, the Corporation is making an
exception. Net charge-offs in 2001 included $210 million related to Enron
Corporation. Excluding exit-related charges, the Corporation recorded
additional provision expense in excess of charge-offs of $283 million due to
deterioration in credit quality and the overall uncertainty in the economy.
o Nonperforming assets were $4.9 billion, or 1.49 percent of loans, leases and
foreclosed properties at December 31, 2001, a $549 million decrease from
December 31, 2000. The decrease was primarily a result of the transfer of
$1.2 billion of nonperforming subprime real estate loans to loans held for
sale as well as nonperforming loan sales, partially offset by increases in
the commercial - domestic loan portfolio that resulted from credit
deterioration as companies were affected by the weakening economic
environment. The allowance for credit losses totaled $6.9 billion or 2.09
percent of total loans and leases at December 31, 2001, a 35 basis point
increase from 1.74 percent of total loans and leases at December 31, 2000.
o Noninterest expense excluding business exit costs in 2001 and restructuring
charges in 2000 was $19.4 billion, a $1.3 billion increase, primarily driven
by higher personnel, litigation, professional fees, data processing and
marketing expenses. Higher personnel expense was driven by a $150 million
severance charge in the fourth quarter of 2001 related to ongoing efficiency
improvement programs, higher revenue-related incentive compensation and
increased salaries expense. Higher professional fees reflected the increase
in initiatives related to the Corporation's strategy to improve customer
satisfaction, the launch of a company-wide Six Sigma quality and
productivity program and implementation of a new integrated business
planning process. The Corporation recorded $334 million in litigation
expense in the fourth quarter of 2001 related to small settlements and an
addition to the legal reserve to cover increased exposure to existing
litigation. Subsequent to December 31, 2001, the Corporation announced that
it had reached an agreement in principle to settle various shareholder
lawsuits for payments totaling $490 million. The proposed settlement will be
paid from existing litigation reserves and insurance and will not have an
impact on the Corporation's financial results. For additional information on
litigation, see Note Twelve of the consolidated financial statements.
o A tax benefit of $418 million, generated as a result of the Corporation's
realignment of certain problem loan management activities into a
wholly-owned subsidiary, Banc of America Strategic Solutions, Inc. (SSI),
resulted in a 17 percent effective tax rate for the fourth quarter of 2001.
The assets and liabilities of SSI are fully consolidated with those of the
Corporation.
B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T
34
<PAGE>
Table 1 Five-Year Summary of Selected Financial Data
<TABLE>
<CAPTION>
(Dollars in millions, except per share information) 2001 2000 1999 1998 1997
----------------------------------------------------
<S> <C> <C> <C> <C> <C>
As Reported
Income statement
Net interest income $ 20,290 $ 18,349 $ 18,127 $ 18,298 $ 18,432
Noninterest income 14,348 14,582 14,179 12,189 11,756
Total revenue 34,638 32,931 32,306 30,487 30,188
Provision for credit losses 4,287 2,535 1,820 2,920 1,904
Gains on sales of securities 475 25 240 1,017 271
Business exit costs 1,305 - - - -
Merger and restructuring charges - 550 525 1,795 374
Other noninterest expense 19,404 18,083 17,986 18,741 17,625
Income before income taxes 10,117 11,788 12,215 8,048 10,556
Income tax expense 3,325 4,271 4,333 2,883 4,014
Net income 6,792 7,517 7,882 5,165 6,542
- ------------------------------------------------ ------ ------ ------ ------ ------
Performance ratios
Return on average assets 1.05% 1.12% 1.28% 0.88% 1.20%
Return on average common shareholders' equity 13.96 15.96 16.93 11.56 15.26
Total equity to total assets (at year end) 7.80 7.42 7.02 7.44 7.81
Total average equity to total average assets 7.49 7.02 7.55 7.67 8.02
Dividend payout ratio 53.44 45.02 40.54 50.18 32.09
- ------------------------------------------------ ------ ------ ------ ------ ------
Per common share data
Earnings $ 4.26 $ 4.56 $ 4.56 $ 2.97 $ 3.71
Diluted earnings 4.18 4.52 4.48 2.90 3.61
Cash dividends paid 2.28 2.06 1.85 1.59 1.37
Book value 31.07 29.47 26.44 26.60 25.49
- ------------------------------------------------ ------ ------ ------ ------ ------
Cash basis financial data/(1)/
Earnings $ 7,670 $ 8,381 $ 8,770 $ 6,067 $ 7,397
Earnings per common share 4.81 5.09 5.08 3.49 4.20
Diluted earnings per common share 4.72 5.03 4.98 3.41 4.09
Return on average assets 1.18% 1.25% 1.42% 1.04% 1.36%
Return on average common shareholders' equity 15.77 17.80 18.85 13.64 17.55
- ------------------------------------------------ ------ ------ ------ ------ ------
Operating Basis/(2)/
Income statement
Net interest income $ 20,290 $ 18,349 $ 18,127 $ 18,298 $ 18,432
Net interest income (taxable-equivalent basis) 20,633 18,671 18,342 18,461 18,589
Noninterest income 14,348 14,582 14,179 12,189 11,756
Total revenue 34,638 32,931 32,306 30,487 30,188
Total revenue (taxable-equivalent basis) 34,981 33,253 32,521 30,650 30,345
Provision for credit losses 3,892 2,535 1,820 2,920 1,904
Gains on sales of securities 475 25 240 1,017 271
Other noninterest expense 19,404 18,083 17,986 18,741 17,625
Income before income taxes 11,817 12,338 12,740 9,843 10,930
Income tax expense 3,775 4,475 4,500 3,353 4,124
Net income 8,042 7,863 8,240 6,490 6,806
Average diluted common shares issued and outstanding (in 1,625,654 1,664,929 1,760,058 1,775,760 1,782,172
thousands)
- ------------------------------------------------ --------- --------- --------- --------- ---------
Performance ratios
Return on average assets 1.24% 1.17% 1.34% 1.11% 1.25%
Return on average common shareholders' equity 16.53 16.70 17.70 14.54 15.88
Efficiency ratio 55.47 54.38 55.30 61.15 58.08
Net interest yield 3.68 3.20 3.45 3.69 4.00
Dividend payout ratio 45.13 43.04 38.77 39.90 30.83
Shareholder value added $ 3,087 $ 3,081 $ 3,544 $ 2,056 $ 2,603
- ------------------------------------------------ ----- ----- ----- ----- -----
Per common share data
Earnings $ 5.04 $ 4.77 $ 4.77 $ 3.73 $ 3.86
Diluted earnings 4.95 4.72 4.68 3.64 3.76
- ------------------------------------------------ ------ ------ ------ ------ ------
Cash basis financial data/(1)/
Earnings $ 8,920 $ 8,727 $ 9,128 $ 7,392 $ 7,661
Earnings per common share 5.59 5.30 5.28 4.25 4.36
Diluted earnings per common share 5.49 5.24 5.19 4.15 4.24
Return on average assets 1.37% 1.30% 1.48% 1.26% 1.41%
Return on average common shareholders' equity 18.34 18.54 19.62 16.62 18.18
Efficiency ratio 52.96 51.78 52.57 58.20 55.27
- ------------------------------------------------ ------ ------ ------ ------ ------
Average balance sheet
Total loans and leases $ 365,447 $392,622 $ 362,783 $ 347,840 $ 343,151
Total assets 649,547 671,573 616,838 584,487 543,796
Total deposits 362,653 353,294 341,748 345,485 336,883
Long-term debt 64,638 65,338 52,619 45,098 41,984
Trust preferred securities 4,984 4,955 4,955 4,871 4,353
Common shareholders' equity 48,609 47,057 46,527 44,467 42,151
Total shareholders' equity 48,678 47,132 46,601 44,829 43,610
- ------------------------------------------------ ------ ------ ------ ------ ------
Risk-based capital ratios (at year end)/(3)/
Tier 1 capital 8.30% 7.50% 7.35% 7.06% 6.50%
Total capital 12.67 11.04 10.88 10.94 10.89
Leverage ratio 6.56 6.12 6.26 6.22 5.57
- ------------------------------------------------ ------ ------ ------ ------ ------
Market price per share of common stock
Closing $ 62.95 $ 45.88 $ 50.19 $ 60.13 $ 60.81
High 65.54 61.00 76.38 88.44 71.69
Low 45.00 36.31 47.63 44.00 48.00
- ------------------------------------------------ ------ ------ ------ ------ ------
</TABLE>
/(1)/ Cash basis calculations exclude goodwill and other intangible amortization
expense.
/(2)/ Operating basis excludes provision for credit losses of $395 million and
noninterest expense of $1,305 million related to the exit of certain consumer
finance businesses in 2001 and merger and restructuring charges in 2000, 1999,
1998 and 1997.
/(3)/ Ratios for 1997 have not been restated to reflect the impact of the
BankAmerica and Barnett mergers.
B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T
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<PAGE>
Summary of Significant Accounting Policies
The Corporation's accounting policies are fundamental to understanding
management's discussion and analysis of results of operations and financial
condition. Many of the Corporation's accounting policies require significant
judgment regarding valuation of assets and liabilities and/or significant
interpretation of the specific accounting guidance. The Corporation's
significant accounting policies are discussed in detail in Note One of the
consolidated financial statements. The following is a summary of the more
judgmental and complex accounting policies of the Corporation.
Many of the Corporation's assets and liabilities are recorded using various
valuation techniques that require significant judgment as to recoverability. The
collectablity of loans is reflected through the Corporation's estimate of the
allowance for credit losses. The Corporation performs periodic and systematic
detailed reviews of its lending portfolio to assess overall collectibility. In
addition, certain assets and liabilities are reflected at their estimated fair
value in the consolidated financial statements. Such amounts are based on either
quoted market prices or estimated values derived by the Corporation utilizing
dealer quotes, market comparisons or internally generated modelling techniques.
The Corporation's internal models generally involve present value of cash flow
techniques. The various valuation techniques are discussed in greater detail
elsewhere in management's discussion and analysis and the notes to the
consolidated financial statements.
There are other complex accounting standards that require the Corporation
to employ significant judgment in interpreting and applying certain of the
principles prescribed by those standards. These judgments include, but are not
limited to, the determination of whether a financial instrument or other
contract meets the definition of a derivative in accordance with Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (SFAS 133), and the applicable hedge deferral criteria,
the accounting for the transfer of financial assets and extinguishments of
liabilities in accordance with Statement of Financial Accounting Standards No.
140, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" (SFAS 140), and the determination of when
certain special purpose vehicles should be consolidated in the Corporation's
balance sheet and statement of income. For a more complete discussion of these
policies, see Notes One, Five and Eight of the consolidated financial
statements.
The remainder of management's discussion and analysis of the Corporation's
results of operations and financial position should be read in conjunction with
the consolidated financial statements and related notes presented on pages 78
through 119.
