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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 15, 1996
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
NATIONSBANK CORPORATION
(Exact name of registrant as specified in its charter)
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NORTH CAROLINA 6711 56-0906609
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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NATIONSBANK CORPORATE CENTER
100 NORTH TRYON STREET
CHARLOTTE, NORTH CAROLINA 28255
(704) 386-5000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
PAUL J. POLKING
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
NATIONSBANK CORPORATION
NATIONSBANK CORPORATE CENTER
100 NORTH TRYON STREET
CHARLOTTE, NORTH CAROLINA 28255
(704) 386-5000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPIES TO:
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EDWARD D. HERLIHY JOHN C. MURPHY, JR. THOMAS C. ERB
WACHTELL, LIPTON, ROSEN & KATZ CLEARY, GOTTLIEB, STEEN & HAMILTON LEWIS, RICE & FINGERSH
51 WEST 52ND STREET 1752 N STREET, N.W. 500 N. BROADWAY,
NEW YORK, NEW YORK 10019 WASHINGTON, D.C. 20036 SUITE 2000
ST. LOUIS, MISSOURI 63102
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective. If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE
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Common Stock...................................... 104,351,996 $92,241(3) $9,625,572,045 $2,916,840
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Cumulative Convertible Preferred Stock, Series A
(and shares of Common Stock into which such
shares may be converted)........................ 233,971 0(4) 0 0
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Preferred Depositary Shares, Series A............. 3,743,539 51.937(5) 194,430,057 58,919
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7% Cumulative Redeemable Preferred Stock, Series
B............................................... 9,487 100(6) 948,700 288
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Total............................................. 2,976,047(2)
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</TABLE>
(1) Based upon the maximum number of shares that may be issued upon consummation
of the merger described herein, and upon exercise of securities exercisable
for shares of Common Stock (other than, with respect to such exercise, the
Series A Preferred Stock).
(2) In accordance with Rule 457(b), the filing fee of $1,812,471 paid pursuant
to Section 14(g) of the Securities Exchange Act of 1934 and Rule 0-11
thereunder at the time of the filing of the Joint Proxy Statement-Prospectus
contained in this Registration Statement as preliminary proxy materials of
NationsBank Corporation and Boatmen's Bancshares, Inc. has been credited to
offset the $2,976,047 registration fee that would otherwise be payable.
(3) Pursuant to Rule 457(f), and solely for the purpose of calculating the
registration fee, the proposed maximum offering price is based upon the
average of the high and the low sale prices of the Common Stock, par value
$1.00, of Boatmen's Bancshares, Inc. on The Nasdaq Stock Market on November
11, 1996 and the number of shares of NationsBank Corporation Common Stock
being registered.
(4) The registration fee for the Depositary Shares, each representing
one-sixteenth of a share of Cumulative Convertible Preferred Stock, Series
A, of Boatmen's Bancshares, Inc. is calculated below and described in note
(5). No additional consideration is to be received in connection with the
Cumulative Convertible Preferred Stock, Series A, of Boatmen's Bancshares,
Inc., and therefore pursuant to Rule 457(i) no separate registration fee is
required.
(5) Pursuant to Rule 457(f), and solely for the purpose of calculating the
registration fee, the proposed maximum offering price is based upon the
average of the high and the low sale prices of the Depositary Shares, each
representing one-sixteenth of one share of Cumulative Convertible Preferred
Sock, Series A, of Boatmen's Bancshares, Inc., on The Nasdaq Stock Market on
November 12, 1996 and the number of NationsBank Corporation Depositary
Shares being registered.
(6) Pursuant to Rule 457(f), and solely for the purpose of calculating the
registration fee, the proposed maximum offering price is based upon the $100
book value per share of the 7% Cumulative Redeemable Preferred Stock, Series
B, of Boatmen's Bancshares, Inc. as of November 12, 1996, times the number
of shares of 7% Cumulative Redeemable Preferred Stock, Series B, of
NationsBank Corporation, being registered.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE
TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL
NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR
SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
JOINT PROXY STATEMENT
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NATIONSBANK CORPORATION BOATMEN'S BANCSHARES, INC.
SPECIAL MEETING OF SHAREHOLDERS SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 20, 1996 TO BE HELD ON DECEMBER 20, 1996
</TABLE>
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NATIONSBANK(R)
PROSPECTUS
---------------------
This Joint Proxy Statement-Prospectus relates to shares of common stock
("NationsBank Common Stock") of NationsBank Corporation, a North Carolina
corporation ("NationsBank"), shares of Cumulative Convertible Preferred Stock,
Series A, of NationsBank ("NationsBank New Series A Preferred Stock"), shares of
7% Cumulative Redeemable Preferred Stock, Series B, of NationsBank ("NationsBank
New Series B Preferred Stock," and together with NationsBank New Series A
Preferred Stock, "NationsBank New Preferred Stock") and depositary shares
relating to the NationsBank New Series A Preferred Stock (the "NationsBank
Depositary Shares") offered hereby to the shareholders of Boatmen's Bancshares,
Inc., a Missouri corporation ("Boatmen's"), upon consummation of a proposed
merger (the "Merger") of Boatmen's into NB Holdings Corporation, a Delaware
corporation and wholly owned subsidiary of NationsBank ("Merger Sub" and,
following the effective time of the Merger, the "Surviving Corporation"),
pursuant to an Agreement and Plan of Merger, dated as of August 29, 1996, as
amended (the "Agreement") by and among NationsBank, Boatmen's and Merger Sub.
The Agreement is attached as Appendix A and is incorporated herein by reference.
Upon consummation of the Merger (the "Effective Time"), each share of
Boatmen's common stock, $1.00 par value per share, including the associated
preferred stock purchase rights (a "Boatmen's Right"), issued pursuant to the
Rights Agreement, dated August 14, 1990, as amended (the "Boatmen's Rights
Agreement"), between Boatmen's and the Rights Agent named therein (such stock
and the accompanying Boatmen's Rights, "Boatmen's Common Stock"), will be
converted into the right to receive 0.6525 (as adjusted pursuant to the
Agreement, the "Exchange Ratio") of a share of NationsBank Common Stock (with
cash in lieu of fractional shares) (the "Per Share Stock Consideration"),
provided that, in lieu of NationsBank Common Stock, holders of Boatmen's Common
Stock may elect to receive cash in an amount equal to the average closing price
of the NationsBank Common Stock on the New York Stock Exchange ("NYSE") during
the 10 consecutive trading day period during which NationsBank Common Stock is
traded on the NYSE ending on the tenth calendar day prior to the anticipated
Effective Time. In the event, however, that the cash to be paid to satisfy such
cash elections, as well as cash expected to be paid with respect to dissenting
shares, would exceed 40% of the aggregate consideration to be paid with respect
to Boatmen's Common Stock in the Merger, certain Boatmen's shareholders electing
to receive cash will be selected by an exchange agent designated by NationsBank
(the "Exchange Agent") pursuant to a selection process described herein to
receive NationsBank Common Stock in lieu of cash.
In addition, in the Merger each share of Cumulative Convertible Preferred
Stock, Series A, of Boatmen's (the "Boatmen's Series A Preferred Stock") will be
converted into one share of NationsBank New Series A Preferred Stock, each share
of 7% Cumulative Redeemable Preferred Stock, Series B, of Boatmen's (the
"Boatmen's Series B Preferred Stock") will be converted into one share of
NationsBank New Series B Preferred Stock and each depositary share relating to
the Boatmen's Series A Preferred Stock (the "Boatmen's Depositary Shares") will
be converted into a NationsBank Depositary Share, each of which series of
NationsBank New Series A Preferred Stock, NationsBank New Series B Preferred
Stock and NationsBank Depositary Shares will have rights, preferences and terms
substantially identical to the rights, preferences and terms of the Boatmen's
Series A Preferred Stock, Boatmen's Series B Preferred Stock and Boatmen's
Depositary Shares, respectively.
For a more complete description of the Agreement and the Merger, see "THE
MERGER."
The last reported sale price of NationsBank Common Stock on the NYSE
Composite Transactions List on November 13, 1996 was $93.875 per share and on
August 29, 1996, the last trading day preceding public announcement of the
proposed Merger, was $92.375 per share. The last reported sale price of
Boatmen's Common Stock as reported by The Nasdaq Stock Market on November 13,
1996 was $60.375 per share and on August 29, 1996 was $42.9375 per share.
THIS JOINT PROXY STATEMENT-PROSPECTUS AND FORMS OF PROXY ARE FIRST BEING
MAILED TO SHAREHOLDERS ON OR ABOUT NOVEMBER 18, 1996.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH
CAROLINA (THE "COMMISSIONER") OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION, THE COMMISSIONER OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
JOINT PROXY STATEMENT-PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR BANK DEPOSITS, ARE
NOT OBLIGATIONS OF OR GUARANTEED BY ANY BANKING OR NONBANKING AFFILIATE
OF NATIONSBANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
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The date of this Joint Proxy Statement-Prospectus is November 15, 1996.
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[LOGO] NATIONSBANK
PRO FORMA
DEPOSIT MARKET SHARE OF PRINCIPAL BANKING OPERATIONS
OF THE COMBINED COMPANY
(# RANK, % OF STATE)
MAP
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TABLE OF CONTENTS
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PAGE
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AVAILABLE INFORMATION................................................................. 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE....................................... 1
SUMMARY............................................................................... 3
General............................................................................. 3
The Companies....................................................................... 3
NationsBank Special Meeting and Vote Required....................................... 4
Boatmen's Special Meeting and Vote Required......................................... 4
The Merger.......................................................................... 5
Conditions to the Merger............................................................ 5
Recommendations of Boards of Directors.............................................. 5
Opinion of NationsBank's Financial Advisor.......................................... 6
Opinion of Boatmen's Financial Advisor.............................................. 6
Effective Time of the Merger........................................................ 6
Waiver; Amendment; Termination; Expenses............................................ 6
Certain Federal Income Tax Consequences............................................. 7
Interests of Certain Persons in the Merger.......................................... 7
The Boatmen's Stock Option Agreement and Amendment to Boatmen's Rights Agreement.... 8
Dissenters' Rights.................................................................. 9
Accounting Treatment................................................................ 9
Regulatory Approvals................................................................ 9
Share Information and Market Prices................................................. 9
COMPARATIVE UNAUDITED PER SHARE DATA.................................................. 11
SELECTED FINANCIAL DATA............................................................... 13
RATIOS OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS........................................................... 17
NATIONSBANK SPECIAL MEETING........................................................... 18
General............................................................................. 18
Matters to Be Considered............................................................ 18
Proxies............................................................................. 18
Record Date and Voting Rights....................................................... 19
Recommendation of NationsBank Board................................................. 19
BOATMEN'S SPECIAL MEETING............................................................. 20
General............................................................................. 20
Proxies............................................................................. 20
Solicitation of Proxies............................................................. 20
Record Date and Voting Rights....................................................... 21
Recommendation of the Boatmen's Board............................................... 21
THE MERGER............................................................................ 22
Description of the Merger........................................................... 22
Background of the Merger............................................................ 23
Reasons of NationsBank for the Merger............................................... 25
Reasons of Boatmen's for the Merger................................................. 27
Opinion of NationsBank's Financial Advisor.......................................... 29
Opinion of Boatmen's Financial Advisor.............................................. 33
The Effective Time.................................................................. 38
The Cash Election................................................................... 39
Exchange of Certificates............................................................ 40
Dissenting Shareholders............................................................. 41
Conduct of Business Prior to the Merger and Other Covenants......................... 42
Conditions to the Merger............................................................ 44
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i
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Termination of the Agreement........................................................ 44
Waiver; Amendment; Expenses......................................................... 46
Certain Federal Income Tax Consequences............................................. 47
Interests of Certain Persons in the Merger.......................................... 47
The Boatmen's Stock Option Agreement................................................ 52
Amendment to Boatmen's Rights Agreement............................................. 55
Accounting Treatment................................................................ 55
Regulatory Matters.................................................................. 56
Restrictions on Resales by Affiliates............................................... 57
Dividend Reinvestment and Stock Purchase Plan....................................... 57
MANAGEMENT AND OPERATIONS AFTER THE MERGER............................................ 59
Management and Operations After the Merger.......................................... 59
1997 and 1998 Earnings Estimates.................................................... 59
PRICE RANGE OF COMMON STOCK AND DIVIDENDS............................................. 61
Market Prices....................................................................... 61
Dividends........................................................................... 61
INFORMATION ABOUT NATIONSBANK......................................................... 62
General............................................................................. 62
Operations.......................................................................... 62
Management and Additional Information............................................... 63
Supervision and Regulation.......................................................... 63
Merger Sub.......................................................................... 65
INFORMATION ABOUT BOATMEN'S........................................................... 66
General............................................................................. 66
Management and Additional Information............................................... 66
Supervision and Regulation.......................................................... 66
NATIONSBANK CAPITAL STOCK............................................................. 68
NationsBank Common Stock............................................................ 68
NationsBank Preferred Stock......................................................... 69
NationsBank ESOP Preferred Stock.................................................... 69
NationsBank Depositary Shares....................................................... 71
NationsBank New Series A Preferred.................................................. 73
NationsBank New Series B Preferred.................................................. 76
COMPARATIVE RIGHTS OF SHAREHOLDERS OF
NATIONSBANK AND BOATMEN'S........................................................... 78
Board of Directors.................................................................. 78
Shareholder Vote Required for Business Combinations................................. 79
Amendments to Articles of Incorporation............................................. 79
Shareholder Rights Plan............................................................. 80
Shareholder Proposal Procedures..................................................... 82
Dissenters' Rights.................................................................. 83
Takeover Statutes................................................................... 83
Consideration of Non-Shareholder Interests by Board of Directors.................... 84
Special Meetings of Shareholders.................................................... 84
DISSENTERS' RIGHTS.................................................................... 84
AMENDMENT TO THE NATIONSBANK ARTICLES OF INCORPORATION................................ 86
AMENDMENT TO THE NATIONSBANK CORPORATION KEY
EMPLOYEE STOCK PLAN................................................................. 86
Number of Shares.................................................................... 87
Administration...................................................................... 87
Eligibility......................................................................... 87
</TABLE>
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Awards of Stock Options and Stock Appreciation Rights............................... 88
Awards of Restricted Stock and Performance Shares................................... 88
Certain Post-Merger Awards of Restricted Stock...................................... 89
Code Section 162(m)................................................................. 89
Withholding for Payment of Taxes.................................................... 89
Changes in Capitalization and Similar Changes....................................... 89
Changes in Control.................................................................. 90
Amendment and Termination of the Plan............................................... 90
Federal Income Tax Treatment........................................................ 90
LEGAL OPINION......................................................................... 91
EXPERTS............................................................................... 91
SHAREHOLDER PROPOSALS................................................................. 91
OTHER MATTERS......................................................................... 92
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION................................... 93
APPENDIX A -- Agreement and Plan of Merger............................................ A-1
APPENDIX B -- Opinion of Stephens Inc................................................. B-1
APPENDIX C -- Opinion of Goldman, Sachs & Co.......................................... C-1
APPENDIX D -- MGBCL sec. 351.455 Appraisal Rights..................................... D-1
</TABLE>
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NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION
OTHER THAN THOSE CONTAINED OR INCORPORATED IN THIS JOINT PROXY
STATEMENT-PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY NATIONSBANK OR BOATMEN'S.
THIS JOINT PROXY STATEMENT-PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO EXCHANGE
OR SELL, OR A SOLICITATION OF AN OFFER TO EXCHANGE OR PURCHASE, THE SECURITIES
OFFERED BY THIS JOINT PROXY STATEMENT-PROSPECTUS, OR THE SOLICITATION OF A
PROXY, IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR TO OR FROM ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. THE INFORMATION CONTAINED IN THIS JOINT PROXY STATEMENT-PROSPECTUS
SPEAKS AS OF THE DATE HEREOF UNLESS OTHERWISE SPECIFICALLY INDICATED.
INFORMATION CONTAINED IN THIS JOINT PROXY STATEMENT-PROSPECTUS REGARDING
NATIONSBANK, AND PRO FORMA INFORMATION, HAS BEEN FURNISHED BY NATIONSBANK, AND
INFORMATION HEREIN REGARDING BOATMEN'S HAS BEEN FURNISHED BY BOATMEN'S.
iii
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AVAILABLE INFORMATION
NationsBank has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (the "Registration Statement") on Form
S-4 under the Securities Act of 1933, as amended (the "Securities Act"),
relating to the securities to be issued in connection with the Merger. For
further information pertaining to the securities of NationsBank to which this
Joint Proxy Statement-Prospectus relates, reference is made to the Registration
Statement, including the exhibits and schedules filed as a part thereof. As
permitted by the rules and regulations of the Commission, certain information
included in the Registration Statement is omitted from this Joint Proxy
Statement-Prospectus. In addition, NationsBank and Boatmen's are subject to
certain of the informational requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and in accordance therewith file certain
reports, proxy statements and other information with the Commission. Such
reports, proxy statements and other information can be inspected and copied at
the public reference room of the Commission, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and copies of such materials can be obtained by mail
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, at prescribed rates. The Commission maintains
an Internet web site that contains reports, proxy and information statements and
other information regarding issuers who file electronically with the Commission.
The address of that site is http://www.sec.gov. In addition, copies of such
materials are available for inspection and reproduction at the public reference
facilities of the Commission at its New York Regional Office, 7 World Trade
Center, Suite 1300, New York, New York 10048; and at its Chicago Regional
Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Reports, proxy statements and other information concerning
NationsBank also may be inspected at the offices of the NYSE, 20 Broad Street,
New York, New York 10005 and at the offices of the Pacific Stock Exchange (the
"PSE"), 301 Pine Street, San Francisco, California 94104. Reports, proxy
statements and other information concerning Boatmen's may also be inspected at
the offices of the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by NationsBank with the Commission
are hereby incorporated by reference in this Joint Proxy Statement-Prospectus:
(a) the NationsBank Annual Report on Form 10-K for the year ended December 31,
1995, as filed March 29, 1996; (b) the NationsBank Quarterly Reports on Form
10-Q for the quarters ended March 31, 1996, as filed May 10, 1996, June 30,
1996, as filed August 14, 1996, and September 30, 1996, as filed November 13,
1996; (c) the description of the NationsBank Common Stock contained in the
NationsBank registration statement filed pursuant to Section 12 of the Exchange
Act as modified by the NationsBank Current Report on Form 8-K filed September
21, 1994; and (d) the NationsBank Current Reports on Form 8-K filed January 12,
1996; February 1, 1996; March 8, 1996; April 17, 1996; May 16, 1996; July 5,
1996; July 31, 1996; September 6, 1996 (as amended on September 11, 1996 and
November 13, 1996); September 20, 1996 (as amended on September 23, 1996);
October 25, 1996; and November 14, 1996.
The following documents previously filed by Boatmen's with the Commission
are hereby incorporated by reference in this Joint Proxy Statement-Prospectus:
(a) the Boatmen's Annual Report on Form 10-K for the year ended December 31,
1995, as filed on March 15, 1996; (b) the Boatmen's Quarterly Reports on Form
10-Q for the quarters ended March 31, 1996, as filed on May 15, 1996, June 30,
1996, as filed on August 12, 1996, and September 30, 1996, as filed November 13,
1996; (c) the description of the Boatmen's Common Stock contained in Boatmen's
Registration Statement on Form 8-A under the Exchange Act, as amended under
cover of Form 8 dated July 15, 1988, as filed on July 20, 1988, and the
description of the preferred share purchase rights contained in Boatmen's
Registration Statement on Form 8-A under the Exchange Act, filed August 14, 1990
(as amended on September 24, 1996); and (d) the Boatmen's Current Reports on
Forms 8-K filed January 31, 1996; May 3, 1996; and September 6, 1996.
In addition, all documents filed by NationsBank and Boatmen's with the
Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date hereof and prior to the time at which the special meeting of
shareholders of Boatmen's (the "Boatmen's Special Meeting") and the special
meeting of shareholders of NationsBank (the "NationsBank Special Meeting," and
together with the Boatmen's Special Meeting, the "Special Meetings") have been
finally adjourned are hereby deemed to be incorporated by reference herein. Any
statements contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Joint Proxy Statement-
<PAGE> 8
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Joint Proxy Statement-Prospectus.
THIS JOINT PROXY STATEMENT-PROSPECTUS INCORPORATES CERTAIN DOCUMENTS BY
REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THE DOCUMENTS
RELATING TO NATIONSBANK (OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH EXHIBITS
ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH DOCUMENTS) ARE AVAILABLE
WITHOUT CHARGE UPON WRITTEN OR ORAL REQUEST FROM JOHN E. MACK, SENIOR VICE
PRESIDENT AND TREASURER, NATIONSBANK CORPORATION, NATIONSBANK CORPORATE CENTER,
CHARLOTTE, NORTH CAROLINA 28255, TELEPHONE NUMBER (704) 386-5972. THE DOCUMENTS
RELATING TO BOATMEN'S (OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH EXHIBITS ARE
NOT SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH DOCUMENTS) ARE AVAILABLE
WITHOUT CHARGE UPON WRITTEN OR ORAL REQUEST FROM KEVIN R. STITT, DIRECTOR OF
INVESTOR RELATIONS, BOATMEN'S BANCSHARES, INC., ONE BOATMEN'S PLAZA, 800 MARKET
STREET, ST. LOUIS, MISSOURI 63101, TELEPHONE NUMBER (314) 466-7662. NATIONSBANK
OR BOATMEN'S, AS THE CASE MAY BE, WILL SEND THE REQUESTED DOCUMENTS BY
FIRST-CLASS MAIL WITHIN ONE BUSINESS DAY OF THE RECEIPT OF THE REQUEST. IN ORDER
TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY
DECEMBER 13, 1996. PERSONS REQUESTING COPIES OF EXHIBITS TO SUCH DOCUMENTS THAT
ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH DOCUMENTS WILL BE CHARGED
THE COSTS OF REPRODUCTION AND MAILING.
THIS JOINT PROXY STATEMENT-PROSPECTUS CONTAINS CERTAIN FORWARD-LOOKING
STATEMENTS WITH RESPECT TO THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND
BUSINESS OF NATIONSBANK FOLLOWING THE CONSUMMATION OF THE MERGER, INCLUDING
STATEMENTS RELATING TO THE COST SAVINGS, REVENUE ENHANCEMENTS AND FUNDING
ADVANTAGES THAT ARE EXPECTED TO BE REALIZED FROM THE MERGER, THE EXPECTED IMPACT
OF THE MERGER ON NATIONSBANK'S FINANCIAL PERFORMANCE, FUTURE SHARE BUYBACKS AND
EARNINGS ESTIMATES FOR THE COMBINED COMPANY (SEE "THE MERGER -- REASONS OF
NATIONSBANK FOR THE MERGER;" "-- REASONS OF BOATMEN'S FOR THE MERGER" AND
"MANAGEMENT AND OPERATIONS AFTER THE MERGER"). THESE FORWARD-LOOKING STATEMENTS
INVOLVE CERTAIN RISKS AND UNCERTAINTIES. FACTORS THAT MAY CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS
INCLUDE, AMONG OTHERS, THE FOLLOWING POSSIBILITIES: (1) EXPECTED COST SAVINGS
FROM THE MERGER CANNOT BE FULLY REALIZED; (2) DEPOSIT ATTRITION, CUSTOMER LOSS
OR REVENUE LOSS FOLLOWING THE MERGER IS GREATER THAN EXPECTED; (3) COMPETITIVE
PRESSURE IN THE BANKING INDUSTRY INCREASES SIGNIFICANTLY; (4) COSTS OR
DIFFICULTIES RELATED TO THE INTEGRATION OF THE BUSINESSES OF NATIONSBANK AND
BOATMEN'S ARE GREATER THAN EXPECTED; (5) CHANGES IN THE INTEREST RATE
ENVIRONMENT REDUCE MARGINS; (6) GENERAL ECONOMIC CONDITIONS, EITHER NATIONALLY
OR REGIONALLY, ARE LESS FAVORABLE THAN EXPECTED, RESULTING IN, AMONG OTHER
THINGS, A DETERIORATION IN CREDIT QUALITY, (7) CHANGES IN THE REGULATORY
ENVIRONMENT, (8) CHANGES IN BUSINESS CONDITIONS AND INFLATION, AND (9) CHANGES
IN THE SECURITIES MARKETS. THE FORWARD-LOOKING EARNINGS ESTIMATES INCLUDED IN
THIS JOINT PROXY STATEMENT-PROSPECTUS HAVE NOT BEEN EXAMINED OR COMPILED BY THE
INDEPENDENT PUBLIC ACCOUNTANTS OF NATIONSBANK OR BOATMEN'S NOR HAVE SUCH
ACCOUNTANTS APPLIED ANY PROCEDURES THERETO. ACCORDINGLY, SUCH ACCOUNTANTS DO NOT
EXPRESS AN OPINION OR ANY OTHER FORM OF ASSURANCE ON THEM. FURTHER INFORMATION
ON OTHER FACTORS WHICH COULD AFFECT THE FINANCIAL RESULTS OF NATIONSBANK AFTER
THE MERGER IS INCLUDED IN THE COMMISSION FILINGS INCORPORATED BY REFERENCE
HEREIN.
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SUMMARY
THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN INFORMATION SET FORTH ELSEWHERE
IN THIS JOINT PROXY STATEMENT-PROSPECTUS AND IS NOT INTENDED TO BE COMPLETE. IT
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO MORE DETAILED INFORMATION CONTAINED
ELSEWHERE IN THIS JOINT PROXY STATEMENT-PROSPECTUS, THE ACCOMPANYING APPENDICES
AND THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE.
GENERAL
This Joint Proxy Statement-Prospectus, notice of the Boatmen's Special
Meeting to be held on December 20, 1996 and notice of the NationsBank Special
Meeting to be held on December 20, 1996 and forms of proxy solicited in
connection therewith are first being mailed to holders of Boatmen's capital
stock ("Boatmen's Shareholders") and holders of NationsBank capital stock
("NationsBank Shareholders") on or about November 18, 1996. At the NationsBank
Special Meeting, holders of shares of NationsBank Common Stock and ESOP
Convertible Preferred Stock, Series C, of NationsBank (the "NationsBank ESOP
Preferred Stock") will consider and vote on (i) the issuance of shares of
NationsBank Common Stock and NationsBank New Series A Preferred Stock in the
Merger, (ii) the amendment to the Restated Articles of Incorporation of
NationsBank (the "NationsBank Articles of Incorporation") to increase the number
of authorized shares of NationsBank Common Stock to 1,250,000,000, and (iii) the
amendment and restatement of the NationsBank Corporation Key Employee Stock
Plan. At the Boatmen's Special Meeting, holders of shares of Boatmen's Common
Stock and Boatmen's Series B Preferred Stock will consider and vote on whether
to approve the Agreement and the transactions contemplated thereby. The holders
of record of shares of Boatmen's Series A Preferred Stock and Boatmen's
Depositary Shares will receive notice of, but are not entitled to vote at, the
Boatmen's Special Meeting. A copy of the Agreement is attached hereto as
Appendix A and incorporated herein by reference.
THE COMPANIES
NationsBank. NationsBank is a multi-bank holding company registered under
the Bank Holding Company Act of 1956, as amended (the "BHCA"), was organized
under the laws of the State of North Carolina in 1968 and has as its principal
assets the stock of its subsidiaries. Through its banking subsidiaries and its
various non-banking subsidiaries, NationsBank provides banking and
banking-related services, primarily throughout the Southeast and Mid-Atlantic
states and Texas. As of September 30, 1996, NationsBank had total assets of
$187.7 billion. The principal executive offices of NationsBank are located at
NationsBank Corporate Center, Charlotte, North Carolina 28255, and its telephone
number is (704) 386-5000. All references herein to NationsBank refer to
NationsBank Corporation and its subsidiaries, unless the context otherwise
requires.
For additional information regarding NationsBank and the combined company
that would result from the Merger, see "THE MERGER," "MANAGEMENT AND OPERATIONS
AFTER THE MERGER" and "INFORMATION ABOUT NATIONSBANK."
Boatmen's. Boatmen's, a Missouri corporation, is a multi-bank holding
company headquartered in St. Louis, Missouri. As of September 30, 1996,
Boatmen's had consolidated assets of approximately $40.7 billion, making it the
largest bank holding company in Missouri and among the 30 largest in the United
States. Boatmen's 55 subsidiary banks, including a federal savings bank, operate
from over 600 locations in Missouri, Arkansas, Illinois, Iowa, Kansas, New
Mexico, Oklahoma, Tennessee and Texas. Boatmen's also ranks among the twenty
largest providers of trust services in the nation, with approximately $42.7
billion in assets under management as of September 30, 1996. Boatmen's other
principal businesses include a mortgage banking company, a credit life insurance
company, a credit card company and an insurance agency. The principal executive
offices of Boatmen's are at One Boatmen's Plaza, 800 Market Street, St. Louis,
Missouri 63101 (telephone number (314) 466-6000). All references herein to
Boatmen's refer to Boatmen's Bancshares, Inc.
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and its subsidiaries, unless the context otherwise requires. See "THE MERGER"
and "INFORMATION ABOUT BOATMEN'S."
Merger Sub. Merger Sub, a Delaware corporation, is a wholly owned
subsidiary of NationsBank and is not engaged in any significant business
activity other than holding stock of other subsidiaries of NationsBank.
NATIONSBANK SPECIAL MEETING AND VOTE REQUIRED
The NationsBank Special Meeting will be held on December 20, 1996 at 11:00
a.m., local time, at the International Trade Center, 200 North College Street,
Charlotte, North Carolina. At that time, the holders of NationsBank Common Stock
and NationsBank ESOP Preferred Stock will be asked to consider and vote upon (i)
the issuance of shares of NationsBank Common Stock and NationsBank New Series A
Preferred Stock in connection with the Merger (collectively, the "Issuance"),
(ii) an amendment to the NationsBank Restated Articles of Incorporation to
increase the number of authorized shares of NationsBank Common Stock to
1,250,000,000 (the "Articles Amendment"), and (iii) an amendment and restatement
of the NationsBank Corporation Key Employee Stock Plan (the "Plan Amendment,"
and together with the Issuance and the Articles Amendment, the "NationsBank
Matters"). The record holders of NationsBank Common Stock and NationsBank ESOP
Preferred Stock at the close of business on October 22, 1996 (the "NationsBank
Record Date") are entitled to notice of and to vote at the NationsBank Special
Meeting. On the NationsBank Record Date, there were approximately 106,981
holders of record of NationsBank Common Stock and 288,109,347 shares of
NationsBank Common Stock outstanding and one holder of NationsBank ESOP
Preferred Stock and 2,379,007 shares of NationsBank ESOP Preferred Stock
outstanding.
Each share of NationsBank Common Stock and NationsBank ESOP Preferred Stock
entitles its holder to one vote. All such shares vote together as a single class
and the affirmative vote of a majority of the votes cast at the NationsBank
Special Meeting is required to approve the NationsBank Matters, provided that,
in the case of the Issuance, at least 50% of the votes entitled to be cast on
the matter are voted at the NationsBank Special Meeting and, in the case of the
Articles Amendment and the Plan Amendment, a majority of the shares entitled to
vote on such matters are represented at the NationsBank Special Meeting in
person or by proxy. In addition to the votes described above, the Articles
Amendment requires for approval the affirmative vote of a majority of the votes
cast by the holders of NationsBank Common Stock, voting together as a separate
group. As of the NationsBank Record Date, directors and executive officers of
NationsBank beneficially owned 9,850,096 shares of NationsBank Common Stock and
868 shares of NationsBank ESOP Preferred Stock, or 3.39%, of the shares entitled
to vote at the NationsBank Special Meeting. It is currently expected that each
such director and executive officer of NationsBank will vote the shares of
NationsBank stock beneficially owned by him or her for approval of the
NationsBank Matters. In addition, as of the NationsBank Record Date the
directors and executive officers of Boatmen's beneficially owned 3,417 shares of
NationsBank Common Stock and no shares of NationsBank ESOP Preferred Stock, or
significantly less than 1% of the shares entitled to be voted at the NationsBank
Special Meeting. See "NATIONSBANK SPECIAL MEETING."
BOATMEN'S SPECIAL MEETING AND VOTE REQUIRED
The Boatmen's Special Meeting will be held on December 20, 1996 at 10:00
a.m., local time, at One Boatmen's Plaza, 800 Market Street, St. Louis,
Missouri 63101, at which time the shareholders of Boatmen's will be asked to
approve the Agreement and the transactions contemplated thereby. The record
holders of Boatmen's Common Stock and Boatmen's Series B Preferred Stock at the
close of business on October 22, 1996 (the "Boatmen's Record Date") are entitled
to notice of and to vote at the Boatmen's Special Meeting. The holders of record
of shares of Boatmen's Series A Preferred Stock and Boatmen's Depositary Shares
will receive notice of, but are not entitled to vote at, the Boatmen's Special
Meeting. On the Boatmen's Record Date, there were approximately 35,194 holders
of record of Boatmen's Common Stock and 155,508,155 shares of Boatmen's Common
Stock outstanding and 52 holders of record of Boatmen's Series B Preferred Stock
and 9,487 shares of Boatmen's Series B Preferred Stock outstanding.
The affirmative vote of the holders of two-thirds of the outstanding shares
of Boatmen's Common Stock and Boatmen's Series B Preferred Stock, voting
together as a single class, is required to approve the
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<PAGE> 11
Agreement and the transactions contemplated thereby. As of the Boatmen's Record
Date, directors and executive officers of Boatmen's beneficially owned
approximately 1,848,351 shares of Boatmen's Common Stock and no shares of
Boatmen's Series B Preferred Stock, or 1.19%, of the Boatmen's stock entitled to
vote at the Boatmen's Special Meeting. It is currently expected that each such
director and executive officer of Boatmen's will vote the shares of Boatmen's
stock beneficially owned by him or her for approval of the Agreement and the
transactions contemplated thereby. In addition, as of the Boatmen's Record Date,
directors and executive officers of NationsBank beneficially owned 293 shares of
Boatmen's Common Stock and no shares of Boatmen's Series B Preferred Stock, or
significantly less than 1% of the shares entitled to be voted at the Boatmen's
Special Meeting. See "BOATMEN'S SPECIAL MEETING."
THE MERGER
In the Merger, subject to the terms of the Agreement, Boatmen's will merge
with and into Merger Sub, a Delaware corporation and wholly owned subsidiary of
NationsBank, which will be the surviving entity, and each outstanding share of
Boatmen's Common Stock will be converted into 0.6525 of a share of NationsBank
Common Stock, with cash to be paid in lieu of any resulting fractional shares of
NationsBank Common Stock.
Holders of Boatmen's Common Stock may elect, with respect to all or a
portion of their shares of Boatmen's Common Stock (subject to certain
limitations described below), to receive, in lieu of NationsBank Common Stock,
an amount in cash in respect of each share of Boatmen's Common Stock that is
equal to the Exchange Ratio times the average closing price of NationsBank
Common Stock during the 10 consecutive trading day period during which the
shares of NationsBank Common Stock are traded on the NYSE ending on the tenth
calendar day immediately prior to the anticipated Effective Time. In the event
the aggregate amount of cash to be paid to satisfy such elections would exceed
40% of the total consideration paid by NationsBank to holders of Boatmen's
Common Stock, certain holders who have made such an election will be selected by
the Exchange Agent (pursuant to a selection method determined by the Exchange
Agent and described under "-- The Cash Election") to receive stock so that the
40% threshold described above is not exceeded. For these purposes, Boatmen's
Shareholders who have exercised their dissenters' rights under Missouri law will
be treated as having made a cash election, but will not be subject to the
selection process described in the immediately preceding sentence.
In addition, at the Effective Time, each share of Boatmen's Series A
Preferred Stock and Boatmen's Series B Preferred Stock (collectively, the
"Boatmen's Preferred Stock") and each Boatmen's Depositary Share will be
converted into a share of NationsBank New Series A Preferred Stock, NationsBank
New Series B Preferred Stock or a NationsBank Depositary Share, as the case may
be, each with rights, terms and preferences substantially identical to the
Boatmen's Preferred Stock or Boatmen's Depositary Share from which it was
converted. Each share of NationsBank capital stock outstanding prior to the
Merger will continue to be outstanding after the Effective Time.
CONDITIONS TO THE MERGER
The Merger is subject to the satisfaction of certain conditions, including
among others, an affirmative vote to approve the Agreement by holders of
two-thirds of the outstanding shares of Boatmen's Common Stock and Boatmen's
Series B Preferred Stock, voting together as a single class, the approval of the
Issuance by the affirmative vote of the holders of a majority of the shares of
NationsBank Common Stock and NationsBank ESOP Preferred Stock, voting together
as a single class, voted at the NationsBank Special Meeting and the approval of
appropriate regulatory agencies. See "THE MERGER -- Conditions to the Merger."
For additional information relating to the Merger, see "THE MERGER."
RECOMMENDATIONS OF BOARDS OF DIRECTORS
THE BOARD OF DIRECTORS OF BOATMEN'S (THE "BOATMEN'S BOARD") AND THE BOARD
OF DIRECTORS OF NATIONSBANK (THE "NATIONSBANK BOARD") HAVE UNANIMOUSLY APPROVED
THE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
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<PAGE> 12
THEREBY. THE BOATMEN'S BOARD AND THE NATIONSBANK BOARD BELIEVE THAT THE MERGER
IS IN THE BEST INTERESTS OF BOATMEN'S AND NATIONSBANK AND THEIR RESPECTIVE
SHAREHOLDERS AND RECOMMEND THAT SUCH SHAREHOLDERS VOTE "FOR" THE MATTERS TO BE
VOTED UPON BY SUCH SHAREHOLDERS IN CONNECTION WITH THE MERGER. FOR A DISCUSSION
OF THE FACTORS CONSIDERED BY THE BOATMEN'S BOARD AND THE NATIONSBANK BOARD IN
REACHING THEIR RESPECTIVE CONCLUSIONS, SEE "THE MERGER -- Background of the
Merger," "-- Reasons of NationsBank for the Merger" and "-- Reasons of Boatmen's
for the Merger."
OPINION OF NATIONSBANK'S FINANCIAL ADVISOR
Stephens Inc. ("Stephens"), which has served as financial advisor to
NationsBank in connection with the Merger, has rendered its opinion to the
NationsBank Board that the consideration proposed to be paid by NationsBank in
the Merger is fair to NationsBank from a financial point of view. Such opinion
was delivered to the NationsBank Board at its meeting of September 25, 1996 and
again on the date of this Joint Proxy Statement-Prospectus. A copy of the
opinion delivered by Stephens on the date hereof is attached hereto as Appendix
B and should be read in its entirety with respect to assumptions made, matters
considered and limitations of the review undertaken by Stephens in rendering
such opinion. See "THE MERGER -- Opinion of NationsBank's Financial Advisor."
OPINION OF BOATMEN'S FINANCIAL ADVISOR
Goldman, Sachs & Co. ("Goldman Sachs"), which has served as financial
advisor to Boatmen's in connection with the Merger, has rendered its opinion to
the Boatmen's Board that the consideration proposed to be paid by NationsBank to
the holders of Boatmen's Common Stock in the Merger is fair to such holders from
a financial point of view. Such opinion was delivered to the Boatmen's Board at
its meeting of August 29, 1996 and again on the date of this Joint Proxy
Statement-Prospectus. A copy of the opinion delivered by Goldman Sachs on the
date hereof is attached hereto as Appendix C and should be read in its entirety
with respect to assumptions made, matters considered and limitations of the
review undertaken by Goldman Sachs in rendering such opinion. See "THE
MERGER -- Opinion of Boatmen's Financial Advisor."
EFFECTIVE TIME OF THE MERGER
Subject to the satisfaction or waiver of certain conditions set forth in
the Agreement, the parties will cause the Effective Time to occur on (i) the
third business day after the last to occur of the satisfaction or waiver of the
following conditions: (a) the receipt of the required shareholder approvals of
NationsBank and Boatmen's, (b) the receipt of all regulatory approvals required
to consummate the transactions contemplated by the Agreement, provided that such
approvals will not be deemed to have been received if they contain conditions or
restrictions which the NationsBank Board or the Boatmen's Board reasonably
determines will have a material adverse effect on NationsBank and its
subsidiaries or the Surviving Corporation and its subsidiaries, see "The
Merger -- Regulatory Matters," (c) the receipt of all consents or approvals of
third parties (other than regulatory authorities) required for consummation of
the Merger other than those that, if not received, would not be reasonably
likely to have a material adverse effect on Boatmen's or NationsBank, and (d)
the listing on the NYSE of the NationsBank Common Stock to be issued in the
Merger and the listing on the NYSE or The Nasdaq Stock Market of the NationsBank
New Preferred Stock and NationsBank Depositary Shares to be issued in the Merger
(but, in the case of the NationsBank New Preferred Stock and NationsBank
Depositary Shares, only to the extent that the corresponding class or series of
Boatmen's Preferred Stock and Boatmen's Depositary Shares were listed on The
Nasdaq Stock Market immediately prior to the Effective Time), or (ii) such other
date to which the parties may agree in writing. The day on which the Effective
Time occurs is referred to as the "Effective Date."
WAIVER; AMENDMENT; TERMINATION; EXPENSES
Prior to the Effective Time, any provision of the Agreement may be (i)
waived by the party benefited by the provision, or (ii) amended or modified at
any time, by an agreement in writing among the parties approved
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<PAGE> 13
by their respective Boards of Directors and executed in the same manner as the
Agreement, except that, after the Boatmen's Special Meeting the consideration to
be received by the Boatmen's Shareholders for each share of Boatmen's stock will
not thereby be decreased.
The Agreement may also be terminated and the Merger abandoned (i) by the
mutual consent of the parties, (ii) by either party if the other party
materially breaches its representations and warranties or fails to perform any
of its material covenants, in each case after inability or failure to cure
within 30 days, (iii) by either party in the event that the Merger is not
consummated by September 1, 1997, except to the extent that the failure of the
Merger then to be consummated arises out of or results from the knowing action
or inaction of the party seeking to terminate the Agreement, or (iv) by either
party, in the event (a) the approval of the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board") required for consummation of the
Merger and the other transactions contemplated by the Agreement will have been
denied by final nonappealable action or (b) any required shareholder approval is
not obtained at the Boatmen's Special Meeting or the NationsBank Special Meeting
or any adjournments or postponements thereof.
In addition, the Agreement may be terminated by the Boatmen's Board, at its
sole option, by giving notice to NationsBank if either (i) the average closing
price of NationsBank Common Stock for the ten full trading days ending on the
date the Federal Reserve Board approves the Merger (the "Average Closing Price")
is less than $79.26 and the number obtained by dividing the Average Closing
Price by $93.25 (the closing price of NationsBank Common Stock on August 28,
1996) is less than the number obtained by (a) dividing the average of the
closing prices of a specified index of bank stocks during the above mentioned
ten-day period by the closing price of such index on August 28, 1996 and (b)
subtracting 0.15 or (ii) the Average Closing Price is less than $74.60. Such
termination right will not apply, however, if NationsBank decides within five
days of receiving notice of Boatmen's intent to terminate the Agreement, to
increase the Exchange Ratio to a number calculated pursuant to the Agreement,
such that holders of Boatmen's Common Stock would receive consideration having
the same implied market value (based on the Average Closing Price) as they would
have received had the Average Closing Price been $79.26 (in the case of
termination pursuant to (i) above) or $74.60 (in the case of termination
pursuant to (ii) above). See "THE MERGER -- Termination of the Agreement."
Each party to the Agreement will bear all expenses incurred by it in
connection with the Agreement and the transactions contemplated thereby, except
that printing expenses and Commission registration fees will be shared equally
between Boatmen's and NationsBank.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Merger is intended to qualify as a reorganization under Section
368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code").
Wachtell, Lipton, Rosen & Katz and Cleary, Gottlieb, Steen & Hamilton have each
delivered an opinion, based upon certain customary assumptions and
representations, to the effect that, for Federal income tax purposes, no gain or
loss will be recognized by the Boatmen's Shareholders as a result of the Merger
to the extent that they receive NationsBank stock solely in exchange for their
Boatmen's stock. With respect to Boatmen's stock exchanged for cash (whether
pursuant to a cash election, the exchange of fractional shares or as a result of
the exercise of dissenters' rights), the Merger will be treated as a sale, and
normal recognition and gain and loss treatment will apply. For a more complete
description of the federal income tax consequences, see "THE MERGER -- Certain
Federal Income Tax Consequences."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Boatmen's management and of the Boatmen's Board have
certain arrangements with NationsBank, including those relating to the election
of Andrew B. Craig III, Chairman and Chief Executive Officer of Boatmen's, as
Chairman of NationsBank, the election or appointment of four additional persons
designated by Boatmen's, and reasonably satisfactory to NationsBank, to the
NationsBank Board, certain benefits under existing employment agreements and
severance and benefit plans, and certain post-Merger employment opportunities.
In addition, NationsBank has agreed to indemnify directors, officers, employees
and agents of Boatmen's and its subsidiaries from and after the Effective Date
against certain liabilities arising prior to the Effective Date to the full
extent permitted under Missouri law and Boatmen's Articles of
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Incorporation and By-laws and to maintain Boatmen's existing directors' and
officers' liability insurance policy or a comparable policy for six years after
the Merger. For a list of the members of Boatmen's management who will receive
benefits in connection with the Merger and the amount of such benefits, see "THE
MERGER -- Interests of Certain Persons in the Merger."
THE BOATMEN'S STOCK OPTION AGREEMENT AND AMENDMENT TO BOATMEN'S RIGHTS AGREEMENT
As an inducement to NationsBank to enter into the Agreement, Boatmen's (as
issuer) and NationsBank (as grantee) entered into the Stock Option Agreement,
dated August 29, 1996 (the "Boatmen's Stock Option Agreement"), pursuant to
which Boatmen's granted NationsBank an irrevocable option (the "Boatmen's
Option") to purchase from Boatmen's up to 31,218,660 shares of Boatmen's Common
Stock (subject to adjustment in certain circumstances, but in no event to exceed
19.9% of the shares of Boatmen's Common Stock outstanding upon exercise
thereof), at a price of $43.375 per share. The $43.375 exercise price was
determined through negotiations, taking into account the recently prevailing
price range of Boatmen's Common Stock prior to the announcement of the Merger
(the closing sale price of Boatmen's Common Stock on the last trading day
preceding the execution of the Agreement was $43.375). NationsBank may exercise
the Boatmen's Option only under certain limited and specifically defined
circumstances (none of which, to the best knowledge of NationsBank and
Boatmen's, has occurred as of the date hereof). At the request of the holder of
the Boatmen's Option, under certain circumstances, Boatmen's will repurchase for
a formula price the Boatmen's Option and any shares of Boatmen's Common Stock
purchased upon the exercise of the Boatmen's Option and beneficially owned by
such holder at that time. Notwithstanding anything in the Boatmen's Stock Option
Agreement to the contrary, the total profit (as defined in the Boatmen's Stock
Option Agreement) that NationsBank may derive directly from the Boatmen's Option
cannot exceed $250 million. See "THE MERGER -- Boatmen's Stock Option
Agreement."
The purchase of any shares of Boatmen's Common Stock pursuant to the
Boatmen's Option is subject to compliance with applicable law, including receipt
of any necessary approvals under the BHCA. See "THE MERGER -- Regulatory
Matters."
Certain aspects of the Boatmen's Stock Option Agreement may have the effect
of discouraging persons who might now, or prior to the Effective Time, be
interested in acquiring all of or a significant interest in Boatmen's from
considering or proposing such an acquisition, even if such persons were prepared
to offer to pay consideration to shareholders of Boatmen's which had a higher
current market price than the shares of NationsBank Common Stock or cash to be
received for each share of Boatmen's Common Stock pursuant to the Agreement.
In the event that the shareholders of Boatmen's or NationsBank fail to
approve the Agreement, either NationsBank or Boatmen's may terminate the
Agreement. See "THE MERGER -- Termination of Agreement." If such termination
occurs prior to the occurrence of a Purchase Event or Preliminary Purchase Event
(as such terms are defined in the Boatmen's Stock Option Agreement; see "THE
MERGER -- The Boatmen's Stock Option Agreement") under the Boatmen's Stock
Option Agreement, the Boatmen's Stock Option Agreement will automatically
terminate at such time. If a Purchase Event occurs under the Boatmen's Stock
Option Agreement prior to the termination of the Agreement, however, NationsBank
will be entitled to exercise the Boatmen's Option in accordance with its terms.
In connection with the execution of the Agreement, Boatmen's amended the
Boatmen's Rights Agreement so that the entering into of the Agreement and the
Boatmen's Stock Option Agreement and consummation of the Merger and the other
transactions contemplated thereby do not and will not result in the ability of
any person to exercise any Boatmen's Rights under the Boatmen's Rights Agreement
or enable or require the Boatmen's Rights to be separated from the shares of
Boatmen's Common Stock to which they are attached or to be triggered or become
exercisable, and so that the Boatmen's Rights Agreement will terminate upon
consummation of the Merger. See "THE MERGER -- Amendment to Boatmen's Rights
Agreement" and "COMPARATIVE RIGHTS OF SHAREHOLDERS OF NATIONSBANK AND
BOATMEN'S -- Shareholder Rights Plan."
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DISSENTERS' RIGHTS
Under Section 455 of the Missouri General and Business Corporation Law (the
"MGBCL"), each holder of Boatmen's Common Stock and Boatmen's Preferred Stock
who dissents from the Merger has the right to have the fair value of such
holder's shares appraised by judicial determination and paid to the holder in
cash. In order to perfect such dissenters' rights, holders of Boatmen's Common
Stock and Boatmen's Preferred Stock must comply with the procedural requirements
of the MGBCL, including, without limitation, filing a written objection to the
Merger with Boatmen's at or prior to the Boatmen's Special Meeting, not voting
in favor of the Agreement and, within 20 days after the Effective Date, making a
written demand for payment of the fair value of the shares held by such
shareholder as of the date prior to the Merger. The written objection should
state that the shareholder objects to the Merger. The written demand for fair
value should state the number and class of the shares owned by such shareholder.
The written objection and the written demand may be contained in one writing so
long as that writing is received prior to or at the Boatmen's Special Meeting.
Written objections to the Merger and demands for the payment of fair value
should be addressed to: Boatmen's Bancshares, Inc., One Boatmen's Plaza, 800
Market Street, St. Louis, Missouri 63101, Attention: Corporate Secretary.
Shares of Boatmen's Common Stock and Boatmen's Preferred Stock held by
dissenting holders will not be converted into shares of NationsBank Common Stock
or NationsBank New Preferred Stock, as the case may be, in the Merger and after
the Effective Time will represent only the right to receive such consideration
as is determined to be due such dissenting holders pursuant to the MGBCL.
Boatmen's Common Stock and Boatmen's Preferred Stock outstanding immediately
prior to the Effective Time and held by a shareholder who withdraws his demand
for dissenters' rights or fails to perfect such rights will be deemed to be
converted (or to have been converted, as the case may be) at the Effective Time
into the right to receive shares of NationsBank Common Stock or NationsBank New
Preferred Stock, as the case may be, without interest. The MGBCL may not provide
dissenters' rights to holders of the Boatmen's Depositary Shares. Nonetheless,
NationsBank and Boatmen's have agreed to provide such holders the right to
dissent from the Merger under the same terms as other Boatmen's Shareholders,
subject to certain limitations. See "DISSENTERS' RIGHTS."
NationsBank Shareholders do not have appraisal rights under the North
Carolina Business Corporation Act (the "NCBCA") with respect to the Merger.
ACCOUNTING TREATMENT
It is intended that the Merger will be accounted for by the purchase method
of accounting under generally accepted accounting principles. See "THE
MERGER -- Accounting Treatment."
REGULATORY APPROVALS
The Merger is subject to the approval of the Federal Reserve Board. In
addition, the Merger may be subject to the approval of or notice to the bank
regulatory authorities in Arkansas, Georgia, Illinois, Iowa, Kansas, Missouri,
New Mexico, Oklahoma, Tennessee and Texas (collectively, the "State
Authorities"). The Merger may not be consummated until expiration of applicable
waiting periods.
NationsBank and Boatmen's have filed or will promptly be filing all
required applications for regulatory review and approval or notice with the
Federal Reserve Board and the State Authorities in connection with the Merger.
There can be no assurance that such approvals will be obtained or as to the date
of any such approvals.
See "THE MERGER -- Conditions to the Merger" and "-- Regulatory Matters."
SHARE INFORMATION AND MARKET PRICES
The NationsBank Common Stock is listed on the NYSE and the PSE under the
symbol "NB." The NationsBank Common Stock is also listed on the London Stock
Exchange ("LSE") and certain shares are listed on the Tokyo Stock Exchange. As
of the NationsBank Record Date, there were 288,109,347 shares of NationsBank
Common Stock outstanding held by approximately 106,981 holders of record and
2,379,007
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shares of NationsBank ESOP Preferred Stock outstanding held by one holder of
record. The Boatmen's Common Stock and the Boatmen's Depositary Shares are each
traded on The Nasdaq Stock Market as a National Market Security and reported by
The Nasdaq Stock Market under the symbols "BOAT" and "BOATZ," respectively. As
of the Boatmen's Record Date, there were 155,508,155 shares of Boatmen's Common
Stock outstanding held by approximately 35,194 holders of record, 234,028
shares of Boatmen's Series A Preferred Stock held by one holder of record, 9,487
shares of Boatmen's Series B Preferred Stock held by approximately 52 holders of
record and 3,744,439 Boatmen's Depositary Shares held by 259 holders of
record. There is no active market for any shares of NationsBank ESOP Preferred
Stock or Boatmen's Preferred Stock, none of which are listed on a national
securities exchange or quoted on The Nasdaq Stock Market or any other national
securities quotation system, and there are no published bid and asked quotations
on any such shares.
The following table sets forth the last sale price reported on the NYSE
Composite Transactions List for shares of NationsBank Common Stock on August 29,
1996, the last trading day preceding public announcement of the proposed Merger,
and on November 13, 1996. It also sets forth the last reported sale prices per
share reported by The Nasdaq Stock Market for shares of Boatmen's Common Stock
and Boatmen's Depositary Shares on August 29, 1996 and on November 13, 1996.
The Boatmen's Common Stock Equivalent represents the last sale price of a share
of NationsBank Common Stock on such date multiplied by the Exchange Ratio of
0.6525.
<TABLE>
<CAPTION>
BOATMEN'S
NATIONSBANK BOATMEN'S COMMON BOATMEN'S
COMMON COMMON STOCK DEPOSITARY
STOCK STOCK EQUIVALENT SHARES
----------- --------- ---------- ----------
<S> <C> <C> <C> <C>
August 29, 1996...................................... $92.375 $42.9375 $60.27 $37.125
November 13, 1996.................................... $93.875 $60.375 $61.25 $51.50
</TABLE>
For additional information regarding the market prices of the NationsBank
Common Stock and Boatmen's Common Stock during the previous two years, see
"PRICE RANGE OF COMMON STOCK AND DIVIDENDS -- Market Prices."
10
<PAGE> 17
COMPARATIVE UNAUDITED PER SHARE DATA
The following table sets forth (i) selected comparative per share data for
each of NationsBank and Boatmen's on an historical basis and (ii) selected
unaudited pro forma comparative per share data reflecting the consummation by
NationsBank of (a) the Merger, and (b) the Merger and the acquisitions of Bank
South Corporation ("Bank South"), completed January 9, 1996, TAC Bancshares,
Inc. and its subsidiary, Chase Federal Bank, FSB ("Chase Federal"), completed
August 13, 1996, and CSF Holdings, Inc. ("CSF"), completed January 10, 1996
(collectively referred to as the "Other Acquisitions"). The unaudited pro forma
comparative per share data assumes the Merger and the Other Acquisitions had
been consummated at the beginning of the periods presented. The acquisitions of
Chase Federal and CSF are reflected in the unaudited pro forma data using the
purchase method of accounting and the merger with Bank South is reflected as a
pooling of interests. The unaudited pro forma data has been prepared giving
effect to the Merger as a purchase. For a description of the effect of purchase
accounting on the Merger and the historical financial statements of NationsBank,
see "THE MERGER -- Accounting Treatment." The Boatmen's pro forma equivalent
amounts are presented with respect to each set of pro forma information, and
have been calculated by multiplying the corresponding pro forma combined amounts
per share of NationsBank Common Stock by the Exchange Ratio of 0.6525.
The unaudited pro forma comparative per share data reflects the Merger
based upon preliminary purchase accounting adjustments. Actual adjustments,
which may include adjustments to additional assets, liabilities and other items,
will be made on the basis of appraisals and evaluations as of the Effective Time
and, therefore, are likely to differ from those reflected in the unaudited pro
forma comparative per share data.
NationsBank and Boatmen's expect that the combined company will achieve
substantial benefits from the Merger including operating cost savings and
revenue enhancements. However, the unaudited pro forma comparative per share
data does not reflect any direct costs, potential savings or revenue
enhancements which are expected to result from the consolidation of operations
of NationsBank, Boatmen's and the Other Acquisitions, and therefore does not
purport to be indicative of the results of future operations.
The comparative per share data presented herein is based on and derived
from, and should be read in conjunction with, the historical consolidated
financial statements and the related notes thereto of NationsBank and the
supplemental historical consolidated financial statements and the related notes
thereto of Boatmen's, both of which are incorporated by reference herein. See
"AVAILABLE INFORMATION," "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE," and
"UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION." Results of each of
NationsBank and Boatmen's for the nine months ended September 30, 1996 are not
necessarily indicative of results expected for the entire year, nor are pro
forma amounts necessarily indicative of results of operations or the combined
financial position that would have resulted had the Merger and the Other
Acquisitions been consummated at the beginning of the periods indicated. All
adjustments consisting of only normal recurring adjustments necessary for a fair
statement of results of interim periods have been included.
11
<PAGE> 18
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
<S> <C> <C>
Earnings per common share (primary)
NationsBank
Historical...................................................... $5.82 $7.13
Pro forma combined for the Merger............................... 4.82 5.77
Pro forma combined for the Merger and Other Acquisitions........ 4.82 5.53
Boatmen's
Historical...................................................... 2.40 3.02
Pro forma equivalent for the Merger(1).......................... 3.15 3.76
Pro forma equivalent for the Merger and Other Acquisitions(1)... 3.15 3.61
Cash dividends declared per common share
NationsBank
Historical...................................................... 1.74 2.08
Pro forma combined for the Merger(2)............................ 1.74 2.08
Pro forma combined for the Merger and Other Acquisitions(2)..... 1.74 2.08
Boatmen's
Historical...................................................... 1.16 1.42
Pro forma equivalent for the Merger(1).......................... 1.14 1.36
Pro forma equivalent for the Merger and Other Acquisitions(1)... 1.14 1.36
</TABLE>
<TABLE>
<CAPTION>
AT AT
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
<S> <C> <C>
Shareholders' equity per common share (period end)
NationsBank
Historical...................................................... $45.77 $46.52
Pro forma combined for the Merger............................... 54.38 54.51
Pro forma combined for the Merger and Other Acquisitions........ 54.38 52.43
Boatmen's
Historical...................................................... 22.45 22.21
Pro forma equivalent for the Merger(1).......................... 35.48 35.57
Pro forma equivalent for the Merger and Other Acquisitions(1)... 35.48 34.21
</TABLE>
- ---------------
(1) Pro forma equivalent amounts for the Merger are calculated by multiplying
the pro forma combined amounts by the Exchange Ratio of 0.6525.
(2) Pro forma combined dividends per share represent historical dividends per
share paid by NationsBank.
12
<PAGE> 19
SELECTED FINANCIAL DATA
The following tables present (i) summary selected financial data for each
of NationsBank and Boatmen's on an historical basis and (ii) summary unaudited
pro forma selected financial data reflecting the consummation by NationsBank of
(a) the Merger, and (b) the Merger and the Other Acquisitions. The unaudited pro
forma selected financial data has been prepared giving effect to the Merger
using the purchase method of accounting. For a description of the effect of
purchase accounting on the Merger and the historical financial statements of
NationsBank, see "THE MERGER -- Accounting Treatment."
The summary unaudited pro forma selected financial data reflects the Merger
based upon preliminary purchase accounting adjustments. Actual adjustments,
which may include adjustments to additional assets, liabilities and other items,
will be made on the basis of appraisals and evaluations as of the Effective Time
and, therefore, is likely to differ from those reflected in the summary
unaudited pro forma selected financial data.
NationsBank and Boatmen's expect that the combined company will achieve
substantial benefits from the Merger including operating cost savings and
revenue enhancements. However, the summary unaudited pro forma selected
financial data does not reflect any direct costs, potential savings or revenue
enhancements which are expected to result from the consolidation of operations
of NationsBank, Boatmen's and the Other Acquisitions, and therefore does not
purport to be indicative of the results of future operations.
The summary selected financial data for NationsBank is based on and derived
from, and should be read in conjunction with, the historical consolidated
financial statements and the related notes thereto of NationsBank, audited by
Price Waterhouse LLP, independent accountants, which are incorporated herein by
reference. The summary selected financial data for Boatmen's as of December 31,
1995 and 1994 and for the three years ended December 31, 1995 is based on and
derived from, and should be read in conjunction with, the supplemental
historical consolidated financial statements and the related notes thereto of
Boatmen's, audited by Ernst & Young LLP, independent accountants, which are
incorporated herein by reference. The summary selected financial data as of
December 31, 1993, 1992 and 1991 and for the two years ended December 31, 1992
is derived from the financial statements of Boatmen's, which have been restated
to reflect the merger of Boatmen's with Fourth Financial Corporation, which was
accounted for as a pooling of interests and was completed January 31, 1996. The
information set forth in the unaudited summary selected pro forma financial data
should be read in connection with the unaudited pro forma condensed financial
information and notes thereto appearing elsewhere herein. Results of each of
NationsBank and Boatmen's for the nine months ended September 30, 1996 are not
necessarily indicative of results expected for the entire year. All adjustments,
consisting of only normal recurring adjustments, necessary for a fair statement
of results of interim periods have been included. See "AVAILABLE INFORMATION"
and "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
13
<PAGE> 20
SELECTED HISTORICAL FINANCIAL DATA OF NATIONSBANK
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
--------------------- -------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------- ------- ------- ------- ------- ------- -------
(DOLLARS IN MILLIONS, EXCEPT PER-SHARE INFORMATION AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
Income statement
Income from earning assets........... $10,438 $ 9,859 $13,220 $10,529 $ 8,327 $ 7,780 $ 9,398
Interest expense..................... 5,699 5,825 7,773 5,318 3,690 3,682 5,599
Net interest income.................. 4,739 4,034 5,447 5,211 4,637 4,098 3,799
Provision for credit losses.......... 455 240 382 310 430 715 1,582
Gains (losses) on sales of
securities......................... 34 8 29 (13) 84 249 454
Noninterest income................... 2,688 2,232 3,078 2,597 2,101 1,913 1,742
Merger-related charge................ 118 -- -- -- 30 -- 330
Noninterest expense (including OREO
expense)........................... 4,212 3,831 5,181 4,930 4,371 4,149 3,974
Income before income taxes and effect
of change in method of accounting
for income taxes................... 2,676 2,203 2,991 2,555 1,991 1,396 109
Income tax expense (benefit)......... 933 763 1,041 865 690 251 (93)
Net income........................... 1,743 1,440 1,950 1,690 1,501(1) 1,145 202
Net income applicable to common
shareholders....................... 1,732 1,434 1,942 1,680 1,491(1) 1,121 171
Per common share
Net income (primary)................. 5.82 5.26 7.13 6.12 5.78(1) 4.60 .76
Net income (fully diluted)........... 5.73 5.19 7.04 6.06 5.72(1) 4.52 .75
Cash dividends paid.................. 1.74 1.50 2.08 1.88 1.64 1.51 1.48
Shareholders' equity (period end).... 45.77 44.00 46.52 39.70 36.39 30.80 27.03
Balance sheet (period end)
Total assets......................... 187,671 182,138 187,298 169,604 157,686 118,059 110,319
Total loans, leases and factored
accounts receivable, net of
unearned income.................... 122,078 114,601 117,033 103,371 92,007 72,714 69,108
Total deposits....................... 108,132 97,870 100,691 100,470 91,113 82,727 88,075
Long-term debt....................... 22,034 15,741 17,775 8,488 8,352 3,066 2,876
Common shareholders' equity.......... 13,186 11,904 12,759 10,976 9,859 7,793 6,252
Total shareholders' equity........... 13,304 11,941 12,801 11,011 9,979 7,814 6,518
Common shares outstanding at period end
(in thousands)....................... 288,112 270,544 274,269 276,452 270,905 252,990 231,246
Performance ratios
Return on average assets............. 1.15%(2) 1.03%(2) 1.03% 1.02% .97% 1.00% .17%
Return on average common
shareholders'
equity(3).......................... 17.58(2) 17.02(2) 17.01 16.10 15.00 15.83 2.70
Risk-based capital ratios
Tier 1............................... 7.05 7.16 7.24 7.43 7.41 7.54 6.38
Total................................ 12.05 11.23 11.58 11.47 11.73 11.52 10.30
Leverage capital ratio................. 6.30 5.96 6.27 6.18 6.00 6.16 5.07
Total equity to total assets........... 7.09 6.56 6.83 6.49 6.33 6.62 5.91
Asset quality ratios
Allowance for credit losses as a
percentage of total loans, leases
and factored accounts receivable,
net of unearned income (period
end)............................... 1.90 1.89 1.85 2.11 2.36 2.00 2.32
Allowance for credit losses as a
percentage of nonperforming loans
(period end)....................... 235.64 255.57 306.49 273.07 193.38 103.11 81.82
Net charge-offs as a percentage of
average loans, leases and factored
accounts receivable, net of
unearned income.................... .48(2) .33(2) .38 .33 .51 1.25 1.86
Nonperforming assets as a percentage
of net loans, leases, factored
accounts receivable, net of
unearned income, and other real
estate owned (period end).......... .93 .90 .73 1.10 1.92 2.72 4.01
</TABLE>
- ---------------
(1) Includes cumulative effect benefit of $200 million for the adoption of SFAS
109. The effect on primary and fully diluted earnings per share was $.78 and
$.77, respectively, for the year ended December 31, 1993.
(2) Annualized.
(3) Average common shareholders' equity does not include the effect of market
value adjustments to securities available for sale and marketable equity
securities.
14
<PAGE> 21
SELECTED HISTORICAL FINANCIAL DATA OF BOATMEN'S
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
--------------------- -----------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------- ------- ------- ------- ------- ------- -------
(DOLLARS IN MILLIONS, EXCEPT PER-SHARE INFORMATION AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
Income statement
Income from earning assets.................... $ 2,159 $ 2,147 $ 2,873 $ 2,511 $ 2,310 $ 2,283 $ 2,470
Interest expense.............................. 975 1,039 1,381 1,042 916 1,037 1,411
Net interest income......................... 1,184 1,108 1,492 1,469 1,394 1,246 1,059
Provision for credit losses................... 65 33 60 26 71 161 162
Gains (losses) on sales of securities......... 2 (18) (7) 10 10 35 9
Noninterest income............................ 635 569 767 703 670 547 476
Merger-related charge......................... 60 -- -- -- -- -- --
Noninterest expense (including OREO
expense).................................... 1,094 1,082 1,451 1,411 1,401 1,222 1,076
Income before income taxes.................... 602 544 741 745 602 445 306
Income tax expense............................ 220 192 261 254 174 117 73
Net income.................................... 382 352 480 491 428 328 233
Net income available to common
shareholders................................ 377 346 473 484 421 322 233
Per common share
Earnings...................................... 2.40 2.21 3.02 3.10 2.74 2.26 1.70
Cash dividends paid........................... 1.11 1.02 1.39 1.27 1.15 1.09 1.07
Shareholders' equity (period end)............. 22.45 21.61 22.21 19.70 19.09 17.00 16.12
Balance sheet (period end)
Total assets.................................. 40,694 40,267 41,123 40,692 37,946 35,147 31,935
Total loans, leases and factored accounts
receivable, net of unearned income.......... 24,315 24,184 24,051 22,718 20,388 17,973 16,863
Total deposits................................ 30,562 30,541 31,978 31,109 29,462 28,306 25,007
Long-term debt................................ 644 564 654 640 629 507 436
Common shareholders' equity................... 3,486 3,369 3,501 3,064 2,968 2,585 2,251
Total shareholders' equity.................... 3,581 3,469 3,600 3,164 3,068 2,689 2,254
Common shares outstanding period end (in
thousands).................................... 155,256 155,913 157,591 155,575 155,496 152,089 139,669
Performance ratios
Return on average assets...................... 1.26%(1) 1.16%(1) 1.19% 1.26% 1.19% 1.01% 0.77%
Return on average common shareholders'
equity...................................... 14.25(1) 14.18(1) 14.31 15.98 15.25 13.43 10.90
Risk-based capital ratios
Tier 1........................................ 11.29 11.04 11.29 10.92 11.23 10.98 10.16
Total......................................... 13.82 13.75 13.97 13.70 14.28 13.85 12.86
Leverage capital ratio.......................... 8.21 7.86 7.95 7.29 7.03 6.85 6.21
Total equity to total assets.................... 8.80 8.61 8.75 7.78 8.09 7.65 7.06
Asset quality ratios:
Allowance for credit losses as a percentage of
total loans, leases and factored accounts
receivable, net of unearned income (period
end)........................................ 1.94 1.91 1.88 1.98 2.18 2.28 2.11
Allowance for credit losses as a percentage of
nonperforming loans (period end)............ 283.75 351.55 260.94 302.20 212.96 136.47 94.50
Net charge-offs as a percentage of average
loans, leases and factored accounts
receivable, net of unearned income.......... 0.26(1) 0.15(1) 0.27 0.13 0.28 0.77 0.86
Nonperforming assets as a percentage of net
loans, leases, factored accounts receivable,
net of unearned income, and other real
estate owned (period end)................... 0.82 0.75 0.87 0.95 1.63 2.52 3.52
</TABLE>
- ---------------
(1) Annualized.
15
<PAGE> 22
SELECTED PRO FORMA FINANCIAL DATA
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1996 DECEMBER 31, 1995
---------------------------------------- ----------------------------------------
NATIONSBANK, NATIONSBANK,
NATIONSBANK BOATMEN'S AND NATIONSBANK BOATMEN'S AND
AND BOATMEN'S(1) OTHER ACQUISITIONS(1) AND BOATMEN'S(1) OTHER ACQUISITIONS(1)
---------------- --------------------- ---------------- ---------------------
(DOLLARS IN MILLIONS, EXCEPT EARNINGS PER-SHARE INFORMATION AND RATIOS)
<S> <C> <C> <C> <C>
Income statement
Income from earning assets........... $ 12,110 $ 12,210 $ 15,450 $ 16,527
Interest expense..................... 6,445 6,520 8,838 9,543
Net interest income................ 5,665 5,690 6,612 6,984
Provision for credit losses.......... 520 526 442 452
Gains on sales of securities......... 36 38 22 31
Noninterest income................... 3,320 3,323 3,840 4,005
Merger-related charge................ 178 178 -- --
Noninterest expense (including OREO
expense)........................... 5,525 5,550 6,924 7,362
Income before income taxes........... 2,798 2,797 3,108 3,206
Income tax expense................... 1,043 1,043 1,161 1,188
Net income........................... 1,755 1,754 1,947 2,018
Net income applicable to common
shareholders....................... 1,739 1,738 1,932 1,997
Per common share
Net income (primary)................. 4.82 4.82 5.77 5.53
Net income (fully diluted)........... 4.77 4.77 5.72 5.48
Cash dividends paid(2)............... 1.74 1.74 2.08 2.08
Shareholders' equity (period end).... 54.38 54.38 54.51 52.43
Balance sheet (period end)
Total assets......................... 224,756 224,756 224,803 240,087
Total loans, leases and factored
accounts receivable, net of
unearned income.................... 146,393 146,393 141,084 149,497
Total deposits....................... 138,694 138,694 132,669 143,385
Long-term debt....................... 26,533 26,533 22,285 23,588
Common shareholders' equity.......... 18,973 18,973 18,263 18,946
Total shareholders' equity........... 19,182 19,182 18,682 19,367
Common shares outstanding period end
(in thousands)....................... 348,895 348,895 335,052 361,360
Performance ratios
Return on average assets............. 0.98%(2) 0.98%(2) 0.86% 0.84%
Return on average common
shareholders' equity(4)............ 12.19(2) 12.19(2) 11.37 11.30
Risk-based capital ratios(5)
Tier 1............................... 5.57 5.57 5.64 5.51
Total................................ 10.20 10.20 10.26 9.98
Leverage capital ratio................. 5.03 5.03 4.94 4.73
Total equity to total assets........... 8.53 8.53 8.31 8.07
Asset quality ratios
Allowance for credit losses as a
percentage of total loans, leases
and factored accounts receivable,
net of unearned income (period
end)............................... 1.91 1.91 1.85 1.82
Allowance for credit losses as a
percentage of nonperforming loans
(period end)....................... 242.60 242.60 297.50 290.73
Net charge-offs as a percentage of
average loans, leases and factored
accounts receivable, net of
unearned income.................... 0.45(2) 0.45(2) 0.36 0.36
Nonperforming assets as a percentage
of net loans, leases, factored
accounts receivable, net of
unearned income, and other real
estate owned (period end).......... 0.91 0.91 0.75 0.76
</TABLE>
- ---------------
(1) An assumed cash election of 40% in the Merger has been used in the unaudited
Selected Pro Forma Financial Data.
(2) Pro forma combined dividends per common share represent the historical
dividends per common share paid by NationsBank.
(3) Annualized.
(4) Average common shareholders' equity does not include the effect of market
value adjustments to securities available for sale and marketable equity
securities.
(5) NationsBank and Boatmen's expect the combined company to be well capitalized
under regulatory guidelines. Not included in the above capital ratios are
fourth quarter earnings net of dividends and the planned issuance of $500
million of qualifying Tier 1 capital.
16
<PAGE> 23
RATIOS OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following are NationsBank's consolidated ratios of earnings to combined
fixed charges and preferred stock dividend requirements for the nine months
ended September 30, 1996 and for each of the years in the five-year period ended
December 31, 1995:
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED
ENDED DECEMBER 31,
SEPTEMBER 30, --------------------------------
1996 1995 1994 1993 1992 1991
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends:
Excluding interest on deposits.............. 1.8 1.6 1.8 2.3 2.3 1.1
Including interest on deposits.............. 1.5 1.4 1.5 1.5 1.4 1.0
</TABLE>
For purposes of computing the consolidated ratios, earnings represent net
income of NationsBank plus applicable income taxes and fixed charges, less
capitalized interest and the equity in undistributed earnings of unconsolidated
subsidiaries and associated companies. Fixed charges represent interest expense
(exclusive of interest on deposits in one case and inclusive of such interest in
the other), capitalized interest, amortization of debt discount and appropriate
issuance costs and one-third (the amount deemed to represent an appropriate
interest factor) of net rent expense under all lease commitments. Preferred
stock dividend requirements represent dividend requirements on the outstanding
preferred stock adjusted to reflect the pre-tax earnings that would be required
to cover such dividend requirements.
17
<PAGE> 24
NATIONSBANK SPECIAL MEETING
GENERAL
This Joint Proxy Statement-Prospectus is first being mailed to NationsBank
Shareholders on or about November 18, 1996 and is accompanied by the notice of
Special Meeting and a form of proxy that is solicited by the NationsBank Board
for use at the NationsBank Special Meeting to be held on December 20, 1996, at
11:00 a.m., local time, at the International Trade Center, 200 North College
Street, Charlotte, North Carolina, and at any adjournments or postponements
thereof.
MATTERS TO BE CONSIDERED
At the NationsBank Special Meeting, NationsBank Shareholders will be asked,
in accordance with the shareholder approval requirements of the NYSE, to
consider and vote upon the issuance of shares of NationsBank Common Stock and
NationsBank New Series A Preferred Stock in the Merger (collectively, the
"Issuance"). The NYSE requires shareholder approval of such issuance because the
number of shares of NationsBank Common Stock to be issued in the Merger
(including the shares of NationsBank Common Stock issuable upon conversion of
the NationsBank New Series A Preferred Stock) is expected to exceed 20% of the
shares of NationsBank Common Stock and voting power outstanding immediately
prior to the Issuance. In addition, the NationsBank Shareholders will be asked
to consider and vote upon (i) an amendment to the NationsBank Articles of
Incorporation increasing the number of authorized shares of NationsBank Common
Stock to 1,250,000,000 (the "Articles Amendment"), and (ii) an amendment and
restatement of the NationsBank Corporation Key Employee Stock Plan (the "Plan
Amendment," and together with the Issuance and the Articles Amendment, the
"NationsBank Matters"). (The NationsBank Shareholders may also be asked to vote
upon a proposal to adjourn or postpone the NationsBank Special Meeting, which
adjournment or postponement could be used for the purpose, among others, of
allowing additional time for the soliciting of additional votes to approve the
NationsBank Matters.)
PROXIES
The accompanying form of proxy is for use at the meeting if a shareholder
will be unable to attend in person. The proxy may be revoked by the shareholder
at any time before it is exercised, by submitting to the Secretary of
NationsBank written notice of revocation, a properly executed proxy of a later
date or by attending the meeting and electing to vote in person. Written notices
of revocation and other communications with respect to the revocation of
NationsBank proxies should be addressed to NationsBank Corporation, NationsBank
Corporate Center, Charlotte, North Carolina 28255, Attention: Corporate
Secretary. All shares represented by valid proxies received pursuant to this
solicitation, and not revoked before they are exercised, will be voted in the
manner specified therein. If no specification is made, the proxies will be voted
in favor of the NationsBank Matters; provided that no proxy that is voted
against any of the NationsBank Matters will be voted in favor of any adjournment
or postponement of the NationsBank Special Meeting for the purpose of soliciting
additional proxies.
The entire cost of soliciting the proxies from the NationsBank Shareholders
will be borne by NationsBank; provided, however, that Boatmen's and NationsBank
have each agreed to pay one-half of the printing costs of this Joint Proxy
Statement-Prospectus and related materials. In addition to the solicitation of
the proxies by mail, NationsBank will request banks, brokers and other record
holders to send proxies and proxy material to the beneficial owners of the stock
and secure their voting instructions, if necessary. NationsBank will reimburse
such record holders for their reasonable expenses in so doing. NationsBank has
also made arrangements with Georgeson & Company Inc. to assist it in soliciting
proxies from banks, brokers and nominees and has agreed to pay $8,500 plus
expenses for such services. If necessary, NationsBank may also use several of
its regular employees, who will not be specially compensated, to solicit proxies
from shareholders, either personally or by telephone, telegram, facsimile or
special delivery letter.
18
<PAGE> 25
RECORD DATE AND VOTING RIGHTS
Pursuant to the provisions of the NCBCA, October 22, 1996 has been fixed as
the record date for determination of NationsBank Shareholders entitled to notice
of and to vote at the NationsBank Special Meeting. Accordingly, only holders of
shares of record at the close of business on that date of NationsBank Common
Stock and NationsBank ESOP Preferred Stock will be entitled to notice of and to
vote at said meeting. The number of outstanding shares of NationsBank Common
Stock and NationsBank ESOP Preferred Stock entitled to vote at the NationsBank
Special Meeting is 288,109,347 and 2,379,007, respectively. In accordance with
North Carolina law, abstentions from voting will be counted for purposes of
determining whether a quorum exists at the NationsBank Special Meeting.
Furthermore, shares represented by proxies returned by a broker holding such
shares in nominee or "street" name will be counted for purposes of determining
whether a quorum exists, even if such shares are not voted in matters where
discretionary voting by the broker is not allowed ("broker non-votes"). In
addition, abstentions from voting and broker non-votes will not be deemed to
have been cast either "for" or "against" the proposals considered at the meeting
and, therefore, will have no effect on the adoption of such proposals.
Each share of NationsBank Common Stock and NationsBank ESOP Preferred Stock
entitles its holder to one vote. All such shares vote together as a single class
and the affirmative vote of a majority of the votes cast at the NationsBank
Special Meeting is required to approve the NationsBank Matters, provided that,
in the case of the Issuance, at least 50% of the votes entitled to be cast are
voted at the NationsBank Special Meeting and, in the case of the Articles
Amendment and the Plan Amendment, a majority of the shares entitled to vote are
represented at the NationsBank Special Meeting in person or by proxy. In
addition to the votes described above, the Articles Amendment requires for
approval the affirmative vote of a majority of the votes cast by the holders of
NationsBank Common Stock, voting together as a separate group. As of the
NationsBank Record Date, 9,850,096 shares of NationsBank Common Stock and 868
shares of NationsBank ESOP Preferred Stock, respectively, or 3.39% of the shares
of NationsBank stock entitled to vote at the NationsBank Special Meeting, were
beneficially owned by directors and executive officers of NationsBank. It is
currently expected that each such director and executive officer of NationsBank
will vote the shares of NationsBank stock beneficially owned by him or her for
approval of the NationsBank Matters. In addition, as of the NationsBank Record
Date directors and executive officers of Boatmen's beneficially owned 3,417
shares of NationsBank Common Stock and no shares of NationsBank ESOP Preferred
Stock or significantly less than 1% of the shares of NationsBank stock entitled
to vote at the NationsBank Special Meeting.
Additional information with respect to beneficial ownership of NationsBank
Common Stock and NationsBank ESOP Preferred Stock by persons and entities owning
more than 5% of such stock and more detailed information with respect to
beneficial ownership of NationsBank Common Stock by directors and executive
officers of NationsBank is incorporated by reference to the 1995 Annual Report
on Form 10-K of NationsBank. See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE."
RECOMMENDATION OF NATIONSBANK BOARD
The NationsBank Board has unanimously approved the NationsBank Matters, the
Agreement and the transactions contemplated thereby. The NationsBank Board
believes that the NationsBank Matters are in the best interests of NationsBank
and its shareholders and recommends that the NationsBank Shareholders vote "FOR"
the NationsBank Matters. See "THE MERGER -- Reasons of NationsBank for the
Merger," "AMENDMENT TO THE NATIONSBANK ARTICLES OF INCORPORATION" and "AMENDMENT
TO THE NATIONSBANK CORPORATION KEY EMPLOYEE STOCK PLAN."
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BOATMEN'S SPECIAL MEETING
GENERAL
This Joint Proxy Statement-Prospectus is first being mailed to the
Boatmen's Shareholders on or about November 18, 1996, and is accompanied by the
notice of Special Meeting and a form of proxy that is solicited by the Board of
Directors of Boatmen's for use at the Boatmen's Special Meeting to be held on
December 20, 1996, at 10:00 a.m., local time, at One Boatmen's Plaza, 800
Market Street, St. Louis, Missouri 63101 and at any adjournments or
postponements thereof. The purpose of the Boatmen's Special Meeting is to take
action with respect to the approval of the Agreement and the transactions
contemplated thereby. (The holders of Boatmen's Common Stock and Boatmen's
Series B Preferred Stock may also be asked to vote upon a proposal to adjourn or
postpone the Boatmen's Special Meeting, which adjournment or postponement could
be used for the purpose, among others, of allowing additional time for the
soliciting of additional votes to approve the Agreement.)
PROXIES
A holder of Boatmen's Common Stock or Boatmen's Series B Preferred Stock
may use the accompanying proxy if such shareholder is unable to attend the
Boatmen's Special Meeting in person or wishes to have his or her shares voted by
proxy even if such shareholder does attend the meeting. A shareholder may revoke
any proxy given pursuant to this solicitation by delivering to the Corporate
Secretary of Boatmen's, prior to or at the Boatmen's Special Meeting, a written
notice revoking the proxy or a duly executed proxy relating to the same shares
bearing a later date; however, attendance at the Boatmen's Special Meeting will
not in and of itself constitute a revocation of a proxy. All written notices of
revocation and other communications with respect to the revocation of Boatmen's
proxies should be addressed to Boatmen's Bancshares, Inc., One Boatmen's Plaza,
800 Market Street, St. Louis, Missouri 63101, Attention: Corporate Secretary.
For such notice of revocation or later proxy to be valid, however, it must
actually be received by Boatmen's prior to the vote of the shareholders at the
Boatmen's Special Meeting. All shares represented by valid proxies received
pursuant to this solicitation, and not revoked before they are exercised, will
be voted in the manner specified therein. If no specification is made, the
proxies will be voted in favor of approval of the Agreement. The Boatmen's Board
is unaware of any other matters that may be presented for action at the
Boatmen's Special Meeting. If other matters do properly come before the
Boatmen's Special Meeting, however, it is intended that shares represented by
proxies in the accompanying form will be voted or not voted by the persons named
in the proxies in their discretion, provided that no proxy that is voted against
approval and adoption of the Agreement will be voted in favor of any adjournment
or postponement of the Boatmen's Special Meeting for the purpose of soliciting
additional proxies.
Boatmen's intends to count shares of Boatmen's Common Stock and Boatmen's
Series B Preferred Stock present in person at the Boatmen's Special Meeting but
not voting, and shares of Boatmen's Common Stock and Boatmen's Series B
Preferred Stock for which it has received proxies but with respect to which
holders of such shares have abstained, as present at the Boatmen's Special
Meeting for purposes of determining the presence or absence of a quorum for the
transaction of business. In addition, brokers who hold shares of Boatmen's
Common Stock or Series B Preferred Stock in street name for customers who are
the beneficial owners of such shares are prohibited from giving a proxy to vote
shares held for such customers with respect to the matters to be considered and
voted upon at the Boatmen's Special Meeting without specific instructions from
such customers.
SOLICITATION OF PROXIES
Solicitation of proxies may be made in person or by mail, telephone or
facsimile, by directors, officers and employees of Boatmen's, who will not be
specially compensated for such solicitation. Nominees, fiduciaries and other
custodians will be requested to forward solicitation materials to beneficial
owners and to secure their voting instructions, if necessary, and will be
reimbursed for the expenses incurred in sending proxy materials to beneficial
owners. In addition, Boatmen's intends to engage the services of a proxy
solicitation firm to assist the solicitation of proxies at an estimated cost of
$18,795 plus expenses.
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All costs of solicitation of proxies from holders of Boatmen's Common Stock
and Boatmen's Series B Preferred Stock will be borne by Boatmen's, provided,
however, that NationsBank and Boatmen's have each agreed to pay one-half of the
printing costs of this Joint Proxy Statement-Prospectus and related materials.
RECORD DATE AND VOTING RIGHTS
The Boatmen's Board has fixed October 22, 1996 as the Boatmen's Record Date
for the determination of the holders of Boatmen's Common Stock and Boatmen's
Series B Preferred Stock entitled to receive notice of and to vote at the
Boatmen's Special Meeting. At the close of business on the Boatmen's Record
Date, there were 155,508,155 shares of Boatmen's Common Stock outstanding held
by approximately 35,194 holders of record and 9,487 shares of Boatmen's Series B
Preferred Stock outstanding held by approximately 52 holders of record. Each
share of Boatmen's Common Stock and Boatmen's Series B Preferred Stock
outstanding on the Record Date entitles its holder to one vote as to (i) the
approval of the Agreement and the transactions contemplated thereby and (ii) any
other proposal that may properly come before the Boatmen's Special Meeting. The
holders of record as of the Boatmen's Record Date of shares of Boatmen's Series
A Preferred Stock and Boatmen's Depositary Shares will receive notice of, but
are not entitled to vote at, the Boatmen's Special Meeting.
Under the terms of the MGBCL, approval of the Agreement will require the
affirmative vote of the holders of two-thirds of the outstanding shares of
Boatmen's stock entitled to vote at the Boatmen's Special Meeting. Each share of
Boatmen's Common Stock and Boatmen's Series B Preferred Stock entitles its
holder to one vote at the Boatmen's Special Meeting and such shares shall vote
together as a single class. As of the Boatmen's Record Date, approximately
1,848,351 shares of Boatmen's Common Stock, and no shares of Boatmen's Series B
Preferred Stock, or approximately 1.19% of the shares entitled to vote at the
Boatmen's Special Meeting, were beneficially owned by directors and executive
officers of Boatmen's. It is currently expected that each such director and
executive officer of Boatmen's will vote the shares of Boatmen's stock
beneficially owned by him or her for approval of the Agreement and the
transactions contemplated thereby. As of the Boatmen's Record Date, directors
and executive officers of NationsBank beneficially owned 293 shares of Boatmen's
Common Stock and no shares of Boatmen's Series B Preferred Stock or
significantly less than 1% of the Boatmen's stock entitled to vote at the
Boatmen's Special Meeting.
Additional information with respect to beneficial ownership of Boatmen's
Common Stock and Boatmen's Preferred Stock by persons and entities owning more
than 5% of such stock and more detailed information with respect to beneficial
ownership of Boatmen's Common Stock by directors and executive officers of
Boatmen's is incorporated by reference to the 1995 Annual Report on Form 10-K of
Boatmen's. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
BECAUSE APPROVAL OF THE AGREEMENT REQUIRES THE AFFIRMATIVE VOTE OF THE
HOLDERS OF TWO-THIRDS OF THE OUTSTANDING SHARES OF BOATMEN'S COMMON STOCK AND
BOATMEN'S SERIES B PREFERRED STOCK, VOTING TOGETHER AS A SINGLE CLASS,
ABSTENTIONS AND BROKER NON-VOTES WILL HAVE THE SAME EFFECT AS NEGATIVE VOTES.
ACCORDINGLY, THE BOATMEN'S BOARD URGES THE HOLDERS OF BOATMEN'S COMMON STOCK AND
BOATMEN'S SERIES B PREFERRED STOCK TO COMPLETE, DATE AND SIGN THE ACCOMPANYING
PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE-PAID ENVELOPE.
RECOMMENDATION OF THE BOATMEN'S BOARD
The Boatmen's Board has unanimously approved the Agreement and the
transactions contemplated thereby. The Boatmen's Board believes that the Merger
is in the best interests of Boatmen's and its shareholders and recommends that
the holders of Boatmen's Common Stock and Boatmen's Series B Preferred Stock
vote "FOR" approval of the Agreement. See "THE MERGER -- Reasons of Boatmen's
for the Merger."
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THE MERGER
THE FOLLOWING SUMMARY OF CERTAIN TERMS AND PROVISIONS OF THE AGREEMENT IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE AGREEMENT, WHICH IS INCORPORATED
HEREIN BY REFERENCE AND, WITH THE EXCEPTION OF CERTAIN EXHIBITS THERETO, IS
INCLUDED AS APPENDIX A TO THIS JOINT PROXY STATEMENT-PROSPECTUS.
DESCRIPTION OF THE MERGER
At the Effective Time, Boatmen's will merge with and into Merger Sub, the
separate corporate existence of Boatmen's will cease and Merger Sub will survive
and continue to exist as a Delaware corporation and a wholly owned subsidiary of
NationsBank. Subject to the satisfaction or waiver of certain conditions set
forth in the Agreement and described more fully in "-- Conditions to the
Merger," the Merger will become effective upon the filing of certificates of
merger in the offices of the Secretaries of State of Missouri and Delaware or at
such later date and time as may be set forth in the certificates of merger, in
accordance with Section 440 of the MGBCL and Section 103 of the General
Corporation Law of the State of Delaware (the "GCL"). The Merger will have the
effects prescribed in Section 450 of the MGBCL and Section 252 of the GCL and
the certificate of incorporation and by-laws of the Surviving Corporation will
be those of Merger Sub, as in effect immediately prior to the Effective Time.
At the Effective Time, automatically by virtue of the Merger and without
any action on the part of any party or shareholder each share of Boatmen's
Common Stock (excluding (i) shares of Boatmen's stock held by Boatmen's or any
of its subsidiaries or by NationsBank or any of its subsidiaries, in each case
other than in a fiduciary capacity or as a result of debts previously contracted
("Treasury Shares") and (ii) any shares of Boatmen's stock with respect to which
dissenters' rights are being exercised pursuant to the MGBCL ("Dissenting
Shares")) issued and outstanding immediately prior to the Effective Time will
become and be converted into the right to receive 0.6525 (which Exchange Ratio
is subject to potential adjustment as described under "-- Termination of the
Agreement") of a share of NationsBank Common Stock, subject to the cash election
rights described in "-- The Cash Election"; provided that in the event
NationsBank changes (or establishes a record date for changing) the number of
shares of NationsBank Common Stock issued and outstanding prior to the Effective
Date as a result of a stock split, stock dividend, recapitalization or similar
transaction with respect to the outstanding NationsBank Common Stock and the
record date of such transaction is set prior to the Effective Date, the Exchange
Ratio will be proportionately adjusted.
In addition, at the Effective Time: (1) each share of Boatmen's Series A
Preferred Stock, Boatmen's Series B Preferred Stock and each Boatmen's
Depositary Share, in each case excluding any Treasury Shares and Dissenting
Shares, issued and outstanding immediately prior to the Effective Time, will
become and be converted into the right to receive one share of NationsBank New
Series A Preferred Stock, NationsBank New Series B Preferred Stock or a
NationsBank Depositary Share, respectively, in each case having terms
substantially identical to those of the Boatmen's stock from which it was
converted; (2) the shares of NationsBank capital stock outstanding immediately
prior to the Effective Time will continue to be outstanding after the Effective
Time; (3) each share of the common stock of Merger Sub issued and outstanding
immediately prior to the Effective Time will be unchanged and will remain issued
and outstanding as common stock of the Surviving Corporation; (4) each of the
shares of Boatmen's capital stock held as Treasury Shares immediately prior to
the Effective Time will be canceled and retired at the Effective Time and no
consideration will be issued in exchange therefor; and (5) all employee and
director stock options to purchase shares of Boatmen's Common Stock (each, a
"Boatmen's Employee Stock Option"), which are then outstanding and unexercised,
will cease to represent a right to acquire shares of Boatmen's Common Stock and
will be converted automatically into options to purchase shares of NationsBank
Common Stock, and NationsBank will assume each Boatmen's Employee Stock Option
subject to the terms of any of the relevant stock option plans of Boatmen's
(collectively, the "Boatmen's Employee Stock Option Plans"), and the agreements
evidencing grants thereunder, including but not limited to the accelerated
vesting of such options which will occur in connection with and by virtue of the
Merger as and to the extent required by such plans and agreements; provided,
however, that from and after the Effective Time, (i) the number of shares of
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NationsBank Common Stock purchasable upon exercise of such Boatmen's Employee
Stock Option will be equal to the number of shares of Boatmen's Common Stock
that were purchasable under such Boatmen's Employee Stock Option immediately
prior to the Effective Time multiplied by the Exchange Ratio, and rounding to
the nearest whole share, and (ii) the per share exercise price under each such
Boatmen's Employee Stock Option will be adjusted by dividing the per share
exercise price of each such Boatmen's Employee Stock Option by the Exchange
Ratio, and rounding down to the nearest cent; each Boatmen's Employee Stock
Option will, in accordance with its terms, be subject to further adjustment as
appropriate to reflect any stock split, stock dividend, recapitalization or
other similar transaction with respect to NationsBank Common Stock on or
subsequent to the Effective Date; provided that each Boatmen's Employee Stock
Option which is intended to be an "incentive stock option" (as defined in
Section 422 of the Code) will be adjusted in accordance with the requirements of
Section 424 of the Code and, with respect to any such incentive stock options,
fractional shares will be rounded down to the nearest whole number of shares and
where necessary the per share exercise price will be rounded down to the nearest
cent.
NationsBank may at any time change the method of effecting the combination
with Boatmen's if and to the extent it deems such change to be desirable,
including without limitation to provide for a merger of Boatmen's directly into
NationsBank, in which NationsBank is the surviving corporation; provided,
however, that no such change will (i) alter or change the amount or kind of
consideration to be issued to holders of Boatmen's stock as provided for in the
Agreement (the "Merger Consideration"), (ii) adversely affect the tax treatment
of the Boatmen's Shareholders as a result of receiving the Merger Consideration,
or (iii) materially impede or delay consummation of the transactions
contemplated by the Agreement.