Business Segment Operations
The Corporation provides a diversified range of banking and nonbanking financial
services and products through its various subsidiaries. The Corporation manages
its operations through four business segments: Consumer and Commercial Banking,
Asset Management, Global Corporate and Investment Banking and Equity
Investments. Certain operating segments have been aggregated into a single
business segment. In the first quarter of 2001, the thirty-year mortgage
portfolio was moved from Consumer and Commercial Banking to the Corporate Other
segment. In the third quarter of 2001, certain consumer finance businesses being
liquidated were transferred from Consumer and Commercial Banking to Corporate
Other. A customer-centered strategic focus is changing the way the Corporation
is managing its business. In addition to existing financial reporting, the
Corporation has begun preparing customer segment-based financial operating
information.
The business segments summarized in Table Two are primarily managed with a
focus on various performance measures including total revenue, net income,
shareholder value added (SVA), return on average equity and efficiency. Some of
these performance measures are also presented on a cash basis which excludes the
impact of goodwill and other intangible amortization expense. Total revenue
includes net interest income on a taxable-equivalent basis and noninterest
income. The net interest income of the business segments reflects the results of
a funds transfer pricing process which matches assets and liabilities with
similar interest rate sensitivity and maturity characteristics and reflects the
allocation of net interest income related to the Corporation's overall asset and
liability management activities on a proportionate basis. SVA is a performance
measure that is aligned with the Corporation's growth strategy orientation and
strengthens the Corporation's focus on generating long-term growth and
shareholder value. SVA is defined as cash basis operating earnings less a charge
for the use of capital. The capital charge is calculated by multiplying 12
percent (management's estimate of the shareholder's minimum required rate of
return on capital invested) by average total common shareholders' equity (at the
Corporation level) and by average allocated equity (at the business segment
level). Equity is allocated to each business segment based on an assessment of
its inherent risk.
See Note Nineteen of the consolidated financial statements for additional
business segment information, reconciliations to consolidated amounts and
information on Corporate Other. Additional information on noninterest income can
be found in the "Noninterest Income" section beginning on page 46. Certain prior
period amounts have been reclassified between segments and their components
(presented after Table Two) to conform to the current period presentation.
B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T
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<PAGE>
<TABLE>
<CAPTION>
Table 2 Business Segment Summary
For the Year Ended December 31
---------------------------------------------------------------------------------
Consumer and Global Corporate
Commercial Asset and Investment Equity
Banking/(1)/ Management/(1)/ Banking/(1)/ Investments/(1)/
--------------------- ------------------- ---------------- ------------------
(Dollars in millions) 2001 2000 2001 2000 2001 2000 2001 2000
------- ------- ------ ------ ------ ------ ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net interest income/(2)/ $ 13,364 $ 12,620 $ 741 $ 666 $ 4,592 $ 3,725 $ (151) $ (139)
Noninterest income/(3)/ 8,008 7,356 1,733 1,801 4,639 4,444 183 1,007
- ------------------------- ------- ------- ------ ------ ------ ------ ----- -----
Total revenue 21,372 19,976 2,474 2,467 9,231 8,169 32 868
Provision for credit losses 1,802 1,111 121 47 1,275 751 8 4
Net income 4,842 4,551 521 589 1,879 1,759 (94) 461
Cash basis earnings 5,479 5,200 578 619 2,022 1,897 (84) 472
Shareholder value added 3,165 2,830 312 421 644 336 (363) 241
Net interest yield 5.06% 4.93% 2.91% 2.80% 2.40% 1.97% n/m n/m
Return on average equity 25.1 23.0 23.6 35.7 16.4 13.5 (4.0)% 24.0%
Cash basis return on equity 28.4 26.3 26.1 37.5 17.6 14.6 (3.6) 24.6
Efficiency ratio 54.7 56.7 62.2 59.3 55.9 59.1 n/m 12.9
Cash basis efficiency ratio 51.7 53.5 59.9 58.0 54.3 57.4 n/m 11.7
Average:
Total loans and leases $ 181,900 $ 173,870 $ 24,381 $ 22,729 $ 80,739 $ 94,391 $ 476 $ 436
Total deposits 266,049 256,805 11,897 11,338 66,983 68,364 13 14
Total assets 290,388 282,014 26,767 24,724 230,755 227,417 6,509 5,453
Year end:
Total loans and leases $ 185,429 $ 179,014 $ 24,692 $ 24,273 $ 66,556 $ 93,510 $ 433 $ 497
Total deposits 280,965 264,196 12,208 12,337 66,532 68,138 - 35
Total assets 304,874 287,013 26,810 27,140 194,146 206,820 6,230 6,691
------------------------- ------- ------- ------ ------ ------- ------- ----- -----
</TABLE>
n/m = not meaningful
/(1)/ There were no material intersegment revenues among the segments.
/(2)/ Net interest income is presented on a taxable-equivalent basis.
/(3)/ Noninterest income included the $83 million SFAS 133 transition adjustment
net loss which was included in trading account profits in 2001. The components
of the transition adjustment by segment were a gain of $4 million for Consumer
and Commercial Banking, a gain of $19 million for Global Corporate and
Investment Banking and a loss of $106 million for Corporate Other (not included
in the table above).
Consumer and Commercial Banking
Consumer and Commercial Banking provides a wide array of products and services
to individuals, small businesses and middle market companies through multiple
delivery channels.
The results for 2001 reflect the Corporation's continued focus on card
services as a growth area. End of period managed consumer card outstandings
increased 19 percent from 2000, primarily driven by the leveraging of the
Corporation's franchise to open new accounts with existing customers, the
results of card marketing programs and efforts aimed at increasing customer
satisfaction. In 2001, merchant processing volume increased 12 percent, and
total card services purchase volume increased 12 percent, primarily driven by an
18 percent increase in debit card purchase volume. The increase in debit card
purchase volume was a result of increased customer penetration and activation
rates, partially offset by a drop in purchase volume growth rates following the
events of September 11, 2001.
In the second quarter of 2001, the Corporation's commercial real estate
banking business was moved from Global Corporate and Investment Banking to
Consumer and Commercial Banking. The credit and client management process and
customer base of the business are better aligned with those of Consumer and
Commercial Banking.
Consumer and Commercial Banking
(Dollars in millions) 2001 2000
--------- ---------
Net interest income $ 13,364 $ 12,620
Noninterest income 8,008 7,356
- ------------------------------------ --------- ---------
Total revenue 21,372 19,976
Provision for credit losses 1,802 1,111
Cash basis earnings 5,479 5,200
Shareholder value added 3,165 2,830
Cash basis efficiency ratio 51.7% 53.5%
- ------------------------------------ --------- ---------
o Total revenue increased $1.4 billion, or seven percent, in 2001 compared to
2000.
o Net interest income increased $744 million, or six percent, due to a
favorable shift in loan mix, overall loan and deposit growth and the
Corporation's overall asset and liability management. This increase was
partially offset by the impact of the money market deposit pricing
initiative as the Corporation offered more competitive money market savings
rates.
o Noninterest income increased $652 million, or nine percent, driven by nine
percent increases in card income and service charges and strong mortgage
banking revenue.
B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T
37
<PAGE>
o Cash basis earnings in 2001 rose $279 million, or five percent, due to the
increases in net interest income and noninterest income discussed above,
partially offset by an increase in the provision for credit losses and a
three percent increase in noninterest expense.
o The provision for credit losses increased $691 million, or 62 percent,
reflecting higher charge-offs in the commercial and bankcard loan
portfolios.
o Shareholder value added increased $335 million over the prior year as a
result of the increase in cash basis earnings and lower capital as a result
of reductions in commercial loan levels.
The major components of Consumer and Commercial Banking are Banking Regions,
Consumer Products and Commercial Banking.
Banking Regions
Banking Regions serves consumer households in 21 states and the District of
Columbia and overseas through its network of 4,251 banking centers, 13,113 ATMs,
telephone and Internet channels on www.bankofamerica.com. Banking Regions
provides a wide array of products and services, including deposit products such
as checking, money market savings accounts, time deposits and IRAs, debit card
products and credit products such as home equity, mortgage and personal auto
loans. Banking Regions also includes small business banking providing treasury
management, credit services, community investment, check card, e-commerce and
brokerage services to nearly two million small business relationships across the
franchise.
Banking Regions
(Dollars in millions) 2001 2000
-------- --------
Net interest income $ 8,561 $ 8,587
Noninterest income 3,866 3,547
- ------------------------------- -------- --------
Total revenue 12,427 12,134
Provision for credit losses 281 268
Cash basis earnings 3,108 3,056
Shareholder value added 1,767 1,693
Cash basis efficiency ratio 58.5% 58.1%
- ------------------------------- -------- --------
o Total revenue in 2001 increased $293 million, or two percent, as an increase
in noninterest income was partially offset by a slight decrease in net
interest income.
o Loan growth, primarily in residential mortgages and home equity lending,
and deposit growth had a positive effect on net interest income but were
offset by the impact of the money market deposit pricing initiative.
o Noninterest income increased $319 million, or nine percent, primarily
due to an increase in consumer service charges of $170 million, or seven
percent, resulting from higher business volumes, and a $117 million, or
23 percent, increase in debit card income, driven by a higher number of
active debit cards from increased penetration and activation rates and
an increase in purchase volume.
o Cash basis earnings increased $52 million, or two percent, in 2001,
primarily attributable to the increase in revenue discussed above offset by
a three percent increase in noninterest expense.
Consumer Products
Consumer Products provides specialized services such as the origination and
servicing of residential mortgage loans, issuance and servicing of credit cards,
direct banking via telephone and Internet, lending and investing to develop low-
and moderate-income communities, student lending and certain insurance services.
Consumer Products also provides retail finance and floorplan programs to marine,
RV and auto dealerships.
Consumer Products
(Dollars in millions) 2001 2000
-------- --------
Net interest income $ 2,211 $ 1,382
Noninterest income 3,109 2,822
- ------------------------------- ----------------
Total revenue 5,320 4,204
Provision for credit losses 915 527
Cash basis earnings 1,447 1,077
Shareholder value added 1,012 649
Cash basis efficiency ratio 40.1% 47.7%
- ------------------------------- ----------------
o Total revenue in 2001 increased $1.1 billion, or 27 percent, due to
increases in both net interest income and noninterest income.
o Net interest income increased $829 million, or 60 percent, primarily due
to an increase in bankcard receivables from portfolio growth and
maturity of credit card securitizations as well as lower funding costs.
o Noninterest income increased $287 million, or 10 percent, primarily due
to strong mortgage banking revenue and increased credit card income.
Mortgage banking revenue increased $246 million, or 48 percent, due to
higher origination activity and increased gains from higher loan sales
to the secondary market. Mortgage banking revenue also included the
favorable net mark-to-market adjustments, included in trading account
B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T
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<PAGE>
profits, on certain mortgage banking assets and the related derivative
instruments. These increases were partially offset by increased
prepayments on mortgage loans as a result of the declining interest rate
environment. Credit card income grew $75 million, or four percent, due
to new consumer card account growth and an increase in purchase volume,
partially offset by a decline in servicing income from maturity of
credit card securitizations.
o The $370 million, or 34 percent, increase in cash basis earnings in 2001 was
due to the increases in net interest income and noninterest income discussed
above. These increases were partially offset by an increase in the provision
for credit losses and higher expenses. Expense growth was primarily driven
by card marketing and mortgage production volume activities.
o The provision for credit losses increased 74 percent to $915 million
primarily due to higher net charge-offs in the bankcard loan portfolio.
The increase in bankcard charge-offs was driven by portfolio growth, an
increase in personal bankruptcy filings and a weaker economic
environment.
Commercial Banking
Commercial Banking provides commercial lending and treasury management services
to middle market companies with annual revenue between $10 million and $500
million. These services are available through relationship manager teams as well
as through alternative channels such as the telephone via the commercial service
center and the Internet by accessing Bank of America Direct.
Commercial Banking
(Dollars in millions) 2001 2000
-------- --------
Net interest income $ 2,592 $ 2,651
Noninterest income 1,033 987
- ------------------------------- -------- --------
Total revenue 3,625 3,638
Provision for credit losses 606 316
Cash basis earnings 924 1,067
Shareholder value added 386 488
Cash basis efficiency ratio 45.6% 44.7%
- ------------------------------- -------- --------
o Noninterest income increased five percent and was offset by a two percent
decline in net interest income. Total revenue in 2001 remained flat at $3.6
billion.
o The $46 million increase in noninterest income was primarily
attributable to higher corporate service charges as customers opted to
pay service charges rather than carry excess deposit balances in the
lower rate environment, offset by the liquidation of certain commercial
finance businesses.
o Net interest income declined $59 million, primarily due to a reduction
in commercial loans and the liquidation of certain commercial finance
businesses.
o The $143 million, or 13 percent, decline in cash basis earnings was
primarily driven by an increase in the provision for credit losses,
partially offset by a tax benefit of $53 million in the fourth quarter of
2001 related to the funding of SSI.
o The provision for credit losses increased $290 million to $606 million
as a result of credit deterioration in the commercial loan portfolio.
o Shareholder value added decreased $102 million as the decline in cash basis
earnings was partially offset by lower capital as a result of reductions in
commercial loan levels.
Asset Management
Asset Management includes the Private Bank, Banc of America Capital Management
and the Individual Investor Group. The Private Bank's goal is to assist
individuals and families in building and preserving their wealth by providing
investment, fiduciary and comprehensive credit expertise to high-net-worth
clients. Banc of America Capital Management is an asset-gathering and asset
management organization serving the needs of institutional clients,
high-net-worth individuals and retail customers. Banc of America Capital
Management manages money and distribution channels, manufactures investment
products, offers institutional separate accounts and wrap programs, and provides
advice to clients through asset allocation expertise and software. The
Individual Investor Group, which is comprised of Private Client Services and
Banc of America Investment Services, Inc., provides investment, securities and
financial planning services to affluent and high-net-worth individuals. Private
Client Services focuses on high-net-worth individuals. Banc of America
Investment Services, Inc. includes both the full-service network of investment
professionals and an extensive on-line investor service.
One of the Corporation's strategies is to focus on and grow the asset
management business. Recent initiatives include new investment platforms that
broaden the Corporation's capabilities to maximize market opportunity for its
clients. The Corporation continues to enhance the financial planning tools used
to assist clients with their financial goals.
Effective January 2, 2001, the Corporation acquired the remaining 50
percent of Marsico for a total investment of $1.1 billion. The Corporation
acquired the first 50 percent in 1999. Marsico is a Denver-based investment
management firm specializing in large capitalization growth stocks.
B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T
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<PAGE>
Client assets at December 31, 2001 and 2000 were:
Client Assets
(Dollars in billions) 2001 2000
-------- --------
Assets under management $ 314.2 $ 278.1
Client brokerage assets 99.4 99.5
Assets in custody 46.9 48.5
- -------------------------- -------- --------
Total client assets $ 460.5 $ 426.1
-------------------------- ------- -------
Assets under management typically generate fees based on a percentage of
their value. Assets of the Nations Funds family of mutual funds reached $148
billion at December 31, 2001, primarily driven by an increase in money market
funds in the declining equity market environment. Growth in assets under
management of $36 billion, or 13 percent, was primarily driven by the growth in
money market funds as well as the addition of the remaining Marsico Funds.
Client brokerage assets, a source of commission revenue, were flat at
approximately $100 billion compared to the prior year. Assets in custody, which
generate custodial fees, declined slightly.
Asset Management
(Dollars in millions) 2001 2000
------ ------
Net interest income $ 741 $ 666
Noninterest income 1,733 1,801
- ------------------------------- ------ ------
Total revenue 2,474 2,467
Provision for credit losses 121 47
Cash basis earnings 578 619
Shareholder value added 312 421
Cash basis efficiency ratio 59.9% 58.0%
- ------------------------------- ------ ------
o Total revenue remained flat at $2.5 billion in 2001, as the increase
in net interest income was offset by a decline in noninterest income.
o Net interest income increased $75 million, or 11 percent, due to the
Corporation's overall asset and liability management and growth in
the commercial and residential mortgage loan portfolios.
o Noninterest income decreased $68 million, or four percent, as a
decline in other income was partially offset by an increase in
investment and brokerage services income. The increase in investment
and brokerage services income was due to new asset management
business and the completed acquisition of Marsico, partially offset
by lower broker activity due to decreased trade volume.
o Cash basis earnings decreased $41 million, or seven percent, in 2001,
primarily due to a $74 million increase in provision expense largely
related to one loan that was charged off in the second quarter of 2001
and increased noninterest expense.
o Noninterest expense increased $78 million, or five percent,
reflecting investments in new private banking offices, the
acquisition of Marsico, and personnel supporting revenue growth
initiatives, partially offset by one-time business divestiture
expenditures in 2000.
o Shareholder value added declined $109 million due to the decline in
cash basis earnings and the increased capital associated with the
acquisition of Marsico.
Global Corporate and Investment Banking
Global Corporate and Investment Banking provides a broad array of financial
services such as investment banking, capital markets, trade finance, treasury
management, lending, leasing and financial advisory services to domestic and
international corporations, financial institutions and government entities.
Clients are supported through offices in 34 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, merger
and acquisition advisory, debt and equity underwriting and trading, cash
management, derivatives, foreign exchange, leasing, leveraged finance, project
finance, structured finance and trade services.
Global Corporate and Investment Banking
(Dollars in millions) 2001 2000
-------- --------
Net interest income $ 4,592 $ 3,725
Noninterest income 4,639 4,444
- --------------------------------------------- -------- --------
Total revenue 9,231 8,169
Provision for credit losses 1,275 751
Cash basis earnings 2,022 1,897
Shareholder value added 644 336
Cash basis efficiency ratio 54.3% 57.4%
- --------------------------------------------- -------- --------
o In 2001, total revenue increased $1.1 billion, or 13 percent,
primarily due to $620 million, or 22 percent, growth in
trading-related revenue.
o Net interest income increased $867 million, or 23 percent, as a
result of higher trading-related activities and the Corporation's
overall asset and liability management, partially offset by lower
commercial loan levels.
B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T
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<PAGE>
o Noninterest income increased $195 million, or four percent, as increases
in investment and brokerage services, corporate service charges, trading
account profits and investment banking income were partially offset by a
decline in other income.
o Cash basis earnings increased $125 million, or seven percent, in 2001 as
revenue growth was partially offset by higher credit-related costs and
noninterest expense.
o The provision for credit losses increased $524 million to $1.3 billion
due to credit quality deterioration in the commercial-domestic loan
portfolio of Global Credit Products.
o A $331 million, or seven percent, increase in noninterest expense was
primarily due to higher market-related incentives and other expenses in
line with revenue growth.
o Shareholder value added increased $308 million as a result of the increase
in cash basis earnings as well as lower capital due to reductions in loan
levels.
Global Corporate and Investment Banking offers clients a comprehensive
range of global capabilities through three components: Global Investment
Banking, Global Credit Products and Global Treasury Services.
Global Investment Banking
Global Investment Banking includes the Corporation's investment banking
activities and risk management products. Through a separate subsidiary, Banc of
America Securities LLC, Global Investment Banking underwrites and makes markets
in equity securities, high-grade and high-yield corporate debt securities,
commercial paper, and mortgage-backed and asset-backed securities. Banc of
America Securities LLC also provides correspondent clearing services for other
securities broker/dealers and prime-brokerage services. Debt and equity
securities research, loan syndications, mergers and acquisitions advisory
services and private placements are also provided through Banc of America
Securities LLC.
In addition, Global Investment Banking provides risk management solutions
for our global customer base using interest rate, equity, credit and commodity
derivatives, foreign exchange, fixed income and mortgage-related products. In
support of these activities, the businesses will take positions in these
products and capitalize on market-making activities. The Global Investment
Banking business also takes an active role in the trading of fixed income
securities in all of the regions in which Global Corporate and Investment
Banking transacts business and is a primary dealer in the U.S. as well as in
several international locations.
Global Investment Banking
(Dollars in millions) 2001 2000
-------- --------
Net interest income $ 1,693 $ 1,125
Noninterest income 3,153 3,007
- ------------------------------- -------- --------
Total revenue 4,846 4,132
Provision for credit losses 26 43
Cash basis earnings 932 778
Shareholder value added 512 374
Cash basis efficiency ratio 69.9% 72.6%
- ------------------------------- -------- --------
o Total revenue grew $714 million, or 17 percent, in 2001 primarily due to
higher trading-related revenue.
o Net interest income grew $568 million, or 51 percent, as a result of
higher trading-related activities.
o Higher investment and brokerage services income and investment banking
income more than offset a decrease in other income, resulting in
noninterest income growth of five percent. Investment banking income
increased $67 million as strong fixed income originations were partially
offset by weaker demand in syndications, equity underwriting and
advisory services.
o Cash basis earnings increased $154 million, or 20 percent, in 2001, as
revenue growth was partially offset by an increase in noninterest expense.
o The $390 million, or 13 percent, increase in noninterest expense
was primarily due to higher market-related incentives and other
expenses in line with revenue growth.
Global Credit Products
Global Credit Products provides credit and lending services and includes the
corporate industry-focused portfolio, leasing and project finance.
Global Credit Products
(Dollars in millions) 2001 2000
-------- --------
Net interest income $ 2,181 $ 1,993
Noninterest income 664 678
- ------------------------------- -------- --------
Total revenue 2,845 2,671
Provision for credit losses 1,265 764
Cash basis earnings 766 887
Shareholder value added (127) (208)
Cash basis efficiency ratio 20.6% 23.5%
- ------------------------------- -------- --------
B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T
41
<PAGE>
o Total revenue increased $174 million, or seven percent, in 2001 compared
to 2000.
o Net interest income increased $188 million, or nine percent, compared
to the prior year as lower funding costs offset the impact of lower
commercial loan levels.
o Noninterest income declined $14 million, or two percent, primarily
due to declines in the leasing portfolio, partially offset by an
increase in trading account profits.
o Cash basis earnings declined $121 million, or 14 percent, primarily due
to an increase in the provision for credit losses, partially offset by
the increase in revenue and a tax benefit of $93 million in the fourth
quarter of 2001 related to the funding of SSI.
o The provision for credit losses increased $501 million, or 66 percent,
driven by credit quality deterioration in the commercial-domestic
loan portfolio. Net charge-offs included $210 million in charge-offs
related to Enron Corporation.
o Shareholder value added increased $81 million as the decline in cash basis
earnings was offset by lower capital, reflecting the continued efforts to
reduce corporate loan levels and exit less profitable relationships.