BACKGROUND OF THE MERGER
Merger activity among financial institutions continued at a heightened
level in 1994 and 1995. From time to time during this period, representatives of
various bank holding companies approached Boatmen's informally to express their
interest in engaging in a business combination with Boatmen's should Boatmen's
consider such a transaction. No proposals were made in connection with, and no
substantive discussions resulted from, these approaches since in Boatmen's view
bank merger and acquisition valuations prevailing at the time did not justify
deviating from its then current strategy of growth through internal operations
and acquisitions of banking and non-banking companies. Boatmen's continued this
strategy through acquisitions of Worthen Banking Corporation, National Mortgage
Company and Fourth Financial Corporation.
Commencing in early 1996, Boatmen's reviewed and updated its strategic plan
in light of recent events and trends in the banking industry. One of the results
of this process was the conclusion that Boatmen's would need to make significant
additional investments in technology in order to continue to provide the range
of competitive products and services demanded by the retail market. This
particular need was considered to be critical in view of the competitive
challenges posed by other banking organizations as well as by large,
experienced, non-bank financial services providers, many of which enjoy the
benefits of advanced technology, fewer regulatory constraints and lower cost
structures. Boatmen's management determined that in order for such capital
investments to be cost effective, they needed to be spread over a larger asset
base, requiring additional acquisitions or other growth strategies. In the
meantime, the number of available acquisition candidates meeting Boatmen's
financial criteria had declined substantially.
During the period from late June through early August 1996, members of
Boatmen's senior management met with senior executives of four bank holding
companies (including NationsBank) with which there had been previous informal
discussions and which were believed to be the most likely to be interested in,
and also financially and otherwise capable of, engaging in a business
combination with Boatmen's. These executives discussed trends in the financial
services industry and in general terms the potential benefits of a combination
of Boatmen's with their respective companies.
At its regular meeting on August 13, 1996, the Boatmen's Board authorized
and directed Boatmen's senior management, with the assistance of its financial
and legal advisors, to explore more formally the interest expressed by four bank
holding companies. On August 13 and 14, 1996, Boatmen's, through its financial
advisers, contacted the four companies (including NationsBank), and each
executed a confidentiality
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agreement. Each company was then provided with certain confidential information
with respect to Boatmen's, and was invited to review additional confidential
information and to meet with certain members of Boatmen's senior management. The
four companies reviewed materials and engaged in discussions with Boatmen's
senior management between August 15 and August 25, 1996. Boatmen's and Goldman
Sachs also made inquiries of each company with respect to its own financial
circumstances and operations. In the course of these discussions, one of the
four bank holding companies determined not to proceed further, stating that its
decision was due to circumstances particular to it, and not related to
Boatmen's. Each of the three remaining companies provided to Boatmen's
confidential information regarding it and its operations similar in nature and
scope to the information provided by Boatmen's.
Also during the week of August 19, 1996, Mr. Craig met with the chief
executive officer of each of the three remaining bank holding companies,
principally to discuss non-financial aspects of a possible business combination.
Among the topics discussed at each of the meetings were the strategic focus of a
combined company going forward, the nature and extent of the continued presence
by the combined company in St. Louis, the possible effects of the combination on
Boatmen's employees and the technologies which the other party could provide in
order to offer enhanced products and services to Boatmen's customers. Mr. Craig
reported the content of these discussions as well as the status of the due
diligence process then being conducted at a meeting of the Executive Committee
of the Boatmen's Board on August 23, 1996.
The three companies then participating in the process, including
NationsBank, were invited to submit on August 26, 1996 proposals for a business
combination with Boatmen's. The companies also were asked to be available to
meet with Boatmen's and its advisors on August 27, 1996 for the purpose of
responding to questions regarding, or to clarify aspects of, its proposal. Each
of the three bank holding companies submitted a proposal as requested by
Boatmen's.
On August 27, 1996, representatives of each of the three bank holding
companies met separately with Boatmen's and its advisors to address questions
raised by Boatmen's about their companies and their respective proposals. Each
company also was invited to clarify and improve its proposal in terms of price
or any other factor. In light of the prices reflected in the proposals from the
other bank holding companies, among other factors, Boatmen's management advised
NationsBank that it would recommend a revised NationsBank proposal for approval
by the Boatmen's Board and would execute promptly a definitive merger agreement
and stock option agreement if NationsBank agreed to increase its proposed
exchange ratio of 0.643 to the Exchange Ratio, and NationsBank submitted such a
revised proposal. The Exchange Ratio and other terms of the revised proposal
were negotiated directly by the executive managements of both NationsBank and
Boatmen's.
In their final forms, each of the three proposals contemplated a
stock-for-stock merger in which holders of Boatmen's Common Stock would receive
in the merger shares of the counterparty's common stock at a specified exchange
ratio. Under the NationsBank proposal, the merger would be accounted for as a
purchase, while under the other proposals, the merger would be accounted for as
a pooling of interests. See "-- Accounting Treatment." Of the three proposals,
the NationsBank proposal offered, among other things, consideration having the
highest implied market value for the Boatmen's Common Stock (based on the market
prices of the counterparties' common stocks as of August 27, 1996). The
NationsBank proposal also offered holders of Boatmen's Common Stock the
opportunity to elect cash consideration (subject to the limitations described
under "-- The Cash Election") in lieu of receiving NationsBank stock, an
alternative not offered by either of the two other companies. Each company made
commitments to retain a significant presence in St. Louis and required that
Boatmen's and such company enter into a stock option agreement substantially
similar to the Boatmen's Stock Option Agreement or a termination fee agreement,
in each case under which such company's profits would be capped.
At a meeting of the Boatmen's Board held on August 28, 1996, Mr. Craig and
other members of the Boatmen's management team described the events which had
transpired since the meeting of the Boatmen's Board on August 13 and presented
the terms of the three proposals submitted. Mr. Craig discussed the relative
advantages and disadvantages of a potential merger with NationsBank (including
the proposed exchange ratio of 0.6525 of a share of NationsBank Common Stock for
each share of Boatmen's Common Stock), as well as
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those of the other merger transactions which had been proposed. See "-- Reasons
of Boatmen's for the Merger." Mr. Craig stated that, after considering the
various alternatives available to Boatmen's, he was of the view that the
NationsBank proposal would be in the best interests of Boatmen's and its
shareholders, employees, customers and other constituencies. Goldman Sachs made
a presentation regarding the financial aspects of the process which had been
conducted, the NationsBank proposal and the outlook for NationsBank. Members of
Boatmen's senior management and Boatmen's legal advisors also made presentations
to the Boatmen's Board, in which certain specific terms of the NationsBank
proposal and the proposed form of agreement, as discussed, and the Boatmen's
Stock Option Agreement were discussed. No action was taken by the Boatmen's
Board at this meeting. Following the meeting, representatives of Boatmen's and
NationsBank negotiated and finalized the terms of the Agreement and the
Boatmen's Stock Option Agreement.
A special meeting of the NationsBank Board was held on the morning of
August 29, 1996 to consider a proposal to acquire Boatmen's. Mr. McColl and
other members of the NationsBank senior management team presented the proposal.
Mr. McColl began the meeting by stating that a proposal to the Boatmen's
management team had been submitted after discussion with and approval from the
Executive Committee of the NationsBank Board, that the proposal had been
accepted by Boatmen's management and that management from both companies had
prepared and approved the form of Agreement for consideration by their
respective Boards. Mr. McColl continued by describing the strategic advantages
of the proposed combination and stating how the addition of the Boatmen's
markets to the existing NationsBank franchise would create the leading bank in
the Southeast, Southwest, Mid-Atlantic and Midwest. Members of the NationsBank
senior management team then discussed additional benefits of the acquisition and
the specific terms of the form of Agreement and Boatmen's Stock Option
Agreement. Members of the NationsBank senior management team also made
presentations in which they described the results of NationsBank's due diligence
review of the financial condition and operations of Boatmen's, and the value
added to NationsBank Shareholders. In conclusion, Mr. McColl discussed the
procedures remaining after receipt of Board approvals and the execution of a
definitive Agreement, including the submission of regulatory applications, the
preparation and filing of a registration statement and joint proxy
statement-prospectus, the holding of shareholder meetings by each company before
year-end, and a targeted closing of the transaction in January 1997. After due
consideration of the foregoing matters, which are more specifically described
under "-- Reasons of NationsBank for the Merger" below, the NationsBank Board
unanimously (with five directors absent) approved the Agreement and the
transactions contemplated thereby. See "-- Reasons of NationsBank for the
Merger."
On the afternoon of August 29, 1996, the Boatmen's Board met again to
consider the NationsBank proposal. At the meeting, Goldman Sachs rendered its
opinion that the consideration to be received in the Merger by holders of
Boatmen's Common Stock was fair to such holders. Mr. McColl of NationsBank made
a presentation to the Boatmen's Board, in which he expressed his views as to the
positive attributes of the proposed combination. The Boatmen's Board then
unanimously approved the Agreement and the Boatmen's Stock Option Agreement and
the transactions contemplated thereby as being in the best interests of
Boatmen's, its shareholders and other constituencies, and the Agreement and the
Boatmen's Stock Option Agreement were executed by Boatmen's and NationsBank.
REASONS OF NATIONSBANK FOR THE MERGER
In reaching its determination to approve the Agreement and recommend
approval of the Issuance in connection with the Merger by the NationsBank
Shareholders, the NationsBank Board considered a number of factors, including,
without limitation, the following:
(1) The NationsBank Board considered (i) its knowledge and analysis of
the financial services industry environment, including rapid consolidation
and increasing nationwide competition in the financial services industry
and the need to anticipate and best position NationsBank in light of
industry trends, (ii) its belief that a combination of NationsBank and
Boatmen's will enhance NationsBank's ability to compete effectively with
other bank holding companies and other financial service providers and
expand its banking franchise to serve more than 13 million customers in 16
states in the Southeast, Mid-Atlantic, Midwest and Southwest, and (iii)
Boatmen's unique franchise, especially its leading market position in many
locations desirable to NationsBank because of their adjacent position to
many current
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NationsBank markets, and the difficulties NationsBank would encounter
attempting to obtain a similar position in such markets by means other than
the Merger.
(2) The NationsBank Board considered its knowledge and review of the
financial condition, results of operations and business operations and
prospects of Boatmen's, as well as the results of NationsBank's due
diligence review of Boatmen's. In that regard, the NationsBank Board
considered its belief that Boatmen's is a high quality franchise with a
respected and capable management team with a compatible approach to
customer service, credit quality and shareholder value.
(3) The NationsBank Board considered its evaluation of the financial
terms of the Merger (see "-- Description of the Merger" and "-- The Cash
Election") and their effect on the NationsBank Shareholders and the
NationsBank Board's belief that such terms are consistent with
NationsBank's long-term strategy of enhancing shareholder value with
external geographic expansion through selective acquisitions. The
NationsBank Board took into account that while there would be some dilution
in 1997 reported earnings per share (prior to the accretive impact that the
Merger is expected to have on reported earnings per share in 1998), the
Merger is expected to be immediately accretive to cash earnings per share.
(Cash earnings per share represent reported earnings per share adjusted to
exclude the amortization of intangibles.) See "MANAGEMENT AND OPERATIONS
AFTER THE MERGER."
The foregoing is based on the following assumptions: consensus
"street" earnings per share estimates published by Institutional Brokers
Estimate System ("IBES") for both NationsBank and Boatmen's and repurchases
of shares of NationsBank Common Stock to the extent that the Merger and
resulting synergies described in (4) below result in incremental net cash
flow. The Company also considered the impact of incremental intangible
assets resulting from the Merger. Based on preliminary purchase accounting
estimates, the Merger is expected to result in identifiable intangibles and
goodwill approximating $6.3 billion and yearly amortization of intangibles
and goodwill of approximately $292 million. (Identifiable intangibles will
be amortized over 10 years and goodwill will be amortized on a
straight-line basis over 25 years.) The combined company's ability to
achieve such results is dependent upon various factors, a number of which
will be beyond its control, including the regulatory environment, economic
conditions, unanticipated changes in business conditions and inflation, and
there can be no assurance in that regard.
(4) The NationsBank Board considered that the Merger represented an
opportunity to leverage NationsBank's infrastructure, technology, products,
marketing, and lines of business over seven new states and 2.5 million new
households through Boatmen's established distribution network, and the
possibility of achieving significant expense savings and operating
efficiencies (see "MANAGEMENT AND OPERATIONS AFTER THE MERGER") through
among other things the elimination of duplicate efforts. The NationsBank
Board also considered that the Merger was expected to provide revenue
growth opportunities based on the combined company's leadership in the
majority of its markets, its broad product line and sales productivity, the
number of products sold per household, its delivery channels and its brand
name.
(5) The NationsBank Board also considered the nonfinancial terms of
the Agreement and related agreements, including the agreement with Mr.
Craig and benefits potentially realizable by other affiliates of Boatmen's
(see "-- Interests of Certain Persons in the Merger") and the Boatmen's
Stock Option Agreement (see "-- The Boatmen's Stock Option Agreement").
(6) The NationsBank Board considered its belief that the Merger would
enhance shareholder value by, among other things, expanding NationsBank's
higher-value consumer and small business operations relative to other
businesses; diversifying the combined company's customer base, revenue
stream, loan portfolio and funding sources; and reducing the combined
company's exposure to regional economic risk, business sector risk and
operational risk.
(7) The NationsBank Board considered the likelihood that the Merger
would receive requisite regulatory approvals (see "-- Regulatory Matters").
NationsBank also considered the fact that, based on market prices shortly
prior to announcement of the Merger, the Exchange Ratio reflected a premium to
Boatmen's stock price of approximately 40%. In addition, in recommending
approval of the Issuance in connection with the Merger by the NationsBank
Shareholders, the NationsBank Board considered the opinion of Stephens
(including the assumptions and financial information relied upon by Stephens in
arriving at such opinion) that, as of the date of this Joint Proxy
Statement-Prospectus, the Exchange Ratio is fair from a financial point of view
to NationsBank (see
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"-- Opinion of NationsBank's Financial Advisor"). Stephens was not requested to,
nor did it, render an opinion as to the fairness of the Exchange Ratio at or
prior to the meeting of the NationsBank Board at which the Merger was approved.
The foregoing discussion of the information and factors considered by the
NationsBank Board is not intended to be exhaustive but is believed to include
all material factors considered by the NationsBank Board. In reaching its
determination to approve the Merger, the NationsBank Board did not assign any
relative or specific weights to the foregoing factors, and individual directors
may have given differing weights to differing factors. After deliberating with
respect to the Merger and other transactions contemplated by the Agreement, and
considering, among other things, the matters discussed above, the NationsBank
Board (with 16 directors present and five directors absent) unanimously approved
the Agreement and the transactions contemplated thereby as being in the best
interest of NationsBank and its shareholders.
BASED ON THE FOREGOING, AND THE OPINION OF STEPHENS REFERRED TO ABOVE, THE
NATIONSBANK BOARD UNANIMOUSLY RECOMMENDS THAT NATIONSBANK SHAREHOLDERS VOTE
"FOR" THE ISSUANCE IN CONNECTION WITH THE MERGER.
REASONS OF BOATMEN'S FOR THE MERGER
In determining to approve the Agreement, the Boatmen's Stock Option
Agreement and the transactions contemplated thereby, the Boatmen's Board
considered, among others, the following factors:
(1) The Boatmen's Board considered the terms of the Agreement, the
Boatmen's Stock Option Agreement and the transactions contemplated thereby.
The Boatmen's Board took into account the historical trading ranges for the
NationsBank Common Stock and the Boatmen's Common Stock, the Exchange Ratio
(noting, in particular, that it reflected a 40 percent premium for the
holders of Boatmen's Common Stock based on the closing prices of Boatmen's
Common Stock and NationsBank Common Stock, respectively, on August 28,
1996, the last trading day prior to the meeting of the Boatmen's Board at
which the Merger was approved), the potential impact of the Merger on the
price of the NationsBank Common Stock over the short term and the long
term, the resulting relative interests of Boatmen's and NationsBank
shareholders in the equity of the combined company, and the potential for
increased earnings and book value per share for shareholders of Boatmen's.
The Boatmen's Board also noted that each of its outstanding series of
Boatmen's Preferred Stock would be exchanged for a corresponding series of
NationsBank Preferred Stock with identical terms. The Boatmen's Board
considered that under the Agreement it would have the right to terminate
the Agreement in the event of a specified significant decline in the price
of NationsBank Common Stock prior to the consummation of the Merger unless
NationsBank then elected to increase the Exchange Ratio in the manner
specified in the Agreement. With respect to the Boatmen's Stock Option
Agreement, the Boatmen's Board was aware that the existence of such
agreement might discourage third parties from seeking to acquire Boatmen's
by increasing the cost of such an acquisition (noting, in this regard, the
$250 million cap on the amount of profit which could be realized by
NationsBank from the Boatmen's Option), and might also preclude any third
party from being able to effect a merger with Boatmen's that would qualify
for pooling of interests accounting treatment. See "-- Termination of the
Agreement," and "-- The Boatmen's Stock Option Agreement."
(2) The Boatmen's Board considered: the discussions held with other
bank holding companies which had expressed interest in a business
combination transaction with Boatmen's; that such companies were believed
to be the most likely to be interested in, and also financially and
otherwise capable of, engaging in a business combination with Boatmen's;
the fact that all such companies were given an opportunity to review
confidential information regarding Boatmen's and to make a business
combination proposal; the terms of the proposals received by Boatmen's from
three bank holding companies; and the fact that the implied value of the
Exchange Ratio was higher (as of August 28, 1996) than the implied values
of the consideration offered in the other proposals submitted.
(3) The Boatmen's Board considered the advice of its financial
advisor, Goldman Sachs, and reviewed the detailed financial analyses, pro
forma results and other information presented by Goldman
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Sachs. The Boatmen's Board took into account the advice of Goldman Sachs
that the multiples of earnings and book value represented by the Exchange
Ratio were among the highest observed in recent mergers of large bank
holding companies. The Boatmen's Board considered the opinion of Goldman
Sachs (including the assumptions and financial information and projections
relied upon by it in arriving at such opinion) that, as of August 29, 1996
and based upon the matters set forth in its written opinion as of that
date, the consideration to be received in the Merger by holders of
Boatmen's Common Stock was fair to such holders. (For a discussion of the
opinion of Goldman Sachs, including a summary of the procedures followed,
the matters considered, the scope of the review undertaken and the
assumptions made with respect thereto, see "-- Opinion of Boatmen's
Financial Advisor.")
(4) The Boatmen's Board considered that the combined company resulting
from the Merger would be the fourth largest banking institution in the
United States in terms of assets and the third largest in terms of market
capitalization based on market prices as of August 29, 1996. The Boatmen's
Board recognized that, as a result, the combined company would be more
likely than Boatmen's alone to possess the financial resources to compete
more effectively in the rapidly changing marketplace for banking and
financial services and more effective in fulfilling Boatmen's long-term
objective of increasing its overall size and enhancing its market presence,
while maintaining its asset quality and credit standards. The Boatmen's
Board also considered the substantial technology capabilities of
NationsBank and its ability to provide state-of-the-art products and
services to Boatmen's customers, and the likelihood that such capabilities
and ability would enhance the ability of the combined company to compete in
the future with other banks and non-banking providers of financial
services. The Boatmen's Board also considered the opportunity for revenue
enhancement by offering NationsBank's greater array of commercial and
consumer products and investment banking services through Boatmen's
branches and offices.
(5) The Boatmen's Board took into account the expectation that the
Merger would result in economies of scale and cost synergies. The Boatmen's
Board noted that, although no assurances can be given that any particular
level of cost savings will be achieved, the managements of Boatmen's and
NationsBank, working together, had identified potential annual pre-tax cost
savings of up to $335 million by 1999, attributable to, among other things,
corporate overhead elimination, leveraging of technology expenses across a
broader base, systems optimization, business line consolidation and
purchasing efficiencies. See "MANAGEMENT AND OPERATIONS AFTER THE MERGER."
(6) The Boatmen's Board took into account that Mr. Craig would be
elected or appointed Chairman of the Board of the combined company, that
Mr. Craig and four other individuals designated by Boatmen's (and
reasonably satisfactory to NationsBank) would be elected or appointed
members of the NationsBank Board and that Mr. Craig would become a member
of the Executive Committee of the NationsBank Board following consummation
of the Merger. The Boatmen's Board also considered the potential effects of
the Merger on Boatmen's employees, including the commitment of NationsBank
to locate in St. Louis the headquarters for the combined company's
operations west of the Mississippi River and for the combined company's
asset management business.
(7) The Boatmen's Board considered the complementary nature of the
businesses, business strategies and products of Boatmen's and NationsBank,
including the fact that each company is active in middle-market lending and
that both companies possess compatible and complementary management
philosophies and strategic objectives.
(8) The Boatmen's Board considered the general impact the Merger would
have on the various constituencies served by Boatmen's, including its
customers and others. The Boatmen's Board took into account that the
combined entity would be able to offer a more extensive range of products
and banking services to Boatmen's customers. The Boatmen's Board also took
into account favorable ratings of NationsBank's bank subsidiaries under the
Community Reinvestment Act.
(9) The Boatmen's Board considered information with respect to, among
other things, the historical financial results of NationsBank and the
projected financial results provided by NationsBank management and reviewed
information with respect to NationsBank's business, operations, financial
condition and future prospects. The Boatmen's Board considered the results
of the due diligence investigation
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conducted by Boatmen's management, including, among other things,
assessments of NationsBank's credit policies, asset quality, adequacy of
loan loss reserves and interest rate risk.
(10) The Boatmen's Board considered that the Merger is expected to be
tax-free for federal income tax purposes to Boatmen's shareholders to the
extent they receive shares of NationsBank stock in the Merger rather than
cash, and to be accounted for as a purchase. See "-- Certain Federal Income
Tax Consequences" and "-- Accounting Treatment."
(11) The Boatmen's Board considered the nature of, and likelihood of
obtaining, the regulatory approvals that would be required with respect to
the Merger. See "-- Regulatory Matters."
(12) The Boatmen's Board took into account the current and prospective
economic and competitive environment facing the financial services industry
generally and each of Boatmen's and NationsBank in particular.
In reaching its determination to approve the Agreement, the Boatmen's Stock
Option Agreement and the transactions contemplated thereby, the Boatmen's Board
did not assign any relative or specific weights to the various factors
considered by it, and individual directors may have given differing weights to
different factors. The foregoing discussion of the information and factors
considered by the Boatmen's Board is not intended to be exhaustive but includes
all material factors considered by the Boatmen's Board.
FOR THE REASONS DESCRIBED ABOVE, THE BOATMEN'S BOARD UNANIMOUSLY APPROVED
THE AGREEMENT AND BELIEVES THE MERGER IS FAIR TO, AND IS IN THE BEST INTERESTS
OF, ITS SHAREHOLDERS. ACCORDINGLY, THE BOATMEN'S BOARD UNANIMOUSLY RECOMMENDS
THAT HOLDERS OF BOATMEN'S COMMON STOCK AND BOATMEN'S SERIES B PREFERRED STOCK
VOTE "FOR" APPROVAL OF THE AGREEMENT.
OPINION OF NATIONSBANK'S FINANCIAL ADVISOR
Stephens has acted as financial advisor to NationsBank in connection with
the Merger. As part of its engagement, Stephens agreed, if requested by
NationsBank, to render an opinion with respect to the fairness from a financial
point of view to NationsBank of the consideration proposed to be paid by
NationsBank in the Merger to the holders of the Boatmen's Common Stock. Stephens
is a nationally recognized investment banking firm and, as part of its
investment banking activities, is regularly engaged in the valuation of
businesses and their securities in connection with mergers and acquisitions,
negotiated underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and valuations for estate,
corporate and other purposes. NationsBank selected Stephens as its financial
advisor on the basis of its experience and expertise in merger transactions, and
its reputation in the banking and investment communities. In the ordinary course
of its business, Stephens actively trades the equity securities of NationsBank
and Boatmen's for its own account and for the accounts of its customers, and,
accordingly, may at any time hold a long or short position in such securities.
In that regard, Stephens is a market maker in Boatmen's Common Stock. Currently,
certain affiliates of Stephens collectively own 3,879,528 shares of Boatmen's
Common Stock, or approximately 2.48% of the outstanding shares of Boatmen's
Common Stock and will benefit from the Merger in their capacities as holders of
Boatmen's Common Stock to the same extent as other holders of Boatmen's Common
Stock.
In connection with its engagement, a written opinion dated September 25,
1996 was delivered by Stephens to the NationsBank Board to the effect that, as
of such date and based upon and subject to certain matters, the consideration to
be paid by NationsBank in the Merger to the holders of the Boatmen's Common
Stock was fair to NationsBank from a financial point of view. Stephens has
confirmed its written opinion dated September 25, 1996, by delivery of a written
opinion dated the date of this Joint Proxy Statement-Prospectus. Stephens
updated certain of its analyses, as necessary, and reviewed the assumptions on
which such analyses were based and the factors considered in connection
therewith.
THE FULL TEXT OF STEPHENS' WRITTEN OPINION TO THE NATIONSBANK BOARD DATED
THE DATE OF THIS JOINT PROXY STATEMENT-PROSPECTUS, WHICH SETS FORTH THE
ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS OF REVIEW BY STEPHENS, IS
ATTACHED HERETO AS APPENDIX B AND IS INCORPORATED
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HEREIN BY REFERENCE AND SHOULD BE READ CAREFULLY AND IN ITS ENTIRETY IN
CONNECTION WITH THIS JOINT PROXY STATEMENT-PROSPECTUS. THE FOLLOWING SUMMARY OF
STEPHENS' OPINION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF
THE OPINION. STEPHENS' OPINION, WHICH IS ADDRESSED TO THE NATIONSBANK BOARD, IS
DIRECTED ONLY TO THE FAIRNESS FROM A FINANCIAL POINT OF VIEW TO NATIONSBANK OF
THE CONSIDERATION TO BE PAID BY NATIONSBANK IN THE MERGER TO THE HOLDERS OF THE
BOATMEN'S COMMON STOCK, DOES NOT ADDRESS ANY OTHER ASPECT OF THE PROPOSED MERGER
OR ANY RELATED TRANSACTION AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY
SHAREHOLDER AS TO HOW SUCH SHAREHOLDER SHOULD VOTE AT THE NATIONSBANK SPECIAL
MEETING.
In connection with its opinion dated the date of this Joint Proxy
Statement-Prospectus, Stephens, among other things: (i) reviewed certain
publicly available financial and other data with respect to NationsBank and
Boatmen's, including the consolidated financial statements of NationsBank and
Boatmen's for recent years and interim periods to June 1996, and certain other
relevant financial and operating data relating to NationsBank and Boatmen's made
available to Stephens from published sources and from the internal records of
NationsBank and Boatmen's; (ii) reviewed the Agreement and certain related
documents provided to Stephens by NationsBank; (iii) reviewed the current Report
on Form 8-K, filed September 6, 1996 (as amended on September 11, 1996), filed
by NationsBank with respect to the Merger; (iv) reviewed a draft of this Joint
Proxy Statement-Prospectus; (v) reviewed certain historical market prices and
trading volumes of NationsBank Common Stock and Boatmen's Common Stock as
reported by the NYSE and The Nasdaq Stock Market, respectively; (vi) compared
NationsBank and Boatmen's from a financial point of view with certain other
companies which Stephens deemed to be relevant; (vii) considered the financial
terms, to the extent publicly available, of selected business combinations in
the banking industry; (viii) reviewed and discussed with representatives of the
management of NationsBank and Boatmen's, respectively, certain information of a
business and financial nature regarding NationsBank and Boatmen's furnished to
Stephens by NationsBank, including financial forecasts relating to cost savings
and other potential synergies anticipated to result from the Merger and related
assumptions of NationsBank and Boatmen's; (ix) made inquiries regarding and
discussed the due diligence review of Boatmen's conducted by NationsBank with
senior executives of NationsBank; (x) made inquiries regarding and discussed the
Merger, the Agreement and other matters related thereto with NationsBank's
counsel; and (xi) performed such other analyses and examinations as Stephens
deemed appropriate.
In connection with its review, Stephens did not assume any obligation
independently to verify any of the foregoing information and relied on all such
information being complete and accurate in all material respects. With respect
to the financial forecasts for NationsBank and Boatmen's prepared by their
respective managements, Stephens assumed, with NationsBank's consent, for
purposes of its opinion that such forecasts were reasonably prepared on bases
reflecting at the time of preparation the best available estimates and judgments
of their respective managements, as to the cost savings, revenue enhancements
and other potential synergies (including the timing, amount and achievability
thereof) anticipated to result from the Merger, and that such forecasts provided
a reasonable basis upon which Stephens could form its opinion. Stephens also
assumed, with NationsBank's consent, that there were no material changes in
NationsBank's or Boatmen's assets, financial condition, results of operations,
business or prospects since the respective dates of their last financial
statements reviewed by Stephens and that off-balance-sheet activities of
NationsBank and Boatmen's, including derivatives and other similar financial
instruments, will not materially and adversely affect the future financial
position or results of operations of NationsBank or Boatmen's. Stephens further
assumed, with NationsBank's consent, that in the course of obtaining the
necessary regulatory and third party consents for the Merger, no restriction
will be imposed that will have a material adverse effect on the contemplated
benefits of the Merger or the transactions contemplated thereby. Stephens
further assumed, with NationsBank's consent, that the Merger will be consummated
in accordance with the terms and provisions of the Agreement, without any
amendments to, and without any waiver by NationsBank of, any of the material
conditions to its obligations thereunder. Stephens noted that it is not an
expert in the evaluation of loan portfolios for purposes of assessing the
adequacy of the allowances for losses with respect thereto and Stephens assumed,
with
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NationsBank's consent, that such allowances for each of NationsBank and
Boatmen's are in the aggregate adequate to cover such losses. In addition,
Stephens did not assume responsibility for reviewing any individual credit files
or making an independent evaluation, appraisal or physical inspection of the
assets or individual properties of NationsBank or Boatmen's, nor was Stephens
furnished with any such evaluations or appraisals. Finally, Stephens' opinion
was based on economic, monetary and market and other conditions as in effect on,
and the information made available to Stephens as of, the date thereof. Although
Stephens evaluated the consideration to be paid by NationsBank in the Merger to
the holders of the Boatmen's Common Stock from a financial point of view,
Stephens was not requested to, and did not, recommend the specific consideration
payable in the proposed Merger. No other limitations were imposed by NationsBank
on Stephens with respect to the investigations made or procedures followed by
Stephens in rendering its opinion.
Set forth below is a summary of the material analyses performed by Stephens
in connection with its opinion delivered to the NationsBank Board on September
25, 1996.
Pro Forma Dilution Analysis. Using recent analysts' estimates of national
and international brokerage firms of fully diluted EPS for NationsBank of $8.98
for 1997 (and assuming an annual growth rate of approximately 11% thereafter)
and Boatmen's of $4.10 for 1997 (and assuming an annual growth rate of
approximately 9% thereafter) and estimates as to the cost savings and other
potential synergies anticipated to result from the Merger prepared by
NationsBank's management and making certain assumptions with respect to future
share repurchases by NationsBank, interest expense with respect to any financing
of the cash portion of the consideration to be paid in the Merger, amortization
of goodwill created in the Merger and future reductions by NationsBank of its
discretionary investment securities portfolio, Stephens compared estimated
reported EPS ("Reported EPS") and estimated cash EPS ("Cash EPS") of NationsBank
Common Stock on a stand-alone basis to the estimated Reported EPS and estimated
Cash EPS of the NationsBank Common Stock for the pro forma combined company for
calendar years 1997, 1998 and 1999. These estimates assumed a price per share
for NationsBank stock of $84.85 (for purposes of estimating goodwill and
financing for the cash portion of the Merger Consideration), which average price
per share was based on the average closing price of NationsBank for the 10-day
period ending prior to the issuance of Stephens' fairness opinion delivered to
the NationsBank Board on September 25, 1996. Stephens noted that, based upon
estimates of NationsBank's management of cost savings and revenue enhancements
and operating synergies and after giving effect to certain assumptions as to,
among other things, anticipated share repurchases and the number of shares
outstanding in each respective period, the Merger could be expected to be
dilutive to NationsBank's Reported EPS in calendar year 1997 by approximately
5.2%, and accretive to NationsBank's Reported EPS in calendar years 1998 and
1999 by approximately 0.3% and 2.0%, respectively, and accretive to
NationsBank's Cash EPS in calendar years 1997, 1998, and 1999 by approximately
2.0%, 6.9% and 8.2%, respectively.
Discounted Dividend Analysis. Stephens performed a discounted dividend
analysis to determine a range of present values per share of Boatmen's Common
Stock as of the date of announcement of the Merger. For the purpose of this
analysis, such projections gave effect to estimated after-tax cost savings,
revenue enhancements, other synergies and merger expenses estimated by the
management of NationsBank, all of which were allocated to Boatmen's. The range
of present values for Boatmen's Common Stock was determined by adding (i) the
present value of the estimated future dividend stream that Boatmen's could
generate over the three and one-third-year period beginning in September 1996,
and ending in 1999, and (ii) the present value of the "terminal value" of the
Boatmen's Common Stock at the end of the year 1999. To determine a projected
dividend stream to NationsBank, Stephens assumed that all excess capital of
Boatmen's (defined for the purposes of the discounted dividend analysis as
capital in excess of that needed to maintain a 7.0% tangible equity ratio for
Boatmen's) was distributed. The earnings projections and growth rates which
formed the basis for this analysis were based on estimates published by recent
analysts' estimates of national and international brokerage firms. Stephens also
assumed that all incremental after-tax cash flow related to expected cost
savings, revenue enhancements and other synergies, will be distributed in the
form of dividends. The "terminal value" of Boatmen's Common Stock at the end of
the three and one third year period was determined by applying two projected
price-to-earnings multiples (10x and 12x) to projected net income for Boatmen's
for the year 1999. The dividend stream and terminal values were discounted to
present values using discount rates of 11% and 13%, which Stephens viewed as the
appropriate discount rate range for Boatmen's
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based on the historical cost of equity and required market returns. These
analyses showed a range of present values from $55.37 to $67.31 per fully
diluted share for Boatmen's Common Stock. The discounted dividend analysis is a
widely used valuation methodology. The results of such methodology are highly
dependent upon the numerous assumptions that must be made, including asset and
earnings growth rates, dividend payout rates, terminal values and discount
rates.
Analysis of Selected Comparable Bank Merger Transactions. Stephens
reviewed the consideration paid in the following 18 transactions announced since
1994 (excluding "mergers of equals") with transaction values greater than $500
million: Crestar Financial Corp./Citizens Bancorp; Wells Fargo and Co./First
Interstate; Bank of Boston Corp./BayBanks, Inc.; Regions Financial Corp./First
National Bancorp.; National Westminster/Citizens First Bancorp; CoreStates
Financial/Meridian Bancorp; UJB Financial/Summit Bancorp; NationsBank
Corporation/Bank South Corporation; National City Corporation/Integra Financial;
Boatmen's Bancshares/Fourth Financial; First Bank System/FirsTier Financial; PNC
Bank Corporation/Midlantic Corporation; First Union Corporation/First Fidelity
Bancorporation; US Bancorp/West One Bancorp; Fleet Financial Group/Shawmut
National; National Australia Bank/Michigan National Corporation; Boatmen's
Bancshares/Worthen Banking Corp.; and BankAmerica/Continental Bank
(collectively, the "Comparable Transactions"). For each company merged or to be
merged in such transactions, Stephens compiled figures illustrating, among other
things, transaction price to latest 12 months adjusted earnings per share,
transaction price to book value, transaction price to tangible book value, and
the ratio of premium over tangible book value to core deposits. For purposes of
this analysis, latest twelve months' earnings per share (before extraordinary
items) were adjusted to exclude certain non-recurring income and expense items.
The figures for the Comparable Transactions announced since September of
1995, and since 1994 are as follows: (i) a median ratio of transaction price to
latest 12 months' adjusted earnings per share of 17.9x and 14.0x, respectively;
(ii) a median ratio of transaction price to book value of 2.2x and 2.1x,
respectively; (iii) a median ratio of transaction price to tangible book value
of 2.4x and 2.2x, respectively; (iv) a median ratio of premium over tangible
book value to core deposits of 16.7% and 14.3%. In comparison, based upon an
assumed Exchange Ratio of 0.6525 of a share of NationsBank Common Stock for each
share of Boatmen's Common Stock, representing shares of NationsBank Common Stock
with a value of $60.27 per share of Boatmen's Common Stock (based on the $92 3/8
per share closing price of NationsBank Common Stock as reported on the NYSE on
August 29, 1996), the consideration to be paid to the holders of Boatmen's
Common Stock represented a ratio of transaction price to latest 12 months
adjusted earnings per share of 17.3x, a ratio of transaction price to book value
of 2.7x, a ratio of transaction price to tangible book value of 3.0x and a ratio
of tangible premium to core deposits of 21.0%. For deals consisting partly or
completely in stock, stock prices on the trading day prior to announcement of
the deal were used.
No other company or transaction used in the above analysis as a comparison
is identical to NationsBank, Boatmen's or the proposed Merger. Accordingly, an
analysis of the results of the foregoing is not mathematical; rather, it
involves complex considerations and judgments concerning differences in
financial and operating characteristics of the companies and other factors that
could affect the acquisition or public trading multiples of the companies to
which NationsBank, Boatmen's and the proposed Merger are being compared.
Other Analysis. Stephens also reviewed selected investment research
reports on Boatmen's and NationsBank. In addition, Stephens prepared an overview
of the historical financial performance of Boatmen's, analyzed its deposit
market share, its loan portfolio, a break-down by industry classification of its
commercial lending, as well as a history of its non-performing assets.
The foregoing is a summary of the material analyses performed by Stephens
in connection with its opinion delivered to the NationsBank Board on September
25, 1996. The summary set forth above does not purport to be a complete
description of the analyses performed by Stephens. The preparation of a fairness
opinion is not necessarily susceptible to partial analysis or summary
description. Stephens believes that its analyses and the summary set forth above
must be considered as a whole and that selecting portions of its analyses and of
the factors considered, without considering all analyses and factors, would
create an incomplete view of the process underlying the analyses. In addition,
Stephens may have given various analyses
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more or less weight than other analyses, and may have deemed various assumptions
more or less probable than other assumptions, so that the ranges of valuations
resulting from any particular analysis described above should not be taken to be
Stephens' view of the actual values of NationsBank, Boatmen's or the combined
company. The fact that any specific analysis has been referred to in the summary
above is not meant to indicate that such analysis was given greater weight than
any other analysis.
In performing its analyses, Stephens made numerous assumptions with respect
to industry performance, regulatory, general business and economic conditions
and other matters, many of which are beyond the control of NationsBank and
Boatmen's. The analyses performed by Stephens are not necessarily indicative of
actual values or actual future results, which may be significantly more or less
favorable than those suggested by such analyses. Such analyses were prepared
solely as part of Stephens' analysis of the fairness of the consideration to be
paid by NationsBank from a financial point of view in connection with the
delivery of Stephens' opinion. The analyses do not purport to be appraisals or
to reflect the prices at which a company might actually be sold or the prices at
which any securities may trade at the present time or at any time in the future.
Stephens used in its analyses the analyst estimates of certain national and
international brokerage firms for NationsBank and Boatmen's and projections
prepared by NationsBank and Boatmen's management as to the cost savings and
other potential synergies anticipated to result from the Merger. Such
projections and estimates are based on numerous variables and assumptions which
are inherently unpredictable and must be considered not certain of occurrence as
projected. Accordingly, actual results could vary significantly from those set
forth in such projections.
Pursuant to the terms of Stephens' engagement, NationsBank has agreed to
pay Stephens a fee equal to $9 million of which $3 million was payable upon the
signing of the Agreement and the balance is payable upon completion of the
Merger. NationsBank also has agreed to reimburse Stephens for its reasonable
out-of-pocket expenses, including the fees and expenses of Stephens' legal
counsel. NationsBank has agreed to indemnify Stephens, its affiliates, and their
respective partners, directors, officers, agents, consultants, employees and
controlling persons against certain liabilities, including liabilities under the
federal securities laws.
Stephens has performed various financial advisory and investment banking
services for NationsBank and Boatmen's in the past, for which Stephens has
received compensation, and may provide such services to NationsBank in the
future.
OPINION OF BOATMEN'S FINANCIAL ADVISOR
Goldman Sachs was retained by Boatmen's to act as its financial advisor in
connection with a possible merger or sale of all or a portion of Boatmen's. At a
meeting of the Boatmen's Board held on August 28, 1996, Goldman Sachs made a
presentation on financial aspects of the Merger and transaction proposals
submitted to the Boatmen's Board by two other banking organizations. At the
meeting of the Boatmen's Board held on August 29, 1996 Goldman Sachs delivered
to the Boatmen's Board its written opinion dated as of August 29, 1996 to the
effect that, as of the date of such opinion, based on the matters set forth in
such opinion, the proposed stock consideration and cash consideration to be
received for shares of Boatmen's Common Stock pursuant to the Agreement was fair
to the holders of such shares. Goldman Sachs has confirmed its August 29, 1996
opinion by delivery of its written opinion to the Boatmen's Board, dated the
date of this Joint Proxy Statement-Prospectus, stating that, as of the date
hereof and based on the matters set forth in such opinion, the proposed stock
consideration and cash consideration to be received for shares of Boatmen's
Common Stock pursuant to the Agreement is fair to the holders of such shares.
Goldman Sachs has consented to the inclusion of its opinion, dated the date
hereof, in this Joint Proxy Statement-Prospectus (the "Goldman Sachs Opinion").
THE FULL TEXT OF THE GOLDMAN SACHS OPINION, DATED THE DATE OF THIS JOINT
PROXY STATEMENT-PROSPECTUS, WHICH SETS FORTH THE ASSUMPTIONS MADE, PROCEDURES
FOLLOWED, MATTERS CONSIDERED AND LIMITS ON THE REVIEW UNDERTAKEN, IS ATTACHED AS
APPENDIX C TO THIS JOINT PROXY STATEMENT-PROSPECTUS AND IS INCORPORATED HEREIN
BY REFERENCE. THE DESCRIPTION OF
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THE GOLDMAN SACHS OPINION SET FORTH HEREIN IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO APPENDIX C. THE GOLDMAN SACHS OPINION IS SUBSTANTIALLY IDENTICAL TO
THE OPINION DELIVERED TO THE BOATMEN'S BOARD DATED AUGUST 29, 1996. BOATMEN'S
SHAREHOLDERS ARE URGED TO READ THE GOLDMAN SACHS OPINION IN ITS ENTIRETY.
Goldman Sachs is a nationally recognized investment banking firm and was
selected by Boatmen's based on the firm's reputation and experience in
investment banking in general, its recognized expertise in the valuation of
banking businesses and because of its familiarity with, and prior work for,
Boatmen's. Goldman Sachs, as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes.
In connection with rendering its opinions dated August 29, 1996 and the
date hereof, Goldman Sachs, among other things: (i) reviewed the Agreement; (ii)
reviewed Annual Reports to Stockholders and Annual Reports on Form 10-K of
Boatmen's and NationsBank for each of the five years in the period ending
December 31, 1995, as well as certain interim reports to stockholders and
Quarterly Reports on Form 10-Q of Boatmen's and NationsBank and the Boatmen's
Form 8-K filed May 3, 1996, and certain other communications from Boatmen's and
NationsBank to their respective stockholders; (iii) reviewed certain internal
financial analyses and forecasts for Boatmen's and NationsBank prepared by their
respective managements, including analyses and forecasts of certain cost
savings, operating efficiencies, revenue effects and financial synergies
expected by NationsBank to be achieved as a result of the Merger and including
share repurchase and capital management policies; (iv) discussed with members of
the senior managements of Boatmen's and NationsBank the past and current
business operations, regulatory relationships, financial conditions and future
prospects of their respective companies, as well as each senior management's
assessment of the strategic fit and implications of the Merger, and related
synergies; (v) reviewed with senior management of Boatmen's the results of
Boatmen's due diligence examination of NationsBank; (vi) reviewed the reported
price and trading activity for the Boatmen's Common Stock and NationsBank Common
Stock; (vii) compared certain financial and stock market information for
Boatmen's and NationsBank with similar information for certain other companies,
the securities of which are publicly traded; (viii) reviewed the financial terms
of certain recent business combinations in the commercial banking industry; and
(ix) performed such other studies and analyses as it deemed appropriate. In
addition, in connection with rendering the Goldman Sachs Opinion, Goldman Sachs
reviewed the Registration Statement of which this Joint Proxy
Statement-Prospectus is a part.
In connection with rendering the Goldman Sachs Opinion, as set forth
therein, Goldman Sachs relied without independent verification upon the accuracy
and completeness of all the financial and other information reviewed by it or
conveyed to it in discussions with senior managements of Boatmen's and
NationsBank for purposes of rendering its opinion. With Boatmen's consent,
Goldman Sachs has assumed that the financial forecasts (including, without
limitation, certain cost savings, operating efficiencies, revenue enhancements
and financial synergies to be realized from the Merger, share repurchase and
capital management policies, and information regarding under-performing and
non-performing assets and net charge-offs) were reasonably prepared on a basis
reflecting the best currently available judgments and estimates of Boatmen's and
NationsBank, and that such forecasts would be realized in the amounts and at the
times contemplated thereby. Goldman Sachs is not an expert in the evaluation of
loan and lease portfolios for purposes of assessing the adequacy of the
allowances for losses with respect thereto, and has assumed, with Boatmen's
consent, that such allowances for each of Boatmen's and NationsBank are in the
aggregate adequate to cover all such losses. In addition, Goldman Sachs has not
reviewed individual credit files nor has it made an independent evaluation or
appraisal of the assets and liabilities of Boatmen's and NationsBank or any of
their respective subsidiaries and has not been furnished with any such
evaluation or appraisal. Goldman Sachs has also assumed, with Boatmen's consent,
that obtaining any necessary regulatory approvals and third party consents for
the Merger or otherwise will not have an adverse effect on Boatmen's,
NationsBank or the combined company pursuant to the Merger.
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The following is a summary of the material financial analyses presented by
Goldman Sachs to the Board in connection with providing its opinion to the Board
on August 29, 1996, and does not purport to be a complete description of the
analyses performed by Goldman Sachs. Goldman Sachs used substantially the same
types of financial analyses in preparing its written opinion dated as of the
date of this Joint Proxy Statement-Prospectus as it used in providing its
opinion dated as of August 29, 1996.
Summary of Terms of Proposed Transaction. Goldman Sachs reviewed the terms
of the proposed Merger, including the form of consideration offered, the
expected method of accounting, the Exchange Ratio, the share price of
NationsBank as of August 27, 1996, and the resulting indicated value of the
Merger. The proposed form of consideration offered in connection with the Merger
permitted the opportunity for each holder of Boatmen's Common Stock to receive
NationsBank Common Stock, cash, or a combination thereof, subject to the
limitations described under "-- The Cash Election." The proposed method of
accounting for the Merger was the purchase method. The indicated value for the
Merger was $61.09 per share of Boatmen's Common Stock, determined by multiplying
the Exchange Ratio by the closing price on the NYSE of the NationsBank Common
Stock on August 27, 1996 (the "Indicated Value"). The Indicated Value therefore
was necessarily dependent on the closing price of the NationsBank Common Stock
at a specific time. The Indicated Value reflects a premium over the closing
price of the Boatmen's Common Stock on August 27, 1996 of 40 percent.
In addition to reviewing the Indicated Value resulting from the Merger, the
analyses described indicated values resulting from the Merger expressed as
multiples of estimates of Boatmen's 1996 and 1997 earnings, as well as multiples
of various measures of Boatmen's book value. In performing these analyses,
Goldman Sachs used estimates based upon the most recent median earnings
estimates published by IBES and the earnings estimates prepared by Boatmen's
management (the "Boatmen's Estimates"). IBES is a data service that monitors and
publishes compilations of earnings estimates by selected research analysts
regarding companies of interest to institutional investors. On the relevant
date, IBES reflected earnings estimates of approximately 26 analysts for
Boatmen's and 37 analysts for NationsBank. Under these analyses the Indicated
Value reflected (i) a multiple of 17.3 times Boatmen's earnings for the twelve
months ending June 30, 1996, (ii) a multiple of 16.5 times the IBES median
estimate of Boatmen's 1996 earnings, and (iii) a multiple of 17.3 times the
Boatmen's Estimates of Boatmen's 1996 earnings. The Indicated Value likewise
reflected (i) a multiple of 15.3 times the IBES median estimate of Boatmen's
1997 earnings and (ii) a multiple of 15.6 times the Boatmen's Estimates of
Boatmen's 1997 earnings. In addition, the Indicated Value reflected a multiple
of 29.5 times the Boatmen's Estimates of Boatmen's 1997 earnings after taking
into account the estimated amortization of $6.8 billion of new goodwill created
by the purchase method of accounting for the Merger. The Indicated Value also
reflected (i) a multiple of 2.7 times Boatmen's stated book value, (ii) a
multiple of 3.0 times Boatmen's tangible book value, and (iii) a multiple of 3.8
times Boatmen's adjusted tangible book value (adjusted to reflect a 6 percent
tangible common equity to tangible assets ratio).
Goldman Sachs also performed a pro forma analysis of certain other
financial aspects of the Merger, calculating the pro forma market capitalization
of the combined entity to be $33.1 billion and the pro forma assets of the
combined entity to be $231.5 billion, assuming that 60% of the shares of
Boatmen's Common Stock are converted in the Merger into NationsBank Common Stock
and that the remainder of the shares of Boatmen's Common Stock are converted in
the Merger into cash at $61.09 per share. Goldman Sachs analyzed the pro forma
impact on estimated earnings per share of the combined entity and estimated that
holders of the shares of Boatmen's Common Stock would own 17.7 percent of the
combined entity resulting from the Merger. The pro forma analysis assumed that
approximately $335 million in cost savings, as well as certain additional
operating efficiencies, revenue enhancements and financial synergies, would be
realized from the Merger. See "MANAGEMENT AND OPERATIONS AFTER THE MERGER."
Indicated annual dividends per share of Boatmen's Common Stock were estimated to
be $1.72 for the combined entity.
Selected Company Analysis. Based on publicly available information and
IBES earnings estimates, Goldman Sachs reviewed and compared actual and
estimated selected financial, operating and stock market information and
financial ratios of Boatmen's and NationsBank and a group of 11 additional
banking organizations consisting of Banc One Corporation; BankAmerica
Corporation; Chase Manhattan Corporation; First Bank System, Inc.; First Chicago
NBD Corporation; First Union Corporation; KeyCorp; Norwest
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Corporation; PNC Bank Corp.; SunTrust Banks, Inc.; and Wells Fargo & Company
(the "Selected Banks"). Such information and ratios included, among other
things, equity market capitalization, total assets, common equity ratios,
price-earnings ratios, price to book value per share ratios, price to tangible
book value per share ratios, dividend yields, efficiency ratios and certain
asset quality data.
Goldman Sachs noted for the Boatmen's Board that, among other things: (i)
Boatmen's and NationsBank had ratios of common equity to assets and tangible
common equity to tangible assets as of June 30, 1996, of 8.58 percent and 7.84
percent, respectively, in the case of Boatmen's, and 7.23 percent and 6.35
percent, respectively, in the case of NationsBank, as compared with median
common equity to assets and tangible common equity to tangible assets ratios for
the Selected Banks as of June 30, 1996, of 7.6 percent and 6.31 percent,
respectively; (ii) Boatmen's and NationsBank had ratios of reserves to
nonperforming loans as of June 30, 1996 of 274 percent in the case of Boatmen's
and 265 percent in the case of NationsBank, as compared with a median reserves
to nonperforming loans ratio for the Selected Banks as of June 30, 1996 of 309
percent, (iii) Boatmen's and NationsBank had return on average assets and return
on average common equity for the latest 12 months ending June 30, 1996, of 1.27
percent and 15 percent, respectively, in the case of Boatmen's, and 1.15 percent
and 16.9 percent, respectively, in the case of NationsBank, as compared with a
median return on assets and median return on common equity for the Selected
Banks for the latest 12 months ending June 30, 1996, of 1.25 percent and 15.5
percent, respectively; and (iv) Boatmen's and NationsBank had noninterest income
to total revenues ratios and efficiency ratios (defined as noninterest expenses
divided by net interest income plus noninterest income, before taking into
account any goodwill amortization) for the latest 12 months ending June 30,
1996, of 34 percent and 58 percent, respectively, in the case of Boatmen's, and
37 percent and 57 percent, respectively, in the case of NationsBank, as compared
with a median noninterest income to total revenues ratio and a median efficiency
ratio for the Selected Banks for the latest 12 months ending June 30, 1996, of
36 percent and 59 percent, respectively.
Selected Transaction Analysis. Goldman Sachs reviewed certain information
relating to 16 announced or completed bank mergers since January 1995 in which
the aggregate consideration paid was in excess of $1 billion (the "Selected Bank
Mergers"). The Selected Bank Mergers were: First Interstate/Wells Fargo; the
U.S. banking business of National Westminster/Fleet Financial; the U.S.
subsidiary of Bank of Ireland/Royal Bank of Scotland; BayBanks/Bank of Boston;
Meridian Bancorp/CoreStates Financial; Summit Bancorp/ UJB Financial; Bank
South/NationsBank; Chase Manhattan Corp./Chemical Banking; Integra Financial/
National City Corp.; Fourth Financial/Boatmen's Bancshares; First Chicago/NBD
Bancorp; Midlantic/PNC Bank; First Fidelity/First Union; West One Bancorp/U.S.
Bancorp; Shawmut National/Fleet Financial; and Michigan National/National
Australia Bank. Such analysis indicated that the high, low and median values of
the premium paid as a percentage of market capitalization (calculated prior to
the public announcement of a possible acquisition of the acquired banking
organization or the acquiror's interest in the transaction) were 46 percent, 3
percent and 22.9 percent, respectively, as compared to a premium of 40 percent
to be paid pursuant to the Merger. Such analysis also indicated that the high,
low and median multiples of per share consideration paid to tangible book value
per share and to the latest 12 month earnings per share for the Selected Bank
Mergers were (i) 3.77 times, 1.4 times and 2.15 times, and (ii) 21.5 times, 8.8
times and 14.1 times, respectively, as compared with multiples of per share
consideration to tangible book value per share, as of June 30, 1996, and to
Boatmen's earnings per share, for the twelve months ending June 30, 1996, for
the Merger of 3.02 times and 17.3 times, respectively. In addition, Goldman
Sachs reviewed certain pending and completed merger transactions, including a
review of the projected cost savings in each transaction, the period anticipated
to achieve such cost savings, the resulting implied net present value of such
cost savings, and a comparison of such net present value of cost savings as a
percentage of market value to the premium to market value received by target
shareholders in such merger transactions.
Goldman Sachs also compared selected indicated values estimated to result
from the Merger with equivalent measures resulting from the merger between Wells
Fargo & Company and First Interstate Bancorp. The Indicated Value reflected a
premium over the closing price of the Boatmen's Common Stock on August 27, 1996
of 40 percent for the Merger as compared with an equivalent premium of 44
percent for the merger between Wells Fargo & Company and First Interstate
Bancorp calculated as of October 17, 1995 (the date before the initial public
announcement of the first offer by Wells Fargo & Company for First Interstate
Bancorp) and January 24, 1996 (the date immediately prior to the announcement of
the proposed merger
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between Wells Fargo & Company and First Interstate Bancorp). In addition, the
Indicated Value reflected a multiple of 17.3 times Boatmen's earnings for the
twelve months ending June 30, 1996, compared with an equivalent multiple of 13.8
times for the merger between Wells Fargo & Company and First Interstate Bancorp.
The Indicated Value reflected multiples of 2.7, 3.0 and 3.8 times Boatmen's
stated book value, tangible book value and adjusted tangible book value (as
adjusted to reflect a 6 percent tangible common equity to tangible assets
ratio), respectively, compared with multiples of 3.0, 3.8 and 3.5 times the
stated book value, tangible book value and adjusted tangible book value (as
adjusted to reflect a 6 percent tangible common equity to tangible assets
ratio), respectively, of First Interstate Bancorp reflected by the consideration
paid pursuant to the merger between Wells Fargo & Company and First Interstate
Bancorp.
Dividend Discount Analysis. Using a discounted dividend analysis, Goldman
Sachs estimated the present value of the future dividend streams and terminal
values that each of Boatmen's and the combined entity resulting from the Merger
could produce over a three and one-half year period from June 30, 1996 to
December 31, 1999. The estimate of Boatmen's future dividend stream and terminal
value assumed a 13.9 percent earnings growth rate for the three and one-half
year period, equal to the growth rate implicit in Boatmen's Estimates of
Boatmen's earnings for the years 1996 through 1999. The estimates of the future
dividend stream and terminal value produced by the combined entity resulting
from the Merger assumed an earnings growth rate for the three and one-half year
period equal to the IBES median forecast growth rate of 11.6 percent. Using an
assumed discount rate of 12.5 percent, Goldman Sachs calculated net present
values ranging from $42 to $49 for the estimated dividend stream and terminal
value produced by Boatmen's over such three and one-half year period and a net
present value of $61 for the pro forma combined entity resulting from the Merger
over such period using the IBES median forecast growth rate. Using an assumed
discount rate of 15 percent, Goldman Sachs calculated net present values ranging
from $39 to $46 for the estimated dividend stream and terminal value produced by
Boatmen's over such three and one-half year period and a net present value of
$57 for the pro forma combined entity resulting from the Merger over such period
using the IBES median forecast growth rate. The analysis assumed dividend payout
ratios approximately equal to Boatmen's and NationsBank's existing dividend
payout ratios, and assumed terminal values of each dividend stream equal to
various multiples of estimated earnings for the twelve months ending December
31, 1999.
Stock Trading Analysis. Goldman Sachs reviewed and analyzed the historical
trading prices for the Boatmen's Common Stock and the NationsBank Common Stock
on a daily basis from August 26, 1995 to August 26, 1996, on a weekly basis from
August 23, 1993 to August 23, 1996, and on a monthly basis from July 31, 1991 to
August 26, 1996. Goldman Sachs also compared the historical trading prices of
each of the Boatmen's Common Stock and the NationsBank Common Stock with a
composite index of selected regional banks on a daily basis from August 26, 1995
to August 26, 1996, on a weekly basis from August 23, 1993 to August 23, 1996,
and on a monthly basis from July 31, 1991 to August 26, 1996. In addition,
Goldman Sachs reviewed and analyzed the four-year price to earnings ratio
history of each of the Boatmen's Common Stock and the NationsBank Common Stock
from June 1992 through July 1996.
Pro Forma Analysis. Goldman Sachs prepared a pro forma summary of selected
income statement and balance sheet items for 1997, 1998 and 1999 of the combined
entity resulting from the Merger as if the Merger had been consummated as of
December 31, 1996, using both IBES median earnings growth forecasts and
NationsBank management's earnings growth forecasts. In addition, Goldman Sachs
analyzed, as of July 30, 1996, the pro forma deposit market share of the
combined entity in the states in which the combined entity would take deposits.
Other Analyses. Goldman Sachs also reviewed, among other things, selected
investment research reports on, and earnings estimates for, Boatmen's and
NationsBank and analyzed available information regarding the ownership of the
Boatmen's Common Stock and the NationsBank Common Stock. In addition, Goldman
Sachs prepared a business line overview and a summary of the historical share
repurchase programs of NationsBank. Goldman Sachs prepared a summary of the
historical financial performance of NationsBank, summarized NationsBank
management estimates of future financial performance based on the NationsBank
Strategic Plan for the years 1996 through 1999, and analyzed its deposit market
share and its business mix and prepared a chronology of NationsBank's recent
involvement in mergers and similar transactions involving aggregate
consideration in excess of $100 million.
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The summary set forth above describes the material analyses that Goldman
Sachs performed and presented to the Boatmen's Board on August 29, 1996, and
does not purport to be a complete description of such analyses. The preparation
of a fairness opinion is a complex process and is not necessarily susceptible to
partial analysis or a summary description.
Goldman Sachs believes that its analyses must be considered as a whole and
that selecting portions of its analyses without considering all factors and
analyses would create an incomplete view of the analyses and processes
underlying its opinion. In its analyses, Goldman Sachs relied upon numerous
assumptions made by Boatmen's and NationsBank with respect to industry
performance, general business and economic conditions, and other matters, many
of which are beyond the control of Boatmen's or NationsBank. Analyses based upon
forecasts of future results are not necessarily indicative of actual values,
which may be significantly more or less favorable than suggested by such
analyses. No company or transaction used as a comparison in the analyses is
identical to Boatmen's or NationsBank or to the Merger. Additionally, estimates
of the value of businesses do not purport to be appraisals or necessarily
reflective of the prices at which businesses actually may be sold. Because such
estimates are inherently subject to uncertainty, none of the Boatmen's Board,
Goldman Sachs, nor any other person assumes responsibility for the accuracy of
such estimates. Goldman Sachs analyses were prepared solely for purposes of its
opinions rendered August 29, 1996 and the date of this Joint Proxy
Statement-Prospectus, provided to the Boatmen's Board regarding the fairness of
the proposed stock consideration and cash consideration to be received for
shares of Boatmen's Common Stock pursuant to the Merger to holders of such
shares, and do not purport to be appraisals or necessarily reflect the prices at
which Boatmen's or its securities actually may be sold.
For the services of Goldman Sachs as financial advisor to Boatmen's in
connection with the Merger, Boatmen's has agreed to pay Goldman Sachs a minimum
fee of $1 million payable upon execution by Boatmen's of an engagement letter
with Goldman Sachs on August 23, 1996, an additional fee of $1 million payable
upon the delivery of its opinion on August 29, 1996, and a transaction fee equal
to 0.2 percent (less the $2 million in fees already payable to Goldman Sachs as
described at the beginning of this paragraph) of the aggregate consideration
paid in the event that the purchase of 50 percent or more of the outstanding
common stock or the assets (based on the book value thereof) of Boatmen's is
accomplished in one or a series of transactions. Boatmen's has also agreed to
pay Goldman Sachs its reasonable out-of-pocket expenses, including the
reasonable fees and disbursements of its counsel, and to indemnify Goldman Sachs
against certain liabilities, including certain liabilities arising under the
federal securities laws. Goldman Sachs has provided certain investment banking
and advisory services to Boatmen's from time to time, for which it has received,
and will receive, customary compensation, including acting as financial advisor
for Boatmen's in connection with the Agreement. In addition, Goldman Sachs has
provided, and may provide in the future, certain investment banking services to
NationsBank, for which it has received, and will receive, customary
compensation. Recent investment banking services provided by Goldman Sachs to
NationsBank include services relating to certain debt offerings and derivative
swaps in 1996, 1995 and 1994 and a stock repurchase program in 1994.
Goldman Sachs has advised Boatmen's that, in the ordinary course of its
business as a full-service securities firm, Goldman Sachs may, subject to
certain restrictions, actively trade the equity and/or debt securities of
Boatmen's and/or of NationsBank for its own account or for the accounts of its
customers, and, accordingly, may at any time hold a long or short position in
such securities.
THE EFFECTIVE TIME
Subject to the satisfaction or waiver of certain conditions contained in
the Agreement, the parties will cause the Effective Time to occur on (i) the
third business day after the last to occur of the satisfaction or waiver of the
following conditions: (a) the receipt of the required shareholder approvals of
NationsBank and Boatmen's, (b) the receipt of all regulatory approvals required
to consummate the transactions contemplated by the Agreement, provided that such
approvals shall not be deemed to have been received if they contain conditions
or restrictions which the NationsBank Board or the Boatmen's Board reasonably
determines will have a material adverse effect on NationsBank or the Surviving
Corporation, (c) the receipt of all consents or approvals of third parties
(other than regulatory authorities) required for consummation of the Merger
other
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than those that, if not received, would not reasonably be likely to have a
material adverse effect on Boatmen's or NationsBank, and (d) the listing on the
NYSE of the NationsBank Common Stock to be issued in the Merger and on The
Nasdaq Stock Market of the NationsBank Depositary Shares to be issued in the
Merger; or (ii) such other date to which the parties may agree in writing.
At the Effective Time, holders of Boatmen's stock will cease to be, and
will have no rights as, shareholders of Boatmen's, other than to receive (i) any
dividend or other distribution with respect to such Boatmen's stock with a
record date occurring prior to the Effective Time and (ii) the Merger
Consideration. After the Effective Time, there will be no transfers on the stock
transfer books of Boatmen's or the Surviving Corporation of shares of Boatmen's
stock.
THE CASH ELECTION
Holders of Boatmen's Common Stock may elect to receive cash consideration
in the Merger in accordance with the election procedures set forth in the
Agreement. Holders who make a cash election will receive an amount in cash (the
"Per Share Cash Consideration") in respect of each share of Boatmen's Common
Stock that is so converted equal to the Exchange Ratio times the average of the
closing sale prices for NationsBank Common Stock as reported on the NYSE
Composite Transactions reporting system (as reported in The Wall Street Journal
or, in the absence thereof, by another authoritative source) during the ten
consecutive trading day period during which the shares of NationsBank Common
Stock are traded on the NYSE ending on the tenth calendar day immediately prior
to the anticipated Effective Time. The aggregate amount of cash that will be
paid in the Merger to satisfy such elections (including cash to be paid with
respect to Dissenting Shares) will not exceed 40% of the aggregate consideration
paid in exchange for shares of Boatmen's Common Stock in the Merger (the "Cash
Amount").
An election form and other appropriate and customary transmittal materials
(which will specify that delivery will be effected, and risk of loss and title
to the certificates representing (or, if after the Effective Time, formerly
representing) shares of Boatmen's Common Stock (the "Boatmen's Certificates")
will pass, only upon proper delivery of such Boatmen's Certificates to the
Exchange Agent), in such form as NationsBank and Boatmen's will mutually agree
(an "Election Form"), will be mailed 25 days prior to the anticipated Effective
Time or on such other date as Boatmen's and NationsBank will mutually agree (the
"Mailing Date") to each holder of record of Boatmen's Common Stock as of five
business days prior to the Mailing Date (the "Election Form Record Date").
Each Election Form will permit a holder (or the beneficial owner through
appropriate and customary documentation and instructions) of Boatmen's Common
Stock to elect to receive cash with respect to all or a portion of such holder's
Boatmen's Common Stock (shares as to which the cash election is made being "Cash
Election Shares").
Any shares of Boatmen's Common Stock with respect to which the holder (or
the beneficial owner, as the case may be) has not submitted to the Exchange
Agent an effective, properly completed Election Form on or before 5:00 p.m. on
the 20th day following the Mailing Date (or such other time and date as
NationsBank and Boatmen's may mutually agree) (the "Election Deadline") will be
converted into NationsBank Common Stock at the Exchange Ratio (such shares being
"No Election Shares").
NationsBank will make available one or more Election Forms as may be
reasonably requested by all persons who become holders (or beneficial owners) of
Boatmen's Common Stock between the Election Form Record Date and the close of
business on the business day prior to the Election Deadline.
Any such election will have been properly made only if the Exchange Agent
will have actually received a properly completed Election Form by the Election
Deadline. An Election Form will be deemed properly completed only if accompanied
by one or more Boatmen's Certificates (or customary affidavits and
indemnification regarding the loss or destruction of such certificates or the
guaranteed delivery of such certificates) representing all shares of Boatmen's
Common Stock covered by such Election Form, together with duly executed
transmittal materials included in the Election Form. Any Election Form may be
revoked or changed by the person submitting such Election Form at or prior to
the Election Deadline. In the event an
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Election Form is revoked prior to the Election Deadline, the shares of Boatmen's
Common Stock represented by such Election Form will become No Election Shares
and NationsBank will cause the relevant Boatmen's Certificates to be promptly
returned without charge to the person submitting the Election Form upon written
request to that effect from the person who submitted the Election Form. Subject
to the terms of the Agreement and of the Election Form, the Exchange Agent will
have reasonable discretion to determine whether any election, revocation or
change has been properly or timely made and to disregard immaterial defects in
the Election Forms, and any good faith decisions of the Exchange Agent regarding
such matters will be binding and conclusive. Neither NationsBank nor the
Exchange Agent will be under any obligation to notify any person of any defect
in an Election Form. Dissenting Shares will be treated as Cash Election Shares
for the purposes of the determinations set forth in the next paragraph (but will
not be converted into the right to receive the Per Share Cash Consideration and
will instead be treated as set forth in "-- Dissenting Shareholders").
Within five business days after the Election Deadline, unless the Effective
Time has not yet occurred, in which case as soon thereafter as practicable,
NationsBank will cause the Exchange Agent to effect the allocation among the
holders of Boatmen's Common Stock in accordance with the Election Forms as
follows: (1) if the amount of cash that would be issued upon conversion in the
Merger of the Cash Election Shares is less than or equal to the Cash Amount,
then: (a) all Cash Election Shares will be converted into the right to receive
the Per Share Cash Consideration, and (b) the No Election Shares will be
converted into the right to receive the Per Share Stock Consideration; and (2)
if the amount of cash that would be issued upon the conversion of the Cash
Election Shares is greater than the Cash Amount, then: (a) all No Election
Shares will be converted into the right to receive the Per Share Stock
Consideration, (b) the Exchange Agent will select from among the holders of Cash
Election Shares (other than Dissenting Shares), by a process described below, a
sufficient number of such holders (the "Stock Designees") such that the amount
of cash that will be issued in the Merger equals as closely as practicable the
Cash Amount, and all shares held by the Stock Designees will be converted into
the right to receive the Per Share Stock Consideration, and (c) the Cash
Election Shares not held by Stock Designees will be converted into the right to
receive the Per Share Cash Consideration. For purposes of determining of whether
the 40% threshold has been met, each share of Boatmen's Common Stock that is a
Dissenting Share and each share of NationsBank Common Stock will be valued at
the Per Share Cash Consideration, each share of Boatmen's Preferred Stock that
is a Dissenting Share will be valued at its respective liquidation value, and
each Boatmen's Depositary Share that is a Dissenting Share will be valued at
one-sixteenth the liquidation value of a share of Boatmen's Series A Preferred
Stock.
In the event the Exchange Agent must select Stock Designees, it will first
eliminate from consideration all holders of Boatmen's Common Stock who elected
cash consideration and who hold 99 shares or fewer ("Odd Lot Holders"), and all
such holders will receive the Per Share Cash Consideration with respect to their
shares of Boatmen's Common Stock. The Exchange Agent shall then randomly select
from the remaining holders of Cash Election Shares holders to be Stock Designees
until the number of shares of Boatmen's Common Stock that remain Cash Election
Shares is such that the cash to be paid with respect to such shares in the
Merger (as well as cash expected to be paid with respect to Dissenting Shares)
equals as closely as practicable the Cash Amount. In the event that the amount
of cash to be paid with respect to Cash Election Shares held by Odd Lot Holders
(together with cash expected to be paid with respect to shares of Boatmen's
Common Stock that are Dissenting Shares) would exceed the Cash Amount, Odd Lot
Holders will be selected at random to be Stock Designees until the cash to be
paid with respect to Cash Election Shares in the Merger (as well as cash
expected to be paid with respect to Dissenting Shares) equals as closely as
practicable the Cash Amount. All decisions by the Exchange Agent made pursuant
to such process shall be final and binding.
EXCHANGE OF CERTIFICATES
At or prior to the Effective Time, NationsBank will deposit, or will cause
to be deposited, with the Exchange Agent, certificates representing the shares
of NationsBank Common Stock ("NationsBank Certificates") and an estimated amount
of cash (such cash and NationsBank Certificates, together with any
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<PAGE> 47
dividends or distributions with respect thereto (without any interest thereon),
being hereinafter referred to as the "Exchange Fund") to be paid in exchange for
outstanding shares of Boatmen's Common Stock in the Merger.
Prior to, or as promptly as practicable after, the Effective Date,
NationsBank will send or cause to be sent to each holder of record of shares of
Boatmen's Common Stock transmittal materials for use in exchanging such
shareholder's Boatmen's Certificates for the consideration due in respect
thereof. NationsBank will cause the NationsBank Certificates into which shares
of a shareholder's Boatmen's Common Stock are converted on the Effective Date
and/or any check in respect of the Per Share Cash Consideration and any
fractional share interests or dividends or distributions which such person will
be entitled to receive to be delivered to such shareholder upon delivery to the
Exchange Agent of Boatmen's Certificates (or indemnity reasonably satisfactory
to NationsBank and the Exchange Agent, if any of such certificates are lost,
stolen or destroyed) owned by such shareholder. No interest will be paid on any
such cash to be paid upon such delivery.
BOATMEN'S SHAREHOLDERS SHOULD NOT SEND IN THEIR BOATMEN'S CERTIFICATES
UNTIL THEY RECEIVE THE TRANSMITTAL MATERIALS FROM THE EXCHANGE AGENT.
No fractional shares of NationsBank Common Stock and no certificates or
scrip therefor, or other evidence of ownership thereof, will be issued in the
Merger; instead, NationsBank will pay to each holder of Boatmen's Common Stock
who would otherwise be entitled to a fractional share of NationsBank Common
Stock (after taking into account all Boatmen's Certificates delivered by such
holder) an amount in cash (without interest) determined by multiplying such
fraction by the average of the last sale prices of NationsBank Common Stock, as
reported by the NYSE Composite Transactions reporting system (as reported in The
Wall Street Journal or, if not reported therein, in another authoritative
source), for the five NYSE trading days immediately preceding the Effective
Date.
Notwithstanding the foregoing, neither the Exchange Agent nor any party to
the Agreement will be liable to any holder (or, if after the Effective Time,
former holder) of Boatmen's Common Stock for any amount properly delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
No dividends or other distributions with respect to NationsBank stock with
a record date occurring after the Effective Time will be paid to the holder of
any unsurrendered Boatmen's Certificate until the holder thereof will surrender
such Boatmen's Certificate in accordance with the terms of the Agreement. After
the proper surrender of a Boatmen's Certificate, the record holder thereof will
be entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to shares of
NationsBank stock represented by such Boatmen's Certificate.
At the Effective Time, certificates representing shares of Boatmen's Series
A Preferred Stock and Boatmen's Series B Preferred Stock shall be deemed to
represent NationsBank New Series A Preferred Stock and NationsBank New Series B
Preferred Stock, respectively, and receipts representing Boatmen's Depositary
Shares ("Boatmen's Depositary Receipts") shall be deemed to represent
NationsBank Depositary Shares ("NationsBank Depositary Receipts"), in each case
without any further action on the part of NationsBank, Boatmen's or the holder
thereof. Upon transfers of any such shares after the Effective Time, NationsBank
will cause to be issued new certificates or receipts, as the case may be, to the
recipient of such shares in such transfer.
DISSENTING SHAREHOLDERS
Shares of Boatmen's Common Stock and Boatmen's Preferred Stock which are
issued and outstanding immediately prior to the Effective Time and which are
held by shareholders whose shares were voted against the adoption of the
Agreement (or were not voted at all on such matter), who are entitled to demand
the fair value of such shares of Boatmen's stock under Section 455 of the MGBCL,
and who comply with all of the relevant provisions of such Section will not be
converted into or be exchangeable for the right to receive NationsBank Common
Stock or NationsBank New Preferred Stock, as applicable (unless and until such
holders will have failed to perfect or will have effectively withdrawn or lost
their dissenters' rights under the
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<PAGE> 48
MGBCL), but will instead be entitled to all applicable dissenters' rights as are
prescribed by the MGBCL. Among the relevant provisions of Section 455 are the
requirements that a written objection to the Merger be filed with Boatmen's at
or prior to the Boatmen's Special Meeting, that the objecting shareholder not
vote in favor of the Merger, and that, within 20 days of the Effective Date,
such shareholder makes a written demand for payment of the fair value of such
shareholder's shares as of the day prior to the Merger. The written objection
should state that the shareholder objects to the Merger. The written demand for
fair value should state the number and class of the shares owned by such
shareholder. The written objection and the written demand may be contained in
one writing so long as that writing is received prior to or at the Boatmen's
Special Meeting. Written objections to the Merger and demands for the payment of
fair value should be addressed to: Boatmen's Bancshares, Inc., One Boatmen's
Plaza, 800 Market Street, St. Louis, Missouri 63101, Attention: Corporate
Secretary. Section 455 of the MGBCL may not provide dissenters' rights to
holders of Boatmen's Depositary Shares. NationsBank and Boatmen's, however, have
agreed to provide holders of Boatmen's Depositary Shares dissenters' rights on
the same terms as holders of Boatmen's Common Stock and Boatmen's Preferred
Stock, subject to certain limitations. Accordingly, actions with respect to
perfecting or withdrawing dissenters' rights taken by holders of Boatmen's
Depositary Shares will have the same effect as if the right to dissent were
explicitly granted the holders of Boatmen's Depositary Shares by law. See
"DISSENTERS' RIGHTS" and the full text of MGBCL sec. 455, a copy of which is
attached hereto as Appendix D and incorporated herein by reference.
CONDUCT OF BUSINESS PRIOR TO THE MERGER AND OTHER COVENANTS
Prior to the Effective Time, except as expressly contemplated by the
Agreement, (i) without the prior written consent of NationsBank (which consent
will not be unreasonably withheld or delayed) Boatmen's will not, and will cause
each of its subsidiaries not to, and (ii) without the prior written consent of
Boatmen's (which consent will not be unreasonably withheld or delayed)
NationsBank will not, and will cause each of its subsidiaries not to: (1)
conduct the business of it and its subsidiaries other than in the ordinary and
usual course or, to the extent consistent therewith, fail to use reasonable
efforts to preserve intact their business organizations and assets and maintain
their rights, franchises and existing relations with customers, suppliers,
employees and business associates, or take any action that would (i) adversely
affect the ability of any party to obtain any necessary approvals of any
regulatory authorities required for the transactions contemplated by the
Agreement without the imposition of a materially adverse condition or
restriction or (ii) adversely affect its ability to perform any of its material
obligations under the Agreement; (2) in the case of Boatmen's, other than
pursuant to the conversion or exchange of convertible or exchangeable securities
previously disclosed to NationsBank and outstanding as of the date of the
Agreement (including, without limitation, the Boatmen's Preferred Stock), (x)
issue, sell or otherwise permit to become outstanding, or authorize the creation
of, any additional shares of capital stock, any stock appreciation rights or any
convertible, exchangeable or derivative securities, (y) enter into any agreement
with respect to the foregoing, or (z) permit any additional shares of capital
stock to become subject to new grants of employee stock options, stock
appreciation rights, or similar stock-based employee rights; (3) (i) make,
declare or pay any dividend (other than (a) in the case of Boatmen's, (A)
quarterly cash dividends on Boatmen's Common Stock in an amount not to exceed
the greater of (I) $0.42 per share and (II) the product of the Exchange Ratio
multiplied by NationsBank's then-effective quarterly dividend, (B) dividends
payable on Boatmen's Preferred Stock at a rate not exceeding the rate provided
for in the terms thereof, and (C) dividends from greater than 95%-owned
subsidiaries to Boatmen's or another greater than 95%-owned subsidiary of
Boatmen's, as applicable, and (b) in the case of NationsBank, (A) quarterly cash
dividends on NationsBank Common Stock not in excess of $0.66 per share, (B)
semi-annual cash dividends on the NationsBank ESOP Preferred Stock, not in
excess of $3.30 per share, (C) cash dividends on any other outstanding issues of
preferred stock of NationsBank in accordance with the terms thereof, and (D)
dividends from subsidiaries to NationsBank or another subsidiary of NationsBank,
as applicable, on or in respect of, or declare or make any distribution on any
shares of its capital stock, or (ii) directly or indirectly combine, redeem,
reclassify, purchase or otherwise acquire, any shares of its capital stock,
other than (A) as previously agreed to by the other party, (B) in the case of
Boatmen's, pursuant to the terms of any Boatmen's Preferred Stock, (C) in the
ordinary course pursuant to employee benefit plans, or (D) in the case of
NationsBank, repurchases of NationsBank stock in the ordinary course (after the
date of
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<PAGE> 49
the Agreement, each of NationsBank and Boatmen's will coordinate with the other
the declaration of any dividends in respect of NationsBank Common Stock and
Boatmen's Common Stock and the record dates and payment dates relating thereto,
it being the intention of the parties that holders of NationsBank Common Stock
or Boatmen's Common Stock will not receive two dividends, or fail to receive one
dividend, for any single calendar quarter with respect to their shares of
NationsBank Common Stock and/or Boatmen's Common Stock and any shares of
NationsBank Common Stock any such holder receives in exchange therefor in the
Merger); (4) in the case of Boatmen's and its subsidiaries, enter into or amend
any written employment, severance or similar agreements or arrangements with any
of its directors, officers or employees, or grant any salary or wage increase or
increase any employee benefit (including incentive or bonus payments), except
for (i) normal individual increases in compensation to employees in the ordinary
course of business consistent with past practice, or (ii) other changes as are
provided for in the Agreement or as may be required by law or to satisfy
contractual obligations existing as of the date of the Agreement or additional
grants of awards to newly hired employees consistent with past practice or such
changes that, either individually or in the aggregate, would not reasonably be
expected to result in a material liability to Boatmen's or its subsidiaries; (5)
in the case of Boatmen's and its subsidiaries, enter into or amend (except as
may be required by applicable law, to satisfy contractual obligations existing
as of the date of the Agreement or amendments which, either individually or in
the aggregate, would not reasonably be expected to result in a material
liability to Boatmen's or its subsidiaries) any pension, retirement, stock
option, stock purchase, savings, profit sharing, deferred compensation,
consulting, bonus, group insurance or other employee benefit, incentive or
welfare contract, plan or arrangement, or any trust agreement related thereto,
in respect of any of its directors, officers or other employees, including
without limitation taking any action that accelerates the vesting or exercise of
any benefits payable thereunder; (6) in the case of Boatmen's, except as
previously agreed to by NationsBank, dispose of or discontinue any portion of
its assets, business or properties, which is material to it and its subsidiaries
taken as a whole, or acquire (other than by way of foreclosures or acquisitions
of control in a bona fide fiduciary capacity or in satisfaction of debts
previously contracted in good faith, in each case in the ordinary and usual
course of business consistent with past practice) all or any portion of, the
business or property of any other entity which is material to it and its
subsidiaries taken as a whole, and in the case of NationsBank, make any
acquisition or take any other action which would materially adversely affect its
ability to consummate the transactions contemplated by the Agreement; (7) in the
case of Boatmen's, amend its Articles of Incorporation or By-laws or amend or
waive any rights under the Boatmen's Rights Agreement; (8) implement or adopt
any change in its accounting principles, practices or methods, other than as may
be required by generally accepted accounting principles; (9) take any action
while knowing that such action would, or is reasonably likely to, prevent or
impede the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code, or knowingly take any action that is intended or is
reasonably likely to result in (x) any of its representations and warranties set
forth in the Agreement being or becoming untrue in any material respect at any
time prior to the Effective Time, (y) any of the conditions to the Merger not
being satisfied, or (z) a material violation of any provision of the Agreement
except, in each case, as may be required by applicable law; or (10) agree or
commit to do anything prohibited by (1)-(9) above.
The Agreement also contains various interim covenants, including those
requiring the parties (1) to use their best, good faith efforts to take
necessary actions to effect the Merger; (2) to obtain all necessary shareholder
approvals; (3) to cooperate in the preparation of the Registration Statement and
this Joint Proxy Statement-Prospectus; (4) to cooperate in preparing, filing and
obtaining all necessary regulatory approvals; (5) to refrain from issuing press
releases regarding the Merger without the other party's prior approval (except
as otherwise required by applicable law or regulation); (6) to provide the other
party with reasonable access to information regarding such party under the
condition that no such confidential information be shared with any third party
except as required by applicable law; (7) with respect to Boatmen's, to refrain
from soliciting or encouraging any alternative business combination transactions
(subject to the fiduciary obligations of the Boatmen's Board); and (8) to take
steps necessary to ensure that the Agreement and the Merger will not trigger any
special shareholder rights contained in the corporate governance documents of
such party or pursuant to any contract.
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<PAGE> 50
In addition, NationsBank has agreed to provide indemnification to the
officers, directors and employees of Boatmen's to the full extent permitted by
Missouri law and the Boatmen's Restated Articles of Incorporation and Bylaws and
to maintain for six years following the Effective Time liability insurance for
those officers, directors and employees of Boatmen's who are currently covered
by similar policies of Boatmen's. NationsBank will also cause employee benefit
plans to be maintained or instituted for employees of the Surviving Corporation
who were employees of Boatmen's ("New Employees") providing benefits, programs,
arrangements and other perquisites that are, in the aggregate, substantially the
same as those currently in place at Boatmen's until a transition is made with
respect to such employees to benefit plans and arrangements covering employees
of the Surviving Corporation who are not New Employees (provided that the
severance plans and arrangements and retiree benefits of Boatmen's currently in
effect will be maintained with respect to New Employees for at least one year
from the Effective Time). In addition, NationsBank has agreed to cause the
Surviving Corporation to assume all of Boatmen's obligations under existing
employment-related contracts and to give fair consideration to the promotion,
retention, firing, and other terms and conditions of employment of all New
Employees. NationsBank has also covenanted to list the shares of NationsBank
Common Stock to be issued in the Merger on the NYSE and to list the shares of
NationsBank New Preferred Stock and NationsBank Depositary Shares to be issued
in the Merger on the NYSE or The Nasdaq Stock Market (in the case of the
NationsBank New Preferred Stock and NationsBank Depositary Shares, only to the
extent the corresponding Boatmen's Preferred Stock and Boatmen's Depositary
Shares are listed on The Nasdaq Stock Market immediately prior to the Effective
Time).
CONDITIONS TO THE MERGER
The obligation of each of the parties to consummate the Merger is
conditioned upon the satisfaction at or prior to the Effective Time of each of
the following: (1) approval of the Plan of Merger contained in the Agreement by
the requisite vote of the Boatmen's Shareholders and approval of the Issuance by
the requisite vote of the NationsBank Shareholders; (2) the receipt of all
regulatory approvals required to consummate the transactions contemplated by the
Agreement, provided that such approvals will not be deemed to have been received
if they contain conditions or restrictions which the NationsBank Board or
Boatmen's Board reasonably determine will have a material adverse effect on
NationsBank and its subsidiaries or the Surviving Corporation and its
subsidiaries; (3) all consents or approvals of all persons required for the
consummation of the Merger will have been obtained and will be in full force and
effect, unless the failure to obtain any such consent or approval is not
reasonably likely to have, individually or in the aggregate, a material adverse
effect on Boatmen's or NationsBank; (4) no order, decree or injunction of any
court or agency of competent jurisdiction will be in effect, and no law, statute
or regulation will have been enacted or adopted, that enjoins, prohibits or
makes illegal consummation of any of the transactions contemplated by the
Agreement; (5) with respect to the obligations of each party, the
representations and warranties of the other party contained in the Agreement
will be true and correct at the time of the Agreement and at the Effective Time,
other than any inaccuracies which would not be reasonably likely, individually
or in the aggregate, to have a material adverse effect on the operations or
results of the party to whom such representations and warranties were made; (6)
no stop order suspending the effectiveness of the Registration Statement will
have been issued and no proceedings for that purpose will have been initiated or
threatened by the Commission or any other regulatory authority; (7) certificates
of designation will have become effective in accordance with the NCBCA setting
forth the rights, terms and preferences of the NationsBank New Preferred Stock;
and (8) the shares of NationsBank Common Stock issuable pursuant to the
Agreement will have been approved for listing on the NYSE (and the NationsBank
Depositary Shares will have been approved for listing on The Nasdaq Stock
Market), subject to official notice of issuance.
TERMINATION OF THE AGREEMENT
The Agreement may be terminated, and the Merger may be abandoned: (1) at
any time prior to the Effective Time, by the mutual consent of the parties, if
the Board of Directors of each so determines by vote of a majority of the
members of its entire Board; (2) at any time prior to the Effective Time, by
either party if its Board of Directors so determines by vote of a majority of
the members of its entire Board, in the event of either: (i) a breach by the
other party of any of its representations or warranties contained in the
Agreement,
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<PAGE> 51
which breach cannot be or has not been cured within 30 days after the giving of
written notice to the breaching party of such breach, or (ii) a material breach
by the other party of any of its covenants or agreements contained in the
Agreement, which breach cannot be or has not been cured within 30 days after the
giving of written notice to the breaching party of such breach; (3) at any time
prior to the Effective Time, by either party, if its Board of Directors so
determines by vote of a majority of the members of its entire Board, in the
event that the Merger is not consummated by September 1, 1997, except to the
extent that the failure of the Merger then to be consummated arises out of or
results from the knowing action or inaction of the party seeking to terminate
the Agreement; (4) by either party, if its Board of Directors so determines by a
vote of a majority of its members, in the event (i) the approval of the Federal
Reserve Board required for consummation of the Merger and the other transactions
contemplated by the Merger will have been denied by final nonappealable action
or (ii) any required stockholder approval is not obtained at the Boatmen's
Special Meeting or the NationsBank Special Meeting; and (5) the Agreement may be
terminated and the Merger abandoned by Boatmen's, if the Boatmen's Board so
determines by a vote of a majority of its members, at any time during the
ten-day period commencing two days after the Determination Date (as defined
below), if either (x) both of the following conditions are satisfied:
(a) the Average Closing Price (as defined below) is less than $79.26,
and
(b) (A) the number obtained by dividing the Average Closing Price by
the Starting Price (as defined below) (such number being referred to herein
as the "NationsBank Ratio") is less than (B) the number obtained by
dividing the Average Index Price (as defined below) by the Index Price (as
defined below) on the Starting Date and subtracting .15 from the quotient
(such number being referred to herein as the "Index Ratio"),
or (y) the Average Closing Price is less than $74.60,
provided, however, that if Boatmen's elects to exercise this termination
right it will give prompt written notice to NationsBank specifying which of
clause (x) or (y) is applicable (or if both would be applicable, which
clause is being invoked) (which notice may be withdrawn at any time within
the aforementioned ten-day period) and during the five-day period
commencing with its receipt of such notice, NationsBank will have the
option, in the case of a failure to satisfy the condition in clause (x), of
adjusting the Exchange Ratio to equal the lesser of (i) a number equal to a
quotient (rounded to the nearest one-thousandth), the numerator of which is
the product of $79.26 and the Exchange Ratio (as then in effect) and the
denominator of which is the Average Closing Price, and (ii) a number equal
to a quotient (rounded to the nearest one-thousandth), the numerator of
which is the Index Ratio multiplied by the Exchange Ratio (as then in
effect) and the denominator of which is the NationsBank Ratio, and in the
case of a failure to satisfy the condition in clause (y), to elect to
increase the Exchange Ratio to equal a number equal to a quotient (rounded
to the nearest one-thousandth), the numerator of which is the product of
$74.60 and the Exchange Ratio (as then in effect) and the denominator of
which is the Average Closing Price (if NationsBank makes an election
contemplated by the preceding sentence within such five-day period, it will
give prompt written notice to Boatmen's of such election and the revised
Exchange Ratio, whereupon no termination will have occurred as a result of
this right of termination and the Agreement will remain in effect in
accordance with its terms (except as the Exchange Ratio will have been so
modified), and any references in the Agreement to "Exchange Ratio" will
thereafter be deemed to refer to the Exchange Ratio as so adjusted).
For purposes of the right of termination and adjustment described in (5)
above, the following terms are defined in the Agreement as follows: "Average
Closing Price" means the average of the daily last sale prices of NationsBank
Common Stock as reported on the NYSE Composite Transactions reporting system (as
reported in The Wall Street Journal or, if not reported therein, in another
mutually agreed upon authoritative source) for the ten consecutive full trading
days in which such shares are traded on the NYSE ending at the close of trading
on the Determination Date; "Average Index Price" means the average of the Index
Prices for the ten consecutive full NYSE trading days ending at the close of
trading on the Determination Date; "Determination Date" means the date on which
the approval of the Federal Reserve Board required for consummation of the
Merger will be received; and "Index Group" means the group of each of the 15
bank
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<PAGE> 52
holding companies listed below, the common stock of all of which will be
publicly traded and as to which there will not have been, since the Starting
Date and before the Determination Date, any public announcement of a proposal
for such company to be acquired or for such company to acquire another company
or companies in transactions with a value exceeding 25% of the acquiror's market
capitalization. In the event that the common stock of any such company ceases to
be publicly traded or such an announcement is made, such company will be removed
from the Index Group, and the weights (which have been determined based on the
number of outstanding shares of common stock) redistributed proportionately for
purposes of determining the Index Price. The 15 bank holding companies and the
weights attributed to them are as follows:
<TABLE>
<CAPTION>
BANK HOLDING COMPANY WEIGHTING
--------------------------------------------------------------------------- ---------
<S> <C>
Citicorp................................................................... 15.8%
Chase Manhattan Corp....................................................... 13.2
BankAmerica Corporation.................................................... 11.3
Wells Fargo & Company...................................................... 9.4
First Union Corporation.................................................... 7.2
Banc One Corporation....................................................... 6.5
Norwest Corporation........................................................ 5.5
First Chicago NBD Corporation.............................................. 5.4
Fleet Financial Group, Inc................................................. 4.4
PNC Bank Corp.............................................................. 4.2
Bank of New York Company, Inc.............................................. 4.2
KeyCorp.................................................................... 3.6
SunTrust Banks, Inc........................................................ 3.4
Wachovia Corporation....................................................... 3.0
Mellon Bank Corporation.................................................... 2.9
-----
Total...................................................................... 100.0%
=====
</TABLE>
"Index Price" on a given date means the weighted average (weighted in
accordance with the factors listed above) of the closing prices on such date of
the companies composing the Index Group; "Starting Date" means the last full day
on which the NYSE was open for trading prior to the execution of the Agreement;
"Starting Price" will mean the last sale price per share of NationsBank Common
Stock on the Starting Date, as reported by the NYSE Composite Transactions
reporting system (as reported in The Wall Street Journal or, if not reported
therein, in another mutually agreed upon authoritative source). If any company
belonging to the Index Group or NationsBank declares or effects a stock
dividend, reclassification, recapitalization, split-up, combination, exchange of
shares or similar transaction between the Starting Date and the Determination
Date, the prices for the common stock of such company or NationsBank will be
appropriately adjusted for use in the index.
In the event of termination of the Agreement pursuant to its terms and the
abandonment of the Merger, no party to the Agreement will have any liability or
further obligation to any other party except (i) for the breach of certain
representations, warranties and covenants which survive termination and (ii)
that termination will not relieve a breaching party from liability for any
willful breach of the Agreement giving rise to such termination.
WAIVER; AMENDMENT; EXPENSES
Prior to the Effective Time, any provision of the Agreement may be (i)
waived by the party benefited by the provision, or (ii) amended or modified at
any time, by an agreement in writing among the parties approved by their
respective Boards of Directors and executed in the same manner as the Agreement,
except that, after the Boatmen's Special Meeting, the consideration to be
received by the stockholders of Boatmen's for each share of Boatmen's stock will
not thereby be decreased.
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<PAGE> 53
Each party to the Agreement will bear all expenses incurred by it in
connection with the Agreement and the transactions contemplated thereby, except
that printing expenses and Commission registration fees will be shared equally
between Boatmen's and NationsBank.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Wachtell, Lipton, Rosen & Katz has delivered to NationsBank and Cleary,
Gottlieb, Steen & Hamilton has delivered to Boatmen's their respective opinions
that, based upon certain customary assumptions and representations, under
Federal law as currently in effect, (a) the proposed Merger will constitute a
reorganization within the meaning of Section 368(a)(1) of the Code; (b) no gain
or loss will be recognized by the shareholders of Boatmen's on the exchange of
their shares of Boatmen's stock for shares of NationsBank stock pursuant to the
terms of the Agreement to the extent of such exchange; (c) the Federal income
tax basis of the NationsBank stock for which shares of Boatmen's stock are
exchanged pursuant to the Merger will be the same as the basis of such shares of
Boatmen's stock exchanged therefor (less any proportionate part of such basis
allocable to any fractional interest in any share of NationsBank Common Stock);
(d) the holding period of NationsBank stock for which shares of Boatmen's stock
are exchanged will include the period that such shares of Boatmen's stock were
held by the holder, provided such shares were capital assets of the holder; and
(e) the receipt of cash in lieu of fractional shares will be treated as if the
fractional shares were distributed as part of the exchange and then redeemed by
NationsBank, and gain or loss will be recognized in an amount equal to the
difference between the cash received and the basis of the Boatmen's Common Stock
surrendered, which gain or loss will be capital gain or loss if the Boatmen's
Common Stock was a capital asset in the hands of the shareholder.