Global Treasury Services
Global Treasury Services provides the technology, strategies and integrated
solutions to help financial institutions, government agencies and public and
private companies manage their operations and cash flows on a local, regional,
national and global level.
Global Treasury Services
(Dollars in millions) 2001 2000
------ ------
Net interest income $ 718 $ 607
Noninterest income 822 759
- ------------------------------- ------ ------
Total revenue 1,540 1,366
Provision for credit losses (16) (56)
Cash basis earnings 324 232
Shareholder value added 259 170
Cash basis efficiency ratio 67.4% 77.6%
- ------------------------------- ------ ------
o Revenue increased $174 million, or 13 percent, with increases in both net
interest income and noninterest income in 2001.
o Net interest income increased $111 million, or 18 percent, primarily due
to deposit growth and lower funding costs.
o Noninterest income increased $63 million, or eight percent, due to an
increase in corporate service charges as customers chose to pay service
charges rather than maintain excess deposit balances in the lower rate
environment.
o Cash basis earnings increased $92 million, or 40 percent, in 2001 driven
primarily by the growth in revenue.
Equity Investments
Equity Investments includes Principal Investing, which is comprised of a
diversified portfolio of investments in companies at all stages of the business
cycle, from start up to buyout. Investments are made on both a direct and
indirect basis in the U.S. and overseas. Direct investing activity focuses on
playing an active role in the strategic and financial direction of the portfolio
company as well as providing broad business experience and access to the
Corporation's global resources. Indirect investments represent passive limited
partnership stakes in funds managed by experienced third party private equity
investors who act as general partners. Equity Investments also includes the
Corporation's strategic technology and alliances investment portfolio.
Equity Investments
(Dollars in millions) 2001 2000
-------- --------
Net interest income $ (151) $ (139)
Noninterest income 183 1,007
- ------------------------------- -------- --------
Total revenue 32 868
Provision for credit losses 8 4
Cash basis earnings (84) 472
Shareholder value added (363) 241
Cash basis efficiency ratio n/m 11.7%
- ------------------------------- -------- --------
n/m = not meaningful
o In 2001, both revenue and cash basis earnings decreased substantially
primarily due to lower equity investment gains.
o Equity investment gains decreased $763 million to $230 million, with
$50 million in Principal Investing and $180 million in the strategic
investments portfolio. Principal Investing recorded cash gains of $425
million, offset by impairment charges of $335 million, of which $245
million occurred in the fourth quarter of 2001, and fair value
adjustment losses of $40 million. Equity investment gains in the
strategic investments portfolio included $140 million in the first
quarter of 2001 related to the sale of an interest in the Star Systems
ATM network.
o Net interest income consists primarily of the funding cost associated
with the carrying value of investments.
B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T
42
<PAGE>
o Shareholder value added declined $604 million reflecting the decline in cash
basis earnings and an increase in capital driven by an increase in the level
of equity investments and unused commitments.
Results of Operations
Net Interest Income
An analysis of the Corporation's net interest income on a taxable-equivalent
basis and average balance sheet for the last three years and most recent five
quarters is presented in Tables Four and Twenty-Six, respectively. The changes
in net interest income from year to year are analyzed in Table Five.
As reported, net interest income on a taxable-equivalent basis increased
$2.0 billion to $20.6 billion in 2001 compared to 2000. Management also reviews
"core net interest income," which adjusts reported net interest income for the
impact of trading-related activities, securitizations, asset sales and
divestitures, excluding balance sheet portfolios used to manage interest rate
risk. For purposes of internal analysis, management combines trading-related net
interest income with trading account profits, as discussed in the "Noninterest
Income" section on page 46, as trading strategies are typically evaluated based
on total revenue. Noninterest income, rather than net interest income, is
recorded for assets that have been securitized as the Corporation takes on the
role of servicer and records servicing income, and gains and losses on
securitizations, where appropriate.
Table Three below provides a reconciliation of net interest income on a
taxable-equivalent basis presented in Table Four to core net interest income for
the year ended December 31:
<TABLE>
<CAPTION>
Table 3 Net Interest Income
(Dollars in millions) 2001 2000 Change
--------- --------- ------
Net interest income
<S> <C> <C> <C>
As reported/(1)/ $ 20,633 $ 18,671 10.5%
Less: Trading-related net interest income (1,566) (1,023)
Add: Impact of securitizations, asset sales and divestitures 65 7
- ----------------------------------------------------------- --------- --------- -----
Core net interest income $ 19,132 $ 17,655 8.4%
----------------------------------------------------------- -------- -------- -----
Average earning assets
As reported $ 560,316 $ 583,467 (4.0)%
Less: Trading-related earning assets (125,263) (113,551)
Add: Earning assets securitized, sold and divested 3,616 641
- ----------------------------------------------------------- --------- --------- -----
Core average earning assets $ 438,669 $ 470,557 (6.8)%
----------------------------------------------------------- -------- -------- -----
Net interest yield on earning assets/(1)/ /(2)/
As reported 3.68% 3.20% 48bp
Add: Impact of trading-related activities 0.69 0.55 14
Impact of securitizations, asset sales and divestitures (0.01) - (1)
----------------------------------------------------------- --------- --------- -----
Core net interest yield on earning assets 4.36% 3.75% 61bp
----------------------------------------------------------- --------- --------- -----
</TABLE>
/(1)/ Net interest income is presented on a taxable-equivalent basis.
/(2)/ bp denotes basis points; 100 bp equals 1%.
Core net interest income on a taxable-equivalent basis was $19.1 billion in 2001
compared to $17.7 billion in 2000, an increase of $1.5 billion. The increase in
core net interest income was driven by changes in interest rates and the effect
of portfolio repositioning, higher levels of core funding and a favorable change
in managed loan mix, partially offset by the impact of the money market deposit
pricing initiative and the decrease in auto lease financing contributions. The
higher levels of core funding reflected a $14.9 billion increase in average
customer-based deposits and a $1.5 billion increase in average shareholders'
equity.
Core average earning assets were $438.7 billion in 2001, a decrease of
$31.9 billion, compared to $470.6 billion in 2000, primarily reflecting reduced
securities levels and average managed commercial loan balances partially offset
by growth in average managed consumer loan levels. Falling interest rates in
2001 allowed the Corporation to shed lower yielding assets and reposition its
balance sheet to take advantage of a steepened yield curve. Average managed
consumer loans increased eight percent led by growth in residential mortgages,
bankcard receivables and home equity lines. Average managed commercial loans
decreased eight percent, reflecting continuing efforts to reduce corporate loan
levels and exit less profitable relationships. Loan growth is dependent on
economic conditions and the management of borrower, industry, product and
geographic concentrations.
The core net interest yield increased 61 basis points to 4.36 percent in
2001 compared to 3.75 percent in 2000, mainly due to the effects of changes in
interest rates and portfolio repositioning, higher levels of core funding and a
favorable change in managed loan mix.
B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T
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<PAGE>
Table 4 Average Balances and Interest Rates - Taxable-Equivalent Basis
<TABLE>
<CAPTION>
2001
-----------------------------
Interest
Average Income/ Yield/
(Dollars in millions) Balance Expense Rate
-------- ------- ----
Earning assets
<S> <C> <C> <C>
Time deposits placed and other short-term investments $ 6,723 $ 318 4.73%
Federal funds sold and securities purchased under agreements to resell 35,202 1,414 4.02
Trading account assets 66,418 3,653 5.50
Securities/(1)/ 60,372 3,761 6.23
Loans and leases/(2)/:
Commercial - domestic 133,569 9,879 7.40
Commercial - foreign 26,492 1,567 5.90
Commercial real estate - domestic 24,607 1,700 6.91
Commercial real estate - foreign 348 20 6.08
- -------------------------------------------------------------- -------- ------- ----
Total commercial 185,016 13,166 7.12
- -------------------------------------------------------------- -------- ------- ----
Residential mortgage 81,472 5,920 7.27
Home equity lines 22,013 1,625 7.38
Direct/Indirect consumer 39,528 3,025 7.65
Consumer finance 18,555 1,683 9.07
Bankcard 16,641 1,879 11.29
Foreign consumer 2,222 127 5.80
- -------------------------------------------------------------- -------- ------- ----
Total consumer 180,431 14,259 7.90
- -------------------------------------------------------------- -------- ------- ----
Total loans and leases 365,447 27,425 7.50
- -------------------------------------------------------------- -------- ------- ----
Other earning assets 26,154 2,065 7.90
- -------------------------------------------------------------- -------- ------- ----
Total earning assets/(3)/ 560,316 38,636 6.90
- -------------------------------------------------------------- -------- ------- ----
Cash and cash equivalents 22,542
Other assets, less allowance for credit losses 66,689
- -------------------------------------------------------------- -------- ------- ----
Total assets $ 649,547
- -------------------------------------------------------------- ------- ------- ----
Interest-bearing liabilities Domestic interest-bearing deposits:
Savings $ 20,208 213 1.05
NOW and money market deposit accounts 114,657 2,498 2.18
Consumer CDs and IRAs 74,458 3,853 5.17
Negotiable CDs, public funds and other time deposits 5,848 290 4.96
- -------------------------------------------------------------- -------- ------- ----
Total domestic interest-bearing deposits
- -------------------------------------------------------------- -------- ------- ----
Foreign interest-bearing deposits/(4)/:
Banks located in foreign countries 23,397 1,053 4.49
Governments and official institutions 3,615 152 4.21
Time, savings and other 22,940 827 3.62
- -------------------------------------------------------------- -------- ------- ----
Total foreign interest-bearing deposits 49,952 2,032 4.07
- -------------------------------------------------------------- -------- ------- ----
Total interest-bearing deposits 265,123 8,886 3.35
- -------------------------------------------------------------- -------- ------- ----
Federal funds purchased, securities sold under agreements
to repurchase and other short-term borrowings 92,476 4,167 4.51
Trading account liabilities 29,995 1,155 3.85
Long-term debt/(5)/ 69,622 3,795 5.45
- -------------------------------------------------------------- -------- ------- ----
Total interest-bearing liabilities/(6)/ 457,216 18,003 3.94
- -------------------------------------------------------------- -------- ------- ----
Noninterest-bearing sources:
Noninterest-bearing deposits 97,529
Other liabilities 46,124
Shareholders' equity 48,678
- -------------------------------------------------------------- -------- ------- ----
Total liabilities and shareholders' equity $ 649,547
- -------------------------------------------------------------- -------- ------- ----
Net interest spread 2.96
Impact of noninterest-bearing sources .72
- -------------------------------------------------------------- -------- ------- ----
Net interest income/yield on earning assets $ 20,633 3.68%
- -------------------------------------------------------------- -------- ------- ----
</TABLE>
/(1)/ The average balance and yield on securities are based on the average of
historical amortized cost balances.