With respect to Cash Election Shares and Dissenting Shares exchanged for
cash, the Merger will be treated as a sale, and normal recognition and gain
treatment will apply. The Merger will not have any direct tax consequences to
NationsBank or the Surviving Corporation.
THE FOREGOING IS A SUMMARY OF THE ANTICIPATED FEDERAL INCOME TAX
CONSEQUENCES OF THE PROPOSED MERGER UNDER THE CODE AND IS FOR GENERAL
INFORMATION ONLY. IT DOES NOT INCLUDE CONSEQUENCES OF STATE, LOCAL OR OTHER TAX
LAWS OR SPECIAL CONSEQUENCES TO PARTICULAR SHAREHOLDERS HAVING SPECIAL
SITUATIONS. SHAREHOLDERS OF BOATMEN'S SHOULD CONSULT THEIR OWN TAX ADVISORS
REGARDING SPECIFIC TAX CONSEQUENCES OF THE MERGER TO THEM, INCLUDING THE
APPLICATION AND EFFECT OF FEDERAL, STATE AND LOCAL TAX LAWS AND TAX CONSEQUENCES
OF SUBSEQUENT SALES OF NATIONSBANK COMMON STOCK.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
General. As described below, certain members of Boatmen's management and
of the Boatmen's Board have certain arrangements with respect to the management
and Board composition of NationsBank following the Merger, certain benefits
under existing employment agreements and severance and benefit plans and certain
post-Merger employment opportunities with NationsBank. In addition, the
Agreement contains certain provisions relating to the indemnification of
Boatmen's directors and officers and directors' and officers' liability
insurance.
Board Composition and Related Matters Post-Merger. NationsBank has agreed
to cause Mr. Craig to be elected Chairman of the NationsBank Board commencing on
the Effective Date and continuing through the date of NationsBank's annual
meeting of shareholders in 1998. Mr. Craig will be entitled to continue to serve
as a director of NationsBank for two additional years after he completes his
service as Chairman of the NationsBank Board. NationsBank has also agreed that
four individuals designated by Boatmen's (in addition to Mr. Craig) will be
elected to the NationsBank Board following consummation of the Merger and that
Mr. Craig will be appointed to the Executive Committee of NationsBank. The four
additional Boatmen's designees have not yet been identified. See "MANAGEMENT AND
OPERATIONS AFTER THE MERGER."
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<PAGE> 54
Existing Employment Agreements with Named Officers. Boatmen's has
Employment Agreements (collectively, the "Existing Employment Agreements") with
each of Messrs. Craig, Hayes, Curl, Brennan and Kienker (collectively, the
"Named Officers"). Pursuant to the Agreement, NationsBank has agreed to honor
each of the Existing Employment Agreements; however, as described below under
"-- Employment Offers and Arrangements with Named Officers," Mr. Craig has
agreed to waive the rights and benefits under his Existing Employment Agreement,
except for certain rights and benefits, as described below, which have been
preserved, in exchange for the rights and benefits contained in a new employment
agreement, also described below.
Each Existing Employment Agreement provides, among other things, that if a
Named Officer's employment is terminated by Boatmen's (or its successor) without
"cause" or by him for "good reason" prior to its expiration date (January 29,
1999 in each case), he shall be paid his then current base salary until the
later of the expiration date or one year after such termination and shall
receive health and welfare benefits for such period, together with all vested
employee benefits. If, however, such a termination occurs either during the six
months before or two years after a "change in control," or if he voluntarily
terminates during the thirty day period commencing on the first anniversary of a
"change in control" (which events are referred to as a "qualifying
termination"), he will receive a severance payment equal to three times his
highest annualized base salary and three times the greater of his average annual
bonus for the prior three years or his target bonus for the current year, three
additional years of age and service credits under any Boatmen's supplemental
retirement plans in which he participates and continuation of health and welfare
benefits for three years from the date of termination. The Named Officer will
also receive, in addition to the severance payment described above, his unpaid
salary up to termination, accrued vacation pay and lump-sum deferred
compensation and actuarial equivalent supplemental retirement benefits. In
addition, Boatmen's will pay the Named Executives an amount sufficient to cover
any excise tax imposed by Section 4999 of the Internal Revenue Code or any
similar federal, state or local tax.
In addition to the terms described above, Mr. Craig's Existing Employment
Agreement was supplemented as of May 17, 1996, to provide that (i) if his
employment is terminated for certain reasons, or if he dies while still in the
employ of Boatmen's and his spouse does not survive him, then he or his estate,
as the case may be, will receive benefits under the Boatmen's Bancshares, Inc.
Retirement Plan for Employees (the "Boatmen's Retirement Plan") and the
Boatmen's Supplemental Retirement Plan (the "BSRP") in an amount no less than he
would have received thereunder had he retired on May 1, 1996 (the "Minimum
Retirement Benefits"), and (ii) if he dies while still in the employ of
Boatmen's and his spouse survives him, then she will receive a portion of the
Minimum Retirement Benefits as described therein. The Minimum Retirement
Benefits to Mr. Craig equal $7,375,761. Also, Mr. Hayes' Existing Employment
Agreement, in addition to providing for the terms described above, was amended
as of August 13, 1996 to provide for a minimum supplemental retirement benefit
based on 25 years of credited service with Boatmen's. The Existing Employment
Agreements with each of Messrs. Brennan and Kienker were entered into on August
13, 1996 and, prior to such date, Messrs. Brennan and Kienker participated in
the Existing Severance Plan described below under "-- Existing Change-in-Control
Severance Plan." Mr. Brennan's employment agreement provides for a minimum
supplemental retirement benefit based on 30 years of credited service with
Boatmen's. The consummation of the Merger will constitute a change in control
under each of the Existing Employment Agreements, as amended, entitling the
Named Officers to the severance payments thereunder in the event of a
"qualifying termination" with respect to such individuals (as described in the
preceding paragraph). If, pursuant to the Existing Employment Agreements
described above, severance payments were required to be made to the Named
Officers, the estimated amount of such severance payments (assuming an Effective
Date of January 7, 1997 and without giving effect to the employment agreements
entered into between NationsBank and certain of the Named Officers described
below under "-- Employment Offers and Arrangements with Named Officers") would
be approximately $4,005,277; $3,335,244; $2,274,825; $1,863,435 and $1,532,574
for Messrs. Craig, Hayes, Curl, Brennan and Kienker, respectively. Mr. Craig,
however, as described below under "-- Employment Offers and Arrangements with
Named Officers," has agreed to waive the rights and benefits under his Existing
Employment Agreement with Boatmen's (except for certain rights and obligations
which have been preserved as discussed below).
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<PAGE> 55
Employment Offers and Arrangements With Named Officers. NationsBank has,
as provided in the Agreement, offered to enter into compensation arrangements
with the Named Officers.
Mr. Craig has agreed, as discussed above, to waive, effective as of the
Effective Date, the rights and benefits under his Existing Employment Agreement,
as amended, with Boatmen's (except for certain rights and obligations which have
been preserved as discussed below). Mr. Craig and NationsBank have entered into
an agreement, dated September 26, 1996, pursuant to which Mr. Craig will
receive, during the period he serves as Chairman of NationsBank (see "-- Board
Composition and Related Matters Post-Merger"), an annual base salary of
$1,000,000 and, for calendar year 1997, a bonus equal to the greater of
$2,000,000 or the bonus paid for 1997 to the Chief Executive Officer of
NationsBank. For the portion of 1998 during which Mr. Craig serves as Chairman
of NationsBank, he will receive a bonus equal to $2,000,000 multiplied by a
fraction, the numerator of which will equal the number of days from January 1,
1998 until his retirement and the denominator of which will equal 365 (the
"Proration Fraction"). In the event that the bonus paid for 1998 to the Chief
Executive Officer of NationsBank exceeds $2,000,000, Mr. Craig will receive, at
the time such bonus is paid, an additional payment equal to the amount of such
excess multiplied by the Proration Fraction. On the Effective Date, Mr. Craig
will be granted 100,000 shares of restricted NationsBank Common Stock pursuant
to the NationsBank Corporation Key Employee Stock Plan. The restricted stock
will vest upon Mr. Craig's retirement as an officer of NationsBank (or, if
earlier, upon his death), other than retirement resulting from a termination of
his employment by NationsBank for "cause", or by Mr. Craig without "good reason"
(as such terms are defined in the agreement). Based on the closing price of
NationsBank Common Stock on the NationsBank Record Date of $90.875, the
restricted stock to be received by Mr. Craig (which is subject to forfeiture as
described above) had an aggregate value of $9,087,500. Upon Mr. Craig's
retirement from NationsBank, he will receive an annual pension of $1,500,000 for
his life (offset by any defined benefit pension benefits received by him from
any other sources) and, upon his death, his current spouse will be entitled to
receive an annual survivor benefit of $1,000,000 for her life. Mr. Craig will be
entitled to receive, at his election, the actuarial equivalent of the
aforementioned pension benefits in a lump sum based upon various actuarial
assumptions set forth in the agreement. In addition to certain other rights and
obligations under Mr. Craig's Existing Employment Agreement, the right to
payment for any tax imposed with respect to Mr. Craig's compensation under his
agreement (or imposed with respect to such payments) pursuant to Section 4999 of
the Code (or any similar tax) has been preserved.
Mr. Hayes and NationsBank have entered into an agreement, dated September
26, 1996, pursuant to which NationsBank will assume the obligations of Boatmen's
under Mr. Hayes' Existing Employment Agreement, as described above under
"-- Existing Employment Agreements with Named Officers," except that Mr. Hayes'
position will be President of NationsBank West, his initial base salary will be
$600,000 (which may be increased but not decreased) and he will be entitled to
an annual incentive bonus for 1997 commensurate with the annual incentive
bonuses of other executives with substantially similar levels of responsibility,
but in no event less than $300,000. In addition, on the Effective Date, Mr.
Hayes will be eligible to participate in the NationsBank Supplemental Executive
Retirement Plan (the "NBSERP") and will receive credit for his service and
compensation with Boatmen's, and, for purposes of determining his benefits under
the NBSERP, his final average five year compensation will not be less than his
base salary and annual incentive for 1997. Under the NBSERP, Mr. Hayes' target
benefit will be 60% of his final average five year compensation (offset by any
defined benefit pension benefits received by him from any other sources), with a
surviving spouse benefit equal to 75% of Mr. Hayes' benefit. Mr. Hayes will be
entitled to receive, at his election, the actuarial equivalent of the accrued
benefit under the Boatmen's Retirement Plan and the BSRP in a lump sum payment.
On the Effective Date, Mr. Hayes will be granted 50,000 shares of restricted
NationsBank Common Stock pursuant to the NationsBank Key Employee Stock Plan,
vesting on the following schedule provided that Mr. Hayes is employed by
NationsBank on such dates: 15,000 shares on each of January 1, 1998 and 1999 and
20,000 shares on January 1, 2000. Based upon the closing price of NationsBank
Common Stock on the NationsBank Record Date of $90.875, the restricted stock to
be received by Mr. Hayes (which is subject to forfeiture as described above) had
an aggregate value of $4,543,750.
Mr. Curl and NationsBank have entered into an agreement, dated September
26, 1996, pursuant to which NationsBank will assume the obligations of Boatmen's
under Mr. Curl's Existing Employment Agreement, as
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<PAGE> 56
described above under "-- Existing Employment Agreements with Named Officers,"
except that Mr. Curl's position will be Vice Chairman-Corporate Development of
NationsBank and he will be a member of the Executive Management Committee, his
initial base salary will be $600,000 (which may be increased but not decreased)
and he will be entitled to an annual incentive bonus for the years 1997 through
1999 commensurate with the annual incentive bonuses of other executives with
substantially similar levels of responsibility, but in no event less than
$300,000 for each such year. In addition, on the Effective Date, Mr. Curl will
be eligible to participate in the NBSERP and will receive credit for his service
and compensation with Boatmen's. Under the NBSERP, Mr. Curl's target benefit
will be 60% of his final average five year compensation (offset by any defined
benefit pension benefits received by him from any other sources), with a
surviving spouse benefit equal to 75% of Mr. Curl's benefit. Mr. Curl will be
entitled to receive, at his election, the actuarial equivalent of the accrued
benefit under the Boatmen's Retirement Plan and the BSRP in a lump sum payment.
On the Effective Date, Mr. Curl will be granted 50,000 shares of restricted
NationsBank Common Stock pursuant to NationsBank Key Employee Stock Plan,
vesting on the following schedule provided that Mr. Curl is employed by
NationsBank on such dates: 15,000 shares on each of January 1, 1998 and 1999 and
20,000 shares on January 1, 2000. Based on the closing price of NationsBank
Common Stock on the NationsBank Record Date of $90.875, the restricted stock to
be received by Mr. Curl (which is subject to forfeiture as described above) had
an aggregate value of $4,543,750.
Mr. Brennan and NationsBank have entered into an agreement, dated September
26, 1996, pursuant to which NationsBank will assume the obligations of Boatmen's
under Mr. Brennan's Existing Employment Agreement, as described above, under
"-- Existing Employment Agreements with Named Officers," except that Mr.
Brennan's position will be Senior Credit Executive of NationsBank West, his
initial base salary will be $400,000 (which may be increased but not decreased)
and he will be entitled to an annual incentive bonus for the years 1997 through
1999 commensurate with the annual incentive bonuses of other executives with
substantially similar levels of responsibility, which will not be less than
$200,000 for each such year. In addition, on the Effective Date, Mr. Brennan
will be eligible to participate in the NationsBank Supplemental Executive
Retirement Plan for Senior Management Employees (the "NBSERP for Senior
Management") and will receive credit for his service and compensation with
Boatmen's. Under the NBSERP for Senior Management, Mr. Brennan's target benefit
will be 50% of his final average five year compensation (offset by any defined
benefit pension benefits received by him from any other sources), with a
surviving spouse benefit equal to 66 2/3% of Mr. Brennan's benefit. Mr. Brennan
will be entitled to receive, at his election, the actuarial equivalent of the
accrued benefit under the Boatmen's Retirement Plan and the BSRP in a lump sum
payment. On the Effective Date, Mr. Brennan will be granted 25,000 shares of
restricted NationsBank Common Stock pursuant to the NationsBank Key Employee
Stock Plan, vesting on the following schedule provided that Mr. Brennan is
employed by NationsBank on such dates: 7,500 shares on each of January 1, 1998
and 1999 and 10,000 shares on January 1, 2000. Based upon the closing price of
NationsBank Common Stock on the NationsBank Record Date of $90.875, the
restricted stock to be received by Mr. Brennan (which is subject to forfeiture
as described above) had an aggregate value of $2,271,875.
Mr. Kienker has determined not to accept an employment offer made to him by
NationsBank. It is anticipated that Mr. Kienker will receive the severance
payment under his Existing Employment Agreement as described above under
"-- Existing Employment Agreements with Named Officers."
Existing Change-in-Control Severance Plan. Boatmen's has a
Change-in-Control Severance Plan (the "Existing Severance Plan") in which ten
senior officers of Boatmen's or its subsidiaries participate (none of whom are
the Named Officers). The senior officers who participate in the Existing
Severance Plan are Ms. Jacquelyn L. Dezort and Messrs. Arthur J. Fleischer,
Thomas P. Johnson, Jr., Phillip E. Peters, Jay D. Burchfield, Charles B. Dudley
III, John Morton III, Ike Kalangis, William C. Nelson and Martin E. Galt III.
Pursuant to the Agreement, NationsBank has agreed to honor the Existing
Severance Plan.
The Existing Severance Plan provides for severance payments in connection
with a "change in control" upon a "qualifying termination" similar to the
Existing Employment Agreements described above, except that the multiplier for
determining such severance payments is two, not three.
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The consummation of the Merger will constitute a change in control under
the Existing Severance Plan. A severance payment will be paid to a participant
in the Existing Severance Plan only if a qualifying termination occurs with
respect to such participant. If, pursuant to the Existing Severance Plan
described above, severance payments were required to be made to each of the
participants under the Existing Severance Plan (assuming an Effective Date of
January 7, 1997), the aggregate amount of such severance payments would be
approximately $8,223,364 for the ten participants. It is anticipated that some
of the participants in the Existing Severance Plan will not continue in the
employ of NationsBank following the Merger and will, therefore, receive
severance payments under the Existing Severance Plan and that other participants
in the Existing Severance Plan will accept positions with NationsBank following
the Merger and, in connection therewith, may waive their respective rights under
the Existing Severance Plan with Boatmen's.
Executive Officer Stock Options. Boatmen's has granted Boatmen's Stock
Options to the Named Officers and certain other executive and management level
officers under the Boatmen's Employee Stock Option Plans. As described above
under "-- Description of the Merger," each Boatmen's Employee Stock Option which
is outstanding and unexercised as of the Effective Time will be converted
automatically into options to purchase NationsBank Common Stock as adjusted to
reflect the Exchange Ratio.
Options granted under certain of the Boatmen's Employee Stock Option Plans
will immediately vest upon consummation of the Merger. The following table sets
forth, as of the Boatmen's Record Date, with respect to the Named Officers and
all executive officers as a group (collectively, including the Named Officers,
the "Executive Officer Group") (i) the number of shares covered by Boatmen's
Employee Stock Options held by such persons, (ii) the number of shares covered
by currently-exercisable Boatmen's Employee Stock Options held by such persons,
(iii) the number of shares covered by Boatmen's Employee Stock Options held by
such persons which will become exercisable upon consummation of the Merger, (iv)
the weighted average exercise price of all such Boatmen's Employee Stock Options
held by such persons, and (v) the aggregate value (i.e., closing price less
weighted average option exercise price per option) of all such options based
upon the per share closing price of Boatmen's Common Stock on the Boatmen's
Record Date (which was $58.4375).
<TABLE>
<CAPTION>
OPTIONS BECOMING
OPTIONS EXERCISABLE UPON WEIGHTED AVERAGE AGGREGATE
CURRENTLY CONSUMMATION EXERCISE PRICE VALUE OF
NAME OPTIONS HELD EXERCISABLE OF MERGER PER OPTION OPTIONS
- ------------------------- ------------ ----------- ---------------- ---------------- -----------
<S> <C> <C> <C> <C> <C>
Andrew B. Craig, III..... 301,894 215,926 85,968 $24.4585 $10,122,747
Samuel B. Hayes, III..... 182,994 130,260 52,734 $24.0232 $ 6,057,376
Gregory L. Curl.......... 110,014 66,147 43,867 $25.9757 $ 3,308,660
John M. Brennan.......... 54,006 29,572 24,434 $21.1475 $ 1,523,633
James W. Kienker......... 65,806 37,972 27,834 $22.5248 $ 1,926,378
Executive Officer Group
(9 persons in all)..... 827,278 534,056 293,222 $24.7348 $26,019,879
</TABLE>
Incentive Bonus and Stock Plans. Boatmen's has established the Boatmen's
Bancshares, Inc. Amended 1982 Long Term Incentive Plan (the "Boatmen's Long Term
Plan") and the Boatmen's Bancshares, Inc. 1996 Stock Incentive Plan (the
"Boatmen's Stock Incentive Plan," together with the Boatmen's Long Term Plan,
the "Boatmen's Long Term Program") in which the Named Officers and certain other
executive and management level officers participate. The Boatmen's Long Term
Plan is a cash award program for the Named Officers and other senior management.
It is contractual and links awards primarily to the performance of the Boatmen's
Common Stock. Effective for performance periods commencing on and after January
1, 1996, these awards are made under the Boatmen's Stock Incentive Plan. In the
event of a "change in control" (as defined in the Boatmen's Long Term Plan and
the Boatmen's Stock Incentive Plan) during any performance period or periods,
each participant therein will be paid, immediately prior to the change in
control, an amount equal to the award or awards that he or she would have been
entitled to receive at the end of each of the performance period or periods had
such change in control not occurred and, for purposes of calculating such award
or awards, the particular "payout factor" for each participant will be equal to
a certain
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level set forth in the Boatmen's Long Term Incentive Plan and guidelines under
the Boatmen's Stock Incentive Plan (which is based upon the particular salary
grade of the participant) without adjustment in relation to Boatmen's annual
earnings per share growth rate and the participant's average salary will be
equal to his or her salary at the date of the change in control. The
consummation of the Merger will constitute a change in control for purposes of
the Boatmen's Long Term Program.
Assuming that the Effective Time of the Merger will occur on January 7,
1997, the estimated amounts payable with respect to the Boatmen's Long Term
Program that would be accelerated upon consummation of the Merger for each of
the Named Officers and the Executive Officer Group, in the aggregate, would be
$839,000, $454,000, $427,000, $197,060, and $239,250 for Messrs. Craig, Hayes,
Curl, Brennan and Kienker, respectively, and $2,620,416 for the Executive
Officer Group (9 persons in all).
Other Matters. Each of the Boatmen's directors is eligible to participate
in the Boatmen's Directors' Deferred Compensation Plan which permits a deferral
of a portion of director fees into a "phantom stock" account, the performance of
which is measured by reference to the market value of Boatmen's Common Stock.
Upon consummation of the Merger, any amounts so invested will be measured,
instead, by reference to the market value of NationsBank Common Stock, following
appropriate adjustments to such phantom stock account balances to reflect the
Exchange Ratio.
Pursuant to the Agreement, NationsBank has agreed that it will indemnify
directors, officers, employees and agents of Boatmen's and its subsidiaries from
and after the Effective Date against certain liabilities arising prior to the
Merger to the full extent permitted under Missouri law and Boatmen's Articles of
Incorporation and Bylaws and that it will maintain Boatmen's existing directors'
and officers' liability insurance policy or a comparable policy for six years
after the Effective Date. See "-- Conduct of Business Prior to the Merger and
Other Covenants."
Pursuant to the Agreement, NationsBank has agreed to provide to Boatmen's
employees who become employees of NationsBank compensation and employee benefits
that are substantially the same as those currently in effect for Boatmen's
employees for the transition periods set forth under "-- Conduct of Business
Prior to the Merger and Other Covenants" below.
THE BOATMEN'S STOCK OPTION AGREEMENT
As an inducement to NationsBank to enter into the Agreement, Boatmen's (as
issuer) entered into the Boatmen's Stock Option Agreement with NationsBank (as
grantee), pursuant to which Boatmen's granted the Boatmen's Option to
NationsBank to purchase from Boatmen's up to 31,218,660 shares of Boatmen's
Common Stock (subject to adjustment in certain circumstances, but in no event to
exceed 19.9% of the shares of Boatmen's Common Stock outstanding upon any
exercise of such option) at a price of $43.375 per share. The $43.375 exercise
price was determined through negotiations, taking into account the recently
prevailing price range of Boatmen's Common Stock prior to the announcement of
the Merger (the closing sale price of Boatmen's Common Stock on the last trading
day preceding the execution of the Agreement was $43.375). The purchase of any
shares of Boatmen's Common Stock pursuant to the Boatmen's Option is subject to
compliance with applicable law, including the receipt of necessary approvals
under the BHCA. See "THE MERGER -- Regulatory Matters."
If NationsBank is not in material breach of the Boatmen's Stock Option
Agreement or the Agreement and if no injunction or other court order against
delivery of the shares covered by the Boatmen's Option is in effect, NationsBank
may exercise the Boatmen's Option, in whole or in part, at any time and from
time to time following the happening of certain events (each a "Purchase
Event"), including: (1) without NationsBank's prior written consent, Boatmen's
taking certain actions (each an "Acquisition Transaction"), including
authorizing, recommending, proposing or entering into an agreement with any
third party to effect (a) a merger, consolidation or similar transaction
involving Boatmen's or any of its significant subsidiaries, (b) the sale, lease,
exchange or other disposition of 25% or more of the consolidated assets or
deposits of Boatmen's and its subsidiaries, or (c) the issuance, sale or other
disposition of securities representing 25% or more of the voting power of
Boatmen's or any of its significant subsidiaries, in each case except as
otherwise permitted by the Boatmen's Stock Option Agreement; or (2) any third
party acquiring or having the right to
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<PAGE> 59
acquire securities representing 25% or more of the voting power of Boatmen's or
any of its significant subsidiaries, except as otherwise permitted by the
Boatmen's Stock Option Agreement; provided that the Boatmen's Option will
terminate upon the earliest to occur of certain events, including: (A)
consummation of the Merger; (B) termination of the Agreement prior to the
happening of a Purchase Event or Preliminary Purchase Event (as hereafter
defined) (other than a termination by NationsBank under certain circumstances
described in the Boatmen's Stock Option Agreement (a "Default Termination"));
(C) fifteen months after a Default Termination; or (D) fifteen months after
termination of the Agreement (other than by reason of a Default Termination)
following the occurrence of a Purchase Event or a Preliminary Purchase Event.
The term "Preliminary Purchase Event" is defined in the Boatmen's Stock
Option Agreement to mean the occurrence of certain events, including: (1)
commencement by any third party of a tender or exchange offer to purchase 15% or
more of the outstanding shares of Boatmen's Common Stock; (2) failure of the
shareholders of Boatmen's to approve the Agreement or the failure of the
Boatmen's Special Meeting to have been held or cancellation of such meeting
prior to the termination of the Agreement or the Boatmen's Board will have
withdrawn or modified in any manner adverse to NationsBank the recommendations
of the Boatmen's Board with respect to the Agreement, in each case after public
announcement that a third party: (a) proposes to engage in an Acquisition
Transaction; or (b) commences a tender offer or exchange offer to purchase 15%
or more of the outstanding shares of Boatmen's Common Stock; or (c) files an
application under certain federal statutes relating to the regulation of banks
and other financial institutions or their holding companies, to engage in an
Acquisition Transaction; (3) any third party proposal to Boatmen's or its
shareholders, publicly or in any writing that becomes publicly disclosed, to
engage in an Acquisition Transaction; (4) after a proposal by a third party to
Boatmen's or its shareholders to engage in an Acquisition Transaction, Boatmen's
breaches any representation or covenant in the Agreement which would entitle
NationsBank to terminate the Agreement; or (5) any third party filing an
application with any federal or state bank regulatory authority for approval to
engage in an Acquisition Transaction.
To the knowledge of Boatmen's and NationsBank, no Purchase Event or
Preliminary Purchase Event has occurred as of the date of this Joint Proxy
Statement-Prospectus.
Until such time as the right to exercise the Boatmen's Option terminates,
at the request of the holder at any time commencing upon the first occurrence of
a Repurchase Event (as defined below) and ending twelve months immediately
thereafter, Boatmen's is required to repurchase from the holder (i) the
Boatmen's Option, and (ii) all shares of Boatmen's Common Stock purchased by the
holder pursuant to the Boatmen's Stock Option Agreement with respect to which
the holder then has beneficial ownership. The repurchase will be at an aggregate
price equal to the sum of: (x) the aggregate exercise price paid by the holder
for any shares of Boatmen's Common Stock acquired pursuant to the Boatmen's
Option with respect to which the holder then has beneficial ownership, (y) the
excess, if any, of (A) the Applicable Price (as defined below) for each share of
Boatmen's Common Stock over (B) the exercise price (subject to adjustment as
provided in the Boatmen's Stock Option Agreement), multiplied by the number of
shares of Boatmen's Common Stock with respect to which the Boatmen's Option has
not been exercised, and (z) the excess, if any, of the Applicable Price over the
exercise price (subject to adjustment as provided in the Boatmen's Stock Option
Agreement) paid (or, in the case of shares of Boatmen's Common Stock covered by
the Boatmen's Option with respect to which the Boatmen's Option has been
exercised but the closing date for such purchase has not occurred, payable) by
the holder for each share of Boatmen's Common Stock with respect to which the
Boatmen's Option has been exercised and with respect to which the holder then
has beneficial ownership, multiplied by the number of such shares. As used in
the Boatmen's Stock Option Agreement, the term "Applicable Price" means the
highest of (i) the highest price per share of Boatmen's Common Stock paid for
any such share by the person or groups described in subsection (x) of the
definition of Repurchase Event (as defined below), (ii) the price per share of
Boatmen's Common Stock received by holders of Boatmen's Common Stock in
connection with any merger or other business combination transaction described
in subsections (i) through (iii) in the next paragraph (with respect to
substitute options), or (iii) the highest closing sale price per share of
Boatmen's Common Stock on The Nasdaq Stock Market (or if Boatmen's Common Stock
is not traded on The Nasdaq Stock Market, the highest bid price per share as
quoted on the principal trading market or securities exchange on which such
shares are traded as reported by a recognized source chosen by the holder)
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<PAGE> 60
during the 40 business days preceding the date upon which the holder exercises
the repurchase right described in this paragraph (in the event of a sale of less
than all of Boatmen's assets, the Applicable Price will be the sum of the price
paid in such sale for such assets and the current market value of the remaining
assets of Boatmen's as determined by a nationally recognized investment banking
firm selected by the holder, divided by the number of shares of the Boatmen's
Common Stock outstanding at the time of such sale). As used in the Boatmen's
Stock Option Agreement, a "Repurchase Event" occurs if (i) any person (other
than NationsBank or any subsidiary of NationsBank) acquires beneficial ownership
of (as such term is defined in Rule 13d-3 promulgated under the Exchange Act),
or the right to acquire beneficial ownership of, or any "group" (as such term is
defined under the Exchange Act) is formed which beneficially owns or has the
right to acquire beneficial ownership of, 50% or more of the then outstanding
shares of Boatmen's Common Stock, or (ii) any of the merger or other business
combination transactions described in subsections (i) through (iii) in the next
paragraph (with respect to substitute options) is consummated.
In the event that prior to the termination of the Boatmen's Stock Option
Agreement, Boatmen's enters into an agreement (i) to consolidate with or merge
into any person, other than NationsBank or one of its subsidiaries, and will not
be the continuing or surviving corporation of such consolidation or merger, (ii)
to permit any person, other than NationsBank or one of its subsidiaries, to
merge into Boatmen's with Boatmen's as the continuing or surviving corporation,
but, in connection therewith, the then outstanding shares of Boatmen's Common
Stock are changed into or exchanged for stock or other securities of Boatmen's
or any other person or cash or any other property, or the outstanding shares of
Boatmen's Common Stock after such merger represent less than 50% of the
outstanding shares and share equivalents of the merged company, or (iii) to sell
or otherwise transfer all or substantially all of its assets or deposits to any
person, other than NationsBank or one of its subsidiaries, then such agreement
will provide that the Boatmen's Option be converted or exchanged for an option
(a "Substitute Option") to purchase shares of common stock of, at the holder's
option, either (x) the continuing or surviving corporation of a merger or
consolidation or the transferee of all or substantially all of Boatmen's assets,
or (y) any person controlling such continuing or surviving corporation or
transferee. The number of shares subject to the Substitute Option and the
exercise price per share will be determined in accordance with a formula in the
Boatmen's Stock Option Agreement. To the extent possible, the Substitute Option
will contain terms and conditions that are the same as those in the Boatmen's
Stock Option Agreement.
Notwithstanding anything to the contrary contained in the Boatmen's Stock
Option Agreement, in no event will NationsBank's Total Profit (as defined below)
exceed $250 million and, if it otherwise would exceed such amount, NationsBank,
at its sole election, will either (i) reduce the number of shares of Boatmen's
Common Stock subject to the Boatmen's Option, (ii) deliver to Boatmen's for
cancellation the shares of Boatmen's Common Stock purchased pursuant to the
Boatmen's Option, (iii) pay cash to Boatmen's, or (iv) any combination thereof,
so that NationsBank will not actually realize Total Profit in excess of $250
million after taking into account the foregoing actions. In addition, the
Boatmen's Option may not be exercised for a number of shares as would, as of the
date of exercise, result in a Notional Total Profit (as defined below) of more
than $250 million; provided, that this limitation shall not restrict any
exercise of the Boatmen's Option permitted by the Boatmen's Stock Option
Agreement on any subsequent date.
The term "Total Profit" is defined in the Boatmen's Stock Option Agreement
to mean the aggregate amount (before taxes) of the following: (i) the amount
received by NationsBank pursuant to Boatmen's repurchase of the Boatmen's Option
(or any portion thereof), (ii) (x) the amount received by NationsBank pursuant
to Boatmen's repurchase of shares of Boatmen's Common Stock purchased pursuant
to the Boatmen's Option, less (y) NationsBank's purchase price for such shares,
(iii) (x) the net cash amounts received by NationsBank pursuant to the sale of
Boatmen's Common Stock purchased pursuant to the Boatmen's Option (or any other
securities into which such shares may be converted or exchanged) to any
unaffiliated party, less (y) NationsBank's purchase price of such shares, (iv)
any amounts received by NationsBank on the transfer of the Boatmen's Option (or
any portion thereof) to any unaffiliated party, and (v) any equivalent amount
with respect to the Substitute Option.
The term "Notional Total Profit" with respect to any number of shares of
Boatmen's Common Stock as to which NationsBank may propose to exercise the
Boatmen's Option shall be the Total Profit determined as
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<PAGE> 61
of the date of such proposed exercise assuming that the Boatmen's Option were
exercised on such date for such number of shares and assuming that such shares,
together with all other Boatmen's Common Stock purchased pursuant to the
Boatmen's Option held by NationsBank and its affiliates as of such date, were
sold for cash at the closing market price for the Boatmen's Common Stock as of
the close of business on the preceding trading day (less customary brokerage
commissions).
Boatmen's is required (but not more than once during any calendar year and
subject to certain other conditions described in the Boatmen's Stock Option
Agreement), if requested by any holder, including NationsBank and any permitted
transferee (a "Selling Shareholder"), as expeditiously as possible to prepare
and file a registration statement under the Securities Act if such registration
is necessary in order to permit the sale or other disposition of any or all
shares of Boatmen's Common Stock or other securities that have been acquired by
or are issuable to the Selling Shareholder upon exercise of the Boatmen's Option
in accordance with the intended method of sale or other disposition stated by
the Selling Shareholder in such request, and Boatmen's is required to use its
best efforts to qualify such shares or other securities for sale under any
applicable state securities laws. The Selling Shareholder also has the right, as
described in the Boatmen's Stock Option Agreement, to include the Selling
Shareholder's shares in certain underwritten public offerings of Boatmen's
Common Stock by Boatmen's after the exercise of the Boatmen's Option. Except
where applicable state law prohibits such payments, Boatmen's will pay all
expenses, excluding discounts and commissions but including liability insurance
if Boatmen's so desires or the underwriters so require, in connection with each
registration described above.
The Boatmen's Stock Option Agreement is intended to increase the likelihood
that the Merger will be consummated in accordance with the terms set forth in
the Agreement. Consequently, certain aspects of the Boatmen's Stock Option
Agreement may have the effect of discouraging persons who might now, or prior to
the Effective Time, be interested in acquiring all of or a significant interest
in Boatmen's from considering or proposing such an acquisition, even if such
persons were prepared to offer to pay consideration to shareholders of Boatmen's
which had a higher current market price than the shares of NationsBank Common
Stock to be received for each share of Boatmen's Common Stock pursuant to the
Agreement.
The Boatmen's Stock Option Agreement is filed as an Exhibit to the
Registration Statement and is incorporated by reference herein and reference is
made thereto for the complete terms of the Boatmen's Stock Option Agreement and
the Boatmen's Option. The foregoing discussion is qualified in its entirety by
reference to the Boatmen's Stock Option Agreement.
AMENDMENT TO BOATMEN'S RIGHTS AGREEMENT
Each share of Boatmen's Common Stock has attached to it a Boatmen's Right
issued pursuant to the Boatmen's Rights Agreement. In connection with the
execution of the Agreement, Boatmen's amended the Boatmen's Rights Agreement to
provide, among other things, that (i) the execution and delivery of the
Agreement and consummation of the Merger and execution and delivery of the
Boatmen's Stock Option Agreement and any acquisition of shares of Boatmen's
Common Stock by NationsBank (and certain related persons) upon exercise thereof,
or as contemplated by the Agreement, will not cause the Boatmen's Rights to
become exercisable, or cause the Boatmen's Rights to be separated from the
shares of Boatmen's Common Stock to which they are attached, and (ii) the
Boatmen's Rights may not become exercisable at any time from and after, and the
Boatmen's Rights Agreement will terminate at, the Effective Time. See
"COMPARATIVE RIGHTS OF SHAREHOLDERS OF NATIONSBANK AND BOATMEN'S -- Shareholder
Rights Plan."
ACCOUNTING TREATMENT
Upon consummation of the Merger, the transaction will be accounted for as a
purchase, and all of the assets and liabilities of Boatmen's will be recorded in
NationsBank's consolidated financial statements at their estimated fair value at
the Effective Time. The amount by which the purchase price paid by NationsBank
exceeds the fair value of the net assets acquired by NationsBank through the
Merger will be recorded as goodwill. The Company currently expects that based
on preliminary purchase accounting estimates the Merger would result in
identifiable intangibles and goodwill approximating $6.3 billion and yearly
amortization of intangibles and goodwill of approximately $292 million.
(Identifiable intangibles will be amortized over 10 years and goodwill will be
amortized on a straight-line basis over 25 years.) NationsBank's
consolidated
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<PAGE> 62
financial statements will include the operations of Boatmen's after the
Effective Time. Were the Merger to be accounted for as a pooling, the historical
basis of the assets and liabilities of the merging companies would be combined
at the Effective Time and carried forward at their previously recorded amounts,
while the shareholders' equity accounts of the two companies would be combined
in the Surviving Corporation's consolidated balance sheet, with no creation of
goodwill or other intangible assets. Also, under pooling-of-interests
accounting, the historical results of operations would be retroactively restated
as if the merging companies were combined for all periods covered by such
financial statements. The unaudited pro forma financial information included in
this Joint Proxy Statement-Prospectus reflects the Merger using the purchase
method of accounting. See "COMPARATIVE UNAUDITED PER SHARE DATA," "SELECTED
FINANCIAL DATA" and "UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION."
REGULATORY MATTERS
Federal Reserve Board. The Merger is subject to prior approval by the
Federal Reserve Board under the BHCA. The BHCA requires the Federal Reserve
Board, when approving a transaction such as the Merger, to take into
consideration the financial and managerial resources (including the competence,
experience and integrity of the officers, directors and principal shareholders)
and future prospects of the existing and proposed institutions and the
convenience and needs of the communities to be served. In considering financial
resources and future prospects, the Federal Reserve Board will, among other
things, evaluate the adequacy of the capital levels of the parties to a proposed
transaction.
The BHCA prohibits the Federal Reserve Board from approving a merger if it
would result in a monopoly or be in furtherance of any combination or conspiracy
to monopolize or to attempt to monopolize the business of banking in any part of
the United States, or if its effect in any section of the country would be
substantially to lessen competition or to tend to create a monopoly, or if it
would in any other manner result in a restraint of trade, unless the Federal
Reserve Board finds that the anti-competitive effects of a merger are clearly
outweighed in the public interest by the probable effect of the transaction in
meeting the convenience and needs of the communities to be served. In addition,
under the Community Reinvestment Act of 1977, as amended (the "CRA"), the
Federal Reserve Board must take into account the record of performance of the
existing institutions in meeting the credit needs of the entire community,
including low- and moderate-income neighborhoods, served by such institutions.
Applicable Federal law provides for the publication of notice and public
comment on applications filed with the Federal Reserve Board and authorizes such
agency to permit interested parties to intervene in the proceedings. If an
interested party is permitted to intervene, such intervention could delay the
regulatory approvals required for consummation of the Merger.
The Merger generally may not be consummated until between 15 and 30 days
following the date of applicable Federal regulatory approval, during which time
the United States Department of Justice may challenge the Merger on antitrust
grounds. The commencement of an antitrust action would stay the effectiveness of
the regulatory agency's approval unless a court specifically ordered otherwise.
NationsBank and Boatmen's believe that the Merger does not raise substantial
antitrust or other significant regulatory concerns and that any divestitures
that may be required in order to consummate the Merger will not be material to
the financial condition or results of operations of NationsBank or Boatmen's
prior to the Effective Time, or NationsBank after the Effective Time.
State Authorities. The Merger may be subject to the approval of or notice
to the State Authorities.
Status of Regulatory Approvals and Other Information. NationsBank and
Boatmen's have filed (or will promptly file) all applications and notices and
have taken (or will promptly take) other appropriate action with respect to any
requisite approvals or other action of any governmental authority. The Agreement
provides that the obligation of each of NationsBank and Boatmen's to consummate
the Merger is conditioned upon the receipt of all requisite regulatory
approvals, including the approvals of the Federal Reserve Board, the OTS and the
State Authorities. There can be no assurance that any governmental agency will
approve or take any other required action with respect to the Merger, and, if
approvals are received or action is taken, there can be no assurance as to the
date of such approvals or action, that such approvals or action will not be
conditioned upon matters that would cause the parties to abandon the Merger or
that no action will be brought challenging
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<PAGE> 63
such approvals or action, including a challenge by the United States Department
of Justice or, if such a challenge is made, the result thereof. To date,
applications or notifications have been filed with the Federal Reserve Board,
the Missouri Department of Economic Development, the Texas Department of
Banking, the Kansas State Banking Department, the Georgia Department of Banking
and Finance, the Oklahoma State Banking Department, the Tennessee Department of
Financial Institutions, the New Mexico Financial Institutions Division, the Iowa
Division of Banking, the Arkansas State Bank Department and the Illinois Office
of Banks and Real Estate. All of the foregoing applications are pending at this
time.
NationsBank and Boatmen's are not aware of any governmental approvals or
actions that may be required for consummation of the Merger other than as
described above. Should any other approval or action be required, NationsBank
and Boatmen's currently contemplate that such approval or action would be
sought.
THE MERGER CANNOT PROCEED IN THE ABSENCE OF THE REQUISITE REGULATORY
APPROVALS. THERE CAN BE NO ASSURANCES THAT SUCH REGULATORY APPROVALS WILL BE
OBTAINED OR AS TO THE DATES OF ANY SUCH APPROVALS. THERE CAN ALSO BE NO
ASSURANCE THAT SUCH APPROVALS WILL NOT CONTAIN A CONDITION OR REQUIREMENT WHICH
CAUSES SUCH APPROVALS TO FAIL TO SATISFY THE CONDITIONS SET FORTH IN THE
AGREEMENT. SEE "-- CONDITIONS TO THE MERGER." THERE CAN LIKEWISE BE NO ASSURANCE
THAT THE UNITED STATES DEPARTMENT OF JUSTICE WILL NOT CHALLENGE THE MERGER, OR,
IF SUCH A CHALLENGE IS MADE, AS TO THE RESULT THEREOF.
See "-- The Effective Time", "-- Conditions to the Merger" and
"-- Termination of the Agreement."
RESTRICTIONS ON RESALES BY AFFILIATES
The shares of NationsBank stock to be issued to Boatmen's Shareholders in
the Merger have been registered under the Securities Act. Such shares may be
traded freely and without restriction by those shareholders not deemed to be
"affiliates" of Boatmen's as that term is defined under the Securities Act. Any
subsequent transfer of such shares, however, by any person who is an affiliate
of Boatmen's at the time the Merger is submitted for vote of the Boatmen's
Shareholders will, under existing law, require either (a) the further
registration under the Securities Act of the shares of NationsBank stock to be
transferred, (b) compliance with Rule 145 promulgated under the Securities Act
(permitting limited sales under certain circumstances) or (c) the availability
of another exemption from registration. An "affiliate" of Boatmen's, as defined
by the rules promulgated pursuant to the Securities Act, is a person who
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with Boatmen's. The foregoing
restrictions are expected to apply to the directors, executive officers and the
holders of 10% or more of the Boatmen's Common Stock (and to certain relatives
or the spouse of any such person and any trusts, estates, corporations, or other
entities in which any such person has a 10% or greater beneficial or equity
interest). Stop transfer instructions will be given by NationsBank to the
transfer agent with respect to the NationsBank stock to be received by persons
subject to the restrictions described above, and the certificates for such stock
will be appropriately legended. Boatmen's has agreed that not later than 30 days
prior to the Effective Time, it will use its best efforts to obtain from each of
those individuals identified by Boatmen's as affiliates appropriate agreements
that each such individual will not make any further sales of shares of
NationsBank stock received upon consummation of the Merger, except in compliance
with the restrictions described above.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
NationsBank has a dividend reinvestment and stock purchase plan that
provides, for those shareholders who elect to participate, that dividends on
NationsBank Common Stock will be used to purchase either original issue shares
or shares in the open market at market value of NationsBank Common Stock on a
quarterly basis. The plan also permits participants to invest in additional
shares of NationsBank Common Stock through optional cash payments, within
certain dollar limitations, at the then-current market price of such stock at
the time of purchase on any of 12 monthly investment dates each year. It is
anticipated that NationsBank will continue its dividend reinvestment and stock
purchase plan and that shareholders of
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<PAGE> 64
Boatmen's who receive shares of NationsBank Common Stock in the Merger will have
the right to participate therein.
The Boatmen's Dividend Reinvestment and Stock Purchase Plan (the "Boatmen's
DRP") provides, in substance, for those shareholders who elect to participate,
that dividends on Boatmen's Common Stock and optional cash payments of not less
than $100 per payment, up to a maximum of $10,000 for each quarter will be
invested in shares of Boatmen's Common Stock. The Boatmen's DRP was suspended on
October 30, 1996.
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<PAGE> 65
MANAGEMENT AND OPERATIONS AFTER THE MERGER
MANAGEMENT AND OPERATIONS AFTER THE MERGER
In the Agreement, NationsBank agreed to cause five (5) persons designated
by Boatmen's and willing so to serve and reasonably satisfactory to NationsBank,
which will include Mr. Andrew B. Craig, III, to be elected or appointed as
directors of NationsBank at, or as promptly as practicable after, the Effective
Time. At the first annual meeting of stockholders of NationsBank subsequent to
the Effective Time, NationsBank will take all corporate action necessary to, and
will, renominate each such person, including Mr. Craig, for election as
directors of NationsBank and will recommend that NationsBank shareholders vote
for the election of such individuals as directors. NationsBank also agreed to
cause Mr. Craig to be elected or appointed as a member of the Executive
Committee of the Board of Directors of NationsBank at, or as promptly as
practicable after, the Effective Time and at the Effective Time Mr. Craig will
be Chairman of the Board of Directors of NationsBank for a term extending
through the NationsBank annual meeting of shareholders in 1998.
See "THE MERGER -- Interests of Certain Persons in the Merger."
Following the Merger, NationsBank intends to combine the operations of and,
subject to required regulatory approvals, to merge subsidiary banks of
NationsBank and Boatmen's and to consolidate the operations of other
subsidiaries of NationsBank and Boatmen's that provide similar services. Receipt
of such regulatory approvals is not a condition to the Merger. As of the date of
this Joint Proxy Statement-Prospectus, no final determination with respect to
such matters has been made. Additionally, NationsBank intends to combine the
trust and investment management operations of NationsBank and Boatmen's in a
single asset-management group in St. Louis and to manage the activities of its
banking operations in Missouri, Arkansas, Kansas, Iowa, Illinois, Texas,
Oklahoma and New Mexico from St. Louis through the NationsBank West group to be
formed after the Merger.
While no assurance can be given, NationsBank and Boatmen's have estimated,
based on information available at this time, pretax expense savings resulting
from the Merger to be approximately $140 million in 1997, increasing to
approximately $295 million in 1998 and $335 million in 1999. The extent to which
such expense savings will be achieved is dependent upon various factors, a
number of which are beyond the control of NationsBank and Boatmen's, including
the regulatory environment, economic conditions, unanticipated changes in
business conditions, and inflation, and no assurances can be given with respect
to the ultimate level and composition of expense savings to be realized, or that
such savings will be realized in the time frame currently anticipated. These
amounts have not been included in any of the unaudited pro forma financial
information included in this Joint Proxy Statement-Prospectus.
Historically, NationsBank has achieved a return on equity on a
consolidated basis of approximately 15.8% in 1992, 15% in 1993, 16.1% in 1994,
17% in 1995, 17.6% for the first nine months of 1996 (after giving effect to a
merger related charge expensed in the first quarter of 1996) and 18.4%
(excluding the merger related charge). NationsBank has achieved a return on
equity for its General Bank of approximately 15% in 1992, 16% in 1993, 17% in
1994, 19% in 1995 and 23% for the first nine months of 1996. NationsBank
believes that these positive trends are reflective of its strength in
integrating past acquisitions, including NationsBank's acquisition of
C&S/Sovran Corporation. NationsBank has recently established a corporate goal
of achieving a targeted return on equity on a consolidated basis in the range
of 17% to 20%. NationsBank expects that the Merger will enable NationsBank and
its General Bank to achieve favorable returns on equity generally consistent
with this historical performance over time upon full integration of the Merger,
although there can be no assurance in that regard.
For additional information regarding management and operations of the
combined company, see "INFORMATION ABOUT NATIONSBANK" and "INFORMATION ABOUT
BOATMEN'S."
1997 AND 1998 EARNINGS ESTIMATES
In analyzing the anticipated financial impact of the Merger, NationsBank
prepared certain earnings estimates for the combined company. As a base line for
these earnings estimates, NationsBank used consensus "street" earnings per share
estimates published by IBES for both NationsBank and Boatmen's. The IBES
estimates for NationsBank's stand-alone fully diluted earnings per share are
$8.98 and $9.97 for 1997 and 1998, respectively.
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<PAGE> 66
From the IBES base, NationsBank made certain adjustments to reflect
preliminary purchase accounting estimates and adjustments regarding cost savings
and revenue enhancements expected to be realized from the Merger to derive an
estimated combined company fully diluted earnings per share estimate of $8.48 in
1997 and $10.00 in 1998. The significant assumptions utilized by NationsBank in
preparing these estimates include the following:
- The Merger will be consummated in January 1997.
- The aggregate transaction value is approximately $9.6 billion based on
the closing price of NationsBank Common Stock of $93.625 on August 27,
1996.
- NationsBank will have average fully diluted common shares outstanding of
approximately 346 million in 1997 and approximately 332 million in 1998.
An estimated 61 million shares will be issued in the Merger, which
assumes a cash election of 40 percent of the Merger consideration.
- Before-tax cost savings relating to the Merger will total approximately
$140 million in 1997 and approximately $295 million in 1998. The majority
of these projected cost savings will result from eliminating redundancies
and centralizing back-office and staff units.
- The Merger will result in before-tax revenue enhancements and funding
advantages totaling approximately $75 million and approximately $165
million in 1997 and 1998, respectively. These projected revenue
enhancements and funding advantages assume, among other things, improved
product delivery processes, higher market penetration for fee-related
business activities and lower deposit and discretionary funding costs.
The combined company's ability to achieve these earnings estimates is
dependent upon various factors, a number of which will be beyond the control of
NationsBank, including the regulatory environment, economic conditions,
unanticipated changes in business conditions and inflation, and no assurances
can be given with respect to the ultimate level and composition of expense
savings and revenue enhancements to be realized, or that such expense savings
and revenue enhancements will be realized in the time frame currently
anticipated. In addition, these earnings estimates will vary based on the final
transaction value as determined by the NationsBank Common Stock price during the
period prior to the Effective Time as specified in the Agreement. These earnings
estimates are also dependent upon whether the level of share buybacks necessary
to reach the average share estimates outlined above are achieved. As a result of
these and other factors, there will be differences between the earnings
estimates presented herein and actual results and these differences could be
material. The components of these earnings estimates have not been included in
any of the unaudited pro forma financial information included in this Joint
Proxy Statement-Prospectus. See cautionary statement included under
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE" regarding these
forward-looking earnings estimates.
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<PAGE> 67
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
MARKET PRICES
NationsBank Common Stock is listed on the NYSE and the PSE under the
trading symbol "NB." NationsBank Common Stock is also listed on the LSE and
certain shares are listed on the Tokyo Stock Exchange. As of August 29, 1996
NationsBank Common Stock was held of record by approximately 107,709 persons.
The following table sets forth the high and low sale prices of the NationsBank
Common Stock as reported on the NYSE Composite Transactions List for the periods
indicated.
Boatmen's Common Stock is traded on The Nasdaq Stock Market as a National
Market Security and reported by The Nasdaq Stock Market under the symbol "BOAT."
The following table sets forth the high and low sale prices for Boatmen's Common
Stock as reported by The Nasdaq Stock Market for the indicated periods. As of
August 30, 1996 Boatmen's Common Stock was held of record by approximately
36,122 persons.
<TABLE>
<CAPTION>
NATIONSBANK BOATMEN'S
SALES PRICES SALES PRICES
------------- -------------
HIGH LOW HIGH LOW
---- --- ---- ---
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1994:
First Quarter.............................................. $50 7/8 $44 3/8 $30 1/2 $26 3/4
Second Quarter............................................. 57 3/8 44 1/2 35 28 7/8
Third Quarter.............................................. 56 47 1/8 34 7/8 30 1/8
Fourth Quarter............................................. 50 3/4 43 3/8 31 1/2 26 1/8
YEAR ENDED DECEMBER 31, 1995:
First Quarter.............................................. 51 3/4 44 5/8 31 7/8 26 7/8
Second Quarter............................................. 57 3/4 49 5/8 36 1/4 30 1/4
Third Quarter.............................................. 68 7/8 53 3/4 38 3/4 34 1/2
Fourth Quarter............................................. 74 3/4 64 42 5/8 36
YEAR ENDING DECEMBER 31, 1996:
First Quarter.............................................. 81 3/8 64 3/8 42 7/8 37 5/8
Second Quarter............................................. 84 5/8 74 3/4 41 37 1/4
Third Quarter.............................................. 94 1/8 76 3/8 56 39 1/4
Fourth Quarter (through November 13, 1996)................. 95 7/8 86 1/4 61 3/4 55 3/8
</TABLE>
DIVIDENDS
The following table sets forth dividends declared per share of NationsBank
Common Stock and Boatmen's Common Stock, respectively, for the periods
indicated. The ability of either NationsBank or Boatmen's to pay dividends to
its shareholders is subject to certain restrictions. See "INFORMATION ABOUT
NATIONSBANK -- Supervision and Regulation" and "INFORMATION ABOUT
BOATMEN'S -- Supervision and Regulation."
<TABLE>
<CAPTION>
NATIONSBANK BOATMEN'S
DIVIDENDS DIVIDENDS
----------- ----------
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1994:
First Quarter...................................................... $ .46 $.31
Second Quarter..................................................... .46 .31
Third Quarter...................................................... .46 .34
Fourth Quarter..................................................... .50 .34
YEAR ENDED DECEMBER 31, 1995:
First Quarter...................................................... .50 .34
Second Quarter..................................................... .50 .34
Third Quarter...................................................... .50 .37
Fourth Quarter..................................................... .58 .37
YEAR ENDING DECEMBER 31, 1996:
First Quarter...................................................... .58 .37
Second Quarter..................................................... .58 .37
Third Quarter...................................................... .58 .42
</TABLE>
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INFORMATION ABOUT NATIONSBANK
GENERAL
NationsBank is a multi-bank holding company established as a North Carolina
corporation in 1968 and is registered under the BHCA, with its principal assets
being the stock of its subsidiaries. Through its banking subsidiaries (the
"Banks") and its various non-banking subsidiaries, NationsBank provides banking
and banking-related services, primarily throughout the Southeast and
Mid-Atlantic states and Texas. The principal executive offices of NationsBank
are located at NationsBank Corporate Center in Charlotte, North Carolina 28255.
Its telephone number is (704) 386-5000.
OPERATIONS
NationsBank provides a diversified range of banking and certain non-banking
financial services and products through its various subsidiaries. NationsBank
manages its activities through three major business units: the General Bank,
Global Finance and Financial Services.
The General Bank provides comprehensive services in the commercial and
retail banking fields, including the origination and servicing of home mortgage
loans, the issuance and servicing of credit cards (through a Delaware
subsidiary), indirect lending, dealer finance and certain insurance services.
The General Bank also provides retirement services for defined benefit and
defined contribution plans, full service and discount brokerage services and
investment advisory services, including advising the Nations Fund family of
mutual funds, as well as private banking, fiduciary and investment management
services through subsidiaries of NationsBank. As of September 30, 1996, the
General Bank operated 1,980 banking offices through the following Banks:
NationsBank, N.A. (serving the states of North Carolina, South Carolina,
Maryland and Virginia and the District of Columbia); NationsBank, N.A. (South)
(serving the states of Florida and Georgia); NationsBank of Kentucky, N.A.;
NationsBank of Tennessee, N.A.; NationsBank of Texas, N.A.; and Sun World, N.A.
(serving the state of Texas). The General Bank also provides fully automated,
24-hour cash dispensing and depositing services throughout the states in which
it is located, through 3,609 automated teller machines.
Global Finance provides comprehensive corporate and investment banking as
well as trading and distribution services to domestic and international
customers. The group serves as a principal lender and investor, as well as an
advisor, arranger and underwriter, and manages treasury and trade transactions
for clients and customers. Loan origination and syndication, asset-backed
lending, leasing, factoring, project finance and mergers and acquisitions are
representative of the services provided. Global Finance also underwrites, trades
and distributes a wide range of securities (including bank-eligible securities
and, to a limited extent, bank-ineligible securities as authorized by the
Federal Reserve Board), and trades and distributes a wide range of derivative
products in certain interest rate, foreign exchange, commodity and equity
markets. Global Finance provides its services through various offices located in
major United States cities as well as in London, Frankfurt, Singapore, Bogota,
Mexico City, Grand Cayman, Nassau, Seoul, Tokyo, Osaka, Taipei and Hong Kong.
Financial Services includes NationsCredit Consumer Corporation, primarily a
consumer finance subsidiary, and NationsCredit Commercial Corporation, primarily
a commercial finance subsidiary. NationsCredit Consumer Corporation, which has
approximately 331 offices located in 36 states, provides personal, mortgage and
automobile loans to consumers and retail finance programs to dealers.
NationsCredit Commercial Corporation consists of seven divisions that specialize
in one or more of the following areas: equipment loans and leasing; loans for
debt restructuring, mergers and acquisitions and working capital; real estate,
golf/recreational and health care financing; and inventory financing to
manufacturers, distributors and dealers.
As part of its operations, NationsBank regularly evaluates the potential
acquisition of, and holds discussions with, various financial institutions and
other businesses of a type eligible for bank holding company investment. In
addition, NationsBank regularly analyzes the values of, and submits bids for,
the acquisition of customer-based funds and other liabilities and assets of such
financial institutions and other businesses. As a
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<PAGE> 69
general rule, NationsBank publicly announces such material acquisitions when a
definitive agreement has been reached.
MANAGEMENT AND ADDITIONAL INFORMATION
Certain information relating to the executive compensation, various benefit
plans (including stock option plans), voting securities and the principal
holders thereof, certain relationships and related transactions and other
related matters as to NationsBank is incorporated by reference or set forth in
the NationsBank Annual Report on Form 10-K for the year ended December 31, 1995,
incorporated herein by reference. Shareholders of NationsBank and Boatmen's
desiring copies of such documents may contact NationsBank at its address or
telephone number indicated under "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE."
SUPERVISION AND REGULATION
General. As a registered bank holding company, NationsBank is subject to
the supervision of, and to regular inspection by, the Federal Reserve Board. The
Banks are organized as national banking associations, which are subject to
regulation, supervision and examination by the Office of the Comptroller of the
Currency (the "Comptroller"). The Banks are also subject to regulation by the
FDIC and other federal regulatory agencies. In addition to banking laws,
regulations and regulatory agencies, NationsBank 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 Corporation's operations, management and ability to make
distributions. The following discussion summarizes certain aspects of those laws
and regulations that affect NationsBank.
The activities of NationsBank, and those of companies which it controls or
in which it holds more than 5% of the voting stock, are limited to banking or
managing or controlling banks or furnishing services to or performing services
for its subsidiaries, or any other activity which the Federal Reserve Board
determines to be so closely related to banking or managing or controlling banks
as to be a proper incident thereto. In making such determinations, the Federal
Reserve Board is required to consider whether the performance of such activities
by a bank holding company or its subsidiaries can reasonably be expected to
produce benefits to the public such as greater convenience, increased
competition or gains in efficiency that outweigh possible adverse effects, such
as undue concentration of resources, decreased or unfair competition, conflicts
of interest or unsound banking practices. Generally, bank holding companies,
such as NationsBank, are required to obtain prior approval of the Federal
Reserve Board to engage in any new activity not previously approved by the
Federal Reserve Board or to acquire more than 5% of any class of voting stock of
any company.
Bank holding companies are also required to obtain the prior approval of
the Federal Reserve Board before acquiring more than 5% 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
became able to acquire banks in states other than its home state beginning
September 29, 1995 without regard to the permissibility of such acquisitions
under state law, but subject to any state requirement that the bank has been
organized and operating for a minimum period of time, not to exceed five years,
and the requirement that the bank holding company, prior to or following the
proposed acquisition, controls no more than 10% of the total amount of deposits
of insured depository institutions in the United States and no more than 30% of
such deposits in that state (or such lesser or greater amount set by state law).
The Interstate Banking and Branching Act also authorizes banks to merge
across state lines, therefore creating interstate branches, beginning June 1,
1997. Under such legislation, each state has the opportunity to "opt out" of
this provision, thereby prohibiting interstate branching in such states, or to
"opt in" at an earlier time, thereby allowing interstate branching within that
state prior to June 1, 1997. Furthermore, pursuant to such act, a bank is now
able to open new branches in a state in which it does not already have banking
operations, if the laws of such state permit such de novo branching. Of those
states in which the Banks are located, Delaware, Maryland, North Carolina and
Virginia have enacted legislation to "opt in,"
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thereby permitting interstate branching prior to June 1, 1997, and Texas has
adopted legislation to "opt out" of the interstate branching provisions (which
Texas law currently expires on September 2, 1999).
As previously described, NationsBank regularly evaluates merger and
acquisition opportunities, and it anticipates that it will continue to evaluate
such opportunities in light of the new legislation.
Proposals to change the laws and regulations governing the banking industry
are frequently introduced in Congress, in the state legislatures and before the
various bank regulatory agencies.
Capital and Operational Requirements. The Federal Reserve Board, the
Comptroller and the FDIC have issued substantially similar risk-based and
leverage capital guidelines applicable to United States banking organizations.
In addition, those regulatory agencies may from time to time require that a
banking organization maintain capital above the minimum levels, whether because
of its financial condition or actual or anticipated growth.
The Federal Reserve Board risk-based guidelines define a two-tier capital
framework. Tier 1 capital consists of common and qualifying preferred
shareholders' equity, less certain intangibles and other adjustments. Tier 2
capital consists of subordinated and other qualifying debt, and the allowance
for credit losses up to 1.25% of risk-weighted assets. The sum of Tier 1 and
Tier 2 capital less investments in unconsolidated subsidiaries represents
qualifying total capital, at least 50% of which must consist of Tier 1 capital.
Risk-based capital ratios are calculated by dividing Tier 1 and total capital by
risk-weighted assets. Assets and off-balance sheet exposures are assigned to one
of four categories of risk-weights, based primarily on relative credit risk. The
minimum Tier 1 capital ratio is 4% and the minimum total capital ratio is 8%.
NationsBank's Tier 1 and total risk-based capital ratios under these guidelines
at September 30, 1996 were 7.05% and 12.05%, respectively.
The leverage ratio is determined by dividing Tier 1 capital by adjusted
average total assets. Although the stated minimum ratio is 3%, most banking
organizations are required to maintain ratios of at least 100 to 200 basis
points above 3%. NationsBank's leverage ratio at September 30, 1996 was 6.30%.
Management believes that NationsBank meets its leverage ratio requirement.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), among other things, identifies five capital categories for insured
depository institutions (well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized) and requires the respective Federal regulatory agencies to
implement systems for "prompt corrective action" for insured depository
institutions that do not meet minimum capital requirements within such
categories. FDICIA imposes progressively more restrictive constraints on
operations, management and capital distributions, depending on the category in
which an institution is classified. Failure to meet the capital guidelines could
also subject a banking institution to capital raising requirements. An
"undercapitalized" bank must develop a capital restoration plan and its parent
holding company must guarantee that bank's compliance with the plan. The
liability of the parent holding company under any such guarantee is limited to
the lesser of 5% of the bank's assets at the time it became "undercapitalized"
or the amount needed to comply with the plan. Furthermore, in the event of the
bankruptcy of the parent holding company, such guarantee would take priority
over the parent's general unsecured creditors. In addition, FDICIA requires the
various regulatory agencies to prescribe certain non-capital standards for
safety and soundness relating generally to operations and management, asset
quality and executive compensation and permits regulatory action against a
financial institution that does not meet such standards.
The various regulatory agencies have adopted substantially similar
regulations that define the five capital categories identified by FDICIA, using
the total risk-based capital, Tier 1 risk-based capital and leverage capital
ratios as the relevant capital measures. Such regulations establish various
degrees of corrective action to be taken when an institution is considered
undercapitalized. Under the regulations, a "well capitalized" institution must
have a Tier 1 capital ratio of at least 6%, a total capital ratio of at least
10% and a leverage ratio of at least 5% and not be subject to a capital
directive order. An "adequately capitalized" institution must have a Tier 1
capital ratio of at least 4%, a total capital ratio of at least 8% and a
leverage ratio of at least 4%,
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or 3% in some cases. Under these guidelines, as of September 30, 1996, each of
the Banks was considered well capitalized.
Banking agencies have recently adopted final regulations which mandate that
regulators take into consideration concentrations of credit risk and risks from
non-traditional activities, as well as an institution's ability to manage those
risks, when determining the adequacy of an institution's capital. This
evaluation will be made as a part of the institution's regular safety and
soundness examination. Banking agencies also have recently adopted final
regulations requiring regulators to consider interest rate risk (when the
interest rate sensitivity of an institution's assets does not match the
sensitivity of its liabilities or its off-balance-sheet position) in the
evaluation of a bank's capital adequacy. Concurrently, banking agencies have
proposed a methodology for evaluating interest rate risk. After gaining
experience with the proposed measurement process, those banking agencies intend
to propose further regulations to establish an explicit risk-based capital
charge for interest rate risk.
Distributions. NationsBank funds for cash distributions to its
shareholders are derived from a variety of sources, including cash and temporary
investments. The primary source of such funds, however, is dividends received
from its banking subsidiaries. The amount of dividends that each Bank may
declare in a calendar year without approval of the Comptroller is the Bank's net
profits for that year, as defined by statute, combined with its net retained
profits, as defined, for the preceding two years. In addition, from time to time
NationsBank applies for, and may receive, permission from the Comptroller for
one or more of the Banks to declare special dividends. As of January 1, 1996,
the Banks can initiate dividend payments without prior regulatory approval of up
to $905 million plus an additional amount equal to their net profits for 1996 up
to the date of any such dividend declaration.
In addition to the foregoing, the ability of NationsBank and the Banks to
pay dividends may be affected by the various minimum capital requirements and
the capital and non-capital standards established under FDICIA as described
above. Furthermore, the Comptroller may prohibit the payment of a dividend by a
national bank if it determines that such payment would constitute an unsafe or
unsound practice. The right of NationsBank, its shareholders and its creditors
to participate in any distribution of the assets or earnings of its subsidiaries
is further subject to the prior claims of creditors of the respective
subsidiaries.
Source of Strength. According to Federal Reserve Board policy, bank
holding companies are expected to act as a source of financial strength to each
subsidiary bank and to commit resources to support each such subsidiary. This
support may be required at times when a bank holding company may not be able to
provide such support. In the event of a loss suffered or anticipated by the
FDIC -- either as a result of default of a banking or thrift subsidiary of
NationsBank or related to FDIC assistance provided to a subsidiary in danger of
default -- the other banking subsidiaries of NationsBank may be assessed for the
FDIC's loss, subject to certain exceptions.
MERGER SUB
Merger Sub, a Delaware corporation, is a wholly owned subsidiary of
NationsBank and is not engaged in any significant business activity other than
holding stock of other subsidiaries of NationsBank.
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INFORMATION ABOUT BOATMEN'S
GENERAL
Boatmen's is a bank holding company registered under the BHCA, was
organized under the laws of the State of Missouri in 1946, and has as its
principal assets the stock of its subsidiaries. Boatmen's is among the 30
largest banking organizations in the United States with, as of September 30,
1996, total assets of approximately $40.7 billion and total shareholders' equity
of $3.6 billion. Through 55 subsidiary banks, including a federal savings bank,
Boatmen's operates from over 600 locations in Missouri, Arkansas, Illinois,
Iowa, Kansas, New Mexico, Oklahoma, Tennessee and Texas and it has the leading
deposit market share in five states -- Missouri, Kansas, Oklahoma, Arkansas and
New Mexico. Boatmen's also ranks among the twenty largest providers of trust
services in the nation, with approximately $42.7 billion in assets under
management as of September 30, 1996. Boatmen's other principal businesses
include a mortgage banking company, a credit life insurance company, a credit
card company and an insurance agency. Boatmen's principal executive offices are
located at One Boatmen's Plaza, 800 Market Street, St. Louis, Missouri 63101,
and its telephone number is (314) 466-6000.
The business of Boatmen's consists primarily of the ownership, supervision
and control of its subsidiaries (the "Boatmen's Banks"). Boatmen's provides its
subsidiaries with advice, counsel and specialized services in various fields of
financial and banking policy and operations.
MANAGEMENT AND ADDITIONAL INFORMATION
Certain information relating to the executive compensation, various benefit
plans (including stock option plans), voting securities and the principal
holders thereof, certain relationships and related transactions and certain
biographical information regarding Mr. Craig and other related matters as to
Boatmen's is incorporated by reference or set forth in Boatmen's Annual Report
on Form 10-K for the year ended December 31, 1995, incorporated herein by
reference. Shareholders of Boatmen's and NationsBank desiring copies of such
documents may contact Boatmen's at its address or phone number indicated under
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
SUPERVISION AND REGULATION
Boatmen's, like NationsBank, is a registered bank holding company subject
to the supervision of, and to regular inspection by, the Federal Reserve Board.
The Boatmen's Banks which are national banks are subject to the supervision,
regulation and examination by the Comptroller. The Boatmen's Banks which are
state chartered banks and members of the Federal Reserve System are subject to
federal supervision, regulation and examination by the FDIC. The state chartered
Boatmen's Banks are also subject to supervision, regulation and examination by
the bank supervisory authorities in their respective states. The Boatmen's Bank
which is a federal savings bank is subject to supervision, regulation and
examination by the OTS. Various federal and state laws and regulations apply to
many aspects of the operations of the Boatmen's Banks, including reserves,
loans, mortgages, issuances of securities, interest rates paid on deposits and
loans, investments, mergers and acquisitions, establishment of branch offices
and facilities and capital. The payment of dividends by the Boatmen's Banks,
which is Boatmen's principal source of income, is also subject to certain
statutory restrictions and to regulation by government agencies. The deposits of
the Boatmen's Banks are insured by the FDIC to the extent provided by law. The
following discussion summarizes certain aspects of the laws and regulations that
affect Boatmen's. This summary is qualified in its entirety by reference to the
particular statutory and regulatory provisions referred to below and is not
intended to be an exhaustive description of the statutes or regulations
applicable to Boatmen's business. Supervision, regulation and examination of
Boatmen's and its subsidiary banks by the bank regulatory agencies are intended
primarily for the protection of depositors rather than holders of stock of
Boatmen's.
Like NationsBank, the activities of Boatmen's, and those companies which it
controls or in which it holds more than 5% of the voting stock, are limited to
banking or managing or controlling banks or furnishing services to or performing
services for its subsidiaries, or any other activity which the Federal Reserve
Board
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determines to be so closely related to banking or managing or controlling banks
as to be a proper incident thereto. In making such determinations, the Federal
Reserve Board is required to consider whether the performance of such activities
by a bank holding company or its subsidiaries can reasonably be expected to
produce benefits to the public such as greater convenience, increased
competition or gains in efficiency that outweigh possible adverse effects, such
as undue concentration of resources, decreased or unfair competition, conflicts
of interest or unsound banking practices. Generally, bank holding companies,
such as Boatmen's, are required to obtain prior approval of the Federal Reserve
Board to engage in any new activity not previously approved by the Federal
Reserve Board or to acquire more than 5% of any class of voting stock of any
company.
Bank holding companies are also required to obtain the prior approval of
the Federal Reserve Board before acquiring more than 5% of any class of voting
stock of any bank which is not already majority-owned by the bank holding
company. Pursuant to the Interstate Banking and Branching Act, a bank holding
company became able to acquire banks in states other than its home state
beginning September 29, 1995 without regard to the permissibility of such
acquisitions under state law, but subject to any state requirement that the bank
has been organized and operating for a minimum period of time, not to exceed
five years, and the requirement that the bank holding company, prior to or
following the proposed acquisition, controls no more than 10% of the total
amount of deposits of insured depository institutions in the United States and
no more than 30% of such deposits in that state (or such lesser or greater
amount set by state law).
The Interstate Banking and Branching Act also authorizes banks to merge
across state lines, therefore creating interstate branches, beginning June 1,
1997. Under such legislation, each state has the opportunity to "opt out" of
this provision, thereby prohibiting interstate branching in such states, or to
"opt in" at an earlier time, thereby allowing interstate branching within that
state prior to June 1, 1997. Furthermore, pursuant to such Act, a bank is now
able to open new branches in a state in which it does not already have banking
operations, if the laws of such state permit such de novo branching. Of those
states in which the Boatmen's Banks are located, New Mexico and Oklahoma
(beginning May 31, 1997) have enacted legislation to "opt in," thereby
permitting interstate branching prior to June 1, 1997, and Texas has adopted
legislation to "opt out" of the interstate branching provisions (which Texas law
currently expires on September 2, 1999).
Proposals to change the laws and regulations governing the banking industry
are frequently introduced in Congress, in the state legislatures and before
various bank regulatory agencies.
Capital and Operational Requirements. As previously described, the Federal
Reserve Board, the Comptroller, the OTS and the FDIC have issued substantially
similar risk-based and leverage capital guidelines applicable to U.S. banking
organizations. Thus, the capital guidelines applicable to Boatmen's and the
Boatmen's Banks are substantially similar to those applicable to NationsBank and
its subsidiary banks. See "INFORMATION ABOUT NATIONSBANK -- Supervision and
Regulation." Boatmen's Tier 1, total risk-based, and leverage capital ratios
under these guidelines at September 30, 1996 were 11.29%, 13.82% and 8.21%,
respectively.
There are also various legal restrictions on the extent to which Boatmen's
and its non-bank subsidiaries can borrow or otherwise obtain credit from its
subsidiary banks. In general, these restrictions require that any such
extensions of credit must be secured by designated amounts of specified
collateral and are limited, as to any one of such non-bank companies, to 10%
(and 20% for all such extensions of credit in the aggregate) of such lending
bank's capital stock and surplus.
Distributions. Boatmen's is a legal entity separate and distinct from its
banking and other subsidiaries. Each of Boatmen's and the Boatmen's Banks is
subject to various general regulatory policies and requirements relating to the
payment of dividends, including requirements to maintain adequate capital above
regulatory minimums. The appropriate federal regulatory authority is authorized
to determine under certain circum-stances 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 to the foregoing, the ability of Boatmen's and the Boatmen's
Banks to pay dividends may be affected by the various minimum capital
requirements and the capital and non-capital standards established
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under FDICIA as described above under "INFORMATION ABOUT
NATIONSBANK -- Supervision and Regulation." Because Boatmen's and the Boatmen's
Banks exceed applicable capital requirements, management of Boatmen's does not
believe that these provisions of FDICIA will have any material impact on
Boatmen's or the Boatmen's Banks or their respective operations.
The right of Boatmen's, its shareholders and its creditors to participate
in any distribution of the assets or earnings of its subsidiaries is further
subject to the prior claims of creditors of the respective subsidiaries.
Source of Strength. Under Federal Reserve Board policy, Boatmen's is
expected to act as a source of financial strength to the Boatmen's Banks and to
commit resources to support such subsidiaries. This support may be required at
times when Boatmen's may not find itself able to provide it. In the event of a
loss suffered or anticipated by the FDIC -- either as a result of default of a
Boatmen's Bank or related to FDIC assistance provided to such subsidiary in
danger of default -- other FDIC-insured institutions under common control with
such institution may be assessed for the FDIC's loss, subject to certain
exceptions. Any capital loans by Boatmen's to the Boatmen's Banks are
subordinate in right of payment to deposits and to certain other indebtedness of
such subsidiary banks. In the event of Boatmen's bankruptcy, any commitment by
it to a federal bank regulatory agency to maintain the capital of its banking
subsidiary will be assumed by the bankruptcy trustee and entitled to a priority
of payment.
NATIONSBANK CAPITAL STOCK
NATIONSBANK COMMON STOCK
General. NationsBank is authorized to issue 800,000,000 shares of
NationsBank Common Stock, of which 291,304,051 shares were outstanding as of
August 29, 1996. NationsBank Common Stock is traded on the NYSE and the PSE
under the trading symbol "NB." NationsBank Common Stock is also listed on the
LSE and certain shares are listed and traded on the Tokyo Stock Exchange. As of
August 29, 1996, 49.9 million shares of NationsBank Common Stock were reserved
for issuance under various employee benefit plans of NationsBank and upon
conversion of the NationsBank ESOP Preferred Stock, 2.8 million shares were
reserved for issuance under the NationsBank Dividend Reinvestment and Stock
Purchase Plan and 110 million shares were reserved for issuance in connection
with the Merger. After taking into account the shares reserved as described
above, the number of authorized shares of NationsBank Common Stock available for
other corporate purposes as of August 29, 1996 was approximately 346 million.
Since that date, five million additional shares have been reserved for issuance
in connection with the NationsBank Corporation Key Employee Stock Plan.
Voting and Other Rights. The holders of NationsBank Common Stock are
entitled to one vote per share, and, in general, a majority of votes cast with
respect to a matter is sufficient to authorize action upon routine matters.
Directors are elected by a plurality of the votes cast, and each shareholder
entitled to vote in such election is entitled to vote each share of stock for as
many persons as there are directors to be elected. In elections for directors,
such shareholders do not have the right to cumulate their votes, so long as
NationsBank has a class of shares registered under Section 12 of the Exchange
Act (unless action is taken to provide otherwise by charter amendment, which
action management does not currently intend to propose). In general, (i)
amendments to the NationsBank Articles of Incorporation must be approved by each
voting group entitled to vote separately thereon by a majority of the votes cast
by that voting group, unless the amendment creates dissenters' rights for a
particular voting group, in which case such amendment must be approved by a
majority of the votes entitled to be cast by such voting group; (ii) a merger or
share exchange required to be approved by the shareholders must be approved by
each voting group entitled to vote separately thereon by a majority of the votes
entitled to be cast by that voting group; and (iii) the dissolution of
NationsBank, or the sale of all or substantially all of the property of
NationsBank other than in the usual and regular course of business, must be
approved by a majority of all votes entitled to be cast thereon.
In the event of liquidation, holders of NationsBank Common Stock would be
entitled to receive pro rata any assets legally available for distribution to
shareholders with respect to shares held by them, subject to any prior rights of
any NationsBank preferred stock (as described below) then outstanding.
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NationsBank Common Stock does not have any preemptive rights, redemption
privileges, sinking fund privileges or conversion rights. All the outstanding
shares of NationsBank Common Stock are, and upon issuance the shares of
NationsBank Common Stock to be issued to shareholders of Boatmen's will be,
validly issued, fully paid and nonassessable.
ChaseMellon Shareholder Services, L.L.C. acts as transfer agent and
registrar for NationsBank Common Stock.
Distributions. The holders of NationsBank Common Stock are entitled to
receive such dividends or distributions as the NationsBank Board may declare out
of funds legally available for such payments. The payment of distributions by
NationsBank is subject to the restrictions of North Carolina law applicable to
the declaration of distributions by a business corporation. A corporation
generally may not authorize and make distributions if, after giving effect
thereto, it would be unable to meet its debts as they become due in the usual
course of business or if the corporation's total assets would be less than the
sum of its total liabilities plus the amount that would be needed, if it were to
be dissolved at the time of distribution, to satisfy claims upon dissolution of
shareholders who have preferential rights superior to the rights of the holders
of its common stock. In addition, the payment of distributions to shareholders
is subject to any prior rights of outstanding preferred stock. Share dividends,
if any are declared, may be paid from authorized but unissued shares.
The ability of NationsBank to pay distributions is affected by the ability
of the Banks to pay dividends. The ability of the Banks, as well as of
NationsBank, to pay dividends in the future currently is, and could be further,
influenced by bank regulatory requirements and capital guidelines. See
"INFORMATION ABOUT NATIONSBANK -- Supervision and Regulation."
NATIONSBANK PREFERRED STOCK
NationsBank has authorized 45,000,000 shares of preferred stock and may
issue such preferred stock in one or more series, each with such preferences,
limitations, designations, conversion rights, voting rights, distribution
rights, voluntary and involuntary liquidation rights and other rights as it may
determine. NationsBank has designated 3,000,000 shares of ESOP Convertible
Preferred Stock, Series C, of which 2,445,143 shares were issued and outstanding
as of August 29, 1996.
NATIONSBANK ESOP PREFERRED STOCK
THE FOLLOWING SUMMARY OF THE NATIONSBANK ESOP PREFERRED STOCK IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO THE DESCRIPTION THEREOF CONTAINED IN THE
NATIONSBANK ARTICLES OF INCORPORATION ATTACHED AS EXHIBIT 3(I) TO NATIONSBANK'S
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1994, INCORPORATED
HEREIN BY REFERENCE.
The NationsBank ESOP Preferred Stock was first issued in the transaction by
which NationsBank was formed from the merger of NCNB Corporation and C&S/Sovran
Corporation in 1991 upon the conversion of shares of ESOP Convertible Preferred
Stock, Series C of C&S/Sovran Corporation. All shares are held by the trustee
under the NationsBank Corporation Retirement Savings Plan (the "ESOP"). The
NationsBank ESOP Preferred Stock ranks senior to the NationsBank Common Stock,
but will rank junior to the NationsBank New Preferred Stock, with respect to
dividends and distributions upon liquidation.
Preferential Rights. Shares of NationsBank ESOP Preferred Stock have no
preemptive or preferential rights to purchase or subscribe for shares of
NationsBank capital stock of any class and are not subject to any sinking fund
or other obligation of NationsBank to repurchase or retire the series, except as
discussed below.
Dividends. Each share of NationsBank ESOP Preferred Stock is entitled to
an annual dividend, subject to certain adjustments, of $3.30 per share, payable
semiannually. Unpaid dividends accumulate as of the date on which they first
became payable, without interest. So long as any shares of NationsBank ESOP
Preferred Stock are outstanding, no dividend may be declared, paid or set apart
for payment on any other series of stock ranking on a parity with NationsBank
ESOP Preferred Stock as to dividends, unless like dividends have been declared
and paid, or set apart for payment, on the NationsBank ESOP Preferred Stock for
all dividend
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payment periods ending on or before the dividend payment date for such parity
stock, ratably in proportion to their respective amounts of accumulated and
unpaid dividends. NationsBank generally may not declare, pay or set apart for
payment any dividends (except for, among other things, dividends payable solely
in shares of stock ranking junior to the NationsBank ESOP Preferred Stock as to
dividends or upon liquidation) on, make any other distribution on, or make
payment on account of the purchase, redemption or other retirement of, any other
class or series of NationsBank capital stock ranking junior to the NationsBank
ESOP Preferred Stock as to dividends or upon liquidation, until full cumulative
dividends on the NationsBank ESOP Preferred Stock have been declared and paid or
set apart for payment when due.
Voting Rights. The holder of the NationsBank ESOP Preferred Stock is
entitled to vote on all matters submitted to a vote of the holders of
NationsBank Common Stock and votes together with the holders of NationsBank
Common Stock as one class. Except as otherwise required by applicable law, the
holder of the NationsBank ESOP Preferred Stock has no special voting rights. To
the extent that the holder of such shares is entitled to vote, each share is
entitled to the number of votes equal to the number of shares of NationsBank
Common Stock into which such share of NationsBank ESOP Preferred Stock could be
converted on the record date for determining the shareholders entitled to vote,
rounded to the nearest whole vote.
Shares of the NationsBank ESOP Preferred Stock initially are convertible
into NationsBank Common Stock at a conversion rate equal to 0.84 shares of
NationsBank Common Stock per share of NationsBank ESOP Preferred Stock, and a
conversion price of $42.50 per 0.84 shares of NationsBank Common Stock, subject
to certain customary anti-dilution adjustments.
Distributions. In the event of any voluntary or involuntary dissolution,
liquidation or winding-up of NationsBank, the holder of the NationsBank ESOP
Preferred Stock will be entitled to receive out of the assets of NationsBank
available for distribution to shareholders, subject to the rights of the holders
of any NationsBank preferred stock ranking senior to or on a parity with the
NationsBank ESOP Preferred Stock as to distributions upon liquidation,
dissolution or winding-up but before any amount will be paid or distributed
among the holders of NationsBank Common Stock or any other shares ranking junior
to the NationsBank ESOP Preferred Stock as to such distributions, liquidating
distributions of $42.50 per share plus all accrued and unpaid dividends thereon
to the date fixed for distribution. If, upon any voluntary or involuntary
dissolution, liquidation or winding-up of NationsBank, the amounts payable with
respect to the NationsBank ESOP Preferred Stock and any other stock ranking on a
parity therewith as to any such distribution are not paid in full, the holder of
the NationsBank ESOP Preferred Stock and such other stock will share ratably in
any distribution of assets in proportion to the full respective preferential
amounts to which they are entitled. After payment of the full amount of the
liquidating distribution to which it is entitled, the holder of the NationsBank
ESOP Preferred Stock will not be entitled to any further distribution of assets
by NationsBank. Neither a merger or consolidation of NationsBank with or into
any other corporation, nor a merger or consolidation of any other corporation
with or into NationsBank nor a sale, transfer or lease of all or any portion of
NationsBank's assets, will be deemed to be a dissolution, liquidation or
winding-up of NationsBank.
Redemption. The NationsBank ESOP Preferred Stock is redeemable, in whole
or in part, at the option of NationsBank, at any time. The redemption price for
the shares of the NationsBank ESOP Preferred Stock will depend upon the time of
redemption. Specifically, the redemption price for the 12-month period that
began on July 1, 1996, is $43.49 per share; on each succeeding July 1, the
redemption price will be reduced by $.33 per share, except that on and after
July 1, 1999, the redemption price will be $42.50 per share, and the redemption
price may be paid in cash or shares of NationsBank Common Stock. In each case,
the redemption price also must include all accrued and unpaid dividends to the
date of redemption. To the extent that the NationsBank ESOP Preferred Stock is
treated as Tier 1 capital for bank regulatory purposes, the approval of the
Federal Reserve Board may be required for redemption of the NationsBank ESOP
Preferred Stock.
NationsBank is required to redeem shares of the NationsBank ESOP Preferred
Stock at the option of the holder of such shares to the extent necessary either
to provide for distributions required to be made under the ESOP or to make
payments of principal, interest or premium due and payable on any indebtedness
incurred by the holder of the shares for the benefit of the ESOP. The redemption
price in such case will be the greater of $42.50 per share plus accrued and
unpaid dividends to the date of redemption or the fair market value of the
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aggregate number of shares of NationsBank Common Stock into which a share of
NationsBank ESOP Preferred Stock then is convertible.
NATIONSBANK DEPOSITARY SHARES
The NationsBank Depositary Shares to be issued in the Merger, as described
below, will be substantially similar to the Boatmen's Depositary Shares
currently outstanding.
General. The shares of NationsBank New Series A Preferred Stock will be
represented by the NationsBank Depositary Shares. Each NationsBank Depositary
Share will represent a 1/16th interest in a share of NationsBank New Series A
Preferred Stock. The NationsBank Depositary Shares will be freely transferrable
under the Securities Act, subject to the restrictions described under "THE
MERGER -- Restrictions on Resales by Affiliates."
The shares of the NationsBank New Series A Preferred Stock underlying the
NationsBank Depositary Shares will be deposited under a separate Deposit
Agreement, dated as of February 24, 1992, and amended January 31, 1996 (the
"Deposit Agreement") between Boatmen's and BANK IV, N.A. (the "Depositary") and
evidenced by NationsBank Depositary Receipts. Pursuant to the Agreement, the
Deposit Agreement will, at the Effective Time, be automatically assumed by
Merger Sub, will be assigned by it to NationsBank and will, thereafter, relate
to the shares of NationsBank New Series A Preferred Stock issued in the Merger.
Subject to the terms of the Deposit Agreement, each owner of a NationsBank
Depositary Share will be entitled, in proportion to the applicable fractional
interest in a share of NationsBank New Series A Preferred Stock underlying such
NationsBank Depositary Share, to all the rights and preferences of the
NationsBank New Series A Preferred Stock underlying such NationsBank Depositary
Share (including dividend, voting, redemption, conversion, and liquidation
rights).
Upon consummation of the Merger, the Boatmen's Depositary Receipts shall be
deemed to be NationsBank Depositary Receipts without any action by NationsBank,
Boatmen's or the holders thereof. Upon subsequent transfers of NationsBank
Depositary Shares, new NationsBank Depositary Receipts will be issued by the
Depositary. See "THE MERGER -- Exchange of Certificates."
Dividends and Other Distributions. The Depositary will distribute all cash
dividends or other cash distributions received in respect of the NationsBank New
Series A Preferred Stock to the record holders of NationsBank Depositary Shares
relating to such NationsBank New Series A Preferred Stock in proportion to the
numbers of such NationsBank Depositary Shares owned by such holders on the
relevant record date. The Depositary shall distribute only such amount, however,
as can be distributed without attributing to any holder of NationsBank
Depositary Shares a fraction of one cent, and any balance not so distributed
shall be added to and treated as part of the next sum received by the Depositary
for distribution to record holders of NationsBank Depositary Shares.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of NationsBank
Depositary Shares entitled thereto, unless the Depositary, after consultation
with NationsBank, determines that it is not feasible to make such distribution,
in which case the Depositary may, with the approval of NationsBank, sell such
property and distribute the net proceeds from such sale to such holders.
Conversion. A holder of NationsBank Depositary Shares will be able to
participate in the conversion of the NationsBank New Series A Preferred Stock as
discussed below under "-- NationsBank New Series A Preferred." If the
NationsBank Depositary Shares represented by a NationsBank Depositary Receipt
are to be converted in part only, a new NationsBank Depositary Receipt will be
issued by the Depositary for the NationsBank Depositary Shares which are not to
be converted. No fractional shares of NationsBank Common Stock will be issued
upon conversion, and if such conversion would result in a fractional share being
issued, an amount will be paid in cash by NationsBank equal to the value of the
fractional interest, based upon the closing price of the NationsBank Common
Stock on the last business day prior to the date of conversion.
Redemption of NationsBank Depositary Shares. If the NationsBank New Series
A Preferred Stock is redeemed, the NationsBank Depositary Shares will be
redeemed from the proceeds received by the Depositary
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resulting from the redemption, in whole or in part, of the NationsBank New
Series A Preferred Stock held by the Depositary. The Depositary will mail notice
of redemption not less than 30 and not more than 60 days prior to the date fixed
for redemption to the record holders of the NationsBank Depositary Shares to be
so redeemed at their respective addresses appearing in the books of the
Depositary. The redemption price per NationsBank Depositary Share will be equal
to the applicable fraction of the redemption price per share payable with
respect to the NationsBank New Series A Preferred Stock. Whenever NationsBank
redeems shares of NationsBank New Series A Preferred Stock held by the
Depositary, the Depositary will redeem as of the same redemption date the number
of NationsBank Depositary Shares relating to shares of NationsBank New Series A
Preferred Stock so redeemed. If less than all the NationsBank Depositary Shares
are to be redeemed, the NationsBank Depositary Shares to be redeemed will be
selected by lot or pro rata as may be determined by the Depositary.
After the date fixed for redemption, the NationsBank Depositary Shares so
called for redemption will no longer be deemed to be outstanding and all rights
of the holders of the NationsBank Depositary Shares will cease, except the right
to receive the moneys payable upon such redemption and any money or other
property to which the holders of such NationsBank Depositary Shares were
entitled upon such redemption upon surrender to the Depositary of the
NationsBank Depositary Receipts evidencing such NationsBank Depositary Shares.
Voting the NationsBank New Series A Preferred. Upon receipt of notice of
any meeting at which the holders of the NationsBank New Series A Preferred Stock
are entitled to vote as discussed below under "-- NationsBank New Series A
Preferred", the Depositary will mail the information contained in such notice of
meeting to the record holders of the NationsBank Depositary Shares relating to
such NationsBank New Series A Preferred Stock. Each record holder of such
NationsBank Depositary Shares on the record date (which will be the same date as
the record date for the NationsBank New Series A Preferred Stock) will be
entitled to instruct the Depositary as to the exercise of the voting rights
pertaining to the number of shares of NationsBank New Series A Preferred Stock
underlying such holder's NationsBank Depositary Shares. The Depositary will
endeavor, insofar as practicable, to vote the number of shares of NationsBank
New Series A Preferred Stock underlying such NationsBank Depositary Shares in
accordance with such instructions, and NationsBank will agree to take all action
which may be deemed necessary by the Depositary in order to enable the
Depositary to do so. The Depositary will abstain from voting shares of
NationsBank New Series A Preferred Stock to the extent it does not receive
specific instructions from the holders of NationsBank Depositary Shares relating
to such NationsBank New Series A Preferred Stock.
Amendment and Termination of Deposit Agreement. The form of NationsBank
Depositary Receipt evidencing the NationsBank Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between NationsBank, as assignee of Merger Sub (successor by merger with
Boatmen's), and the Depositary. Any amendment, however, which materially and
adversely alters the rights of the holders of NationsBank Depositary Shares will
not be effective unless such amendment has been approved by the record holders
of at least a majority of the NationsBank Depositary Shares then outstanding.
The Deposit Agreement may be terminated by NationsBank or the Depositary if,
among other reasons, (i) all outstanding NationsBank Depositary Shares have been
redeemed or converted into NationsBank Common Stock, or (ii) there has been a
final distribution in respect of the NationsBank New Series A Preferred Stock in
connection with any liquidation, dissolution or winding up of NationsBank and
such distribution has been distributed to the holders of the related NationsBank
Depositary Shares.
Charges of Depositary. NationsBank will pay all transfer and other taxes
and governmental charges arising solely from the existence of the Deposit
Agreement. NationsBank will pay charges of the Depositary in connection with the
initial deposit of the NationsBank New Series A Preferred Stock and any
redemption of the NationsBank New Series A Preferred Stock. Holders of
NationsBank Depositary Shares will pay other transfer and other taxes and
governmental charges and such other charges as are expressly provided in the
Deposit Agreement to be for their accounts.
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Miscellaneous. The Depositary will forward to the holders of NationsBank
Depositary Shares all reports and communications from NationsBank which are
delivered to the Depositary and which NationsBank is required to furnish to the
holders of the NationsBank New Series A Preferred Stock.
Neither the Depositary nor NationsBank will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of NationsBank and the
Depositary under the Deposit Agreement will be limited to performance in good
faith of their duties thereunder and they will not be obligated to prosecute or
defend any legal proceeding in respect of any NationsBank Depositary Shares or
NationsBank New Series A Preferred Stock unless satisfactory indemnity is
furnished. They may rely upon written advice of counsel or accountants, holders
of NationsBank Depositary Shares or other persons believed to be competent and
on documents believed to be genuine.
Resignation and Removal of Depositary. The Depositary may resign at any
time by delivering to NationsBank notice of its election to do so, and
NationsBank may at any time remove the Depositary, any such resignation or
removal to take effect upon the appointment of a successor Depositary and its
acceptance of such appointment. Such successor Depositary must be appointed
within 60 days after delivery of the notice of resignation or removal and must
be a bank or trust company having its principal office in the United States and
having a combined capital and surplus of at least $50,000,000.
NATIONSBANK NEW SERIES A PREFERRED
The shares of NationsBank New Series A Preferred Stock, as described below,
will be substantially similar to the shares of Boatmen's Series A Preferred
Stock. The shares of NationsBank New Series A Preferred Stock will rank prior to
the shares of NationsBank New Series B Preferred Stock and NationsBank ESOP
Preferred Stock as to dividends and upon liquidation. Upon consummation of the
Merger, certificates representing shares of Boatmen's Series A Preferred Stock
will be deemed to represent shares of NationsBank New Series A Preferred Stock,
without any action by NationsBank, Boatmen's or the holders thereof. Upon
subsequent transfers of shares of NationsBank New Series A Preferred Stock,
NationsBank will issue new certificates to the recipient of such shares. See
"THE MERGER -- Exchange of Certificates."
Dividends. Holders of the NationsBank New Series A Preferred Stock will be
entitled to receive, when and as declared by the NationsBank Board, out of
assets of NationsBank legally available for payment, cash dividends at the rate
of 7.00% of the liquidation preference per annum (equivalent to $1.75 per annum
per NationsBank Depositary Share). Dividends will be calculated on the basis of
a 360-day year consisting of twelve 30-day months and will be payable quarterly
on March 1, June 1, September 1, and December 1 of each year. Dividends on the
NationsBank New Series A Preferred Stock will be cumulative from the date of
original issue. Each dividend will be payable to holders of record as they
appear on the stock register of NationsBank on the record dates fixed by the
NationsBank Board.
If at any time there are outstanding shares of any other series of
preferred stock ranking junior to or on a parity with the NationsBank New Series
A Preferred Stock as to dividends, no dividends will be declared or paid or set
apart for payment on any such other series for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for such payment on the
NationsBank New Series A Preferred Stock for all dividend payment periods
terminating on or prior to the date of payment of such dividends. If dividends
on the NationsBank New Series A Preferred Stock and on any other series of
preferred stock ranking on a parity as to dividends with the NationsBank New
Series A Preferred Stock are in arrears, in making any dividend payment on
account of such arrears, NationsBank will make payments ratably upon all
outstanding shares of the NationsBank New Series A Preferred Stock and shares of
such other series of preferred stock in proportion to the respective amounts of
dividends in arrears on the NationsBank New Series A Preferred Stock and on such
other series of preferred stock to the date of such dividend payment. Holders of
shares of the NationsBank New Series A Preferred Stock will not be entitled to
any dividend, whether payable in cash, property or stock, in excess of full
cumulative dividends.
Unless full cumulative dividends on all outstanding shares of the
NationsBank New Series A Preferred Stock will have been paid or declared and set
aside for payment for all past dividend payment periods, no
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dividends (other than a dividend in NationsBank Common Stock or in any other
stock ranking junior to the NationsBank New Series A Preferred Stock as to
dividends and upon liquidation) will be declared upon the NationsBank Common
Stock or upon any other stock ranking junior to the NationsBank New Series A
Preferred Stock as to dividends and upon liquidation, nor will any NationsBank
Common Stock or any other stock of NationsBank ranking junior to or on a parity
with the NationsBank New Series A Preferred Stock as to dividends or upon
liquidation, be redeemed, purchased or otherwise acquired for any consideration
(or any moneys be paid to or made available for a sinking fund for the
redemption of any shares of any such stock) by NationsBank (except by conversion
into or exchange for stock of NationsBank ranking junior to the NationsBank New
Series A Preferred Stock as to dividends and upon liquidation). No interest, or
sum of money in lieu of interest, will be payable in respect of any dividend
payment or payments on the NationsBank New Series A Preferred Stock which may be
in arrears.
Conversion Rights. Shares of the NationsBank New Series A Preferred Stock
will be convertible at any time at the option of the holder into shares of
NationsBank Common Stock at a conversion price of $44.44 per share of
NationsBank Common Stock (equivalent to a conversion rate of approximately 0.562
share of NationsBank Common Stock for each NationsBank Depositary Share),
subject to adjustment as described below (except that a share of NationsBank New
Series A Preferred Stock that has been called for redemption will be convertible
up to and including but not after the close of business on the tenth day
preceding the date fixed for redemption).
The conversion price is subject to adjustment upon certain events,
including the issuance of NationsBank Common Stock as a dividend or distribution
on shares of NationsBank Common Stock; subdivisions, splits, combinations or
reclassifications of outstanding shares of NationsBank Common Stock; the
issuance to holders of NationsBank Common Stock generally of rights or warrants
to subscribe for NationsBank Common Stock at less than the then current market
price; or the distribution to holders of the NationsBank Common Stock of
evidences of indebtedness, assets (excluding cash dividends or distributions
payable out of consolidated earnings or earned surplus), or rights or warrants
to subscribe for securities of NationsBank other than those mentioned above.
In the case of (i) any consolidation or merger to which NationsBank is a
party (other than one in which NationsBank is the continuing corporation and the
outstanding shares of the NationsBank Common Stock are not changed into or
exchanged for stock or other securities of any other person or cash or other
property as a result of or in connection with the consolidation or merger), (ii)
a sale or conveyance of the properties and assets of NationsBank as, or
substantially as, an entirety, or (iii) any statutory exchange of securities
with another corporation, there will be no adjustment of the conversion price,
but the holder of each share of NationsBank New Series A Preferred Stock then
outstanding will have the right thereafter to convert such share into the kind
and amount of securities, cash, or other property that the holder would have
owned or been entitled to receive immediately after such consolidation, merger,
statutory exchange, sale or conveyance if such share had been converted
immediately before the effective date of such consolidation, merger, statutory
exchange, sale or conveyance.
Upon conversion, no adjustments will be made for accrued dividends and,
therefore, NationsBank Depositary Shares surrendered for conversion after the
record date next preceding a dividend payment date for the NationsBank New
Series A Preferred Stock and before the dividend payment date must be
accompanied by payment of an amount equal to the dividend thereon which is to be
paid on such dividend payment date (unless the NationsBank Depositary Shares
surrendered for conversion have been called for redemption prior to such
dividend payment date).
No adjustment of the conversion price will be required to be made in any
case unless the adjustment amounts to 1% or more of the conversion price, but
any adjustment not made by reason of this limitation will be required to be
carried forward cumulatively and taken into account in any subsequent
adjustments.
If at any time NationsBank makes a distribution of property to its
shareholders which would be taxable to such shareholders as a dividend for
federal income tax purposes (e.g., distributions of evidences of indebtedness or
assets of NationsBank, but generally not stock dividends or rights to subscribe
to capital stock) and, pursuant to the antidilution provisions described above,
the conversion price of the NationsBank
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New Series A Preferred Stock is reduced, such reduction may be deemed to be the
receipt of taxable income by holders of the NationsBank Depositary Shares.
A holder may effect the conversion of any whole number of NationsBank
Depositary Shares (whether or not evenly divisible by sixteen) by delivering the
NationsBank Depositary Receipts evidencing such shares to the Depositary.
NationsBank will issue to the Depositary a certificate for any fractional share
of NationsBank New Series A Preferred Stock remaining unconverted.
Fractional shares of NationsBank Common Stock will not be delivered upon
conversion. Instead, a cash adjustment will be paid in respect of such
fractional interest, based on the then current market price of NationsBank
Common Stock.
Redemption. Shares of NationsBank New Series A Preferred Stock will not be
redeemable prior to March 1, 1997. Subject to obtaining the prior approval of
the Federal Reserve Board, if required, the shares of NationsBank New Series A
Preferred Stock will be redeemable at the option of NationsBank, in whole or in
part, at any time or from time to time, on and after March 1, 1997, on not less
than 30 nor more than 60 days' notice by mail, at a redemption price of $400 per
share (equivalent to $25 per NationsBank Depositary Share) plus accrued and
unpaid dividends to the redemption date.
The NationsBank New Series A Preferred Stock will not be subject to any
sinking fund or other obligation of NationsBank to redeem or retire the
NationsBank New Series A Preferred Stock.
At its election, NationsBank, before the redemption date, may deposit the
funds for such redemption, in trust, with a designated depositary and authorize
such depositary to complete the redemption notice, and, after such deposit, all
rights of the holders of NationsBank New Series A Preferred Stock and related
NationsBank Depositary Shares so called for redemption will cease, except the
right to receive the redemption price. As and to the extent, however, that
NationsBank or the Depositary is required or permitted under the abandoned
property laws of any jurisdiction to escheat any redemption funds held for the
benefit of any holder, NationsBank and the Depositary will be absolved of any
further liability or obligation to such holder to the full extent provided by
law. Notwithstanding the foregoing, if any dividends on the NationsBank New
Series A Preferred Stock are in arrears, no shares of NationsBank New Series A
Preferred Stock or NationsBank Depositary Shares may be redeemed unless all
outstanding shares of NationsBank New Series A Preferred Stock are
simultaneously redeemed, and NationsBank will not purchase or otherwise acquire
any shares of NationsBank New Series A Preferred Stock or NationsBank Depositary
Shares; provided, however, that the foregoing will not prevent the purchase or
acquisition of shares of NationsBank New Series A Preferred Stock or NationsBank
Depositary Shares by NationsBank pursuant to a purchase or exchange offer made
on the same terms to holders of all outstanding shares of NationsBank New Series
A Preferred Stock or NationsBank Depositary Shares.
If a notice of redemption has been given, from and after the redemption
date for the shares of NationsBank New Series A Preferred Stock called for
redemption (unless default will be made by NationsBank in providing money for
the payment of the redemption price of the shares so called for redemption),
dividends on the NationsBank New Series A Preferred Stock so called for
redemption will cease to accrue and such shares will no longer be deemed to be
outstanding, and all rights of the holders thereof as shareholders of
NationsBank (except the right to receive the redemption price) will cease. Upon
surrender in accordance with such notice of the certificates representing any
shares so redeemed (properly endorsed or assigned for transfer, if the
NationsBank Board will so require and the notice will so state), the redemption
price set forth above will be paid out of funds provided by NationsBank. If
fewer than all of the shares represented by any such certificates are redeemed,
a new certificate will be issued representing the unredeemed shares without cost
to the holder thereof.
Liquidation Rights. In the event of any voluntary or involuntary
dissolution, liquidation, or winding up of NationsBank, the holders of the
NationsBank New Series A Preferred Stock will be entitled to receive and to be
paid out of assets of NationsBank available for distribution to its
shareholders, before any payment or distribution is made to holders of
NationsBank Common Stock or any other class of stock ranking junior to the
NationsBank New Series A Preferred Stock upon liquidation, a liquidating
distribution of $400 per share
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of NationsBank New Series A Preferred Stock (equivalent to $25 per NationsBank
Depositary Share) plus accrued and unpaid dividends. After payment of the full
amount of the liquidating distributions to which they are entitled, the holders
of the NationsBank New Series A Preferred Stock will have no right or claim to
any of the remaining assets of NationsBank. If, upon any voluntary or
involuntary dissolution, liquidation, or winding up of NationsBank, the amounts
payable with respect to the NationsBank New Series A Preferred Stock and any
other shares of stock of NationsBank ranking as to any such distribution on a
parity with the NationsBank New Series A Preferred Stock are not paid in full,
the holders of the NationsBank New Series A Preferred Stock and of such other
shares will share ratably in any such distribution of assets of NationsBank in
proportion to the full respective distributable amounts to which they are
entitled. Neither the sale of all or substantially all the property or business
of NationsBank, nor the merger or consolidation of NationsBank into or with any
other corporation will be deemed to be a dissolution, liquidation, or winding
up, voluntary or involuntary, of NationsBank.
Voting. Except as otherwise expressly required by applicable law or as
described below, holders of the NationsBank Depositary Shares or the NationsBank
New Series A Preferred Stock will not be entitled to vote on any matter,
including but not limited to any merger, consolidation or transfer of assets,
and will not be entitled to notice of any meeting of shareholders of
NationsBank. Whenever the approval or other action of holders of the NationsBank
New Series A Preferred Stock is required by applicable law or by the NationsBank
Articles of Incorporation, each share of the NationsBank New Series A Preferred
Stock will be entitled to one vote and, except as described below, the
affirmative vote of a majority of such shares at a meeting at which a majority
of such shares are present or represented will be sufficient to constitute such
approval or other action. Holders of NationsBank Depositary Shares will be
entitled to vote the shares of NationsBank New Series A Preferred Stock which
their NationsBank Depositary Shares represent. See "-- NationsBank Depositary
Shares."
The affirmative vote of the holders of at least 66 2/3% of the outstanding
shares of NationsBank New Series A Preferred Stock is required to (i) authorize,
effect or validate the amendment, alteration or repeal of any provision of the
NationsBank Articles of Incorporation which would adversely affect the
preferences, rights, powers or privileges, qualifications, limitations and
restrictions of the NationsBank New Series A Preferred Stock and (ii) create,
authorize or issue, or reclassify any authorized stock of NationsBank into, or
create, authorize or issue any obligation or security convertible into or
evidencing a right to purchase any shares of any class of stock ranking on a
parity with or prior to the NationsBank New Series A Preferred Stock in respect
of dividends or distribution of assets on liquidation.
If at any time NationsBank falls in arrears in the payment of dividends on
the NationsBank New Series A Preferred Stock in an aggregate amount at least
equal to the full accrued dividends for six quarterly dividend periods, the
number of directors of NationsBank will be increased by two and the holders of
the NationsBank New Series A Preferred Stock (and all classes of preferred stock
ranking on parity thereto), voting separately as a single class, will have the
exclusive right to elect two directors to fill the positions so created, and
such right will continue annually until all dividends in arrears for any past
dividend period have been paid in full or declared or set aside for payment.
Immediately upon the cessation of such special voting rights the terms of the
directors so elected will terminate.
Other Aspects. Holders of the NationsBank New Series A Preferred Stock
will have no preemptive rights. Shares of NationsBank New Series A Preferred
Stock, when issued, will be validly issued, fully paid and nonassessable.
The NationsBank Depositary Shares are expected to be approved for listing
on The Nasdaq Stock Market.
NATIONSBANK NEW SERIES B PREFERRED
The shares of NationsBank New Series B Preferred Stock, as described below,
will be substantially similar to the shares of Boatmen's Series B Preferred
Stock. Upon consummation of the Merger, certificates representing shares of
Boatmen's Series B Preferred Stock will be deemed to represent shares of
NationsBank New Series B Preferred Stock, without any action by NationsBank,
Boatmen's or the holders thereof. Upon
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subsequent transfers of shares of NationsBank New Series B Preferred Stock,
NationsBank will issue new certificates to the recipient of such shares. See
"THE MERGER -- Exchange of Certificates."
Dividend Rights. Holders of shares of NationsBank New Series B Preferred
Stock will be entitled to receive, when and as declared by the NationsBank
Board, out of any funds legally available for such purpose, cumulative cash
dividends at an annual dividend rate per share of 7% of the stated value
thereof, payable quarterly. Dividends on NationsBank New Series B Preferred
Stock will be cumulative and no cash dividends can be declared or paid on any
shares of NationsBank Common Stock unless full cumulative dividends on
NationsBank New Series B Preferred Stock have been paid, or declared and funds
sufficient for the payment thereof set apart.
Liquidation Rights. In the event of the dissolution, liquidation or
winding up of NationsBank, the holders of NationsBank New Series B Preferred
Stock will be entitled to receive, after payment of the full liquidation
preference on shares of any class of preferred stock ranking superior to
NationsBank New Series B Preferred Stock (if any such shares are then
outstanding) but before any distribution on shares of NationsBank Common Stock,
liquidating dividends of $100 per share plus accumulated dividends.
Redemption. Shares of NationsBank New Series B Preferred Stock will be
redeemable, in whole or in part, at the option of the holders thereof, at the
redemption price of $100 per share plus accumulated dividends, provided, that
(i) full cumulative dividends have been paid, or declared and funds sufficient
for payment set apart, upon any class or series of preferred stock ranking
superior to NationsBank New Series B Preferred Stock; and (ii) NationsBank is
not then in default or arrears with respect to any sinking or analogous fund or
call for tenders obligation or agreement for the purchase or any class or series
of preferred stock ranking superior to NationsBank New Series B Preferred Stock.
Voting Rights. Each share of NationsBank New Series B Preferred Stock will
have equal voting rights, share for share, with each share of NationsBank Common
Stock.
Superior Stock. NationsBank may, without the consent of holders of
NationsBank New Series B Preferred Stock, issue preferred stock with superior or
equal rights or preferences. The shares of NationsBank New Series A Preferred
Stock to be issued in the Merger will rank prior to, and the NationsBank ESOP
Preferred Stock and NationsBank Common Stock will rank junior to, the
NationsBank New Series B Preferred Stock as to dividends and upon liquidation.
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COMPARATIVE RIGHTS OF SHAREHOLDERS
OF NATIONSBANK AND BOATMEN'S
NationsBank is a North Carolina corporation subject to the provisions of
the NCBCA. Boatmen's is a Missouri corporation subject to the provisions of the
MGBCL. Shareholders of Boatmen's, whose rights are governed by the Restated
Articles of Incorporation and Bylaws of Boatmen's (the "Boatmen's Articles of
Incorporation" and "Boatmen's Bylaws," respectively) and by the MGBCL, will upon
consummation of the Merger, become shareholders of NationsBank. As shareholders
of NationsBank, their rights will then be governed by the NationsBank Articles
of Incorporation and the Bylaws of NationsBank (the "NationsBank Bylaws") and by
the NCBCA.
Except as set forth below, there are no material differences between the
rights of Boatmen's Shareholders under the Boatmen's Articles of Incorporation
and Bylaws and under the MGBCL, on the one hand, and the rights of NationsBank
Shareholders under the NationsBank Articles of Incorporation, NationsBank Bylaws
and the NCBCA, on the other hand.
BOARD OF DIRECTORS
Election. The Boatmen's Board is divided into three classes, and the
directors are elected by classes to three-year terms, so that approximately
one-third of the directors of Boatmen's will be elected at each annual meeting
of the shareholders. In addition, each share of Boatmen's Common Stock and
Boatmen's Series B Preferred Stock entitles its holder to cast as many votes at
an election for directors as there are directors to be elected, and to cast all
of such votes for the same candidate. The NationsBank Board is not classified
and votes are not cumulated. Each director must be elected at the annual meeting
of directors by a plurality of the votes cast.
Removal. The MGBCL provides that, unless otherwise provided in a
corporation's articles of incorporation or bylaws, one or more directors or the
entire board of directors may be removed, with or without cause, by a vote of
the holders of a majority of the shares then entitled to vote in an election of
the directors. Directors may be removed only at a meeting called expressly for
that purpose. If a corporation's articles of incorporation or bylaws provide for
cumulative voting in the election of directors and if less than the entire board
is to be removed, no one of the directors may be removed if the votes cast
against his removal would be sufficient to elect him if then cumulatively voted
at an election of the entire board of directors or, if there are classes of
directors, at an election of the class of directors of which he or she is a
part. Whenever the holders of the shares of any class are entitled to elect one
or more directors by the provisions of the articles of incorporation, any
references to a vote of the holders of outstanding shares are references to
outstanding shares of that class and not to the vote of the outstanding shares
as a whole. Any director of a corporation may be removed for cause by an action
of a majority of the entire board of directors if the director fails to meet the
qualifications stated in the corporation's articles of incorporation or bylaws
for election as a director or is in breach of any agreement between such
director and the corporation relating to such director's services as a director
or employee of the corporation. Notice of the proposed removal by the directors
must be given to all directors of a corporation prior to action thereon.
The Boatmen's Articles of Incorporation provide that, at a meeting called
expressly for that purpose, a director or the entire Boatmen's Board (other than
directors elected by holders of preferred stock pursuant to certain special
rights) may be removed without cause only upon the affirmative vote of the
holders of not less than 80% of the shares entitled to vote generally in an
election of directors. Notwithstanding the foregoing, however, if less than the
entire Board of Directors is to be removed without cause, no one of the
directors may be removed if the votes cast against his removal would be
sufficient to elect him if then cumulatively voted at an election of the class
of directors of which he is a part. At a meeting called expressly for that
purpose, a director (other than those elected by holders of preferred stock),
may be removed by the shareholders for cause by the affirmative vote of the
holders of a majority of the shares entitled to vote upon his election.
The NCBCA provides that, in the absence of cumulative voting or a contrary
provision in a corporation's governance documents, a director may be removed
with or without cause by the affirmative vote of the holders of a majority of
votes cast for such purpose. Additionally, the entire board of directors may be
removed with or
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without cause by the holders of a majority of the shares entitled to elect such
directors. The NationsBank Articles of Incorporation and the NationsBank Bylaws
do not provide otherwise. In addition, the NCBCA provides that an appropriate
court can remove a director upon petition of the holders of at least 10% of the
outstanding shares of any class of stock of a corporation upon certain findings
by such court.
SHAREHOLDER VOTE REQUIRED FOR BUSINESS COMBINATIONS
The MGBCL provides that unless a corporation's articles of incorporation or
bylaws provide otherwise, certain business combinations including mergers
require the approval of the holders of at least two-thirds of the outstanding
shares entitled to vote on the subject transaction.
The Boatmen's Articles of Incorporation provide that, in addition to any
affirmative vote required by law, any Business Combination (as hereafter
defined) will require the affirmative vote of the holders of not less than 80%
of the issued and outstanding shares of Boatmen's Common Stock. Notwithstanding
the foregoing, however, the Boatmen's Articles of Incorporation also provide
that any such Business Combination may be approved by the affirmative vote
required by law if it has been approved by 75% of the entire Boatmen's Board. As
used in this paragraph, the term "Business Combination" means (i) any merger or
consolidation of Boatmen's or any subsidiary of Boatmen's with (a) any
individual or entity who, together with certain affiliates or associates, owns
greater than 5% of Boatmen's Common Stock (a "Substantial Shareholder"), or (b)
any other corporation which, after such merger or consolidation, would be a
Substantial Shareholder, regardless of which entity survives; (ii) any sale,
lease, exchange, mortgage, pledge, transfer or other disposition (in one
transaction or a series of transactions) to or with any Substantial Shareholder
of all or substantially all of the assets of Boatmen's or any of its
subsidiaries; (iii) the adoption of any plan or proposal for the liquidation of
Boatmen's by or on behalf of a Substantial Shareholder; or (iv) any transaction
involving Boatmen's or any of its subsidiaries, if the transaction would have
the effect, directly or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible securities of Boatmen's
of which a Substantial Shareholder is the beneficial owner. Because the
Boatmen's Board approved the Merger unanimously, this 80% approval requirement
is inapplicable to the Merger.
The NCBCA provides that, unless a corporation's governance documents
provide otherwise, certain business combinations including mergers require the
approval of a majority of the outstanding shares of each voting group of the
corporation entitled to vote on the subject transaction. The NationsBank
Articles of Incorporation and NationsBank Bylaws do not require otherwise.
Accordingly, it is easier for the shareholders of NationsBank to cast sufficient
votes to approve a merger or similar business combination than it is for the
shareholders of Boatmen's.
AMENDMENTS TO ARTICLES OF INCORPORATION
Under the MGBCL, a corporation may amend its articles of incorporation upon
receiving the affirmative vote of the holders of a majority of its voting shares
and the affirmative vote of the holders of a majority of the outstanding shares
of each class entitled to vote thereon as a class; provided, however, that if
the corporation's articles of incorporation or bylaws provide for cumulative
voting in the election of directors, the number of directors of the corporation
may not be decreased to less than three by amendment to the corporation's
articles of incorporation when the number of shares voting against the proposal
for decrease would be sufficient to elect a director if the shares were voted
cumulatively at an election of three directors; and provided, further, that a
proposed amendment which provides that Section 351.407 of the MGBCL does not
apply to "control share acquisitions" of shares of a corporation requires the
affirmative vote of the holders of two-thirds of such corporation's voting
shares.
Article XII of the Boatmen's Articles of Incorporation provides that
Boatmen's may amend, alter, change or repeal provisions of the Boatmen's
Articles of Incorporation in the manner provided by law, with the exception,
however, of the provisions of the Boatmen's Articles of Incorporation relating
to the classification and number of directors, the approval of Business
Combinations (which provision is described above under "-- Shareholder Vote
Required for Business Combinations"), and the aforementioned exceptions to Arti-
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cle XII, which require the affirmative vote of the holders of 80% of Boatmen's
Common Stock then entitled to vote at a meeting of shareholders called for that
purpose.
NationsBank is subject to Article 10 of the NCBCA which provides that a
corporation's board of directors may adopt several minor amendments to the
corporation's certificate of incorporation without a shareholder vote. Other
proposed amendments to the certificate of incorporation must be submitted to the
shareholders by the board of directors. Such amendments must be approved by (1)
a majority of the votes entitled to be cast on the amendment by any voting group
with respect to which the amendment would create dissenters rights; and (2) for
shares entitled to vote as a separate voting group, a majority of those shares,
provided that a quorum of the voting group is present. The NationsBank Articles
of Incorporation do not contain any special provisions regarding their
amendment.
SHAREHOLDER RIGHTS PLAN
Boatmen's has adopted a shareholder rights plan pursuant to which holders
of a share of Boatmen's Common Stock also hold one preferred share purchase
right which may be exercised upon the occurrence of certain "triggering events"
specified in the Boatmen's Rights Agreement (as hereafter defined). Shareholder
rights plans such as Boatmen's plan are intended to encourage potential hostile
acquirors of a "target" corporation to negotiate with the Board of Directors of
the target corporation in order to avoid occurrence of the "triggering events"
specified in such plans. Shareholder rights plans are intended to give the
directors of a target corporation the opportunity to assess the fairness and
appropriateness of a proposed transaction in order to determine whether or not
it is in the best interests of the corporation and its shareholders.
Notwithstanding these purposes and intentions of shareholder rights plans, such
plans, including that of Boatmen's, could have the effect of discouraging a
business combination which shareholders believe to be in their best interests.
The provisions of the Boatmen's Rights Agreement are discussed below.
Boatmen's has amended the Boatmen's Rights Agreement so that the execution
of the agreement and the consummation of the merger or the exercise by
NationsBank of its rights under the Boatmen's Stock Option Agreement will not
trigger any Boatmen's rights. See "THE MERGER -- Amendment to the Boatmen's
Rights Agreement."
On August 14, 1990, the Boatmen's Board declared a dividend, payable on
August 31, 1990 (the "Boatmen's Dividend Record Date"), of one Boatmen's Right
for each outstanding share of Boatmen's Common Stock. Each Boatmen's Right
entitles the registered holder to purchase from Boatmen's one one-hundredth of a
share of Boatmen's Series C Preferred Stock at a price of $110 (the "Boatmen's
Purchase Price"), subject to adjustment. The description and terms of the
Boatmen's Rights are set forth in the Boatmen's Rights Agreement between
Boatmen's and Boatmen's Trust Company, as Rights Agent (the "Rights Agent"), and
the following description is qualified in its entirety by the Boatmen's Rights
Agreement.
Until the earlier to occur of (i) ten days following a public announcement
that a person or group of affiliated or associated persons (a "Boatmen's
Acquiring Person") has acquired beneficial ownership of 20% or more of the
outstanding shares of Boatmen's Common Stock, or (ii) ten business days (or such
later date as may be determined by action of the Boatmen's Board prior to such
time as any person becomes a Boatmen's Acquiring Person) following the
commencement of, or announcement of an intention to make, a tender or exchange
offer the consummation of which would result in the beneficial ownership by a
person or group of 20% or more of such outstanding shares of Boatmen's Common
Stock (the earlier of such dates being called the "Boatmen's Distribution
Date"), the Boatmen's Rights will be evidenced, with respect to any of the
Boatmen's Common Stock share certificates outstanding as of the Boatmen's
Dividend Record Date, by such Boatmen's Common Stock share certificates, with a
copy of a Summary of Rights attached thereto.
The Boatmen's Rights Agreement provides that until the Boatmen's
Distribution Date (or earlier redemption or expiration of the Boatmen's Rights)
the Boatmen's Rights will be transferred only with shares of Boatmen's Common
Stock. New Boatmen's Common Stock share certificates issued after the Boatmen's
Dividend Record Date, upon transfer or new issuance of Boatmen's Common Stock
will contain a notation incorporating the Boatmen's Rights Agreement by
reference, and the surrender for transfer of any certificates for Boatmen's
Common Stock outstanding as of the Boatmen's Dividend Record Date, even without
such
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notation or a copy of the Summary of Rights being attached thereto, will also
constitute the transfer of the Boatmen's Rights associated with the Boatmen's
Common Stock shares represented by such certificate. As soon as practicable
following the Boatmen's Distribution Date, separate certificates evidencing the
Boatmen's Rights (the "Boatmen's Right Certificates") will be mailed to holders
of record of Boatmen's Common Stock as of the close of business on the Boatmen's
Distribution Date and such separate Boatmen's Right Certificates alone will
evidence the Boatmen's Rights.
The Boatmen's Rights are not exercisable until the Boatmen's Distribution
Date. The Boatmen's Rights will expire on August 14, 2000 (the "Final Expiration
Date"), unless the Final Expiration Date is extended or unless the Boatmen's
Rights are earlier redeemed by Boatmen's, in each case as described below.
The Boatmen's Purchase Price payable, and the number of shares of Boatmen's
Series C Preferred or other securities or property issuable, upon exercise of
the Boatmen's Rights are subject to adjustment from time to time upon the
occurrence of certain events in order to prevent dilution. In addition, the
number of outstanding Boatmen's Rights and the number of one one-hundredths of a
share of Boatmen's Series C Preferred issuable upon exercise of each Boatmen's
Right are also subject to adjustment in the event of a stock split of Boatmen's
Common Stock or a stock dividend on Boatmen's Common Stock payable in shares of
Boatmen's Common Stock or subdivisions, consolidations or combinations of shares
of Boatmen's Common Stock occurring, in any such case, prior to the Boatmen's
Distribution Date.
Shares of Boatmen's Series C Preferred purchasable upon exercise of the
Boatmen's Rights will not be redeemable. Each share of Boatmen's Series C
Preferred will be entitled to a minimum preferential quarterly dividend payment
of $1.00 per share and will be entitled to an aggregate dividend of 100 times
the dividend declared on each share of Boatmen's Common Stock. In the event of
liquidation, the holders of the Shares of Boatmen's Series C Preferred will be
entitled to a minimum preferential liquidation payment of $100 per share but
will be entitled to an aggregate payment of 100 times the payment made on each
share of Boatmen's Common Stock. Each share of Boatmen's Series C Preferred will
have 100 votes, voting together with the Boatmen's Common Stock shares. Finally,
in the event of any merger, consolidation or other transaction in which shares
of Boatmen's Common Stock are exchanged, each share of Boatmen's Series C
Preferred will be entitled to receive 100 times the amount received on each
share of Boatmen's Common Stock. The Boatmen's Rights are protected by customary
anti-dilution provisions.
Because of the nature of the Boatmen's Series C Preferred dividend,
liquidation and voting rights, the value of the one-hundredth interest in a
share of Boatmen's Series C Preferred purchasable upon exercise of each
Boatmen's Right should approximate the value of one Boatmen's Common Stock
share.
In the event that Boatmen's is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold, proper provision will be made so that each holder of a Boatmen's
Right will thereafter have the right to receive, upon the exercise thereof at
the then current exercise price of the Boatmen's Right, that number of shares of
common stock of the acquiring company which at the time of such transaction will
have a market value of two times the exercise price of the Boatmen's Right. In
the event that (i) any person or group of affiliated or associated persons
becomes the beneficial owner of 20% or more of the outstanding shares of
Boatmen's Common Stock (unless such person first acquires 20% or more of the
outstanding shares of Boatmen's Common Stock by a purchase pursuant to a tender
offer for all of the Boatmen's Common Stock for cash, which purchase increases
such person's beneficial ownership to 80% or more of the outstanding shares of
Boatmen's Common Stock); or (ii) during such time as there is a Boatmen's
Acquiring Person, there is a reclassification of securities or a
recapitalization or reorganization of Boatmen's or other transaction or series
of transactions involving Boatmen's which has the effect of increasing by more
than 1% the proportionate share of the outstanding shares of any class of equity
securities of Boatmen's or any of its subsidiaries beneficially owned by the
Boatmen's Acquiring Person, proper provision will be made so that each holder of
a Boatmen's Right, other than Boatmen's Rights beneficially owned by the
Boatmen's Acquiring Person (which will thereafter be void), will thereafter have
the right to receive upon exercise that number of shares of Boatmen's Common
Stock having a market value of two times the exercise price of the Boatmen's
Right.
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At any time after the acquisition by a Boatmen's Acquiring Person of
beneficial ownership of 20% or more of the outstanding shares of Boatmen's
Common Stock, and prior to the acquisition by such Boatmen's Acquiring Person of
50% or more of the outstanding shares of Boatmen's Common Stock, the Boatmen's
Board may exchange the Boatmen's Rights (other than Boatmen's Rights owned by
such person or group which have become void), in whole or in part, at an
exchange ratio of one share of Boatmen's Common Stock per Boatmen's Right
(subject to adjustment).
With certain exceptions, no adjustment in the Boatmen's Purchase Price will
be required until cumulative adjustments require an adjustment of at least 1% of
the Boatmen's Purchase Price. No fractional shares of Boatmen's Series C
Preferred will be issued (other than fractions which are integral multiples of
one one-hundredth of a share of Boatmen's Series C Preferred and which may, at
the election of Boatmen's, be evidenced by depositary receipts) and in lieu
thereof, an adjustment in cash will be made based on the market price of the
shares of Boatmen's Common Stock on the last trading day prior to the date of
exercise.
At any time prior to the acquisition by a Boatmen's Acquiring Person of
beneficial ownership of 20% or more of the outstanding shares of Boatmen's
Common Stock, the Boatmen's Board may redeem the Boatmen's Rights in whole, but
not in part, at a price of $0.01 per Boatmen's Right (the "Boatmen's Redemption
Price"). The redemption of the rights may be made effective at such time, on
such basis, and with such conditions as the Boatmen's Board in its sole
discretion may establish.
In addition, if a bidder who does not beneficially own more than 1% of the
shares of Boatmen's Common Stock and all other voting shares of Boatmen's
(together the "Voting Shares") (and who has not within the past year owned in
excess of 1% of the Voting Shares and, at a time he held a greater than 1%
stake, disclosed, or caused the disclosure of, an intention which relates to or
would result in the acquisition or influence of control of Boatmen's) proposes
to acquire all of the Voting Shares for cash at a price which a nationally
recognized investment banker selected by such bidder states in writing is fair,
and such bidder has obtained written financing commitments (or otherwise has
financing) and complies with certain procedural requirements, then Boatmen's,
upon the request of the bidder, will hold a special shareholders meeting to vote
on a resolution requesting the Board of Directors to accept the proposal of the
bidder. If a majority of the outstanding shares entitled to vote on the proposal
vote in favor of such resolution, then for a period of 60 days after such
meeting the Boatmen's Rights will be automatically redeemed at the Boatmen's
Redemption Price immediately prior to the consummation of any tender offer for
all of such shares at a price per share in cash equal to or greater than the
price offered by such bidder; provided, however, that no redemption will be
permitted or required after the acquisition by any person or group of affiliated
or associated persons of beneficial ownership of 20% or more of the outstanding
shares of Boatmen's Common Stock. Immediately upon any redemption of the
Boatmen's Rights, the right to exercise the Boatmen's Rights will terminate and
the only right of the holders of Boatmen's Rights will be to receive the
Boatmen's Redemption Price.
The terms of the Boatmen's Rights may be amended by the Boatmen's Board
without the consent of the holders of the Boatmen's Rights, including an
amendment to lower certain thresholds described above to not less than the
greater of (i) any percentage greater than the largest percentage of the
outstanding shares of Boatmen's Common Stock then known to Boatmen's to be
beneficially owned by any person or group of affiliated or associated persons;
or (ii) 10%, except that from and after such time as any person becomes a
Boatmen's Acquiring Person no such amendment may adversely affect the interests
of the holders of the Boatmen's Rights.
Until a Boatmen's Right is exercised, the holder thereof, as such, will
have no rights as a shareholder of Boatmen's, including, without limitation, the
right to vote or to receive dividends.
NationsBank does not have a shareholder rights plan. This may make it less
difficult for a potential acquiror to effect a non-negotiated business
combination with NationsBank than with Boatmen's.
SHAREHOLDER PROPOSAL PROCEDURES
The MGBCL does not contain any specific provisions regarding notice of
shareholders' proposals.
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The Bylaws of Boatmen's provide that in order for any business to be
transacted at any meeting of the shareholders, other than business proposed by
or at the direction of the Boatmen's Board, notice thereof must be received from
the proposing shareholder by the Secretary of Boatmen's, accompanied or promptly
followed by such supporting information as he reasonably requests, not less than
75 days prior to the date of any annual meeting or more than seven days after
the mailing of notice of any special meeting.
Neither the NCBCA nor the NationsBank Articles of Incorporation or
NationsBank Bylaws contain any specific provisions regarding notice of
shareholders' proposals.
The provisions of the Bylaws of Boatmen's make it more difficult for the
shareholders of Boatmen's than for those of NationsBank to present proposals for
business to be transacted at their meetings.
DISSENTERS' RIGHTS
Under the MGBCL, a shareholder of a corporation is entitled to receive
payment for the fair value of his or her shares if such shareholder dissents
from a sale or exchange of substantially all of the property and assets of the
corporation or a merger or consolidation to which such corporation is a party. A
shareholder is also entitled to receive payment for the fair value of his or her
shares if such shareholder dissents from according voting rights to "control
shares" in a control share acquisition, as further described below. Boatmen's
Shareholders who follow certain specified procedures are entitled to exercise
their dissenters' rights in the merger. See "DISSENTERS' RIGHTS."
The NCBCA generally provides dissenters' rights for mergers and share
exchanges that require shareholder approval, sales of substantially all the
assets (other than sales that are in the usual and regular course of business
and certain liquidations and court-ordered sales), and certain types of
amendments to the articles of incorporation of a North Carolina corporation (of
which the proposed amendment to the NationsBank Articles of Incorporation is not
one). Because NationsBank is not merging directly with Boatmen's, NationsBank
Shareholders are not entitled to dissenters' rights in the Merger.
TAKEOVER STATUTES
The MGBCL contains provisions regulating a broad range of business
combinations, such as a merger or consolidation, between a Missouri corporation
which is a "resident domestic corporation," as defined in the statute, with
shares of its stock registered under the federal securities laws or that makes
an election by appropriate provisions in its articles of incorporation, and an
"interested shareholder" (which is defined as any owner of 20% or more of the
corporation's stock) for five years after the date on which such shareholder
became an interested shareholder, unless, among other things, the stock
acquisition which caused the person to become an interested shareholder was
approved in advance by the corporation's board of directors. This so-called
"five year freeze" provision is effective even if all the parties should
subsequently decide that they wish to engage in a business combination. The
MGBCL also contains a "control share acquisition" provision which effectively
denies voting rights to shares of a Missouri corporation acquired in control
share acquisitions unless a resolution granting such voting rights is approved
at a meeting of shareholders by affirmative majority vote of (i) all outstanding
shares entitled to vote at such meeting voting by class if required by the terms
of such shares; and (ii) all outstanding shares entitled to vote at such meeting
voting by class if required by the terms of such shares, excluding all
interested shares. A control share acquisition is one by which a purchasing
shareholder acquires more than one-fifth, one-third, or a majority, under
various circumstances, of the voting power of the stock of an "issuing public
corporation." An "issuing public corporation" is a Missouri corporation with (i)
one hundred or more shareholders; (ii) its principal place of business,
principal office or substantial assets in Missouri; and (iii) either (a) more
than 10% of its shareholders resident in Missouri; (b) more than 10% of its
shares owned by Missouri residents; or (c) 10,000 shareholders resident in
Missouri. Boatmen's meets the statutory definition of an issuing public
corporation. If a control share acquisition should be made of a majority or more
of the corporation's voting stock, and those shares are granted full voting
rights, shareholders are granted dissenters' rights.
North Carolina has two anti-takeover statutes in force, the North Carolina
Shareholder Protection Act and the North Carolina Control Share Acquisition Act
which restrict business combinations with, and the
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accumulation of shares of voting stock of, North Carolina corporations.
NationsBank has taken action to irrevocably "opt out" of the restrictions
imposed by these statutes.
CONSIDERATION OF NON-SHAREHOLDER INTERESTS BY BOARD OF DIRECTORS
The MGBCL provides that in exercising business judgment in consideration of
acquisition proposals, a Missouri corporation's board of directors may consider
the following factors, among others (i) the consideration being offered, (ii)
the existing political, economic, and other factors bearing on security prices
generally, or the corporation's securities in particular, (iii) whether the
acquisition proposal may violate any applicable laws, (iv) social, legal and
economic effects on employees, suppliers, customers and others having similar
relationships with the corporation, and the communities in which the corporation
conducts its businesses, (v) the financial condition and earning prospects of
the person making the acquisition proposal, and (vi) the competence, experience
and integrity of the person making the acquisition proposal.
Neither the NCBCA nor the NationsBank Articles of Incorporation or
NationsBank Bylaws contain any similar provisions.
SPECIAL MEETINGS OF SHAREHOLDERS
A special meeting of Boatmen's Shareholders may be called by the Chairman
of the Board or the President or by resolution of the Boatmen's Board whenever
deemed necessary. The business transacted at any special meeting of the
shareholders must be confined to the purpose or purposes specified in the notice
therefor and to related matters. A quorum is a majority of the shares entitled
to vote at the meeting in person or by proxy and, other than in certain
specified circumstances, a vote of the majority of the shares present, in person
or by proxy, constitutes a valid corporate act.
A special meeting of NationsBank Shareholders may be called for any purpose
by the NationsBank Board, by the Chairman of the NationsBank Board or by the
NationsBank Chief Executive Officer or President. A quorum for a meeting of
NationsBank Shareholders is a majority of the outstanding shares of NationsBank
Common Stock entitled to vote. A majority of the votes cast is generally
required for an action by the NationsBank Shareholders. North Carolina law
provides that these quorum and voting requirements may only be increased with
approval of NationsBank Shareholders.
DISSENTERS' RIGHTS
Boatmen's. Section 455 of the MGBCL, a copy of which is attached hereto as
Annex B, entitles each holder of Boatmen's Common Stock and Boatmen's Preferred
Stock who follows the procedures set forth in Section 455 to receive the fair
value of such holder's shares in cash. Under Section 351.455, a holder of
Boatmen's Common Stock or Boatmen's Preferred Stock may dissent and the
Surviving Corporation will pay to such shareholder, upon surrender of the
certificate or certificates representing such shares, the fair value of such
shareholder's shares as of the day prior to the Boatmen's Special Meeting, if
such shareholder (i) files with Boatmen's prior to or at the Boatmen's Special
Meeting a written objection to the Merger; (ii) does not vote in favor thereof;
and (iii) within 20 days after the Effective Time makes a written demand to the
Surviving Corporation for payment of the fair value of the shares held by such
shareholder as of the day prior to the date of the Boatmen's Special Meeting.
Such demand must state the number and class of the shares owned by such
dissenting shareholder. The written objection and the demand for fair value may
be contained in a single writing, provided that such writing is filed with
Boatmen's at or prior to the Boatmen's Special Meeting. Written objections to
the Merger and demands for the payment of fair value should be addressed to:
Boatmen's Bancshares, Inc., One Boatmen's Plaza, 800 Market Street, St. Louis,
Missouri 63101, Attention: Corporate Secretary. Boatmen's Shareholders who have
not complied with all of these requirements will be conclusively presumed to
have consented to the Merger and will be bound by the terms thereof. Boatmen's
will provide written notice of the Effective Time of the Merger to all
shareholders who have timely filed written notice of objection and not voted in
favor of the Merger.
A PROXY MARKED "AGAINST" THE MERGER WILL NOT BE DEEMED TO BE A WRITTEN
NOTICE OF OBJECTION TO THE MERGER. A SHAREHOLDER WHO WISHES TO
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DISSENT FROM THE MERGER MUST PROVIDE A SEPARATE WRITTEN NOTICE OF OBJECTION AT
OR PRIOR TO THE BOATMEN'S SPECIAL MEETING, MUST NOT VOTE "FOR" THE MERGER AND
MUST MAKE WRITTEN DEMAND FOR PAYMENT WITHIN 20 DAYS AFTER THE EFFECTIVE TIME OF
THE MERGER. A PROXY MARKED "AGAINST" OR "ABSTAIN" OR A SHAREHOLDER'S FAILURE TO
VOTE WITH RESPECT TO THE MERGER WILL SUFFICE AS NOT VOTING IN FAVOR OF THE
MERGER.
A beneficial owner of shares who is not the record owner may not assert
dissenters' rights. If the stock is owned of record in a fiduciary capacity,
such as by a trustee, guardian or custodian, or by a nominee, the written demand
asserting dissenters' rights must be executed by the fiduciary or nominee. If
the stock is owned of record by more than one person, as in a joint tenancy or
tenancy in common, the demand must be executed by all joint owners. An
authorized agent, including an agent for two or more joint owners, may execute
the demand for a shareholder of record; however, the agent must identify the
record owner and expressly disclose the fact that, in executing the demand, he
is acting as agent for the record owner.
If within 30 days after the Effective Time the value of such shares is
agreed upon between the dissenting shareholder and the Surviving Corporation,
payment therefor will be made within 90 days after the Effective Time, upon the
surrender by such shareholder of the certificate or certificates representing
such shares. Upon payment of the agreed value the dissenting shareholder will
cease to have any interest in such shares or in the Surviving Corporation.
If within such 30-day period, a dissenting shareholder and the Surviving
Corporation do not so agree as to value, then the dissenting shareholder may,
within 60 days after the expiration of the 30-day period, file a petition in any
court of competent jurisdiction within the county in which the registered office
of the Surviving Corporation is located, asking for a finding and determination
of the fair value of such shares, and will be entitled to judgment against the
Surviving Corporation for the amount of such fair value as of the day prior to
the date of the Boatmen's Special Meeting, together with interest thereon to the
date of such judgment. The judgment will be payable only upon, and
simultaneously with, the surrender to the Surviving Corporation of the
certificate or certificates representing shares with respect to which
dissenters' rights have been exercised. Upon the payment of the judgment, the
dissenting shareholder will cease to have any interest in such shares or in the
Surviving Corporation. Unless the dissenting shareholder will file such petition
within the 60-day period, such shareholder and all persons claiming under such
shareholder shall be conclusively presumed to have approved and ratified the
Merger and will be bound by the terms thereof.
The right of a dissenting shareholder to be paid the fair value of the
shareholder's shares shall cease if the shareholder fails to comply with the
procedures set forth in Section 351.455 and described above, or if the Agreement
is terminated for any reason.
Section 455 of the MGBCL may not provide dissenters' rights to holders of
Boatmen's Depositary Shares. NationsBank and Boatmen's, however, have agreed to
provide holders of Boatmen's Depositary Shares dissenters' rights on the same
terms as holders of Boatmen's Common Stock and Boatmen's Preferred Stock,
provided however that holders of Boatmen's Depositary Shares will not be
entitled to exercise dissenters' rights on their own behalf in the event that
the Depositary exercises dissenters' rights with respect to the shares of
Boatmen's Series A Preferred Stock underlying such holder's Boatmen's Depositary
Shares. Accordingly, subject to the foregoing limitation, actions with respect
to perfecting or withdrawing dissenters' rights taken by holders of Boatmen's
Depositary Shares will have the same effect as if the right to dissent were
explicitly granted to the holders of Boatmen's Depositary Shares by law.
The foregoing does not purport to be a complete statement of the procedures
to be followed by shareholders desiring to exercise appraisal rights and, in
view of the fact that exercise of such rights requires strict adherence to the
relevant provisions of the MGBCL, shareholders who desire to exercise appraisal
rights are advised to review with care all applicable provisions of law and to
obtain legal counsel concerning proper compliance with applicable provisions of
the MGBCL.
NationsBank. NationsBank Shareholders do not have appraisal rights under
the NCBCA with respect to the Merger or the proposed amendment to the
NationsBank Articles of Incorporation.
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AMENDMENT TO THE NATIONSBANK
ARTICLES OF INCORPORATION
NationsBank is currently authorized to issue 800,000,000 shares of
NationsBank Common Stock. The NationsBank Board has unanimously approved a
proposed amendment to the NationsBank Articles of Incorporation which would
increase the number of authorized shares of NationsBank Common Stock from
800,000,000 to 1,250,000,000. The principal purpose of this proposed amendment
would be to permit potential future stock splits in appropriate circumstances.
It is NationsBank's intention to finance its operations through, among
other things, the issuance from time to time of various debt and equity
securities and to consider the issuance of additional shares of NationsBank
Common Stock through stock splits and stock dividends in appropriate
circumstances. Accordingly, the continued availability of shares of NationsBank
Common Stock is necessary to provide NationsBank with the flexibility to take
advantage of opportunities in such situations. NationsBank Common Stock may also
be issued as consideration in future acquisitions. There are, at present, no
plans, understandings, agreements or arrangements concerning the issuance of
additional shares of NationsBank Common Stock, except for (i) the shares to be
issued pursuant to the Merger and (ii) shares presently reserved for issuance.
Authorized but unissued shares of NationsBank Common Stock may be issued
from time to time to such persons and for such consideration as the NationsBank
Board may determine and holders of the then outstanding shares of NationsBank
stock may or may not be given the opportunity to vote thereon, depending upon
the nature of any such transactions, applicable law, the rules and policies of
applicable stock exchanges and the judgment of the NationsBank Board regarding
the submission thereof to NationsBank's shareholders. Shareholders generally
will have no preemptive rights to subscribe to newly issued shares. Issuance of
NationsBank Common Stock (or the issuance of authorized but unissued NationsBank
preferred stock or other capital stock) could have the effect of discouraging an
attempt to acquire control of NationsBank.
The NationsBank Board believes that the proposed increase in the number of
authorized shares of NationsBank Common Stock will provide flexibility needed to
meet corporate objectives and is in the best interests of NationsBank and its
shareholders. The increase in the number of authorized shares of NationsBank
Common Stock will, if approved by the requisite vote of NationsBank
Shareholders, be adopted by NationsBank regardless of whether the Merger is
consummated. The Merger is not conditioned upon the approval of this proposal.
Holders of shares of NationsBank Common Stock vote on this proposal as a
separate group and together with the holders of NationsBank ESOP Preferred Stock
as a single class. In each case, the affirmative vote of a majority of the votes
cast is required for approval of the Articles Amendment, subject to the
applicable quorum requirements. See "NATIONSBANK SPECIAL MEETING." If the
proposal is approved, NationsBank intends to restate the NationsBank Articles of
Incorporation at the time of the amendment. Officers of NationsBank will make
appropriate filings in the State of North Carolina and take any other action
necessary to implement the amendment and restatement.
THE NATIONSBANK BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL TO AMEND THE NATIONSBANK ARTICLES OF INCORPORATION.
AMENDMENT TO THE NATIONSBANK CORPORATION
KEY EMPLOYEE STOCK PLAN
NationsBank maintains the NationsBank Corporation Key Employee Stock Plan
(the "Stock Plan"). The Stock Plan reserves a number of shares of NationsBank
Common Stock for issuance to certain key employees of NationsBank in the form of
stock options, stock appreciation rights ("SARs"), restricted stock and
performance shares.
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<PAGE> 93
In the event of the consummation of the Merger, the number of key employees
of NationsBank will be significantly increased. As a result, the Stock Plan's
formula for determining the number of shares of NationsBank Common Stock
reserved for issuance (which was designed without the Merger in mind) would not
result in an adequate pool of shares of NationsBank Common Stock. The
NationsBank Board has therefore approved, subject to shareholder approval, an
amendment and restatement of the Stock Plan that would add 5.0 million
additional shares of NationsBank Common Stock to the shares of NationsBank
Common Stock otherwise available for issuance under the Stock Plan (which
represents the approximate number of shares currently available for grants under
the various Boatmen's stock incentive plans after adjustment for the Exchange
Ratio).
The following is a summary of the material terms of the Stock Plan as
proposed to be amended.
NUMBER OF SHARES
Under the Stock Plan as originally approved by the shareholders, the number
of shares of NationsBank Common Stock authorized for issuance under the Stock
Plan was 0.75% of the outstanding shares of NationsBank Common Stock as of the
first business day of each calendar year beginning with calendar year 1995 and
continuing through calendar year 2004. An additional 3,612,051 shares of
NationsBank Common Stock were authorized for issuance under the Stock Plan in
connection with the termination of the NationsBank Corporation 1986 Restricted
Stock Award Plan (the "Restricted Stock Plan") effective January 31, 1995.
Under the Stock Plan as amended and restated, the formula described above
would remain unchanged. However, if the Merger is consummated, an additional 5.0
million shares (which represents the approximate number of shares currently
available for grants under the various Boatmen's stock incentive plans after
adjustment for the Exchange Ratio) would be authorized for issuance under the
Stock Plan for the reasons discussed above.
All shares of NationsBank Common Stock available for granting awards in any
year that are not used, as well as shares of NationsBank Common Stock allocated
to awards under both the Stock Plan and the Restricted Stock Plan that are
canceled or forfeited, are available for use in subsequent years.
ADMINISTRATION
The Stock Plan is administered by the Stock Option Committee of the
NationsBank Board (the "Committee"). It is intended that the Committee at all
times be made up of "disinterested persons" within the meaning of Rule 16b-3
promulgated under Section 16(b) of the Exchange Act and that all of its members
be "outside directors" within the meaning of Code Section 162(m). Under the
Stock Plan, the Committee (i) selects the key employees to receive awards from
time to time, (ii) makes awards in such amounts as it determines, (iii) imposes
such limitations, restrictions and conditions upon awards as it deems
appropriate, (iv) establishes performance targets and allocation formulas for
awards of restricted stock or performance shares intended to be "qualified
performance-based compensation" under Code Section 162(m), (v) certifies the
attainment of performance goals, if applicable, as required by Code Section
162(m), (vi) interprets the Stock Plan and adopts, amends and rescinds
administrative guidelines and other rules and regulations relating to the Stock
Plan, (vii) corrects any defect or omission or reconciles any inconsistency in
the Stock Plan or any award granted thereunder and (viii) makes all other
determinations and takes all other actions necessary or advisable for the
implementation and administration of the Stock Plan. The Committee also has the
authority to accelerate the vesting and/or waive any restrictions of any
outstanding awards. No awards would be made under the Stock Plan after December
31, 2004. In no event may an individual receive awards under the Stock Plan for
a given calendar year covering in excess of 250,000 shares.
ELIGIBILITY
Only "key employees" of NationsBank may participate in the Stock Plan. "Key
employees" are those employees of NationsBank who occupy managerial or other
important positions and who have made important contributions to the business of
NationsBank, as determined by the Committee, including persons employed
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outside the United States. After the consummation of the Merger, approximately
14,000 employees are expected to be eligible to participate. As mentioned above,
the Committee in its discretion selects which key employees would in fact
receive any awards from time to time.
AWARDS OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The Stock Plan provides for the grant of options to purchase shares of
NationsBank Common Stock at option prices which are not less than the fair
market value of shares of NationsBank Common Stock at the close of business on
the date of grant. (The fair market value of a share of NationsBank Common Stock
as of November 13, 1996 was $93.875.) The Stock Plan also provides for the grant
of SARs (either in tandem with stock options or freestanding), which entitle
holders upon exercise to receive either cash or shares of NationsBank Common
Stock or a combination thereof, as the Committee in its discretion shall
determine, with a value equal to the difference between (i) the fair market
value on the exercise date of the shares with respect to which an SAR is
exercised and (ii) fair market value of such shares on the date of grant (or, if
different, the exercise price of the related option in the case of a tandem
SAR).
Awards of options under the Stock Plan, which may be either incentive stock
options (which qualify for special tax treatment) or non-qualified stock
options, are determined by the Committee. However, over the ten year term of the
Stock Plan the total number of shares of NationsBank Common Stock that may be
issued in the aggregate as incentive stock options is limited to 0.75% of the
outstanding shares of NationsBank Common Stock as of the first business day of
1995 multiplied by ten. The terms and conditions of each option and of any SAR
are to be determined by the Committee at the time of grant.
Exercise of an option (or an SAR) will result in the cancellation of any
related SAR (or option) to the extent of the number of shares of NationsBank
Common Stock in respect of which such option or SAR has been exercised. Options
and SARs granted under the Stock Plan will expire not more than 10 years from
the date of grant, and the option agreements entered into with the optionees
will specify the extent to which options and SARs may be exercised during their
respective terms, including in the event of the optionee's death, disability or
termination of employment.
Payment for shares of NationsBank Common Stock issuable pursuant to the
exercise of an option may be made either in cash or by tendering shares of
NationsBank Common Stock with a fair market value at the date of the exercise
equal to the portion of the exercise price which is not paid in cash.
AWARDS OF RESTRICTED STOCK AND PERFORMANCE SHARES
The Stock Plan provides for the issuance of shares of NationsBank Common
Stock subject to certain restrictions (the "Restricted Stock") to such key
employees and on such terms and conditions as determined from time to time by
the Committee. The Restricted Stock award agreement with the participant will
set forth the terms of the award, including the applicable restrictions. Such
restrictions may include the continued service of the participant with
NationsBank, the attainment of specified performance goals or any other
conditions deemed appropriate by the Committee.
The stock certificates evidencing the Restricted Stock will bear an
appropriate legend and will be held in the custody of NationsBank until the
applicable restrictions have been satisfied. The participant cannot sell,
transfer, pledge, assign or otherwise alienate or hypothecate shares of
Restricted Stock until the applicable restrictions have been satisfied. Once the
restrictions are satisfied, the shares of NationsBank Common Stock will be
delivered to the participant. During the period of restriction, the participant
may exercise full voting rights with respect to the Restricted Stock. The
participant will also be credited with dividends with respect to the Restricted
Stock. Such dividends may be payable currently or subject to additional
restrictions as determined by the Committee and set forth in the award
agreement.
In addition to Restricted Stock, the Committee may award performance shares
("Performance Shares") to selected key employees. The value of a Performance
Share will equal the fair market value of a share of NationsBank Common Stock.
The Stock Plan provides that the number of Performance Shares granted and/or the
vesting of granted Performance Shares can be contingent on the attainment of
certain performance
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<PAGE> 95
goals or other conditions over a period of time (called the "performance
period"), all as determined by the Committee and evidenced by an award
agreement. During the performance period, the Committee would determine what
number (if any) of Performance Shares have been earned. Earned Performance
Shares may be paid in cash, shares of NationsBank Common Stock or a combination
thereof having an aggregate fair market value equal to the value of the earned
Performance Shares as of the payment date. Shares of NationsBank Common Stock
used to pay earned Performance Shares may have additional restrictions as
determined by the Committee. In addition, the Committee may cancel any earned
Performance Shares and replace them with stock options determined by the
Committee to be of equivalent value based on a conversion formula specified in
the participant's Performance Share award agreement. Earned but unpaid
Performance Shares may have dividend equivalents rights as determined by the
Committee and evidenced in the award agreement.
CERTAIN POST-MERGER AWARDS OF RESTRICTED STOCK
Following the consummation of the Merger, it is anticipated that certain of
Boatmen's Named Officers will be awarded shares of Restricted Stock under the
Stock Plan in connection with accepting positions of employment with NationsBank
as follows: Andrew B. Craig, III, 100,000 shares; Samuel B. Hayes III, 50,000
shares; Gregory L. Curl, 50,000 shares; and John M. Brennan, 25,000 shares. See
"THE MERGER -- Interests of Certain Persons in the Merger." It is anticipated
that six other Boatmen's senior officers will be awarded in the aggregate 85,000
shares of Restricted Stock under the Stock Plan following the Merger in
connection with their accepting employment with NationsBank. Because awards
under the Stock Plan are discretionary, no other awards are determinable at this
time.
CODE SECTION 162(M)
Because stock options and SARs granted under the Stock Plan must have an
exercise price equal at least to fair market value at the date of grant,
compensation from the exercise of stock options and SARs should be treated as
"qualified performance-based compensation" for Code Section 162(m) purposes.
In addition, the Stock Plan authorizes the Committee to make awards of
Restricted Stock or Performance Shares that are conditioned on the satisfaction
of certain performance criteria. For such awards intended to result in
"qualified performance-based compensation," the Committee will establish prior
to or within 90 days after the start of the applicable performance period the
applicable performance conditions. The Committee may select from the following
performance measures for such purpose: (i) return on average common
shareholders' equity of NationsBank, (ii) return on average assets of
NationsBank, (iii) net income of NationsBank, (iv) earnings per common share of
NationsBank or (v) total shareholder return of NationsBank. The performance
conditions will be stated in the form of an objective, nondiscretionary formula,
and the Committee will certify in writing the attainment of such performance
conditions prior to any payout with respect to such awards. The Committee in its
discretion may adjust downward any such award.
WITHHOLDING FOR PAYMENT OF TAXES
The Stock Plan provides for the withholding and payment by a participant of
any payroll or withholding taxes required by applicable law. The Stock Plan
permits a participant to satisfy such requirement, with the approval of the
Committee and subject to the terms of the Stock Plan, by having the Corporation
withhold from the participant a number of shares of NationsBank Common Stock
otherwise issuable under the award having a fair market value equal to the
amount of the applicable payroll and withholding taxes.
CHANGES IN CAPITALIZATION AND SIMILAR CHANGES
In the event of any change in the outstanding shares of NationsBank Common
Stock by reason of any stock dividend, split, spin-off, recapitalization,
merger, consolidation, combination, exchange of shares or otherwise, the
aggregate number of shares of NationsBank Common Stock with respect to which
awards may be made under the Stock Plan, the annual limit on individual awards
and the limit on incentive stock options and the terms, types of shares and
number of shares of any outstanding awards under the Stock Plan may be
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<PAGE> 96
equitably adjusted by the Committee in its discretion to preserve the benefit of
the award for NationsBank and the participant.
CHANGES IN CONTROL
The Stock Plan provides that in the event of a change in control of
NationsBank, all options and SARs will be fully exercisable as of the date of
the change in control and shall remain exercisable through their full term.
Outstanding awards of Restricted Stock and Performance Shares will become
immediately vested, and any applicable performance conditions shall be deemed
satisfied (at the target performance condition, if applicable) as of the date of
the change in control.
AMENDMENT AND TERMINATION OF THE PLAN
The NationsBank Board has the power to amend, modify or terminate the Stock
Plan on a prospective basis. Shareholder approval will be obtained for any
change to the material terms of the Stock Plan to the extent required by Code
Section 162(m) or other applicable law.
FEDERAL INCOME TAX TREATMENT
Incentive Stock Options. Incentive stock options ("ISOs") granted under
the Stock Plan will be subject to the applicable provisions of the Internal
Revenue Code, including Code Section 422. If shares of NationsBank Common Stock
are issued to an optionee upon the exercise an ISO, and if no "disqualifying
disposition" of such shares is made by such optionee within one year after the
exercise of the ISO or within two years after the date the ISO was granted, then
(i) no income will be recognized by the optionee at the time of the grant of the
ISO, (ii) no income, for regular income tax purposes, will be realized by the
optionee at the date of exercise, (iii) upon sale of the shares of NationsBank
Common Stock acquired by exercise of the ISO, any amount realized in excess of
the option price will be taxed to the optionee, for regular income tax purposes,
as a long-term capital gain and any loss sustained will be a long-term capital
loss, and (iv) no deduction will be allowed to NationsBank for federal income
tax purposes. If a "disqualifying disposition" of such shares is made, the
optionee will realize taxable ordinary income in an amount equal to the excess
of the fair market value of the shares purchased at the time of exercise over
the option price (the bargain purchase element) and NationsBank will be entitled
to a federal income tax deduction equal to such amount. The amount of any gain
in excess of the bargain purchase element realized upon a "disqualifying
disposition" will be taxable as capital gain to the holder (for which
NationsBank will not be entitled a federal income tax deduction). Upon exercise
of an ISO, the optionee may be subject to alternative minimum tax.
Nonqualified Stock Options. With respect to nonqualified stock options
("NQSOs") granted to optionees under the Stock Plan, (i) no income is realized
by the optionee at the time the NQSO is granted, (ii) at exercise, ordinary
income is realized by the optionee in an amount equal to the difference between
the option price and the fair market value of the shares on the date of
exercise, and NationsBank receives a tax deduction for the same amount, and
(iii) on disposition, appreciation or depreciation after the date of exercise is
treated as either short-term or long-term capital gain or loss depending on
whether the shares have been held for more than one year.
Restricted Stock. Upon becoming entitled to receive shares at the end of
the applicable restriction period without a forfeiture, the recipient has
ordinary income in an amount equal to the fair market value of the shares at
that time. However, a recipient who elects under Code Section 83(b) within 30
days of the date of the grant will have ordinary taxable income on the date of
the grant equal to the fair market value of the shares of Restricted Stock as if
the shares were unrestricted and could be sold immediately. If the shares
subject to such election are forfeited, the recipient will not be entitled to
any deduction, refund or loss for tax purposes. Upon sale of the shares after
the forfeiture period has expired, the holding period to determine whether the
recipient has long-term or short-term capital gain or loss begins when the
restriction period expires, and the tax basis will be equal to the fair market
value of the shares when the restriction period expires. However, if the
recipient timely elects to be taxed as of the date of grant, the holding period
commences on the date of the grant and the tax basis will be equal to the fair
market value of the shares on the
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date of the grant as if the shares were then unrestricted and could be sold
immediately. NationsBank generally will be entitled to a deduction equal to the
amount that is taxable as ordinary compensation income to the recipient.
Performance Shares. A participant who is awarded Performance Shares will
not recognize income and NationsBank will not be allowed a deduction at the time
the award is made. When a participant receives payment for Performance Shares in
cash or shares of NationsBank Common Stock, the amount of the cash and the fair
market value of the shares of NationsBank Common Stock received will be ordinary
income to the participant and will be allowed as a deduction for federal income
tax purposes to NationsBank. However, if there is a substantial risk that any
shares of NationsBank Common Stock used to pay out earned Performance Shares
will be forfeited (for example, because the Committee conditions such shares on
the performance of future services), the taxable event is deferred until the
risk of forfeiture lapses. In this case, the participant can elect to make a
Code Section 83(b) election as previously described. NationsBank can take the
deduction at the time the income is recognized by the participant.
The affirmative vote of a majority of the votes cast is required for
approval of the Plan Amendment, subject to the applicable quorum requirements.
See "NationsBank Special Meeting."
THE NATIONSBANK BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL TO AMEND AND RESTATE THE STOCK PLAN.
LEGAL OPINION
The legality of the NationsBank stock to be issued in connection with the
Merger will be passed upon by Paul J. Polking, Executive Vice President and
General Counsel of NationsBank. As of the date of this Joint Proxy
Statement-Prospectus, Mr. Polking beneficially owned approximately 33,774 shares
of NationsBank Common Stock.
EXPERTS
The consolidated financial statements of NationsBank incorporated in this
Joint Proxy Statement-Prospectus by reference to the NationsBank Annual Report
on Form 10-K for the year ended December 31, 1995, have been so incorporated in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in auditing and accounting.
The supplemental consolidated financial statements of Boatmen's at December
31, 1995 and 1994, and for the three years ended December 31, 1995, incorporated
by reference from Boatmen's Current Report on Form 8-K filed May 3, 1996 have
been audited by Ernst & Young LLP, independent auditors, as set forth in its
report thereon incorporated herein by reference in reliance upon such report
given on the authority of such firm as experts in accounting and auditing.
Representatives of Price Waterhouse LLP are expected to be present at the
NationsBank Special Meeting, and representatives of Ernst & Young LLP are
expected to be present at the Boatmen's Special Meeting. In each case, such
representatives will have the opportunity to make a statement if they desire to
do so and are expected to be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS
Shareholders of NationsBank may submit proposals to be considered for
shareholder action at the 1997 annual meeting of shareholders of NationsBank if
they do so in accordance with applicable regulations of the Commission. Any such
proposals must be submitted to the Secretary of NationsBank no later than
November 29, 1996, in order to be considered for inclusion in NationsBank's 1997
proxy materials.
Boatmen's will hold a 1997 annual meeting of shareholders only if the
Merger is not consummated before the time of such meeting. In the event that
such a meeting is held, any proposals of shareholders intended to
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be presented at the 1997 annual meeting must have been received by the Secretary
of Boatmen's no later than November 13, 1996 in order to be considered for
inclusion in the Boatmen's 1997 proxy materials.
OTHER MATTERS
As of the date of this Joint Proxy Statement-Prospectus, the Boatmen's
Board and the NationsBank Board know of no matters that will be presented for
consideration at the Special Meetings other than as described in this Joint
Proxy Statement-Prospectus. If any other matters shall properly come before
either Special Meeting or any adjournments or postponements thereof and be voted
upon, the enclosed proxies will be deemed to confer discretionary authority on
the individuals named as proxies therein to vote the shares represented by such
proxies as to any such matters. The persons named as proxies intend to vote or
not to vote in accordance with the recommendation of the respective management's
of Boatmen's and NationsBank.
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UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
The following unaudited Pro Forma Condensed Financial Information and
explanatory notes are presented to show the impact on the historical financial
position and results of operations of NationsBank of the proposed combination
with Boatmen's.
In accordance with the Agreement, each share of Boatmen's Common Stock
outstanding at the Effective Time will be converted in the Merger into the right
to receive 0.6525 of a share of NationsBank Common Stock or, at the election of
each of the holders of Boatmen's Common Stock, an amount in cash in respect of
each share of Boatmen's Common Stock that is equal to the Exchange Ratio times
the average closing price of the NationsBank Common Stock during the 10
consecutive trading day period during which the shares of NationsBank Common
Stock are traded on the NYSE ending on the tenth calendar day immediately prior
to the anticipated Effective Time (such cash consideration in the aggregate,
including cash to be paid with respect to Dissenting Shares, not to exceed 40%
of the aggregate consideration paid by NationsBank for Boatmen's Common Stock),
and each share of Boatmen's Preferred Stock will be converted into new shares of
NationsBank New Preferred Stock having substantially similar terms.
The unaudited Pro Forma Condensed Financial Information reflects the Merger
using the purchase method of accounting. The cash component of the purchase
price is assumed to equal 40% of the purchase price in the unaudited Pro Forma
Condensed Financial Information and is expected to be funded by NationsBank
through the issuance of additional debt securities.
The unaudited Pro Forma Condensed Balance Sheet assumes that the Merger was
consummated on September 30, 1996. The unaudited Pro Forma Condensed Statements
of Income reflect the consolidation of the results of operations of NationsBank
and Boatmen's for the year ended December 31, 1995 and the nine months ended
September 30, 1996.
The unaudited Pro Forma Condensed Financial Information reflects
preliminary purchase accounting adjustments. Estimates relating to the fair
value of certain assets, liabilities and other items have been made as more
fully described in the Notes to the unaudited Pro Forma Condensed Financial
Information. Actual adjustments, which may include adjustments to additional
assets, liabilities and other items, will be made on the basis of appraisals and
evaluations as of the Effective Time and, therefore, will differ from those
reflected in the unaudited Pro Forma Condensed Financial Information.
The combined company expects to achieve substantial merger benefits
including operating cost savings and revenue enhancements. The pro forma
earnings, which do not reflect any direct costs, potential savings or revenue
enhancements which are expected to result from the consolidation of operations
of NationsBank and Boatmen's, are not indicative of the results of future
operations. No assurances can be given with respect to the ultimate level of
expense savings and revenue enhancements to be realized.
The unaudited Pro Forma Condensed Financial Information and explanatory
notes presented also show the impact on the historical financial position and
results of operations of NationsBank of the Merger and the acquisitions of Bank
South, completed January 9, 1996, TAC Bancshares, Inc. and its subsidiary, Chase
Federal Bank, FSB ("Chase Federal"), completed August 13, 1996, and CSF
Holdings, Inc. ("CSF"), completed January 10, 1996 (collectively referred to as
the "Other Acquisitions"). The Other Acquisitions are reflected net of pro forma
adjustments in the unaudited Pro Forma Condensed Financial Information and
explanatory notes.
The Other Acquisitions were all closed prior to September 30, 1996, and are
reflected in the September 30, 1996 unaudited NationsBank historical balance
sheet. The unaudited Pro Forma Condensed Statements of Income reflect the
results of operations of the Other Acquisitions for the year ended December 31,
1995 and the nine months ended September 30, 1996 as if the Other Acquisitions
had occurred on January 1, 1995 and January 1, 1996 respectively. The
acquisition of Chase Federal and CSF are reflected in the unaudited Pro Forma
Condensed Financial Information using the purchase method of accounting and the
merger with Bank South is reflected as a pooling of interests. The Other
Acquisitions' pro forma earnings do not reflect any direct costs, potential
savings or revenue enhancements that may result from the consolidation of
operations related to the Other Acquisitions, and are therefore not indicative
of the results of future operations.
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PRO FORMA CONDENSED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
-----------------------------------------------------
PRO FORMA PRO FORMA
NATIONSBANK BOATMEN'S ADJUSTMENTS COMBINED
----------- --------- ----------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents...................... $ 8,866 $ 2,233 $ $ 11,099
Time deposits placed........................... 1,553 59 1,612
Investment securities.......................... 16,369 11,973 34(1) 18,376
(10,000)(2)
Federal funds sold and securities purchased
under agreements to resell................... 7,689 183 7,872
Trading account assets......................... 19,709 55 19,764
Loans, leases and factored accounts receivable,
net of unearned income....................... 122,078 24,315 146,393
Allowance for credit losses.................... (2,319) (472) (2,791)
Premises, equipment and lease rights, net...... 2,752 776 3,528
Customers' acceptance liability................ 990 -- 990
Other assets................................... 9,984 1,572 6,324(1) 17,913
33(1)
-------- ------- -------- --------
Total assets......................... $ 187,671 $40,694 $ (3,609) $ 224,756
======== ======= ======== ========
LIABILITIES
Deposits....................................... 108,132 30,562 138,694
Borrowed funds................................. 26,003 5,223 (10,000)(2) 21,226
Trading account liabilities.................... 12,686 -- 12,686
Acceptances outstanding........................ 990 -- 990
Accrued expenses and other liabilities......... 4,522 684 239(1) 5,445
Long-term debt................................. 22,034 644 3,855(1) 26,533
-------- ------- -------- --------
Total liabilities.................... $ 174,367 $37,113 $ (5,906) $ 205,574
======== ======= ======== ========
SHAREHOLDERS' EQUITY
Preferred stock................................ $ 174 $ 96 $ $ 270
Common stock................................... 3,956 158 (158)(1) 9,738
5,782(1)
Surplus........................................ -- 1,209 (1,209)(1) --
Retained earnings.............................. 9,235 2,332 (2,332)(1) 9,235
Less: Treasury stock........................... -- (152) 152(1) --
Other including loan to ESOP trust............. (61) (62) 62(1) (61)
-------- ------- -------- --------
Total shareholders' equity........... 13,304 3,581 2,297 19,182
-------- ------- -------- --------
Total liabilities and shareholders'
equity............................. $ 187,671 $40,694 $ (3,609) $ 224,756
======== ======= ======== ========
</TABLE>
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PRO FORMA CONDENSED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
------------------------------------------------------------------------------
PRO FORMA PRO FORMA OTHER PRO FORMA
NATIONSBANK BOATMEN'S ADJUSTMENTS COMBINED ACQUISITIONS COMBINED
----------- --------- ----------- --------- ------------ ---------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
Income from Earning Assets
Interest and fees on loans
and leases............... $ 7,853 $ 1,582 $ $ 9,435 $ 55 $ 9,490
Interest and dividends on
securities............... 1,071 548 5(3) 1,132 45 1,177
(492)(5)
Interest on federal funds
sold and securities
purchased under
agreements to
resell................... 504 21 525 -- 525
Trading account
securities............... 891 3 894 -- 894
Other....................... 119 5 124 -- 124
------ ------ ----- ------ ---- ------
Total income from
earning assets.... 10,438 2,159 (487) 12,110 100 12,210
Interest Expense
Deposits.................... 2,528 751 3,279 45 3,324
Borrowed funds.............. 1,700 184 (455)(5) 1,429 9 1,438
Long-term debt.............. 970 40 226(4) 1,236 21 1,257
Other....................... 501 -- 501 -- 501
------ ------ ----- ------ ---- ------
Total interest
expense........... 5,699 975 (229) 6,445 75 6,520
------ ------ ----- ------ ---- ------
Net interest income........... 4,739 1,184 (258) 5,665 25 5,690
Provision for credit losses... 455 65 520 6 526
------ ------ ----- ------ ---- ------
Net credit income........... 4,284 1,119 (258) 5,145 19 5,164
Gains on sales of
securities.................. 34 2 36 2 38
Non-interest income........... 2,688 635 (3)(3) 3,320 3 3,323
Merger-related charge......... 118 60 178 -- 178
Non-interest expense.......... 4,212 1,094 219(3) 5,525 25 5,550
------ ------ ----- ------ ---- ------
Income before taxes........... 2,676 602 (480) 2,798 (1) 2,797
Income taxes.................. 933 220 (110)(7) 1,043 -- 1,043
------ ------ ----- ------ ---- ------
Net income.................... 1,743 382 (370) 1,755 (1) 1,754
Preferred dividends........... 11 5 16 -- 16
------ ------ ----- ------ ---- ------
Net income available to common
shareholders................ $ 1,732 $ 377 $(370) $ 1,739 $ (1) $ 1,738
====== ====== ===== ====== ==== ======
Primary earnings per common
share....................... $ 5.82 $ 2.40 $ 4.82 $ 4.82
====== ====== ====== ======
Fully diluted earnings per
common share................ $ 5.73 $ 4.77 $ 4.77
====== ====== ======
Average Common Shares --
Primary..................... 297,772 157,216 360,515 360,515
====== ====== ====== ======
Average Common Shares --
Fully Diluted............... 303,077 365,820 365,820
====== ====== ======
</TABLE>
95
<PAGE> 102
PRO FORMA CONDENSED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1995
------------------------------------------------------------------------------
NATIONSBANK
PRO FORMA BOATMEN'S OTHER PRO FORMA
NATIONSBANK BOATMEN'S ADJUSTMENTS COMBINED ACQUISITIONS COMBINED
----------- --------- ----------- ----------- ------------ ---------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
Income from Earning Assets
Interest and fees on loans and
leases..................... $ 9,552 $ 2,108 $ $11,660 $ 677 $12,337
Interest and dividends on
securities................. 1,468 719 7(3) 1,544 379 1,923
(650)(5)
Interest on federal funds sold
and securities purchased
under agreements to
resell..................... 937 40 977 16 993
Trading account securities.... 1,097 2 1,099 1 1,100
Other......................... 166 4 170 4 174
------- ------ ------- ------- ------ ------
Total income from
earning assets...... 13,220 2,873 (643) 15,450 1,077 16,527
Interest Expense
Deposits...................... 3,281 1,025 4,306 444 4,750
Borrowed funds................ 2,710 305 (617)(5) 2,398 195 2,593
Long-term debt................ 886 51 301(4) 1,238 66 1,304
Other......................... 896 -- 896 -- 896
------- ------ ------- ------- ------ ------
Total interest
expense............. 7,773 1,381 (316) 8,838 705 9,543
------- ------ ------- ------- ------ ------
Net interest income............. 5,447 1,492 (327) 6,612 372 6,984
Provision for credit losses..... 382 60 442 10 452
------- ------ ------- ------- ------ ------
Net credit income..... 5,065 1,432 (327) 6,170 362 6,532
Gains (losses) on sales of
securities.................... 29 (7) 22 9 31
Non-interest income............. 3,078 767 (5)(3) 3,840 165 4,005
Non-interest expense............ 5,181 1,451 292(3) 6,924 438 7,362
------- ------ ------- ------- ------ ------
Income before taxes............. 2,991 741 (624) 3,108 98 3,206
Income taxes.................... 1,041 261 (141)(7) 1,161 27 1,188
------- ------ ------- ------- ------ ------
Net income...................... 1,950 480 (483) 1,947 71 2,018
Preferred dividends............. 8 7 15 6 21
------- ------ ------- ------- ------ ------
Net income available to common
shareholders.................. $ 1,942 $ 473 $(483) $ 1,932 $ 65 $ 1,997
======= ====== ======= ======= ====== ======
Primary earnings per common
share......................... $ 7.13 $ 3.02 $ 5.77 $ 5.53
======= ====== ======= ======
Fully diluted earnings per
common share.................. $ 7.04 $ 5.72 $ 5.48
======= ======= ======
Average Common Shares --
Primary....................... 272,480 156,664 334,671 360,979
======= ====== ======= ======
Average Common Shares --
Fully Diluted................. 277,134 339,325 365,633
======= ======= ======
</TABLE>
96
<PAGE> 103
NOTES TO THE UNAUDITED PRO FORMA
CONDENSED FINANCIAL INFORMATION
(DOLLARS IN MILLIONS, SHARES IN THOUSANDS, PER SHARE AMOUNTS ACTUALS)
The unaudited Pro Forma Condensed Financial Information is based on the
following adjustments and related assumptions; the actual purchase accounting
adjustments will be made on the basis of appraisals and evaluations as of the
date of consummation of the Merger and, therefore, will differ from those
reflected in the unaudited Pro Forma Condensed Financial Information.
NOTE 1
The purchase accounting adjustments to record the Merger used in the
preparation of the unaudited Pro Forma Condensed Balance Sheet are summarized
below:
<TABLE>
<S> <C>
Shares of Boatmen's Common Stock outstanding.......................... 155,256(A)
Exchange Ratio........................................................ 0.6525
--------
NationsBank Common Stock equivalent................................... 101,305
Consideration to be paid in NationsBank Common Stock................ 60%(B)
--------
NationsBank Common Stock assumed issued............................. 60,783
Assumed NationsBank Share Price..................................... 95.125(C)
--------
Assumed additional shareholders' equity............................. $ 5,782
--------
Consideration to be paid in cash.................................... 40%(B)
NationsBank Common Stock assumed issued............................. 40,522
========
Assumed NationsBank Share Price..................................... $ 95.125(C)
--------
Assumed cash consideration.......................................... $ 3,855
--------
Total purchase price................................................ $ 9,637
Historical net assets acquired...................................... $ 3,581
Less: Boatmen's preferred stock..................................... (96)
--------
3,485
--------
Premium to allocate................................................... $ 6,152
Adjustments to fair value of net assets acquired:
Investment securities............................................... 34(D)
Mortgage servicing rights........................................... 33(E)
Deferred income taxes................................................. (239)(F)
Intangibles........................................................... 6,324(G)
--------
$ 6,152
========
</TABLE>
- ---------------
(A) The number of shares of Boatmen's Common Stock to be exchanged will be
those outstanding immediately prior to the Effective Time of the Merger.
The number of shares of Boatmen's Common Stock outstanding on September 30,
1996 has been used in the pro forma computations.
(B) Each share of Boatmen's Common Stock outstanding at the Effective Time will
be converted in the Merger into the right to receive 0.6525 of a share of
NationsBank Common Stock or, at the election of each of the holders of
Boatmen's Common Stock, an amount in cash in respect of each share of
Boatmen's Common Stock that is equal to the Exchange Ratio times the
average closing price of the NationsBank Common Stock during the 10
consecutive trading day period during which the shares of NationsBank
Common Stock are traded on the NYSE ending on the tenth calendar day
immediately prior to the anticipated Effective Time (such cash
consideration in the aggregate not to exceed 40% of the aggregate
consideration paid by NationsBank for Boatmen's Common Stock). An assumed
cash election of 40% has been used in the pro forma computations. The
unaudited Pro Forma Condensed Financial Information reflects funding of the
cash component of the purchase price from issuance by NationsBank of
additional debt securities.
97
<PAGE> 104
NOTES TO THE UNAUDITED PRO FORMA
CONDENSED FINANCIAL INFORMATION -- (CONTINUED)
(DOLLARS IN MILLIONS, SHARES IN THOUSANDS, PER SHARE AMOUNTS ACTUALS)
(C) NationsBank Common Stock price as of November 6, 1996.
(D) Reflects the net appreciation in the investment securities portfolio at
September 30, 1996.
(E) Reflects the estimated fair value in excess of carrying value of mortgage
servicing rights at September 30, 1996.
(F) Represents the estimated tax liability associated with adjustments to the
carrying value of investment securities, mortgage servicing rights and
certain identifiable intangible assets.
(G) Includes both identifiable intangibles and goodwill. Since the final
determination of adjustments to assets and liabilities will be made based
upon the fair values as of the Effective Time and after appraisals and
evaluations are complete, the final amounts will differ from the estimates
provided herein.
NOTE 2
Reflects the planned reduction of discretionary investment securities
portfolio and related paydown of borrowed funds.
NOTE 3
The purchase accounting adjustments related to the Merger reflected in the
unaudited Pro Forma Condensed Statement of Income are summarized as follows:
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED
ENDED DECEMBER 31,
SEPTEMBER 30, 1996 1995
------------------ ------------
<S> <C> <C>
Interest income
Amortization of investment securities adjustment....... $ 5 $ 7
Noninterest income
Amortization of mortgage servicing rights adjustment... $ 3 $ 5
Noninterest expense
Amortization of incremental intangibles................ $219 $292
</TABLE>
NOTE 4
Purchase accounting adjustments related to NationsBank's funding of the
Merger have been reflected in the unaudited Pro Forma Condensed Statements of
Income as follows:
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED
ENDED DECEMBER 31,
SEPTEMBER 30, 1996 1995
------------------ ------------
<S> <C> <C>
Interest expense
Increase in interest expense on debt securities to fund
the cash component of the purchase price............ $226 $301
</TABLE>
NOTE 5
Foregone interest income on discretionary investment security portfolio
reduction and related reduction in funding cost.
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED
ENDED DECEMBER 31,
SEPTEMBER 30, 1996 1995
------------------ ------------
<S> <C> <C>
Interest income.......................................... $492 $650
Interest expense......................................... $455 $617
---- ----
$ 37 $ 33
</TABLE>
98
<PAGE> 105
NOTES TO THE UNAUDITED PRO FORMA
CONDENSED FINANCIAL INFORMATION -- (CONTINUED)
(DOLLARS IN MILLIONS, SHARES IN THOUSANDS, PER SHARE AMOUNTS ACTUALS)
NOTE 6
The following assumptions were used in establishing the purchase accounting
adjustments related to the Merger in the unaudited Pro Forma Condensed
Statements of Income.
SECURITIES
Amortize the discount related to investment securities portfolio assumed to
be retained into interest income on a straight-line method over the estimated
maturities of the affected securities, three years.
MORTGAGE SERVICING RIGHTS
Amortize the excess of fair value over carrying value over the estimated
seven year maturity of the underlying mortgages.
INTANGIBLES
Amortize the identifiable intangible value as noninterest expense over 10
years and goodwill on a straight-line basis over 25 years.
NOTE 7
Income tax expense on pro forma adjustments is reflected using a 36% tax
rate.
99
<PAGE> 106
APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
BOATMEN'S BANCSHARES, INC.
AND
NATIONSBANK CORPORATION
DATED AS OF AUGUST 29, 1996
A-1
<PAGE> 107
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE 1. CERTAIN DEFINITIONS....................................................... A-4
1.01. Certain Definitions...................................................... A-4
ARTICLE 2. THE MERGER; EFFECTS OF THE MERGER......................................... A-8
2.01. The Merger............................................................... A-8
2.02. Effective Date And Effective Time........................................ A-8
2.03. Amendment Of Parent Articles............................................. A-8
2.04. Tax Consequences......................................................... A-8
ARTICLE 3. MERGER CONSIDERATION; EXCHANGE PROCEDURES................................. A-8
3.01. Merger Consideration..................................................... A-8
3.02. Optional Cash Election................................................... A-9
3.03. Rights As Stockholders; Stock Transfers.................................. A-11
3.04. Fractional Shares........................................................ A-11
3.05. Exchange Procedures...................................................... A-11
3.06. Dissenting Stockholders.................................................. A-12
3.07. Anti-Dilution Provisions................................................. A-12
3.08. Treasury Shares.......................................................... A-12
3.09. Options.................................................................. A-12
ARTICLE 4. ACTIONS PENDING MERGER.................................................... A-13
4.01. Ordinary Course.......................................................... A-13
4.02. Capital Stock............................................................ A-13
4.03. Dividends, Etc. ......................................................... A-13
4.04. Compensation; Employment Agreements; Etc. ............................... A-14
4.05. Benefit Plans............................................................ A-14
4.06. Acquisitions And Dispositions............................................ A-14
4.07. Amendments............................................................... A-14
4.08. Accounting Methods....................................................... A-14
4.09. Adverse Actions.......................................................... A-14
4.10. Agreements............................................................... A-14
ARTICLE 5. REPRESENTATIONS AND WARRANTIES............................................ A-14
5.01. Disclosure Schedules..................................................... A-14
5.02. Standard................................................................. A-15
5.03. Representations And Warranties........................................... A-15
ARTICLE 6. COVENANTS................................................................. A-20
6.01. Best Efforts............................................................. A-20
6.02. Stockholder Approvals.................................................... A-20
6.03. Registration Statement................................................... A-21
6.04. Press Releases........................................................... A-21
6.05. Access; Information...................................................... A-21
6.06. Acquisition Proposals.................................................... A-22
6.07. Affiliate Agreements..................................................... A-22
6.08. Takeover Laws............................................................ A-22
6.09. No Rights Triggered...................................................... A-22
6.10. Shares Listed............................................................ A-22
6.11. Regulatory Applications.................................................. A-23
6.12. Indemnification.......................................................... A-23
6.13. Benefit Plans............................................................ A-24
6.14. Certain Director And Officer Positions................................... A-24
6.15. Notification Of Certain Matters.......................................... A-25
</TABLE>
A-2
<PAGE> 108
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE 7. CONDITIONS TO CONSUMMATION OF THE MERGER.................................. A-25
7.01. Shareholder Vote......................................................... A-25
7.02. Regulatory Approvals..................................................... A-25
7.03. Third Party Consents..................................................... A-25
7.04. No Injunction, Etc. ..................................................... A-25
7.05. Representations, Warranties And Covenants Of Parent...................... A-25
7.06. Representations, Warranties And Covenants Of The Company................. A-25
7.07. Effective Registration Statement......................................... A-26
7.08. Tax Opinion.............................................................. A-26
7.09. Articles Of Amendment.................................................... A-26
7.10. NYSE Listing............................................................. A-26
7.11. Company Rights Agreement................................................. A-26
ARTICLE 8. TERMINATION............................................................... A-27
8.01. Termination.............................................................. A-27
8.02. Effect of Termination And Abandonment.................................... A-29
ARTICLE 9. MISCELLANEOUS............................................................. A-29
9.01. Survival................................................................. A-29
9.02. Waiver; Amendment........................................................ A-29
9.03. Counterparts............................................................. A-29
9.04. Governing Law............................................................ A-29
9.05. Expenses................................................................. A-29
9.06. Confidentiality.......................................................... A-29
9.07. Notices.................................................................. A-29
9.08. Entire Understanding; No Third Party Beneficiaries....................... A-30
9.09. Headings................................................................. A-30
</TABLE>
A-3
<PAGE> 109
AGREEMENT AND PLAN OF MERGER, dated as of August 29, 1996 (this
"Agreement"), by and between Boatmen's Bancshares, Inc. (the "Company") and
NationsBank Corporation ("Parent").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of the Company and Parent have determined
that it is in the best interests of their respective companies and their
stockholders to consummate the strategic business combination transaction
provided for herein in which the Company will, subject to the terms and
conditions set forth herein, merge (the "Merger") with and into a wholly-owned
direct or indirect subsidiary of Parent ("Merger Sub"), so that Merger Sub is
the surviving corporation in the Merger;
WHEREAS, in connection with the execution of this Agreement, the Company
and Parent will enter into a stock option agreement (the "Stock Option
Agreement") in the form attached hereto as Exhibit A; and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
10.1. Certain Definitions. As used in this Agreement, the following terms
shall have the meanings set forth below:
"Affiliate" shall have the meaning set forth in Section 6.07(a).
"Agreement" shall have the meaning set forth in the recitals to this
Agreement.
"Articles of Amendment" shall have the meaning set forth in Section
2.03.
"Average Closing Price" shall have the meaning set forth in Section
8.01(e).
"Average Index Price" shall have the meaning set forth in Section
8.01(e).
"Cash Amount" shall have the meaning set forth in Section 3.02.
"Cash Election Shares" shall have the meaning set forth in Section
3.02.
"Certificate of Merger" shall have the meaning set forth in Section
2.01(b).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning set forth in the recitals to this
Agreement.
"Company Common Stock" shall have the meaning set forth in Section
3.01(a).
"Company Directors" shall have the meaning set forth in Section 6.14.
"Company Meeting" shall have the meaning set forth in Section 6.02.
"Company Preferred Stock" shall mean Company Series A Preferred Stock
and Company Series B Preferred Stock.
"Company Right" shall have the meaning set forth in Section 3.01(a).
"Company Rights Agreement" shall have the meaning set forth in Section
3.01(a).
"Company Series A Preferred Stock" shall have the meaning set forth in
Section 3.01(b).
"Company Series B Preferred Stock" shall have the meaning set forth in
Section 3.01(b).
A-4
<PAGE> 110
"Company Stock" shall mean Company Common Stock and Company Preferred
Stock.
"Company Stock Option" shall have the meaning set forth in Section
3.09.
"Company Stock Option Plans" shall have the meaning set forth in
Section 3.09.
"Compensation and Benefit Plans" shall have the meaning set forth in
Section 5.03(l).
"Confidentiality Agreement" shall mean the Confidentiality Agreement,
dated August 13, 1996, between the Company and Parent.
"Costs" shall have the meaning set forth in Section 6.12(a).
"Determination Date" shall have the meaning set forth in Section
8.01(e).
"Disclosure Schedule" shall have the meaning set forth in Section
5.01.
"Dissenting Shares" shall have the meaning set forth in Section 3.06.
"Effective Date" shall have the meaning set forth in Section 2.02.
"Effective Time" shall have the meaning set forth in Section 2.02.
"Election Deadline" shall have the meaning set forth in Section 3.02.
"Election Form" shall have the meaning set forth in Section 3.02.
"Election Form Record Date" shall have the meaning set forth in
Section 3.02.
"Employee Benefit Plans" shall have the meaning set forth in Section
6.13.
"Environmental Laws" shall have the meaning set forth in Section
5.03(o).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall have the meaning set forth in Section 5.03(l).
"ESOP Preferred Stock" shall have the meaning set forth in Section
4.03(1).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
"Exchange Agent" shall have the meaning set forth in Section 3.02.
"Exchange Fund" shall have the meaning set forth in Section 3.05(a).
"Exchange Ratio" shall have the meaning set forth in Section 3.01(a).
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System.
"GBCL" shall have the meaning set forth in Section 2.01(b).
"Indemnified Party" shall have the meaning set forth in Section
6.12(a).
"Index Group" shall have the meaning set forth in Section 8.01(e).
"Index Price" shall have the meaning set forth in Section 8.01(e).
"Index Ratio" shall have the meaning set forth in Section 8.01(e).
"Joint Proxy Statement" shall have the meaning set forth in Section
6.03.
"Liens" shall mean any charge, mortgage, pledge, security interest,
restriction, claim, lien, or encumbrance.
"Mailing Date" shall have the meaning set forth in Section 3.02.