/(2)/ Nonperforming loans are included in the respective average loan balances.
Income on such nonperforming loans is recognized on a cash basis.
/(3)/ Interest income includes taxable-equivalent basis adjustments of $343,
$322 and $215 in 2001, 2000 and 1999, respectively. Interest income also
includes the impact of risk management interest rate contracts, which increased
(decreased) interest income on the underlying assets $978, $(48) and $306 in
2001, 2000 and 1999, respectively. These amounts were substantially offset by
corresponding decreases or increases in the income earned on the underlying
assets. For further information on interest rate contracts, see "Asset and
Liability Management Activities" beginning on page 67.
/(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
liabilities $63, $(36) and $116 in 2001, 2000, and 1999, respectively. These
amounts were substantially offset by corresponding decreases or increases in the
interest paid on the underlying liabilities. For further information on interest
rate contracts, see "Asset and Liability Management Activities" beginning on
page 67.
B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T
44
<PAGE>
<TABLE>
<CAPTION>
2000 1999
- ----------------------------------------------------------------------------------
Interest Interest
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 4,863 $ 336 6.91% $ 5,268 $ 295 5.59%
42,021 2,354 5.60 32,252 1,666 5.17
48,938 2,751 5.62 39,206 2,102 5.36
84,211 5,111 6.07 80,127 4,811 6.00
148,168 12,025 8.12 138,339 10,112 7.31
29,316 2,114 7.21 29,374 1,897 6.46
25,878 2,299 8.88 25,533 2,115 8.28
304 27 8.87 294 25 8.76
- ----------------------------------------------------------------------------------
203,666 16,465 8.08 193,540 14,149 7.31
- ----------------------------------------------------------------------------------
91,091 6,754 7.41 78,948 5,667 7.18
19,492 1,748 8.97 16,152 1,268 7.85
41,476 3,446 8.31 42,274 3,469 8.21
24,395 2,160 8.85 18,752 1,670 8.91
10,279 1,241 12.07 9,778 1,134 11.59
2,223 195 8.77 3,339 316 9.45
- ----------------------------------------------------------------------------------
188,956 15,544 8.23 169,243 13,524 7.99
- ----------------------------------------------------------------------------------
392,622 32,009 8.15 362,783 27,673 7.63
- ----------------------------------------------------------------------------------
10,812 926 8.57 11,875 881 7.41
- ----------------------------------------------------------------------------------
583,467 43,487 7.45 531,511 37,428 7.04
- ----------------------------------------------------------------------------------
24,766 25,766
63,340 59,561
- ----------------------------------------------------------------------------------
$ 671,573 $ 616,838
- ----------------------------------------------------------------------------------
$ 23,452 314 1.34 $ 23,655 300 1.27
99,927 2,941 2.94 98,649 2,374 2.41
77,409 4,205 5.43 74,010 3,534 4.78
7,626 481 6.31 6,646 361 5.44
- ----------------------------------------------------------------------------------
208,414 7,941 3.81 202,960 6,569 3.24
- ----------------------------------------------------------------------------------
18,788 1,130 6.01 16,301 802 4.92
8,922 513 5.75 7,884 400 5.08
26,024 1,423 5.47 25,949 1,231 4.74
- ----------------------------------------------------------------------------------
53,734 3,066 5.71 50,134 2,433 4.85
- ----------------------------------------------------------------------------------
262,148 11,007 4.20 253,094 9,002 3.56
- ----------------------------------------------------------------------------------
131,492 7,957 6.05 116,150 5,826 5.02
23,843 892 3.74 15,458 658 4.26
70,293 4,960 7.06 57,574 3,600 6.25
- ----------------------------------------------------------------------------------
487,776 24,816 5.09 442,276 19,086 4.32
- ----------------------------------------------------------------------------------
91,146 88,654
45,519 39,307
47,132 46,601
- ----------------------------------------------------------------------------------
$ 671,573 $ 616,838
- ----------------------------------------------------------------------------------
2.36 2.72
.84 .73
- ----------------------------------------------------------------------------------
$ 18,671 3.20% $ 18,342 3.45%
- ----------------------------------------------------------------------------------
</TABLE>
B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T
45
<PAGE>
Table 5 Analysis of Changes in Net Interest Income - Taxable-Equivalent Basis
<TABLE>
<CAPTION>
From 2000 to 2001 From 1999 to 2000
------------------------------------------------------------------
Due to Change in/(1)/ Due to Change in/(1)/
---------------------- Net ---------------------- Net
(Dollars in millions) Volume Rate Change Volume Rate Change
------------------------------------------------------------------
Increase (decrease) in interest income
<S> <C> <C> <C> <C> <C> <C>
Time deposits placed and other short-term investments $ 129 $ (147) $ (18)$ (23) $ 64 $ 41
Federal funds sold and securities purchased under (383) (557) (940) 506 182 688
agreements to resell
Trading account assets 982 (80) 902 521 128 649
Securities (1,446) 96 (1,350) 242 58 300
Loans and leases:
Commercial - domestic (1,179) (967) (2,146) 719 1,914 1,913
Commercial - foreign (204) (343) (547) (3) 220 217
Commercial real estate - domestic (114) (485) (599) 28 156 184
Commercial real estate - foreign 4 (11) (7) 2 - 2
- --------------------------------------------------------------------------------------------------------------------------
Total commercial (3,299) 2,316
- --------------------------------------------------------------------------------------------------------------------------
Residential mortgage (717) (117) (834) 873 214 1,087
Home equity lines 227 (350) (123) 262 218 480
Direct/Indirect consumer (161) (260) (421) (64) 41 (23)
Consumer finance (518) 41 (477) 504 (14) 490
Bankcard 768 (130) 638 57 50 107
Foreign consumer - (68) (68) (106) (15) (121)
- --------------------------------------------------------------------------------------------------------------------------
Total consumer (1,285) 2,020
- --------------------------------------------------------------------------------------------------------------------------
Total loans and leases (4,584) 4,336
- --------------------------------------------------------------------------------------------------------------------------
Other earning assets 1,315 (176) 1,139 (80) 125 45
- --------------------------------------------------------------------------------------------------------------------------
Total interest income (4,851) 6,059
- --------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in interest expense Domestic
interest-bearing deposits:
Savings (43) (58) (101) (2) 16 14
NOW and money market deposit accounts 430 (873) (443) 34 533 567
Consumer CDs and IRAs (162) (190) (352) 166 505 671
Negotiable CDs, public funds and other time
deposits (112) (79) (191) 54 66 120
- --------------------------------------------------------------------------------------------------------------------------
Total domestic interest-bearing deposits (1,087) 1,372
- --------------------------------------------------------------------------------------------------------------------------
Foreign interest-bearing deposits:
Banks located in foreign countries 276 (353) (77) 122 206 328
Governments and official institutions (305) (56) (361) 53 60 113
Time, savings and other (168) (428) (596) 3 189 192
- --------------------------------------------------------------------------------------------------------------------------
Total foreign interest-bearing deposits (1,034) 633
- --------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits (2,121) 2,005
- --------------------------------------------------------------------------------------------------------------------------
Federal funds purchased, securities sold under
agreements to repurchase and other short-term
borrowings (2,362) (1,428) (3,790) 775 1,356 2,131
Trading account liabilities 230 33 263 358 (124) 234
Long-term debt (45) (1,120) (1,165) 793 567 1,360
- --------------------------------------------------------------------------------------------------------------------------
Total interest expense (6,813) 5,730
- --------------------------------------------------------------------------------------------------------------------------
Net increase in net interest income $1,962 $ 329
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ The changes for each category of interest income and expense are
divided between the portion of change attributable to the variance in
volume or rate for that category. The change in rate/volume variance
has been allocated to the rate variance.
Noninterest Income
As presented in Table Six, noninterest income decreased $234 million to $14.3
billion in 2001 from the comparable 2000 period. The decrease in noninterest
income reflects the increases in service charges, card income, investment and
brokerage services, mortgage banking income and investment banking income being
offset by a sharp decline in equity investment gains as well as declines in
other income and trading account profits.
B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T
46
<PAGE>
Table 6 Noninterest Income
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Increase/(Decrease)
--------------------
(Dollars in millions) 2001 2000 Amount Percent
--------- --------- -------- --------
Consumer service charges $ 2,866 $ 2,654 $ 212 8.0%
Corporate service charges 2,078 1,889 189 10.0
- ----------------------------------------------- --------- --------- -------- --------
Total service charges 4,944 4,543 401 8.8
----------------------------------------------- --------- --------- -------- --------
Consumer investment and brokerage services 1,546 1,466 80 5.5
Corporate investment and brokerage services 566 463 103 22.2
- ----------------------------------------------- --------- --------- -------- --------
Total investment and brokerage services 2,112 1,929 183 9.5
----------------------------------------------- --------- --------- -------- --------
Mortgage banking income 593 512 81 15.8
Investment banking income 1,579 1,512 67 4.4
Equity investment gains 291 1,054 (763) (72.4)
Card income 2,421 2,229 192 8.6
Trading account profits/(1)/ 1,842 1,923 (81) (4.2)
Other income 566 880 (314) (35.7)
- ----------------------------------------------- --------- --------- -------- --------
Total $14,348 $14,582 $(234) (1.6)%
----------------------------------------------- -------- --------- -------- --------
</TABLE>
/1/ Trading account profits in 2001 included the $83 million SFAS 133
transition adjustment net loss. The components of the transition
adjustment by segment were a gain of $4 million for Consumer and
Commercial Banking, a gain of $19 million for Global Corporate and
Investment Banking and a loss of $106 million for Corporate Other.
The following section discusses the noninterest income results of the
Corporation's four business segments. For additional business segment
information, see "Business Segment Operations" beginning on page 36.
Consumer and Commercial Banking
o Noninterest income for Consumer and Commercial Banking increased $652
million to $8.0 billion in 2001 from the comparable 2000 period, driven
by increased service charges, higher card income and strong mortgage
banking revenue.
o Service charges include deposit account service charges, non-deposit
service charges and fees and bankers' acceptances and letters of credit
fees. Service charges increased $321 million to $3.8 billion in 2001
due to an increase in both consumer and corporate service charges.
Consumer service charges increased $204 million primarily due to higher
business volumes. Corporate service charges increased $117 million as
corporate customers chose to pay higher fees rather than maintain
excess deposit balances in the lower rate environment.
o Card income includes interchange income, credit and debit card fees and
merchant discount fees. Card income increased $192 million to $2.4
billion primarily due to new account growth in both credit and debit
card and increased purchase volume on existing accounts. Growth in
income for the core portfolio is being generated through traditional
marketing channels, expanding relationships with existing customers and
leveraging the banking center network. Card income includes activity
from the securitized portfolio of $193 million and $209 million in 2001
and 2000, respectively. This amount represents residual income which
consists of revenues from the securitized credit card portfolio offset
by charge-offs and interest expense paid to the bondholders.
o Mortgage banking revenue increased $246 million to $758 million in 2001
and was comprised of mortgage banking income of $593 million and
trading account profits of $165 million. The amount recorded in trading
account profits represents the net mark-to-market adjustments on
certain mortgage banking assets and the related derivative instruments.