A-5
<PAGE> 111
"Material Adverse Effect" shall mean with respect to the Company or
Parent, respectively, any effect that (i) is material and adverse to the
financial position, results of operations or business of the Company and
its Subsidiaries taken as a whole, or Parent and its Subsidiaries taken as
a whole, respectively, or (ii) would materially impair the ability of the
Company or Parent, respectively, to perform its obligations under this
Agreement or otherwise materially threaten or materially impede the
consummation of the Merger and the other transactions contemplated by this
Agreement; provided, however, that Material Adverse Effect shall not be
deemed to include the impact of (a) changes in banking and similar laws of
general applicability or interpretations thereof by courts or governmental
authorities, (b) changes in generally accepted accounting principles or
regulatory accounting requirements applicable to banks or savings
associations and their holding companies generally, (c) actions or
omissions of the Company, Parent or Merger Sub taken with the prior written
consent of the Company or Parent, as applicable, in contemplation of the
transactions contemplated hereby, (d) circumstances affecting banks or
savings associations and their holding companies generally, and (e) the
effects of the Merger and compliance with the provisions of this Agreement
on the operating performance of such party and its Subsidiaries.
"Meeting" shall have the meaning set forth in Section 6.02.
"Merger" shall have the meaning set forth in the recitals to this
Agreement and in Section 2.01(a).
"Merger Consideration" shall have the meaning set forth in Section
2.01.
"Merger Sub" shall have the meaning set forth in the recitals to this
Agreement.
"Merger Sub Common Stock" shall have the meaning set forth in Section
3.01(c).
"Multiemployer Plans" shall have the meaning set forth in Section
5.03(l).
"NASDAQ" shall mean The Nasdaq Stock Market, Inc.'s National Market.
"New Certificates" shall have the meaning set forth in Section
3.05(a).
"No Election Shares" shall have the meaning set forth in Section 3.02.
"NYSE" shall mean the New York Stock Exchange.
"OCC" shall mean the Office of the Comptroller of the Currency.
"Old Certificates" shall have the meaning set forth in Section 3.02.
"OTS" shall mean the Office of Thrift Supervision.
"Parent" shall have the meaning set forth in the recitals to this
Agreement.
"Parent Common Stock" shall have the meaning set forth in Section
3.01(a).
"Parent Meeting" shall have the meaning set forth in Section 6.02.
"Parent Preferred Stock" shall mean Parent Series A Preferred Stock
and Parent Series B Preferred Stock.
"Parent Ratio" shall have the meaning set forth in Section 8.01(e).
"Parent Series A Preferred Stock" shall have the meaning set forth in
Section 3.01(b).
"Parent Series B Preferred Stock" shall have the meaning set forth in
Section 3.01(b).
"Parent Stock" shall mean Parent Common Stock and Parent Preferred
Stock.
"Pension Plan" shall have the meaning set forth in Section 5.03(l).
"Per Share Cash Consideration" shall have the meaning set forth in
Section 3.02.
"Per Share Stock Consideration" shall have the meaning set forth in
Section 3.01(a).
A-6
<PAGE> 112
"Person" or "person" shall mean any individual, bank, corporation,
partnership, association, joint-stock company, business trust or
unincorporated organization.
"Plans" shall have the meaning set forth in Section 5.03(l).
"Previously Disclosed" by a party shall mean information set forth in
its Disclosure Schedule.
"Registration Statement" shall have the meaning set forth in Section
6.03.
"Regulatory Authorities" shall have the meaning set forth in Section
5.03(h).
"Rights" shall mean, with respect to any person, securities or
obligations convertible into or exchangeable for, or giving any person any
right to subscribe for or acquire, or any options, calls or commitments
relating to, shares of capital stock of such person.
"SEC" shall mean the Securities and Exchange Commission.
"SEC Documents" shall have the meaning set forth in Section 5.03(g).
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations thereunder.
"Starting Date" shall have the meaning set forth in Section 8.01(e).
"Starting Price" shall have the meaning set forth in Section 8.01(e).
"Stock Designees" shall have the meaning set forth in Section 3.02.
"Stock Option Agreement" shall have the meaning set forth in the
recitals to this Agreement.
"Subsidiary" and "Significant Subsidiary" shall have the meanings
ascribed to them in Rule 1-02 of Regulation S-X of the SEC; provided that
for purposes of Article V, Merger Sub shall be deemed a Significant
Subsidiary of Parent.
"Surviving Corporation" shall have the meaning set forth in Section
2.01(a).
"Takeover Laws" shall have the meaning set forth in Section 5.03(n).
"Takeover Proposal" shall mean, with respect to any person, any tender
or exchange offer, proposal for a merger, consolidation or other business
combination involving the Company or any of its Significant Subsidiaries or
any proposal or offer to acquire in any manner a substantial equity
interest in, or a substantial portion of the assets of, the Company or any
of its Significant Subsidiaries other than the transactions contemplated or
permitted by this Agreement.
"Tax Returns" shall have the meaning set forth in Section 5.03(p).
"Taxes" shall mean all taxes, charges, fees, levies or other
assessments, including, without limitation, all net income, gross income,
gross receipts, sales, use, ad valorem, goods and services, capital,
transfer, franchise, profits, license, withholding, payroll, employment,
employer health, excise, estimated, severance, stamp, occupation, property
or other taxes, custom duties, fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax
or additional amounts imposed by any taxing authority.
"Treasury Shares" shall have the meaning set forth in Section 3.01(a).
"Valuation Period" shall have the meaning set forth in Section 3.02.
"Valuation Period Market Value" shall have the meaning set forth in
Section 3.02.
A-7
<PAGE> 113
ARTICLE II
THE MERGER; EFFECTS OF THE MERGER
2.01. The Merger. (a) The Surviving Corporation. At the Effective Time,
the Company shall merge with and into Merger Sub (the "Merger"), the separate
corporate existence of the Company shall cease and Merger Sub shall survive and
continue to exist as a Missouri corporation (Merger Sub, as the surviving
corporation in the Merger, sometimes being referred to herein as the "Surviving
Corporation"). Parent may at any time change the method of effecting the
combination with the Company (including without limitation the provisions of
this Article II) if and to the extent it deems such change to be desirable,
including without limitation to provide for a merger of the Company directly
into Parent, in which Parent is the surviving corporation; provided, however,
that no such change shall (A) alter or change the amount or kind of
consideration to be issued to holders of Company Stock as provided for in this
Agreement (the "Merger Consideration"), (B) adversely affect the tax treatment
of the Company's stockholders as a result of receiving the Merger Consideration
or (C) materially impede or delay consummation of the transactions contemplated
by this Agreement.
(b) Effectiveness And Effects Of The Merger. Subject to the satisfaction or
waiver of the conditions set forth in Article VII in accordance with this
Agreement, the Merger shall become effective upon the filing in the office of
the Secretary of State of Missouri of a certificate of merger (the "Certificate
of Merger"), or such later date and time as may be set forth in the Certificate
of Merger, in accordance with Section 440 of the General and Business
Corporation Law of Missouri (the "GBCL"). The Merger shall have the effects
prescribed in Section 450 of the GBCL.
(c) Certificate Of Incorporation And By-Laws. The certificate of
incorporation and by-laws of the Surviving Corporation shall be those of Merger
Sub, as in effect immediately prior to the Effective Time.
2.02. Effective Date And Effective Time. Subject to the satisfaction or
waiver of the conditions as set forth in Article VII in accordance with this
Agreement, the parties shall cause the effective date of the Merger (the
"Effective Date") to occur on (1) the third business day to occur after the last
of the conditions set forth in Sections 7.01, 7.02, 7.03 and 7.10 shall have
been satisfied or waived in accordance with the terms of this Agreement or (2)
such other date to which the parties may agree in writing. The time on the
Effective Date when the Merger shall become effective is referred to as the
"Effective Time."
2.03. Amendment Of Parent Articles. At the Effective Time, the articles of
incorporation of Parent shall be amended to fix the preferences, limitations and
relative rights of the series of Parent Preferred Stock, shares of which are to
be issued in the Merger pursuant to Section 3.01(b). At or prior to the
Effective Time, Parent shall deliver to the Secretary of State of North Carolina
for filing, pursuant to Section 6-02 of the North Carolina Business Corporation
Act, articles of amendment, in a form mutually acceptable to Parent and the
Company, giving effect to the foregoing and containing any other provisions with
respect to the aforementioned series of Parent Preferred Stock necessary to
permit consummation of the Merger in accordance with the terms of this Agreement
(the "Articles of Amendment").
2.04. Tax Consequences. It is intended that the Merger shall qualify as a
reorganization under Section 368(a) of the Code.
ARTICLE III
MERGER CONSIDERATION; EXCHANGE PROCEDURES
3.01. Merger Consideration. Subject to the provisions of this Agreement,
at the Effective Time, automatically by virtue of the Merger and without any
action on the part of any party or stockholder:
(a) Outstanding Company Common Stock. Each share (excluding (i)
shares held by the Company or any of its Subsidiaries or by Parent or any
of its Subsidiaries, in each case other than in a fiduciary capacity or as
a result of debts previously contracted ("Treasury Shares") and (ii)
Dissenting Shares) of the common stock, par value $1.00 per share, of the
Company, including each attached right
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(a "Company Right") issued pursuant to the Rights Agreement, dated August
14, 1990, as amended (the "Company Rights Agreement"), between the Company
and the Rights Agent named therein (the "Company Common Stock"), issued and
outstanding immediately prior to the Effective Time shall become and be
converted into the right to receive 0.6525 share (subject to adjustment as
set forth herein, the "Exchange Ratio") of common stock (the "Parent Common
Stock") of Parent (the "Per Share Stock Consideration"), subject to the
election rights set forth in Section 3.02.
(b) Outstanding Company Preferred Stock. (i) Each share of the
Company's Cumulative Convertible Preferred Stock, Series A, stated value
$100 per share, liquidation preference $400 per share ("Company Series A
Preferred Stock"), excluding any Treasury Shares, issued and outstanding
immediately prior to the Effective Time, shall become and be converted into
the right to receive one share of newly created preferred stock of Parent
("Parent Series A Preferred Stock") having terms (to be set forth in the
Articles of Amendment) substantially identical to those of the Company
Series A Preferred Stock.
(ii) Each share of the Company's 7% Cumulative Redeemable Preferred Stock,
Series B, stated value $100 per share, liquidation preference $100 per share
("Company Series B Preferred Stock"), excluding any Treasury Shares, issued and
outstanding immediately prior to the Effective Time, shall become and be
converted into the right to receive one share of newly created preferred stock
of Parent ("Parent Series B Preferred Stock") having terms (to be set forth in
the Articles of Amendment) substantially identical to those of the Company
Series B Preferred Stock.
(iii) At the Effective Time, any deposit agreements pursuant to which
shares of Company Preferred Stock are held subject to depositary receipts shall
automatically, and without further action on the part of Parent or the Surviving
Corporation, be assumed by Parent.
(c) Outstanding Merger Sub Common Stock. Each share of the common stock of
Merger Sub ("Merger Sub Common Stock") issued and outstanding immediately prior
to the Effective Time shall be unchanged and shall remain issued and outstanding
as common stock of the Surviving Corporation.
3.02. Optional Cash Election. Holders of the Company Common Stock shall be
provided with an opportunity to elect to receive cash consideration in lieu of
receiving Parent Common Stock in the Merger, in accordance with the election
procedures set forth below in this Section 3.02. Holders who are to receive cash
in lieu of exchanging their shares of Company Common Stock for Parent Common
Stock as specified below shall receive an amount in cash (the "Per Share Cash
Consideration") in respect of each share of Company Common Stock that is so
converted equal to the Exchange Ratio times the Valuation Period Market Value.
The aggregate amount of cash that shall be issued in the Merger to satisfy such
elections shall not exceed 40% of the aggregate consideration paid in exchange
for shares of Company Common Stock in the Merger (the "Cash Amount"). For
purposes of this Section 3.02:
(i) "Valuation Period Market Value" shall mean the average of the
closing sales prices for Parent Common Stock as reported on the NYSE
Composite Transactions reporting system (as reported in The Wall Street
Journal or, in the absence thereof, by another authoritative source) during
the Valuation Period; and
(ii) "Valuation Period" shall mean the ten (10) consecutive trading
day period during which the shares of Parent Common Stock are traded on the
NYSE ending on the tenth calendar day immediately prior to the anticipated
Effective Time.
An election form and other appropriate and customary transmittal materials
(which shall specify that delivery shall be effected, and risk of loss and title
to the certificates theretofore representing Company Common Stock ("Old
Certificates") shall pass, only upon proper delivery of such Old Certificates to
an exchange agent designated by Parent (the "Exchange Agent")) in such form as
Parent and the Company shall mutually agree ("Election Form") shall be mailed 25
days prior to the anticipated Effective Time or on such other date as the
Company and Parent shall mutually agree ("Mailing Date") to each holder of
record of Company Common Stock as of five business days prior to the Mailing
Date ("Election Form Record Date").
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Each Election Form shall permit a holder (or the beneficial owner through
appropriate and customary documentation and instructions) of Company Common
Stock to elect to receive cash with respect to all or a portion of such holder's
Company Common Stock (shares as to which the election is made being "Cash
Election Shares").
Any shares of Company Common Stock with respect to which the holder (or the
beneficial owner, as the case may be) shall not have submitted to the Exchange
Agent an effective, properly completed Election Form on or before 5:00 p.m. on
the 20th day following the Mailing Date (or such other time and date as Parent
and the Company may mutually agree) (the "Election Deadline") shall be converted
into Parent Common Stock at the Exchange Ratio (such shares being "No Election
Shares").
Parent shall make available one or more Election Forms as may be reasonably
requested by all persons who become holders (or beneficial owners) of Company
Common Stock between the Election Form Record Date and the close of business on
the business day prior to the Election Deadline, and the Company shall provide
to the Exchange Agent all information reasonably necessary for it to perform as
specified herein.
Any such election shall have been properly made only if the Exchange Agent
shall have actually received a properly completed Election Form by the Election
Deadline. An Election Form shall be deemed properly completed only if
accompanied by one or more certificates (or customary affidavits and
indemnification regarding the loss or destruction of such certificates or the
guaranteed delivery of such certificates) representing all shares of the Company
Common Stock covered by such Election Form, together with duly executed
transmittal materials included in the Election Form. Any Election Form may be
revoked or changed by the person submitting such Election Form at or prior to
the Election Deadline. In the event an Election Form is revoked prior to the
Election Deadline, the shares of Company Common Stock represented by such
Election Form shall become No Election Shares and Parent shall cause the
certificates representing Company Common Stock to be promptly returned without
charge to the person submitting the Election Form upon written request to that
effect from the person who submitted the Election Form. Subject to the terms of
this Agreement and of the Election Form, the Exchange Agent shall have
reasonable discretion to determine whether any election, revocation or change
has been properly or timely made and to disregard immaterial defects in the
Election Forms, and any good faith decisions of the Exchange Agent regarding
such matters shall be binding and conclusive. Neither Parent nor the Exchange
Agent shall be under any obligation to notify any person of any defect in an
Election Form. Any Dissenting Shares (as defined below) shall be treated as Cash
Election Shares for the purposes of the determinations set forth below (but
shall not be converted into the right to receive the Per Share Cash
Consideration and shall instead be treated as set forth in Section 3.06).
Within five business days after the Election Deadline, unless the Effective
Time has not yet occurred, in which case as soon thereafter as practicable,
Parent shall cause the Exchange Agent to effect the allocation among the holders
of Company Common Stock in accordance with the Election Forms as follows:
(i) Cash Elections Less Than or Equal To the Cash Amount. If the
amount of cash that would be issued upon conversion in the Merger of the
Cash Election Shares is less than or equal to the Cash Amount, then:
(1) all Cash Election Shares shall be converted into the right to
receive the Per Share Cash Consideration, and
(2) the No Election Shares shall be converted into the right to
receive the Per Share Stock Consideration.
(ii) Cash Elections More Than the Cash Amount. If the amount of cash
that would be issued upon the conversion of the Cash Election Shares is
greater than the Cash Amount, then:
(1) all No Election Shares shall be converted into the right to
receive the Per Share Stock Consideration,
(2) the Exchange Agent shall select from among the holders of Cash
Election Shares (other than Dissenting Shares), by random selection (as
described below), a sufficient number of such
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holders ("Stock Designees") such that the amount of cash that will be
issued in the Merger equals as closely as practicable the Cash Amount,
and all shares held by the Stock Designees shall be converted into the
right to receive the Per Share Stock Consideration, and
(3) the Cash Election Shares not held by Stock Designees shall be
converted into the right to receive the Per Share Cash Consideration.
The random selection process to be used by the Exchange Agent shall consist
of such processes as shall be mutually determined by Parent and the Company.
3.03. Rights As Stockholders; Stock Transfers. At the Effective Time,
holders of Company Stock shall cease to be, and shall have no rights as,
stockholders of the Company, other than to receive any dividend or other
distribution with respect to such Company Stock with a record date occurring
prior to the Effective Time and the consideration provided under this Article
III. After the Effective Time, there shall be no transfers on the stock transfer
books of the Company or the Surviving Corporation of shares of Company Stock.
3.04. Fractional Shares. Notwithstanding any other provision hereof, no
fractional shares of Parent Common Stock and no certificates or scrip therefor,
or other evidence of ownership thereof, will be issued in the Merger; instead,
Parent shall pay to each holder of Company Common Stock who would otherwise be
entitled to a fractional share of Parent Common Stock (after taking into account
all Old Certificates delivered by such holder) an amount in cash (without
interest) determined by multiplying such fraction by the average of the last
sale prices of Parent Common Stock, as reported by the NYSE Composite
Transactions reporting system (as reported in The Wall Street Journal or, if not
reported therein, in another authoritative source), for the five NYSE trading
days immediately preceding the Effective Date.
3.05. Exchange Procedures. (a) At or prior to the Effective Time, Parent
shall deposit, or shall cause to be deposited, with the Exchange Agent, for the
benefit of the holders of Old Certificates (which for purposes of this Section
3.05 shall include certificates formerly representing shares of Company
Preferred Stock), for exchange in accordance with this Article III, certificates
representing the shares of Parent Stock ("New Certificates") and an estimated
amount of cash (such cash and New Certificates, together with any dividends or
distributions with respect thereto (without any interest thereon), being
hereinafter referred to as the "Exchange Fund") to be paid pursuant to this
Article III in exchange for outstanding shares of Company Stock.
(b) As promptly as practicable after the Effective Date, Parent shall send
or cause to be sent to each former holder of record of shares (other than Cash
Election Shares, Treasury Shares or Dissenting Shares) of Company Stock
immediately prior to the Effective Time transmittal materials for use in
exchanging such stockholder's Old Certificates for the consideration set forth
in this Article III. Parent shall cause the New Certificates into which shares
of a stockholder's Company Stock are converted on the Effective Date and/or any
check in respect of the Per Share Cash Consideration and any fractional share
interests or dividends or distributions which such person shall be entitled to
receive to be delivered to such stockholder upon delivery to the Exchange Agent
of Old Certificates representing such shares of Company Stock (or indemnity
reasonably satisfactory to Parent and the Exchange Agent, if any of such
certificates are lost, stolen or destroyed) owned by such stockholder. No
interest will be paid on any such cash to be paid pursuant to this Article III
upon such delivery.
(c) Notwithstanding the foregoing, neither the Exchange Agent nor any party
hereto shall be liable to any former holder of Company Stock for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(d) No dividends or other distributions with respect to Parent Stock with a
record date occurring after the Effective Time shall be paid to the holder of
any unsurrendered Old Certificate representing shares of Company Stock converted
in the Merger into shares of such Parent Stock until the holder thereof shall
surrender such Old Certificate in accordance with this Article III. After the
surrender of an Old Certificate in accordance with this Article III, the record
holder thereof shall be entitled to receive any such dividends or
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other distributions, without any interest thereon, which theretofore had become
payable with respect to shares of Parent Stock represented by such Old
Certificate.
(e) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of the Company for twelve months after the Effective Time shall be
paid to Parent. Any stockholders of the Company who have not theretofore
complied with this Article III shall thereafter look only to Parent for payment
of the shares of Parent Stock, cash in lieu of any fractional shares and unpaid
dividends and distributions on the Parent Stock deliverable in respect of each
share of Company Stock such stockholder holds as determined pursuant to this
Agreement, in each case, without any interest thereon.
3.06. Dissenting Stockholders. Notwithstanding anything in this Agreement
to the contrary, shares of Company Stock which are issued and outstanding
immediately prior to the Effective Time and which are held by stockholders who
did not vote in favor of the adoption of this Agreement, who are entitled to
demand the fair value of such shares of Company Stock under Section 455 of the
GBCL, and who comply with all of the relevant provisions of such Section (the
"Dissenting Shares") shall not be converted into or be exchangeable for the
right to receive Parent Common Stock or Parent Preferred Stock, as applicable
(unless and until such holders shall have failed to perfect or shall have
effectively withdrawn or lost their dissenters' rights under the GBCL), but
shall instead be entitled to all applicable dissenters' rights as are prescribed
by the GBCL. If any such holder shall have failed to perfect or shall have
effectively withdrawn or lost such dissenters' rights, such holder's shares of
Company Stock shall thereupon be converted into and become exchangeable for the
right to receive, as of the Effective Time, Parent Common Stock or Parent
Preferred Stock, as applicable, without any interest thereon. The Company shall
give Parent (i) prompt notice of any written demands for payment for any Company
Stock under Section 455 of the GBCL, attempted withdrawals of such demands, and
any other instruments served pursuant to the GBCL and received by the Company
relating to dissenters' rights, and (ii) the opportunity to participate in all
negotiations and proceedings with respect to the exercise of dissenters' rights
under the GBCL. The Company shall not, except with the prior written consent of
the Parent, voluntarily make any payment with respect to any demands for payment
for Company Stock under Section 455 of the GBCL, offer to settle or settle any
such demands or approve any withdrawal of any such demands.
3.07. Anti-Dilution Provisions. In the event Parent changes (or
establishes a record date for changing) the number of shares of Parent Common
Stock issued and outstanding prior to the Effective Date as a result of a stock
split, stock dividend, recapitalization or similar transaction with respect to
the outstanding Parent Common Stock and the record date therefor shall be prior
to the Effective Date, the Exchange Ratio shall be proportionately adjusted.
3.08. Treasury Shares. Each of the shares of Company Stock held as
Treasury Shares immediately prior to the Effective Time shall be canceled and
retired at the Effective Time and no consideration shall be issued in exchange
therefor.
3.09. Options. At the Effective Time, all employee and director stock
options to purchase shares of Company Common Stock (each, a "Company Stock
Option"), which are then outstanding and unexercised, shall cease to represent a
right to acquire shares of Company Stock and shall be converted automatically
into options to purchase shares of Parent Common Stock, and Parent shall assume
each such Company Stock Option subject to the terms of any of the stock option
plans listed under "Stock Option Plans" in Exhibit 5.03(l)(i) of the Company's
Disclosure Schedule (collectively, the "Company Stock Option Plans"), and the
agreements evidencing grants thereunder, including but not limited to the
accelerated vesting of such options which shall occur in connection with and by
virtue of the Merger as and to the extent required by such plans and agreements;
provided, however, that from and after the Effective Time, (i) the number of
shares of Parent Common Stock purchasable upon exercise of such Company Stock
Option shall be equal to the number of shares of Company Common Stock that were
purchasable under such Company Stock Option immediately prior to the Effective
Time multiplied by the Exchange Ratio, and rounding to the nearest whole share,
and (ii) the per share exercise price under each such Company Stock Option shall
be adjusted by dividing the per share exercise price of each such Company Stock
Option by the Exchange Ratio, and rounding down to the nearest cent. The terms
of each Company Stock Option shall, in accordance with its
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terms, be subject to further adjustment as appropriate to reflect any stock
split, stock dividend, recapitalization or other similar transaction with
respect to Parent Common Stock on or subsequent to the Effective Date.
Notwithstanding the foregoing, each Company Stock Option which is intended to be
an "incentive stock option" (as defined in Section 422 of the Code) shall be
adjusted in accordance with the requirements of Section 424 of the Code.
Accordingly, with respect to any incentive stock options, fractional shares
shall be rounded down to the nearest whole number of shares and where necessary
the per share exercise price shall be rounded down to the nearest cent.
ARTICLE IV
ACTIONS PENDING MERGER
From the date hereof until the Effective Time, except as expressly
contemplated by this Agreement, (i) without the prior written consent of Parent
(which consent shall not be unreasonably withheld or delayed) the Company will
not, and will cause each of its Subsidiaries not to, and (ii) without the prior
written consent of the Company (which consent shall not be unreasonably withheld
or delayed) Parent will not, and will cause each of its Subsidiaries not to:
4.01. Ordinary Course. Conduct the business of it and its
Subsidiaries other than in the ordinary and usual course or, to the extent
consistent therewith, fail to use reasonable efforts to preserve intact
their business organizations and assets and maintain their rights,
franchises and existing relations with customers, suppliers, employees and
business associates, or take any action that would (i) adversely affect the
ability of any party to obtain any necessary approvals of any Regulatory
Authorities required for the transactions contemplated hereby without the
imposition of a condition or restriction of the type referred to in the
second sentence of Section 7.02 or (ii) adversely affect its ability to
perform any of its material obligations under this Agreement.
4.02. Capital Stock. In the case of the Company, other than (i)
pursuant to Rights or other stock options Previously Disclosed in its
Disclosure Schedule and currently outstanding as of the date hereof, or
(ii) upon conversion of shares of Company Preferred Stock pursuant to the
terms thereof, (x) issue, sell or otherwise permit to become outstanding,
or authorize the creation of, any additional shares of capital stock, any
stock appreciation rights or any Rights, (y) enter into any agreement with
respect to the foregoing, or (z) permit any additional shares of capital
stock to become subject to new grants of employee stock options, stock
appreciation rights, or similar stock-based employee rights.
4.03. Dividends, Etc. (1) Make, declare or pay any dividend (other
than (i) in the case of the Company, (A) quarterly cash dividends on
Company Common Stock in an amount not to exceed the greater of (I) $0.42
per share and (II) the product of the Exchange Ratio multiplied by Parent's
then-effective quarterly dividend, dividends payable on Company Preferred
Stock at a rate not exceeding the rate provided for in the terms thereof,
and (B) dividends from greater than 95%-owned Subsidiaries to the Company
or another greater than 95%-owned Subsidiary of the Company, as applicable,
and (ii) in the case of Parent, quarterly cash dividends on Parent Common
Stock not in excess of $0.66 per share, semi-annual cash dividends on the
ESOP Convertible Preferred Stock, Series C (the "ESOP Preferred Stock"),
not in excess of $3.30 per share and cash dividends on any other
outstanding issues of preferred stock in accordance with the terms thereof
and dividends from Subsidiaries to Parent or another Subsidiary of Parent,
as applicable) on or in respect of, or declare or make any distribution on
any shares of its capital stock, or (2) other than (A) as Previously
Disclosed in its Disclosure Schedule, (B) in the case of the Company,
pursuant to the terms of the Company Preferred Stock, (C) in the ordinary
course pursuant to employee benefit plans, directly or indirectly combine,
redeem, reclassify, purchase or otherwise acquire, any shares of its
capital stock, or (D) in the case of Parent, repurchases of Parent Stock in
the ordinary course. After the date of this Agreement, each of Parent and
the Company shall coordinate with the other the declaration of any
dividends in respect of Parent Common Stock and Company Common Stock and
the record dates and payment dates relating thereto, it being the intention
of the parties hereto that holders of Parent Common Stock or Company Common
Stock shall not receive two dividends, or fail to receive one dividend, for
any single calendar quarter with respect to their shares
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of Parent Common Stock and/or Company Common Stock and any shares of Parent
Common Stock any such holder receives in exchange therefor in the Merger.
4.04. Compensation; Employment Agreements; Etc. In the case of the
Company and its Subsidiaries, enter into or amend any written employment,
severance or similar agreements or arrangements with any of its directors,
officers or employees, or grant any salary or wage increase or increase any
employee benefit (including incentive or bonus payments), except for (i)
normal individual increases in compensation to employees in the ordinary
course of business consistent with past practice or (ii) other changes as
are provided for herein or as may be required by law or to satisfy
contractual obligations existing as of the date hereof or additional grants
of awards to newly hired employees consistent with past practice or such
changes that, either individually or in the aggregate, would not reasonably
be expected to result in a material liability to the Company or its
Subsidiaries or such changes that, either individually or in the aggregate,
would not reasonably be expected to result in a material liability to the
Company or its Subsidiaries.
4.05. Benefit Plans. In the case of the Company and its Subsidiaries,
enter into or amend (except as may be required by applicable law, to
satisfy contractual obligations existing as of the date hereof or
amendments which, either individually or in the aggregate, would not
reasonably be expected to result in a material liability to the Company or
its Subsidiaries) any pension, retirement, stock option, stock purchase,
savings, profit sharing, deferred compensation, consulting, bonus, group
insurance or other employee benefit, incentive or welfare contract, plan or
arrangement, or any trust agreement related thereto, in respect of any of
its directors, officers or other employees, including without limitation
taking any action that accelerates the vesting or exercise of any benefits
payable thereunder.
4.06. Acquisitions And Dispositions. In the case of the Company,
except as Previously Disclosed in its Disclosure Schedule, dispose of or
discontinue any portion of its assets, business or properties, which is
material to it and its Subsidiaries taken as a whole, or acquire (other
than by way of foreclosures or acquisitions of control in a bona fide
fiduciary capacity or in satisfaction of debts previously contracted in
good faith, in each case in the ordinary and usual course of business
consistent with past practice) all or any portion of, the business or
property of any other entity which is material to it and its Subsidiaries
taken as a whole. Parent will not, and will cause its Subsidiaries not to,
make any acquisition or take any other action which would materially
adversely affect its ability to consummate the transactions contemplated by
this Agreement.
4.07. Amendments. In the case of the Company, amend its Articles of
Incorporation or By-laws or amend or waive any rights under the Company
Rights Agreement.
4.08. Accounting Methods. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required
by generally accepted accounting principles.
4.09. Adverse Actions. (1) Take any action while knowing that such
action would, or is reasonably likely to, prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code; or (2) knowingly take any action that is intended or is reasonably
likely to result in (x) any of its representations and warranties set forth
in this Agreement being or becoming untrue in any material respect at any
time prior to the Effective Time, (y) any of the conditions to the Merger
set forth in Article VII not being satisfied or (z) a material violation of
any provision of this Agreement except, in each case, as may be required by
applicable law.
4.10. Agreements. Agree or commit to do anything prohibited by
Sections 4.01 through 4.09.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01. Disclosure Schedules. On or prior to the date hereof, Parent has
delivered to the Company and the Company has delivered to Parent a schedule
(respectively, its "Disclosure Schedule") setting forth, among other things,
items the disclosure of which is necessary or appropriate in relation to any or
all of its
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representations and warranties; provided, that (i) no such item is required to
be set forth in a Disclosure Schedule as an exception to a representation or
warranty if its absence is not reasonably likely to result in the related
representation or warranty being deemed untrue or incorrect under the standard
established by Section 5.02, and (ii) the mere inclusion of an item in a
Disclosure Schedule shall not be deemed an admission by a party that such item
represents a material exception or fact, event or circumstance or that such item
is reasonably likely to result in a Material Adverse Effect.
5.02. Standard. No representation or warranty of Parent or the Company
contained in Section 5.03 shall be deemed untrue or incorrect, and no party
hereto shall be deemed to have breached a representation or warranty, as a
consequence of the existence of any fact, circumstance or event unless such
fact, circumstance or event, individually or taken together with all other
facts, circumstances or events inconsistent with any paragraph of Section 5.03
has had or is expected to have a Material Adverse Effect.
5.03. Representations And Warranties. Subject to Sections 5.01 and 5.02
and except as Previously Disclosed in its Disclosure Schedule, the Company
hereby represents and warrants to Parent, and Parent hereby represents and
warrants to the Company, to the extent applicable, in each case with respect to
itself and its Subsidiaries, as follows:
(a) Organization, Standing and Authority. Such party is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. Such party is duly qualified to do
business and is in good standing in the states of the United States and
foreign jurisdictions where its ownership or leasing of property or the
conduct of its business requires it to be so qualified. It has in effect
all federal, state, local, and foreign governmental authorizations
necessary for it to own or lease its properties and assets and to carry on
its business as it is now conducted.
(b) Shares. (i) As of the date hereof, the authorized capital stock
of the Company consists solely of 250,000,000 shares of Company Common
Stock, of which, as of July 31, 1996, 156,741,130 shares were outstanding,
10,300,000 shares of Company Preferred Stock, of which 250,000 shares have
been designated as Company Series A Preferred Stock, of which, as of July
31, 1996, 247,729 shares were outstanding, and 35,045 shares have been
designated as Company Series B Preferred Stock, of which, as of July 31,
1996, 9,487 shares were outstanding. As of the date hereof, the authorized
capital stock of Parent consists solely of 800,000,000 shares of Parent
Common Stock, of which, as of July 31, 1996, 291,169,674 shares were
outstanding, and 45,000,000 shares of Parent Preferred Stock, of which, as
of July 31, 1996, 2,445,143 shares of ESOP Preferred Stock were
outstanding. As of July 31, 1996, 1,659,226 shares of Company Common Stock
and no shares of Parent Common Stock were held in treasury. The outstanding
shares of such party's capital stock are validly issued and outstanding,
fully paid and nonassessable, and subject to no preemptive rights (and were
not issued in violation of any preemptive rights). As of the date hereof,
there are no shares of such party's capital stock authorized and reserved
for issuance, such party does not have any Rights issued or outstanding
with respect to its capital stock, and such party does not have any
commitment to authorize, issue or sell any such shares or Rights, except
pursuant to this Agreement and the Company Rights Agreement, as the case
may be. Since July 31, 1996, the Company has issued no shares of its
capital stock or rights in respect thereof or reserved any shares for such
purposes except pursuant to plans or commitments Previously Disclosed in
its Disclosure Schedule.
(ii) The number of shares of Company Common Stock which are issuable
and reserved for issuance upon exercise of Company Stock Options as of the
date hereof are Previously Disclosed in the Company's Disclosure Schedule,
and the number of shares of Parent Common Stock which are issuable and
reserved for issuance upon exercise of any employee or director stock
options to purchase shares of Parent Common Stock as of the date hereof are
Previously Disclosed in Parent's Disclosure Schedule.
(iii) In the case of the representations and warranties of Parent: (i)
the outstanding shares of Merger Sub Common Stock are validly issued and
outstanding, fully paid and nonassessable, and subject to no preemptive
rights; and (ii) the shares of Parent Stock to be issued in exchange for
shares of Company Stock in the Merger, when issued in accordance with the
terms of this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable.
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(c) Subsidiaries. (i) (A) Such party has Previously Disclosed in its
Disclosure Schedule a list of all of its Subsidiaries together with the
jurisdiction of organization of each such Subsidiary, (B) it owns, directly
or indirectly at least 99% of the issued and outstanding shares of each of
its Significant Subsidiaries, (C) no equity securities of any of its
Significant Subsidiaries are or may become required to be issued (other
than to it or a Subsidiary of it) by reason of any Rights, (D) there are no
contracts, commitments, understandings or arrangements by which any of such
Significant Subsidiaries is or may be bound to sell or otherwise transfer
any shares of the capital stock of any such Significant Subsidiaries (other
than to it or a Subsidiary of it), (E) there are no contracts, commitments,
understandings, or arrangements relating to its rights to vote or to
dispose of such shares (other than to it or a Subsidiary of it), and (F)
all of the shares of capital stock of each such Significant Subsidiary held
by it or its Subsidiaries are fully paid and (except pursuant to 12 U.S.C.
sec. 55 or equivalent state statutes in the case of bank Subsidiaries)
nonassessable and are owned by it or its Subsidiaries free and clear of any
Liens.
(ii) In the case of the representations and warranties of the Company,
the Company does not own (other than in a bona fide fiduciary capacity or
in satisfaction of a debt previously contracted) beneficially, directly or
indirectly, any shares of any equity securities or similar interests of any
person, or any interest in a partnership or joint venture of any kind.
(iii) Each of such party's Significant Subsidiaries has been duly
organized and is validly existing in good standing under the laws of the
jurisdiction of its organization, and is duly qualified to do business and
in good standing in the jurisdictions where its ownership or leasing of
property or the conduct of its business requires it to be so qualified.
Each of such Significant Subsidiaries has in effect all federal, state,
local, and foreign governmental authorizations necessary for it to own or
lease its properties and assets and to carry on its business as it is now
conducted.
(d) Corporate Power. Such party and each of its Significant
Subsidiaries has the corporate power and authority to carry on its business
as it is now being conducted and to own all its properties and assets; and
it has (and, in the case of the representations and warranties of Parent,
Merger Sub will have as of the Effective Time) the corporate power and
authority to execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby.
(e) Corporate Authority. Subject to receipt of the requisite approval
by the holders of two-thirds of the outstanding Company Common Stock (in
the case of the Company) and by the holders of a majority of a quorum of
Parent Common Stock (in the case of Parent), this Agreement and the
transactions contemplated hereby have been authorized by all necessary
corporate action of it, and this Agreement is a legal, valid and binding
agreement of it, enforceable in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general
equity principles).
(f) No Defaults. Subject to receipt of the regulatory approvals, and
expiration of the waiting periods, referred to in Section 7.02 and the
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby by it do not and will not (i) constitute a
breach or violation of, or a default under, any law, rule or regulation or
any judgment, decree, order, governmental permit or license, or agreement,
indenture or instrument of it or of any of its Significant Subsidiaries or
to which it or any of its Significant Subsidiaries or properties is subject
or bound, (ii) constitute a breach or violation of, or a default under, its
articles or certificate of incorporation or by-laws, or (iii) require any
consent or approval under any such law, rule, regulation, judgment, decree,
order, governmental permit or license agreement, indenture or instrument.
(g) Financial Reports And SEC Documents. Its Annual Report on Form
10-K for the fiscal year ended December 31, 1995, and all other reports,
registration statements, definitive proxy statements or information
statements filed or to be filed by it or any of its Subsidiaries subsequent
to December 31, 1995 under the Securities Act, or under Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act, in the form filed, or to be filed
(collectively, its "SEC Documents"), with the SEC (i) complied or will
comply
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in all material respects as to form with the applicable requirements under
the Securities Act or the Exchange Act, as the case may be, and (ii) did
not and will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances under which they
were made, not misleading; and each of the balance sheets contained in or
incorporated by reference into any such SEC Document (including the related
notes and schedules thereto) fairly presents and will fairly present the
financial position of the entity or entities to which it relates as of its
date, and each of the statements of income and changes in stockholders'
equity and cash flows or equivalent statements in such SEC Documents
(including any related notes and schedules thereto) fairly presents and
will fairly present the results of operations, changes in stockholders'
equity and changes in cash flows, as the case may be, of the entity or
entities to which it relates for the periods to which they relate, in each
case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except in each case as
may be noted therein, subject to normal year-end audit adjustments in the
case of unaudited statements.
(h) Litigation; Regulatory Action. (i) No litigation, claim or other
proceeding before any court or governmental agency is pending against it or
any of its Subsidiaries and, to the best of its knowledge, no such
litigation, claim or other proceeding has been threatened.
(ii) Neither it nor any of its Subsidiaries or properties is a party
to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or
similar submission to, any federal or state governmental agency or
authority charged with the supervision or regulation of financial
institutions or issuers of securities or engaged in the insurance of
deposits (including, without limitation, the OCC, the Federal Reserve
Board, the FDIC and the OTS) or the supervision or regulation of it or any
of its Subsidiaries (collectively, the "Regulatory Authorities").
(iii) Neither it nor any of its Subsidiaries has been advised by any
Regulatory Authority that such Regulatory Authority is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of understanding,
commitment letter or similar submission.
(i) Compliance With Laws. It and each of its Subsidiaries:
(i) in the conduct of its business, is in compliance with all
applicable federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees applicable
thereto or to the employees conducting such businesses, including,
without limitation, the Equal Credit Opportunity Act, the Fair Housing
Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act
and all other applicable fair lending laws and other laws relating to
discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and have made all filings, applications and registrations
with, all Regulatory Authorities that are required in order to permit
them to conduct their businesses substantially as presently conducted;
all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect and, to the best of its
knowledge, no suspension or cancellation of any of them is threatened;
and
(iii) has received, since December 31, 1995, no notification or
communication from any Regulatory Authority (A) asserting that it or any
of its Subsidiaries is not in compliance with any of the statutes,
regulations, or ordinances which such Regulatory Authority enforces, (B)
threatening to revoke any license, franchise, permit, or governmental
authorization, (C) threatening or contemplating revocation or limitation
of, or which would have the effect of revoking or limiting, federal
deposit insurance (nor, to its knowledge, do any grounds for any of the
foregoing exist) or (D) failing to approve any proposed acquisition, or
stating its intention not to approve acquisitions proposed to be
effected by it within a certain time period or indefinitely.
(j) Defaults. Neither it nor any of its Subsidiaries is in default
under any contract, agreement, commitment, arrangement, lease, insurance
policy, or other instrument to which it is a party, by which its respective
assets, business, or operations may be bound or affected, or under which it
or its respective
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assets, business, or operations receives benefits, and there has not
occurred any event that, with the lapse of time or the giving of notice or
both, would constitute such a default.
(k) No Brokers. No action has been taken by it that would give rise
to any valid claim against any party hereto for a brokerage commission,
finder's fee or other like payment with respect to the transactions
contemplated by this Agreement, excluding, in the case of the Company, a
fee to be paid to Goldman, Sachs & Co., and, in the case of Parent, a fee
to be paid to Stephens, Inc., which, in each case, has been heretofore
disclosed to the other party.
(l) Employee Benefit Plans. (i) Such Party's Disclosure Schedule
contains a complete list of all written bonus, vacation, deferred
compensation, pension, retirement, profit-sharing, thrift, savings,
employee stock ownership, stock bonus, stock purchase, restricted stock and
stock option plans, all employment or severance contracts, all medical,
dental, disability, health and life insurance plans, all other employee
benefit and fringe benefit plans, contracts or arrangements and any
applicable "change of control" or similar provisions in any plan, contract
or arrangement maintained or contributed to by it or any of its
Subsidiaries for the benefit of officers, former officers, employees,
former employees, directors, former directors, or the beneficiaries of any
of the foregoing (collectively, "Compensation and Benefit Plans").
(ii) True and complete copies of its Compensation and Benefit Plans,
including, but not limited to, any trust instruments and/or insurance
contracts, if any, forming a part thereof, and all amendments thereto have
been supplied to the other party.
(iii) Each of its Compensation and Benefit Plans has been administered
in all material respects in accordance with the terms thereof. All
"employee benefit plans" within the meaning of Section 3(3) of ERISA, other
than "multiemployer plans" within the meaning of Section 3(37) of ERISA
("Multiemployer Plans"), covering employees or former employees of it and
its Subsidiaries (its "Plans"), to the extent subject to ERISA, are in
material compliance with ERISA, the Code, the Age Discrimination in
Employment Act and other applicable laws. Each Compensation and Benefit
Plan of it or its Subsidiaries which is an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA ("Pension Plan") and which is
intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service, and it is
not aware of any circumstances reasonably likely to result in the
revocation or denial of any such favorable determination letter. There is
no pending or, to its knowledge, threatened litigation or governmental
audit, examination or investigation relating to the Plans.
(iv) No material liability under Title IV of ERISA has been or is
expected to be incurred by it or any of its Subsidiaries with respect to
any ongoing, frozen or terminated "single-employer plan", within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained
by any of them, or the single-employer plan of any entity which is
considered one employer with it under Section 4001(a)(15) of ERISA or
Section 414 of the Code (an "ERISA Affiliate"). Neither it nor any of its
Subsidiaries presently contributes to a Multiemployer Plan, nor have they
contributed to such a plan within the past five calendar years. No notice
of a "reportable event", within the meaning of Section 4043 of ERISA for
which the 30-day reporting requirement has not been waived, has been
required to be filed for any Pension Plan of it or any of its Subsidiaries
or by any ERISA Affiliate within the past 12 months.
(v) All contributions, premiums and payments required to be made under
the terms of any Compensation and Benefit Plan of it or any of its
Subsidiaries have been made. Neither any Pension Plan of it or any of its
Subsidiaries nor any single-employer plan of an ERISA Affiliate of it or
any of its Subsidiaries has an "accumulated funding deficiency" (whether or
not waived) within the meaning of Section 412 of the Code or Section 302 of
ERISA. Neither it nor any of its Subsidiaries has provided, or is required
to provide, security to any Pension Plan or to any single-employer plan of
an ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
(vi) Under each Pension Plan of it or any of its Subsidiaries which is
a single-employer plan, as of the last day of the most recent plan year
ended prior to the date hereof, the actuarially determined present
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(vii) Neither it nor any of its Subsidiaries has any obligations under
any Compensation and Benefit Plans to provide benefits, including death or
medical benefits, with respect to employees of it or its Subsidiaries
beyond their retirement or other termination of service other than (i)
coverage mandated by Part 6 of Title I of ERISA or Section 4980B of the
Code, (ii) retirement or death benefits under any employee pension benefit
plan (as defined under Section 3(2) of ERISA), (iii) disability benefits
under any employee welfare plan that have been fully provided for by
insurance or otherwise, or (iv) benefits in the nature of severance pay.
(viii) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to any director
or any employee of it or any of its Subsidiaries under any Compensation and
Benefit Plan or otherwise from it or any of its Subsidiaries, (ii) increase
any benefits otherwise payable under any Compensation and Benefit Plan or
(iii) result in any acceleration of the time of payment or vesting of any
such benefit.
(m) Labor Matters. Neither it nor any of its Subsidiaries is a party
to, or is bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is
it or any of its Subsidiaries the subject of a proceeding asserting that it
or any such Subsidiaries has committed an unfair labor practice (within the
meaning of the National Labor Relations Act) or seeking to compel it or
such Subsidiaries to bargain with any labor organization as to wages and
conditions of employment.
(n) Takeover Laws; Rights Plans. (i) It has taken all action required
to be taken by it in order to exempt this Agreement and the transactions
contemplated hereby from, and this Agreement and the transactions
contemplated hereby are exempt from, the requirements of any "moratorium",
"control share", "fair price" or other antitakeover laws and regulations
(collectively, "Takeover Laws") of the State of Missouri in the case of the
representations and warranties of the Company, including Section 459 of the
GBCL. In the case of the representations and warranties of the Company, the
transactions contemplated by this Agreement have been approved for purposes
of Article XI of the Company's Restated Articles of Incorporation.
(ii) In the case of the representations and warranties of the Company,
it has (A) duly entered into an amendment to the Company Rights Agreement
in substantially the form of Exhibit B hereto and (B) taken all other
action necessary or appropriate so that, the entering into of this
Agreement, and the consummation of the transactions contemplated hereby
(including, without limitation, the Merger) do not and will not result in
the ability of any person to exercise any Rights under the Company Rights
Agreement or enable or require the Company Rights to separate from the
shares of Company Common Stock to which they are attached or to be
triggered or become exercisable.
(iii) In the case of the representations and warranties of the
Company, no "Distribution Date" or "Shares Acquisition Date" (as such terms
are defined in the Company Rights Plan) has occurred.
(o) Environmental Matters. (i) As used in this Plan, "Environmental
Laws" means all applicable local, state and federal environmental, health
and safety laws and regulations, including, without limitation, the
Resource Conversation and Recovery Act, the Comprehensive Environmental
Response, Compensation, and Liability Act, the Clean Water Act, the Federal
Clean Air Act, and the Occupational Safety and Health Act, each as amended,
regulations promulgated thereunder, and state counterparts.
(ii) Neither the conduct nor operation of such party or its
Subsidiaries nor any condition of any property presently or previously
owned, leased or operated by any of them violates or violated Environmental
Laws and no condition has existed or event has occurred with respect to any
of them or any such property that, with notice or the passage of time, or
both, is reasonably likely to result in liability under Environmental Laws.
Neither such party nor any of its Subsidiaries has received any notice from
any person or entity that it or its Subsidiaries or the operation or
condition of any property ever owned, leased, operated, held as collateral
or held as a fiduciary by any of them are or were in violation of or
otherwise are alleged to have liability under any Environmental Law,
including but not limited to
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responsibility (or potential responsibility) for the cleanup or other
remediation of any pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on, beneath, or originating from any such
property.
(p) Tax Matters. (i) (A) All returns, declarations, reports,
estimates, information returns and statements required to be filed under
federal, state, local or any foreign tax laws ("Tax Returns") with respect
to it or any of its Subsidiaries, have been timely filed, or requests for
extensions have been timely filed and have not expired; (B) all material
Tax Returns filed by it are complete and accurate; (C) all Taxes shown to
be due on such Tax Returns have been paid or adequate reserves have been
established for the payment of such Taxes; and (D) no material (1) audit or
examination or (2) refund litigation with respect to any Tax Return is
pending.
(ii) It has no reason to believe that any conditions exist that might
prevent or impede the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code.
(q) Tax Treatment. As of the date hereof, it is aware of no reason
why the Merger will fail to qualify as a reorganization under Section
368(a) of the Code.
(r) Regulatory Approvals. The approval of the following regulatory
authorities is necessary to consummate the Merger: the Federal Reserve
Board and the regulatory authorities of the States in which the Company and
its Subsidiaries operate. As of the date hereof, neither of the Company nor
Parent is aware of any reason why the approvals of such regulatory
authorities will not be received without the imposition of a condition or
requirement described in the second sentence of Section 7.02.
(s) No Material Adverse Effect. Since December 31, 1995, except as
disclosed in its SEC Documents filed with the SEC on or before the date
hereof, (i) it and its Subsidiaries have conducted their respective
businesses in the ordinary and usual course (excluding the incurrence of
expenses related to this Agreement and the transactions contemplated
hereby) and (ii) no event has occurred or circumstance arisen that,
individually or taken together with all other facts, circumstances and
events (described in any paragraph of Section 5.03 or otherwise), is
reasonably likely to have a Material Adverse Effect with respect to it.
ARTICLE VI
COVENANTS
The Company hereby covenants to and agrees with Parent, and Parent hereby
covenants to and agrees with the Company, that:
6.01. Best Efforts. Subject to the terms and conditions of this
Agreement, it shall use its best efforts in good faith to take, or cause to
be taken, all actions, and to do, or cause to be done, all things
necessary, proper or desirable, or advisable under applicable laws, so as
to permit consummation of the Merger as promptly as practicable and
otherwise to enable consummation of the transactions contemplated hereby
and shall cooperate fully with the other parties hereto to that end.
6.02. Stockholder Approvals. Each of them shall take, in accordance
with applicable law, applicable stock exchange or NASDAQ rules and its
respective articles or certificate of incorporation and by-laws, all action
necessary to convene, respectively, an appropriate meeting of stockholders
of Parent to consider and vote upon the issuance of the shares of Parent
Stock to be issued in the Merger pursuant to this Agreement and any other
matters required to be approved by Parent stockholders for consummation of
the Merger (including any adjournment or postponement, the "Parent
Meeting"), and an appropriate meeting of stockholders of the Company to
consider and vote upon the approval of this Agreement and any other matters
required to be approved by the Company's stockholders for consummation of
the Merger (including any adjournment or postponement, the "Company
Meeting"; and each of the Parent Meeting and the Company Meeting, a
"Meeting"), respectively, as promptly as practicable after the Registration
Statement is declared effective. The Board of Directors of each of Parent
and the Company shall (subject in the case of the Company to compliance
with its fiduciary duties as advised by counsel)
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recommend such approval, and each of Parent and the Company shall take all
reasonable lawful action to solicit such approval by its respective
stockholders.
6.03. Registration Statement. (a) Each of Parent and the Company
agrees to cooperate in the preparation of a registration statement on Form
S-4 (the "Registration Statement") to be filed by Parent with the SEC in
connection with the issuance of Parent Stock in the Merger (including the
joint proxy statement and prospectus and other proxy solicitation materials
of Parent and the Company constituting a part thereof (the "Joint Proxy
Statement") and all related documents). Provided the Company has cooperated
as required above, Parent agrees to file the Registration Statement with
the SEC as promptly as practicable, but in no event later than 45 days
after the date of this Agreement. Each of the Company and Parent agrees to
use all reasonable efforts to cause the Registration Statement to be
declared effective under the Securities Act as promptly as reasonably
practicable after filing thereof. Parent also agrees to use all reasonable
efforts to obtain all necessary state securities law or "Blue Sky" permits
and approvals required to carry out the transactions contemplated by this
Agreement. The Company agrees to furnish to Parent all information
concerning the Company, its Subsidiaries, officers, directors and
stockholders as may be reasonably requested in connection with the
foregoing.
(b) Each of the Company and Parent agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it
for inclusion or incorporation by reference in (i) the Registration
Statement will, at the time the Registration Statement and each amendment
or supplement thereto, if any, becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) the Joint Proxy Statement and
any amendment or supplement thereto will, at the date of mailing to
stockholders and at the times of the Parent Meeting and the Company
Meeting, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading or any statement which, in the light of
the circumstances under which such statement is made, will be false or
misleading with respect to any material fact, or which will omit to state
any material fact necessary in order to make the statements therein not
false or misleading or necessary to correct any statement in any earlier
statement in the Joint Proxy Statement or any amendment or supplement
thereto. Each of the Company and Parent further agrees that if it shall
become aware prior to the Effective Date of any information that would
cause any of the statements in the Joint Proxy Statement to be false or
misleading with respect to any material fact, or to omit to state any
material fact necessary to make the statements therein not false or
misleading, to promptly inform the other party thereof and to take the
necessary steps to correct the Joint Proxy Statement.
(c) In the case of Parent, Parent will advise the Company, promptly
after Parent receives notice thereof, of the time when the Registration
Statement has become effective or any supplement or amendment has been
filed, of the issuance of any stop order or the suspension of the
qualification of the Parent Stock for offering or sale in any jurisdiction,
of the initiation or threat of any proceeding for any such purpose, or of
any request by the SEC for the amendment or supplement of the Registration
Statement or for additional information.
6.04. Press Releases. It will not, without the prior approval of the
other parties, issue any press release or written statement for general
circulation relating to the transactions contemplated hereby, except as
otherwise required by applicable law or regulation.
6.05. Access; Information. (a) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, it shall afford
the other parties and their officers, employees, counsel, accountants and
other authorized representatives, access, during normal business hours
throughout the period prior to the Effective Date, to all of its
properties, books, contracts, commitments and records and, during such
period, it shall furnish promptly to such other parties and representatives
(i) a copy of each material report, schedule and other document filed by it
pursuant to the requirements of federal or state securities or banking
laws, and (ii) all other information concerning the business, properties
and personnel of it as the other may reasonably request.
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(b) It will not use any information obtained pursuant to this Section
6.05 for any purpose unrelated to the consummation of the transactions
contemplated by this Agreement and, if this Agreement is terminated, will
hold all information and documents obtained pursuant to this paragraph in
confidence (as provided in, and subject to the provisions of, the
Confidentiality Agreement). No investigation by either party of the
business and affairs of another shall affect or be deemed to modify or
waive any representation, warranty, covenant or agreement in this
Agreement, or the conditions to either party's obligation to consummate the
transactions contemplated by this Agreement.
6.06. Acquisition Proposals. Without the prior written consent of
Parent, the Company shall not, and shall cause its Subsidiaries and its and
its Subsidiaries' officers, directors, agents, advisors and affiliates not
to, solicit or encourage inquiries or proposals with respect to, or engage
in any negotiations concerning, or provide any confidential information to,
or have any discussions with, any such person relating to, any tender offer
or exchange offer for, or any proposal for the acquisition of a substantial
equity interest in, or a substantial portion of the assets of, or any
merger or consolidation with, the Company or any of its Significant
Subsidiaries; provided, however, that the Board of Directors of the
Company, on behalf of the Company, may furnish or cause to be furnished
information and may participate in such discussions and negotiations
directly or through its representatives if such Board of Directors, after
having consulted with and considered the advice of outside counsel
reasonably acceptable to Parent, has determined that the failure to provide
such information or participate in such negotiations and discussions would
cause the members of such Board of Directors to breach their fiduciary
duties under applicable laws. The Company shall promptly (within 24 hours)
advise Parent of its receipt of any such proposal or inquiry, of the
substance thereof, and of the identity of the person making such proposal
or inquiry.
6.07. Affiliate Agreements. (a) Not later than the 15th day prior to
the mailing of the Joint Proxy Statement, the Company shall deliver to
Parent, a schedule of each person that, to the best of its knowledge, is or
is reasonably likely to be, as of the date of the relevant Meeting, deemed
to be an "affiliate" of it (each, an "Affiliate") as that term is used in
Rule 145 under the Securities Act.
(b) The Company shall use its best efforts to cause each person who
may be deemed to be an Affiliate of the Company to execute and deliver to
the Company and Parent on or before the date of mailing of the Joint Proxy
Statement an agreement in the form attached hereto as Exhibit C.
6.08. Takeover Laws. No party shall take any action that would cause
the transactions contemplated by this Agreement to be subject to
requirements imposed by any Takeover Law and each of them shall take all
necessary steps within its control to exempt (or ensure the continued
exemption of) the transactions contemplated by this Agreement from, or if
necessary challenge the validity or applicability of, any applicable
Takeover Law, as now or hereafter in effect, including, without limitation,
Section 459 of the GBCL and Takeover Laws of any other State that purport
to apply to this Agreement or the transactions contemplated hereby or
thereby.
6.09. No Rights Triggered. Each of Company and Parent shall take all
steps necessary to ensure that the entering into of this Agreement and the
consummation of the transactions contemplated hereby and any other action
or combination of actions, or any other transactions contemplated hereby,
do not and will not result in the grant of any rights to any person (i)
under its articles or certificate of incorporation or bylaws, (ii) under
any material agreement to which it or any of its Subsidiaries is a party
(including without limitation, in the case of the Company, the Company
Rights Agreement) or (iii) in the case of the Company, to exercise or
receive certificates for Rights, or acquire any property in respect of
Rights, under the Company Rights Agreement.
6.10. Shares Listed. In the case of Parent, Parent shall use its best
efforts to list, prior to the Effective Date, on the NYSE (or, in the case
of Company Preferred Stock, NASDAQ), upon official notice of issuance, the
shares of Parent Stock to be issued to the holders of Company Stock in the
Merger (but only to the extent that the corresponding class or series of
Company Stock were listed on NASDAQ immediately prior to the Effective
Time).
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6.11. Regulatory Applications. Parent and the Company and their
respective Subsidiaries shall cooperate and use their respective best
efforts (i) to prepare all documentation, to effect all filings and to
obtain all permits, consents, approvals and authorizations of all third
parties and Regulatory Authorities necessary to consummate the transactions
contemplated by this Agreement, including, without limitation, any such
approvals or authorizations required by the Federal Reserve Board and the
regulatory authorities of the States in which the Company and its
Subsidiaries operate, and (ii) to cause the Merger to be consummated as
expeditiously as practicable. Provided the Company has cooperated as
required above, Parent agrees to file the requisite applications to be
filed by it with the Federal Reserve Board and the regulatory authorities
of the States in which the Company and its Subsidiaries operate as promptly
as practicable, but in no event later than 45 days after the date of this
Agreement. Each of Parent and the Company shall have the right to review in
advance, and to the extent practicable each will consult with the other, in
each case subject to applicable laws relating to the exchange of
information, with respect to, all material written information submitted to
any third party or any Regulatory Authorities in connection with the
transactions contemplated by this Agreement. In exercising the foregoing
right, each of the parties hereto agrees to act reasonably and as promptly
as practicable. Each party hereto agrees that it will consult with the
other parties hereto with respect to the obtaining of all material permits,
consents, approvals and authorizations of all third parties and Regulatory
Authorities necessary or advisable to consummate the transactions
contemplated by this Agreement and each party will keep the other parties
apprised of the status of material matters relating to completion of the
transactions contemplated hereby.
Each party agrees, upon request, to furnish the other parties with all
information concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or
advisable in connection with any filing, notice or application made by or
on behalf of such other party or any of its Subsidiaries to any Regulatory
Authority.
6.12. Indemnification. (a) Following the Effective Date and without
limitation as to time, Parent shall indemnify, defend and hold harmless the
present and former directors, officers and employees of the Company and its
Subsidiaries (each, an "Indemnified Party") against all costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively, "Costs") incurred in connection with
any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of actions or
omissions occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement) to the fullest
extent that the Company is permitted to indemnify such persons under the
laws of the State of Missouri and the Company's Restated Articles of
Incorporation and By-laws as in effect on the date hereof (and Parent shall
also advance expenses (including expenses constituting Costs described in
Section 6.12(e)) as incurred to the fullest extent permitted under
applicable law; provided that any determination required to be made with
respect to whether an officer's or director's conduct complies with the
standards set forth under Missouri law and such articles of incorporation
and by-laws shall be made by independent counsel (which shall not be
counsel that provides material services to Parent) selected by Parent and
reasonably acceptable to such officer or director; and provided, further,
that in the absence of applicable Missouri judicial precedent to the
contrary, such counsel, in making such determination, shall presume such
officer's or director's conduct complied with such standard and Parent
shall have the burden to demonstrate that such officer's or director's
conduct failed to comply with such standard.
(b) Parent shall maintain the Company's existing directors' and
officers' liability insurance policy (or a policy providing comparable
coverage amount on terms no less favorable to the covered persons,
including Parent's existing policy if it meets the foregoing standard)
covering persons who are currently covered by such insurance for a period
of six years after the Effective Date.
(c) Any Indemnified Party wishing to claim indemnification under
Section 6.12(a), upon learning of any claim, action, suit, proceeding or
investigation described above, shall promptly notify Parent thereof;
provided that the failure so to notify shall not affect the obligations of
Parent under Section 6.12(a) unless and to the extent such failure
materially increases Parent's liability under such subsection (a).
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(d) If Parent or any of its successors or assigns shall consolidate
with or merge into any other entity and shall not be the continuing or
surviving entity of such consolidation or merger or shall transfer all or
substantially all of its assets to any entity, then and in each case,
proper provision shall be made so that the successors and assigns of Parent
shall assume the obligations set forth in this Section 6.12.
(e) Parent shall pay all reasonable Costs, including attorneys' fees,
that may be incurred by any Indemnified Party in enforcing the indemnity
and other obligations provided for in this Section 6.12. The rights of each
Indemnified Party hereunder shall be in addition to any other rights such
Indemnified Party may have under applicable law.
6.13. Benefit Plans. (i) Until the transition to Parent's benefit
plans as set forth below, Parent shall cause the Surviving Corporation and
its Subsidiaries to provide employees of the Company and its Subsidiaries
who become employees of the Surviving Corporation and its Subsidiaries with
compensation and employee benefit plans, programs, arrangements and other
perquisites (including, but not limited to, "employee benefit plans" within
the meaning of section 3(3) of ERISA) ("Employee Benefit Plans") that are,
in the aggregate, substantially the same as the compensation and Employee
Benefit Plans provided to such individuals by the Company immediately prior
to the Effective Date; provided, however, that for at least a one-year
period, Parent shall cause the Surviving Corporation and its Subsidiaries
to continue the Company's severance benefits, as disclosed in the Company's
Disclosure Schedule, with respect to all employees of the Company and its
Subsidiaries who become employees of the Surviving Corporation or its
Subsidiaries. Promptly following the Effective Time, Parent shall cause the
Surviving Corporation and its Subsidiaries to provide Company employees who
are employees thereof with compensation and Employee Benefit Plans that are
substantially the same as the compensation and Employee Benefit Plans
provided to similarly situated employees of the Surviving Corporation or
its Subsidiaries who were not employees of the Company; provided, however,
that employees of the Company shall not be required to satisfy any
additional copayment or other eligibility requirements in connection with
such transition of Employee Benefit Plans. For the purpose of determining
eligibility to participate in Employee Benefit Plans, eligibility for
benefit forms and subsidies and the vesting of benefits under such Employee
Benefit Plans (including, but not limited to, any pension, severance,
401(k), vacation and sick pay), and for purposes of accrual of benefits
under any severance, sick leave, vacation and other similar Employee
Benefit Plans, Parent shall give effect to years of service (and for
purposes of qualified and nonqualified pension plans, prior earnings) with
the Company or its Subsidiaries, as the case may be, as if they were with
Parent or its Subsidiaries. For a period of one year after the Effective
Date, Parent shall cause the Surviving Corporation and its Subsidiaries to
continue substantially the same retiree benefits to all retirees of the
Company and its Subsidiaries as well as all employees of the Company and
its Subsidiaries who become retirees during the one-year period. Parent
also shall cause the Surviving Corporation and its Subsidiaries to assume
and agree to perform the Company's obligations under all employment,
severance, consulting and other compensation contracts as disclosed in the
Company Disclosure Schedule, including without limitation the Company
Change in Control Severance Plan, between the Company or any of its
Subsidiaries and any current or former director, officer or employee
thereof. Parent shall give fair consideration to the promotion, retention,
firing, and other terms and conditions of employment of all employees of
the Company and its Subsidiaries who become employees thereof. Furthermore,
Parent will offer to enter into executive compensation arrangements with
certain Company executives on terms to be set forth in separate letter
agreements.
6.14. Certain Director And Officer Positions. (a) Parent agrees to
cause five (5) persons designated by the Company willing so to serve and
reasonably satisfactory to Parent ("Company Directors"), which shall
include Mr. Andrew B. Craig, III, to be elected or appointed as directors
of Parent at, or as promptly as practicable after, the Effective Time. At
the first annual meeting of stockholders of Parent subsequent to the
Effective Time, Parent shall take all corporate action necessary to, and
shall, renominate each such person, including Mr. Andrew B. Craig, III, for
election as directors of Parent and shall recommend that the Parent
stockholders vote for the election of such individuals as directors.
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(b) Parent agrees to cause Mr. Andrew B. Craig, III to be elected or
appointed as a member of the Executive Committee of the Board of Directors
of Parent at, or as promptly as practicable after, the Effective Time.
(c) At the Effective Time, Mr. Andrew B. Craig, III shall be Chairman
of the Board of Directors of Parent for a term extending through one year
from the Effective Date.
6.15. Notification Of Certain Matters. Each of the Company and Parent
shall give prompt notice to the other of any fact, event or circumstance
known to it that (i) is reasonably likely, individually or taken together
with all other facts, events and circumstances known to it, to result in
any Material Adverse Effect with respect to it or (ii) would cause or
constitute a material breach of any of its representations, warranties,
covenants or agreements contained herein.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
The obligations of each of the parties to consummate the Merger is
conditioned upon the satisfaction at or prior to the Effective Time of each of
the following:
7.01. Shareholder Vote. Approval of the Plan of Merger contained in
this Agreement by the requisite vote of the stockholders of the Company and
of Parent, respectively.
7.02. Regulatory Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby, including, without
limitation, those specified in Section 5.03(r), shall have been obtained
and shall remain in full force and effect and all statutory waiting periods
in respect thereof shall have expired. No such approvals shall contain any
conditions or restrictions which the Board of Directors of either Parent or
the Company reasonably determines in good faith will have a Material
Adverse Effect on Parent and its Subsidiaries (including the Surviving
Corporation and its Subsidiaries) taken as a whole. For purposes of this
paragraph, a divestiture required as a condition to any regulatory approval
shall not be deemed to have a Material Adverse Effect if such divestiture
is consistent with Department of Justice and Federal Reserve Board
guidelines, policies and practices regarding mergers of bank holding
companies that have been utilized in transactions that have recently been
reviewed prior to the date of this Agreement.
7.03. Third Party Consents. All consents or approvals of all persons
(other than Regulatory Authorities) required for the consummation of the
Merger shall have been obtained and shall be in full force and effect,
unless the failure to obtain any such consent or approval is not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect
on the Company or Parent.
7.04. No Injunction, Etc. No order, decree or injunction of any court
or agency of competent jurisdiction shall be in effect, and no law, statute
or regulation shall have been enacted or adopted, that enjoins, prohibits
or makes illegal consummation of any of the transactions contemplated
hereby.
7.05. Representations, Warranties And Covenants Of Parent. In the
case of the Company's obligations: (i) each of the representations and
warranties contained herein of Parent shall be true and correct as of the
date of this Agreement and upon the Effective Date with the same effect as
though all such representations and warranties had been made on the
Effective Date, except for any such representations and warranties made as
of a specified date, which shall be true and correct as of such date, in
any case subject to the standard set forth in Section 5.02, (ii) each and
all of the agreements and covenants of Parent to be performed and complied
with pursuant to this Agreement on or prior to the Effective Date shall
have been duly performed and complied within all material respects, and
(iii) the Company shall have received a certificate signed by the Chief
Financial Officer of Parent, dated the Effective Date, to the effect set
forth in clauses (i) and (ii) of this Section 7.05.
7.06. Representations, Warranties And Covenants Of The Company. In
the case of Parent's obligations: (i) each of the representations and
warranties contained herein of the Company shall be true
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and correct as of the date of this Agreement and upon the Effective Date
with the same effect as though all such representations and warranties had
been made on the Effective Date, except for any such representations and
warranties made as of a specified date, which shall be true and correct as
of such date, in any case subject to the standard set forth in Section
5.02, (ii) each and all of the agreements and covenants of the Company to
be performed and complied with pursuant to this Agreement on or prior to
the Effective Date shall have been duly performed and complied with in all
material respects, and (iii) Parent shall have received a certificate
signed by the Chief Financial Officer of the Company, dated the Effective
Date, to the effect set forth in clauses (i) and (ii) of this Section 7.06.
7.07. Effective Registration Statement. The Registration Statement
shall have become effective and no stop order suspending the effectiveness
of the Registration Statement shall have been issued and no proceedings for
that purpose shall have been initiated or threatened by the SEC or any
other Regulatory Authority.
7.08. Tax Opinion. Parent and the Company shall have received an
opinion from Wachtell, Lipton, Rosen & Katz, Cleary, Gottlieb, Steen &
Hamilton or such other tax counsel as is reasonably acceptable to the
Company and Parent, dated as of the Effective Time, substantially to the
effect that, on the basis of the facts, representations and assumptions set
forth in such opinions which are consistent with the state of facts
existing at the Effective Time, the Merger will be treated for Federal
income tax purposes as a reorganization within the meaning of Section
368(a) of the Code and that accordingly:
(i) No gain or loss will be recognized by Parent, the Company or
Merger Sub as a result of the Merger;
(ii) No gain or loss will be recognized by the stockholders of the
Company who exchange their Company Stock solely for Parent Stock
pursuant to the Merger (except with respect to cash received in lieu of
a fractional share interest in Parent Stock); and
(iii) The tax basis of the Parent Stock received by stockholders
who exchange all of their Company Stock solely for Parent Stock in the
Merger will be the same as the tax basis of the Company Stock
surrendered in exchange therefor (reduced by any amount allocable to a
fractional share interest for which cash is received).
In rendering such opinion, such counsel may require and rely upon
representations and covenants including those contained in certificates of
officers of Parent, the Company and Merger Sub and others.
7.09. Articles Of Amendment. The Articles of Amendment shall have
become effective in accordance with the North Carolina Business Corporation
Act.
7.10. NYSE Listing. The shares of Parent Stock issuable pursuant to
this Agreement shall have been approved for listing on the NYSE (or, in the
case of Company Preferred Stock, NASDAQ) (but only to the extent that the
corresponding class or series of Company Stock were listed on NASDAQ
immediately prior to the Effective Time), subject to official notice of
issuance.
7.11. Company Rights Agreement. There shall exist no "Shares
Acquisition Date" or "Distribution Date" (as each of such terms is defined
in the Company Rights Agreement).
It is specifically provided, however, that a failure to satisfy any of
the conditions set forth in Section 7.06 or 7.11 shall only constitute
conditions if asserted by Parent, and a failure to satisfy the condition
set forth in Section 7.05 shall only constitute a condition if asserted by
the Company.
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ARTICLE VIII
TERMINATION
8.01. Termination. This Agreement may be terminated, and the Merger may be
abandoned:
(a) Mutual Consent. At any time prior to the Effective Time, by the
mutual consent of Parent and the Company, if the Board of Directors of each
so determines by vote of a majority of the members of its entire Board.
(b) Breach. At any time prior to the Effective Time, by Parent or the
Company, if its Board of Directors so determines by vote of a majority of
the members of its entire Board, in the event of either: (i) a breach by
the other party of any representation or warranty contained herein (subject
to the standard set forth in Section 5.02), which breach cannot be or has
not been cured within 30 days after the giving of written notice to the
breaching party of such breach; or (ii) a material breach by the other
party of any of the covenants or agreements contained herein, which breach
cannot be or has not been cured within 30 days after the giving of written
notice to the breaching party of such breach.
(c) Delay. At any time prior to the Effective Time, by Parent or the
Company, if its Board of Directors so determines by vote of a majority of
the members of its entire Board, in the event that the Merger is not
consummated by September 1, 1997, except to the extent that the failure of
the Merger then to be consummated arises out of or results from the knowing
action or inaction of the party seeking to terminate pursuant to this
Section 8.01(c).
(d) No Approval. By the Company or Parent, if its Board of Directors
so determines by a vote of a majority of the members of its entire Board,
in the event (i) the approval of the Federal Reserve Board required for
consummation of the Merger and the other transactions contemplated by the
Merger shall have been denied by final nonappealable action of such
Regulatory Authority or (ii) any stockholder approval required by Section
7.01 herein is not obtained at the Company Meeting or the Parent Meeting.
(e) Possible Adjustment. By the Company, if its Board of Directors so
determines by a vote of a majority of the members of its entire Board, at
any time during the ten-day period commencing two days after the
Determination Date, if either (x) both of the following conditions are
satisfied:
(i) the Average Closing Price shall be less than $79.26; and
(ii) (A) the number obtained by dividing the Average Closing Price
by the Starting Price (such number being referred to herein as the
"Parent Ratio") shall be less than (B) the number obtained by dividing
the Average Index Price by the Index Price on the Starting Date and
subtracting .15 from the quotient in this clause (x)(ii)(B) (such number
being referred to herein as the "Index Ratio");
or (y) the Average Closing Price shall be less than $74.60;
subject, however, to the following four sentences. If the Company elects to
exercise its termination right pursuant to the immediately preceding sentence,
it shall give prompt written notice to Parent which notice shall specify which
of clause (x) or (y) is applicable (or if both would be applicable, which clause
is being invoked); provided that such notice of election to terminate may be
withdrawn at any time within the aforementioned ten-day period. During the
five-day period commencing with its receipt of such notice, Parent shall have
the option in the case of a failure to satisfy the condition in clause (x), of
adjusting the Exchange Ratio to equal the lesser of (i) a number equal to a
quotient (rounded to the nearest one-thousandth), the numerator of which is the
product of $79.26 and the Exchange Ratio (as then in effect) and the denominator
of which is the Average Closing Price, and (ii) a number equal to a quotient
(rounded to the nearest one-thousandth), the numerator of which is the Index
Ratio multiplied by the Exchange Ratio (as then in effect) and the denominator
of which is the Parent Ratio. During such five-day period, Parent shall have the
option, in the case of a failure to satisfy the condition in clause (y), to
elect to increase the Exchange Ratio to equal a number equal to a quotient
(rounded to the nearest one-thousandth), the numerator of which is the product
of $74.60 and the Exchange Ratio (as then in effect) and the denominator of
which is the Average Closing Price.
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If Parent makes an election contemplated by either of the two preceding
sentences within such five-day period, it shall give prompt written notice to
the Company of such election and the revised Exchange Ratio, whereupon no
termination shall have occurred pursuant to this Section 8.01(e) and this
Agreement shall remain in effect in accordance with its terms (except as the
Exchange Ratio shall have been so modified), and any references in this
Agreement to "Exchange Ratio" shall thereafter be deemed to refer to the
Exchange Ratio as adjusted pursuant to this Section 8.01(e).
For purposes of this Section 8.01(e), the following terms shall have the
meanings indicated:
"Average Closing Price" means the average of the daily last sale
prices of Parent Common Stock as reported on the NYSE Composite
Transactions reporting system (as reported in The Wall Street Journal or,
if not reported therein, in another mutually agreed upon authoritative
source) for the ten consecutive full trading days in which such shares are
traded on the NYSE ending at the close of trading on the Determination
Date.
"Average Index Price" means the average of the Index Prices for the
ten consecutive full NYSE trading days ending at the close of trading on
the Determination Date.
"Determination Date" means the date on which the approval of the
Federal Reserve Board required for consummation of the Merger shall be
received.
"Index Group" means the group of each of the 15 bank holding companies
listed below, the common stock of all of which shall be publicly traded and
as to which there shall not have been, since the Starting Date and before
the Determination Date, any public announcement of a proposal for such
company to be acquired or for such company to acquire another company or
companies in transactions with a value exceeding 25% of the acquiror's
market capitalization. In the event that the common stock of any such
company ceases to be publicly traded or such an announcement is made, such
company will be removed from the Index Group, and the weights (which have
been determined based on the number of outstanding shares of common stock)
redistributed proportionately for purposes of determining the Index Price.
The 15 bank holding companies and the weights attributed to them are as
follows:
<TABLE>
<CAPTION>
BANK HOLDING COMPANY WEIGHTING
----------------------------------------------------------------------- ---------
<S> <C>
Citicorp............................................................... 15.8%
Chase Manhattan Corp................................................... 13.2
BankAmerica Corporation................................................ 11.3
Wells Fargo & Company.................................................. 9.4
First Union Corporation................................................ 7.2
Banc One Corporation................................................... 6.5
Norwest Corporation.................................................... 5.5
First Chicago NBD Corporation.......................................... 5.4
Fleet Financial Group, Inc............................................. 4.4
PNC Bank Corp.......................................................... 4.2
Bank of New York Company, Inc.......................................... 4.2
KeyCorp................................................................ 3.6
SunTrust Banks, Inc.................................................... 3.4
Wachovia Corporation................................................... 3.0
Mellon Bank Corporation................................................ 2.9
-----
Total.................................................................. 100.0%
=====
</TABLE>
"Index Price" on a given date means the weighted average (weighted in
accordance with the factors listed above) of the closing prices on such
date of the companies composing the Index Group.
"Starting Date" means the last full day on which the NYSE was open for
trading prior to the execution of this Agreement.
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"Starting Price" shall mean the last sale price per share of Parent
Common Stock on the Starting Date, as reported by the NYSE Composite
Transactions reporting system (as reported in The Wall Street Journal or,
if not reported therein, in another mutually agreed upon authoritative
source).
If any company belonging to the Index Group or Parent declares or effects a
stock dividend, reclassification, recapitalization, split-up, combination,
exchange of shares or similar transaction between the Starting Date and the
Determination Date, the prices for the common stock of such company or Parent
shall be appropriately adjusted for the purposes of applying this Section
8.01(e).
8.02. Effect Of Termination And Abandonment. In the event of termination
of this Agreement and the abandonment of the Merger pursuant to this Article
VIII, no party to this Agreement shall have any liability or further obligation
to any other party hereunder except (i) as set forth in Section 9.01 and (ii)
that termination will not relieve a breaching party from liability for any
willful breach of this Agreement giving rise to such termination.
ARTICLE IX
MISCELLANEOUS
9.01. Survival. All representations, warranties, agreements and covenants
contained in this Agreement shall not survive the Effective Time or termination
of this Agreement if this Agreement is terminated prior to the Effective Time;
provided, however, if the Effective Time occurs, the agreements of the parties
in Sections 6.12, 6.13, 6.14, 9.01, 9.04 and 9.08 shall survive the Effective
Time, and if this Agreement is terminated prior to the Effective Time, the
agreements of the parties in Sections 6.05(b), 8.02, 9.01, 9.02, 9.04, 9.05,
9.06, 9.07 and 9.08, shall survive such termination.
9.02. Waiver; Amendment. Prior to the Effective Time, any provision of
this Agreement may be (i) waived by the party benefited by the provision, or
(ii) amended or modified at any time, by an agreement in writing among the
parties hereto approved by their respective Boards of Directors and executed in
the same manner as this Agreement, except that, after the Company Meeting the
consideration to be received by the stockholders of the Company for each share
of Company Stock shall not thereby be decreased. Prior to submission of this
Agreement for approval by the stockholders of the Company, Parent shall
supplement this Agreement by specifying the name of Merger Sub and may make such
amendments as are permitted by Section 2.01 and the Company's Board of Directors
shall approve the supplements and amendments specified in this sentence.
9.03. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04. Governing Law. This Agreement shall be governed by, and interpreted
in accordance with, the laws of the State of Missouri, without regard to the
conflict of law principles thereof (except to the extent that mandatory
provisions of Federal law govern).
9.05. Expenses. Each party hereto will bear all expenses incurred by it in
connection with this Agreement and the transactions contemplated hereby, except
that printing expenses and SEC registration fees shall be shared equally between
the Company and Parent.
9.06. Confidentiality. Each of the parties hereto and their respective
agents, attorneys and accountants will maintain the confidentiality of all
information provided in connection herewith in accordance, and subject to the
limitations of, the Confidentiality Agreement.
9.07. Notices. All notices, requests and other communications hereunder to
a party shall be in writing and shall be deemed given if personally delivered,
telecopied (with confirmation) or mailed by registered or certified mail (return
receipt requested) to such party at its address set forth below or such other
address as such party may specify by notice to the parties hereto.
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If to Parent, to:
NationsBank Corporation
NationsBank Corporate Center
100 North Tryon Center
Charlotte, North Carolina 28255
Attention: Hugh L. McColl, Jr.
Chairman and Chief Executive Officer
With copies to:
Paul J. Polking, Esq.
Executive Vice President and General Counsel
NationsBank Corporation
NationsBank Corporate Center
Legal Department
100 North Tryon Center
Charlotte, North Carolina 28255
and:
Edward D. Herlihy, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
If to the Company, to:
Boatmen's Bancshares, Inc.
One Boatmen's Plaza
800 Market Street
P.O. Box 236
St. Louis, Missouri 63166-0236
Attention: Andrew B. Craig, III
Chairman and Chief Executive Officer
With copies to:
John C. Murphy, Jr., Esq.
Cleary, Gottlieb, Steen & Hamilton
1752 N Street, N.W.
Washington, D.C. 20036
and:
Thomas C. Erb, Esq.
Lewis, Rice & Fingersh
500 N. Broadway, Suite 2000
St. Louis, Missouri 63102-2147
9.08. Entire Understanding; No Third Party Beneficiaries. Except for the
Confidentiality Agreement, which shall remain in effect, this Agreement
represents the entire understanding of the parties hereto with reference to the
transactions contemplated hereby and thereby and supersede any and all other
oral or written agreements heretofore made. Except for Sections 6.12 and 6.14,
nothing in this Agreement expressed or implied, is intended to confer upon any
person, other than the parties hereto or their respective successors, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
9.09. Headings. The headings contained in this Agreement are for reference
purposes only and are not part of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
BOATMEN'S BANCSHARES, INC.
By: /s/ ANDREW B. CRAIG, III
------------------------------------
Andrew B. Craig, III
Chairman and
Chief Executive Officer
NATIONSBANK CORPORATION
By: /s/ HUGH L. MCCOLL, JR.
------------------------------------
Hugh L. McColl, Jr.
Chairman and
Chief Executive Officer
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<PAGE> 137
APPENDIX B
[STEPHENS INC. LETTERHEAD]
November 15, 1996
Board of Directors
NationsBank Corporation
NationsBank Corporate Center
100 North Tryon Center
Charlotte, North Carolina 28255
Members of the Board:
Boatmen's Bancshares, Inc. ("Boatmen's") and NationsBank Corporation
("NationsBank") have entered into an Agreement and Plan of Merger, dated as of
August 29, 1996 (the "Merger Agreement"), which provides among other things for
the merger of Boatmen's with and into a wholly-owned, direct or indirect
subsidiary of NationsBank (the "Merger"). In accordance with the terms of the
Merger Agreement, (i) each share of Boatmen's common stock outstanding
immediately prior to the effective time of the Merger (the "Effective Time"),
other than shares held directly or indirectly by Boatmen's or NationsBank and
shares as to which the holder thereof shall have exercised dissenter's rights,
will be converted into the right to receive 0.6525 shares (the "Exchange Ratio")
of NationsBank common stock or, at the election of each of the holders of
Boatmen's common stock, an amount in cash in respect of each share of Boatmen's
common stock that is equal to the Exchange Ratio times the average of the
closing sales prices of the NationsBank common stock for the 10 consecutive
trading-day period during which the shares of NationsBank common stock are
traded on the New York Stock Exchange ending on the tenth calendar day
immediately prior to the anticipated Effective Time (such cash consideration in
the aggregate not to exceed 40% of the aggregate consideration paid by
NationsBank in exchange for Boatmen's common stock), and (ii) each share of
Boatmen's preferred stock will be converted into new shares of NationsBank
preferred stock having substantially similar terms.
You have asked for our opinion as investment bankers as to whether the
consideration to be paid by NationsBank in the Merger to the holders of
Boatmen's common stock is fair to NationsBank from a financial point of view.
In connection with our opinion, we have, among other things:
(i) reviewed certain publicly available financial and other data with
respect to NationsBank and Boatmen's, including the consolidated financial
statements for recent years and interim periods to September 30, 1996 and
certain other relevant financial and operating data relating to NationsBank
and Boatmen's made available to us from published sources and from the
internal records of NationsBank and Boatmen's;
(ii) reviewed the Merger Agreement and certain related documents
provided to us by NationsBank;
(iii) reviewed the current Report on Form 8-K, dated August 29, 1996,
filed by NationsBank on September 6, 1996 (as amended on September 11,
1996) with respect to the Merger;
(iv) reviewed the Joint Proxy Statement -- Prospectus included in the
Registration Statement on Form S-4 filed by NationsBank and Boatmen's with
respect to the Merger;
(v) reviewed certain historical market prices and trading volumes of
the common stock of NationsBank and Boatmen's;
(vi) compared NationsBank and Boatmen's from a financial point of view
with certain other companies which we deemed to be relevant;
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(vii) considered the financial terms, to the extent publicly
available, of selected business combinations in the banking industry;
(viii) reviewed and discussed with representatives of the management
of NationsBank and Boatmen's, respectively, certain information of a
business and financial nature regarding NationsBank and Boatmen's furnished
to us by NationsBank, including financial forecasts relating to costs
savings and other potential synergies anticipated to result from the
Merger, anticipated share repurchases, and related assumptions of
NationsBank and Boatmen's;
(ix) made inquiries regarding and discussed the Merger, the Merger
Agreement and other matters related thereto with NationsBank's counsel;
(x) made inquiries regarding and discussed the due diligence review of
Boatmen's conducted by NationsBank with senior executives of NationsBank;
and
(xi) performed such other analyses and examinations as we have deemed
appropriate.
In connection with our review, we have not assumed any obligation
independently to verify any of the foregoing information and have relied on all
such information being complete and accurate in all material respects. With
respect to the financial forecasts for NationsBank and Boatmen's provided to us
by their respective managements, we have assumed, with your consent, for
purposes of our opinion that such forecasts have been reasonably prepared on
bases reflecting at the time of preparation the best available estimates and
judgments of their respective management as to the cost savings and other
potential synergies (including the timing, amount and achievability thereof)
anticipated to result from the Merger, and as to anticipated share repurchases,
and that they provide a reasonable basis upon which we can form our opinion. We
are not an expert in the evaluation of loan portfolios for purposes of assessing
the adequacy of the allowances for losses with respect thereto and have assumed,
with your consent, that such allowances for each of NationsBank and Boatmen's
are in the aggregate adequate to cover such losses. In addition, we have not
assumed responsibility for reviewing any individual credit files or making an
independent evaluation, appraisal or physical inspection of the assets or
individual properties of NationsBank or Boatmen's, nor have we been furnished
with any such evaluations or appraisals.
We have also assumed, with your consent, that there have been no material
changes in NationsBank's or Boatmen's assets, financial condition, results of
operations, business or prospects since the respective dates of their last
financial statements reviewed by us and that off-balance sheet activities of
NationsBank and Boatmen's, including derivatives and other similar financial
instruments, will not materially and adversely affect the future financial
position or results of operations of NationsBank or Boatmen's. We have further
assumed, with your consent, that in the course of obtaining the necessary
regulatory and third party consents for the Merger, no restriction will be
imposed that will have a material adverse effect on the contemplated benefits of
the Merger or the transactions contemplated thereby, and that the Merger will be
consummated in accordance with the terms of the Merger Agreement, without any
amendments to, and without any waiver by NationsBank of, any of the material
conditions to its obligations thereunder. Finally, our opinion is based on
economic, monetary, market and other conditions as in effect on, and the
information made available to us as of, the date hereof.
As part of our investment banking business, we are continually engaged in
the valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. We are familiar with
NationsBank and Boatmen's having performed investment banking and financial
advisory services on a compensatory basis for both of them in the past, and
having acted as NationsBank's financial advisor in connection with the Merger.
We will receive a fee for acting as financial advisor to NationsBank, a
substantial portion of which is contingent upon the consummation of the Merger.
In the ordinary course of our business, we actively trade the equity securities
of NationsBank and Boatmen's for our own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities. In that regard, we are a market maker in Boatmen's common
stock. Also, certain
B-2
<PAGE> 139
affiliates of our firm currently own collectively 3,857,907 shares, or
approximately 2.48% of the outstanding common stock of Boatmen's.
Based upon the foregoing and in reliance thereon, it is our opinion as
investment bankers that, as of the date hereof, the consideration to be paid by
NationsBank in the Merger to the holders of Boatmen's common stock is fair to
NationsBank from a financial point of view.
This opinion is furnished pursuant to our engagement letter dated August
22, 1996. It is addressed to the Board of Directors of NationsBank and is not
intended to be and shall not be deemed to constitute a recommendation to any
stockholder as to how such stockholder should vote with respect to the Merger.
This opinion and a summary discussion of our underlying analyses and role as
your financial advisor may be included in communications to the shareholders of
NationsBank and Boatmen's provided that we approve of such disclosures prior to
publication. In furnishing this opinion, we do not admit that we are experts
within the meaning of the term "experts" as used in the Securities Act and the
rules and regulations promulgated thereunder, nor do we admit that this opinion
constitutes a report or valuation within the meaning of Section 11 of the
Securities Act.
Very truly yours,
/s/ Stephens Inc.
STEPHENS INC.
B-3
<PAGE> 140
APPENDIX C
[GOLDMAN, SACHS LETTERHEAD]
PRIVILEGED AND CONFIDENTIAL
November 15, 1996
Board of Directors
Boatmen's Bancshares, Inc.
One Boatmen's Plaza
800 Market Street
St. Louis, Missouri 63101
Gentlemen:
You have requested our opinion as to the fairness to the holders of the
outstanding shares of Common Stock, par value $1 per share (the "Shares"), of
Boatmen's Bancshares, Inc. (the "Company") of the Stock Consideration and Cash
Consideration (as defined below) to be received for Shares pursuant to the
Agreement and Plan of Merger dated as of August 29, 1996, by and between
NationsBank Corporation ("NationsBank") and the Company (the "Agreement").
Pursuant to the Agreement, the Company will be merged (the "Merger") with a
wholly owned subsidiary of NationsBank and each outstanding Share not owned by
NationsBank will be converted into a number of shares of Common Stock, no par
value per share, of NationsBank (the "NationsBank Shares") determined as set
forth in the Agreement (the "Stock Consideration") or an amount of cash
determined as set forth in the Agreement (the "Cash Consideration"). Holders of
shares may elect to convert such Shares into the right to receive either Stock
Consideration or Cash Consideration subject to certain procedures and
limitations contained in the Agreement, as to which procedures and limitations
we are expressing no opinion.
Goldman, Sachs & Co. ("Goldman Sachs"), as part of its investment banking
business, is continually engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for estate, corporate and
other purposes. We are familiar with the Company having performed investment
banking services for the Company from time to time and having acted as its
financial advisor in connection with, and having participated in certain of the
negotiations leading to, the Agreement. We also have provided certain investment
banking services to NationsBank from time to time and may provide investment
banking services to NationsBank in the future. In addition, Goldman Sachs is a
full service securities firm and in the course of its trading activities it may
from time to time effect transactions, for its own account or the account of
customers, and hold positions in securities or options on securities of the
Company and NationsBank.
In connection with this opinion, we have reviewed, among other things, the
Agreement; the Company's and NationsBank's Registration Statement on Form S-4,
including the Joint Proxy Statement -- Prospectus relating to the Special
Meeting of Shareholders of the Company and the Special Meeting of Shareholders
of NationsBank held in connection with the Agreement; Annual Reports to
Stockholders and Annual Reports on Form 10-K of the Company and NationsBank for
the five years ended December 31, 1995; certain interim reports to stockholders
and Quarterly Reports on Form 10-Q of the Company and NationsBank; certain other
communications from the Company and NationsBank to their respective
stockholders; and certain internal financial analyses and forecasts for the
Company and NationsBank prepared by their respective managements, including
analyses and forecasts of certain cost savings, operating efficiencies, revenue
effects and financial
C-1
<PAGE> 141
Boatmen's Bancshares, Inc.
November 15, 1996
Page 2
synergies (collectively, the "Synergies") expected by NationsBank to be achieved
as a result of the Merger and including share repurchase and capital management
policies expected to be fulfilled by NationsBank following the Merger. We also
have held discussions with members of the senior managements of the Company and
NationsBank regarding the past and current business operations, regulatory
relationships, financial condition and future prospects of their respective
companies, each senior management's assessment of the strategic fit and
implications of the Merger, and the Synergies. We also have reviewed with
members of the senior management of the Company the results of the Company's due
diligence examination of NationsBank. In addition, we have reviewed the reported
price and trading activity for the Shares and NationsBank Common Stock, compared
certain financial and stock market information for the Company and NationsBank
with similar information for certain other companies the securities of which are
publicly traded, reviewed the financial terms of certain recent business
combinations in the commercial banking industry and performed such other studies
and analyses as we considered appropriate.
We have relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by us or
conveyed to us in discussions with senior managements of the Company and
NationsBank for purposes of this opinion. In that regard, we have assumed, with
your consent, that the financial forecasts, including, without limitation, the
Synergies, the anticipated share repurchase and capital management policies, and
projections regarding under-performing and non-performing assets and net
charge-offs have been reasonably prepared on a basis reflecting the best
currently available judgments and estimates of the Company and NationsBank and
that such forecasts will be realized in the amounts and at the times
contemplated thereby. We are not experts in the evaluation of loan and lease
portfolios for purposes of assessing the adequacy of the allowances for losses
with respect thereto and have assumed, with your consent, that such allowances
for each of the Company and NationsBank are in the aggregate adequate to cover
all such losses. In addition, we have not reviewed individual credit files nor
have we made an independent evaluation or appraisal of the assets and
liabilities of the Company or NationsBank or any of their respective
subsidiaries and we have not been furnished with any such evaluation or
appraisal. We also have assumed, with your consent, that obtaining any necessary
regulatory approvals and third party consents for the Merger or otherwise will
not have an adverse effect on the Company, NationsBank or the combined company
pursuant to the Merger.
Our opinion is directed to the Board of Directors of the Company and does
not constitute a recommendation to any stockholder of the Company as to how such
stockholder should vote at the stockholders' meeting to be held in connection
with the Merger.
Based upon and subject to the foregoing and based upon such other matters
as we consider relevant, it is our opinion that as of the date hereof the Stock
Consideration and Cash Consideration to be received by the holders of the Shares
are each fair to the holders of Shares receiving such Consideration.
Very truly yours,
/s/ Goldman, Sachs & Co.
GOLDMAN, SACHS & CO.
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<PAGE> 142
APPENDIX D
351.455 Shareholder Who Objects To Merger May Demand Value of Shares,
When. -- 1. If a shareholder of a corporation which is a party to a merger or
consolidation shall file with such corporation, prior to or at the meeting of
shareholders at which the plan of merger or consolidation is submitted to a
vote, a written objection to such plan of merger or consolidation, and shall not
vote in favor thereof, and such shareholder, within twenty days after the merger
or consolidation is effected, shall make written demand on the surviving or new
corporation for payment of the fair value of his shares as of the day prior to
the date on which the vote was taken approving the merger or consolidation, the
surviving or new corporation shall pay to such shareholder, upon surrender of
his certificate or certificates representing said shares, the fair value
thereof. Such demand shall state the number and class of the shares owned by
such dissenting shareholder. Any shareholder failing to make demand within the
twenty day period shall be conclusively presumed to have consented to the merger
or consolidation and shall be bound by the terms thereof.