The increase in mortgage banking revenue in 2001 primarily reflected
higher origination activity, increased gains on loan sales to the
secondary market and favorable net mark-to-market adjustments included
in trading account profits. These increases were partially offset by
increased prepayments on mortgage loans as a result of the declining
interest rate environment. The average managed portfolio of mortgage
loans serviced increased $6.1 billion to $334.8 billion in 2001
compared to the same period in 2000. Total production of first mortgage
loans originated through the Corporation increased $30.6 billion to
$82.4 billion in 2001, reflecting a significant increase in
refinancings as a result of declining interest rates. First mortgage
loan origination volume was composed of approximately $49.6 billion of
retail loans and $32.8 billion of correspondent and wholesale loans in
2001. Retail first mortgage origination volume increased to 60 percent
of total volume in 2001 from 42 percent in 2000. The Corporation made a
strategic decision to exit the correspondent loan origination channel
during the second quarter of 2001. The Corporation's decision to exit
the correspondent business was based upon its overall strategy to
focus on businesses with greater potential to deepen and expand
customer relationships and with higher potential returns.
Asset Management
o Noninterest income for Asset Management decreased $68 million to $1.7
billion in 2001 compared to the same period in 2000. The decrease was
primarily attributable to a decline in other income, partially offset
by increased income from investment and brokerage services.
o Income from investment and brokerage services includes personal and
institutional asset management fees and brokerage income. Income from
investment and brokerage services increased $45 million to $1.6 billion
in 2001 compared to the same period in 2000. This increase was largely
due to new asset management business and the completed acquisition of
Marsico being offset by lower broker activity due to decreased trade
volume.
B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T
47
<PAGE>
Global Corporate and Investment Banking
o Noninterest income for Global Corporate and Investment Banking increased
$195 million to $4.6 billion in 2001 compared to the same period in 2000.
The increase was primarily due to increases in investment and brokerage
services, corporate service charges, trading account profits and investment
banking income, partially offset by a decline in other income.
o Corporate service charges increased $72 million to $1.1 billion in
2001, primarily driven by corporate customers opting to pay service
charges rather than maintain excess deposit balances in the lower rate
environment.
o Trading account profits, as reported in the Consolidated Statement of
Income, does not include the net interest income recognized on
interest-earning and interest-bearing trading positions or the related
funding charge or benefit. Trading account profits as well as
trading-related net interest income ("trading-related revenue") are
presented in the following table as they are both considered in
evaluating the overall profitability of the Corporation's trading
positions.
Trading-related revenue increased $620 million to $3.4 billion in
2001, due to a $543 million increase in the net interest margin and a
$77 million increase in trading account profits. Increases in the fixed
income, interest rate and commodities contract categories were
partially offset by a decrease in equities and equity derivatives
contracts. Fixed income showed the largest increase, up $483 million,
or 129 percent, primarily attributable to an increase in market
liquidity which resulted from a lower interest rate environment, as
well as tightening of credit spreads. Revenue from interest rate
contracts increased $198 million to $893 million reflecting a more
volatile rate environment as well as an increase in customer flow as
customers sought to lock in lower rates. Commodities contracts
increased $102 million to $172 million, attributable to market
volatility and increased customer flow. Foreign exchange revenue
increased $5 million to $541 million. Income from equities and equity
derivatives contracts decreased $168 million to $920 million, due to a
slowdown in customer activity in the market. Trading account profits in
2001 included a $19 million transition adjustment gain resulting from
the adoption of SFAS 133.
Trading-related Revenue in Global Corporate and Investment Banking
(Dollars in millions) 2001 2000
-------- --------
Trading account profits $ 1,818 $ 1,741
Net interest income 1,566 1,023
- --------------------------------------- -------- --------
Total trading-related revenue $ 3,384 $ 2,764
- --------------------------------------- -------- --------
Trading-related revenue by product
Foreign exchange contracts $ 541 $ 536
Interest rate contracts 893 695
Fixed income 858 375
Equities and equity derivatives 920 1,088
Commodities 172 70
- --------------------------------------- -------- --------
Total trading-related revenue $ 3,384 $ 2,764
- --------------------------------------- -------- --------
o Investment banking income increased $67 million to $1.6 billion in 2001.
Increases in securities underwriting and other investment banking income
were offset by declines in syndications and advisory fees. Securities
underwriting fees increased $177 million to $797 million from strong growth
in high grade and high yield origination which was offset by lower equity
underwriting. Syndication fees decreased $119 million to $402 million in
2001 as a result of fewer deals in the marketplace. A sluggish market for
advisory services drove a decline in fees of $22 million to $276 million in
2001. Investment banking income by major activity follows:
Investment Banking Income
(Dollars in millions) 2001 2000
-------- --------
Securities underwriting $ 797 $ 620
Syndications 402 521
Advisory services 276 298
Other 104 73
- ----------------------------- -------- --------
Total $ 1,579 $ 1,512
- ----------------------------- -------- --------
Equity Investments
o Noninterest income for Equity Investments decreased $824 million to $183
million in 2001 compared to the same period in 2000. This decrease resulted
from a sharp decline in equity investment gains driven by weaker equity
markets.
o Equity investment gains decreased $763 million to $230 million, with
$50 million in Principal Investing and $180 million in the strategic
investments portfolio. Principal Investing recorded cash gains of $425
million, offset by impairment charges of $335 million, of which $245
million occurred in the fourth quarter of 2001, and fair value
adjustment losses of $40 million. Equity investment gains in the
strategic investments portfolio included a gain of $140 million in the
first quarter of 2001 related to the sale of an interest in the Star
Systems ATM network.
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<PAGE>
Provision for Credit Losses
The provision for credit losses totaled $3.9 billion for the year ended December
31, 2001 compared to $2.5 billion in 2000, excluding the impact of charges
related to the exit of the subprime real estate lending business. The increase
in the provision for credit losses from last year was primarily due to an
increase in net charge-offs, which included $210 million in charge-offs in the
fourth quarter of 2001 related to Enron Corporation. Additional provision
expense was also recorded in 2001 to increase the allowance for credit losses
due to deterioration in credit quality and the overall uncertainty in the
economy. Excluding the impact of subprime real estate exit-related charges, the
provision for credit losses for 2001 was $283 million in excess of net
charge-offs. Total net charge-offs, excluding the impact of exit-related
charges, were $3.6 billion for the year ended December 31, 2001 compared to $2.4
billion in 2000. This increase was due to higher charge-offs in the commercial -
domestic portfolio due to a deterioration in credit quality stemming from the
weak economic environment. Bankcard charge-offs also increased due to growth in
the portfolio, an increase in personal bankruptcy filings and a weaker economic
environment.
An exit-related provision for credit losses of $395 million, combined with
an existing allowance for credit losses of $240 million, was used to write down
the subprime real estate loan portfolio to estimated market value in the third
quarter of 2001. This resulted in charge-offs of $635 million in the consumer
finance loan portfolio. Including the exit impact, the provision for credit
losses totaled $4.3 billion and total net charge-offs were $4.2 billion for the
year ended December 31, 2001.
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 54.
Noninterest Expense
As presented in Table Seven, the Corporation's noninterest expense increased
$2.1 billion to $20.7 billion in 2001. This increase in noninterest expense was
driven by business exit costs, higher other general operating expense,
personnel, professional fees, data processing and marketing, reflecting
investments in growth businesses such as e-commerce, Asset Management and card
and payment businesses.
Table 7 Noninterest Expense
<TABLE>
<CAPTION>
2001 2000 Increase/(Decrease)
--------------------------------------------------------------------
(Dollars in millions) Amount Percent/(1)/ Amount Percent/(1)/ Amount Percent
-------- ----------- -------- ----------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Personnel $ 9,829 28.1% $ 9,400 28.2% $ 429 4.6%
Occupancy 1,774 5.1 1,682 5.0 92 5.5
Equipment 1,115 3.2 1,173 3.5 (58) (4.9)
Marketing 682 1.9 621 1.9 61 9.8
Professional fees 564 1.6 452 1.4 112 24.8
Amortization of intangibles 878 2.5 864 2.6 14 1.6
Data processing 776 2.2 667 2.0 109 16.3
Telecommunications 484 1.4 527 1.6 (43) (8.2)
Other general operating 2,687 7.7 2,114 6.4 573 27.1
General administrative and other 615 1.8 583 1.8 32 5.5
Business exit costs 1,305 3.7 - - 1,305 n/m
Restructuring charges - - 550 1.7 (550) n/m
- ---------------------------------- -------- --------- -------- ------ -------- ------
Total $ 20,709 59.2% $ 18,633 56.0% $ 2,076 11.1%
- ---------------------------------- -------- --------- -------- ------ -------- ------
</TABLE>
/(1)/ Percent of net interest income on a taxable-equivalent basis and
noninterest income.
o Personnel expense increased $429 million to $9.8 billion in 2001, primarily
due to a severance charge of $150 million in the fourth quarter of 2001
related to ongoing efficiency improvement programs, higher revenue-related
incentive compensation and increased salaries expense. The Corporation had
approximately 143,000 full-time equivalent employees at both December 31,
2001 and 2000.
o Marketing expense increased $61 million to $682 million for 2001, primarily
due to the Corporation's national brand-building campaign and higher card
marketing in Consumer and Commercial Banking.
o Professional fees increased $112 million to $564 million for 2001, primarily
reflecting higher consulting and other professional fees due to an increase
in initiatives related to the Corporation's strategy to improve customer
satisfaction, the launch of a company-wide Six Sigma quality and productivity
program and implementation of a new integrated business planning process.
o Data processing expense increased $109 million to $776 million for 2001,
primarily due to higher outsourced processing expense as a result of the
outsourcing of personnel services and higher item processing and check
clearing expenses.
o Other general operating expense increased $573 million to $2.7 billion in
2001, reflecting $334 million in litigation expenses in the fourth quarter of
2001 related to small settlements and an addition to the legal reserve to
cover increased exposure to existing litigation, foreclosed properties
expense in Corporate Other and other miscellaneous expenses throughout the
Corporation.
B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T
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<PAGE>
o On August 15, 2001, the Corporation announced that it was exiting its
auto leasing and subprime real estate lending businesses. As a result
of this strategic decision, the Corporation recorded pre-tax business
exit costs in the third quarter of 2001 of $1.3 billion in noninterest
expense. Business exit costs consisted of goodwill write-offs of $685
million, auto lease residual charges of $400 million, real estate
servicing asset charges of $145 million and other transaction costs of
$75 million.
o As part of its productivity and investment initiatives announced on
July 28, 2000, the Corporation recorded a pre-tax charge of $550
million in the third quarter of 2000. Of the $550 million restructuring
charge, approximately $475 million was used to cover severance and
related costs and approximately $75 million was used for other costs
related to process change and channel consolidation. At December 31,
2001, the reserve had been substantially utilized.
Income Taxes
The Corporation's income tax expense for 2001 was $3.3 billion for an
effective tax rate of 32.9 percent and for 2000 was $4.3 billion for an
effective tax rate of 36.2 percent. The decrease in the effective tax rate for
2001 was due primarily to a fourth quarter tax benefit of $418 million. The tax
benefit, which resulted in a 17 percent effective tax rate for the fourth
quarter of 2001, was generated as a result of the Corporation's realignment of
certain problem loan management activities into a wholly-owned subsidiary. This
tax benefit was partially offset by the portion of goodwill write-off included
in business exit costs recorded during 2001 that is not deductible for federal
or state income tax purposes. Note Seventeen of the consolidated financial
statements includes a reconciliation of expected federal income tax expense
computed using the federal statutory rate of 35 percent to actual income tax
expense.
Balance Sheet Review
The Corporation utilizes an integrated approach in managing its balance sheet.
The following summary discusses various aspects of both on-and off-balance
sheet positions as of December 31, 2001 and 2000 and for the years then ended.
Cash and Cash Equivalents
At December 31, 2001, cash and cash equivalents were $26.8 billion, a decrease
of $676 million from December 31, 2000. During 2001, net cash used in operating
activities was $12.8 billion, net cash provided by investing activities was
$37.6 billion and net cash used in financing activities was $25.3 billion. For
further information on cash flows, see the Consolidated Statement of Cash Flows
of the consolidated financial statements.
Securities
The securities portfolio serves a primary role in the Corporation's balance
sheet management activities. 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 average securities portfolio in 2001 decreased $23.8 billion to $60.4
billion due to significant reductions in the portfolio in early 2001. As a
percentage of total uses of funds, the average securities portfolio decreased by
four percent to nine percent in 2001.
The securities portfolio at December 31, 2001 consisted of
available-for-sale securities totaling $84.5 billion compared to $64.7 billion
at December 31, 2000. The increase in available-for-sale securities was
concentrated in the mortgage-backed securities portfolio and was primarily a
result of loans securitized during the year and subsequently held in the
portfolio. The reduction in the U.S. Treasury securities and agency debentures
in the available-for-sale portfolio was driven by portfolio repositioning during
the year. The estimated average duration of the available-for-sale securities
portfolio was 3.34 years at December 31, 2001 compared to 4.13 years at December
31, 2000.
The valuation allowance for available-for-sale and marketable equity
securities is included in shareholders' equity. At December 31, 2001, the
valuation allowance consisted of net unrealized losses of $480 million, net of
related income taxes of $311 million. At December 31, 2000, the valuation
allowance reflected net unrealized losses of $560 million, net of related income
taxes of $330 million.
Held-to-maturity securities totaled $1.0 billion at December 31, 2001
compared to $1.2 billion at December 31, 2000. At December 31, 2001 and 2000,
the market value of the Corporation's held-to-maturity securities reflected
pre-tax net unrealized losses of $40 million and $54 million, respectively.
Gains on sales of securities were $475 million in 2001 compared to $25
million in 2000. The majority of the gains were realized in the fourth quarter
of 2001 as the Corporation reduced its risk of slower prepayments in the
securities portfolio through sales of mortgage-backed securities in anticipation
of rising interest rates. See Note Three of the consolidated financial
statements for further details on securities.
Loans and Leases
As presented in Table Four, average loans and leases, the Corporation's primary
use of funds, decreased $27.2 billion to $365.4 billion in 2001. This decline
was primarily due to a decrease in consumer finance loans as the Corporation
exited the subprime real estate lending business and a decline in commercial
loans as the Corporation continued efforts to reduce corporate loan levels and
exit less profitable relationships. The Corporation also reviews loans on a
managed basis, which adjusts for securitizations, sales and divestitures.
Average managed loans and leases decreased $1.2 billion to $378.7 billion in
2001. This decrease was primarily due to lower average managed commercial loan
levels, partially offset by growth in average managed consumer loans. See Note
Eight of the consolidated financial statements for additional information on
managed loans.
B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T
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<PAGE>
Average managed commercial loans decreased $15.3 billion to $187.2 billion
in 2001. The commercial-domestic portfolio decreased $12.2 billion to $135.8
billion, reflecting aggressive paydowns precipitated by falling interest rates
and continuing efforts to exit less profitable relationships. The commercial-
foreign portfolio declined $2.4 billion to $26.5 billion primarily due to
paydowns on customer balances.
Average managed consumer loans increased eight percent in 2001, reflecting
increases throughout the consumer loan portfolios. Average managed residential
mortgages increased $4.6 billion to $84.0 billion due to strong growth in
branch-originated products. Average managed bankcard loans increased $4.4
billion to $24.6 billion due to an increase in new business volume and slower
balance paydowns. Average managed home equity lines increased $2.5 billion to
$22.0 billion, due to the impact of new marketing programs implemented in mid
2000. Average managed consumer finance loans increased $2.3 billion to $18.6
billion, and average managed direct/indirect consumer loans increased $308
million to $40.1 billion.
A significant source of liquidity for the Corporation is the repayments and
maturities of loans. Table Eight presents the contractual maturity distribution
and interest sensitivity of selected loan categories at December 31, 2001, and
indicates that approximately 44 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 8 Selected Loan Maturity Data/(1)/
<TABLE>
<CAPTION>
December 31, 2001
---------------------------------------------
Due after
Due in 1 year
1 year through Due after
(Dollars in millions) or less 5 years 5 years Total
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
Commercial - domestic $ 42,536 $ 47,058 $ 21,382 $ 110,976
Commercial real estate - domestic 2,888 5,905 3,374 12,167
Construction real estate - domestic 5,748 3,963 393 10,104
Foreign/(2)/ 16,389 3,538 1,408 21,335
- ------------------------- -------- -------- --------- ---------
Total selected loans $ 67,561 $ 60,464 $ 26,557 $ 154,582
- ------------------------- -------- -------- --------- ---------
Percent of total 43.7% 39.1% 17.2% 100.0%
Cumulative percent of total 43.7 82.8 100.0
Sensitivity of loans to changes in interest rates for loans due
after one year:
Fixed interest rates $ 8,821 $ 12,648 $ 21,469
Floating or adjustable interest rates 51,643 13,909 65,552
------- -------- -------- --------
Total $ 60,464 $ 26,557 $ 87,021
------- -------- -------- --------
</TABLE>
/(1)/ Loan maturities are based on the remaining maturities under contractual
terms.
/(2)/ Loan maturities include consumer and commercial foreign loans.
Deposits
Table Four 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 $9.4 billion to $362.7 billion in 2001 due to a $6.8 billion
increase in average domestic interest-bearing deposits and a $6.4 billion
increase in average total noninterest-bearing deposits, partially offset by a
$3.8 billion decrease in average foreign interest-bearing deposits. Average core
deposits, which exclude negotiable CDs, public funds, other domestic time
deposits, and foreign interest-bearing deposits, increased $14.9 billion to
$306.9 billion in 2001. The increase in average core deposits was primarily
driven by an increase in money market savings accounts and noninterest-bearing
deposits, partially offset by a decline in CDs and savings accounts. The
increase in money market savings accounts was driven by the Corporation's
deposit pricing initiative to offer more competitive money market savings rates.
As a percentage of total sources of funds, average core deposits increased by
four percent to 47 percent in 2001. At December 31, 2001, core deposits exceeded
loans and leases. See Note Nine of the consolidated financial statements for
further details on deposits.
Short-Term Borrowings
The Corporation uses short-term borrowings as a funding source and in its
management of interest rate risk. Table Nine presents the categories of
short-term borrowings.
During 2001, total average short-term borrowings decreased $39.0 billion to
$92.5 billion from $131.5 billion in 2000. This decline was primarily due to
decreases in repurchase agreements, short-term notes payable and commercial
paper driven by lower funding needs.
B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T
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<PAGE>
Table 9 Short-Term Borrowings
<TABLE>
<CAPTION>
2001 2000 1999
--------------------------------------------------------------
(Dollars in millions) Amount Rate Amount Rate Amount Rate
-------- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Federal funds purchased
At December 31 $ 5,487 1.45% $ 4,612 5.92% $ 4,806 3.04%
Average during year 6,267 3.99 4,506 6.44 5,835 5.03
Maximum month-end balance during year 8,718 - 7,149 - 8,311 -
Securities sold under agreements to repurchase
At December 31 42,240 1.25 44,799 6.26 69,755 4.12
Average during year 54,826 4.01 79,217 5.93 73,242 4.89
Maximum month-end balance during year 70,674 - 90,062 - 83,046 -
Commercial paper
At December 31 1,558 1.99 6,955 6.54 7,331 5.83
Average during year 4,156 4.91 9,645 6.41 7,610 5.17
Maximum month-end balance during year 7,410 - 10,762 - 8,379 -
Other short-term borrowings
At December 31 20,659 2.13 35,243 5.97 40,340 5.18
Average during year 27,227 5.56 38,124 6.18 29,463 5.30
Maximum month-end balance during year 39,391 - 45,271 - 40,340 -
</TABLE>
Long-Term Debt and Trust Preferred Securities
Long-term debt decreased $5.0 billion to $62.5 billion at December 31, 2001,
from $67.5 billion at December 31, 2000. The overall decline in long-term debt
reflected a decline in average assets, but was partially offset by additional
issuances to maintain liquidity, repay maturing debt and fund share repurchases.
During 2001, the Corporation issued, domestically and internationally, $14.9
billion in long-term senior and subordinated debt, an $8.6 billion decrease from
$23.5 billion during 2000. The Corporation issued $575 million of trust
preferred securities in 2001. There were no trust preferred securities issued in
2000. See Notes Ten and Eleven of the consolidated financial statements for
further details on long-term debt and trust preferred securities, respectively.
Subsequent to December 31, 2001, the Corporation issued $1.7 billion of
long-term senior and subordinated debt, with maturities ranging from 2007 to
2027.
Bank of America Corporation, as successor to NationsBank Corporation,
announced the redemption of its 7.84 percent Trust Originated Preferred
Securities issued by NB Capital Trust I and its 7.75 percent Trust Originated
Preferred Securities issued by BankAmerica Capital I. The redemption date is
March 15, 2002 with a redemption price of $25 per security plus accrued and
unpaid distributions, if any, up to but excluding the redemption date of March
15, 2002.
Subsequent to December 31, 2001, BAC Capital Trust II, a wholly-owned
grantor trust of Bank of America Corporation, issued $900 million in capital
securities. The annual dividend rate is 7 percent and is paid quarterly on
February 1, May 1, August 1 and November 1 of each year, commencing May 1, 2002.
The debt ratings of the Corporation and Bank of America, N.A at December
31, 2001 are reflected in the following table:
<TABLE>
<CAPTION>
Bank of America Corporation Bank of America, N.A.