2. If within thirty days after the date on which such merger or
consolidation was effected the value of such shares is agreed upon between the
dissenting shareholder and the surviving or new corporation, payment therefor
shall be made within ninety days after the date on which such merger or
consolidation was effected, upon the surrender of his certificate or
certificates representing said shares. Upon payment of the agreed value the
dissenting shareholder shall cease to have any interest in such shares or in the
corporation.
3. If within such period of thirty days the shareholder and the surviving
or new corporation do not so agree, then the dissenting shareholder may, within
sixty days after the expiration of the thirty day period, file a petition in any
court of competent jurisdiction within the county in which the registered office
of the surviving or new corporation is situated, asking for a finding and
determination of the fair value of such shares, and shall be entitled to
judgement against the surviving or new corporation for the amount of such fair
value as of the day prior to the date on which such vote was taken approving
such merger or consolidation, together with interest thereon to the date of such
judgment. The judgment shall be payable only upon and simultaneously with the
surrender to the surviving or new corporations of the certification or
certificates representing said shares. Upon the payment of the judgment, the
dissenting shareholder shall cease to have any interest in such shares, or in
the surviving or new corporation. Such shares may be held and disposed of by the
surviving or new corporation as it may see fit. Unless the dissenting
shareholder shall file such petition within the time herein limited, such
shareholder and all persons claiming under him shall be conclusively approved
and ratified the merger or consolidation, and shall be bound by the terms
thereof.
4. The right of a dissenting shareholder to be paid the fair value of his
shares as herein provided shall cease if and when the corporation shall abandon
the merger of consolidation.
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<PAGE> 143
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
There are no provisions in the registrant's Articles of Incorporation, and
no contracts between the registrant and its directors and officers nor
resolutions adopted by the registrant, relating to indemnification. The
registrant's Articles of Incorporation prevent the recovery by the registrant of
monetary damages against its directors. However, in accordance with the
provisions of the North Carolina Business Corporation Act (the "Act"), the
registrant's Bylaws provide that, in addition to the indemnification of
directors and officers otherwise provided by the Act, the registrant shall,
under certain circumstances, indemnify its current or former directors and
officers against any and all liability and litigation expense, including
reasonable attorney's fees, arising out of their status or activities as
directors and officers, except for liability or litigation expense incurred on
account of activities that were at the time known or believed by such director
or officer to be clearly in conflict with the best interests of the registrant.
Pursuant to such Bylaw, the registrant may also maintain insurance on behalf of
its directors and officers against liability asserted against such persons in
such capacity whether or not such directors or officers have the right to
indemnification pursuant to the Bylaw or otherwise.
Sections 55-8-50 through 55-8-58 of the Act contain provisions prescribing
the extent to which directors and officers shall or may be indemnified. Section
55-8-51 of the Act permits a corporation, with certain exceptions, to indemnify
a present or former director against liability if (i) the director conducted
himself in good faith, (ii) the director reasonably believed (x) that the
director's conduct in the director's official capacity with the corporation was
in its best interests and (y) in all other cases the director's conduct was at
least not opposed to the corporation's best interests, and (iii) in the case of
any criminal proceeding, the director had no reasonable cause to believe the
director's conduct was unlawful. A corporation may not indemnify a director in
connection with a proceeding by or in the right of the corporation in which the
director was adjudged liable to the corporation or in connection with a
proceeding charging improper personal benefit to the director. The above
standard of conduct is determined by the board of directors, or a committee or
special legal counsel or the shareholders as prescribed in Section 55-8-55.
Sections 55-8-52 and 55-8-56 of the Act require a corporation to indemnify
a director or officer in the defense of any proceeding to which the director or
officer was a party against reasonable expenses when the director or officer is
wholly successful in the director's or officer's defense, unless the articles of
incorporation provide otherwise. Upon application, the court may order
indemnification of the director or officer if the director or officer is
adjudged fairly and reasonably so entitled under Section 55-8-54.
In addition, Section 55-8-57 permits a corporation to provide for
indemnification of directors, officers, employees or agents, in its articles of
incorporation or bylaws or by contract or resolution, against liability in
various proceedings and to purchase and maintain insurance policies on behalf of
these individuals.
The foregoing is only a general summary of certain aspects of North
Carolina law dealing with indemnification of directors and officers and does not
purport to be complete. It is qualified in its entirety by reference to the
relevant statutes, which contain detailed specific provisions regarding the
circumstances under which and the person for whose benefit indemnification shall
or may be made and accordingly are set forth in Exhibit 28(h) hereto and
incorporated herein by reference.
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<PAGE> 144
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following exhibits are filed herewith or incorporated herein by
reference.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------------------------------------------------------------------------------
<C> <C> <S>
2.1 -- Agreement and Plan of Merger, by and between Boatmen's Bancshares, Inc. and
NationsBank Corporation, dated as of August 29, 1996, included as Appendix A to the
accompanying Joint Proxy Statement-Prospectus.
2.2 -- Amendment, dated November 11, 1996, to the Agreement and Plan of Merger, among
NationsBank Corporation, NB Holdings Corporation and Boatmen's Bancshares, Inc.
3.1 -- Form of Amended and Restated Articles of Incorporation of NationsBank Corporation.
4.1 -- Deposit Agreement, dated as of February 24, 1992, among Fourth Financial
Corporation, Bank IV Kansas, N.A., and the holders of the depositary receipts
issued thereunder.
4.2 -- Amendment, dated January 31, 1996, to the Deposit Agreement among Boatmen's
Bancshares, Inc., Acquisition Sub, Inc., Boatmen's Trust Company and Bank IV, N.A.
5.1 -- Opinion of Paul J. Polking Esq., Executive Vice President and General Counsel of
NationsBank Corporation.
8.1 -- Opinion of Cleary, Gottlieb, Steen & Hamilton.
8.2 -- Opinion of Wachtell, Lipton, Rosen & Katz.
10.1 -- Employment Agreement, dated as of September 26, 1996, by and between NationsBank
Corporation and Andrew B. Craig, III.
10.2 -- Employment Agreement, dated as of January 30, 1996, as amended May 17, 1996, by and
between Boatmen's Bancshares, Inc. and Andrew B. Craig, III.
12.1 -- Statement re Computation of Earnings to Combined Fixed Charges and Preferred Stock
Dividends.
23.1 -- Consent of Stephens Inc.
23.2 -- Consent of Goldman, Sachs & Co.
23.3 -- Consent of Paul J. Polking, Esq., Executive Vice President and General Counsel of
NationsBank Corporation, included in Exhibit 5.1 to this Registration Statement.
23.4 -- Consent of Cleary, Gottlieb, Steen & Hamilton, included in Exhibit 8.1 to this
Registration Statement.
23.5 -- Consent of Wachtell, Lipton, Rosen & Katz, included in Exhibit 8.2 to this
Registration Statement.
23.6 -- Consent of Ernst & Young LLP.
23.7 -- Consent of Price Waterhouse LLP.
24.1 -- Power of Attorney and Certified Resolutions.
99.1 -- Stock Option Agreement, dated as of August 29, 1996, by and between Boatmen's
Bancshares, Inc. and NationsBank Corporation (incorporated herein by reference to
Exhibit 99.2 to the NationsBank Corporation Form 8-K, filed September 6, 1996, as
amended September 11, 1996).
99.2 -- Consent of Andrew B. Craig, III to the use of his name as a person about to become
a director of NationsBank Corporation.
99.3 -- Notice of Special Meeting of Shareholders of NationsBank Corporation.
99.4 -- Chairman's Letter to Shareholders of NationsBank Corporation.
99.5 -- Notice of Special Meeting of Shareholders of Boatmen's Bancshares, Inc.
99.6 -- Chairman's Letter to Shareholders of Boatmen's Bancshares, Inc.
99.7 -- Form of Proxy for Special Meeting of Shareholders of NationsBank Corporation.
99.8 -- Form of Proxy for Special Meeting of Shareholders of Boatmen's Bancshares, Inc.
99.9 -- Provisions of North Carolina law regarding indemnification of directors and
officers (incorporated herein by reference to Exhibit 99.1 of the NationsBank
Corporation Registration Statement on Form S-3, Registration No. 33-63097).
</TABLE>
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<PAGE> 145
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change in such information in the registration
statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at the time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) The undersigned registrant hereby undertakes that prior to any public
reoffering of the securities registered hereunder through use of a prospectus
which is a part of this registration statement, by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the information called
for by the applicable registration form with respect to reofferings by persons
who may be deemed underwriters, in addition to the information called for by the
other items of the applicable form.
(d) The undersigned registrant hereby undertakes that every prospectus (i)
that is filed pursuant to paragraph (c) immediately preceding, or (ii) that
purports to meet the requirements of Sections 10(a)(3) of the Securities Act and
is used in connection with an offering of securities subject to Rule 415, will
be filed as a part of an amendment to the registration statement and will not be
used until such amendment is effective, and that, for purposes of determining
any liability under the Securities Act, each such post-effective amendment shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(e) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other that the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnifica-
II-3
<PAGE> 146
tion by it is against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
(f) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
(g) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
<PAGE> 147
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Charlotte, State of North
Carolina, this 15th day of November, 1996.
NATIONSBANK CORPORATION
(Registrant)
By: *
--------------------------------------
Hugh L. McColl, Jr.
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on this 15th day of November, 1996.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
- --------------------------------------------- ----------------------------------------------
<C> <S>
* Chairman of the Board, Chief Executive Officer
- --------------------------------------------- and Director (Principal Executive Officer)
Hugh L. McColl, Jr.
* Vice Chairman, Chief Financial Officer
- --------------------------------------------- (Principal Financial Officer)
James H. Hance, Jr.
* Executive Vice President (Principal Accounting
- --------------------------------------------- Officer)
Marc D. Oken
* Director
- ---------------------------------------------
Ronald W. Allen
* Director
- ---------------------------------------------
Ray C. Anderson
* Director
- ---------------------------------------------
William M. Barnhardt
Director
- ---------------------------------------------
Thomas E. Capps
* Director
- ---------------------------------------------
Charles W. Coker
* Director
- ---------------------------------------------
Thomas G. Cousins
* Director
- ---------------------------------------------
Alan T. Dickson
Director
- ---------------------------------------------
W. Frank Dowd, Jr.
</TABLE>
II-5
<PAGE> 148
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
- --------------------------------------------- ----------------------------------------------
<C> <S>
* Director
- ---------------------------------------------
Paul Fulton
* Director
- ---------------------------------------------
Timothy L. Guzzle
* Director
- ---------------------------------------------
W. W. Johnson
* Director
- ---------------------------------------------
John J. Murphy
* Director
- ---------------------------------------------
John C. Slane
Director
- ---------------------------------------------
O. Temple Sloan, Jr.
* Director
- ---------------------------------------------
John W. Snow
* Director
- ---------------------------------------------
Meredith R. Spangler
* Director
- ---------------------------------------------
Robert H. Spilman
* Director
- ---------------------------------------------
Ronald Townsend
* Director
- ---------------------------------------------
E. Craig Wall, Jr.
* Director
- ---------------------------------------------
Jackie M. Ward
* Director
- ---------------------------------------------
Virgil R. Williams
*By: /s/ CHARLES M. BERGER
- ---------------------------------------------
Charles M. Berger
Attorney-in-fact
</TABLE>
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<PAGE> 149
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------------------------------------------------------------------------------
<C> <C> <S>
2.1 -- Agreement and Plan of Merger, by and between Boatmen's Bancshares, Inc. and
NationsBank Corporation, dated as of August 29, 1996, included as Appendix A to the
accompanying Joint Proxy Statement-Prospectus.
2.2 -- Amendment, dated November 11, 1996, to the Agreement and Plan of Merger, among
NationsBank Corporation, NB Holdings Corporation and Boatmen's Bancshares, Inc.
3.1 -- Form of Amended and Restated Articles of Incorporation of NationsBank Corporation.
4.1 -- Deposit Agreement, dated as of February 24, 1992, among Fourth Financial
Corporation, Bank IV Kansas, N.A., and the holders of the depositary receipts
issued thereunder.
4.2 -- Amendment, dated January 31, 1996, to the Deposit Agreement among Boatmen's
Bancshares, Inc., Acquisition Sub, Inc., Boatmen's Trust Company and Bank IV, N.A.
5.1 -- Opinion of Paul J. Polking Esq., Executive Vice President and General Counsel of
NationsBank Corporation.
8.1 -- Opinion of Cleary, Gottlieb, Steen & Hamilton.
8.2 -- Opinion of Wachtell, Lipton, Rosen & Katz.
10.1 -- Employment Agreement, dated as of September 26, 1996, by and between NationsBank
Corporation and Andrew B. Craig, III.
10.2 -- Employment Agreement, dated as of January 30, 1996, as amended May 17, 1996, by and
between Boatmen's Bancshares, Inc. and Andrew B. Craig, III.
12.1 -- Statement re Computation of Earnings to Combined Fixed Charges and Preferred Stock
Dividends.
23.1 -- Consent of Stephens Inc.
23.2 -- Consent of Goldman, Sachs & Co.
23.3 -- Consent of Paul J. Polking, Esq., Executive Vice President and General Counsel of
NationsBank Corporation, included in Exhibit 5.1 to this Registration Statement.
23.4 -- Consent of Cleary, Gottlieb, Steen & Hamilton, included in Exhibit 8.1 to this
Registration Statement.
23.5 -- Consent of Wachtell, Lipton, Rosen & Katz, included in Exhibit 8.2 to this
Registration Statement.
23.6 -- Consent of Ernst & Young LLP.
23.7 -- Consent of Price Waterhouse LLP.
24.1 -- Power of Attorney and Certified Resolutions.
99.1 -- Stock Option Agreement, dated as of August 29, 1996, by and between Boatmen's
Bancshares, Inc. and NationsBank Corporation (incorporated herein by reference to
Exhibit 99.2 to the NationsBank Corporation Form 8-K, filed September 6, 1996, as
amended September 11, 1996).
99.2 -- Consent of Andrew B. Craig, III to the use of his name as a person about to become
a director of NationsBank Corporation.
99.3 -- Notice of Special Meeting of Shareholders of NationsBank Corporation.
99.4 -- Chairman's Letter to Shareholders of NationsBank Corporation.
99.5 -- Notice of Special Meeting of Shareholders of Boatmen's Bancshares, Inc.
99.6 -- Chairman's Letter to Shareholders of Boatmen's Bancshares, Inc.
99.7 -- Form of Proxy for Special Meeting of Shareholders of NationsBank Corporation.
99.8 -- Form of Proxy for Special Meeting of Shareholders of Boatmen's Bancshares, Inc.
99.9 -- Provisions of North Carolina law regarding indemnification of directors and
officers (incorporated herein by reference to Exhibit 99.1 of the NationsBank
Corporation Registration Statement on Form S-3, Registration No. 33-63097).
</TABLE>
<PAGE> 1
EXHIBIT 2.2
AMENDMENT
TO
AGREEMENT AND PLAN OF MERGER
AMENDMENT dated as of November 11, 1996 (this "Amendment")
between NationsBank Corporation, a North Carolina corporation ("Parent"), NB
Holdings Corporation, a Delaware corporation and wholly-owned subsidiary of
Parent ("Merger Sub") and Boatmen's Bancshares, Inc., a Missouri corporation
(the "Company").
WHEREAS, Parent and the Company have previously entered into
that certain Agreement and Plan of Merger dated as of August 29, 1996 (the
"Agreement"); and
WHEREAS, such persons wish to amend the Agreement in the
manner set forth below.
NOW, THEREFORE, the parties hereto agree as follows:
1. All capitalized terms used herein, unless otherwise
defined herein, shall have the meanings given them in the Agreement, and each
reference in the Agreement to "this Agreement", "hereof", "herein", "hereunder"
or "hereby" and each other similar reference shall be deemed to refer to the
Agreement as amended hereby. All references to the Agreement in any other
agreement between Parent and the Company relating to the transactions
contemplated by the Agreement shall be deemed to refer to the Agreement as
amended hereby.
2. The first paragraph on page 1 of the Agreement is
hereby amended by deleting the words "Boatmen's Bancshares, Inc. (the
"Company") and NationsBank Corporation ("Parent")" and inserting the words
"NationsBank Corporation ("Parent"), NB Holdings Corporation, a wholly owned
subsidiary of Parent ("Merger Sub") and Boatmen's Bancshares, Inc. (the
"Company")."
3. The first recital to the Agreement is hereby amended
by deleting the words "a wholly-owned direct or indirect subsidiary of Parent
("Merger Sub")" with the words "Merger Sub."
4. Section 1.01 of the Agreement is hereby amended by
deleting the definition of "Certificate of Merger" and adding the sentence
""DGCL" shall have the meaning set forth in Section 2.01(b)." immediately after
the definition of "Determination Date."
5. Section 2.01(a) of the Agreement is hereby amended by
deleting the word "Missouri" in the fourth line of such
- 1 -
<PAGE> 2
paragraph and replacing it with the word "Delaware."
6. Section 2.01(b) is hereby amended and restated in its
entirety as follows:
(b) Effectiveness And Effects Of The Merger. Subject
to the satisfaction or waiver of the conditions set forth in Article
VII in accordance with this Agreement, the Merger shall become
effective upon the later to occur of (i) the filing in the office of
the Secretary of State of Missouri of a certificate of merger or such
later date and time as may be set forth in such certificate of merger,
in accordance with Section 440 of the General and Business Corporation
Law of Missouri (the "GBCL") and (ii) the filing in the office of the
Secretary of State of Delaware of a certificate of merger or such
later date and time as may be set forth in such certificate of merger
in accordance with Section 252 of the General Corporation Law of the
State of Delaware (the "GCL"). The Merger shall have the effects
prescribed in Section 450 of the GBCL and Section 252 of the GCL.
7. Upon the execution of this Amendment, Merger Sub
shall become a party to the Agreement with such rights and obligation as are
provided herein and therein.
8. This Amendment shall be governed by and construed in
accordance with the law of the State of Missouri , without regard to the
conflicts of law rules of such state.
9. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument. This Amendment
shall become effective when each party hereto shall have received counterparts
hereof signed by all of the other parties hereto.
10. Except as expressly amended hereby, the Agreement
shall remain in full force and effect.
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<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed in counterparts by their duly authorized officers,
all as of the day and year first above written.
BOATMEN'S BANCSHARES, INC.
By: /s/ Gregory L. Curl
-----------------------
Name: Gregory L. Curl
Title: Vice Chairman
NATIONSBANK CORPORATION
By: /s/ James H. Hance, Jr.
-------------------------
Name: James H. Hance, Jr.
Title: Vice Chairman and
Chief Financial Officer
NB HOLDINGS CORPORATION
By: /s/ John E. Mack
----------------------
Name: John E. Mack
Title: Senior Vice President
and Treasurer
<PAGE> 1
EXHIBIT 3.1
FORM OF
RESTATED
ARTICLES OF INCORPORATION
OF
NATIONSBANK CORPORATION
NationsBank Corporation, a business corporation incorporated under the
North Carolina Business Corporation Act, pursuant to action by its Board of
Directors, hereby sets forth its Restated Articles of Incorporation:
1. The name of the Corporation is NationsBank Corporation.
2. The purposes for which the Corporation is organized are to engage
in any lawful act or activity for which corporations may be organized under
Chapter 55 of the North Carolina General Statutes, as amended.
3. The number of shares the Corporation is authorized to issue is One
Billion Two Hundred Ninety-Five Million (1,295,000,000), divided into the
following classes:
<TABLE>
<CAPTION>
Class Number of Shares
----- ----------------
<S> <C>
Common . . . . . . . . . . . . . . . . . . . . . . 1,250,000,000
Preferred . . . . . . . . . . . . . . . . . . . . 45,000,000
</TABLE>
The class of common has unlimited voting rights and, after satisfaction
of claims, if any, of the holders of preferred shares, is entitled to receive
the net assets of the Corporation upon distribution.
The Board of Directors of the Corporation shall have full power and
authority to establish one or more series within the class of preferred shares
(the "Preferred Shares"), to define the designations, preferences, limitations
and relative rights (including conversion rights) of shares within such class
and to determine all variations between series.
The Board of Directors of the Corporation has designated, established and
authorized the following series of Preferred Shares:
(a) Cumulative Convertible Preferred Stock, Series A.
A. Designation.
The designation of the series of Preferred Stock created by this
resolution shall be Cumulative Convertible Preferred Stock, Series A,
$100 stated value, of the Corporation (hereinafter referred to as "Series
A Preferred Stock"), and the number of shares constituting such series
shall be 250,000, which number may be increased (but not
<PAGE> 2
above the total number of shares of Preferred Stock of the Corporation then
authorized by the Restated Articles of Incorporation, as amended from time to
time) or decreased (but not below the number of shares then outstanding) from
time to time by the Board of Directors. The Series A Preferred Stock shall rank
prior to the Common Stock, the 7% Cumulative Redeemable Preferred Stock, Series
B, $100 stated value per share, and the ESOP Convertible Preferred Stock,
Series C, with respect to the payment of dividends and the distribution of
assets.
B. Dividend Rights.
(1) The holders of shares of Series A Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors, out of
funds legally available therefor, cash dividends, accruing from the date of
initial issuance, at the annual rate of 7.00% of the liquidation preference per
annum, and no more, payable, when and as declared by the Board of Directors,
quarterly on March 1, June 1, September 1, and December 1 of each year (each
quarterly period ending on any such date being hereinafter referred to as a
"dividend period"), commencing on the first March 1, June 1, September 1, or
December 1 to occur after the Issue Date (as hereafter defined), at such annual
rate. Each dividend will be payable to holders of record as they appear on the
stock books of the Corporation on such record dates as shall be fixed by the
Board of Directors of the Corporation. The date of initial issuance of shares
of Series A Preferred Stock is hereinafter referred to as the "Issue Date".
Dividends payable on the Series A Preferred Stock (i) for any period other than
a full dividend period shall be computed on the basis of a 360-day year
consisting of twelve 30-day months and (ii) for each full dividend period shall
be computed by dividing the annual dividend rate by four.
(2) Dividends on shares of Series A Preferred Stock shall be
cumulative from the Issue Date whether or not there shall be funds legally
available for the payment thereof. If there shall be outstanding shares of any
other series of Preferred Stock ranking junior to or on a parity with the
Series A Preferred Stock as to dividends, no dividends shall be declared or
paid or set apart for payment on any such other series for any period unless
full cumulative dividends have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof is set apart for such
payment on the Series A Preferred Stock for all dividend periods terminating on
or prior to the date of payment of such dividends. If
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<PAGE> 3
dividends on the Series A Preferred Stock and on any other series of Preferred
Stock ranking on a parity as to dividends with the Series A Preferred Stock are
in arrears, in making any dividend payment on account of such arrears, the
Corporation shall make payments ratably upon all outstanding shares of the
Series A Preferred Stock and shares of such other series of Preferred Stock in
proportion to the respective amounts of dividends in arrears on the Series A
Preferred Stock and on such other series of Preferred Stock to the date of such
dividend payment. Holders of shares of the Series A Preferred Stock shall not
be entitled to any dividend, whether payable in cash, property or stock, in
excess of full cumulative dividends on such shares. No interest or sum of money
in lieu of interest shall be payable in respect of any dividend payment or
payments which may be in arrears.
(3) Unless full cumulative dividends on all outstanding shares of
the Series A Preferred Stock shall have been paid or declared and set aside for
payment for all past dividend periods, no dividend (other than a dividend in
Common Stock or in any other stock ranking junior to the Series A Preferred
Stock as to dividends and the distribution of assets upon liquidation,
dissolution or winding up) shall be declared upon the Common Stock or upon any
other stock ranking junior to the Series A Preferred Stock as to dividends and
the distribution of assets upon liquidation, dissolution, or winding up, nor
shall any Common Stock or any other stock of the Corporation ranking junior to
or on a parity with the Series A Preferred Stock as to dividends or upon the
distribution of assets upon liquidation, dissolution or winding up be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any shares of any
such stock) by the Corporation (except by conversion into or exchange for stock
of the Corporation ranking junior to the Series A Preferred Stock as to
dividends and the distribution of assets upon liquidation, dissolution or
winding up).
C. Liquidation Preferences.
(1) In the event of any liquidation, dissolution or winding up of
the affairs of the Corporation, whether voluntary or involuntary, the holders
of Series A Preferred Stock shall be entitled to receive out of the assets of
the Corporation available for distribution to stockholders an amount equal to
$400.00 per share plus an amount equal to any accrued and unpaid dividends
thereon to and including the date of such distribution, and no more, before any
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<PAGE> 4
distribution shall be made to the holders of Common Stock or any other class of
stock of the Corporation ranking junior to the Series A Preferred Stock as to
the distribution of assets. After payment of such liquidating distributions,
the holders of shares of Series A Preferred Stock will not be entitled to any
further participation in any distribution of assets by the Corporation.
(2) In the event the assets of the Corporation available for
distribution to stockholders upon any liquidation, dissolution or winding up of
the affairs of the Corporation, whether voluntary or involuntary, shall be
insufficient to pay in full the amounts payable with respect to the Series A
Preferred Stock and any other shares of Preferred Stock ranking on a parity
with the Series A Preferred Stock as to the distribution of assets, the holders
of Series A Preferred Stock and the holders of such other Preferred Stock shall
share ratably in any distribution of assets of the Corporation in proportion to
the full respective preferential amounts to which they are entitled.
(3) The merger or consolidation of the Corporation into or with any
other corporation, the merger or consolidation of any other corporation into or
with the Corporation or the sale of the assets of the Corporation substantially
as an entirety shall not be deemed a liquidation, dissolution or winding up of
the affairs of the Corporation within the meaning of this Section 3.
D. Redemption.
(1) Subject to obtaining the prior approval of the Board of
Governors of the Federal Reserve System, the Corporation, at its option, may
redeem any or all shares of Series A Preferred Stock, at any time or from time
to time, on or after March 1, 1997 at a redemption price of $400.00 per share,
plus an amount equal to accrued and unpaid dividends thereon to and including
the date of redemption (the "Redemption Price").
(2) If less than all the outstanding shares of Series A Preferred
Stock are to be redeemed, the shares to be redeemed shall be selected pro rata
as nearly as practicable or by lot, or by such other method as the Board of
Directors may determine to be fair and appropriate.
(3) Notice of any redemption shall be given by first class mail,
postage prepaid, mailed not less than 30 nor more than 60 days prior to the
date fixed for redemption to
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<PAGE> 5
the holders of record of the shares of Series A Preferred Stock to be redeemed,
at their respective addresses appearing on the books of the Corporation. Notice
so mailed shall be conclusively presumed to have been duly given whether or not
actually received. Such notice shall state: (i) the date fixed for redemption;
(ii) the Redemption Price; (iii) that the holder has the right to convert such
shares into Common Stock until the close of business on the tenth day preceding
the redemption date; (iv) the then-effective conversion price and the place
where certificates for such shares may be surrendered for conversion; (v) the
number of shares of Series A Preferred Stock to be redeemed and if less than all
the shares held by such holder are to be redeemed, the number of such shares to
be so redeemed from such holder; (vi) the place where certificates for such
shares are to be surrendered for payment of the Redemption Price; and (vii) that
after such date fixed for redemption the shares to be redeemed shall not accrue
dividends. If such notice is mailed as aforesaid, and if on or before the date
fixed for redemption funds sufficient to redeem the shares called for redemption
are set aside by the Corporation in trust for the account of the holders of the
shares to be redeemed, notwithstanding the fact that any certificate for shares
called for redemption shall not have been surrendered for cancellation, on and
after the redemption date the shares represented thereby so called for
redemption shall be deemed to be no longer outstanding, dividends thereon shall
cease to accrue and all rights of the holders of such shares as stockholders of
the Corporation shall cease (except the right to receive the Redemption Price,
without interest, upon surrender of the certificate representing such shares).
Upon surrender in accordance with the aforesaid notice of the certificate for
any shares so redeemed (duly endorsed or accompanied by appropriate instruments
of transfer, if so required by the Corporation in such notice), the holders of
record of such shares shall be entitled to receive the Redemption Price, without
interest. Notwithstanding the foregoing, however, as and to the extent that the
Corporation is required or permitted under the abandoned property laws of any
jurisdiction to escheat any redemption funds held in trust for the benefit of
any holder, the Corporation shall be absolved of any further obligation or
liability to such holder to the full extent provided by any such law. In case
fewer than all the shares represented by any such certificate are redeemed, a
new certificate shall be issued representing the unredeemed shares without cost
to the holder thereof.
-5-
<PAGE> 6
(4) At the option of the Corporation, if notice of redemption is
mailed as aforesaid, and if prior to the date fixed for redemption funds
sufficient to pay in full the Redemption Price are deposited in trust, for the
account of the holders of the shares to be redeemed, with a bank or trust
company named in such notice doing business in the State of North Carolina or
the Borough of Manhattan, The City of New York, State of New York, and having
capital and surplus of at least $50 million (which bank or trust company also
may be the transfer agent and/or paying agent for the Series A Preferred Stock)
notwithstanding the fact that any certificate(s) for shares called for
redemption shall not have been surrendered for cancellation, on and after such
date of deposit the shares represented thereby so called for redemption shall be
deemed to be no longer outstanding, and all rights of the holders of such shares
as shareholders of the Corporation shall cease, except the right of the holders
thereof to convert such shares in accordance with the provisions of Section 5 at
any time prior to the close of business on the tenth day preceding the
redemption date and the right of the holders thereof to receive out of the funds
so deposited in trust the Redemption Price, without interest, upon surrender of
the certificate(s) representing such shares. Any funds so deposited with such
bank or trust company in respect of shares of Series A Preferred Stock converted
before the close of business on the tenth day preceding the redemption date
shall be returned to the Corporation upon such conversion. Unless otherwise
required by law, any funds so deposited with such bank or trust company which
shall remain unclaimed by the holders of shares called for redemption at the end
of two years after the redemption date shall be repaid to the Corporation, on
demand, and thereafter the holder of any such shares shall look only to the
Corporation for the payment, without interest, of the Redemption Price.
Notwithstanding the foregoing, however, as and to the extent that the
Corporation is required or permitted under the abandoned property laws of any
jurisdiction to escheat any redemption funds held in trust for the benefit of
any holder, the Corporation shall be absolved of any further obligation or
liability to such holder to the full extent provided by any such laws.
(5) Any provision of this Section 4 to the contrary
notwithstanding, in the event that any quarterly dividend payable on the Series
A Preferred Stock shall be in arrears and until all such dividends in arrears
shall have been paid or declared and set apart for payment, the Corporation
shall not redeem any shares of Series A Preferred Stock unless all outstanding
shares of Series A Preferred Stock
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<PAGE> 7
are simultaneously redeemed and shall not purchase or otherwise acquire any
shares of Series A Preferred Stock except in accordance with a purchase or
exchange offer made on the same terms to all holders of record of Series A
Preferred Stock for the purchase of all outstanding shares thereof.
E. Conversion Rights.
The holders of shares of Series A Preferred Stock shall have the right,
at their option, to convert such shares into shares of Common Stock on the
following terms and conditions:
(1) Shares of Series A Preferred Stock shall be convertible at any
time into fully paid and nonassessable shares of Common Stock at a conversion
price of $44.44 per share of Common Stock (the "Conversion Price"). For purposes
of this Section 5, references to shares of Series A Preferred Stock shall apply
equally to fractional shares thereof, but only to the extent that such
fractional shares are integral multiples of 1/16 of one share. The Conversion
Price shall be subject to adjustment from time to time as hereinafter provided.
For purposes of such conversion, each share of Series A Preferred Stock will be
valued at $400. No payment or adjustment shall be made on account of any accrued
and unpaid dividends on shares of Series A Preferred Stock surrendered for
conversion prior to the record date for the determination of stockholders
entitled to such dividends or on account of any dividends on the shares of
Common Stock issued upon such conversion subsequent to the record date for the
determination of stockholders entitled to such dividends. If any shares of
Series A Preferred Stock shall be called for redemption, the right to convert
the shares designated for redemption shall terminate at the close of business on
the tenth day preceding the date fixed for redemption unless default is made in
the payment of the Redemption Price. In the event of default in the payment of
the Redemption Price, the right to convert the shares designated for redemption
shall terminate at the close of business on the business day immediately
preceding the date that such default is cured.
(2) In order to convert shares of Series A Preferred Stock into
Common Stock, the holder thereof shall surrender the certificates therefor, duly
endorsed if the Corporation shall so require, or accompanied by appropriate
instruments of transfer satisfactory to the Corporation, at the office of the
transfer agent for the Series A Preferred Stock, or at such other office as may
be designated by the Corpora-
-7-
<PAGE> 8
tion, together with written notice that such holder irrevocably elects to
convert such shares or any fraction of a share of Series A Preferred Stock
having a denominator of 16, each such fractional interest, measured in 1/16 of a
share, being valued for purposes of conversion at $25; references in this
Section 5 to the conversion of any share of Series A Preferred Stock shall also
apply, mutatis mutandis, to such fractional interests. Such notice shall also
state the name and address in which such holder wishes the certificate for the
shares of Common Stock issuable upon conversion to be issued. As soon as
practicable after receipt of the certificates representing the shares of Series
A Preferred Stock to be converted and the notice of election to convert the
same, the Corporation shall issue and deliver at said office a certificate for
the number of whole shares of Common Stock issuable upon conversion of the
shares of Series A Preferred Stock surrendered for conversion, together with a
cash payment in lieu of any fraction of a share, as hereinafter provided, to the
person entitled to receive the same. If more than one stock certificate for
Series A Preferred Stock shall be surrendered for conversion at one time by the
same holder, the number of full shares of Common Stock issuable upon conversion
thereof shall be computed on the basis of the aggregate number of shares
represented by all the certificates so surrendered. Shares of Series A Preferred
Stock shall be deemed to have been converted immediately prior to the close of
business on the date such shares are surrendered for conversion and notice of
election to convert the same is received by the Corporation in accordance with
the foregoing provision, and the person entitled to receive the Common Stock
issuable upon such conversion shall be deemed for all purposes as the record
holder of such Common Stock as of such date.
(3) In the case of any share of Series A Preferred Stock which is
converted after any record date with respect to the payment of a dividend on
the Series A Preferred Stock and on or prior to the date on which such dividend
is payable by the Corporation (the "Dividend Due Date"), the dividend due on
such Dividend Due Date shall be payable on such Dividend Due Date to the holder
of record of such shares as of such preceding record date notwithstanding such
conversion. Shares of Series A Preferred Stock surrendered for conversion
during the period from the close of business on any record date with respect to
the payment of a dividend on the Series A Preferred Stock next preceding any
Dividend Due Date to the opening of business on such Dividend Due Date shall
(except in the case of shares of Series A Preferred Stock which have been
called for
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<PAGE> 9
redemption on a redemption date within such period) be accompanied by payment in
New York Clearing House funds or other funds acceptable to the Corporation of an
amount equal to the dividend payable on such Dividend Due Date on the shares of
Series A Preferred Stock being surrendered for conversion. The dividend with
respect to a share of Series A Preferred Stock called for redemption on a
redemption date during the period from the close of business on any record date
with respect to the payment of a dividend on the Series A Preferred Stock next
preceding any Dividend Due Date to the opening of business on such Dividend Due
Date shall be payable on such Dividend Due Date to the holder of record of such
share on such dividend record date, notwithstanding the conversion of such share
of Series A Preferred Stock after such record date and prior to such Dividend
Due Date, and the holder converting such share of Series A Preferred Stock
called for redemption need not include a payment of such dividend amount upon
surrender of such share of Series A Preferred Stock for conversion. Except as
provided in this subsection, no payment or adjustment shall be made upon any
conversion on account of any dividends accrued on shares of Series A Preferred
Stock surrendered for conversion or on account of any dividends on the shares of
Common Stock issued upon conversion.
(4) No fractional shares of Common Stock shall be issued upon
conversion of any shares of Series A Preferred Stock. If more than one share of
Series A Preferred Stock is surrendered at one time by the same holder, the
number of full shares issuable upon conversion thereof shall be computed on the
basis of the aggregate number of shares so surrendered. If the conversion of any
shares of Series A Preferred Stock results in a fractional share of Common
Stock, the Corporation shall pay cash in lieu thereof in an amount equal to such
fraction multiplied by the closing price, determined as provided in subsection
(vi) of Section 5(e) below, on the date on which the shares of Series A
Preferred Stock were duly surrendered for conversion, or if such date is not a
trading date, on the next succeeding trading date.
(5) The Conversion Price shall be adjusted from time to time as
follows:
(i) In case the Corporation shall pay or make a
dividend or other distribution on shares of Common Stock in Common
Stock, the Conversion Price in effect at the opening of business on the
date following the date fixed for the determination of stock-
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<PAGE> 10
holders entitled to receive such dividend or other distribution shall
be reduced by multiplying such Conversion Price by a fraction of which
the numerator shall be the number of shares of Common Stock outstanding
at the close of business on the date fixed for such determination and
the denominator shall be the sum of such number of shares and the total
number of shares constituting such dividend or other distribution, such
reduction to become effective immediately after the opening of business
on the day following the date fixed for such determination. For
purposes of this subsection, the number of shares of Common Stock at
any time outstanding shall not include shares held in the treasury of
the Corporation but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The
Corporation will not pay any dividend or make any distribution on
shares of Common Stock held in the treasury of the Corporation.
(ii) In case the Corporation shall issue additional rights
or warrants to all holders of its Common Stock entitling them to subscribe for
or purchase shares of Common Stock at a price per share less than the then
current market price per share (determined as provided in subsection (vi)
below) of the Common Stock on the date fixed for the determination of
stockholders entitled to receive such rights or warrants (other than pursuant
to a dividend reinvestment plan), the Conversion Price in effect at the opening
of business on the day following the date fixed for such determination shall be
reduced by multiplying such Conversion Price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the
close of business on the date fixed for such determination plus the number of
shares of Common Stock which the aggregate of the offering price of the total
number of shares of Common Stock so offered for subscription or purchase would
purchase at such current market price (determined as provided in subsection
(vi) below) and the denominator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such determination
plus the number of shares of Common Stock so offered for subscription or
purchase, such reduction to become effective immediately after the opening of
business on the day following the date fixed for such determination. For the
purposes of this subsection (ii), the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of the
Corporation but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions
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<PAGE> 11
of shares of Common Stock. The Corporation will not issue any rights or
warrants in respect of shares of Common Stock held in the treasury of the
Corporation during the period so held.
(iii) In case outstanding shares of Common Stock
shall be subdivided into a greater number of shares of Common Stock, the
Conversion Price in effect at the opening of business on the day following the
day upon which such subdivision becomes effective shall be proportionately
reduced, and, conversely, in case outstanding shares of Common Stock shall be
combined into a smaller number of shares of Common Stock, the Conversion Price
in effect at the opening of business on the day following the day upon which
such combination becomes effective shall be proportionately increased, such
reduction or increase, as the case may be, to become effective immediately
after the opening of business on the day following the day upon which such
subdivision or combination becomes effective.
(iv) In case the Corporation shall, by dividend or
otherwise, distribute to all holders of its Common Stock evidences of its
indebtedness or assets (including securities, but excluding (1) any rights or
warrants referred to in subsection (ii) above, (2) any dividend or distribution
paid in cash out of the retained earnings of the Corporation and (3) any
dividend or distribution referred to in subsection (i) above), the Conversion
Price shall be adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the close of
business on the date fixed for the determination of stockholders entitled to
receive such distribution by a fraction of which the numerator shall be the
current market price per share (determined as provided in subsection (vi)
below) of the Common Stock on the date fixed for such determination less the
then fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and shall be described in a statement filed
with the transfer agent for the Series A Preferred Stock) of the portion of the
evidences of indebtedness or assets so distributed applicable to one share of
Common Stock and the denominator shall be such current market price per share
of the Common Stock, such adjustment to become effective immediately prior to
the opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such distribution.
(v) For the purposes of this Section 5, the
reclassification of Common Stock into securities including
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<PAGE> 12
securities other than Common Stock (other than any reclassification upon a
consolidation or merger to which Section 5(g) below applies) shall be deemed to
involve (A) a distribution of such securities other than Common Stock to all
holders of Common Stock (and the effective date of such reclassification shall
be deemed to be "the date fixed for the determination of stockholders entitled
to receive such distribution" and the "date fixed for such determination" within
the meaning of subsection (iv) above), and (B) a subdivision or combination, as
the case may be, of the number of shares of Common Stock outstanding immediately
prior to such reclassification into the number of shares of Common Stock
outstanding immediately thereafter (and the effective date of such
reclassification shall be deemed to be "the day upon which such subdivision
became effective" or "the day upon which such combination becomes effective" as
the case may be, and "the day upon which such subdivision or combination becomes
effective" within the meaning of subsection (iii) above).
(vi) For the purpose of any computation under subsections
(ii) and (iv) above, the current market price per share of Common Stock on any
day shall be deemed to be the average of the daily closing prices for the 30
consecutive trading days commencing 45 trading days before the day in question.
The closing price for each day shall be as reported on the New York Stock
Exchange Composite Tape or, if the Common Stock is no longer listed on such
exchange, as reported on the principal national securities exchange or national
automated stock quotation system on which the Common Stock is listed, traded or
quoted, or, if the Common Stock is not listed, traded or quoted on any national
securities exchange or national automated stock quotation system, the closing
price shall be deemed to be the average of the closing bid and asked prices in
the over-the-counter market as furnished by any New York Stock Exchange member
firm selected from time to time by the Board of Directors for that purpose.
(vii) Notwithstanding the foregoing, no adjustment in the
Conversion Price for the Series A Preferred Shares shall be required unless such
adjustment would require an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason of this subsection (vii)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section shall be made to
the nearest cent or to the nearest one-hundredth of a share, as the case may be.
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<PAGE> 13
(6) Whenever the Conversion Price shall be adjusted as herein
provided (i) the Corporation shall forthwith make available at the office of the
transfer agent for the Series A Preferred Stock a statement describing in
reasonable detail the adjustment, the facts requiring such adjustment and the
method of calculation used; and (ii) the Corporation shall cause to be mailed by
first class mail, postage prepaid, as soon as practicable to each holder of
record of shares of Series A Preferred Stock a notice stating that the
Conversion Price has been adjusted and setting forth the adjusted Conversion
Price.
(7) In the event of any consolidation of the Corporation with or
merger of the Corporation into any other corporation (other than a merger in
which the Corporation is the surviving corporation) or a sale, lease or
conveyance of the assets of the Corporation as an entirety or substantially as
an entirety, or any statutory exchange of securities with another corporation,
the holder of each share of Series A Preferred Stock shall have the right,
after such consolidation, merger, sale or exchange, to convert such share into
the number and kind of shares of stock or other securities and the amount and
kind of property which such holder would have been entitled to receive upon
such consolidation, merger, sale or exchange of the number of shares of Common
Stock that would have been issued to such holder had such shares of Series A
Preferred Stock been converted immediately prior to such consolidation, merger
or sale. The provisions of this Section 5(g) shall similarly apply to
successive consolidations, mergers, sales or exchanges.
(8) The Corporation shall pay any taxes that may be payable in
respect of the issuance of shares of Common Stock upon conversion of shares of
Series A Preferred Stock, but the Corporation shall not be required to pay any
taxes which may be payable in respect of any transfer involved in the issuance
of shares of Common Stock in the name other than that in which the shares of
Series A Preferred Stock so converted are registered, and the Corporation shall
not be required to issue or deliver any such shares unless and until the person
requesting such issuance shall have paid to the Corporation the amount of any
such taxes, or shall have established to the satisfaction of the Corporation
that such taxes have been paid.
(9) The Corporation may (but shall not be required to) make such
reductions in the Conversion Price, in addition to those required by subsections
(i) through (iv) of Section 5(e) above, as it considers to be advisable in
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order that any event treated for federal income tax purposes as a dividend of
stock or stock rights shall not be taxable to the recipients.
(10) The Corporation shall at all times reserve and keep available out
of its authorized but unissued Common Stock the full number of shares of Common
Stock issuable upon the conversion of all shares of Series A Preferred Stock
then outstanding.
(11) In the event that:
(i) the Corporation shall declare a dividend or any other
distribution on its Common Stock, payable otherwise than in cash out of
retained earnings; or
(ii) the Corporation shall authorize the granting to the
holders of its Common Stock of rights to subscribe for or purchase any shares
of capital stock of any class or of any other rights; or
(iii) any capital reorganization of the Corporation,
reclassification of the capital stock of the Corporation, consolidation or
merger of the Corporation with or into another corporation (other than a merger
in which the Corporation is the surviving corporation), or sale, lease or
conveyance of the assets of the Corporation as an entirety or substantially as
an entirety to another corporation occurs; or
(iv) the voluntary or involuntary dissolution, liquidation
or winding up of the Corporation occurs, the Corporation shall cause to be
mailed to the holders of record of Series A Preferred Stock at least 15 days
prior to the applicable date hereinafter specified a notice stating (x) the date
on which a record is to be taken for the purpose of such dividend, distribution
of rights or, if a record is not to be taken, the date as of which the holders
of Common Stock of record to be entitled to such dividend, distribution or
rights are to be determined or (y) the date on which such reorganization,
reclassification, consolidation, merger, sale, lease, conveyance, dissolution,
liquidation or winding up is expected to take place, and the date, if any is to
be fixed, as of which holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, lease, conveyance, dissolution, liquidation or winding up. Failure to give
such notice, or any defect therein, shall not
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<PAGE> 15
affect the legality or validity of such dividend, distribution, reorganization,
reclassification, consolidation, merger, sale, lease, conveyance, dissolution,
liquidation or winding up.
F. Voting Rights.
Other than as required by applicable law, the Series A Preferred Stock
shall not have any voting powers either general or special, except that:
(1) Unless the vote or consent of the holders of a greater number
of shares shall then be required by law, the affirmative vote or consent of the
holders of at least 66-2/3% of all of the shares of the Series A Preferred
Stock, and any one or more other series of preferred stock of the Corporation
similarly affected, at the time outstanding, given in person or by proxy,
either in writing or by a vote at a meeting called for the purpose at which the
holders of shares of the Series A Preferred Stock and any such other series of
preferred stock shall vote together as a separate class, shall be necessary for
authorizing, effecting or validating the amendment, alteration or repeal of any
of the provisions of the Restated Articles of Incorporation, as amended, or of
any amendment or supplement thereto (including any certificate of designation
or any similar document relating to any series of preferred stock) of the
Corporation, which would adversely affect the preferences, rights, powers or
privileges, qualifications, limitations and restrictions of the Series A
Preferred Stock.
(2) Unless the vote or consent of the holders of a greater number
of shares shall then be required by law, the affirmative vote or consent of the
holders of at least 66-2/3% of all of the shares of the Series A Preferred
Stock and any other series of preferred stock of the Corporation ranking on a
parity with shares of the Series A Preferred Stock, either as to dividends or
the distribution of assets upon liquidation, dissolution or winding up, at the
time outstanding, given in person or by proxy, either in writing or by a vote
at a meeting called for the purpose at which the holders of shares of the
Series A Preferred Stock and any such other series of preferred stock of the
Corporation shall vote together as a single class without regard to series,
shall be necessary to create, authorize or issue, or reclassify any authorized
stock of the Corporation into, or create, authorize or issue any obligation or
security convertible into or evidencing a right to purchase, any shares of any
class of stock of the
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<PAGE> 16
Corporation ranking prior to the Series A Preferred Stock or ranking prior to
any other series of preferred stock of the Corporation which ranks on a parity
with the Series A Preferred Stock as to dividends or upon the distribution of
assets upon liquidation, dissolution or winding up. Subject to the foregoing,
the Corporation's Restated Articles of Incorporation, as amended, may be
amended to increase the number of authorized shares of preferred stock without
the vote of the holders of preferred stock, including the Series A Preferred
Stock.
(3) Whenever, at any time or times, dividends payable on the
shares of Series A Preferred Stock shall be in arrears in an amount equal to at
least six full quarterly dividends on shares of the Series A Preferred Stock at
the time outstanding, the holders of the outstanding shares of Series A
Preferred Stock shall have the exclusive right, voting separately as a class
together with holders of shares of any one or more other series of preferred
stock ranking on a parity with the Series A Preferred Stock either as to
dividends or the distribution of assets upon liquidation, dissolution or
winding up and upon which like voting rights have been conferred and are
exercisable, to elect two directors of the Corporation for one-year terms at
the Corporation's next annual meeting of stockholders and at each subsequent
annual meeting of stockholders. At elections for such directors, each holder of
Series A Preferred Stock shall be entitled to one vote for each share held (the
holders of shares of any other series of preferred stock ranking on such a
parity being entitled to such number of votes, if any, for each share of stock
held as may be granted to them). Upon the vesting of such right of the holders
of Series A Preferred Stock, the maximum authorized number of members of the
Board of Directors shall automatically be increased by two and the two
vacancies so created shall be filled by vote of the holders of the outstanding
shares of Series A Preferred Stock (either alone or together with the holders
of shares of any one or more other series of preferred stock ranking on such a
parity) as hereinafter set forth. The right of the holders of Series A
Preferred Stock, voting separately as a class to elect (either alone or
together with the holders of shares of any one or more other series of
preferred stock ranking on such a parity) members of the Board of Directors of
the Corporation as aforesaid shall continue until such time as all dividends
accumulated on the Series A Preferred Stock shall have been paid in full or
declared and set apart for payment, at which time such right shall immediately
terminate, except as herein or by law expressly
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<PAGE> 17
provided, subject to revesting in the event of each and every subsequent
default of the character above mentioned.
(4) Upon termination of such special voting rights attributable to
all holders of the Series A Preferred Stock and any other series or preferred
stock ranking on a parity with the Series A Preferred Stock as to dividends or
the distribution of assets upon liquidation, dissolution or winding up and upon
which like voting rights have been conferred and are exercisable, the term of
office of each director elected by the holders of shares of Series A Preferred
Stock and such parity preferred stock (a "Preferred Stock Director") pursuant
to such special voting rights shall immediately terminate and the number of
directors constituting the entire Board of Directors shall be reduced by the
number of Preferred Stock Directors. Any Preferred Stock Director may be
removed by, and shall not be removed otherwise than by, the vote of the holders
of record of a majority of the outstanding shares of Series A Preferred Stock
and all other series of preferred stock ranking on a parity with the Series A
Preferred Stock with respect to dividends who were entitled to participate in
such Preferred Stock Director's election, voting as a separate class, at a
meeting called for such purposes. If the office of any Preferred Stock Director
becomes vacant by reason of death, resignation, retirement, disqualification,
removal from office, or otherwise, the remaining Preferred Stock Director may
choose a successor who shall hold office for the unexpired term in respect of
which such vacancy occurred.
G. Reacquired Shares.
Shares of Series A Preferred Stock converted, redeemed, or otherwise
purchased or acquired by the Corporation shall be restored to the status of
authorized but unissued shares of Series A Preferred Stock without designation
as to series.
H. Ranking.
Any class or classes of stock of the Corporation shall be deemed to
rank:
(1) prior to the Series A Preferred Stock, as to dividends or as
to distribution of assets upon liquidation, dissolution or winding up, if the
holders of such class shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up,
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<PAGE> 18
as the case may be, in preference or priority to the holders of the Series A
Preferred Stock;
(2) on a parity with the Series A Preferred Stock, as to dividends
or as to distribution of assets upon liquidation, dissolution or winding up,
whether or not the dividend rates, dividend payment dates or redemption or
liquidation prices per share thereof be different from those of the Series A
Preferred Stock, if the holders of such class of stock and the Series A
Preferred Stock shall be entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in proportion to their respective amounts of accrued and unpaid dividends per
share or liquidation prices, without preference or priority one over the other;
and
(3) junior to the Series A Preferred Stock, as to dividends or as
to the distribution of assets upon liquidation, dissolution or winding up, if
such stock shall be Common Stock or if the holders of Series A Preferred Stock
shall be entitled to receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of shares of such stock.
I. No Sinking Fund.
Shares of Series A Preferred Stock are not subject to the operation of
a sinking fund or other obligation of the Corporation to redeem or retire the
Series A Preferred Stock.
(b) 7% Cumulative Redeemable Preferred Stock, Series B.
A. Designation.
The designation of this series is "7% Cumulative Redeemable Preferred
Stock, Series B" (hereinafter referred to as the "Series B Preferred Stock")
and the number of shares constituting such series is Thirty-Five Thousand and
Forty-Five (35,045). Shares of Series B Preferred Stock shall have a stated
value of $100.00 per share.
B. Dividends.
The holders of record of the shares of the Series B Preferred Stock
shall be entitled to receive, when and as declared by the Board of Directors of
the corporation, out of any funds legally available for such purpose,
cumulative
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<PAGE> 19
cash dividends at an annual dividend rate per share of 7% of the stated value
thereof, which amount is $7.00 per annum, per share, and no more. Such
dividends shall be payable each calendar quarter at the rate of $1.75 per share
on such dates as shall be fixed by resolution of the Board of Directors of the
Corporation. The date from which dividends on such shares shall be cumulative
shall be the first day after said shares are issued. Accumulations of
dividends shall not bear interest. No cash dividend shall be declared, paid or
set apart for any shares of Common Stock unless all dividends on all shares of
the Series B Preferred Stock at the time outstanding for all past dividend
periods and for the then current dividend shall have been paid, or shall have
been declared and a sum sufficient for the payment thereof, shall have been set
apart. Subject to the foregoing provisions of this paragraph (2), cash
dividends or other cash distributions as may be determined by the Board of
Directors of the Corporation, may be declared and paid upon the shares of the
Common Stock of the corporation from time to time out of funds legally
available therefor, and the shares of the Series B Preferred Stock shall not be
entitled to participate in any such cash dividend or other such cash
distribution so declared and paid or made on such shares of Common Stock.
C. Redemption.
From and after October 31, 1988, any holder may, by written request,
call upon the Corporation to redeem all or any part of said holder's shares of
said Series B Preferred Stock at a redemption price of $100.00 per share plus
accumulated unpaid dividends to the date said request for redemption is
received by the Corporation and no more (the "Redemption Price"). Any such
request for redemption shall be accompanied by the certificates for which
redemption is requested, duly endorsed or with appropriate stock power
attached, in either case with signature guaranteed. Upon receipt by the
Corporation of any such request for redemption from any holder of the Series B
Preferred Stock, the Corporation shall forthwith redeem said stock at the
Redemption Price, provided that: (i) full cumulative dividends have been paid
or declared and set apart for payment upon all shares of any series of
preferred stock ranking superior to the Series B Preferred Stock as to
dividends or other distributions (collectively the "Superior Stock"); and (ii)
the Corporation is not then in default or in arrears with respect to any
sinking or analogous fund or call for tenders obligation or agreement for the
purchase, redemption or retirement of any shares of Superior Stock. In the
event that, upon receipt of a re-
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<PAGE> 20
quest for redemption, either or both of the conditions set forth in clauses (i)
and (ii) above are not met, the Corporation shall forthwith return said request
to the submitting shareholder along with a statement that the Corporation is
unable to honor such request and explanation of the reasons therefor. From and
after the receipt by the Corporation of a request for redemption from any
holder of said Series B Preferred Stock, which request may be honored
consistent with the foregoing provisions, all rights of such holder in the
Series B Preferred Stock for which redemption is requested shall cease and
terminate, except only the right to receive the Redemption Price thereof, but
without interest.
D. Liquidation Preference.
In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the corporation, the holders of the Series B Preferred Stock
shall be entitled to receive, subject to the provisions of paragraph 7 and
before any payment shall be made to the holders of the shares of Common Stock,
the amount of $100.00 each share, plus accumulated dividends. After payment to
the holders of the Series B Preferred Stock of the full amount as aforesaid,
the holders of the Series B Preferred Stock as such shall have no right or
claim to any of the remaining assets which shall be distributed ratably to the
holders of the Common Stock. If, upon any such liquidation, dissolution or
winding up, the assets available therefore are not sufficient to permit
payments to the holders of Series B Preferred Stock of the full amount as
aforesaid, then subject to the provisions of paragraph 7, the holders of the
Series B Preferred Stock then outstanding shall share ratably in the
distribution of assets in accordance with the sums which would be payable if
such holders were to receive the full amounts as aforesaid.
E. Sinking Fund.
There shall be no sinking fund applicable to the shares of Series B
Preferred Stock.
F. Conversion.
The shares of Series B Preferred Stock shall not be convertible into
any shares of Common Stock or any other class of shares, nor exchanged for any
shares of Common Stock or any other class of shares.
G. Superior Stock.
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The corporation may issue stock with preferences superior or equal to
the shares of the Series B Preferred Stock without the consent of the holders
thereof.
H. Voting rights.
Each share of the Series B Preferred Stock shall be entitled to equal
voting rights, share for share, with each share of the Common Stock.
(c) ESOP Convertible Preferred Stock, Series C.
The shares of the ESOP Convertible Preferred Stock, Series C, of the
Corporation shall be designated "ESOP Convertible Preferred Stock, Series C,"
and the number of shares constituting such series shall be 3,000,000. The ESOP
Convertible Preferred Stock, Series C, shall hereinafter be referred to as the
"ESOP Preferred Stock."
A. Special Purpose Restricted Transfer Issue.
Shares of ESOP Preferred Stock shall be issued only to a trustee acting
on behalf of an employee stock ownership plan or other employee benefit plan of
the Corporation or any subsidiary of the Corporation. In the event of any
transfer of shares of ESOP Preferred Stock to any person other than any such
plan trustee or the Corporation, the shares of ESOP Preferred Stock so
transferred, upon such transfer and without any further action by the
Corporation or the holder, shall be automatically converted into shares of
Common Stock on the terms otherwise provided for the conversion of shares of
ESOP Preferred Stock into shares of Common Stock pursuant to paragraph E hereof
and no such transferee shall have any of the voting powers, preferences and
relative, participating, optional or special rights ascribed to shares of ESOP
Preferred Stock hereunder but, rather, only the powers and rights pertaining to
the Common Stock into which such shares of ESOP Preferred Stock shall be so
converted. Certificates representing shares of ESOP Preferred Stock shall be
legended to reflect such restrictions on transfer. Notwithstanding the foregoing
provisions of this paragraph A, shares of ESOP Preferred Stock (i) may be
converted into shares of Common Stock as provided by paragraph E hereof and the
shares of Common Stock issued upon such conversion may be transferred by the
holder thereof as permitted by law and (ii) shall be redeemable by the
Corporation upon the terms and conditions provided by paragraphs F, G and H
hereof.
B. Dividends and Distributions.
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(1) Subject to the provisions for adjustment hereinafter set
forth, the holders of shares of ESOP Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds
legally available therefor, cash dividends ("Preferred Dividends") in an amount
equal to $3.30 per share per annum, and no more, payable semi-annually,
one-half on the first day of January and one-half on the first day of July of
each year (each a "Dividend Payment Date") commencing the first such day
following the effective time of the Merger (as defined below), to holders of
record at the start of business on such Dividend Payment Date. Preferred
Dividends shall begin to accrue on shares of ESOP Preferred Stock on the last
dividend payment date on the outstanding shares of ESOP Convertible Preferred
Stock, Series C, of C&S/Sovran Corporation ("C&S/Sovran") (which shares are to
be converted on a one-for-one basis into shares of ESOP Preferred Stock at the
effective time of the merger (the "Merger") of C&S/Sovran Merger Corporation
("Merger Corporation"), a Delaware corporation and a wholly owned subsidiary of
the Corporation, with and into C&S/Sovran, as provided in the Agreement and
Plan of Consolidation, dated July 21, 1991, between the Corporation and
C&S/Sovran). Preferred Dividends shall accrue on a daily basis whether or not
the Corporation shall have earnings or surplus at the time, but Preferred
Dividends on the shares of ESOP Preferred Stock for any period less than a full
semi-annual period between Dividend Payment Dates shall be computed on the
basis of a 360-day year of 30-day months. Accumulated but unpaid Preferred
Dividends shall accumulate as of the Dividend Payment Date on which they first
become payable, but no interest shall accrue on accumulated but unpaid
Preferred Dividends.
(2) So long as any ESOP Preferred Stock shall be outstanding, no
dividend shall be declared or paid or set apart for payment on any other series
of stock ranking on a parity with the ESOP Preferred Stock as to dividends,
unless there shall also be or have been declared and paid or set apart for
payment on the ESOP Preferred Stock, like dividends for all dividend payment
periods of the ESOP Preferred Stock ending on or before the dividend payment
date of such parity stock, ratably in proportion to the respective amounts of
dividends accumulated and unpaid through such dividend payment period on the
ESOP Preferred Stock and accumulated and unpaid or payable on such parity stock
through the dividend payment period on such parity stock next preceding such
Dividend Payment Date. In the event that full cumulative dividends on the ESOP
Preferred Stock have not been declared and paid or set apart for
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payment when due, the Corporation shall not declare or pay or set apart for
payment any dividends or make any other distributions on, or make any payment
on account of the purchase, redemption or other retirement of any other class
of stock or series thereof of the Corporation ranking, as to dividends or as to
distributions in the event of a liquidation, dissolution or winding-up of the
Corporation, junior to the ESOP Preferred Stock until full cumulative dividends
on the ESOP Preferred Stock shall have been paid or declared and provided for;
provided, however, that the foregoing shall not apply to (i) any dividend
payable solely in any shares of any stock ranking, as to dividends or as to
distributions in the event of the liquidation, dissolution or winding-up of the
Corporation, junior to the ESOP Preferred Stock, or (ii) the acquisition of
shares of any stock ranking, as to dividends or as to distributions in the
event of a liquidation, dissolution or winding-up of the Corporation, junior to
the ESOP Preferred Stock either (A) pursuant to any employee or director
incentive or benefit plan or arrangement (including any employment, severance
or consulting agreement) of the Corporation or any subsidiary of the
Corporation heretofore or hereafter adopted or (B) in exchange solely for
shares of any other stock ranking junior to the ESOP Preferred Stock.
C. Voting Rights.
The holders of shares of ESOP Preferred Stock shall have the following
voting rights:
(1) The holders of ESOP Preferred Stock shall be entitled to vote
on all matters submitted to a vote of the holders of Common Stock of the
Corporation, voting together with the holders of Common Stock as one class.
Each share of the ESOP Preferred Stock shall be entitled to the number of votes
equal to the number of shares of Common Stock into which such share of ESOP
Preferred Stock could be converted on the record date for determining the
shareholders entitled to vote, rounded to the nearest whole vote; it being
understood that whenever the "Conversion Price" (as defined in paragraph E
hereof) is adjusted as provided in paragraph I hereof, the voting rights of the
ESOP Preferred Stock shall also be similarly adjusted.
(2) Except as otherwise required by the North Carolina Business
Corporation Act or set forth in paragraph C(1), holders of ESOP Preferred Stock
shall have no special voting rights and their consent shall not be required for
the taking of any corporate action.
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D. Liquidation, Dissolution or Winding-Up.
(1) Upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation, the holders of ESOP Preferred Stock shall be
entitled to receive out of the assets of the Corporation which remain after
satisfaction in full of all valid claims of creditors of the Corporation and
which are available for payment to shareholders and subject to the rights of
the holders of any stock of the Corporation ranking senior to or on a parity
with the ESOP Preferred Stock in respect of distributions upon liquidation,
dissolution or winding-up of the Corporation, before any amount shall be paid
or distributed among the holders of Common Stock or any other shares ranking
junior to the ESOP Preferred Stock in respect of the distributions upon
liquidation, dissolution or winding-up of the Corporation, liquidating
distributions in the amount of $42.50 per share, plus an amount equal to all
accrued and unpaid dividends thereon to the date fixed for distribution, and no
more. If upon any liquidation, dissolution or winding-up of the Corporation,
the amounts payable with respect to the ESOP Preferred Stock and any other
stock ranking as to any such distribution on a parity with the ESOP Preferred
Stock are not paid in full, the holders of the ESOP Preferred Stock and such
other stock shall share ratably in any distribution of assets in proportion to
the full respective preferential amounts to which they are entitled. After
payment of the full amount to which they are entitled as provided by the
foregoing provisions of this paragraph D(1), the holders of shares of ESOP
Preferred Stock shall not be entitled to any further right or claim to any of
the remaining assets of the Corporation.
(2) Neither the merger or consolidation of the Corporation with or
into any other corporation, nor the merger or consolidation of any other
corporation with or into the Corporation, nor the sale, transfer or lease of
all or any portion of the assets of the Corporation, shall be deemed to be a
dissolution, liquidation or winding-up of the affairs of the Corporation for
purposes of this paragraph D, but the holders of ESOP Preferred Stock shall
nevertheless be entitled in the event of any such merger or consolidation to
the rights provided by paragraph H hereof.
(3) Written notice of any voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation, stating the payment date or dates
when, and the place or places where, the amounts distributable to holders of
ESOP Preferred Stock in such circumstances shall be payable,
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shall be given by first-class mail, postage prepaid, mailed not less than
twenty (20) days prior to any payment date stated therein, to the holders of
ESOP Preferred Stock, at the address shown on the books of the Corporation or
any transfer agent for the ESOP Preferred Stock.
E. Conversion into Common Stock.
(1) A holder of shares of ESOP Preferred Stock shall be entitled,
at any time prior to the close of business on the date fixed for redemption of
such shares pursuant to paragraph F, G or H hereof, to cause any or all of such
shares to be converted into shares of Common Stock, initially at a conversion
rate equal to the ratio of 1.0 shares of ESOP Preferred Stock to 0.84 shares of
Common Stock and a conversion price the amount of which initially shall be
$42.50 (as adjusted as hereinafter provided, the "Conversion Price") for,
initially, each 0.84 shares of Common Stock. Each of the Conversion Price and
the resulting conversion ratio is subject to adjustment as hereinafter
provided.
(2) Any holder of shares of ESOP Preferred Stock desiring to
convert such shares into shares of Common Stock shall surrender the certificate
or certificates representing the shares of ESOP Preferred Stock being
converted, duly assigned or endorsed for transfer to the Corporation (or
accompanied by duly executed stock powers relating thereto), at the principal
executive office of the Corporation or the offices of the transfer agent for
the ESOP Preferred Stock or such office or offices in the continental United
States of an agent for conversion as may from time to time be designated by
notice to the holders of the ESOP Preferred Stock by the Corporation or the
transfer agent for the ESOP Preferred Stock, accompanied by written notice of
conversion. Such notice of conversion shall specify (i) the number of shares of
ESOP Preferred Stock to be converted and the name or names in which such holder
wishes the certificate or certificates for Common Stock and for any shares of
ESOP Preferred Stock not to be so converted to be issued, and (ii) the address
to which such holder wishes delivery to be made of such new certificates to be
issued upon such conversion.
(3) Upon surrender of a certificate representing a share or shares
of ESOP Preferred Stock for conversion, the Corporation shall issue and send by
hand delivery (with receipt to be acknowledged) or by first-class mail, postage
prepaid, to the holder thereof or to such holder's designee, at the address
designated by such holder, a cer-
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<PAGE> 26
tificate or certificates for the number of shares of Common Stock to which such
holder shall be entitled upon conversion. In the event that there shall have
been surendered a certificate or certificates representing shares of ESOP
Preferred Stock, only part of which are to be converted, the Corporation shall
issue and deliver to such holder or such holder's designee a new certificate or
certificates representing the number of shares of ESOP Preferred Stock which
shall not have been converted.
(4) The issuance by the Corporation of shares of Common Stock upon
a conversion of shares of ESOP Preferred Stock into shares of Common Stock made
at the option of the holder thereof shall be effective as of the earlier of (i)
the delivery to such holder or such holder's designee of the certificate or
certificates representing the shares of Common Stock issued upon conversion
thereof or (ii) the commencement of business on the second business day after
the surrender of the certificate or certificates for the shares of ESOP
Preferred Stock to be converted, duly assigned or endorsed for transfer to the
Corporation (or accompanied by duly executed stock powers relating thereto) as
provided hereby. On and after the effective date of conversion, the person or
persons entitled to receive the Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such
shares of Common Stock, but no allowance or adjustment shall be made in respect
of dividends payable to holders of Common Stock in respect of any period prior
to such effective date. The Corporation shall not be obligated to pay any
dividends which shall have been declared and shall be payable to holders of
shares of ESOP Preferred Stock on a Dividend Payment Date if such Dividend
Payment Date for such dividend shall coincide with or be on or subsequent to
the effective date of conversion of such shares.
(5) The Corporation shall not be obligated to deliver to holders
of ESOP Preferred Stock any fractional share or shares of Common Stock issuable
upon any conversion of such shares of ESOP Preferred Stock, but in lieu thereof
may make a cash payment in respect thereof in any manner permitted by law.
(6) The Corporation shall at all times reserve and keep available
out of its authorized and unissued Common Stock, solely for issuance upon the
conversion of shares of ESOP Preferred Stock as herein provided, free from any
preemptive rights, such number of shares of Common Stock as shall from time to
time be issuable upon the conversion of all shares of ESOP Preferred Stock then
outstanding. The
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Corporation shall prepare and shall use its best efforts to obtain and keep in
force such governmental or regulatory permits or other authorizations as may be
required by law, and shall comply with all requirements as to registration or
qualification of the Common Stock, in order to enable the Corporation lawfully
to issue and deliver to each holder of record of ESOP Preferred Stock such
number of shares of its Common Stock as shall from time to time be sufficient
to effect the conversion of all shares of ESOP Preferred Stock then outstanding
and convertible into shares of Common Stock.
F. Redemption At the Option of the Corporation.
(1) The ESOP Preferred Stock shall be redeemable, in whole or in
part, at the option of the Corporation at any time after July 1, 1992, or on or
before July 1, 1992 if permitted by paragraph F(3) or F(4), at the following
redemption prices per share (except as to redemption pursuant to paragraph
F(3)):
<TABLE>
<CAPTION>
During the Twelve-Month Price Per
Period Beginning July 1, Share
- ------------------------ ---------
<S> <C>
1991 . . . . . . . . . . . . . . . . . $45.14
1992 . . . . . . . . . . . . . . . . . 44.81
1993 . . . . . . . . . . . . . . . . . 44.48
1994 . . . . . . . . . . . . . . . . . 44.15
1995 . . . . . . . . . . . . . . . . . 43.82
1996 . . . . . . . . . . . . . . . . . 43.49
1997 . . . . . . . . . . . . . . . . . 43.16
1998 . . . . . . . . . . . . . . . . . 42.83
</TABLE>
and thereafter at $42.50 per share, plus, in each case, an amount equal to all
accrued and unpaid dividends thereon to the date fixed for redemption. Payment
of the redemption price shall be made by the Corporation in cash or shares of
Common Stock, or a combination thereof, as permitted by paragraph F(5). From
and after the date fixed for redemption, dividends on shares of ESOP Preferred
Stock called for redemption will cease to accrue, such shares will no longer be
deemed to be outstanding and all rights in respect of such shares of the
Corporation shall cease, except the right to receive the redemption price. If
less than all of the outstanding shares of ESOP Preferred Stock are to be
redeemed, the Corporation shall either redeem a portion of the shares of each
holder determined pro rata based on the number of shares held by each holder or
shall select the shares to be redeemed by lot, as may be determined by the
Board of Directors of the Corporation.
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<PAGE> 28
(2) Unless otherwise required by law, notice of redemption will be
sent to the holders of ESOP Preferred Stock at the address shown on the books of
the Corporation or any transfer agent for the ESOP Preferred Stock by
first-class mail, postage prepaid, mailed not less than twenty (20) days nor
more than sixty (60) days prior to the redemption date. Each such notice shall
state: (i) the redemption date; (ii) the total number of shares of the ESOP
Preferred Stock to be redeemed and, if fewer than all the shares held by such
holder are to be redeemed, the number of such shares to be redeemed from such
holder; (iii) the redemption price; (iv) the place or places where certificates
for such shares are to be surrendered for payment of the redemption price; (v)
that dividends on the shares to be redeemed will cease to accrue on such
redemption date; and (vi) the conversion rights of the shares to be redeemed,
the period within which conversion rights may be exercised, and the Conversion
Price and number of shares of Common Stock issuable upon conversion of a share
of ESOP Preferred Stock at the time. These notice provisions may be supplemented
if necessary in order to comply with optional redemption provisions for
preferred stock which may be required under the Internal Revenue Code of 1986,
as amended, or the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). Upon surrender of the certificates for any shares so called for
redemption and not previously converted (properly endorsed or assigned for
transfer, if the Board of Directors of the Corporation shall so require and the
notice shall so state), such shares shall be redeemed by the Corporation at the
date fixed for redemption and at the applicable redemption price set forth in
this paragraph F.
(3) In the event of a change in the federal tax law of the United
States of America which has the effect of precluding the Corporation from
claiming any of the tax deductions for dividends paid on the ESOP Preferred
Stock when such dividends are used as provided under Section 404(k)(2) of the
Internal Revenue Code of 1986, as amended and in effect on the date shares of
ESOP Preferred Stock are initially issued, the Corporation may, within 180 days
following the effective date of such tax legislation and implementing
regulations of the Internal Revenue Service, if any, in its sole discretion and
notwithstanding anything to the contrary in paragraph F(1), elect to redeem any
or all such shares for the amount payable in respect of the shares upon
liquidation of the Corporation pursuant to paragraph D.
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<PAGE> 29
(4) In the event the C&S/Sovran Retirement Savings, ESOP and
Profit Sharing Plan (as amended, together with any successor plan, the "Plan")
is terminated, the Corporation shall, notwithstanding anything to the contrary
in paragraph F(1), redeem all shares of ESOP Preferred Stock for the amount
payable in respect of the shares upon redemption of the ESOP Preferred Stock
pursuant to paragraph F(1) hereof.
(5) The Corporation, at its option, may make payment of the
redemption price required upon redemption of shares of ESOP Preferred Stock in
cash or in shares of Common Stock, or in a combination of such shares and cash,
any such shares to be valued for such purpose at their Fair Market Value (as
defined in paragraph I(7) hereof).
G. Other Redemption Rights.
Shares of ESOP Preferred Stock shall be redeemed by the Corporation at
a price which is the greater of the Conversion Value (as defined in paragraph
I) of the ESOP Preferred Stock on the date fixed for redemption or a redemption
price of $42.50 per share plus accrued and unpaid dividends thereon to the date
fixed for redemption, for shares of Common Stock (any such shares of Common
Stock to be valued for such purpose as provided by paragraph F(5) hereof), at
the option of the holder, at any time and from time to time upon notice to the
Corporation given not less than five (5) business days prior to the date fixed
by the Corporation in such notice for such redemption, when and to the extent
necessary (i) to provide for distributions required to be made under, or to
satisfy an investment election provided to participants in accordance with, the
Plan to participants in the Plan or (ii) to make payment of principal, interest
or premium due and payable (whether as scheduled or upon acceleration) on any
indebtedness incurred by the holder or Trustee under the Plan for the benefit
of the Plan.
H. Consolidation, Merger, etc.
(1) In the event that the Corporation shall consummate any
consolidation or merger or similar transaction, however named, pursuant to
which the outstanding shares of Common Stock are by operation of law exchanged
solely for or changed, reclassified or converted solely into stock of any
successor or resulting company (including the Corporation and any company that
directly or indirectly owns all of the outstanding capital stock of such
successor or resulting company) that constitutes "qualifying employer
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<PAGE> 30
securities" with respect to a holder of ESOP Preferred Stock within the meaning
of Section 409(l) of the Internal Revenue Code of 1986, as amended, and Section
407(d)(5) of ERISA, or any successor provisions of law, and, if applicable, for
a cash payment in lieu of fractional shares, if any, the shares of ESOP
Preferred Stock of such holder shall be assumed by and shall become preferred
stock of such successor or resulting company, having in respect of such company
insofar as possible the same powers, preferences and relative, participating,
optional or other special rights (including the redemption rights provided by
paragraphs F, G and H hereof), and the qualifications, limitations or
restrictions thereon, that the ESOP Preferred Stock had immediately prior to
such transaction, except that after such transaction each share of the ESOP
Preferred Stock shall be convertible, otherwise on the terms and conditions
provided by paragraph E hereof, into the qualifying employer securities so
receivable by a holder of the number of shares of Common Stock into which such
shares of ESOP Preferred Stock could have been converted immediately prior to
such transaction if such holder of Common Stock failed to exercise any rights
of election to receive any kind or amount of stock, securities, cash or other
property (other than such qualifying employer securities and a cash payment, if
applicable, in lieu of fractional shares) receivable upon such transaction
(provided that, if the kind or amount of qualifying employer securities
receivable upon such transaction is not the same for each non-electing share,
then the kind and amount of qualifying employer securities receivable upon such
transaction for each non-electing share shall be the kind and amount so
receivable per share by a plurality of the non-electing shares). The rights of
the ESOP Preferred Stock as preferred stock of such successor or resulting
company shall successively be subject to adjustments pursuant to paragraph I
hereof after any such transaction as nearly equivalent to the adjustments
provided for by such paragraph prior to such transaction. The Corporation shall
not consummate any such merger, consolidation or similar transaction unless all
then outstanding shares of the ESOP Preferred Stock shall be assumed and
authorized by the successor or resulting company as aforesaid.
(2) In the event that the Corporation shall consummate any consolidation
or merger or similar transaction, however named, pursuant to which the
outstanding shares of Common Stock are by operation of law exchanged for or
changed, reclassified or converted into other stock or securities or cash or any
other property, or any combination thereof, other than any such consideration
which is
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<PAGE> 31
constituted solely of qualifying employer securities (as referred to in
paragraph H(1)) and cash payments, if applicable, in lieu of fractional shares,
outstanding shares of ESOP Preferred Stock shall, without any action on the
part of the Corporation or any holder thereof (but subject to paragraph H(3)),
be deemed converted by virtue of such merger, consolidation or similar
transaction immediately prior to such consummation into the number of shares of
Common Stock into which such shares of ESOP Preferred Stock could have been
converted at such time, and each share of ESOP Preferred Stock shall, by virtue
of such transaction and on the same terms as apply to the holders of Common
Stock, be converted into or exchanged for the aggregate amount of stock,
securities, cash or other property (payable in like kind) receivable by a
holder of the number of shares of Common Stock into which such shares of ESOP
Preferred Stock could have been converted immediately prior to such transaction
if such holder of Common Stock failed to exercise any rights of election as to
the kind or amount of stock, securities, cash or other property receivable upon
such transaction (provided that, if the kind or amount of stock, securities,
cash or other property receivable upon such transaction is not the same for
each non-electing share, then the kind and amount of stock, securities, cash or
other property receivable upon such transaction for each non-electing share
shall be the kind and amount so receivable per share by a plurality of the
non-electing shares).
(3) In the event the Corporation shall enter into any agreement
providing for any consolidation or merger or similar transaction described in
paragraph H(2), then the Corporation shall as soon as practicable thereafter
(and in any event at least ten (10) business days before consummation of such
transaction) give notice of such agreement and the material terms thereof to
each holder of ESOP Preferred Stock and each such holder shall have the right
to elect, by written notice to the Corporation, to receive, upon consummation
of such transaction (if and when such transaction is consummated), from the
Corporation or the successor of the Corporation, in redemption and retirement
of such ESOP Preferred Stock, a cash payment equal to the amount payable in
respect of shares of ESOP Preferred Stock upon redemption pursuant to paragraph
F(1) hereof. No such notice of redemption shall be effective unless given to
the Corporation prior to the close of business on the second business day prior
to consummation of such transaction, unless the Corporation or the successor of
the Corporation shall waive such prior notice, but any notice of redemption so
given prior to such time may be withdrawn by notice of
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<PAGE> 32
withdrawal given to the Corporation prior to the close of business on the
second business day prior to consummation of such transaction.
I. Anti-dilution Adjustments.
(1) In the event the Corporation shall, at any time or from time to time
while any of the shares of the ESOP Preferred Stock are outstanding, (i) pay a
dividend or make a distribution in respect of the Common Stock in shares of
Common Stock, (ii) subdivide the outstanding shares of Common Stock, or (iii)
combine the outstanding shares of Common Stock into a smaller number of shares,
in each case whether by reclassification of shares, recapitalization of the
Corporation (including a recapitalization effected by a merger or consolidation
to which paragraph H hereof does not apply) or otherwise, the Conversion Price
in effect immediately prior to such action shall be adjusted by multiplying such
Conversion Price by the fraction the numerator of which is the number of shares
of Common Stock outstanding immediately before such event and the denominator of
which is the number of shares of Common Stock outstanding immediately after such
event. An adjustment made pursuant to this paragraph I(l) shall be given effect,
upon payment of such a dividend or distribution, as of the record date for the
determination of shareholders entitled to receive such dividend or distribution
(on a retroactive basis) and in the case of a subdivision or combination shall
become effective immediately as of the effective date thereof.
(2) In the event that the Corporation shall, at any time or from time to
time while any of the shares of ESOP Preferred Stock are outstanding, issue to
holders of shares of Common Stock as a dividend or distribution, including by
way of a reclassification of shares or a recapitalization of the Corporation,
any right or warrant to purchase shares of Common Stock (but not including as
such a right or warrant any security convertible into or exchangeable for shares
of Common Stock) at a purchase price per share less than the Fair Market Value
(as hereinafter defined) of a share of Common Stock on the date of issuance of
such right or warrant, then, subject to the provisions of paragraphs I(5) and
I(6), the Conversion Price shall be adjusted by multiplying such Conversion
Price by the fraction the numerator of which shall be the number of shares of
Common Stock outstanding immediately before such issuance of rights or warrants
plus the number of shares of Common Stock which could be purchased at the Fair
Market Value of a share of Common Stock at the time of such issuance for
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<PAGE> 33
the maximum aggregate consideration payable upon exercise in full of all such
rights or warrants and the denominator of which shall be the number of shares of
Common Stock outstanding immediately before such issuance of rights or warrants
plus the maximum number of shares of Common Stock that could be acquired upon
exercise in full of all such rights and warrants.
(3) In the event the Corporation shall, at any time and from time to
time while any of the shares of ESOP Preferred Stock are outstanding, issue,
sell or exchange shares of Common Stock (other than pursuant to any right or
warrant to purchase or acquire shares of Common Stock (including as such a right
or warrant any security convertible into or exchangeable for shares of Common
Stock) and other than pursuant to any dividend reinvestment plan or employee or
director incentive or benefit plan or arrangement, including any employment,
severance or consulting agreement, of the Corporation or any subsidiary of the
Corporation heretofore or hereafter adopted) for a consideration having a Fair
Market Value on the date of such issuance, sale or exchange less than the Fair
Market Value of such shares on the date of such issuance, sale or exchange,
then, subject to the provisions of paragraphs I(5) and (6), the Conversion Price
shall be adjusted by multiplying such Conversion Price by the fraction the
numerator of which shall be the sum of (i) the Fair Market Value of all the
shares of Common Stock outstanding on the day immediately preceding the first
public announcement of such issuance, sale or exchange plus (ii) the Fair Market
Value of the consideration received by the Corporation in respect of such
issuance, sale or exchange of shares of Common Stock, and the denominator of
which shall be the product of (i) the Fair Market Value of a share of Common
Stock on the day immediately preceding the first public announcement of such
issuance, sale or exchange multiplied by (ii) the sum of the number of shares of
Common Stock outstanding on such day plus the number of shares of Common Stock
so issued, sold or exchanged by the Corporation. In the event the Corporation
shall, at any time or from time to time while any shares of ESOP Preferred Stock
are outstanding, issue, sell or exchange any right or warrant to purchase or
acquire shares of Common Stock (including as such a right or warrant any
security convertible into or exchangeable for shares of Common Stock), other
than any such issuance to holders of shares of Common Stock as a dividend or
distribution (including by way of a reclassification of shares or a
recapitalization of the Corporation) and other than pursuant to any dividend
reinvestment plan or employee or director incentive or benefit plan or
arrangement
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(including any employment, severance or consulting agreement) of the Corporation
or any subsidiary of the Corporation heretofore or hereafter adopted, for a
consideration having a Fair Market Value on the date of such issuance, sale or
exchange less than the Non-Dilutive Amount (as hereinafter defined), then,
subject to the provisions of paragraphs I(5) and (6), the Conversion Price shall
be adjusted by multiplying such Conversion Price by a fraction the numerator of
which shall be the sum of (a) the Fair Market Value of all the shares of Common
Stock outstanding on the day immediately preceding the first public announcement
of such issuance, sale or exchange plus (b) the Fair Market Value of the
consideration received by the Corporation in respect of such issuance, sale or
exchange of such right or warrant plus (c) the Fair Market Value at the time of
such issuance of the consideration which the Corporation would receive upon
exercise in full of all such rights or warrants, and the denominator of which
shall be the product of (a) the Fair Market Value of a share of Common Stock on
the day immediately preceding the first public announcement of such issuance,
sale or exchange multiplied by (b) the sum of the number of shares of Common
Stock outstanding on such day plus the maximum number of shares of Common Stock
which could be acquired pursuant to such right or warrant at the time of the
issuance, sale or exchange of such right or warrant (assuming shares of Common
Stock could be acquired pursuant to such right or warrant at such time).
(4) In the event the Corporation shall, at any time or from time to time
while any of the shares of ESOP Preferred Stock are outstanding, make any
Extraordinary Distribution (as hereinafter defined) in respect of the Common
Stock, whether by dividend, distribution, reclassification of shares or
recapitalization of the Corporation (including a recapitalization or
reclassification effected by a merger or consolidation to which paragraph H
hereof does not apply) or effect a Pro Rata Repurchase (as hereinafter defined)
of Common Stock, the Conversion Price in effect immediately prior to such
Extraordinary Distribution or Pro Rata Repurchase shall, subject to paragraphs
I(5) and (6), be adjusted by multiplying such Conversion Price by the fraction
the numerator of which is (a) the product of (i) the number of shares of Common
Stock outstanding immediately before such Extraordinary Distribution or Pro Rata
Repurchase multiplied by (ii) the Fair Market Value (as herein defined) of a
share of Common Stock on the Valuation Date (as hereinafter defined) with
respect to an Extraordinary Distribution, or on the applicable expiration date
(including all extensions thereof) of any tender offer which is a Pro Rata
Repurchase, or on the date of purchase with respect to any Pro Rata Repurchase
which is not a tender offer, as the case may be, minus (b) the Fair Market Value
of the Extraordinary Distribution or the aggregate purchase price of the Pro
Rata Repurchase, as the case may be, and the denominator of which shall be the
product of (i) the number of shares of Common Stock outstanding immediately
before such Extraordinary Distribution or Pro Rata Repurchase minus, in the case
of a Pro Rata Repurchase, the number of shares of Common Stock repurchased by
the Corporation multiplied by (ii) the Fair Market Value of a share of Common
Stock on the record date with respect to an Extraordinary Distribution or on the
applicable expiration date (including all extensions thereof) of any tender
offer
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<PAGE> 35
which is a Pro Rata Repurchase or on the date of purchase with respect to any
Pro Rata Repurchase which is not a tender offer, as the case may be. The
Corporation shall send each holder of ESOP Preferred Stock (x) notice of its
intent to make any Extraordinary Distribution and (y) notice of any offer by the
Corporation to make a Pro Rata Repurchase, in each case at the same time as, or
as soon as practicable after, such offer is first communicated (including by
announcement of a record date in accordance with the rules of any stock exchange
on which the Common Stock is listed or admitted to trading) to holders of Common
Stock. Such notice shall indicate the intended record date and the amount and
nature of such dividend or distribution, or the number of shares subject to such
offer for a Pro Rata Repurchase and the purchase price payable by the
Corporation pursuant to such offer, as well as the Conversion Price and the
number of shares of Common Stock into which a share of ESOP Preferred Stock may
be converted at such time.
(5) Notwithstanding any other provisions of this paragraph I, the
Corporation shall not be required to make any adjustment of the Conversion Price
unless such adjustment would require an increase or decrease of at least one
percent (1%) in the Conversion Price. Any lesser adjustment shall be carried
forward and shall be made no later than the time of, and together with, the next
subsequent adjustment which, together with any adjustment or adjustments so
carried forward, shall amount to an increase or decrease of at least one percent
(1%) in the Conversion Price.
(6) If the Corporation shall make any dividend or distribution on the
Common Stock or issue any Common Stock, other capital stock or other security of
the Corporation or any rights or warrants to purchase or acquire any such
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<PAGE> 36
security, which transaction does not result in an adjustment to the Conversion
Price pursuant to the foregoing provisions of this paragraph I, the Board of
Directors of the Corporation shall consider whether such action is of such a
nature that an adjustment to the Conversion Price should equitably be made in
respect of such transaction. If in such case the Board of Directors of the
Corporation determines that the adjustment to the Conversion Price should be
made, an adjustment shall be made effective as of such date, as determined by
the Board of Directors of the Corporation. The determination of the Board of
Directors of the Corporation as to whether an adjustment to the Conversion Price
should be made pursuant to the foregoing provisions of this paragraph I(6), and,
if so, as to what adjustment should be made and when, shall be final and binding
on the Corporation and all shareholders of the Corporation. The Corporation
shall be entitled to make such additional adjustments in the Conversion Price,
in addition to those required by the foregoing provisions of this paragraph I,
as shall be necessary in order that any dividend or distribution in shares of
capital stock of the Corporation, subdivision, reclassification or combination
of shares of stock of the Corporation or any recapitalization of the Corporation
shall not be taxable to holders of the Common Stock.
(7) For purposes of this paragraph I, the following definitions shall
apply:
"Conversion Value" shall mean the Fair Market Value of the aggregate
number of shares of Common Stock into which a share of ESOP Preferred Stock is
convertible.
"Extraordinary Distribution" shall mean any dividend or other
distribution (effected while any of the shares of ESOP Preferred Stock are
outstanding) (a) of cash, where the aggregate amount of such cash dividend and
distribution together with the amount of all cash dividends and distributions
made during the preceding period of 12 months, when combined with the aggregate
amount of all Pro Rata Repurchases (for this purpose, including only that
portion of the aggregate purchase price of such Pro Rata Repurchase which is in
excess of the Fair Market Value of the Common Stock repurchased as determined on
the applicable expiration date (including all extensions thereof) of any tender
offer or exchange offer which is a Pro Rata Repurchase, or the date of purchase
with respect to any other Pro Rata Repurchase which is not a tender offer or
exchange offer made during such period), exceeds Twelve and One-Half percent
(12.5%) of the aggregate Fair Market Value
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of all shares of Common Stock outstanding on the record date for determining
the shareholders entitled to receive such Extraordinary Distribution and (b)
any shares of capital stock of the Corporation (other than shares of Common
Stock), other securities of the Corporation (other than securities of the type
referred to in paragraph I(2)), evidence of indebtedness of the Corporation or
any other person or any other property (including shares of any subsidiary of
the Corporation), or any combination thereof. The Fair Market Value of an
Extraordinary Distribution for purposes of paragraph I(4) shall be the sum of
the Fair Market Value of such Extraordinary Distribution plus the amount of any
cash dividends which are not Extraordinary Distributions made during such
twelve-month period and not previously included in the calculation of an
adjustment pursuant to paragraph I(4).
"Fair Market Value" shall mean, as to shares of Common Stock or any
other class of capital stock or securities of the Corporation or any other
issuer which are publicly traded, the average of the Current Market Prices (as
hereinafter defined) of such shares or securities for each day of the Adjustment
Period (as hereinafter defined). "Current Market Price" of publicly traded
shares of Common Stock or any other class of capital stock or other security of
the Corporation or any other issuer for a day shall mean the last reported sales
price, regular way, or, in case no sale takes place on such day, the average of
the reported closing bid and asked prices, regular way, in either case as
reported on the New York Stock Exchange Composite Tape or, if such security is
not listed or admitted to trading on the New York Stock Exchange, on the
principal national securities exchange on which such security is listed or
admitted to trading or, if not listed or admitted to trading on any national
securities exchange, on the NASDAQ National Market System or, if such security
is not quoted on such National Market System, the average of the closing bid and
asked prices on each such day in the over-the-counter market as reported by
NASDAQ or, if bid and asked prices for such security on each such day shall not
have been reported through NASDAQ, the average of the bid and asked prices for
such day as furnished by any New York Stock Exchange member firm selected for
such purpose by the Board of Directors of the Corporation or a committee thereof
on each trading day during the Adjustment Period. "Adjustment Period" shall mean
the period of five (5) consecutive trading days preceding the date as of which
the Fair Market Value of a security is to be determined. The "Fair Market Value"
of any security which is not publicly traded or of any other property shall mean
the fair value
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<PAGE> 38
thereof as determined by an independent investment banking or appraisal firm
experienced in the valuation of such securities or property selected in good
faith by the Board of Directors of the Corporation or a committee thereof, or,
if no such investment banking or appraisal firm is in the good faith judgment of
the Board of Directors or such committee available to make such determination,
as determined in good faith by the Board of Directors of the Corporation or such
committee.
"Non-Dilutive Amount" in respect of an issuance, sale or exchange by the
Corporation of any right or warrant to purchase or acquire shares of Common
Stock (including any security convertible into or exchangeable for shares of
Common Stock) shall mean the remainder of (a) the product of the Fair Market
Value of a share of Common Stock on the day preceding the first public
announcement of such issuance, sale or exchange multiplied by the maximum number
of shares of Common Stock which could be acquired on such date upon the exercise
in full of such rights and warrants (including upon the conversion or exchange
of all such convertible or exchangeable securities), whether or not exercisable
(or convertible or exchangeable) at such date, minus (b) the aggregate amount
payable pursuant to such right or warrant to purchase or acquire such maximum
number of shares of Common Stock; provided, however, that in no event shall the
Non-Dilutive Amount be less than zero. For purposes of the foregoing sentence,
in the case of a security convertible into or exchangeable for shares of Common
Stock, the amount payable pursuant to a right or warrant to purchase or acquire
shares of Common Stock shall be the Fair Market Value of such security on the
date of the issuance, sale or exchange of such security by the Corporation.
"Pro Rata Repurchase" shall mean any purchase of shares of Common Stock
by the Corporation or any subsidiary thereof, whether for cash, shares of
capital stock of the Corporation, other securities of the Corporation, evidences
of indebtedness of the Corporation or any other person or any other property
(including shares of a subsidiary of the Corporation), or any combination
thereof, effected while any of the shares of ESOP Preferred Stock are
outstanding, pursuant to any tender offer or exchange offer subject to Section
13(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or any successor provision of law, or pursuant to any other offer available to
substantially all holders of Common Stock; provided, however, that no purchase
of shares by the Corporation or any subsidiary thereof made in open market
transactions
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<PAGE> 39
shall be deemed a Pro Rata Repurchase. For purposes of this paragraph I(7),
shares shall be deemed to have been purchased by the Corporation or any
subsidiary thereof "in open market transactions" if they have been purchased
substantially in accordance with the requirements of Rule 10b-18 as in effect
under the Exchange Act, on the date shares of ESOP Preferred Stock are initially
issued by the Corporation or on such other terms and conditions as the Board of
Directors of the Corporation or a committee thereof shall have determined are
reasonably designed to prevent such purchases from having a material effect on
the trading market for the Common Stock.
"Valuation Date" with respect to an Extraordinary Distribution shall
mean the date that is five (5) business days prior to the record date for such
Extraordinary Distribution.
(8) Whenever an adjustment to the Conversion Price is required pursuant
hereto, the Corporation shall forthwith place on file with the transfer agent
for the Common Stock and the ESOP Preferred Stock if there be one, and with the
Secretary of the Corporation, a statement signed by two officers of the
Corporation, stating the adjusted Conversion Price determined as provided herein
and the resulting conversion ratio, and the voting rights (as appropriately
adjusted), of the ESOP Preferred Stock. Such statement shall set forth in
reasonable detail such facts as shall be necessary to show the reason and the
manner of computing such adjustment, including any determination of Fair Market
Value involved in such computation. Promptly after each adjustment to the
Conversion Price and the related voting rights of the ESOP Preferred Stock, the
Corporation shall mail a notice thereof and of the then prevailing conversion
ratio to each holder of shares of the ESOP Preferred Stock.