-----------------------------------------------------------------------------
Commercial Senior Subordinated
Paper Debt Debt Short-Term Long-Term
---------- ------ ------------ ---------- ---------
<S> <C> <C> <C> <C> <C>
Moody's Investors Service P-1 Aa2 Aa3 P-1 Aa1
Standard & Poor's Corporation A-1 A+ A A-1+ AA-
Fitch, Inc. F-1+ AA- A+ F-1+ AA
- ------------------------------- ---------- ------ ------------ ---------- ---------
</TABLE>
Debt and Lease Obligations
The Corporation has contractual obligations to make future payments on debt and
lease agreements. Long-term debt, capital leases and trust preferred securities
are reflected on the balance sheet, whereas, operating lease obligations for
office space and equipment are not recorded on the balance sheet. These types of
obligations are more fully discussed in Notes Ten and Eleven of the consolidated
financial statements. Total debt and lease obligations at December 31, 2001
included:
<TABLE>
<CAPTION>
Due after Due after
Due in 1 year 3 years
1 year through through Due after
(Dollars in millions) or less 3 years 5 years 5 years Total
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Debt and lease obligations
Long-term debt and capital $ 11,592 $ 18,781 $ 14,875 $ 17,248 $ 62,496
leases/(1)/
Trust preferred securities/(1)/ - - - 5,530 5,530
Operating lease obligations 1,174 1,994 1,413 2,528 7,109
-------- --------- ---------- --------- --------
Total debt and lease obligations $ 12,766 $ 20,775 $ 16,288 $ 25,306 $ 75,135
-------- --------- ---------- --------- --------
</TABLE>
/(1)/ Includes principal payments
only.
B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T
52
<PAGE>
Credit Extension Commitments
Many of the Corporation's lending relationships, including those with commercial
and consumer customers, contain both funded and unfunded elements. The unfunded
component of these commitments is not recorded on the Corporation's balance
sheet. These commitments are more fully discussed in Note Twelve of the
consolidated financial statements. The table below summarizes the total unfunded
credit extension, or off-balance sheet, commitment amounts by expiration date.
<TABLE>
<CAPTION>
Expires after Expires after
Expires in 1 year 3 years
1 year through through Expires after
(Dollars in millions) or less 3 years 5 years 5 years Total
---------- ------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Credit extension commitments
Credit card commitments $ 73,644 $ - $ - $ - $ 73,644
Other loan commitments/(1)/ 97,570 50,891 37,359 35,709 221,529
Standby letters of credit and financial 28,268 8,790 829 2,487 40,374
guarantees
Commercial letters of credit 3,243 518 49 147 3,957
- -------------------------------------- ---------- ------------- ------------- ------------- -----------
Total credit extension commitments $ 202,725 $ 60,199 $ 38,237 $ 38,343 $ 339,504
-------------------------------------- ---------- ------------- ------------- ------------- -----------
</TABLE>
/(1)/ Other loan commitments include equity commitments of approximately $2.7
billion primarily related to obligations to fund existing venture
capital equity investments.
Off-Balance Sheet Financing Entity Commitments
In the normal course of business, the Corporation also supports its customers'
financing needs through facilitating their access to the commercial paper
markets. These markets provide an attractive, lower cost financing alternative
for the Corporation's customers. These customers sell assets, such as high-grade
trade or other receivables or leases, to a commercial paper financing entity,
which in turn issues high-grade short-term commercial paper that is
collateralized by such assets. The Corporation facilitates these transactions
and bills and collects fees from the financing entity for the services it
provides including administration, trust services and marketing the commercial
paper. In addition, the Corporation receives fees for providing liquidity and
standby letters of credit or similar loss protection commitments to the
financing entities. The Corporation manages its credit risk on these commitments
by subjecting them to normal underwriting and risk management processes. At
December 31, 2001 and 2000, the Corporation had off-balance sheet liquidity
commitments and standby letters of credit and other financial guarantees to
these financing entities of $36.1 billion and $27.6 billion, respectively.
Substantially all of these liquidity commitments and standby letters of credit
and other financial guarantees mature within one year. These amounts are
included in total credit extension commitments in the table above. Net revenues
earned from fees associated with these financing entities were approximately
$223 million and $200 million in 2001 and 2000, respectively.
In addition, to preserve its own liquidity and control its capital
position, the Corporation from time to time will seek alternative funding
sources. To accomplish this, the Corporation will sell or fund assets using an
off-balance sheet financing entity, which in turn, issues collateralized
commercial paper or structured notes to third-party market participants. The
Corporation may provide liquidity and standby letters of credit or similar loss
protection commitments to the financing entity, or it may enter into a
derivative with the entity whereby the Corporation assumes certain market risk.
Similar to that discussed above, the Corporation receives fees for the services
it provides to the financing entity, and it manages any market risk on
commitments or derivatives through normal underwriting and risk management
processes. Derivative activity related to these financing entities is included
in Note Five of the consolidated financial statements. At December 31, 2001 and
2000, the Corporation had off-balance sheet liquidity commitments and standby
letters of credit and other financial guarantees to these financing entities of
$3.9 billion and $2.9 billion, respectively. Substantially all of these
liquidity commitments and standby letters of credit and other financial
guarantees mature within one year. These amounts are included in total credit
extension commitments in the table above. Net revenues earned from fees
associated with these financing entities were $49 million and $51 million in
2001 and 2000, respectively.
Because the Corporation provides liquidity and credit support to these
financing entities, the Corporation's credit ratings and changes thereto will
affect the borrowing cost and liquidity of these entities. In addition,
significant changes in counterparty asset valuation and credit standing may also
affect the liquidity of the commercial paper issuance. Further, disruption in
the commercial paper markets may result in the Corporation having to fund under
these commitments and letters of credit discussed above. These risks, along with
all other credit and liquidity risks, are managed by the Corporation within its
policies and practices. See Note One of the consolidated financial statements
for an additional discussion of off-balance sheet financing entities.
Capital Resources and Capital Management
Shareholders' equity at December 31, 2001 was $48.5 billion compared to $47.6
billion at December 31, 2000, an increase of $892 million. The increase was
primarily due to $3.2 billion of net earnings (net income less dividends), $1.1
billion of net gains on derivatives and $1.1 billion in common stock issued
under employee plans, partially offset by the repurchase of common stock for
approximately $4.7 billion. The Tier 1 Capital Ratio rose 80 basis points from
December 31, 2000 to 8.30 percent. At December 31, 2001, the Corporation was
classified as well-capitalized.
On December 11, 2001, the Corporation's Board of Directors (the Board)
authorized a new stock repurchase program of up to 130 million shares of the
Corporation's common stock at an aggregate cost of up to $10.0 billion. No
shares had been repurchased under the 2001 program at December 31, 2001. The
remaining buyback authority for common stock under the 2000 repurchase program
totaled $2.1 billion, or two million shares. During 2001, the Corporation
repurchased approximately 82 million shares of its common stock in open market
repurchases at an average per-share price of $57.58,
B A N K O F A M E R I C A 2 0 0 1 A N N U A L R E P O R T
53
<PAGE>
which reduced shareholders' equity by $4.7 billion and increased earnings per
share by approximately $0.08 for the year ended December 31, 2001. Management
anticipates it will continue to repurchase shares at least equal to shares
issued under its various stock option plans. See Note Thirteen of the
consolidated financial statements for additional disclosures related to the
repurchase program.
On October 24, 2001, the Board approved a $0.04 per share, or seven
percent, increase in the quarterly common dividend. This increase brings the
common dividend to $0.60 per share for the fourth quarter of 2001 and $2.28 per
share for the year ended December 31, 2001.
The regulatory capital ratios of the Corporation and Bank of America, N.A.,
along with a description of the components of risk-based capital, capital
adequacy requirements and prompt corrective action provisions, are included in
Note Fourteen of the consolidated financial statements.
Risk Management Overview
The Corporation's goal in managing risk is to produce appropriate risk-adjusted
returns, reduce the wide volatility in earnings and increase shareholder value.
The Corporation believes it has a governance structure and risk management
approach in place in order to reach that goal. Processes are designed to align
the Corporation's measures for business success with the measures for return,
growth and risk. Further, these processes enable the Corporation to better
communicate with its associates the corporate appetite for risk, manage sources
of earnings' volatility and manage appropriate capital levels.
The Corporation manages risk by adherence to the following key principles:
o Emphasize that individual decision-making and accountability are the
cornerstone.
o Include risk assessments in all business units.
o Appropriate limits, policies, procedures and measures are in place.
o Independently test, verify and evaluate controls.
o Identify and minimize the sources of earnings' volatility.
o Use SVA as a key financial measure to evaluate businesses and to direct
capital.
Each of these key principles contributes to a more risk/return focused
culture. Importantly, the Corporation believes SVA leads to better risk/return
decisioning and to a lower risk profile. Reinforcing the cost of capital among
the Corporation's business segments creates critical assessments of the
Corporation's uses of capital. The cost of capital for each business is based on
an assessment of its specific credit, market and operational risk.
The goal of the governance structure is to enable management to actively
balance risk and return.
o The Chief Financial Officer has oversight responsibility for the
soundness of the Corporation's capitalization and earnings.
o The Chief Risk Officer has enterprise-wide oversight of market, credit
and operational risks.
o The business unit leaders have responsibility for
meeting corporate performance objectives within the boundaries of their
allocated risk position.
The Corporation manages day-to-day risk-taking through three senior
executive committees. The Risk and Capital Committee determines the corporate
objectives for each performance measure, allocates capital, sets aggregate risk
levels and plans the use of capital. It also coordinates two committees
responsible for market and credit risk. The Asset and Liability Committee
reviews aggregate balance sheet exposures, including trading positions,
recommends balance sheet capital allocations and recommends changes in the
market risk profile. The Credit Risk Committee reviews business asset quality,
portfolio management results and industry concentrations and limits.
The Board of Directors addresses risk in three ways. The Finance Committee
oversees both market and credit risk through reports from the Asset and
Liability Committee and the Credit Risk Committee. The Asset Quality Committee
of the Board also reviews credit risk, and the Audit Committee of the Board
reviews the scope and coverage of the external audit and internal audit
activities.
Senior management and the Board of Directors oversight builds on the
cornerstone of the Corporation's corporate governance: individual
decision-making and accountability. The Corporation's corporate governance is
designed so that individuals at all levels are delegated appropriate authority,
take appropriate action and are accountable for actions taken. Wherever
practical, decision-making authority is delegated as close to the customer as
possible.
The following sections, Credit Risk Management and Credit Portfolio Review,
Market Risk Management and Liquidity Risk Management, provide specific
information on the Corporation's processes and current risk assessment in each
area as of December 31, 2001 and 2000.
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.
This exposure exists in both on-and off-balance sheet relationships. Credit
risk arises through the extension of loans and leases, certain securities,
off-balance sheet letters of credit and financial guarantees, unfunded loan
commitments and through counterparty exposure on trading and capital markets
transactions. To manage both on-and off-