J. Ranking; Retirement of Shares.
(1) The ESOP Preferred Stock shall rank (a) senior to the Common Stock
as to the payment of dividends and the distribution of assets on liquidation,
dissolution and winding-up of the Corporation, (b) junior to the shares of
Series B Cumulative Perpetual Convertible Preferred Stock, no par value per
share, of the Corporation as to the payment of dividends and the distribution
of assets on liquidation, dissolution or winding-up of the Corporation, and (c)
unless otherwise provided in the Articles of Incorporation of the Corporation
or an amendment to such Articles of Incorporation relating to a subsequent
series of Pre-
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ferred Stock, without par value, of the Corporation (the "Preferred Stock"),
junior to all other series of the Preferred Stock as to the payment of dividends
and the distribution of assets on liquidation, dissolution or winding-up.
(2) Any shares of ESOP Preferred Stock acquired by the Corporation by
reason of the conversion or redemption of such shares as provided hereby, or
otherwise so acquired, shall be retired as shares of ESOP Preferred Stock and
restored to the status of authorized but unissued shares of Preferred Stock,
undesignated as to series, and may thereafter be reissued as part of a new
series of such Preferred Stock as permitted by law.
K. Miscellaneous.
(1) All notices referred to herein shall be in writing, and all notices
hereunder shall be deemed to have been given upon the earlier of receipt thereof
or three (3) business days after the mailing thereof if sent by registered mail
(unless first-class mail shall be specifically permitted for such notice under
the terms hereof) with postage prepaid, addressed: (a) if to the Corporation, to
its office at NationsBank Corporate Center, Charlotte, North Carolina 28255
(Attention: Treasurer) or to the transfer agent for the ESOP Preferred Stock, or
other agent of the Corporation designated as permitted hereby or (b) if to any
holder of the ESOP Preferred Stock or Common Stock, as the case may be, to such
holder at the address of such holder as listed in the stock record books of the
Corporation (which may include the records of any transfer agent for the ESOP
Preferred Stock or Common Stock, as the case may be) or (c) to such other
address as the Corporation or any such holder, as the case may be, shall have
designated by notice similarly given.
(2) The term "Common Stock" as used herein means the Corporation's
Common Stock, as the same existed at the date of filing of the Amendment to the
Corporation's Articles of Incorporation relating to the ESOP Preferred Stock or
any other class of stock resulting from successive changes or reclassification
of such Common Stock consisting solely of changes in par value, or from par
value to no par value. In the event that, at any time as a result of an
adjustment made pursuant to paragraph I hereof, the holder of any share of the
ESOP Preferred Stock upon thereafter surrendering such shares for conversion
shall become entitled to receive any shares or other securities of the
Corporation other than shares of Common Stock, the Conversion Price in respect
of such other shares or
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securities so receivable upon conversion of shares of ESOP Preferred Stock
shall thereafter be adjusted, and shall be subject to further adjustment from
time to time, in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to Common Stock contained in paragraph I hereof,
and the provisions of paragraphs A through H, J, and K hereof with respect to
the Common Stock shall apply on like or similar terms to any such other shares
or securities.
(3) The Corporation shall pay any and all stock transfer and documentary
stamp taxes that may be payable in respect of any issuance or delivery of shares
of ESOP Preferred Stock or shares of Common Stock or other securities issued on
account of ESOP Preferred Stock pursuant hereto or certificates representing
such shares or securities. The Corporation shall not, however, be required to
pay any such tax which may be payable in respect of any transfer involved in the
issuance or delivery of shares of ESOP Preferred Stock or Common Stock or other
securities in a name other than that in which the shares of ESOP Preferred Stock
with respect to which such shares or other securities are issued or delivered
were registered, or in respect of any payment to any person with respect to any
such shares or securities other than a payment to the registered holder thereof,
and shall not be required to make any such issuance, delivery or payment unless
and until the person otherwise entitled to such issuance, delivery or payment
has paid to the Corporation the amount of any such tax or has established, to
the satisfaction of the Corporation, that such tax has been paid or is not
payable.
(4) In the event that a holder of shares of ESOP Preferred Stock shall
not by written notice designate the name in which shares of Common Stock to be
issued upon conversion of such shares should be registered or to whom payment
upon redemption of shares of ESOP Preferred Stock should be made or the address
to which the certificate or certificates representing such shares, or such
payment, should be sent, the Corporation shall be entitled to register such
shares, and make such payment, in the name of the holder of such ESOP Preferred
Stock as shown on the records of the Corporation and to send the certificate or
certificates representing such shares, or such payment, to the address of such
holder shown on the records of the Corporation.
(5) The Corporation may appoint, and from time to time discharge and
change, a transfer agent for the ESOP Preferred Stock. Upon any such appointment
or discharge of
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a transfer agent, the Corporation shall send notice thereof by
first-class mail, postage prepaid, to each holder of record of ESOP
Preferred Stock.
4. The address of the registered office of the Corporation is
NationsBank Corporate Center, NC1-007-56, Charlotte, Mecklenburg County, North
Carolina 28255, and the name of its registered agent at such address is James W.
Kiser.
5. No holder of any stock of the Corporation of any class now or
hereafter authorized shall have any preemptive right to purchase, subscribe for,
or otherwise acquire any shares of stock of the Corporation of any class now or
hereafter authorized, or any securities exchangeable for or convertible into any
such shares, or any warrants or other instruments evidencing rights or options
to subscribe for, purchase or otherwise acquire any such shares whether such
shares, securities, warrants or other instruments be unissued, or issued and
thereafter acquired by the Corporation.
6. To the fullest extent permitted by the North Carolina Business
Corporation Act, as the same exists or may hereafter be amended, a director of
the Corporation shall not be personally liable to the Corporation, its
shareholders or otherwise for monetary damage for breach of his duty as a
director. Any repeal or modification of this Article shall be prospective only
and shall not adversely affect any limitation on the personal liability of a
director of the Corporation existing at the time of such repeal or modification.
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EXHIBIT 4.1
DEPOSIT AGREEMENT
DEPOSIT AGREEMENT dated as of February 24, 1992, among Fourth Financial
Corporation, a corporation duly organized and existing under the laws of the
State of Kansas (the "Company"), BANK IV Kansas, National Association, a
national banking association, as depositary (the "Depositary"), and the holders
from time to time of Depositary Receipts issued hereunder.
W I T N E S S E T H:
WHEREAS, the parties hereto desire to provide for the deposit with the
Depositary of shares of Class A Cumulative Convertible Preferred Stock, $100 par
value, of the Company, and for the issuance of receipts evidencing fractional
interests in such shares; and
WHEREAS, the parties further desire that the Depositary act as registrar,
transfer agent and depositary with respect to the said receipts.
NOW, THEREFORE, in consideration of the premises, it is agreed by and among
the parties hereto as follows:
ARTICLE I
DEFINITIONS
The following definitions shall for all purposes, unless otherwise indicated,
apply to the respective terms used in this Deposit Agreement and the Receipts:
The term "Certificate of Designation" shall mean the Certificate of
Designation adopted by the Company's Board of Directors or a duly authorized
committee thereof setting forth the number, terms, powers, designations, rights,
preferences, qualifications, restrictions and limitations of the Stock, attached
hereto as Exhibit A.
The term "Articles of Incorporation" shall mean the Restated Articles of
Incorporation, as amended from time to time, of the Company.
The term "Common Stock" shall mean the common stock, value $5.00 per share,
of the Company or any security into which the Common Stock may be converted.
The term "Company" shall mean Fourth Financial Corporation, incorporated
under the laws of the State of Kansas and its successors.
The term "Deposit Agreement" shall mean this Agreement, as amended or
supplemented from time to time.
The term "Depositary" shall mean BANK IV Kansas, National Association, a
national banking association, and any successor in its role as Depositary,
Registrar and Transfer Agent hereunder.
The term "Depositary Shares" shall mean the Depositary Shares evidenced by
the Receipts. Each Depositary Share shall, as provided herein, represent a
1/16th interest in a share of Stock. Subject to
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the terms of this Deposit Agreement, each owner of a Depositary Share is
entitled, proportionate to the fractional interest in a share of Deposited Stock
underlying such Depositary Share, to all the rights and preferences of the Stock
represented thereby, including dividend, voting, conversion, redemption and
liquidation rights.
The term "Depositary's Agent" shall mean an agent appointed by the Depositary
as provided, and for the purpose specified, in Section 7.05.
The term "Deposited Stock" shall mean the shares of Stock which are at the
time of determination held by the Depositary hereunder.
The term "Exchange Act" shall mean the Securities Exchange Act of 1934, as
from time to time amended.
The term "Receipt" shall mean one or more of the depositary receipts issued
hereunder, whether in definitive or temporary form, substantially in the form of
Exhibit B hereto.
The term "record date" shall mean the date fixed pursuant to Section 4.04.
The term "record holder," as applied to a Receipt shall mean the person in
whose name a Receipt is registered on the books of the Depositary maintained for
such purpose.
The term "Redemption Date" shall have the meaning set forth in Section 2.03
hereof.
The term "Registrar" shall mean BANK IV Kansas, National Association, or any
bank or trust company which shall be appointed to register ownership and
transfers of Receipts as herein provided.
The term "Registration Statement" shall mean the Registration Statement on
Form S-3 of the Company (Registration No. 33-45414), as amended by Amendment No.
1, declared effective on February 13, 1992 relating to the offering of the
Depositary Shares.
The term "Securities Act" shall mean the Securities Act of 1933, as from time
to time amended.
The term "Securities Division" shall mean the principal office of the
Depositary in Wichita, Kansas, at which at any particular time its corporate
trust business shall have responsibilities for the administration of this
Agreement and obligations hereunder.
The term "Stock" shall mean shares of the Company's Class A Cumulative
Convertible Preferred Stock, par value $100 per share.
The term "Transfer Agent" shall mean BANK IV Kansas, National Association, or
any bank or trust company which shall be appointed to transfer the Receipts as
herein provided.
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ARTICLE II
DEPOSIT OF STOCK; FORM, EXECUTION,
DELIVERY, TRANSFER, SURRENDER AND REDEMPTION OF RECEIPTS
SECTION 2.01. DEPOSIT OF STOCK: EXECUTION AND DELIVERY OF RECEIPTS IN
RESPECT THEREOF. Concurrently with the execution and delivery of this Deposit
Agreement, the Company is delivering to the Depositary a certificate or
certificates, registered in the name of the Depositary and evidencing 250,000
shares of the Stock, together with (i) all such certifications as may be
required by the Depositary in accordance with the provisions of this Deposit
Agreement, and (ii) a written order of the Company directing the Depositary to
execute and deliver to, or upon the written order of, the person or persons
stated in such order a Receipt or Receipts for the 4,000,000 Depositary Shares
representing such Deposited Stock. The certificate or certificates evidencing
the Deposited Stock shall be held by the Depositary, at its Securities Division
or at such other place or places as the Depositary shall determine. The Company
hereby authorizes the Depositary, in its capacity as Transfer Agent and
Registrar for the Stock, to reflect changes in the number of shares (including
any fractional shares) of Deposited Stock from time to time held by the
Depositary by notation, book entry or other appropriate method and the
Depositary, in its capacity as aforesaid, agrees to furnish the Company with
regular reports as to the number of shares of Deposited Stock from time to time
held under this Deposit Agreement.
Subject to the terms and conditions of this Deposit Agreement, Stock may also
be deposited hereunder in connection with the delivery of Receipts to represent
distributions under Section 4.02 and upon exercise of the rights to subscribe
referred to in Section 4.03.
The Depositary hereby acknowledges delivery of the Deposited Stock together
with the other documents required as above specified and, concurrently with such
delivery, has caused to be delivered, to or upon the order of the Company, one
or more Receipts evidencing the 4,000,000 Depositary Shares which represent all
of the fractional interests in the Deposited Stock, in such denominations and
registered in such name or names as are specified in such Company order.
SECTION 2.02. FORM AND TRANSFERABILITY OF RECEIPTS. The definitive Receipts
shall be substantially in the form set forth in Exhibit B annexed to this
Deposit Agreement, with appropriate insertions, modifications and omissions, as
hereinafter provided and shall be engraved or otherwise prepared so as to comply
with applicable rules of the National Association of Securities Dealers
Automated Quotation National Market System ("NASDAQ/NMS") or any securities
exchange upon which the Stock, the Depositary Shares or the Receipts may be
included for quotation or listed. Pending the preparation of definitive
Receipts, the Depositary, upon the written order of the Company delivered in
compliance with Section 2.01, shall issue, execute and deliver temporary
Receipts substantially in the form set forth in Exhibit B annexed to this
Deposit Agreement which may be printed, lithographed, typewritten, mimeographed
or otherwise substantially of the tenor of the definitive Receipts in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the Depositary may determine. If
temporary Receipts are issued, the Company and the Depositary will cause
definitive Receipts to be prepared without unreasonable delay. After the
preparation of definitive Receipts, the temporary Receipts shall be exchangeable
for definitive Receipts upon surrender of the temporary Receipts at the office
or agency of the Depositary maintained for such purpose, without charge to the
holder. Upon surrender for cancellation of any one or more temporary Receipts,
the Depositary shall issue, execute and deliver in exchange therefor definitive
Receipts representing the same number of Depositary Shares as represented by the
surrendered temporary Receipt or Receipts. Such exchange
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shall be made at the Company's expense and without any charge therefor. Until
so exchanged, the holders of temporary Receipts shall in all respects be
entitled to the same benefits under this Deposit Agreement, and with respect to
the Stock, as holders of definitive Receipts.
Receipts shall be executed by the Depositary by the manual or facsimile
signature of a duly authorized officer of the Depositary. No Receipt shall be
entitled to any benefits under this Deposit Agreement or be valid or obligatory
for any purpose, unless it shall have been executed manually or by facsimile by
a duly authorized officer of the Depositary or, if a Registrar for the Receipts
(other than the Depositary) shall have been appointed, by manual or facsimile
signature of a duly authorized officer of the Depositary and countersigned
manually by a duly authorized officer of such Registrar. Receipts executed as
provided in this section may be issued notwithstanding the fact that any
authorized officer of the Depositary authenticating such Receipts shall have
ceased to hold office at the time of issuance of such Receipts. The Depositary
shall record on its books each Receipt so signed and delivered as hereafter
provided.
Receipts shall be in denominations of any number of Depositary Shares
representing fractional interests in the Stock in even multiples of 1/16th of a
share of Stock. All Receipts shall be dated the date of their issuance.
Receipts may be endorsed with or have incorporated in the text thereof such
legends or recitals or changes not inconsistent with the provisions of this
Deposit Agreement as may be required by the Depositary, or by the rules and
regulations of the NASDAQ/NMS or any securities exchange upon which the Stock,
the Depositary Shares or the Receipts may be included for quotation or listed or
to conform with any usage with respect thereto, or to indicate any special
limitations or restrictions to which any particular Receipts are subject.
Title to the Depositary Shares evidenced by a Receipt which is properly
endorsed or accompanied by a properly executed instrument of transfer shall be
transferable by delivery with the same effect as in the case of a negotiable
instrument; provided, however, that until transfer of a Receipt shall be
registered on the books of the Depositary as provided in Section 2.05, the
Depositary may, notwithstanding any notice to the contrary, treat the record
holder thereof at such time as the absolute owner thereof for the purpose of
determining the person entitled to distribution of dividends or other
distributions, the exercise of conversion rights or to any notice provided for
in this Deposit Agreement and for all other purposes.
SECTION 2.03. REDEMPTION OF STOCK. The Company agrees that whenever it
shall elect to redeem shares of Stock in accordance with the provisions of the
Articles of Incorporation and Certificate of Designation, it shall (unless
otherwise agreed in writing with the Depositary) give the Depositary at least 60
days' notice of the date of such proposed redemption of Stock (the "Redemption
Date") and of the number of shares of Deposited Stock to be so redeemed and the
applicable redemption price, as set forth in the Articles of Incorporation and
Certificate of Designation, including the amount, if any, of accrued and unpaid
dividends to the date of such redemption on the Redemption Date, provided that
the Company shall then have paid in full to the Depositary the redemption price
of the Stock to be redeemed (including any accrued and unpaid dividends to the
date of redemption), the Depositary shall redeem, as of the Redemption Date, the
number of Depositary Shares representing the shares of Deposited Stock so called
for redemption by the Company. The Depositary shall mail notice of such
redemption and the proposed simultaneous redemption of the number of Depositary
Shares representing the Deposited Stock to be redeemed, first-class postage
prepaid, not less than 30 and not more than 60 days prior to the Redemption
Date, to the holders of record (determined pursuant to Section 4.04) of the
Receipts evidencing the
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Depositary Shares representing the Deposited Stock to be so redeemed, at the
addresses of such holders as they appear on the records of the Depositary; but
neither failure to mail any such notice to one or more such holders nor any
defect in any notice to one or more such holders shall affect the sufficiency of
the proceedings for redemption as to other holders. Each such notice provided
to the Depositary by the Company shall state the Redemption Date; that the right
to convert Stock into shares of Common Stock will expire at the close of
business on the 10th day preceding the Redemption Date; the number of Depositary
Shares to be redeemed; the redemption price; the place or places where Receipts
evidencing Depositary Shares to be redeemed are to be surrendered for payment of
the redemption price; and that dividends in respect of the Deposited Stock and
the Depositary Shares to be redeemed will cease to accumulate at the close of
business on the Redemption Date. In case less than all the outstanding
Depositary Shares are to be redeemed, the Depositary Shares to be so redeemed
shall be selected by lot or pro rata (as nearly as may be) as may be determined
by the Depositary.
Notice having been mailed by the Depositary as aforesaid (a) after the 10th
day preceding the Redemption Date (unless the Company shall fail to redeem the
shares of Stock to be redeemed by it as set forth in the Company's notice
provided for in the preceding paragraph) the conversion rights in respect of the
shares of Stock called for redemption on such Redemption Date will terminate,
and (b) all dividends in respect of the shares of Stock so called for redemption
shall cease to accrue, the Depositary Shares being redeemed shall be deemed no
longer to be outstanding, all rights of the holders of Receipts evidencing such
Depositary Shares (except the right to receive the redemption price and any
money or other property to which the holders of such Depositary Shares were
entitled upon such redemption) shall cease and terminate and, upon surrender in
accordance with said notice of the Receipts evidencing such Depositary Shares
(properly endorsed or assigned for transfer, if the Depositary shall so require
or if required by law), such Depositary Shares shall be redeemed by the
Depositary at a redemption price per Depositary Share equal to 1/16th (as such
fraction may from time to time be adjusted, in certain events, so as to equal at
all times the fraction of an interest represented by one Depositary Share in one
share of Stock) of the redemption price per share plus all money and other
property, if any (including amounts in respect of accrued and unpaid dividends)
has been paid in respect of the shares of Stock represented by such Depositary
Shares.
If less than all the Depositary Shares evidenced by a Receipt are called for
redemption, the Depositary will deliver to the holder of such Receipt, without
service charge, upon its surrender to the Depositary, a new Receipt, together
with the redemption payment, evidencing the Depositary Shares evidenced by such
prior Receipt that were not called for redemption.
SECTION 2.04. CONVERSION OF STOCK INTO COMMON STOCK. The Company hereby
agrees to accept the delivery of Receipts for purposes of effecting conversions
of the Deposited Stock utilizing the same procedures as those provided for
delivery of certificates for the Stock to effect such conversions in accordance
with the terms and conditions of the Stock as provided in the Certificate of
Designation. Any whole number of Depositary Shares (whether or not evenly
divisible by 16) represented by a Receipt may be surrendered for conversion. If
the Depositary Shares represented by a Receipt are to be converted in part only,
a new Receipt or Receipts will be issued by the Depositary for the Depositary
Shares not to be converted. No fractional shares of Common Stock will be issued
upon conversion, and if such conversion will result in a fractional share being
issued, an amount will be paid in cash by the Company equal to the value of the
fractional interest based upon the closing price of the Common Stock on the last
business day prior to the conversion. For this purpose, a holder of a Receipt
or Receipts must surrender such Receipt or Receipts to the Company, together
with a duly completed and executed Notice of Conversion in the form included in
the Receipt. In all cases the foregoing shall be conditioned upon
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compliance in full by the holders with the applicable terms and conditions of
the Stock as provided in the Certificate of Designation and of this Deposit
Agreement. The Company and the Depositary will thereafter effect the
cancellation of each Receipt surrendered for such conversion and of the related
Deposited Stock so converted. In the event that the conversion of Depositary
Shares results in issuance of a fraction of a share of Stock, the Depositary
will make appropriate adjustment in its records (as contemplated in Section
2.01) to reflect such issuance and, if appropriate, the combination of any
fractions of shares into one or more whole shares of Stock.
Upon conversion no adjustments will be made for accrued dividends and,
therefore, Depositary Shares surrendered for conversion after the record date
next preceding a dividend payment date for the Deposited Stock and prior to such
dividend payment date must be accompanied by payment of an amount equal to the
applicable fraction of the dividend thereon which is to be paid on such dividend
payment date (unless the Depositary Shares surrendered for conversion have been
called for redemption prior to such dividend payment date). No adjustment of
the conversion price will be required to be made in any case until cumulative
adjustment amounts to 1% or more of the conversion price.
SECTION 2.05. REGISTRATION OF TRANSFER OF RECEIPTS. Subject to the terms
and conditions of this Deposit Agreement, the Depositary, as Registrar and
Transfer Agent for the Depositary Shares, shall register on its books from time
to time transfers of Receipts upon any surrender thereof by the holder in person
or by duly authorized attorney, properly endorsed or accompanied by a properly
executed instrument of transfer, and duly stamped as may be required by law.
Thereupon the Depositary shall execute a new Receipt or Receipts evidencing the
same aggregate number of Depositary Shares evidenced by the Receipt or Receipts
surrendered.
SECTION 2.06. COMBINATIONS AND SPLIT-UPS OF RECEIPTS. Upon surrender of a
Receipt or Receipts at the Depositary's Securities Division or at such other
offices as it may designate for the purpose of effecting a split-up or
combination of such Receipt or Receipts, and subject to the terms and conditions
of this Deposit Agreement, the Depositary shall execute and deliver a new
Receipt or Receipts in the authorized denominations requested evidencing the
same aggregate number of Depositary Shares evidenced by the Receipt or Receipts
surrendered.
SECTION 2.07. SURRENDER OF RECEIPTS AND WITHDRAWAL OF DEPOSITED STOCK.
Unless the related Depositary Shares have previously been called for redemption,
any holder of a Receipt or Receipts representing any number of whole shares of
Stock may withdraw the Deposited Stock and all money and other property, if any,
represented thereby by surrendering such Receipt or Receipts, at the
Depositary's Securities Division. Thereafter, without unreasonable delay, the
Depositary shall deliver to such holder, or to the person or persons designated
by such holder as hereinafter provided, the number of whole shares of Stock and
all money, if any, and other property, if any, represented by the Receipt or
Receipts so surrendered for withdrawal. If a Receipt delivered by the holder to
the Depositary in connection with such withdrawal shall evidence a number of
Depositary Shares in excess of the number of Depositary Shares representing the
number of whole shares of Deposited Stock to be so withdrawn, the Depositary
shall at the same time, in addition to such number of whole shares of Stock and
such money, if any, and other property, if any, to be so withdrawn, deliver to
such holder, or (subject to Section 2.05) upon his order, a new Receipt
evidencing such excess number of Depositary Shares. In no event will fractional
shares of Stock (except as represented by Depositary Shares) be distributed by
the Depositary. Delivery of the Stock and money being withdrawn may be made by
the delivery of such certificates, documents of title and other instruments as
the Depositary may deem appropriate, which, if required by law, shall be
properly endorsed or accompanied by proper instruments of transfer.
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HOLDERS ACKNOWLEDGE THAT THERE WILL BE NO MARKET FOR THE UNDERLYING DEPOSITED
STOCK AND THAT UPON WITHDRAWAL OF THE DEPOSITED STOCK HOLDERS THEREOF WILL NOT
BE ENTITLED THEREAFTER TO DEPOSIT SUCH STOCK UNDER THIS DEPOSIT AGREEMENT.
If the Stock and the money and other property being withdrawn are to be
delivered to a person or persons other than the record holder of the Receipt or
Receipts being surrendered for withdrawal of Deposited Stock, such holder shall
execute and deliver to the Depositary a written order so directing the
Depositary and the Depositary may require that the Receipt or Receipts
surrendered by such holder for withdrawal of such shares of Deposited Stock be
properly endorsed in blank or accompanied by a properly executed instrument of
transfer in blank.
Delivery of the Stock and the money and other property, if any, represented
by Receipts surrendered for withdrawal shall be made by the Depositary at its
Securities Division, except that, at the request, risk and expense of the holder
surrendering such Receipt or Receipts and for the account of the holder thereof,
such delivery may be made at such other place as may be designated by such
holder.
SECTION 2.08. LIMITATIONS ON EXECUTION AND DELIVERY OF RECEIPTS. As a
condition precedent to the execution and delivery, registration of transfer,
split-up, combination, surrender or redemption of any Receipt, or the exercise
of any conversion right, the Depositary, any of the Depositary's Agents or the
Company may require payment to it of a sum sufficient for the payment (or, in
the event that the Depositary or the Company shall have made such payment, the
reimbursement to it) of any charge or expenses payable by the holder of a
Receipt pursuant to Section 5.07, may require the production of proof
satisfactory to it as to the identity and genuineness of any signature and may
also require compliance with such regulations, if any, as the Depositary or the
Company may establish consistent with the provisions of this Deposit Agreement
as may be required by the rules and regulations of the NASDAQ/NMS or any
securities exchange upon which the Stock, the Depositary Shares or the Receipts
may be included for quotation or listed.
The exercise of any conversion right may be suspended, or the registration of
transfer, surrender or redemption of outstanding Receipts may be suspended (a)
during any period when the register of holders of the Stock or of the Common
Stock of the Company is closed, or (b) if any such action is deemed reasonably
necessary or advisable by the Depositary, any of the Depositary's Agents or the
Company at any time or from time to time because of any requirement of law or of
any government or governmental body or commission or under any provision of this
Deposit Agreement.
SECTION 2.09. LOST RECEIPTS, ETC. In case any Receipt shall be mutilated,
destroyed, lost or stolen, the Depositary in its discretion may execute and
deliver a Receipt of like form and tenor in exchange and substitution for such
destroyed, lost or stolen Receipt, upon (i) the filing by the holder thereof
with the Depositary of evidence of such destruction or loss or theft of such
Receipt, of the authenticity thereof and of his ownership thereof, such evidence
being reasonably satisfactory to both the Depositary and the Company, and (ii)
the furnishing to the Depositary of an indemnity in accordance with the
Depositary's ordinary standard practice.
SECTION 2.10. CANCELLATION AND DESTRUCTION OF SURRENDERED RECEIPTS. All
Receipts surrendered to the Depositary or any Depositary's Agent shall be
cancelled by the Depositary. The Depositary is authorized to turn over such
cancelled Receipts to the Company unless the Company instructs the Depositary to
destroy such Receipts.
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ARTICLE III
CERTAIN OBLIGATIONS OF HOLDERS
OF RECEIPTS AND THE COMPANY
SECTION 3.01. FILING PROOFS, CERTIFICATES AND OTHER INFORMATION. Any holder
of a Receipt may be required from time to time to file such proof of residence,
or other matters or other information, and to execute such certificates and to
make such representations and warranties as the Depositary or the Company may
reasonably deem necessary and proper. The Depositary or the Company may
withhold the delivery or delay the registration of transfer, redemption or
exchange, of any Receipt or the withdrawal of the Deposited Stock represented by
the Depositary Shares evidenced by any Receipt or the distribution of any
dividend or other distribution or the sale of any rights or of the proceeds
thereof or the exercise of any conversion right until such proof or other
information is filed or such certificates are executed or such representations
and warranties are made.
SECTION 3.02. PAYMENT OF TAXES OR OTHER GOVERNMENTAL CHARGES. As and to the
extent required by the Certificate of Designation, Holders of Receipts shall be
obligated to make payments to the Depositary of certain charges and expenses, as
further provided in Section 5.07. Registration of transfer of any Receipt or any
withdrawal of Deposited Stock and all money or other property, if any,
represented by the Depositary Shares evidenced by such Receipt may be refused
until any such payment due is made, and any dividends, interest payments or
other distributions may be withheld, and any conversion right may be refused, or
any part or all of the Deposited Stock or other property represented by the
Depositary Shares evidenced by such Receipt and not theretofore sold may be sold
for the account of the holder thereof (after attempting by reasonable means to
notify such holder prior to such sale), and such dividends, interest payments or
other distributions or the proceeds of any such sale may be applied to any
payment of such charges or expenses, the holder of such Receipt remaining liable
for any deficiency.
SECTION 3.03. WARRANTY AS TO STOCK. The Company represents and warrants
that the Stock is validly issued, fully paid and nonassessable. Such
representation and warranty shall survive the deposit of the Stock and the
issuance of Receipts.
SECTION 3.04. COVENANTS AND WARRANTIES AS TO COMMON STOCK. The Company
covenants that it will keep reserved or otherwise available a sufficient number
of authorized and unissued shares of Common Stock to meet conversion
requirements in respect of the Deposited Stock and that it will give written
notice to the Depositary of any adjustments in the conversion price made
pursuant to the Certificate of Designation. The Company represents and warrants
that the Common Stock issued upon conversion of the Deposited Stock will be
validly issued, fully paid and non-assessable.
ARTICLE IV
THE DEPOSITED STOCK; NOTICES
SECTION 4.01. CASH DISTRIBUTIONS. Whenever the Depositary shall receive any
cash dividend or other cash distribution on the Deposited Stock, the Depositary
shall, subject to Section 3.02, distribute to record holders of Receipts on the
record date fixed pursuant to Section 4.04 such amounts of such sum as are, as
nearly as practicable, in proportion to the respective numbers of Depositary
Shares evidenced by the Receipts held by such holders; provided, however, that,
in case the Company or the Depositary
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shall be required to withhold and shall withhold from any cash dividend or other
cash distribution in respect of the Deposited Stock an amount on account of
taxes, the amount made available for distribution or distributed in respect of
Depositary Shares shall be reduced accordingly. In the event such withholding
is required as to only a portion but not all of the holders of Depositary
Shares, the reduced amount available for distribution shall be chargeable only
to those holders requiring such withholding. The Depositary shall distribute or
make available for distribution, as the case any be, only such amount, however,
as can be distributed without attributing to any holder of Depositary Shares a
fraction of one cent, and any balance not so distributable shall be held by the
Depositary (without liability for interest thereon) and shall be added to and be
treated as part of the next sum received by the Depositary for distribution to
record holders of Receipts then outstanding.
SECTION 4.02. DISTRIBUTIONS OTHER THAN CASH. Whenever the Depositary shall
receive any distribution other than cash on the Deposited Stock, the Depositary
shall, subject to Section 3.02, distribute to record holders of Receipts on the
record date fixed pursuant to Section 4.04 such amounts of such distribution
received by it as are, as nearly as practicable, in proportion to the respective
numbers of Depositary Shares evidenced by the Receipts held by such holders, in
any manner that the Depositary may deem equitable and practicable for
accomplishing such distribution. If in the opinion of the Depositary such
distribution cannot be made proportionately among such record holders, or if for
any other reason (including any requirement that the Depositary or the Company
withhold an amount on account of taxes) the Depositary deems, after consultation
with the Company, such distribution not to be feasible, the Depositary may, with
the approval of the Company, adopt such method as it deems equitable and
practicable for the purpose of effecting such distribution, including the sale
(at public or private sale) of such distribution thus received, or any part
thereof, at such place or places and upon such terms as it may deem proper. The
net proceeds of any such sale shall, subject to section 3.02, be distributed or
made available for distribution, as the case may be, by the Depositary to record
holders of Receipts as provided by Section 4.01 in the case of a distribution
received in cash. The Company shall not make any distribution of securities on
or in respect of the Stock to holders of Depositary Shares unless the Company
shall have provided to the Depositary an opinion of counsel (which may be in-
house counsel) stating that such securities have been registered under the
Securities Act or are to be issued in a transaction which is exempt from the
registration requirements thereof.
SECTION 4.03. SUBSCRIPTION RIGHTS, PREFERENCES OR PRIVILEGES. If the
Company shall at any time offer or cause to be offered to the persons in whose
names Stock is registered on the books of the Company any rights, preferences or
privileges to subscribe for or to purchase any securities or any rights,
preferences or privileges of any other nature, such rights, preferences or
privileges shall in each such instance be made available by the Depositary to
the record holders of Receipts in such manner as the Company shall instruct,
either by the issue to such record holders of warrants representing such rights,
preferences or privileges or by such other method as may be directed by the
Company; provided, however, that (a) if at the time of issue or offer of any
such rights, preferences or privileges the Depositary determines upon advice of
its legal counsel that it is not lawful or (after consultation with the Company)
feasible to make such rights, preferences or privileges available to holders of
Receipts by the issue of warrants or otherwise, or (b) if and to the extent so
instructed by holders of Receipts who do not desire to exercise such rights,
preferences or privileges, then the Depositary, (with the approval of the
Company, in any case where the Depositary has determined that it is not feasible
to make such rights, preferences or privileges available) may, if applicable
laws or the terms of such rights, preferences or privileges permit such
transfer, sell such rights preferences or privileges at public or private sale
at such place or places and upon such terms as it may deem proper. The net
proceeds of any such sale shall be, subject to Sections 3.01 and 3.02,
distributed by the Depositary to the record holders of Receipts entitled
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thereto as provided by Section 4.01 in the case of a distribution received in
cash. The Company shall not make any distribution of any such rights,
preferences or privileges on or in respect of the Stock to holders of Depositary
Shares unless the Company shall have provided to the Depositary an opinion of
counsel (which may be in-house counsel) stating that such rights, preferences or
privileges have been registered under the Securities Act or are to be issued in
a transaction which is exempt from the registration requirements thereof.
If registration under the Securities Act is required in order for holders of
Receipts to be offered or sold the securities to which such rights, preferences
or privileges relate, the Company agrees with the Depositary that it will file
promptly a registration statement pursuant to such Act with respect to such
rights, preferences or privileges and securities and use its best efforts and
take all steps reasonably available to it to cause such registration to become
effective so as to enable such holders to exercise such rights, preferences or
privileges. In no event shall the Depositary make available to the holders of
Receipts any right, preference or privilege to subscribe for or to purchase any
securities unless and until the Depositary has received an opinion of counsel
(which may be in-house counsel), stating that no other action under the laws of
any jurisdiction or any governmental or administrative authorization, consent or
permit is required in order for such rights, preferences or privileges to be
made available to holders of Receipts and either (a) such a registration
statement shall have become effective or (b) the offering and sale of such
securities to such holders are exempt from registration under the provisions of
the Securities Act.
If any other action under the laws of any jurisdiction or any governmental or
administrative authorization, consent or permit is required in order for such
rights, preferences or privileges to be made available to holders of Receipts,
the Company agrees with the Depositary that the Company will use its best
efforts to take such action or obtain such authorization, consent or permit
sufficiently in advance of the expiration of such rights, preferences or
privileges to enable such holders to exercise such rights, preferences or
privileges.
SECTION 4.04. NOTICE OF DIVIDENDS; FIXING OF RECORD DATE FOR HOLDERS OF
RECEIPTS. Whenever any cash dividend or other cash distribution shall become
payable or any distribution other than cash shall be made, or if rights,
preferences or privileges shall at any time be offered, with respect to the
Stock, or whenever the Depositary shall receive notice of any meeting at which
holders of the Stock are entitled to vote or of which holders of the Stock are
entitled to notice, or wherever the Depositary and the Company shall decide it
is appropriate, the Depositary shall in each such instance fix a record date
(which shall be the same date as the record date fixed by the Company with
respect to the Stock) for the determination of the holders of Receipts who shall
be entitled to receive such dividend, distribution, rights, preferences or
privileges or the net proceeds of the sale thereof, or to give instructions for
the exercise of voting rights at any such meeting, or who shall be entitled to
notice of such meeting or for any other appropriate reasons. The Company shall
give the Depositary not less than 10 days' notice prior to fixing any record
date with respect to the Stock for any of the aforementioned purposes.
SECTION 4.05. VOTING RIGHTS. Upon receipt of notice of any meeting at which
the holders of the Stock are entitled to vote, the Depositary shall, as soon as
practicable thereafter, mail to the record holders of Receipts a notice which
shall contain (a) such information as is contained in such notice of meeting and
(b) a statement that the holders of Receipts may, subject to any applicable
restrictions, instruct the Depositary as to the exercise of the voting rights
pertaining to the amount of Deposited Stock represented by their respective
Depositary Shares and a brief statement as to the manner in which such
instructions may be given. Upon the written request of a holder of a Receipt on
such record date, the
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Depositary shall endeavor insofar as practicable to vote or cause to be voted
the shares of Deposited Stock represented by the Depositary Shares evidenced by
such Receipt in accordance with the instructions set forth in such request. To
the extent any such instructions request the voting of a fraction of a share of
Deposited Stock, the Depositary shall aggregate such fraction with all other
fractions resulting from requests with the same voting instructions and shall
vote the number of whole shares resulting from such aggregation in accordance
with the instructions received in such requests. The Company hereby agrees to
take all action which may be deemed necessary by the Depositary in order to
enable the Depositary to vote such Deposited Stock or cause such Stock to be
voted. In the absence of specific instructions from the holder of a Receipt,
the Depositary will abstain from voting (but, at its discretion, not from
appearing at any meeting with respect to the Stock unless directed to the
contrary by the holders of Receipts evidencing a majority of the Depositary
Shares) to the extent of the Deposited Stock represented by the Depositary
Shares evidenced by such Receipt. The Company also agrees that it will at all
times comply with the proxy rules of the Exchange Act and with the rules and
regulations of the NASDAQ/NMS or of any securities exchange upon which the
Stock, the Depositary Shares or the Receipts may be included for quotation or
listed.
SECTION 4.06. CHANGES AFFECTING DEPOSITED STOCK AND RECLASSIFICATIONS,
RECAPITALIZATIONS, ETC. Upon any change in par or stated value, split-up,
combination or any other reclassification of the Stock, or upon any
recapitalization, reorganization, merger, consolidation or sale of all or
substantially all the Company's assets affecting the Company or to which it is a
party, the Depositary may with the approval of the Company, and shall upon the
specific instructions of the Company, (a) make such adjustments in (i) the
fraction of an interest represented by one Depositary Share in one share of
Stock and (ii) the ratio of the redemption price per Depositary Share to the
redemption price of a share of Stock, in each case as may be required by or as
is consistent with the provisions of the Certificate of Designation to fully
reflect the effects of such change in liquidation value, split-up, combination
or other reclassification of Stock, or of such recapitalization, reorganization,
merger, consolidation or sale and (b) treat any securities which shall be
received by the Depositary in exchange for or upon conversion of or in respect
of the Stock as new deposited securities under this Deposit Agreement, and
Receipts then outstanding shall thereafter represent such new deposited
securities. In any such case the Depositary may, with the approval of the
Company, execute and deliver additional Receipts, or may call for the surrender
of all outstanding Receipts to be exchanged for new Receipts specifically
describing such new deposited securities. Anything to the contrary herein
notwithstanding, holders of Receipts shall have the right from and after the
effective date of any such change in par or stated value, split-up, combination
or other reclassification of the Stock or any such recapitalization,
reorganization, merger, consolidation or sale of substantially all the assets of
the Company to surrender such Receipts to the Depositary with instructions to
convert, exchange or surrender the Stock represented thereby only into or for,
as the case may be, the kind and amount of shares of stock and other securities
and cash into which the Deposited Stock evidenced by such Receipts might have
been converted or for which such Deposited Stock might have been exchanged or
surrendered immediately prior to the effective date of such transaction. The
Company shall cause effective provision to be made in the charter of the
resulting or surviving corporation (if other than the Company) for protection of
such rights as may be applicable upon exchange of such Stock for securities or
property or cash of the surviving corporation in connection with the
transactions set forth above. The Company shall cause any such surviving
corporation (if other than the Company) expressly to assume the obligations of
the Company hereunder.
SECTION 4.07. REPORTS. The Depositary shall make available for inspection
by holders of Receipts at its Securities Division and at such other places as it
may from time to time deem advisable, any reports and communications received
from the Company which are both (a) received by the
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Depositary as the holder of Deposited Stock and (b) made generally available to
the holders of Stock by the Company. In addition, the Depositary shall transmit
certain notices and reports to the registered holders of Receipts as provided in
Section 5.05.
SECTION 4.08. LISTS OF RECEIPT HOLDERS. Promptly upon request from time to
time by the Company, the Depositary shall furnish to it a list, as of a recent
date, of the names, addresses and holdings of Deposited Stock by all persons in
whose names Receipts are registered on the books of the Depositary.
SECTION 4.09. REQUEST OF HOLDERS. The Depositary, upon request, shall
furnish the holders of Depositary Shares with copies of the Company's Articles
of Incorporation, the Certificate of Designation and the Deposit Agreement.
ARTICLE V
THE DEPOSITARY AND THE COMPANY
SECTION 5.01. MAINTENANCE OF OFFICES, AGENCIES, TRANSFER BOOKS BY THE
DEPOSITARY; REGISTRATION. The Depositary shall maintain at its Securities
Division facilities for the execution and delivery, transfer, surrender and
redemption of Receipts, and at the offices of the Depositary's Agents, if any,
facilities for the delivery, transfer, surrender and redemption of Receipts, all
in accordance with the provisions of this Deposit Agreement.
The Depositary shall keep books at its Securities Division for the
registration and registration of transfer of Receipts, which books at all
reasonable times shall be open for inspection by the record holders of Receipts;
provided that such inspection shall be for a proper purpose reasonably related
to such person's interest as an owner of Depositary Shares evidenced by the
Receipts. The Depositary may close such books, at any time or from time to
time, when deemed expedient by it in connection with the performance of its
duties hereunder.
If the Receipts or the Depositary Shares evidenced thereby or the Deposited
Stock represented by such Depositary Shares shall be included for quotation on
the NASDAQ/NMS, the Company may, if necessary to conform to the rules and
regulations of the included for quotation on the NASDAQ/NMS or any securities
exchange upon which the Stock, the Depositary Shares or the Receipts may be
included for quotation or listed, appoint a Registrar for registration of such
Receipts or Depositary Shares in accordance with any requirements of such
Exchange. Such Registrar (which may be the Depositary if so permitted by the
requirements of the NASDAQ/NMS or such Exchange) may be removed and a substitute
Registrar appointed by the Depositary upon the request or with the approval of
the Company. If the Receipts, such Depositary Shares or such Deposited Stock
are included for quotation on NASDAQ/NMS or listed on one or more other stock
exchanges, the Depositary will, at the request of the Company, arrange such
facilities for the delivery, registration, registration of transfer, surrender
and exchange of such Receipts, such Depositary Shares or such Stock as may be
required by law, by NASDAQ/NMS or by applicable stock exchange regulation.
SECTION 5.02. PREVENTION OR DELAY IN PERFORMANCE BY THE DEPOSITARY, THE
DEPOSITARY'S AGENTS OR THE COMPANY. Neither the Depositary nor any Depositary's
Agent nor the Company shall incur any liability to any holder of any Receipt, if
(i) by reason of any provision of any present or future law, or regulation
thereunder, of the United States of America or of any other governmental
authority or, in the
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case of the Depositary or the Depositary's Agent, by reason of any provision,
present or future, of the Articles of Incorporation or Certificate of
Designation, or (ii) by reason of any act of God or war or other circumstance
beyond the control of the relevant party, the Depositary, the Depositary's Agent
or the Company shall be prevented or forbidden from doing or performing any act
or thing which the terms of this Deposit Agreement provide shall be done or
performed; nor shall the Depositary, any Depositary's Agent or the Company incur
any liability to any holder of a Receipt by reason of non-performance or delay
caused as aforesaid, in the performance of any act or thing which the terms of
this Deposit Agreement provide shall or may be done or performed or by reason of
any exercise of, or failure to exercise, any discretion provided for in this
Deposit Agreement.
SECTION 5.03. OBLIGATIONS OF THE DEPOSITARY, THE DEPOSITARY'S AGENTS AND THE
COMPANY. Neither the Depositary nor any Depositary's Agent nor the Company
assumes any obligation, nor shall be subject to any liability under this Deposit
Agreement to holders of Receipts, except that nothing herein shall relieve the
Depositary, the Depositary's Agent or the Company for liability to such holders
from acts or omissions arising out of conduct finally adjudicated to constitute
gross negligence or bad faith on the part of such person or persons in the
performance of such duties as are specifically set forth in this Deposit
Agreement.
Neither the Depositary nor any Depositary's Agent nor the Company shall be
under any obligation to appear in, prosecute or defend any action, suit or other
proceeding in respect of the Deposited Stock, the Depositary Shares or the
Receipts, which in its reasonable opinion may involve it in expense or
liability, unless indemnity satisfactory to it against all expense and liability
is furnished as often as may be required.
Neither the Depositary nor any Depositary's Agent nor the Company shall be
liable (i) if it is prevented or delayed by law or any circumstance beyond its
control in performing its obligations under this Deposit Agreement, or (ii) for
any action or any failure to act by it in reliance upon the advice of legal
counsel (which may be in-house counsel) or accountants. The Depositary, any
Depositary's Agent and the Company may each rely and shall each be protected in
acting upon any written notice, request, direction or other document delivered
by it to be genuine and to have been signed or presented by the proper party or
parties.
The Depositary and any Depositary's Agent may own and deal in any class of
securities of the Company and its affiliates and in Receipts. The Depositary
may also act as Transfer Agent or Registrar of any of the securities of the
Company and its affiliates, including, without limitation, the Common Stock as
to which the Depositary, at the date hereof, is Transfer Agent and Registrar.
Neither the Depositary nor any of the Depositary's Agents is a trustee for
the benefit of holders of the Receipts. It is intended that neither the
Depositary nor any Depositary's Agent shall be deemed to be an "issuer" of the
securities under the federal securities laws or applicable state securities
laws, it being expressly understood and agreed that the Depositary and the
Depositary's Agents are acting only in a ministerial capacity as Depositary for
the Deposited Stock.
Neither the Depositary (or its officers, directors, employees or agents) nor
any Depositary's Agent makes any representation or has any responsibility as to
the validity of the Registration Statement, the Deposited Stock, the Depositary
Shares or any instruments referred to therein or herein, or as to the
correctness of any statement made therein or herein; provided, however, that the
Depositary is
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responsible for (i) its representations in this Deposit Agreement and (ii) the
validity of any action taken or required to be taken by the Depositary in
connection with this Deposit Agreement.
Notwithstanding any other provisions herein or set forth in the Receipts, the
Depositary makes no warranties or representations as to the validity,
genuineness or sufficiency of any Deposited Stock at any time deposited with the
Depositary hereunder or of the Depositary Shares as to the value of the
Depositary Shares, the Deposited Stock or Receipts or as to any right, title or
interest of the record holders of the Receipts to the Depositary Shares or
Deposited Stock represented thereby. The Depositary shall not be accountable
for the use or application by the Company of the Deposited Stock, the Depositary
Shares or Receipts or the proceeds of any thereof.
The Company agrees that it will register the Deposited Stock and the
Depositary Shares in accordance with applicable securities laws.
SECTION 5.04. RESIGNATION AND REMOVAL OF THE DEPOSITARY; APPOINTMENT OF
SUCCESSOR DEPOSITARY. The Depositary may at any time resign as Depositary
hereunder by notice of its election so to do delivered to the Company, such
resignation to take effect upon the appointment of a successor Depositary,
Registrar and Transfer Agent and its acceptance of such appointment as
hereinafter provided.
The Depositary may at any time be removed by the Company by notice of such
removal delivered to the Depositary, such removal to take effect upon the
appointment of a successor Depositary, Registrar and Transfer Agent and its
acceptance of such appointment as hereinafter provided.
In case at any time the Depositary acting hereunder shall resign or be
removed, the Company shall, within 60 days after the delivery of the notice of
resignation or removal, as the case may be, appoint a successor Depositary,
which shall be a bank or trust company having its principal office in the United
States of America and having a combined capital and surplus of at least
$50,000,000. Every successor Depositary, Registrar and Transfer Agent shall
execute and deliver to its predecessor and to the Company an instrument in
writing accepting its appointment hereunder, and thereupon such successor
Depositary, Registrar and Transfer Agent without any further act or deed, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor and for all purposes shall be the Depositary under this Deposit
Agreement, and such predecessor, upon payment of all sums due it and on the
written request of the Company, shall execute and deliver an instrument
transferring to such successor all rights and powers of such predecessor
hereunder, shall duly assign, transfer and deliver all right, title and interest
in the Deposited Stock and any moneys or property held hereunder to such
successor, and shall deliver to such successor a list of the record holders of
all outstanding Receipts. Any such successor Depositary shall promptly mail
notice of its appointment to the record holders of the Receipts.
Any corporation into or with which the Depositary may be merged, consolidated
or converted shall be the successor of such Depositary without the execution or
filing of any document or any further act. Such successor Depositary may
authenticate the Receipts in the name of its predecessor Depositary or in the
name of the successor.
SECTION 5.05. CORPORATE NOTICES AND REPORTS. The Company agrees that it
will deliver to the Depositary, and the Depositary will, promptly after receipt
thereof, transmit to the record holders of Receipts in each case at the address
recorded in the Depositary's books, copies of all notices and reports
(including, without limitation, financial statements) required by law, by the
rules of the NASDAQ/NMS
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or any national securities exchange upon which the Stock, the Depositary Shares
or the Receipts are included for quotation or listed or by the Articles of
Incorporation or Certificate of Designation to be furnished by the Company to
holders of Deposited Stock. Such transmissions will be at the Company's expense
and the Company will provide the Depositary with such number of copies of such
documents as the Depositary may reasonably request. In addition, the Depositary
will transmit to the holders of Receipts (at the Company's expense) such other
documents as shall be directed by the Company.
SECTION 5.06. INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify the Depositary and any Depositary's Agent, against and hold each of
them harmless from, any liability which may arise out of acts performed or
omitted in connection with the provisions of this Deposit Agreement, as the same
may be amended, modified or supplemented from time to time, and the Receipts (a)
by the Depositary, or any of the Depositary's Agents, except for any liability
arising out of gross negligence or bad faith on the part of any such person or
persons, or (b) by the Company or any of the Company's Agents (other than the
Depositary or the Depositary's Agents).
SECTION 5.07. CHARGES AND EXPENSES. No charges and expenses of the
Depositary or any Depositary's Agent hereunder shall be payable by any person,
except for any taxes and other governmental charges and except as provided in
this Section 5.07. The Company will pay charges of the Depositary in connection
with the initial deposit of the Deposited Stock and any redemption of the Stock
and will pay all transfer and other taxes and governmental charges arising
solely from the existence of this Deposit Agreement. If, at the election of a
holder of Deposited Stock or Receipts, any delivery or communication from the
Depositary to such holder is by telegram or telex or if the Depositary incurs
charges or expenses for which it is not otherwise liable hereunder at the
election of such holder, such holder will be liable for such charges and
expenses. All other charges and expenses of the Depositary and any Depositary's
Agent hereunder (including fees and expenses of counsel) incident to the
performance of its obligations hereunder will be promptly paid by the Company as
previously agreed upon by the Company and the Depositary. The Depositary shall
present its statement for charges and expenses to the Company once every three
months or at such other intervals as the Company and the Depositary may agree.
ARTICLE VI
AMENDMENT AND TERMINATION
SECTION 6.01. AMENDMENT. The form of the Receipts and any provisions of
this Deposit Agreement may at any time and from time to time be amended by
agreement between the Company and the Depositary in any respect which they may
deem necessary or desirable. However, any amendment which shall materially and
adversely alter the rights of holders of Receipts, shall not become effective
unless such amendment has been approved by the record holders of at least a
majority of the number of the Depositary Shares then outstanding. In no event
shall any amendment impair the right, subject to the provisions of Sections 2.07
and 2.08 and Article III, of any owner of any Depositary Shares to surrender the
Receipt evidencing such Depositary Shares with instructions to the Depositary to
deliver to the holder the Deposited Stock and all money and other property, if
any, represented thereby, except in order to comply with mandatory provisions of
applicable law.
SECTION 6.02. TERMINATION. This Deposit Agreement may only be terminated by
the Company or the Depositary by written notice to the other party if (i) all
outstanding Depositary Shares issued pursuant hereto have been redeemed or
converted into Common Stock or (ii) there has been a final
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distribution in respect of the Deposited Shares in connection with a
liquidation, dissolution or winding up of the Company and such distribution has
been distributed to the holders of the Depositary Shares entitled thereto. Upon
the termination of this Deposit Agreement, the Company shall be discharged from
all obligations under this Deposit Agreement except for its obligations to the
Depositary and any Depositary's Agent under Section 5.06 and 5.07.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. COUNTERPARTS. This Deposit Agreement may be executed in any
number of counterparts, and by each of the parties hereto on separate
counterparts, each of which Counterparts when so executed and delivered, shall
be deemed an original, but all such counterparts taken together shall constitute
one and the same instrument. Copies of this Deposit Agreement shall be filed
with the Depositary and the Depositary's Agents and shall be open to inspection
during business hours at the Depositary's Securities Division and the respective
offices of the Depositary's Agents, if any, by any holder of a Receipt.
SECTION 7.02. EXCLUSIVE BENEFIT OF PARTIES. This Deposit Agreement is for
the exclusive benefit of the parties hereto, and their respective successors
hereunder, and shall not be deemed to give any legal or equitable right, remedy
or claim to any other person whatsoever.
SECTION 7.03. INVALIDITY OF PROVISIONS. In case any one or more of the
provisions contained in this Deposit Agreement or in the Receipts should be or
become invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein or therein shall
in no way be affected, prejudiced or disturbed thereby.
SECTION 7.04. NOTICES. Any and all notices to be given to the Company
hereunder or under the Receipts shall be in writing and shall be deemed to have
been duly given if personally delivered or sent by mail or by telegram or telex
confirmed by letter, addressed to the Company at 100 North Broadway, P.O. Box 4,
Wichita, Kansas 67201, attention John C. Maloney, or at any other place of which
the Company has notified the Depositary in writing.
Any and all notices to be given to the Depositary hereunder or under the
Receipts shall be in writing and shall be deemed to have been duly given if
personally delivered or sent by mail or by telegram or telex confirmed by
letter, addressed to the Depositary at its Securities Division.
Any and all notices to be given to any record holder of a Receipt hereunder
or under the Receipts shall be in writing and shall be deemed to have been duly
given if personally delivered or sent by mail or by telegram or telex confirmed
by letter, addressed to such record holder at the address of such record holder
as it appears on the books of the Depositary, or if such holder shall have filed
with the Depositary a written request that notices intended for such holder be
mailed to some other address, at the address designated in such request.
Delivery of a notice sent by mail or by telegram or telex shall be deemed to
be effected at the time when a duly addressed letter containing the same (or a
confirmation thereof in the case of a telegram or telex message) is deposited,
postage prepaid, in a post office letter box. The Depositary or the Company
may, however, act upon any facsimile transmission, telegram or telex message
received by it from the
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<PAGE> 17
other or from any holder of a Receipts notwithstanding that such telegram or
telex message shall not subsequently be confirmed by letter or as aforesaid.
SECTION 7.05. DEPOSITARY'S AGENTS. The Depositary may with the approval of
the Company (such approval not to be unreasonably withheld or denied) from time
to time appoint Depositary's Agents (which may include a Registrar appointed
pursuant to Section 5.01) to act in any respect for the Depositary for the
purposes of this Deposit Agreement and may at any time appoint additional
Depositary's Agents and vary or terminate the appointment of such Depositary's
Agents. The Depositary will notify the Company of any such action.
SECTION 7.06. HOLDERS OF RECEIPTS ARE PARTIES. The holders of Receipts from
time to time shall be deemed to be parties to this Deposit Agreement and shall
be bound by all of the terms and conditions hereof and of the Receipts by
acceptance of delivery thereof.
SECTION 7.07. GOVERNING LAW. The Deposit Agreement and the Receipts and all
rights hereunder and thereunder and provisions hereof and thereof shall be
governed by, and construed in accordance with, the laws of the State of Kansas.
SECTION 7.08. HEADINGS. The headings of articles and sections in this
Deposit Agreement and in the form of the Receipt set forth in Exhibit B hereto
have been inserted for convenience only and are not to be regarded as a part of
this Deposit Agreement or to have any bearing upon the meaning or interpretation
of any provision contained herein or in the Receipts.
IN WITNESS WHEREOF, the Company and the Depositary have duly executed this
Agreement as of the day and year first above set forth and all holders of
Receipts shall become parties hereto by and upon acceptance by them of delivery
of, Receipts issued in accordance with the terms hereof.
FOURTH FINANCIAL CORPORATION
By: /s/ Ronald L. Baldwin
-------------------------------
Name: Ronald L. Baldwin
Title: Executive Vice President
Attest:
/s/
- ------------------------
Secretary
BANK IV KANSAS, NATIONAL ASSOCIATION,
as Depositary
By: /s/ J. Steven Larigan
------------------------------
Name: J. Steven Larigan
Title: Vice President
Attest:
/s/
- ------------------------
Secretary
17
<PAGE> 18
EXHIBIT A
FORM OF
COMPANY'S CERTIFICATE OF DESIGNATION
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<PAGE> 19
STATE OF KANSAS
OFFICE OF
SECRETARY OF STATE
BILL GRAVES
To all to whom these presents shall come, Greetings:
I, Bill Graves, Secretary of State of the State of Kansas, do hereby certify
that the attached is a true and correct copy of an original on file and of
record in this office.
In testimony whereof:
I hereto set my hand and cause to be affixed my official seal.
Done at the City of Topeka on the date below:
BILL GRAVES
SECRETARY OF STATE
BY
ASSISTANT SECRETARY OF STATE
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CERTIFICATE OF DESIGNATION
RIGHTS AND PREFERENCES
OF THE
CLASS A CUMULATIVE CONVERTIBLE PREFERRED STOCK
$100 PAR VALUE
OF
FOURTH FINANCIAL CORPORATION
-------------------------------
Pursuant to Section 17-6401 of the
General Corporation Code
of the State of Kansas
-------------------------------
FOURTH FINANCIAL CORPORATION, a corporation organized and existing under the
General Corporation Code of the State of Kansas (the "Corporation"),
DOES HEREBY CERTIFY:
FIRST: The Restated Articles of Incorporation of the corporation, as
amended, authorize the issuance of 250,000 shares of preferred stock, $100 par
value, of the Corporation ("Preferred Stock") in one or more series, and
authorizes the Board of Directors to fix by resolution or resolutions the
designation of each series of Preferred Stock and the powers, preferences and
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions thereof.
SECOND: The Restated Articles of Incorporation of the Corporation, as
amended, authorize the issuance of 50,000,000 shares of Common Stock of which
3,448,276 shares have been reserved for issuance upon conversion of the Class A
Preferred Stock, as hereinafter defined, in accordance with Section 5 of this
Certificate of Designation.
THIRD: The Board of Directors of the Corporation, pursuant to resolutions
adopted at a regular meeting of the Board of Directors duly held on January 23,
1992, authorized the issuance, the public offering and the sale of shares of a
series of Preferred Stock of the Corporation, to be designated as the Class A
Cumulative Convertible Preferred Stock (the "Class A Preferred Stock"), and
authorized the Executive Committee of the Board of Directors to approve the
price at which, the title, dividend rate,
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form, and number of shares of which the Class A Preferred Stock shall be offered
to the public; the underwriting discount, agency fees or similar selling costs;
the period or periods within which, and the price at which, the Class A
Preferred Stock may be redeemed by the Corporation, if any; to approve or ratify
the Registration Statement for the Class A Preferred Stock and all amendments
and supplements thereto; to fix the terms at which the Class A Preferred Stock
can be converted into the Common Stock of the Corporation and to reserve the
number of shares of Common Stock issuable upon the conversion of any such series
of Class A Preferred Stock; to establish such other terms and make such other
changes in the terms of the proposed issue of Class A Preferred Stock; and to
approve all the forms of instruments relating thereto, and any changes therein,
not inconsistent with the foregoing, as such Committee deemed to be desirable
and in the best interests of the Corporation.
FOURTH: Pursuant to the authority previously granted to it by the Board of
Directors, the Executive Committee of the Board of Directors of the Corporation,
at a meeting duly held on February 13, 1992, did duly adopt the following
resolutions providing for the designation, powers, preferences, and rights, and
the qualifications, limitations, and/or restrictions thereof, of Class A
Cumulative Convertible Preferred Stock, $100 par value, of the Corporation:
BE IT RESOLVED, that the Executive Committee of the Board of Directors of
Fourth Financial Corporation (the "Corporation"), pursuant to authority vested
in it by the Board of Directors and in accordance with the provisions of the
Restated Articles of Incorporation, as amended, of the Corporation, hereby
approves the issuance of a series of the Class A Cumulative Convertible
Preferred Stock, $100 par value, of the Corporation and hereby fixes the powers,
preferences, rights, and qualifications, limitations and restrictions thereof in
addition to those set forth in said Restated Articles of Incorporation, as
amended, as follows:
1. DESIGNATION. The designation of the series of Preferred Stock created
by this resolution shall be Class A Cumulative Convertible Preferred Stock, $100
par value, of the Corporation (hereinafter referred to as "Class A Preferred
Stock"), and the number of shares constituting such series shall be 250,000,
which number may be increased (but not above the total number of shares of
Preferred Stock of the Corporation then authorized by the Restated Articles of
Incorporation, as amended from time to time) or decreased (but not below the
number of shares then outstanding) from time to time by the Board of Directors.
The Class A Preferred Stock shall rank prior to the Common Stock of the
Corporation with respect to the payment of dividends and the distribution of
assets.
2. DIVIDEND RIGHTS.
(a) The holders of shares of Class A Preferred Stock shall be entitled
to receive, when and as declared by the Board of Directors, out of funds legally
available therefor, cash dividends, accruing from the date of initial issuance,
at the annual rate of 7.00% per annum, and no more, payable, when and as
declared by the Board of Directors, quarterly on March 1, June 1, September 1,
and December 1 of each year (each quarterly period ending on any such date being
hereinafter referred to as a "dividend period"), commencing June 1, 1992, at
such annual rate. Each dividend will be payable to holders of record as they
appear on the stock books of the Corporation on such record dates as shall be
fixed by the Board of Directors of the Corporation. The date of initial
issuance of shares of Class A Preferred Stock is hereinafter referred to as the
"Issue Date". Dividends payable on the Class A Preferred Stock (i) for any
period other than a full dividend period shall be computed on the basis of a
360-day year consisting of twelve 30-day months and (ii) for each full dividend
period shall be computed by dividing the annual dividend rate by four.
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(b) Dividends on shares of Class A Preferred Stock shall be cumulative
from the Issue Date whether or not there shall be funds legally available for
the payment thereof. If there shall be outstanding shares of any other series
of Preferred Stock ranking junior to or on a parity with the Class A Preferred
Stock as to dividends, no dividends shall be declared or paid or set apart for
payment on any such other series for any period unless full cumulative dividends
have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof is set apart for such payment on the Class A
Preferred Stock for all dividend periods terminating on or prior to the date of
payment of such dividends. If dividends on the Class A Preferred Stock and on
any other series of Preferred Stock ranking on a parity as to dividends with the
Class A Preferred Stock are in arrears, in making any dividend payment on
account of such arrears, the Corporation shall make payments ratably upon all
outstanding shares of the Class A Preferred Stock and shares of such other
series of Preferred Stock in proportion to the respective amounts of dividends
in arrears on the Class A Preferred Stock and on such other series of Preferred
Stock to the date of such dividend payment. Holders of shares of the Class A
Preferred Stock shall not be entitled to any dividend, whether payable in cash,
property or stock, in excess of full cumulative dividends on such shares. No
interest or sum of money in lieu of interest shall be payable in respect of any
dividend payment or payments which may be in arrears.
(c) Unless full cumulative dividends on all outstanding shares of the
Class A Preferred Stock shall have been paid or declared and set aside for
payment for all past dividend periods, no dividend (other than a dividend in
Common Stock or in any other stock ranking junior to the Class A Preferred Stock
as to dividends and the distribution of assets upon liquidation, dissolution or
winding up) shall be declared upon the Common Stock or upon any other stock
ranking junior to the Class A Preferred Stock as to dividends and the
distribution of assets upon liquidation, dissolution, or winding up, nor shall
any Common Stock or any other stock of the Corporation ranking junior to or on a
parity with the Class A Preferred Stock as to dividends or upon the distribution
of assets upon liquidation, dissolution or winding up be redeemed, purchased or
otherwise acquired for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any shares of any such stock)
by the Corporation (except by conversion into or exchange for stock of the
Corporation ranking junior to the Class A Preferred Stock as to dividends and
the distribution of assets upon liquidation, dissolution or winding up).
3. LIQUIDATION PREFERENCES.
(a) In the event of any liquidation, dissolution or winding up of the
affairs of the Corporation, whether voluntary or involuntary, the holders of
Class A Preferred Stock shall be entitled to receive out of the assets of the
Corporation available for distribution to stockholders an amount equal to
$400.00 per share plus an amount equal to any accrued and unpaid dividends
thereon to and including the date of such distribution, and no more, before any
distribution shall be made to the holders of Common Stock or any other class of
stock of the Corporation ranking junior to the Class A Preferred Stock as to the
distribution of assets. After payment of such liquidating distributions, the
holders of shares of Class A Preferred Stock will not be entitled to any further
participation in any distribution of assets by the Corporation.
(b) In the event the assets of the Corporation available for
distribution to stockholders upon any liquidation, dissolution or winding up of
the affairs of the Corporation, whether voluntary or involuntary, shall be
insufficient to pay in full the amounts payable with respect to the Class A
Preferred Stock and any other shares of Preferred Stock ranking on a parity with
the Class A Preferred Stock as to the distribution of assets, the holders of
Class A Preferred Stock and the holders of such other
A-5
<PAGE> 23
Preferred Stock shall share ratably in any distribution of assets of the
Corporation in proportion to the full respective preferential amounts to which
they are entitled.
(c) The merger or consolidation of the Corporation into or with any
other corporation, the merger or consolidation of any other corporation into or
with the Corporation or the sale of the assets of the Corporation substantially
as an entirety shall not be deemed a liquidation, dissolution or winding up of
the affairs of the Corporation within the meaning of this Section 3.
4. REDEMPTION.
(a) Subject to obtaining the prior approval of the Board of Governors of
the Federal Reserve System, the Corporation, at its option, may redeem any or
all shares of Class A Preferred Stock, at any time or from time to time, on or
after March 1, 1997 at a redemption price of $400.00 per share, plus an amount
equal to accrued and unpaid dividends thereon to and including the date of
redemption (the "Redemption Price").
(b) If less than all the outstanding shares of Class A Preferred Stock
are to be redeemed, the shares to be redeemed shall be selected pro rata as
nearly as practicable or by lot, or by such other method as the Board of
Directors may determine to be fair and appropriate.
(c) Notice of any redemption shall be given by first class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the date fixed
for redemption to the holders of record of the shares of Class A Preferred Stock
to be redeemed, at their respective addresses appearing on the books of the
Corporation. Notice so mailed shall be conclusively presumed to have been duly
given whether or not actually received. Such notice shall state: (i) the date
fixed for redemption; (ii) the Redemption Price; (iii) that the holder has the
right to convert such shares into Common Stock until the close of business on
the tenth day preceding the redemption date; (iv) the then-effective conversion
price and the place where certificates for such shares may be surrendered for
conversion; (v) the number of shares of Class A Preferred Stock to be redeemed
and if less than all the shares held by such holder are to be redeemed, the
number of such shares to be so redeemed from such holder; (vi) the place where
certificates for such shares are to be surrendered for payment of the Redemption
Price; and (vii) that after such date fixed for redemption the shares to be
redeemed shall not accrue dividends. If such notice is mailed as aforesaid, and
if on or before the date fixed for redemption funds sufficient to redeem the
shares called for redemption are set aside by the Corporation in trust for the
account of the holders of the shares to be redeemed, notwithstanding the fact
that any certificate for shares called for redemption shall not have been
surrendered for cancellation, on and after the redemption date the shares
represented thereby so called for redemption shall be deemed to be no longer
outstanding, dividends thereon shall cease to accrue and all rights of the
holders of such shares as stockholders of the Corporation shall cease (except
the right to receive the Redemption Price, without interest, upon surrender of
the certificate representing such shares). Upon surrender in accordance with
the aforesaid notice of the certificate for any shares so redeemed (duly
endorsed or accompanied by appropriate instruments of transfer, if so required
by the Corporation in such notice), the holders of record of such shares shall
be entitled to receive the Redemption Price, without interest. Notwithstanding
the foregoing, however, as and to the extent that the Corporation is required or
permitted under the abandoned property laws of any jurisdiction to escheat any
redemption funds held in trust for the benefit of any holder, the Corporation
shall be absolved of any further obligation or liability to such holder to the
full extent provided by any such law. In case fewer than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares without cost to the holder thereof.
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<PAGE> 24
(d) At the option of the Corporation, if notice of redemption is mailed
as aforesaid, and if prior to the date fixed for redemption funds sufficient to
pay in full the Redemption Price are deposited in trust, for the account of the
holders of the shares to be redeemed, with a bank or trust company named in such
notice doing business in the State of Kansas or the Borough of Manhattan, The
City of New York, State of New York, and having capital and surplus of at least
$50 million (which bank or trust company also may be the transfer agent and/or
paying agent for the Class A Preferred Stock) notwithstanding the fact that any
certificate(s) for shares called for redemption shall not have been surrendered
for cancellation, on and after such date of deposit the shares represented
thereby so called for redemption shall be deemed to be no longer outstanding,
and all rights of the holders of such shares as shareholders of the Corporation
shall cease, except the right of the holders thereof to convert such shares in
accordance with the provisions of Section 5 at any time prior to the close of
business on the tenth day preceding the redemption date and the right of the
holders thereof to receive out of the funds so deposited in trust the Redemption
Price, without interest, upon surrender of the certificate(s) representing such
shares. Any funds so deposited with such bank or trust company in respect of
shares of Class A Preferred Stock converted before the close of business on the
tenth day preceding the redemption date shall be returned to the Corporation
upon such conversion. Unless otherwise required by law, any funds so deposited
with such bank or trust company which shall remain unclaimed by the holders of
shares called for redemption at the end of two years after the redemption date
shall be repaid to the Corporation, on demand, and thereafter the holder of any
such shares shall look only to the Corporation for the payment, without
interest, of the Redemption Price. Notwithstanding the foregoing, however, as
and to the extent that the Corporation is required or permitted under the
abandoned property laws of any jurisdiction to escheat any redemption funds held
in trust for the benefit of any holder, the Corporation shall be absolved of any
further obligation or liability to such holder to the full extent provided by
any such laws.
(e) Any provision of this Section 4 to the contrary notwithstanding, in
the event that any quarterly dividend payable on the Class A Preferred Stock
shall be in arrears and until all such dividends in arrears shall have been paid
or declared and set apart for payment, the Corporation shall not redeem any
shares of Class A Preferred Stock unless all outstanding shares of Class A
Preferred Stock are simultaneously redeemed and shall not purchase or otherwise
acquire any shares of Class A Preferred Stock except in accordance with a
purchase or exchange offer made on the same terms to all holders of record of
Class A Preferred Stock for the purchase of all outstanding shares thereof.
5. CONVERSION RIGHTS. The holders of shares of Class A Preferred Stock
shall have the right, at their option, to convert such shares into shares of
Common Stock on the following terms and conditions:
(a) Shares of Class A Preferred Stock shall be convertible at any time
into fully paid and nonassessable shares of Common Stock at a conversion price
of $29.00 per share of Common Stock (the "Conversion Price"). For purposes of
this Section 5, references to shares of Class A Preferred Stock shall apply
equally to fractional shares thereof, but only to the extent that such
fractional shares are integral multiples of 1/16 of one share. The Conversion
Price shall be subject to adjustment from time to time as hereinafter provided.
For purposes of such conversion, each share of Class A Preferred Stock will be
valued at $400. No payment or adjustment shall be made on account of any
accrued and unpaid dividends on shares of Class A Preferred Stock surrendered
for conversion prior to the record date for the determination of stockholders
entitled to such dividends or on account of any dividends on the shares of
Common Stock issued upon such conversion subsequent to the record date for the
determination of stockholders entitled to such dividends. If any shares of
Class A Preferred Stock shall be called for
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<PAGE> 25
redemption, the right to convert the shares designated for redemption shall
terminate at the close of business on the tenth day preceding the date fixed for
redemption unless default is made in the payment of the Redemption Price. In
the event of default in the payment of the Redemption Price, the right to
convert the shares designated for redemption shall terminate at the close of
business on the business day immediately preceding the date that such default is
cured.
(b) In order to convert shares of Class A Preferred Stock into Common
Stock, the holder thereof shall surrender the certificates therefor, duly
endorsed if the Corporation shall so require, or accompanied by appropriate
instruments of transfer satisfactory to the Corporation, at the office of the
transfer agent for the Class A Preferred Stock, or at such other office as may
be designated by the Corporation, together with written notice that such holder
irrevocably elects to convert such shares or any fraction of a share of Class A
Preferred Stock having a denominator of 16, each such fractional interest,
measured in 1/16 of a share, being valued for purposes of conversion at $25;
references in this Section 5 to the conversion of any share of Class A Preferred
Stock shall also apply, mutatis mutandis, to such fractional interests. Such
notice shall also state the name and address in which such holder wishes the
certificate for the shares of Common Stock issuable upon conversion to be
issued. As soon as practicable after receipt of the certificates representing
the shares of Class A Preferred Stock to be converted and the notice of election
to convert the same, the Corporation shall issue and deliver at said office a
certificate for the number of whole shares of Common Stock issuable upon
conversion of the shares of Class A Preferred Stock surrendered for conversion,
together with a cash payment in lieu of any fraction of a share, as hereinafter
provided, to the person entitled to receive the same. If more than one stock
certificate for Class A Preferred Stock shall be surrendered for conversion at
one time by the same holder, the number of full shares of Common Stock issuable
upon conversion thereof shall be computed on the basis of the aggregate number
of shares represented by all the certificates so surrendered. Shares of Class A
Preferred Stock shall be deemed to have been converted immediately prior to the
close of business on the date such shares are surrendered for conversion and
notice of election to convert the same is received by the Corporation in
accordance with the foregoing provision, and the person entitled to receive the
Common Stock issuable upon such conversion shall be deemed for all purposes as
the record holder of such Common Stock as of such date.
(c) In the case of any share of Class A Preferred Stock which is
converted after any record date with respect to the payment of a dividend on the
Class A Preferred Stock and on or prior to the date on which such dividend is
payable by the Corporation (the "Dividend Due Date"), the dividend due on such
Dividend Due Date shall be payable on such Dividend Due Date to the holder of
record of such shares as of such preceding record date notwithstanding such
conversion. Shares of Class A Preferred Stock surrendered for conversion during
the period from the close of business on any record date with respect to the
payment of a dividend on the Class A Preferred Stock next preceding any Dividend
Due Date to the opening of business on such Dividend Due Date shall (except in
the case of shares of Class A Preferred Stock which have been called for
redemption on a redemption date within such period) be accompanied by payment in
New York Clearing House funds or other funds acceptable to the Corporation of an
amount equal to the dividend payable on such Dividend Due Date on the shares of
Class A Preferred Stock being surrendered for conversion. The dividend with
respect to a share of Class A Preferred Stock called for redemption on a
redemption date during the period from the close of business on any record date
with respect to the payment of a dividend on the Class A Preferred Stock next
preceding any Dividend Due Date to the opening of business on such Dividend Due
Date shall be payable on such Dividend Due Date to the holder of record of such
share on such dividend record date, notwithstanding the conversion of such share
of Class A Preferred Stock after such record date and prior to such Dividend Due
Date, and the holder converting such share of Class A Preferred Stock called for
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<PAGE> 26
redemption need not include a payment of such dividend amount upon surrender of
such share of Class A Preferred Stock for conversion. Except as provided in
this subsection, no payment or adjustment shall be made upon any conversion on
account of any dividends accrued on shares of Class A Preferred Stock
surrendered for conversion or on account of any dividends on the shares of
Common Stock issued upon conversion.
(d) No fractional shares of Common Stock shall be issued upon conversion
of any shares of Class A Preferred Stock. If more than one share of Class A
Preferred Stock is surrendered at one time by the same holder, the number of
full shares issuable upon conversion thereof shall be computed on the basis of
the aggregate number of shares so surrendered. If the conversion of any shares
of Class A Preferred Stock results in a fractional share of Common Stock, the
Corporation shall pay cash in lieu thereof in an amount equal to such fraction
multiplied by the closing price, determined as provided in subsection (vi) of
Section 5(e) below, on the date on which the shares of Class A Preferred Stock
were duly surrendered for conversion, or if such date is not a trading date, on
the next succeeding trading date.
(e) The conversion Price shall be adjusted from time to time as follows:
(i) In case the Corporation shall pay or make a dividend or other
distribution on shares of Common Stock in Common Stock, the Conversion Price
in effect at the opening of business on the date following the date fixed
for the determination of stockholders entitled to receive such dividend or
other distribution shall be reduced by multiplying such Conversion Price by
a fraction of which the numerator shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such number of shares
and the total number of shares constituting such dividend or other
distribution, such reduction to become effective immediately after the
opening of business on the day following the date fixed for such
determination. For purposes of this subsection, the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Corporation but shall include shares issuable in respect of
scrip certificates issued in lieu of fractions of shares of Common Stock.
The Corporation will not pay any dividend or make any distribution on shares
of Common Stock held in the treasury of the Corporation.
(ii) In case the Corporation shall issue additional rights or
warrants to all holders of its Common Stock entitling them to subscribe for
or purchase shares of Common Stock at a price per share less than the then
current market price per share (determined as provided in subsection (vi)
below) of the Common Stock on the date fixed for the determination of
stockholders entitled to receive such rights or warrants (other than
pursuant to a dividend reinvestment plan), the Conversion Price in effect at
the opening of business on the day following the date fixed for such
determination shall be reduced by multiplying such Conversion Price by a
fraction of which the numerator shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock which the aggregate
of the offering price of the total number of shares of Common Stock so
offered for subscription or purchase would purchase at such current market
price (determined as provided in subsection (vi) below) and the denominator
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of shares
of Common Stock so offered for subscription or purchase, such reduction to
become effective immediately after the opening of business on the day
following the date fixed for such determination. For the purposes of this
subsection (ii), the number of shares of Common Stock at anytime outstanding
shall not include shares held in the
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treasury of the Corporation but shall include shares issuable in respect of
scrip certificates issued in lieu of fractions of shares of Common Stock.
The Corporation will not issue any rights or warrants in respect of shares
of Common Stock held in the treasury of the Corporation during the period so
held.
(iii) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the Conversion
Price in effect at the opening of business on the day following the day upon
which such subdivision becomes effective shall be proportionately reduced,
and, conversely, in case outstanding shares of Common Stock shall be
combined into a smaller number of shares of Common Stock, the Conversion
Price in effect at the opening of business on the day following the day upon
which such combination becomes effective shall be proportionately increased,
such reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the day upon
which such subdivision or combination becomes effective.
(iv) In case the Corporation shall, by dividend or otherwise,
distribute to all holders of its Common Stock evidences of its indebtedness
or assets (including securities, but excluding (1) any rights or warrants
referred to in subsection (ii) above, (2) any dividend or distribution paid
in cash out of the retained earnings of the Corporation and (3) any dividend
or distribution referred to in subsection (i) above), the Conversion Price
shall be adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the close of
business on the date fixed for the determination of stockholders entitled to
receive such distribution by a fraction of which the numerator shall be the
current market price per share (determined as provided in subsection (vi)
below) of the Common Stock on the date fixed for such determination less the
then fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and shall be described in a statement
filed with the transfer agent for the Class A Preferred Stock) of the
portion of the evidences of indebtedness or assets so distributed applicable
to one share of Common Stock and the denominator shall be such current
market price per share of the Common Stock, such adjustment to become
effective immediately prior to the opening of business on the day following
the date fixed for the determination of stockholders entitled to receive
such distribution.
(v) For the purposes of this Section 5, the reclassification of
Common Stock into securities including securities other than Common Stock
(other than any reclassification upon a consolidation or merger to which
Section 5(g) below applies) shall be deemed to involve (A) a distribution of
such securities other than Common Stock to all holders of Common Stock (and
the effective date of such reclassification shall be deemed to be "the date
fixed for the determination of stockholders entitled to receive such
distribution" and the "date fixed for such determination" within the meaning
of subsection (iv) above), and (B) a subdivision or combination, as the case
may be, of the number of shares of Common Stock outstanding immediately
prior to such reclassification into the number of shares of Common Stock
outstanding immediately thereafter (and the effective date of such
reclassification shall be deemed to be "the day upon which such subdivision
became effective" or "the day upon which such combination becomes effective"
as the case may be, and "the day upon which such subdivision or combination
becomes effective" within the meaning of subsection (iii) above).
(vi) For the purpose of any computation under subsections (ii) and
(iv) above, the current market price per share of Common Stock on any day
shall be deemed to be the average
A-10
<PAGE> 28
of the daily closing prices for the 30 consecutive trading days commencing
45 trading days before the day in question. The closing price for each day
shall be the reported last sale price or, in case no such reported sale
takes place on such day, the average of the reported closing bid and asking
prices, in either case on the National Association of Securities Dealers
Automated Quotations National Market System or, if the Common Stock is no
longer quoted to trading on such system, on the principal national
securities exchange on which the Common Stock is then listed or admitted to
trading or, if the Common Stock is not quoted on such National Market System
or listed or admitted to trading on any national securities exchange, the
average of the closing bid and asked prices in the over-the-counter market
as furnished by any New York Stock Exchange member firm selected from time
to time by the Board of Directors for that purpose.
(vii) Notwithstanding the foregoing, no adjustment in the
Conversion Price for the Class A Preferred Shares shall be required unless
such adjustment would require an increase or decrease of at least 1% in such
price; provided, however, that any adjustments which by reason of this
subsection (vii) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under
this Section shall be made to the nearest cent or to the nearest one-
hundredth of a share, as the case may be.
(f) Whenever the Conversion Price shall be adjusted as herein provided
(i) the Corporation shall forthwith make available at the office of the transfer
agent for the Class A Preferred Stock a statement describing in reasonable
detail the adjustment, the facts requiring such adjustment and the method of
calculation used; and (ii) the Corporation shall cause to be mailed by first
class mail, postage prepaid, as soon as practicable to each holder of record of
shares of Class A Preferred Stock a notice stating that the Conversion Price has
been adjusted and setting forth the adjusted Conversion Price.
(g) In the event of any consolidation of the Corporation with or merger
of the Corporation into any other corporation (other than a merger in which the
Corporation is the surviving corporation) or a sale, lease or conveyance of the
assets of the Corporation as an entirety or substantially as an entirety, or any
statutory exchange of securities with another corporation, the holder of each
share of Class A Preferred Stock shall have the right, after such consolidation,
merger, sale or exchange to convert such share into the number and kind of
shares of stock or other securities and the amount and kind of property which
such holder would have been entitled to receive upon such consolidation, merger,
sale or exchange of the number of shares of Common Stock that would have been
issued to such holder had such shares of Class A Preferred Stock been converted
immediately prior to such consolidation, merger or sale. The provisions of this
Section 5(g) shall similarly apply to successive consolidations, mergers, sales
or exchanges.
(h) The Corporation shall pay any taxes that may be payable in respect
of the issuance of shares of Common Stock upon conversion of shares of Class A
Preferred Stock, but the Corporation shall not be required to pay any taxes
which may be payable in respect of any transfer involved in the issuance of
shares of Common Stock in the name other than that in which the shares of Class
A Preferred Stock so converted are registered, and the Corporation shall not be
required to issue or deliver any such shares unless and until the person
requesting such issuance shall have paid to the Corporation the amount of any
such taxes, or shall have established to the satisfaction of the Corporation
that such taxes have been paid.
(i) The Corporation may (but shall not be required to) make such
reductions in the Conversion Price, in addition to those required by subsections
(i) through (iv) of Section 5(e) above, as
A-11
<PAGE> 29
it considers to be advisable in order that any event treated for federal income
tax purposes as a dividend of stock or stock rights shall not be taxable to the
recipients.
(j) The Corporation shall at all times reserve and keep available out of
its authorized but unissued Common Stock the full number of shares of Common
Stock issuable upon the conversion of all shares of Class A Preferred Stock then
outstanding.
(k) In the event that:
(i) the Corporation shall declare a dividend or any other
distribution on its Common Stock, payable otherwise than in cash out of
retained earnings; or
(ii) the Corporation shall authorize the granting to the holders
of its Common Stock of rights to subscribe for or purchase any shares of
capital stock of any class or of any other rights; or
(iii) any capital reorganization of the Corporation,
reclassification of the capital stock of the Corporation, consolidation or
merger of the Corporation with or into another corporation (other than a
merger in which the Corporation is the surviving corporation), or sale,
lease or conveyance of the assets of the Corporation as an entirety or
substantially as an entirety to another corporation occurs; or
(iv) the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation occurs, the Corporation shall cause to be
mailed to the holders of record of Class A Preferred Stock at least 15 days
prior to the applicable date hereinafter specified a notice stating (x) the
date on which a record is to be taken for the purpose of such dividend,
distribution of rights or, if a record is not to be taken, the date as of
which the holders of Common Stock of record to be entitled to such dividend,
distribution or rights are to be determined or (y) the date on which such
reorganization, reclassification, consolidation, merger, sale, lease,
conveyance, dissolution, liquidation or winding up is expected to take
place, and the date, if any is to be fixed, as of which holders of Common
Stock of record shall be entitled to exchange their shares of Common Stock
for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, lease, conveyance,
dissolution, liquidation or winding up. Failure to give such notice, or any
defect therein, shall not affect the legality or validity of such dividend,
distribution, reorganization, reclassification, consolidation, merger, sale,
lease, conveyance, dissolution, liquidation or winding up.
6. VOTING RIGHTS. Other than as required by applicable law, the Class A
Preferred Stock shall not have any voting powers either general or special,
except that:
(a) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the affirmative vote or consent of the
holders of at least 66-2/3% of all of the shares of the Class A Preferred Stock,
and any one or more other series of preferred stock of the Corporation similarly
affected, at the time outstanding, given in person or by proxy, either in
writing or by a vote at a meeting called for the purpose at which the holders of
shares of the Class A Preferred Stock and any such other series of preferred
stock shall vote together as a separate class, shall be necessary for
authorizing, effecting or validating the amendment, alteration or repeal of any
of the provisions of the Restated Articles of Incorporation, as amended, or of
any amendment or supplement thereto (including
A-12
<PAGE> 30
any certificate of designation or any similar document relating to any series of
preferred stock) of the Corporation, which would adversely affect the
preferences, rights, powers or privileges, qualifications, limitations and
restrictions of the Class A Preferred Stock.
(b) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the affirmative vote or consent of the
holders of at least 66-2/3% of all of the shares of the Class A Preferred Stock
and any other series of preferred stock of the Corporation ranking on a parity
with shares of the Class A Preferred Stock, either as to dividends or the
distribution of assets upon liquidation, dissolution or winding up, at the time
outstanding, given in person or by proxy, either in writing or by a vote at a
meeting called for the purpose at which the holders of shares of the Class A
Preferred Stock and any such other series of preferred stock of the Corporation
shall vote together as a single class without regard to series, shall be
necessary to create, authorize or issue, or reclassify any authorized stock of
the Corporation into, or create, authorize or issue any obligation or security
convertible into or evidencing a right to purchase, any shares of any class of
stock of the Corporation ranking prior to the Class A Preferred Stock or ranking
prior to any other series of preferred stock of the Corporation which ranks on a
parity with the Class A Preferred Stock as to dividends or upon the distribution
of assets upon liquidation, dissolution or winding up. Subject to the
foregoing, the Corporation's Restated Articles of Incorporation, as amended, may
be amended to increase the number of authorized shares of preferred stock
without the vote of the holders of preferred stock, including the Class A
Preferred Stock.
(c) Whenever, at any time or times, dividends payable on the shares of
Class A Preferred Stock shall be in arrears in an amount equal to at least six
full quarterly dividends on shares of the Class A Preferred Stock at the time
outstanding, the holders of the outstanding shares of Class A Preferred Stock
shall have the exclusive right, voting separately as a class together with
holders of shares of any one or more other series of Preferred Stock ranking on
a parity with the Class A Preferred Stock either as to dividends or the
distribution of assets upon liquidation, dissolution or winding up and upon
which like voting rights have been conferred and are exercisable, to elect two
directors of the Corporation for one-year terms at the Corporation's next annual
meeting of stockholders and at each subsequent annual meeting of stockholders.
At elections for such directors, each holder of Class A Preferred Stock shall be
entitled to one vote for each share held (the holders of shares of any other
series of preferred stock ranking on such a parity being entitled to such number
of votes, if any, for each share of stock held as may be granted to them). Upon
the vesting of such right of the holders of Class A Preferred Stock, the maximum
authorized number of members of the Board of Directors shall automatically be
increased by two and the two vacancies so created shall be filled by vote of the
holders of the outstanding shares of Class A Preferred Stock (either alone or
together with the holders of shares of any one or more other series of preferred
stock ranking on such a parity) as hereinafter set forth. The right of the
holders of Class A Preferred Stock, voting separately as a class to elect
(either alone or together with the holders of shares of any one or more other
series of preferred stock ranking on such a parity) members of the Board of
Directors of the Corporation as aforesaid shall continue until such time as all
dividends accumulated on the Class A Preferred Stock shall have been paid in
full or declared and set apart for payment, at which time such right shall
immediately terminate, except as herein or by law expressly provided, subject to
revesting in the event of each and every subsequent default of the character
above mentioned.
(d) Upon termination of such special voting rights attributable to all
holders of the Class A Preferred Stock and any other series or preferred stock
ranking on a parity with the Class A Preferred Stock as to dividends or the
distribution of assets upon liquidation, dissolution or winding up
A-13
<PAGE> 31
and upon which like voting rights have been conferred and are exercisable, the
term of office of each director elected by the holders of shares of Class A
Preferred Stock and such parity preferred stock (a "Preferred Stock Director")
pursuant to such special voting rights shall immediately terminate and the
number of directors constituting the entire Board of Directors shall be reduced
by the number of Preferred Stock Directors. Any Preferred Stock Director may be
removed by, and shall not be removed otherwise than by, the vote of the holders
of record of a majority of the outstanding shares of Class A Preferred Stock and
all other series of preferred stock ranking on a parity with the Class A
Preferred Stock with respect to dividends who were entitled to participate in
such Preferred Stock Director's election, voting as a separate class, at a
meeting called for such purposes. If the office of any Preferred Stock Director
becomes vacant by reason of death, resignation, retirement, disqualification,
removal from office, or otherwise, the remaining Preferred Stock Director may
choose a successor who shall hold office for the unexpired term in respect of
which such vacancy occurred.
7. REACQUIRED SHARES. Shares of Class A Preferred Stock converted,
redeemed, or otherwise purchased or acquired by the Corporation shall be
restored to the status of authorized but unissued shares of Class A Preferred
Stock without designation as to series.
8. RANKING. Any class or classes of stock of the Corporation shall be
deemed to rank:
(i) prior to the Class A Preferred Stock, as to dividends or as to
distribution of assets upon liquidation, dissolution or winding up, if the
holders of such class shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, as the
case may be, in preference or priority to the holders of the Class A
Preferred Stock;
(ii) on a parity with the Class A Preferred Stock, as to dividends
or as to distribution of assets upon liquidation, dissolution or winding up,
whether or not the dividend rates, dividend payment dates or redemption or
liquidation prices per share thereof be different from those of the Class A
Preferred Stock, if the holders of such class of stock and the Class A
Preferred Stock shall be entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case may
be, in proportion to their respective amounts of accrued and unpaid
dividends per share or liquidation prices, without preference or priority
one over the other; and
(iii) junior to the Class A Preferred Stock, as to dividends or as
to the distribution of assets upon liquidation, dissolution or winding up,
if such stock shall be Common Stock or if the holders of Class A Preferred
Stock shall be entitled to receipt of dividends or of amounts distributable
upon liquidation, dissolution or winding up, as the case may be, in
preference or priority to the holders of shares of such stock.
9. NO SINKING FUND. Shares of Class A Preferred Stock are not subject to
the operation of a sinking fund or other obligation of the Corporation to redeem
or retire the Class A Preferred Stock.
FURTHER RESOLVED, that the officers of the Corporation, and each of them, are
hereby authorized, for and on behalf of and in the name of the Corporation, to
file a copy of the foregoing resolution with the Secretary of State of the State
of Kansas in accordance with the provisions of Sections 17-6003 and 17-6401 of
the General Corporation Code of the State of Kansas.
A-14
<PAGE> 32
IN WITNESS WHEREOF, FOURTH FINANCIAL CORPORATION, has caused this Certificate
of Designation to be signed by Darrell G. Knudson, its Chairman of the Board,
and attested by John C. Maloney, its Secretary, this 17th day of February, 1992.
FOURTH FINANCIAL CORPORATION
By
--------------------------------
Name: Darrell G. Knudson
Title: Chairman of the Board
Attest:
-------------------------
Name: John C. Maloney
Title: Secretary
A-15
<PAGE> 33
ACKNOWLEDGMENT
STATE OF KANSAS )
) ss.
SEDGWICK COUNTY )
BE IT REMEMBERED, that on this 17th day of February, 1992, before me, a
Notary Public within and for the County and State aforesaid, came Darrell G.
Knudson, Chairman of the Board and John C. Maloney, Secretary, of Fourth
Financial Corporation, a Kansas corporation, who are personally known to me and
known to me to be the same persons who executed the foregoing Certificate of
Designation as Chairman of the Board and Secretary, and said persons duly
acknowledged to me their execution of the same as and for their free and
voluntary act and deed, for the uses and purposes therein set forth.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal
at Wichita, Kansas, the day, month, and year last above written.
--------------------------------
Notary Public
My Appointment Expires:
- ------------------------
A-16
<PAGE> 34
EXHIBIT B
FORM OF DEPOSITARY RECEIPTS
B-1
<PAGE> 35
NOT MORE THAN
DEPOSITARY RECEIPT FOR DEPOSITARY SHARES
DR EACH REPRESENTING 1/16 OF A SHARE OF
CLASS A CUMULATIVE CONVERTIBLE PREFERRED STOCK
$100 PAR VALUE
- ----
SEE REVERSE FOR CERTAIN DEFINITIONS DEPOSITARY SHARES
FOURTH FINANCIAL CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF KANSAS
THIS CERTIFICATE IS TRANSFERABLE IN NEW YORK, NEW YORK OR WICHITA, KANSAS
BANK IV Kansas, National Association, a national banking association, duly
organized and existing under the laws of the United States, as Depositary (the
"Depositary")
hereby certifies that
is the registered owner of
Depositary Shares ("Depositary Shares"), each Depositary Share representing one
one-sixteenth (1/16) of a share of Class A Cumulative Convertible Preferred
Stock, $100 par value (the "Stock"), of Fourth Financial Corporation, a
corporation duly organized and existing under the laws of the State of Kansas
(the "Company"). Subject to the terms of a Deposit Agreement (the "Deposit
Agreement") among the Depositary, the Company and holders of receipts for
Depositary Shares ("Receipts"), each owner of a Depositary Share is entitled,
proportionately, to all the powers, preferences and rights and the
qualifications, limitations or restrictions of such preferences and/or rights of
the Stock represented thereby including dividends, voting, conversion,
redemption and liquidation rights as set forth in the Restated Articles of
Incorporation of the Company as amended and supplemented by the Certificate of
Designation (the "Certificate of Designation") fixing the terms of Stock filed
with the Secretary of State of the State of Kansas.
The Depositary will furnish without charge to any registered owner of
Depositary Shares who so requests copies of the Restated Articles of
Incorporation of the Company, Deposit Agreement and Certificate of Designation.
This Receipt shall not be valid or obligatory for any purpose, nor shall the
holder be entitled to any benefits under the Deposit Agreement, unless this
Receipt shall have been executed manually or by facsimile, or, if a Registrar
for the Receipts (other than the Depositary) shall have been appointed, by
manual or facsimile signature by the Depositary of a duly authorized officer
thereof, and if executed by facsimile signature of the Depositary, shall have
been countersigned manually by such Registrar by signature of a duly authorized
officer thereof.
BANK IV Kansas, National Association
Depositary, Transfer Agent and Registrar
------------------------------------------------
Authorized Signature
B-2
<PAGE> 36
The Depositary will furnish without charge to any registered owner of Depositary
Shares who so requests, copies of the Restated Articles of Incorporation of the
Company, Deposit Agreement and Certificate of Designation. Any such request
should be addressed to the Depositary.
The following abbreviations, when used in the inscription on the face of
this Receipt, shall be construed as though they were written out in full
according to applicable laws or regulations.
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - ________________________ Custodian _________________________
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right under Uniform Gifts to Minors Act __________________________________
of survivorship and not as (State)
tenants in common
</TABLE>
Additional abbreviations may also be used though not in the above list.
NOTICE OF CONVERSION
The undersigned holder of this Receipt for Depositary Shares hereby
irrevocably exercises the option to convert that number of shares of Stock of
the Company, represented by ______________ Depositary Shares, into shares of
common stock, $5.00 par value, of the Company ("Common Stock") in accordance
with the terms of and subject to the conditions of such Stock, including the
Certificate of Designation in respect thereof and the Deposit Agreement, and
directs that the Common Stock deliverable upon such conversion be registered in
the name of and delivered together with a check in payment for any fractional
shares of Common Stock to the undersigned unless a different name has been
indicated below. If the shares of Common Stock are to be registered in the name
of a person other than the undersigned, the undersigned will pay all transfer
and similar taxes payable with respect thereto. If the number of shares of such
Stock represented by the number of Depositary Shares set forth above is less
than the number of shares of such Stock on deposit in respect of this Receipt,
the undersigned directs that the Depositary issue to the undersigned, unless a
different name is indicated below, a new Receipt evidencing Depositary Shares
for the balance of such Stock not be converted.
Dated: _________________________
NAME: __________________________
ADDRESS: _______________________ Signature: ________________________________
(Please print name and Note: The signature in this Notice of
address of Registered Holder) Conversion must correspond with the
name as written upon the face of this
Receipt in every particular, without
alteration or enlargement, or any
change whatever.
NAME: __________________________
ADDRESS: _______________________
(Please indicate other delivery
instructions if applicable)
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- -------------------------
[ ]
[ ]
- -------------------------
________________________________________________________________________________
the within Receipt, and all rights and interests represented by the Depositary
Shares evidenced thereby, and hereby irrevocably constitutes and appoints
_________________________________________________________________, his attorney,
to transfer the said Depositary Shares on the books of the within-named
Depositary, with full power of substitution in the premises.
Dated: _________________________
Signature: ________________________________
Note: The signature in this
Assignment must correspond with the
names as written upon the fact of this
Receipt in every particular, without
alteration or enlargement, or change
whatever.
B-3
<PAGE> 1
EXHIBIT 4.2
ASSIGNMENT AND ASSUMPTION OF
AND AMENDMENT #1 TO THE
DEPOSIT AGREEMENT
This Assignment and Assumption of and Amendment #1 to the Deposit
Agreement (this "Agreement") is made as of this 31st day of January, 1996, by
and among Boatmen's Bancshares, Inc., a corporation duly organized and existing
under the laws of the State of Missouri ("Boatmen's"), Acquisition Sub, Inc., a
corporation duly organized and existing under the laws of the State of Kansas
and wholly-owned subsidiary of Boatmen's ("Acquisition Sub"), Boatmen's Trust
Company, a corporation duly organized and existing under the laws of the State
of Missouri and wholly-owned subsidiary of Boatmen's (the "New Depositary") and
BANK IV, National Association, a national banking association and wholly-owned
subsidiary of Acquisition Sub (the "Old Depositary").
WITNESSETH:
WHEREAS, Fourth Financial Corporation, a corporation formerly duly
organized and existing under the laws of the State of Kansas ("Fourth"), the
Old Depositary and the holders of Receipts (as defined in the Deposit
Agreement) were the original parties to that certain Deposit Agreement, dated
February 24, 1992 (the "Deposit Agreement"), a copy of which is attached hereto
as Exhibit A, which provides for the deposit with the Old Depositary of shares
of Class A Cumulative Convertible Preferred Stock, $100 par value, of Fourth
and for the issuance of Receipts and under which the Old Depositary acts as
Registrar, Transfer Agent and Depositary (as such terms are defined in the
Deposit Agreement) with respect to said Receipts, all subject to the terms and
conditions set forth in the Deposit Agreement; and
WHEREAS, effective as of the date hereof, Fourth merged (the "Merger")
with and into Acquisition Sub pursuant to that certain Agreement and Plan of
Merger, dated August 25, 1995, by and among Boatmen's, Acquisition Sub and
Fourth (the "Merger Agreement"), under which Merger Acquisition Sub by
operation of law assumed the Deposit Agreement and pursuant to which Merger
Agreement the Class A Cumulative Convertible Preferred Stock, $100 par value,
of Fourth was converted into the right to a like number of shares of Cumulative
Convertible Preferred Stock, Series A, $100 stated value, of Boatmen's; and
WHEREAS, the parties hereto desire that Acquisition Sub assign and
Boatmen's assume the rights, privileges, duties and obligations that
Acquisition Sub acquired from Fourth under the Merger by operation of law which
arise or accrue after the date of this Agreement and which are set forth in the
Deposit Agreement, as amended herein; and
WHEREAS, the Old Depositary desires to resign as Registrar, Transfer
Agent and Depositary with respect to said Receipts and Boatmen's desires to
appoint the New Depositary as Registrar, Transfer Agent and Depositary with
respect to said Receipts, all subject to the terms and conditions set forth in
the Deposit Agreement; and
WHEREAS, the parties hereto desire to amend the Deposit Agreement as
set forth herein.
NOW, THEREFORE, in consideration of the premises, the parties hereto
agree as follows:
<PAGE> 2
ASSIGNMENT, ASSUMPTION, RESIGNATION AND APPOINTMENT
Section 1.01. Assignment. Acquisition Sub hereby assigns to Boatmen's
----------
all of the rights, privileges, duties and obligations that Acquisition Sub
acquired from Fourth under the Merger by operation of law which arise or accrue
after the date of this Agreement and which are set forth in the Deposit
Agreement, as amended herein.
Section 1.02. Assumption. Boatmen's hereby assumes from Acquisition
----------
Sub all of the rights, privileges, duties and obligations that Acquisition Sub
acquired from Fourth under the Merger by operation of law which arise or accrue
after the date of this Agreement and which are set forth in the Deposit
Agreement, as amended herein.
Section 1.03. Resignation. Pursuant to Section 5.04 of the Deposit
-----------
Agreement, the Old Depositary hereby resigns, effective immediately, as
Registrar, Transfer Agent and Depositary under the Deposit Agreement.
Section 1.04. Appointment and Acceptance. Pursuant to Section 5.04
--------------------------
of the Deposit Agreement, (i) Boatmen's hereby appoints the New Depositary,
effective immediately, as Registrar, Transfer Agent and Depositary under the
Deposit Agreement, (ii) the New Depositary hereby accepts such appointment, and
(iii) the Old Depositary hereby (a) transfers to the New Depositary all rights
and powers of the Old Depositary under the Deposit Agreement, as amended
herein, (b) delivers to the New Depositary a list of the record holders of all
outstanding Receipts, and (c) assigns, transfers and delivers all of its right,
title and interest in the Deposited Stock (as defined in the Deposit Agreement)
and any moneys or property held by the Old Depositary under the Depositary
Agreement.
AMENDMENT #1
The Deposit Agreement is hereby amended as follows:
Section 2.01. Amended Definitions. Article I of the Deposit
-------------------
Agreement is hereby amended as follows:
a. The definition of "Common Stock" is hereby amended to
read as follows:
"The term "Common Stock" shall mean the common stock,
par value $1.00 per share, of the Company or any
security into which the Common Stock may be
converted."
b. The definition of "Company" is hereby amended to read
as follows:
"The term "Company" shall mean Boatmen's Bancshares,
Inc., incorporated under the laws of the State of
Missouri and its successors."
c. The definition of "Depositary" is hereby amended to
read as follows:
2
<PAGE> 3
"The term "Depositary" shall mean Boatmen's Trust
Company, incorporated under the laws of the State of
Missouri, and any successor in its role as Depositary,
Registrar and Transfer Agent hereunder."
d. The definition of "Registrar" is hereby amended to
read as follows:
"The term "Registrar" shall mean Boatmen's Trust
Company, incorporated under the laws of the State of
Missouri, or any bank or trust company which shall be
appointed to register ownership and transfers of
Receipts as herein provided."
e. The definition of "Registration Statement" is hereby
amended to read as follows:
"The term "Registration Statement" shall mean the
Registration Statement on Form S-4 of the Company
(Registration No. 33-64087), declared effective on
November 9, 1995 relating to, among other things, the
offering of the Depositary Shares."
f. The definition of "Securities Division" is hereby
amended to read as follows:
"The term "Securities Division" shall mean the
principal office of the Depositary in St. Louis,
Missouri, at which at any particular time its
corporate trust business shall have the
responsibilities for the administration of this
Agreement and obligations hereunder."
g. The definition of "Stock" is hereby amended to read as
follows:
"The term "Stock" shall mean shares of the Company's
Cumulative Convertible Preferred Stock, Series A,
stated value $100 per share."
h. The definition of "Transfer Agent" is hereby amended
to read as follows:
"The term "Transfer Agent" shall mean Boatmen's Trust
Company, incorporated under the laws of the State of
Missouri, or any bank or trust company which shall be
appointed to transfer the Receipts as herein
provided."
Section 2.02. Amended Notice Provision. Article VII, Section 7.04,
------------------------
paragraph 1, of the Deposit Agreement is hereby amended to read as follows:
"Any and all notices to be given to the Company
hereunder or under the Receipts shall be in writing
and shall be deemed to have been duly given if
personally delivered or sent by mail or by telegram
or telex confirmed by letter, addressed to the Company
at One Boatmen's Plaza, 800 Market Street, St. Louis,
Missouri 63101, attention Corporate Secretary,
3
<PAGE> 4
or at any other place of which the Company has
notified the Depositary in writing."
Section 2.03. Amended Form of Certificate of Designation. The
------------------------------------------
Company's Form of Certificate of Designation, attached to the original Deposit
Agreement as Exhibit A, is hereby replaced as set forth in Exhibit B attached
hereto.
Section 2.04. Amended Form of Receipts. The Form of Receipts,
------------------------
attached to the original Deposit Agreement as Exhibit B, is hereby replaced as
set forth in Exhibit C attached hereto.
IN WITNESS WHEREOF, Boatmen's, Acquisition Sub, the New Depositary and
the Old Depositary have duly executed this Agreement as of the day and year
first set forth above.
BOATMEN'S BANCSHARES, INC.
By: /s/ Gregory L. Curl
-------------------------------------
Name: Gregory L. Curl
Title: Vice Chairman
ACQUISITION SUB, INC.
By: /s/ Gregory L. Curl
-------------------------------------
Name: Gregory L. Curl
Title: President
BOATMEN'S TRUST COMPANY
By: /s/ H. E. Bradford
-------------------------------------
Name: H. Eugene Bradford
-----------------------------------
Title: Senior Vice President
----------------------------------
BANK IV, NATIONAL ASSOCIATION
By: /s/ K. Gordon Greer
-------------------------------------
Name: K. Gordon Greer
-----------------------------------
Title: Chairman
----------------------------------
4
<PAGE> 1
[NationsBank Letterhead] EXHIBIT 5.1
November 12, 1996
NationsBank Corporation
NationsBank Corporate Center
100 North Tryon Street
Charlotte, North Carolina 28255
Re: Registration Statement on Form S-4 Related to the
Acquisition of Boatmen's Bancshares, Inc.
-------------------------------------------------
Ladies and Gentlemen:
I have acted as counsel to NationsBank Corporation, a North Carolina
corporation (the "Corporation"), in connection with the preparation and
filing of a Registration Statement on Form S-4 (the "Registration
Statement") relating to the issuance of up to: (i) 104,351,996 shares
of the Corporation's Common Stock (the "Common Stock"), (ii) 233,971
shares of the Corporation's Cumulative Convertible Preferred Stock,
Series A, and 9,743,539 Depositary Shares relating thereto
(collectively, the "Series A Preferred Stock"), and (iii) 9,487 shares
of the Corporation's 7% cumulative Redeemable Preferred Stock, Series
B (the "Series B Preferred Stock" and, together with the Common Stock
and the Series A Preferred Stock, the "Securities") to be issued by the
Corporation in connection with the merger of Boatmen's Bancshares, Inc.
with and into a wholly owned subsidiary of the Corporation.
In rendering this opinion, I have examined such corporate records and
other documents, and I have reviewed such matters of law, as I have
deemed necessary or appropriate. Based on the foregoing. I am of the
opinion that the Securities are legally authorized and, when the
Registration Statement has been declared effective by order of the
Securities and Exchange Commission and the Securities have been issued
and paid for upon the terms and conditions set forth in the
Registration Statement, the Securities will be validly issued, fully
paid and nonassessable.
<PAGE> 2
NationsBank Corporation
November 12, 1996
Page 2
I hereby consent to be named in the Registration Statement and in the related
joint proxy statement - prospectus contained therein as the attorney who passed
upon the legality of the Securities, and to the filing of a copy of this
opinion as Exhibit 5.1 to the Registration Statement.
Very truly yours,
/s/ Paul J. Polking
- ---------------------
Paul J. Polking
Executive Vice President
and General Counsel
<PAGE> 1
EXHIBIT 8.1
[Letterhead of Cleary, Gottlieb, Steen & Hamilton]
Writer's Direct Dial: (212) 225-2360
November 12, 1996
Boatmen's Bancshares, Inc.
One Boatmen's Plaza
800 Market Street
St. Louis, Missouri 63101
Ladies and Gentlemen:
You have requested our opinion regarding certain U.S. federal income tax
consequences of the proposed merger (the "Merger") of Boatmen's Bancshares,
Inc., a Missouri corporation ("Boatmen's"), and NB Holdings Corporation, a
Delaware corporation (the "Merger Sub") and a direct subsidiary of NationsBank
Corporation, a North Carolina corporation ("NationsBank"). The Merger is to be
effected pursuant to the Agreement and Plan of Merger dated as of August 29,
1996 between Boatmen's, NationsBank and the Merger Sub (the "Merger
Agreement"). Defined terms used but not defined herein have the same meaning as
in the Merger Agreement.
In arriving at the opinions expressed below, we have examined and
relied on the originals, or copies certified or otherwise identified to our
satisfaction, of:
(i) the Merger Agreement;
(ii) the Prospectus and Joint Proxy Statement included in the
Registration Statement on Form S-4 filed with the Securities and
Exchange Commission by NationsBank in connection with the Merger
(the "Prospectus"); and
<PAGE> 2
Boatmen's Bancshares, Inc., p.2
(iii) such corporate records of Boatmen's, NationsBank and
the Merger Sub as we have deemed appropriate.
We have also relied, without independent verification of the
statements contained therein, on Officer's Certificates of Boatmen's,
NationsBank and the Merger Sub, each dated the date hereof (the "Certificates"),
containing representations as to certain tax matters. We have assumed that the
parties to the Merger will act, and the Merger will be effected, in accordance
with the Merger Agreement and that the representations contained in the
Certificates are accurate. In addition, we have made such other investigations
of law as we have deemed appropriate as a basis for the opinions expressed
below.
The opinion contained herein is being provided in advance of
the actual Merger in compliance with certain requirements of the Securities and
Exchange Commission and assumes that all subsequent events will be in accordance
with the Merger Agreement.
We express no opinion as to the laws of any jurisdiction other
than the income tax laws of the United States.
Based upon and subject to the foregoing, it is our opinion that
for U.S. federal income tax purposes, under current law:
(a) The Merger will constitute a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code");
(b) Each of Boatmen's, NationsBank and the Merger Sub will
be a party to the reorganization within the meaning of Section 368(b) of
the Code;
(c) No gain or loss will be recognized by Boatmen's in
connection with the Merger;
(d) No gain or loss will be recognized by the stockholders
of Boatmen's on the exchange of their shares of Boatmen's stock solely
for shares of NationsBank stock pursuant to the terms of the Merger
Agreement to the extent of such exchange (except as provided below with
respect to fractional shares);
(e) The federal income tax basis of the shares of the
NationsBank stock for which the shares of Boatmen's stock are exchanged
solely therefor pursuant to the Merger will be the same as the tax basis
of such shares of Boatmen's stock exchanged solely therefor (less any
proportionate part of such basis allocable to any fractional interest in
any share of NationsBank Common Stock);
(f) The holding period for the shares of NationsBank stock
for which the shares of Boatmen's stock are exchanged will include the
holding period of the shares of
<PAGE> 3
Boatmen's Bancshares, Inc., p. 3
Boatmen's stock that they exchanged therefor, provided that such shares
of Boatmen's stock are held as a capital asset at the Effective Time;
and
(g) The receipt of cash in lieu of fractional shares will be
treated as if the fractional shares were distributed as part of the
exchange and then redeemed by NationsBank, and gain or loss will be
recognized in an amount equal to the difference
between the cash received and the tax basis of the NationsBank Common
Stock surrendered, which gain or loss will be capital gain or loss if
the Boatmen's Common Stock was a capital asset in the hands of the
shareholder.
We hereby consent to the use of our name and the making of
statements with respect to us under the captions "SUMMARY--Certain Federal
Income Tax Consequences" and "THE MERGER--Certain Federal Income Tax
Consequences" in the Prospectus.
In giving this consent, we do not hereby admit that we are in
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933 as amended.
Very truly yours,
CLEARY, GOTTLIEB, STEEN & HAMILTON
By: /s/ Dana L. Trier
------------------------------
Dana L. Trier, a Partner
<PAGE> 1
EXHIBIT 8.2
[WACHTELL, LIPTON, ROSEN & KATZ LETTERHEAD]
November 13, 1996
NationsBank Corporation
NationsBank Corporate Center
100 North Tryon Center
Charlotte, North Carolina 28255
Gentlemen:
We have acted as special counsel to NationsBank Corporation, a
North Carolina corporation ("NationsBank"), in connection with the proposed
merger (the "Merger") of Boatmen's Bancshares, Inc., a Missouri corporation
("Boatmen's"), with and into NB Holdings Corporation, a Delaware corporation
("Merger Sub"), a direct wholly-owned subsidiary of NationsBank, upon the terms
and conditions set forth in the Agreement and Plan of Merger dated as of August
29, 1996 (the "Agreement"). At your request, in connection with the closing of
the Merger, we are rendering our opinion concerning certain federal income tax
consequences of the Merger.
For purposes of the opinion set forth below, we have relied,
with the consent of NationsBank and the consent of Boatmen's, upon the accuracy
and completeness of the statements and representations (which statements and
representations we have neither investigated nor verified) contained,
respectively, in the certificates of the officers of NationsBank, Merger Sub and
Boatmen's (copies of which are attached hereto and which are incorporated herein
by reference), and have assumed
<PAGE> 2
NationsBank Corporation
November 13, 1996
Page 2
that such certificates will be complete and accurate as of the Effective Time.
We have also relied upon the accuracy of the Registration Statement on Form S-4
(the "Registration Statement") and the Proxy Statement-Prospectus (the "Proxy
Statement") as amended through the date hereof. Any capitalized term used and
not defined herein has the meaning given to it in the Proxy Statement or the
appendices thereto (including the Agreement).
We have also assumed that the transactions contemplated by the
Agreement will be consummated in accordance therewith and as described in the
Proxy Statement and that the Merger will qualify as a statutory merger under the
applicable laws of the State of Missouri, the State of Delaware and the United
States.
Based upon and subject to the foregoing, it is our opinion
that, under currently applicable law, the Merger will constitute a
reorganization within the meaning of Section 368(a)(1) of the Internal Revenue
Code of 1986, as amended (the "Code"), and that, accordingly, the following will
be the material federal income tax consequences of the Merger:
(i) No gain or loss will be recognized by the
shareholders of Boatmen's on the exchange of their
shares of Boatmen's stock for shares of NationsBank
stock pursuant to the terms of the Agreement to the
extent of such exchange.
(ii) The federal income tax basis of the shares of the
NationsBank stock for which shares of Boatmen's stock
are exchanged pursuant to the Merger will be the same
as the basis of such shares of Boatmen's stock
exchanged therefor (less any proportionate part of
such basis allocable to any fractional interest in
any share of NationsBank Common Stock).
(iii) The holding period for shares of NationsBank stock
for which shares of Boatmen's stock are exchanged
will include the period that such shares of Boatmen's
stock were held by the holder, provided such shares
were capital assets of the holder.
(iv) The receipt of cash in lieu of fractional shares will
be treated as if the fractional shares were
<PAGE> 3
NationsBank Corporation
November 13, 1996
Page 3
distributed as part of the exchange and then redeemed
by NationsBank, and gain or loss will be recognized
in an amount equal to the difference between the cash
received and the basis of the Boatmen's Common Stock
surrendered, which gain or loss will be capital gain
or loss if the Boatmen's Common Stock was a capital
asset in the hands of the shareholder.
This opinion may not be applicable to Boatmen's shareholders
who received their Boatmen's stock pursuant to the exercise of employee stock
options or otherwise as compensation or who are not citizens or residents of the
United States.
We hereby consent to the filing of this opinion with the
Securities and Exchange Commission as an exhibit to the Registration Statement,
and to the reference to this opinion under the caption "SUMMARY -- Certain
Federal Income Tax Consequences", under the caption "THE MERGER -- Certain
Federal Income Tax Consequences" and elsewhere in the Proxy Statement.
Very truly yours,
/s/ Wachtell, Lipton, Rosen & Katz
<PAGE> 1
EXHIBIT 10.1
[NationsBank Letterhead]
September 26, 1996
Andrew B. Craig, III
Chairman and Chief Executive Officer
Boatmen's Bancshares, Inc.
One Boatmen's Plaza
800 Market Street
St. Louis, Missouri 63101
Dear Mr. Craig:
This letter agreement serves to formalize our agreement with respect to
your future employment with NationsBank Corporation following the proposed
combination of Boatmen's Bancshares and NationsBank pursuant to the Agreement
and Plan of Merger by and between NationsBank Corporation and Boatmen's
Bancshares, Inc. dated as of August 29, 1996 (the "Merger Agreement"). Terms
not otherwise defined herein shall have the meanings ascribed to them in the
Merger Agreement.
Commencing on the Effective Date, you will be elected Chairman of the
Board of Directors of NationsBank Corporation until the annual meeting of
NationsBank in 1998 (the "Term"). During the Term, you will receive a base
salary at an annual rate of $1,000,000, payable in accordance with NationsBank's
payroll practices. For calendar year 1997, you will be paid a bonus equal to
the greater of (x) $2,000,000, or (y) the bonus paid for 1997 to the Chief
Executive Officer of NationsBank. For the portion of 1998 during which you are
an officer of NationsBank you will be paid a bonus of $2,000,000 multiplied by a
fraction, the numerator of which is the number of days from January 1, 1998
until the date of your retirement and the denominator of which is 365 (the
"Proration Fraction"). In the event that the bonus paid for 1998 to the Chief
Executive Officer of NationsBank exceeds $2,000,000, at the time such bonus is
paid you will receive an additional payment equal to the amount of such excess
multiplied by the Proration Fraction.
On the Effective Date, you will be granted 100,000 shares of restricted
stock pursuant to the NationsBank Corporation Key Employee Stock Plan. This
restricted stock
<PAGE> 2
Andrew B. Craig, III
September 26, 1996
Page 2
will vest upon the occurrence of any of the following events: (a) your
retirement as an officer of NationsBank upon the expiration of the Term, (b)
your death prior to your retirement as an officer of NationsBank (c) your
becoming permanently and totally disabled (as defined in NationsBank's Long-Term
Disability Insurance Plan) prior to your retirement as an officer of
NationsBank, or (d) your retirement as an officer of NationsBank prior to the
expiration of the Term resulting from (i) a termination of your employment by
NationsBank for reasons other than Cause as defined in the Employment Agreement
between you and Boatmen's Bancshares, Inc. dated as of January 30, 1996, as
subsequently amended (the "Employment Agreement"), or (ii) a termination of your
employment by you for Good Reason. You will forfeit the restricted stock award
in the case of any other termination of your employment prior to the expiration
of the Term. For purposes of this agreement, "Good Reason" shall mean (a) a
breach of this agreement by NationsBank, or (b) assignment to you of duties or
responsibilities inconsistent with your position as Chairman of NationsBank.
You will be provided with other employee benefits, perquisites and
other terms and conditions of employment commensurate with your position as
Chairman of NationsBank. In that regard, NationsBank will continue during the
Term on the same terms and conditions the executive life insurance program
currently in effect at Boatmen's under which you are insured by a policy of
insurance in the face amount of $3.2 million. Upon the expiration of the Term
you will be accorded the right to take over the policy by assuming the
obligation to make all future premium payments on such policy.
Upon your retirement, if you have satisfied the vesting requirements
described above related to your restricted stock award, you will be entitled to
an annual pension of $1.5 million for your lifetime with a survivor annuity
payable after your death to your current spouse of $1.0 million annually for her
remaining lifetime. The annual amount of such joint and two-thirds survivor
annuity shall be offset by the annual amount of any retirement income benefit to
which you or your spouse are entitled from (i) the Boatmen's Bancshares
Retirement Plan for Employees, (ii) the Boatmen's Bancshares, Inc. Supplemental
Retirement Plan, (iii) the retirement income plan of any of your previous
employers under which you have a vested accrued benefit, (iv) the NationsBank
Pension Plan, (v) the NationsBank Supplemental Retirement Plan, and (vi) Social
Security. The amount of the offset shall be computed as if
<PAGE> 3
Andrew B. Craig, III
September 26, 1996
Page 3
you were to receive your retirement benefits under such plans in the form of a
joint and two-thirds survivor annuity beginning on the date of your retirement
from NationsBank with your current spouse as the contingent annuitant using the
same actuarial assumptions used to arrive at the amounts set forth in the letter
agreement between you and Boatmen's dated May 17, 1996 related to retirement
benefits (the "May Agreement"). The annuity benefit determined under this
paragraph will be payable by the same method of payment as provided in the May
Agreement, and any actuarial equivalence calculation required for that purpose
will be made using the actuarial assumptions used to arrive at the amounts in
the May Agreement.
In the event of your death prior to your retirement, a death benefit
will be paid in a lump sum payment in an amount equal to the amount you would
have received if you had vested in your pension benefits under this agreement
and retired on the day before your death and elected to receive the benefit
described in the preceding paragraph in a lump sum payment. For purposes of
calculating such lump sum death benefit, the offset annuity amounts described in
the preceding paragraph shall be (i) adjusted to reflect only the actual death
benefits payable by such plans on account of your death and (ii) converted to a
single sum value using the actuarial assumptions used to arrive at the amounts
set forth in the May Agreement. The foregoing lump sum death benefit will be
paid to your current spouse if she survives you, or if she does not survive you,
to the Trustees of your Revocable Trust dated July 23, 1993, as amended.
In no event would the total retirement or death benefits payable to you
(or, in event of your death, your current spouse or the Trustees of the
Revocable Trust) from all sources be less than the amount described in the May
Agreement, which amount for purposes of this agreement shall be deemed to be
fully vested, if not previously paid to you, your spouse or the Trustees of your
Revocable Trust, as of the Effective Date. It is understood and agreed that
within thirty days following the Effective Date assets will be set aside in a
trust, dated December 31, 1993 by and between Boatmen's Bancshares Inc. and
United States Trust Company of New York, as amended from time to time
thereafter, to provide for such vested and unpaid benefits under the May
Agreement.
For two years following your retirement, we would like you to continue
to serve as a director of NationsBank
<PAGE> 4
Andrew B. Craig, III
September 26, 1996
Page 4
Corporation for which you would receive customary director's fees.
By signing below, you agree that the provisions of the Employment
Agreement, the May Agreement, and any other plan or agreement which provides
benefits duplicative of those described herein shall be deemed to be replaced
in their entirety as of the Effective Date by the terms of this agreement;
provided, however, the definition of "Cause" in Section 6.5 and the provisions
of Section 7.3, 7.4, 7.5, 9.1, 9.2, 9.3, 11.1, 11.2, 12.7 and 12.9 of the
Employment Agreement shall remain in effect after the Effective Date, with the
sole modification that on and after the Effective Date the term "Company" shall
mean NationsBank Corporation. In that regard, you acknowledge and agree that
NationsBank intends to treat all such benefits under this agreement as
reasonable compensation for your services actually rendered after the Effective
Date.
This letter agreement supersedes all prior correspondence between you
and NationsBank relating to the subject matter hereof.
Sincerely,
/s/ Hugh L. McColl, Jr.
-------------------------------------
Hugh L. McColl, Jr.
Chairman and Chief Executive Officer
Agreed to:
/s/ Andrew B. Craig, III
- ------------------------------
Andrew B. Craig, III
<PAGE> 1
EXHIBIT 10.2
[BOATMEN'S BANCSHARES, INC. LETTERHEAD]
May 17, 1996
Andrew B. Craig, III
Chairman and Chief Executive Officer
Boatmen's Bancshares, Inc.
One Boatmen's Plaza
800 Market Street, 13th Floor
St. Louis, Missouri 63101
Dear Mr. Craig:
This letter agreement is in consideration of your not retiring this
spring; it supplements your Employment Agreement dated as of January 30, 1996.
If you had retired and had elected to receive lump-sum payments, your benefits
as of May 1, 1996, would have been $423,294.79 under the Boatmen's Bancshares,
Inc. Retirement Plan for Employees the ("Retirement Plan") and $6,952,466.40
under the Boatmen's Supplemental Retirement Plan (the "BSRP").
Boatmen's Bancshares, Inc. ("Boatmen's") will pay you, in a lump sum
promptly upon the termination of your employment for reasons other than death or
Cause under your Employment Agreement, in addition to the Retirement Plan and
BSRP benefits to which you become entitled at that time, any amount by which the
total lump-sum benefits under the Retirement Plan and the BSRP at that time
would be less than the total of the two dollar amounts in the first paragraph.
If you die while still in Boatmen's employ and your wife does not survive you or
if you die in a common disaster, there would be no benefits under the Retirement
Plan or the BSRP; in such case, Boatmen's will promptly pay the two amounts in
the first paragraph to the trustees of your revocable trust dated July 23, 1993,
as amended. If you die while still in Boatmen's employ but your wife does
survive you, she will receive a 50% periodic-payment benefit under the
Retirement Plan and will be entitled to benefits under the BSRP; in that case,
Boatmen's will also pay her one-half the Retirement Plan amount in the first
paragraph and, if she waives her BSRP benefits, the entire BSRP amount in the
first paragraph.
BOATMEN'S BANCSHARES, INC.
By /s/ Arthur J. Fleischer
----------------------------------------
Arthur J. Fleischer
Senior Vice President - Human Resources
ACCEPTED AND APPROVED:
/s/ Andrew B. Craig, III
- -----------------------------
Andrew B. Craig, III
<PAGE> 2
Employment Agreement For
Andrew B. Craig, III
Boatmen's Bancshares, Inc.
January 30, 1996
<PAGE> 3
Boatmen's Bancshares, Inc.
Employment Agreement For Andrew B. Craig, III
This EMPLOYMENT AGREEMENT is made, entered into, and is effective,
pursuant to Compensation Committee approval and ratification by the Board of
Directors, as of January 30, 1996 (the "Effective Date"), by and between
Boatmen's Bancshares, Inc., a Missouri corporation, (the "Company"), and Andrew
B. Craig, III, (the "Executive").
WHEREAS, the Executive is presently employed the Company in the capacity
of Chairman and Chief Executive Officer; and
WHEREAS, the Executive possesses considerable experience and an intimate
knowledge of the business and affairs of the Company, its policies, methods,
personnel, and operations; and
WHEREAS, the Company recognizes that the Executive's contributions have
been substantial and meritorious and, as such, the Executive has demonstrated
unique qualifications to act in an executive capacity for the Company; and
WHEREAS, the Company is desirous of assuring the continued employment of
the Executive in the above stated capacities, and Executive is desirous of
having such assurance;
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties set forth in this Agreement, and of
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE 1. TERM OF EMPLOYMENT
The Company hereby agrees to employ the Executive and the Executive
hereby agrees to continue to serve the Company, in accordance with the terms and
conditions set forth herein, for an initial period of three (3) years,
commencing as of the Effective Date of this Agreement, as indicated above;
subject, however, to earlier termination as expressly provided herein.
The initial three (3) year period of employment automatically shall be
extended for one (1) additional year at the end of the initial three (3) year
term, and then again after each successive year thereafter. However, either
party may terminate this Agreement at the end of the initial three (3) year
period, or at the end of any successive one (1) year term thereafter, by giving
the other party written notice of intent not to renew, delivered at least three
(3) months prior to the end of such initial period or successive term. In the
event such notice of intent not to renew is properly delivered, this Agreement,
along with all corresponding rights, duties, and covenants, automatically shall
expire at the end of the initial period or successive term then in progress.
However, regardless of the above, if at any time during the initial
period of employment, or successive term, a Change in Control of the Company
occurs (as defined in Article 7 herein), then this Agreement shall become
immediately irrevocable for the longer of: (a) two (2) years following the
effective date of such Change in Control; or (b) until all obligations of the
Company hereunder have been fulfilled, and until all benefits provided hereunder
have been paid.
<PAGE> 4
ARTICLE 2. POSITION AND RESPONSIBILITIES
During the term of this Agreement, the Executive agrees to serve as
Chairman and Chief Executive Officer of the Company. In his capacity as
Chairman and Chief Executive Officer of the Company, the Executive shall report
directly to the Board of Directors, and shall maintain the level of duties and
responsibilities as in effect as of the Effective Date, or such higher level of
duties and responsibilities as he may be assigned during the term of this
Agreement. The Executive shall have the same status, privileges, and
responsibilities normally inherent in such capacities in financial institutions
of similar size and character.
ARTICLE 3. STANDARD OF CARE
During the term of this Agreement, the Executive agrees to devote
substantially his full time, attention, and energies to the Company's business
and shall not be engaged in any other business activity, whether or not such
business activity is pursued for gain, profit, or other pecuniary advantage.
However, subject to Article 9 herein, the Executive may serve as a director of
other companies so long as such service is not injurious to the Company. The
Executive covenants, warrants, and represents that he shall:
(a) Devote his full and best efforts to the fulfillment of his
employment obligations; and
(b) Exercise the highest degree of loyalty and the highest standards
of conduct in the performance of his duties.
This Article 3 shall not be construed as preventing the Executive from
investing assets in such form or manner as will not require his services in the
daily operations of the affairs of the companies in which such investments are
made.
ARTICLE 4. COMPENSATION
As remuneration for all services to be rendered by the Executive during
the term of this Agreement, and as consideration for complying with the
covenants herein, the Company shall pay and provide to the Executive the
following:
4.1 BASE SALARY. The Company shall pay the Executive a Base Salary
in an amount which shall be established from time to time by the Board of
Directors of the Company or the Board's designee; provided, however, that such
Base Salary shall not be less than Seven Hundred Fifty Thousand Dollars dollars
($750,000.00) per year. This Base Salary shall be paid to the Executive in
equal bimonthly installments throughout the year, consistent with the normal
payroll practices of the Company.
The annual Base Salary shall be reviewed at least annually following the
Effective Date of this Agreement, while this Agreement is in force, to ascertain
whether, in the judgment of the Board or the Board's designee, such Base Salary
should be increased, based primarily on the performance of the Executive during
the year and on the then current rate of inflation. If so increased, the Base
Salary as stated above shall, likewise, be increased for all purposes of this
Agreement.
4.2 ANNUAL BONUS. In addition to his salary, the Executive shall be
entitled to participate in the Company's short-term incentive program, as such
program may exist from time to time, at a level
2
<PAGE> 5
commensurate with the Executive's position with the Company, as determined at
the sole discretion of the Compensation Committee.
4.3 LONG-TERM INCENTIVES. The Executive shall be eligible to
participate in the Company's 1996 Stock Incentive Plan, as such shall be
amended or superseded from time to time, at a level commensurate with the
Executive's position, as determined at the sole discretion of the Compensation
Committee.
4.4 RETIREMENT BENEFITS. The Company shall provide to the
Executive participation in all Company qualified defined benefit and defined
contribution retirement plans, subject to the eligibility and participation
requirements of such plans. The Executive's retirement benefits shall not be
less than those that would be provided him under the terms of the Boatmen's
Bancshares, Inc. Retirement Plan for Employees and the Boatmen's Supplemental
Retirement Plan in effect as of the Effective Date, or as such benefits shall
be increased, whether or not such benefits shall be decreased or eliminated.
The obligations of the Company pursuant to this Section 4.4 shall survive the
termination of this Agreement.
4.5 EMPLOYEE BENEFITS. The Company shall provide to the Executive
all benefits to which other executives and employees of the Company are
entitled, as commensurate with the Executive's position, subject to the
eligibility requirements and other provisions of such arrangements. Such
benefits shall include, but shall not be limited to, group term life insurance,
comprehensive health and major medical insurance, dental and life insurance,
and short-term and long-term disability.
4.6 PERQUISITES. The Company shall provide to the Executive, at
the Company's cost, all perquisites which are suitable to the character of
Executive's position with the Company and adequate for the performance of his
duties hereunder.
4.7 RIGHT TO CHANGE PLANS. By reason of Sections 4.5 and 4.6
herein, the Company shall not be obligated to institute, maintain, or refrain
from changing, amending, or discontinuing any benefit plan, or perquisite, so
long as such changes are similarly applicable to executive employees generally.
ARTICLE 5. EXPENSES
The Company shall pay or reimburse the Executive for all ordinary and
necessary expenses, in a reasonable amount, which the Executive incurs in
performing his duties under this Agreement including, but not limited to,
travel, entertainment, professional dues and subscriptions, and all dues, fees,
and expenses associated with membership in various professional, business, and
civic associations and societies in which the Executive's participation is in
the best interest of the Company.
ARTICLE 6. EMPLOYMENT TERMINATIONS
6.1 TERMINATION DUE TO RETIREMENT OR DEATH. In the event the
Executive's employment is terminated while this Agreement is in force by reason
of retirement (as defined or provided for under the then established rules of
the Company's tax-qualified retirement plan), or death, the Executive's
benefits shall be determined in accordance with the Company's retirement,
survivor's benefits, insurance, and other applicable programs of the Company
then in effect (provided, however, that such benefits shall be no less than
those set forth in Section 4.4 herein) and, upon the effective date of such
termination, the Company's obligation under this Agreement to provide to the
Executive the elements of pay described in Sections 4.1,
3
<PAGE> 6
4.2, and 4.3 shall immediately expire; provided, however, that the Executive
shall receive all rights and benefits that he is vested in, pursuant to the
Plan or Plans described in Section 4.3 herein and other plans and programs of
the Company; and provided further, however, that any retirement during the
periods set forth in Section 7.1 herein shall be subject to the provisions of
Article 7 herein.
6.2 TERMINATION DUE TO DISABILITY. In the event that the Executive
becomes Disabled (as defined below) during the term of this Agreement and is,
therefore, unable to perform his duties herein for more than one hundred eighty
(180) total calendar days during any period of twelve (12) consecutive months,
or in the event of the Board's reasonable expectation that the Executive's
Disability will exist for more than a period of one hundred eighty (180)
calendar days, the Company shall have the right to terminate the Executive's
active employment as provided in this Agreement. However, the Board shall
deliver written notice to the Executive of the Company's intent to terminate
for Disability at least thirty (30) calendar days prior to the effective date
of such termination.
A termination for Disability shall become effective upon the end of
the thirty (30) day notice period. Upon such effective date, the Company's
obligation to provide to the Executive the elements of pay described in
Sections 4.1, 4.2, and 4.3 shall immediately expire; provided, however, that
the Executive shall receive all rights and benefits that he is vested in,
pursuant the plan or plans described in Section 4.3 herein and to other plans
and programs of the Company.
The term "Disability" shall mean, for all purposes of this Agreement,
the incapacity of the Executive, due to injury, illness, disease, or bodily or
mental infirmity, to engage in the performance of substantially all of the
usual duties of employment with the Company as contemplated by Article 2
herein, such Disability to be determined by the Board of Directors of the
Company upon receipt of and in reliance on competent medical advice from one
(1) or more individuals, selected by the Board, who are qualified to give such
professional medical advice.
It is expressly understood that the Disability of the Executive for a
period of one hundred eighty (180) calendar days or less in the aggregate
during any period of twelve (12) consecutive months, in the absence of any
reasonable expectation that his Disability will exist for more than such a
period of time, shall not constitute a failure by him to perform his duties
hereunder and shall not be deemed a breach or default and the Executive shall
receive full compensation for any such period of Disability or for any other
temporary illness or incapacity during the term of this Agreement.
6.3 VOLUNTARY TERMINATION BY THE EXECUTIVE. The Executive may
terminate this Agreement at any time by giving the Board of Directors of the
Company written notice of intent to terminate, delivered at least three (3)
months prior to the effective date of such termination.
Upon the effective date of such termination, following the expiration
of the three (3) months notice period, the Company shall pay the Executive his
full Base Salary, at the rate then in effect as provided in Section 4.1,
herein, through the effective date of termination, plus all other benefits to
which the Executive has a vested right at that time. In the event that the
terms and provisions of Article 7 herein do not apply to such termination, the
Company and the Executive thereafter shall have no further obligations under
this Agreement except as provided in Section 4.4 and Article 9 herein.
However, in the event the terms and provisions of Article 7 herein apply, the
payments and benefits set forth therein shall apply.
4
<PAGE> 7
6.4 INVOLUNTARY TERMINATION BY THE COMPANY WITHOUT CAUSE. At all
times prior to six (6) full calendar months before the effective date of a
Change in Control, or at any time more than two (2) years after the effective
date of a Change in Control, the Board may terminate the Executive's
employment, as provided under this Agreement, at any time, for reasons other
than death or Disability, or for Cause, by notifying the Executive in writing
of the Company's intent to terminate, at least thirty (30) calendar days prior
the effective date of such termination.
Upon the effective date of such termination, following the expiration
of the thirty (30) day notice period, the Company shall pay to the Executive a
lump-sum cash payment equal to the greater of: (a) the Base Salary then in
effect for the remaining term of this Agreement (assuming no additional
extensions of this Agreement's term beyond that in effect as of the effective
date of termination), together with continuation of health and welfare benefits
for the remaining term of this Agreement; or (b) one (1) full year of his Base
Salary in effect as of the effective date of termination, plus a one (1) year
continuation of health and welfare benefits.
Further, the Company shall pay the Executive all other benefits to
which the Executive has a vested right at the time, according to the
provisions of the governing plan or program. The Company and the Executive
thereafter shall have no further obligations under this Agreement except as
provided in Section 4.4 and Article 9 herein.
If the Executive's employment is terminated during the periods set
forth in Section 7.1 herein, the Executive shall be entitled to receive the
benefits provided in Section 7.1 herein in lieu of the benefits set forth in
this Section 6.4.
6.5 TERMINATION FOR CAUSE. Nothing in this Agreement shall be
construed to prevent the Board from terminating the Executive's employment
under this Agreement for "Cause".
"Cause" shall be defined as conduct of the Executive which is finally
adjudged to be knowingly fraudulent, deliberately dishonest or willful
misconduct. The Company's Board of Directors, by majority vote, shall make the
determination of whether Cause exists, after providing the Executive with notice
of the reasons the Board believes Cause may exist and after giving the
Executive the opportunity to respond to the allegation that Cause exists.
In the event this Agreement is terminated by the Board for Cause, the
Company shall pay the Executive his Base Salary through the effective date of
the employment termination and the Executive shall immediately thereafter
forfeit all rights and benefits (other than vested benefits) he would otherwise
have been entitled to receive under this Agreement. The Company and the
Executive thereafter shall have no further obligations under this Agreement
except as provided in Article 9 herein.
6.6 TERMINATION FOR GOOD REASON. At any time during the term of
this Agreement, the Executive may terminate this Agreement for Good Reason (as
defined below) by giving the Board of Directors of the Company thirty (30)
calendar days written notice of intent to terminate, which notice sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
such termination.
Upon the expiration of the thirty (30) day notice period, the Good
Reason termination shall become effective, and the Company shall pay and
provide to the Executive the benefits set forth in this Section 6.6 (or, in the
event of termination for Good Reason within the six (6) full calendar month
period prior to the
5
<PAGE> 8
effective date of a Change in Control, or within two (2) years following the
effective date of a Change in Control, the benefits set forth in Section 7.1
herein).
Good Reason shall mean, without the Executive's express written
consent, the occurrence of any one or more of the following:
(a) The assignment of the Executive to duties materially
inconsistent with the Executive's authorities, duties,
responsibilities, and status (including offices, titles, and
reporting requirements) as an officer of the Company, or a
reduction or alteration in the nature or status of the
Executive's authorities, duties, or responsibilities from those
in effect during the immediately preceding fiscal year;
(b) Without the Executive's consent, the Company's requiring the
Executive to be based at a location which is at least fifty
(50) miles further from the Executive's primary residence at
the time such requirement is imposed than is such residence
from the Company's office at which the Executive is primarily
rendering services at such time, except for required travel on
the Company's business to an extent substantially consistent
with the Executive's business obligations as of the Effective
Date;
(c) A reduction by the Company in the Executive's Base Salary as in
effect on the Effective Date, as provided in Section 4.1
herein, or as the same shall be increased from time to time;
(d) A material reduction in the Executive's level of participation
in any of the Company's short- and/or long-term incentive
compensation plans, or employee benefit or retirement plans,
policies, practices, or arrangements in which the Executive
participates as of the Effective Date; provided, however, that
reductions in the levels of participation in any such plans
shall not be deemed to be "Good Reason" if the Executive's
reduced level of participation in each such program remains
substantially consistent with the average level of
participation of other executives who have positions
commensurate with the Executive's position; or
(e) The failure of the Company to obtain a satisfactory agreement
from any successor to the Company to assume and agree to
perform this Agreement, as contemplated in Section 10.1 herein.
Upon a termination of the Executive's employment for Good Reason at any
time other than the six (6) full calendar month period prior to the effective
date of a Change in Control, or the two (2) years period following the
effective date of a Change in Control, the Executive shall be entitled to
receive the same payments and benefits as he is entitled to receive following
an involuntary termination of his employment by the Company without Cause, as
specified in Section 6.4 herein. The payment of Base Salary and pro rata Bonus
shall be made to the Executive within thirty (30) calendar days following the
effective date of employment termination. Upon a termination for Good Reason
within the six (6) full calendar month period prior to the effective date of a
Change in Control, or within the two (2) years following the effective date of
a Change in Control, the Executive shall be entitled to receive the payments
and benefits set forth in Section 7.1 herein in lieu of those set forth in this
Section 6.6.
The Executive's right to terminate employment for Good Reason shall not
be affected by the Executive's incapacity due to physical or mental illness.
The Executive's continued employment shall not
6
<PAGE> 9
constitute consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason herein.
ARTICLE 7. CHANGE IN CONTROL
7.1 EMPLOYMENT TERMINATIONS IN CONNECTION WITH A CHANGE IN
CONTROL. In the event of a Qualifying Termination (as defined below) within
six (6) full calendar months prior to the effective date of a Change in
Control, or within two years following the effective date of a Change in
Control, then in lieu of all other benefits provided to the Executive under the
provisions of this Agreement (other than the first sentence of Section 4.4
herein and without derogation of his rights to receive vested benefits under
the Company's Amended 1982 Long Term Incentive Plan and the plan or plans
described in Section 4.3 herein), the Company shall pay to the Executive and
provide him with the following severance benefits (hereinafter referred to as
the "Severance Benefits"):
(a) An amount equal to three (3) times the highest rate of the
Executive's annualized Base Salary rate in effect at any time
up to and including the effective date of termination;
(b) An amount equal to three (3) times the greater of: (i) the
Executive's average annual bonus earned over the three (3)
fiscal years prior to the Change in Control (whether or not
deferred); or (ii) the Executive's target bonus established
for the fiscal year in which the Executive's effective date of
termination occurs;
(c) An amount equal to the Executive's unpaid Base Salary and
accrued vacation pay through the effective date of termination;
(d) A continuation of the welfare benefits of medical insurance,
dental insurance, and life insurance for three (3) full years
after the effective date of termination. These benefits shall
be provided to the Executive at the same premium cost, and at
the same coverage level, as in effect as of the Executive's
effective date of termination. However, in the event the
premium cost and/or level of coverage shall change for all
employees of the Company, the cost and/or coverage level,
likewise, shall change for the Executive in a corresponding
manner.
The continuation of these welfare benefits shall be
discontinued prior to the end of the three (3) year period in
the event the Executive has available substantially similar
benefits from a subsequent employer, as determined by the
Company's Board of Directors or the Board's designee.
(e) A lump-sum cash payment of the actuarial present value
equivalent of the aggregate benefits accrued by the Executive
as of the effective date of termination under the terms of any
and all supplemental retirement plans in which the Executive
participates (subject to the provisions of the second sentence
of Section 4.4 herein). For this purpose, such benefits shall
be calculated under the assumption that the Executive's
employment continued following the effective date of
termination for three (3) full years (i.e., three (3)
additional years of age and service credits shall be added);
provided, however, that for purposes of determining "final
average pay" under such programs, the Executive's actual pay
history as of the effective date of termination shall be used.
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<PAGE> 10
(f) A lump-sum cash payment of the entire balance of the
Executive's compensation which has been deferred under the
Company's nonqualified deferred compensation plan(s) together
with all interest that has been credited with respect to
such deferred compensation balance.
For purposes of this Article 7, a Qualifying Termination shall mean
any termination of the Executive's employment other than: (1) by the Company
for Cause (as provided in Section 6.5 herein); (2) by reason of death,
Disability (as provided in Section 6.2 herein), or voluntary retirement;
provided, however, that a termination which qualifies as a retirement and which
occurs within the thirty (30) day period described in clause (3) of this
Section 7.1 below will be deemed to be a Qualifying Termination); or (3) by the
Executive without Good Reason (as provided in Section 6.6 herein, but
specifically excluding voluntary terminations within the period beginning on
the first anniversary of the effective date of the Change in Control and ending
thirty (30) days after such date -- i.e., any voluntary termination by the
Executive within such period shall be deemed to be a Qualifying Termination).
7.2 DEFINITION OF "CHANGE IN CONTROL."
A Change in Control of the Company shall be deemed to have occurred as
of the first day any one or more of the following conditions shall have been
satisfied:
(a) Any individual, corporation (other than the Company),
partnership, trust, association, pool, syndicate, or any other
entity or any group of persons acting in concert becomes the
beneficial owner, as that concept is defined in Rule 13d-3
promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, of securities of the Company
possessing twenty percent (20%) or more of the voting power for
the election of directors of the Company;
(b) There shall be consummated any consolidation, merger, or other
business combination involving the Company or the securities of
the Company in which holders of voting securities of the
Company immediately prior to such consummation own, as a group,
immediately after such consummation, voting securities of the
Company (or, if the Company does not survive such transaction,
voting securities of the corporation surviving such
transaction) having less than sixty percent (60%) of the total
voting power in an election of directors of the Company (or
such other surviving corporation);
(c) During any period of two (2) consecutive years, individuals who
at the beginning of such period constitute the directors of the
Company cease for any reason to constitute at least a majority
thereof unless the election, or the nomination for election by
the Company's shareholders, of each new director of the
Company was approved by a vote of at least two-thirds (2/3) of
the directors of the Company then still in office who were
directors of the Company at the beginning of any such period;
or
(d) There shall be consummated any sale, lease, exchange, or other
transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of
the Company (on a consolidated basis) to a party which is not
controlled by or under common control with the Company.
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<PAGE> 11
7.3 EXCISE TAX EQUALIZATION PAYMENT. In the event that the
Executive becomes entitled to Severance Benefits or any other payment or
benefit under this Agreement, or under any other agreement with or plan of the
Company (in the aggregate, the "Total Payments"), if any of the Total Payments
will be subject to the tax (the "Excise Tax") imposed by Section 4999 of the
Code (or any similar tax that may hereafter be imposed), the Company shall pay
to the Executive in cash an additional amount (the "Gross-Up Payment") such
that the net amount retained by the Executive after deduction of any Excise Tax
upon the Total Payments and any Federal, state and local income tax and Excise
Tax upon the Gross-Up Payment provided for by this Section 7.3 (including FICA
and FUTA), shall be equal to the Total Payments. Such payment shall be made by
the Company to the Executive as soon as practical following the effective date
of termination, but in no event beyond thirty (30) days from such date.
7.4 TAX COMPUTATION. For purposes of determining whether any of
the Total Payments will be subject to the Excise Tax and the amounts of such
Excise Tax:
(a) Any other payments or benefits received or to be received by
the Executive in connection with a Change in Control of the
Company or the Executive's termination of employment (whether
pursuant to the terms of this Agreement or any other plan,
arrangement, or agreement with the Company, or with any person
(which shall have the meaning set forth in Section 3(a)(9) of
the Securities Exchange Act of 1934, including a "group" as
defined in Section 13(d) therein) whose actions result in a
Change in Control of the Company or any person affiliated with
the Company or such persons) shall be treated as "parachute
payments" within the meaning of Section 280G(b)(2) of the
Code, and all "excess parachute payments" within the meaning of
Section 280G(b)(1) shall be treated as subject to the Excise
Tax, unless in the opinion of tax counsel as supported by the
Company's independent auditors and acceptable to the Executive,
such other payments or benefits (in whole or in part) do not
constitute parachute payments, or unless such excess parachute
payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning
of Section 280G(b)(4) of the Code in excess of the base amount
within the meaning of Section 280G(b)(3) of the Code, or are
otherwise not subject to the Excise Tax;
(b) The amount of the Total Payments which shall be treated as
subject to the Excise Tax shall be equal to the lesser of:
(i) the total amount of the Total Payments; or (ii) the amount
of excess parachute payments within the meaning of Section
280G(b)(1) (after applying clause (a) above); and
(c) The value of any noncash benefits or any deferred payment or
benefit shall be determined by the Company's independent
auditors in accordance with the principles of Sections
280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up Payment, the
Executive shall be deemed to pay Federal income taxes at the highest marginal
rate of Federal income taxation in the calendar year in which the Gross-Up
Payment is to be made, and state and local income taxes at the highest marginal
rate of taxation in the state and locality of the Executive's residence on the
effective date of termination, net of the maximum reduction in Federal income
taxes which could be obtained from deduction of such state and local taxes.
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<PAGE> 12
7.5 SUBSEQUENT RECALCULATION. In the event the Internal Revenue
Service adjusts the computation of the Company under Section 7.4 herein so that
the Executive did not receive the greatest net benefit, the Company shall
reimburse the Executive for the full amount necessary to make the Executive
whole, plus a market rate of interest, as determined by the Committee.
ARTICLE 8. OUTPLACEMENT ASSISTANCE
Following a Qualifying Termination (as defined in Section 7.1 herein)
the Executive shall be reimbursed by the Company for the costs of all
outplacement services obtained by the Executive; provided, however, that the
total reimbursement shall be limited to an amount equal to fifteen percent
(15%) of the Executive's Base Salary as of the effective date of termination.
ARTICLE 9. NONCOMPETITION
9.1 Prohibition on Competition. Without the prior written consent
of the Company, during the term of this Agreement, and for twelve (12) months
following the expiration or other termination of this Agreement the Executive
shall not, as an employee or an officer, engage directly or indirectly in any
business or enterprise which is "in competition" with the Company or its
successors or assigns. For purposes of this Agreement, a business or
enterprise will be deemed to be "in competition" if it is engaged in any
significant business activity of the Company or its subsidiaries within the
state (or states, if changed from time to time) within which, during the two
(2) years immediately preceding such termination of employment, the Executive
has been principally engaged in business for the Company or its subsidiaries.
However the Executive shall be allowed to purchase and hold for
investment less than three percent (3%) of the shares of any corporation whose
shares are regularly traded on a national securities exchange or in the
over-the-counter market.
9.2 DISCLOSURE OF INFORMATION. The Executive recognizes that he
has access to and knowledge of certain confidential and proprietary information
of the Company which is essential to the performance of his duties under this
Agreement. The Executive will not, during or after the term of his employment
by the Company, in whole or in part, disclose such information to any person,
firm, corporation, association, or other entity for any reason or purpose
whatsoever, nor shall he make use of any such information for his own purposes.
9.3 COVENANTS REGARDING OTHER EMPLOYEES. During the term of this
Agreement, and for a period of twenty four (24) months following the expiration
of this Agreement, the Executive agrees not to attempt to induce any employee
of the Company to terminate his or her employment with the Company, to accept
employment with any competitor of the Company, or to interfere in a similar
manner with the business of the Company.
ARTICLE 10. ASSIGNMENT
10.1 ASSIGNMENT BY COMPANY. This Agreement may and shall be
assigned or transferred to, and shall be binding upon and shall inure to the
benefit of, any successor of the Company, and any such successor shall be
deemed substituted for all purposes for the "Company" under the terms of this
Agreement. As used in this Agreement, the term "successor" shall mean any
person, firm, corporation, or business entity which at any time, whether by
merger, purchase, or otherwise, acquires all or substantially all of the assets
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or the business of the Company. Notwithstanding such assignment, the Company
shall remain, with such successor, jointly and severally liable for all its
obligations hereunder.
Failure of the Company to obtain the agreement of any successor to be
bound by the terms of this Agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement, and shall immediately entitle
the Executive to compensation from the Company in the same amount and on the
same terms as the Executive would be entitled in the event of a termination of
employment for Good Reason within two (2) years after a Change in Control, as
provided in Article 7 herein. Except as herein provided, this Agreement may not
otherwise be assigned by the Company.
10.2 ASSIGNMENT BY EXECUTIVE. The services to be provided by the
Executive to the Company hereunder are personal to the Executive, and the
Executive's duties may not be assigned by the Executive; provided, however that
this Agreement shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, and administrators,
successors, heirs, distributees, devisees, and legatees. If the Executive dies
while any amounts payable to the Executive hereunder remain outstanding, all
such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the Executive's devisee, legatee, or other
designee or, in the absence of such designee, to the Executive's estate.
ARTICLE 11. DISPUTE RESOLUTION AND NOTICE
11.1 DISPUTE RESOLUTION. The Executive shall have the right
and option to elect to have any good faith dispute or controversy arising under
or in connection with this Agreement settled by litigation or by arbitration.
If arbitration is selected, such proceeding shall be conducted before a
panel of three (3) arbitrators sitting in a location selected by the Executive
within fifty (50) miles from the location of his principal place of employment,
in accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the award of the arbitrators in any court
having competent jurisdiction.
11.2 NOTICE. Any notices, requests, demands, or other
communications provided for by this Agreement shall be sufficient if in writing
and if sent by registered or certified mail to the Executive at the last
address he has filed in writing with the Company or, in the case of the Company,
at its principal offices.
ARTICLE 12. MISCELLANEOUS
12.1 ENTIRE AGREEMENT. This Agreement supersedes any prior
agreements or understandings, oral or written, between the parties hereto, with
respect to the subject matter hereof, and constitutes the entire agreement of
the parties with respect thereto. Without limiting the generality of the
foregoing sentence, this Agreement completely replaces and supersedes any and
all prior employment agreements entered into by and between the Company and the
Executive, and all amendments thereto, in their entirety.
12.2 MODIFICATION. This Agreement shall not be varied, altered,
modified, canceled, changed, or in any way amended except by mutual agreement
of the parties in a written instrument executed by the parties hereto or their
legal representatives.
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12.3 SEVERABILITY. In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement shall be unaffected thereby
and shall remain in full force and effect.
12.4 COUNTERPARTS. This Agreement may be executed in one (1) or
more counterparts, each of which shall be deemed to be an original, but all of
which together will constitute one and the same Agreement.
12.5 TAX WITHHOLDING. The Company may withhold from any benefits
payable under this Agreement all Federal, state, city, or other taxes as may be
required pursuant to any law or governmental regulation or ruling.
12.6 BENEFICIARIES. The Executive may designate one or more persons
or entities as the primary and/or contingent beneficiaries of any amounts to be
received under this Agreement. Such designation must be in the form of a
signed writing acceptable to the Board or the Board's designee. The Executive
may make or change such designation at any time.
12.7 PAYMENT OBLIGATION ABSOLUTE. The Company's obligation to make
the payments and the arrangement provided for herein shall be absolute and
unconditional, and shall not be affected by any circumstances, including,
without limitation, any offset, counterclaim, recoupment, defense, or other
right which the Company may have against the Executive or anyone else. All
amounts payable by the Company hereunder shall be paid without notice or
demand. Each and every payment made hereunder by the Company shall be final,
and the Company shall not seek to recover all or any part of such payment from
the Executive or from whomsoever may be entitled thereto, for any reasons
whatsoever.
The Executive shall not be obligated to seek other employment in
mitigation of the amounts payable or arrangements made under any provision of
this Agreement, and the obtaining of any such other employment shall in no
event effect any reduction of the Company's obligations to make the payments
and arrangements required to be made under this Agreement, except to the extent
provided in Section 7.1(d) herein.
12.8 CONTRACTUAL RIGHT TO BENEFITS. This Agreement establishes and
vests in the Executive a contractual right to the benefits to which he is
entitled hereunder. However, nothing herein contained shall require or be
deemed to require, or prohibit or be deemed to prohibit, the Company to
segregate, earmark, or otherwise set aside any funds or other assets, in trust
or otherwise, to provide for any payments to be made or required hereunder.
12.9 PAYMENT OF LEGAL FEES. To the extend permitted by law, the
Company shall pay all legal fees, costs of arbitration and litigation,
prejudgment interest, and other expenses incurred in good faith by the
Executive as a result of the Company's refusal to provide the benefits to which
the Executive becomes entitled under this Agreement, or as a result of the
Company's contesting the validity, enforceability, or interpretation of this
Agreement, or as a result of any conflict between the parties pertaining to
this Agreement.
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ARTICLE 13. GOVERNING LAW
To the extent not preempted by Federal law, the provisions of this
Agreement shall be construed and enforced in accordance with the laws of the
state of Missouri.
IN WITNESS WHEREOF, the Executive and the Company have executed this
Agreement, pursuant to Compensation Committee approval and ratification by the
Board of Directors, as of the Effective Date.
BOATMEN'S BANCSHARES, INC. EXECUTIVE:
By: /s/ Arthur J. Fleischer /s/ Andrew B. Craig, III
---------------------------- ------------------------------
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EXHIBIT 12.1
NATIONSBANK CORPORATION AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED DECEMBER 31,
ENDED -------------------------------------------
SEPTEMBER 30, 1996 1995 1994 1993 1992 1991
------------------ ------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
EXCLUDING INTEREST ON DEPOSITS
Income before taxes................... $2,676 $ 2,991 $2,555 $1,991 $1,396 $ 109
Equity in undistributed earnings of
unconsolidated subsidiaries......... (12) (7) (3) (5) (1) (1)
Fixed charges:
Interest expense (including
capitalized interest)............ 3,156 4,480 2,896 1,421 916 1,291
Amortization of debt discount and
appropriate issuance costs....... 15 12 8 6 3 2
1/3 of net rent expense............ 94 125 114 96 91 82
------ ------ ------ ------ ------ ------
Total fixed charges......... 3,265 4,617 3,018 1,523 1,010 1,375
Preferred dividend requirements....... 17 13 15 16 29 31
Earnings (excluding capitalized
interest)........................... $5,935 $ 7,601 $5,570 $3,509 $2,398 $1,471
====== ====== ====== ====== ====== ======
Fixed charges......................... $3,282 $ 4,630 $3,033 $1,539 $1,039 $1,406
====== ====== ====== ====== ====== ======
Ratio of Earnings to Fixed Charges.... 1.81 1.64 1.84 2.28 2.31 1.05
INCLUDING INTEREST ON DEPOSITS
Income before taxes................... $2,676 $ 2,991 $2,555 $1,991 $1,396 $ 109
Equity in undistributed earnings of
unconsolidated subsidiaries......... (12) (7) (3) (5) (1) (1)
Fixed charges:
Interest expense (including
capitalized interest)............ 5,684 7,761 5,310 3,570 3,688 5,611
Amortization of debt discount and
appropriate issuance costs....... 15 12 8 6 3 2
1/3 of net rent expense............ 94 125 114 96 91 82
------ ------ ------ ------ ------ ------
Total fixed charges......... 5,793 7,898 5,432 3,672 3,782 5,695
Preferred dividend requirements....... 17 13 15 16 29 31
Earnings (excluding capitalized
interest)........................... $8,463 $10,882 $7,984 $5,658 $5,170 $5,791
====== ====== ====== ====== ====== ======
Fixed charges......................... $5,810 $ 7,911 $5,447 $3,688 $3,811 $5,726
====== ====== ====== ====== ====== ======
Ratio of Earnings to Fixed Charges.... 1.46 1.38 1.47 1.53 1.36 1.01
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF STEPHENS INC.
We hereby consent to the inclusion of our opinion letter dated November
15, 1996 to the Board of Directors of NationsBank Corporation ("NationsBank")
as an annex to the Joint Proxy Statement/Prospectus which forms a part of the
Registration Statement on Form S-4 relating to the proposed merger of Boatmen's
Bancshares, Inc. with and into a wholly owned subsidiary of NationsBank and to
the references to such opinion under "Summary - Opinion of NationsBank's
Financial Advisor", "The Merger - Reasons of NationsBank for the Merger" and
"The Merger - Opinion of NationsBank's Financial Advisor", in such Joint Proxy
Statement/Prospectus. In giving such consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7
of the Securities Act of 1933 or the rules and regulations of the Securities and
Exchange Commission thereunder.
Very truly yours,
/s/ Stephens Inc.
November 15, 1996 Stephens Inc.
<PAGE> 1
EXHIBIT 23.2
[Goldman, Sachs Letterhead]
PERSONAL AND CONFIDENTIAL
- -------------------------
November 15, 1996
Board of Directors
Boatmen's Bancshares, Inc.
One Boatmen's Plaza
800 Market Street
St. Louis, Missouri 63101
Re: Joint Proxy Statement - Prospectus on Form S-4
Gentlemen:
Attached is our opinion letter dated November 15, 1996, with respect to the
fairness to the holders of the outstanding shares of Common Stock, par value $1
per share (the "Shares"), of Boatmen's Bancshares, Inc. (the "Company") of the
Stock Consideration and Cash Consideration (as defined below) to be received for
Shares pursuant to the Agreement and Plan of Merger dated as of August 29, 1996,
by and between NationsBank Corporation ("NationsBank") and the Company (the
"Agreement"). Pursuant to the Agreement, the Company will be merged with a
wholly owned subsidiary of NationsBank and each outstanding Share not owned by
NationsBank will be converted into a number of shares of Common Stock, no par
value per share, of NationsBank determined as set forth in the Agreement (the
"Stock Consideration") or an amount of cash determined as set forth in the
Agreement (the "Cash Consideration").
The foregoing opinion letter is for the information and assistance of
the Board of Directors of the Company in connection with their consideration of
the transaction contemplated therein and is not to be used, circulated, quoted
or otherwise referred to for any other purpose, nor is it to be filed with,
included in or referred to in whole or in part in any registration statement,
proxy statement or any other document, except in accordance with our written
prior consent. We understand that the Company has determined to include our
opinion in the above-referenced Registration Statement.
In that regard, we hereby consent to the reference to the opinion of our Firm
under "Summary - Opinion of Boatmen's Financial Advisors", "The Merger -
Reasons of Boatmen's for the Merger" and "The Merger - Opinion of Boatmen's
Financial Advisors" and to the inclusion of the foregoing opinion in the Joint
Proxy Statement - Prospectus included in the above-mentioned Registration
Statement, as amended. In giving such consent, we do not thereby admit that
we come within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933 or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Goldman, Sachs & Co.
GOLDMAN, SACHS & CO.
<PAGE> 1
EXHIBIT 23.6
Consent of Ernst & Young LLP
We consent to the reference to our firm in the headnote to "Selected Financial
Data" and under the caption "Experts" in the Registration Statement (Form
S-4) and related prospectus of NationsBank Corporation for the merger with
Boatmen's Bancshares, Inc. of its common and preferred stock and to the
incorporation by reference therein of our reports (a) dated January 18, 1996,
with respect to the consolidated financial statements of Boatmen's Bancshares,
Inc. incorporated by reference in its Annual Report (Form 10-K) for the year
ended December 31, 1995, and (b) dated January 18, 1996 (except for the pooling
of interests with Fourth Financial Corporation as of January 31, 1996, and Note
3, for which the date is January 31, 1996) with respect to the supplemental
consolidated financial statements of Boatmen's Bancshares, Inc. as of December
31, 1995 and 1994, and for each of the three years in the period ended December
31, 1995, included in its Current Report on Form 8-K dated May 3, 1996, both
filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
St. Louis, Missouri
November 12, 1996
<PAGE> 1
EXHIBIT 23.7
CONSENT OF PRICE WATERHOUSE LLP
We hereby consent to the incorporation by reference in the Joint Proxy
Statement-Prospectus constituting part of this Registration Statement on Form
S-4 of NationsBank Corporation of our report dated January 12, 1996, which
appears on page 46 of NationsBank Corporation's 1995 Annual Report to
Shareholders, which is incorporated by reference in its Annual Report on Form
10-K for the year ended December 31, 1995. We also consent to the reference to
us under the headings "Experts" and "Selected Financial Date" in such Joint
Proxy Statement-Prospectus. However, it should be noted that Price Waterhouse
LLP has not prepared or certified such "Selected Financial Data".
/s/ PRICE WATERHOUSE LLP
Charlotte, North Carolina
November 13, 1996
<PAGE> 1
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each of NationsBank
Corporation, and the several undersigned Officers and Directors thereof whose
signatures appear below, hereby makes, constitutes and appoints James W. Kiser
and Charles M. Berger, and each of them acting individually, its, his and her
true and lawful attorneys with power to act without any other and with full
power of substitution, to execute, deliver and file in its, his and her name and
on its, his and her behalf, and in each of the undersigned Officer's and
Director's capacity or capacities as shown below, (a) a Registration Statement
of NationsBank Corporation on Form S-4 (or other appropriate form) with respect
to the registration under the Securities Act of 1933, as amended, of a number of
shares of common stock and preferred stock and depositary shares of NationsBank
Corporation to be issued in exchange for the outstanding shares of common stock
and preferred stock and depositary shares of Boatmen's Bancshares, Inc. upon
consummation of the proposed merger of Boatmen's Bancshares, Inc. with and into
NationsBank Corporation, or a wholly owned subsidiary thereof, and any and all
documents in support thereof or supplemental thereto and any and all amendments,
including any and all post-effective amendments, to the foregoing (hereinafter
called the "Registration Statement"), and (b) such registration statements,
petitions, applications, consents to service of process or other instruments,
any and all documents in support thereof or supplemental thereto, and any and
all amendments or supplements to the foregoing, as may be necessary or advisable
to qualify or register the securities covered by said Registration Statement
under such securities laws, regulations or requirements as may be applicable;
and each of NationsBank Corporation and said Officers and Directors hereby
grants to said attorneys, and to each of them, full power and authority to do
and perform each and every act and thing whatsoever as said attorneys or
attorney may deem necessary or advisable to carry out fully the intent of this
power of attorney to the same extent and with the same effect as NationsBank
Corporation might or could do, and as each of said Officers and Directors might
or could do personally in his or her capacity or capacities as aforesaid, and
each of NationsBank Corporation and said Officers and Directors hereby ratifies
and confirms all acts and things which said attorneys or attorney might do or
cause to be done by virtue of this power of attorney and its, his or her
signature as the same may be signed by said attorneys or attorney, or any of
them, to any or all of the following (and/or any and all amendments and
supplements to any or all thereof): such Registration Statement under the
Securities Act of 1933, as amended, and all such registration statements,
petitions, applications, consents to service of process and other instruments,
and any and all documents in support thereof or supplemental thereto, under such
securities laws, regulations and requirements as may be applicable.
IN WITNESS WHEREOF, NationsBank Corporation has caused this
power of attorney to be signed on its behalf, and each of the undersigned
Officers and Directors in the capacity or capacities
<PAGE> 2
noted has hereunto set his or her hand as of the date indicated below.
NATIONSBANK CORPORATION
By: /s/ Hugh L. McColl, Jr.
---------------------------
Hugh L. McColl, Jr.
Chairman of the Board and
Chief Executive Officer
Dated: September 25, 1996
- 2 -
<PAGE> 3
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Hugh L. McColl, Jr. Chairman of the Board, Chief September 25, 1996
- ------------------------------ Executive Officer and Director
Hugh L. McColl, Jr. (Principal Executive Officer)
/s/ James H. Hance, Jr. Vice Chairman and September 25, 1996
- ------------------------------ Chief Financial Officer
James H. Hance, Jr. (Principal Financial Officer)
/s/ Marc D. Oken Executive Vice President and September 25, 1996
- ------------------------------ Chief Accounting Officer
Marc D. Oken (Principal Accounting Officer)
/s/ Ronald W. Allen Director September 25, 1996
- ------------------------------
Ronald W. Allen
/s/ Ray C. Anderson Director September 25, 1996
- ------------------------------
Ray C. Anderson
/s/ William M. Barnhardt Director September 25, 1996
- ------------------------------
William M. Barnhardt
- ------------------------------ Director September __, 1996
Thomas E. Capps
/s/ Charles W. Coker Director September 25, 1996
- ------------------------------
Charles W. Coker
/s/ Thomas G. Cousins Director September 25, 1996
- ------------------------------
Thomas G. Cousins
/s/ Alan T. Dickson Director September 25, 1996
- ------------------------------
Alan T. Dickson
- ------------------------------ Director September __, 1996
W. Frank Dowd, Jr.
/s/ Paul Fulton Director September 25, 1996
- ------------------------------
Paul Fulton
/s/ Timothy L. Guzzle Director September 25, 1996
- ------------------------------
Timothy L. Guzzle
/s/ W.W. Johnson Director September 25, 1996
- ------------------------------
W.W. Johnson
/s/ John J. Murphy Director September 25, 1996
- ------------------------------
John J. Murphy
</TABLE>
- 3 -
<PAGE> 4
<TABLE>
<S> <C> <C>
/s/ John C. Slane Director September 25, 1996
- -----------------------------
John C. Slane
/s/ John W. Snow Director September 25, 1996
- -----------------------------
John W. Snow
/s/ Meredith R. Spangler Director September 25, 1996
- -----------------------------
Meredith R. Spangler
/s/ Robert H. Spilman Director September 25, 1996
- -----------------------------
Robert H. Spilman
/s/ Ronald Townsend Director September 25, 1996
- -----------------------------
Ronald Townsend
/s/ E. Craig Wall, Jr. Director September 25, 1996
- -----------------------------
E. Craig Wall, Jr.
/s/ Jackie M. Ward Director September 25, 1996
- -----------------------------
Jackie M. Ward
/s/ Virgil R. Williams Director September 25, 1996
- -----------------------------
Virgil R. Williams
</TABLE>
- 4 -
<PAGE> 5
EXHIBIT A
NATIONSBANK CORPORATION
BOARD OF DIRECTORS
RESOLUTIONS
ACQUISITION OF BOATMEN'S BANCSHARES, INC.
AND REPURCHASE OF SHARES
August 29, 1996
Acquisition of Boatmen's Bancshares, Inc.
WHEREAS, it is proposed that NationsBank Corporation (the "Corporation")
purchase all of the outstanding capital stock (the "Acquisition") of Boatmen's
Bancshares, Inc. ("Boatmen's"); and
WHEREAS, up to 100% of the purchase price for the Acquisition will be paid in
shares of the Corporation's common stock (the "NationsBank Common Stock"),
subject to the cash election rights of the shareholders of Boatmen's in
accordance with the terms of the transaction as set forth in the draft
Acquisition Agreement (as defined below) as attached hereto as Exhibit A, with
---------
such changes and modifications thereto as the appropriate officers of the
Corporation determine to be necessary or desirable; and
WHEREAS, it is deemed to be fair, advisable and in the best interests of the
Corporation and its shareholders to effect the Acquisition;
NOW, THEREFORE, BE IT:
RESOLVED, that the Board of Directors of the Corporation hereby approves the
Acquisition and the other transactions contemplated in connection therewith, to
be negotiated and evidenced by an Agreement and Plan of Merger by and between
the Corporation and Boatmen's (the "Acquisition Agreement"), including the
issuance of up to 100% of the purchase price in shares of NationsBank Common
Stock in exchange for the outstanding shares of Boatmen's common stock
("Boatmen's Common Stock") upon consummation of the Acquisition at an exchange
ratio of .6525 shares of NationsBank Common Stock for each outstanding share of
Boatmen's Common Stock, with the right of Boatmen's shareholders to elect at
their option to receive cash, with a maximum of 40% of the purchase price to be
issued in cash; and
RESOLVED, that the Board of Directors of the Corporation hereby determines that
the Boatmen's Common Stock as the consideration to be received by the
Corporation in exchange for shares of NationsBank Common Stock and cash, if
any, is adequate; and
RESOLVED, that the Board of Directors of the Corporation hereby authorizes the
appropriate officers of the Corporation to nego-
- 1 -
<PAGE> 6
tiate, execute and deliver the Acquisition Agreement, with such changes and
modifications thereto as such officers determine to be necessary or desirable;
and
RESOLVED, that the appropriate officers of the Corporation be, and each of them
hereby is, authorized, empowered and directed, subject to the terms and
conditions of the Acquisition Agreement, to do any and all things necessary to
effectuate and consummate the transactions contemplated by the Acquisition
Agreement as may be prescribed by law or as they may deem necessary or
advisable, including the negotiation, execution and delivery of a stock option
agreement and certain employment agreements; to prepare all documentation and
to effect all filings and obtain appropriate permits, consents, approvals and
authorizations of all third parties, including the Board of Governors of the
Federal Reserve System, the Office of the Comptroller of the Currency, the
Federal Deposit Insurance Corporation and any other applicable federal or state
regulatory authority; and to execute personally or by attorney-in-fact such
required filings or amendments or supplements to such required filings, and
otherwise to cause such filings and any amendments thereto to become effective
or otherwise approved; and
RESOLVED, that the proper officers of the Corporation be, and each of them
hereby is, authorized and directed to execute an amendment to the Corporation's
Articles of Incorporation, establishing and fixing the preferences, limitations
and relative rights of the Corporation's Cumulative Convertible Preferred
Stock, Series A, and 7% Cumulative Redeemable Preferred Stock, Series B
(collectively, the "Preferred Stock"); and
RESOLVED, that the issuance by the Corporation of shares of Preferred Stock to,
respectively, the holders of the Boatmen's Cumulative Convertible Preferred
Stock, Series A, and 7% Cumulative Redeemable Preferred Stock, Series B pursuant
to the terms of the Acquisition Agreement be, and it hereby is, approved, and
all such shares, upon issuance will be fully paid and nonassessable and not
subject to preemptive rights; and
RESOLVED, that a special meeting of shareholders of the Corporation (the
"Special Meeting") be held at such place, date and time as shall be determined
by the Chairman of the Board, the President or the Secretary in accordance with
the terms of the Acquisition Agreement, to consider and act on the issuance of
NationsBank Common Stock in the Acquisition (the "Issuance"); and
RESOLVED, that the record date for the determination of shareholders entitled
to vote at the Special Meeting and any adjournments thereof shall be the close
of business on such date as shall be determined by the Chairman of the Board,
the President or the Secretary (the "Record Date"); and
RESOLVED, that the proper officers of the Corporation be, and each of them
hereby is, authorized and directed, for and on behalf of the Corporation, to
mail to the shareholders of record as of the close of business on the Record
Date, a Notice of Special Meeting, accompanied by a Joint Proxy
Statement-Prospectus of the Corporation and Boatmen's; and
- 2 -
<PAGE> 7
RESOLVED, that the Issuance shall be submitted to the Corporation's shareholders
entitled to vote thereon for their approval at the Special Meeting, and that the
Board of Directors unanimously recommend that the shareholders of the
Corporation entitled to vote thereon approve the Issuance; and
RESOLVED, that Andrew B. Craig, III and four other persons as may be acceptable
to the Board of Directors of the Corporation be appointed as directors of the
Corporation in such manner and at such time as set forth in the Acquisition
Agreement; and
RESOLVED, that the Board of Directors of the Corporation will nominate Mr. Craig
to serve as a member of the Executive Committee and to serve as Chairman of the
Board for the period set forth in the Acquisition Agreement; and
RESOLVED, that the appropriate officers of the Corporation be, and each of them
hereby is, authorized, empowered and directed to vote any shares of any
subsidiary of the Corporation (other than those shares held by any subsidiary in
a fiduciary capacity, in which event the fiduciary shall make all decisions
related to such shares, including whether or not and how to vote any shares held
by it in such capacity) as may be necessary to effect the consummation of the
Acquisition; and
RESOLVED, that the Corporation hereby reserves, sets aside and authorizes for
issuance up to 110,000,000 shares of the authorized but unissued shares of
NationsBank Common Stock (the "Shares"), and that the appropriate officers of
the Corporation be, and each of them hereby is, authorized and empowered to
issue the Shares, or such portion thereof, as may be necessary in connection
with the conversion and exchange of the issued and outstanding shares of
Boatmen's, as well as any outstanding stock options of Boatmen's, in accordance
with the provisions of such conversion and exchange as set forth in the
Acquisition Agreement; and
RESOLVED, that the appropriate officers of the Corporation be, and each of them
hereby is, authorized, empowered and directed to convert any rights with respect
to Boatmen's Common Stock pursuant to stock options or stock appreciation rights
which are outstanding as of the closing of the Acquisition into rights with
respect to NationsBank Common Stock, such conversion and the terms of any
converted stock options or stock appreciation rights to be in accordance with
the terms of the Acquisition Agreement; and
RESOLVED, that, in connection with the issuance of the Shares pursuant to the
Acquisition Agreement, the appropriate officers of the Corporation be, and each
of them hereby is, authorized, empowered and directed to execute and file with
the Securities and Exchange Commission (the "Commission") a Registration
- 3 -
<PAGE> 8
Statement on Form S-4 (or such other form as such officers, upon advice of
counsel, may determine to be necessary or appropriate) under the Securities Act
of 1933, as amended (the "Securities Act"), to execute and file all such other
instruments and documents, and to do all such other acts and things in
connection with the Registration Statement, including the execution and filing
of such amendment or amendments (including any post-effective amendments)
thereto, as they may deem necessary or advisable to effect such filings and to
procure the effectiveness of the Registration Statement (and any such
post-effective amendments thereto) and to make such supplements to the Joint
Proxy Statement-Prospectus forming a part of said Registration Statement as may
be required or otherwise as they may deem advisable; and
RESOLVED, that Paul J. Polking and Charles M. Berger be, and each of them with
full power to act without the other hereby is, authorized and empowered to sign
the aforesaid Registration Statement and any amendment or amendments thereto
(including any post-effective amendments) on behalf of and as attorneys for the
Corporation and on behalf of and as attorneys for any of the following: the
Principal Executive Officer, the Principal Financial Officer, the Principal
Accounting Officer and any other officer of the Corporation; and
RESOLVED, that Paul J. Polking be, and he hereby is, designated as Agent for
Service of the Corporation with all such powers and functions as are provided
by the General Rules and Regulations of the Commission under the Securities Act
and the Securities Exchange Act of 1934, as amended (the "Exchange Act"); and
RESOLVED, that the Shares, when issued and distributed in accordance with and
pursuant to the Acquisition Agreement, shall be fully paid and non-assessable
and the holders of such Shares shall be subject to no further call or liability
with respect thereto; and
RESOLVED, that the appropriate officers of the Corporation be, and each of them
hereby is, authorized, empowered and directed, in the name of and on behalf of
the Corporation, to take all such actions and to execute all such documents as
such officers may deem necessary or appropriate for compliance with the
Securities Act or the Exchange Act in connection with the transactions
contemplated by the Acquisition Agreement; and
RESOLVED, that the listing of the Shares to be issued pursuant to the
Acquisition Agreement on the New York Stock Exchange, the Pacific Stock Exchange
and the London Stock Exchange hereby is approved, and that the appropriate
officers of the Corporation be, and each of them hereby is, authorized,
empowered and directed, with the assistance of counsel, to prepare, execute and
file listing applications and any requests for determinations as to the
application of certain rules to the Acquisition with the New York Stock
Exchange, the Pacific Stock Exchange and the London Stock Exchange and to take
all actions necessary or appropriate to effect such listings and requests; and
RESOLVED, that the listing of the shares of Preferred Stock on the Nasdaq Stock
Market (or such other exchange as the appro-
- 4 -
<PAGE> 9
priate officers deem necessary or desirable) hereby is approved, and that the
appropriate officers of the Corporation be, and each of them hereby is,
authorized, empowered and directed, with the assistance of counsel, to prepare,
execute and file listing applications and any requests for determinations with
respect to the Preferred Stock as to the application of certain rules to the
Acquisition with the Nasdaq Stock Market (or other such exchange as the
appropriate officers deem necessary or desirable) and to take all actions
necessary or appropriate to effect such listings and requests; and
RESOLVED, that it is desirable and in the best interests of the Corporation that
the Shares to be issued in accordance with and pursuant to the Acquisition
Agreement be qualified or registered for distribution in various states where
appropriate, that the Chairman and Chief Executive Officer, the Chief Financial
Officer, any Executive Vice President, any Senior Vice President or any
Associate General Counsel and the Secretary or any Assistant Secretary hereby
are authorized, empowered and directed to determine the states in which
appropriate action shall be taken to qualify or register for distribution the
Shares as such officers may deem advisable; that said officers be, and each of
them hereby is, authorized, empowered and directed to perform on behalf of the
Corporation any and all such acts as they may deem necessary or advisable in
order to comply with the applicable laws of any such states, and in connection
therewith to execute and file all requisite papers and documents, including,
without limitation, resolutions, applications, reports, surety bonds,
irrevocable consents and appointments of attorneys for service of process; and
the execution by such officers of any such paper or document or the doing by
them of any act in connection with the foregoing matters shall establish
conclusively their authority therefor from the Corporation and the approval and
ratification by the Corporation of the papers and documents so executed and the
actions so taken; and
RESOLVED, that the foregoing officers be, and each of them hereby is,
authorized, empowered and directed to do any and all things which in their
judgment may be necessary or appropriate in order to obtain a permit, exemption,
registration or qualification for, and a dealer's license with respect to, the
distribution of the Shares in accordance with and under the securities or
insurance laws of any one or more of the states as such officers may deem
advisable, and in connection therewith to execute, acknowledge, verify, deliver,
file and publish all applications, reports, resolutions, consents, consents to
service of process, powers of attorneys, commitments and other papers and
instruments as may be required under such laws and to take any and all further
action which they may deem necessary or appropriate in order to secure and to
maintain such permits, exemptions, registrations and qualifications in effect
for so long as they shall deem in the best interests of the
- 5 -
<PAGE> 10
Corporation; and
RESOLVED, that ChaseMellon Shareholder Services ("ChaseMellon") be, and it
hereby is, appointed Transfer Agent and Registrar for the Shares; that
ChaseMellon be, and it hereby is, vested with all the power and authority as
Transfer Agent and Registrar with respect to the Shares as it has heretofore
been vested with for the shares of NationsBank Common Stock currently issued
and outstanding; and that, if determined to be necessary or advisable by the
appropriate officers of the Corporation, ChaseMellon may be appointed Exchange
Agent for the Acquisition; and
RESOLVED, that the Board of Directors of the Corporation hereby adopts, as if
expressly set forth herein, the form of any resolution required by any authority
to be filed in connection with any applications, consents to service, issuer's
covenants or other documents, applications, reports or filings relating to the
foregoing resolutions if (i) in the opinion of the officers of the Corporation
executing same, the adoption of such resolutions is necessary or desirable and
(ii) the Secretary or an Assistant Secretary of the Corporation evidences such
adoption by inserting in the minutes of this meeting copies of such resolutions,
which will thereupon be deemed to be adopted by the Board of Directors of the
Corporation with the same force and effect as if presented at this meeting.
Repurchase of Shares
WHEREAS, it is deemed to be in the best interests of the Corporation and its
shareholders to repurchase shares of NationsBank Common Stock in open market
transactions or in negotiated unsolicited private sales up to an amount equal
to the number of shares to be issued in the Acquisition; and
WHEREAS, the Board of Directors of the Corporation has been advised by
management that the Corporation satisfies its state law requirements applicable
to repurchasing its shares, including its ability to declare and pay
distributions;
NOW, THEREFORE, BE IT:
RESOLVED, that the Corporation may repurchase, from time to time and in one or
more transactions, up to an aggregate of 110,000,000 shares of NationsBank
Common Stock in open market transactions or in negotiated unsolicited private
sales in order to offset the Corporation's obligations under the Acquisition
Agreement; and
RESOLVED, that Hugh L. McColl, Jr., Chairman and Chief Executive Officer, James
H. Hance, Jr., Vice Chairman and Chief Financial Officer, and John E. Mack,
Senior Vice President and Treasurer are, and any one of them hereby is, directed
and authorized to determine whether to repurchase any shares of NationsBank
Common Stock related to the Acquisition and the timing relating to such
repurchases, and to do or cause to be done any and all such acts and things,
including the execution and delivery of all documents, agreements, certificates,
and other instruments, which they may deem necessary or advisable in order to
carry out
- 6 -
<PAGE> 11
the intent of the preceding resolutions.
Further Authority and Ratification
NOW, THEREFORE, BE IT:
RESOLVED, that the appropriate officers of the Corporation hereby are
authorized, empowered and directed to do any and all things necessary,
appropriate or convenient to carry into effect the foregoing resolutions,
including the execution and delivery of all such instruments, agreements,
certificates, reports, applications, notices, letters and other documents; and
RESOLVED, that any and all actions heretofore taken by any of the directors,
officers, representatives or agents of the Corporation or any of its affiliates
in connection with the transactions contemplated by the Acquisition Agreement or
otherwise referred to in the foregoing resolutions hereby are ratified,
confirmed and approved in all respects as the acts and deeds of the Corporation.
- 7 -
<PAGE> 12
CERTIFICATE OF SECRETARY
------------------------
I, ALLISON L. GILLIAM, Assistant Secretary of NationsBank
Corporation, a corporation duly organized and existing under the laws of the
State of North Carolina, do hereby certify that the foregoing is a true and
correct copy of resolutions duly adopted by a majority of the entire Board of
Directors of said corporation at a meeting of said Board of Directors held
August 29, 1996, at which meeting a quorum was present and acted throughout and
that said resolutions are in full force and effect and have not been amended or
rescinded as of the date hereof.
IN WITNESS WHEREOF, I have hereupon set my hand and affixed
the seal of said corporation this 26th day of September, 1996.
(CORPORATE SEAL)
/s/ Allison L. Gilliam
---------------------------
Assistant Secretary
- 8 -
<PAGE> 1
EXHIBIT 99.2
CONSENT OF PERSON ABOUT TO BECOME A DIRECTOR
--------------------------------------------
The undersigned, pursuant to Rule 438 promulgated under the Securities Act of
1933, as amended, hereby consents to being named as a person about to become a
Director of NationsBank Corporation in the Joint Proxy Statement-Prospectus
which forms a part of the Registration Statement on Form S-4 of NationsBank
Corporation to be filed by NationsBank Corporation with the Securities and
Exchange Commission in connection with the Agreement and Plan of Merger, dated
as of August 29, 1996, as amended, among NationsBank Corporation, NB Holdings
Corporation and Boatmen's Bancshares, Inc.
Dated November 12, 1996
------------
/s/ Andrew B. Craig, III
---------------------------
Andrew B. Craig, III
<PAGE> 1
EXHIBIT 99.3
NATIONSBANK CORPORATION
---------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
---------------------
A Special Meeting of Shareholders of NationsBank Corporation
("NationsBank") will be held in the International Trade Center, 200 North
College Street, in the city of Charlotte, North Carolina, at 11:00 a.m. local
time on December 20, 1996, to consider and act upon:
1. The issuance of shares of Common Stock of NationsBank ("Common
Stock") and a new series of NationsBank Convertible Preferred Stock
pursuant to the merger (the "Merger") of Boatmen's Bancshares, Inc.
("Boatmen's") with and into NB Holdings Corporation, a wholly owned
subsidiary of NationsBank ("NB Holdings"), upon the terms and subject to
the conditions set forth in the Agreement and Plan of Merger, dated as of
August 29, 1996, as amended, between NationsBank, Boatmen's and NB
Holdings.
2. The amendment of the NationsBank Restated Articles of Incorporation
to increase the number of authorized shares of Common Stock to
1,250,000,000.
3. The amendment and restatement of the NationsBank Corporation Key
Employee Stock Plan.
4. The transaction of such other business as may properly come before
the meeting or any adjournments or postponements thereof.
Only holders of record of Common Stock and ESOP Convertible Preferred
Stock, Series C, at the close of business on October 22, 1996, are entitled to
notice of and to vote at such meeting or any adjournments or postponements
thereof. Approval of the matters to be voted on at the Special Meeting requires
the affirmative vote of a majority of the votes cast by holders of Common Stock
and ESOP Convertible Preferred Stock, Series C, voting together as a single
class. In addition, the proposal regarding the amendment to the NationsBank
Restated Articles of Incorporation also requires for approval the affirmative
vote of a majority of the votes cast by the holders of Common Stock, voting
together as a separate group.
/s/ HUGH L. McCOLL, JR.
--------------------------------------
Hugh L. McColl, Jr.
Chairman of the Board and
Chief Executive Officer
November 15, 1996
- --------------------------------------------------------------------------------
PLEASE, MARK, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY, WHETHER OR NOT YOU PLAN
TO ATTEND THE SPECIAL MEETING.
THE BOARD OF DIRECTORS OF NATIONSBANK UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE TO APPROVE THE MATTERS TO BE VOTED UPON AT THE SPECIAL MEETING.
- --------------------------------------------------------------------------------
<PAGE> 1
EXHIBIT 99.4
[NATIONSBANK LETTERHEAD]
November 15, 1996
Dear Fellow Shareholder:
We are pleased to enclose information relating to a Special Meeting of
Shareholders of NationsBank Corporation to be held in the International Trade
Center, 200 North College Street, in the city of Charlotte, North Carolina, at
11:00 a.m. local time on December 20, 1996.
On August 29, 1996, NationsBank and Boatmen's Bancshares, Inc. entered into
a definitive agreement to combine NationsBank with Boatmen's by merging
Boatmen's into a wholly owned subsidiary of NationsBank. The merger has been
approved by the Boards of Directors of both NationsBank and Boatmen's.
The purpose of our Special Meeting is to consider and vote on (i) the
issuance of NationsBank stock to Boatmen's shareholders in the proposed merger,
(ii) an amendment to the NationsBank Restated Articles of Incorporation to
increase the authorized number of shares of Common Stock to 1,250,000,000, and
(iii) an amendment and restatement of the NationsBank Corporation Key Employee
Stock Plan.
The merger with Boatmen's is a momentous event in the history of our
company. The merger will create an unmatched banking franchise serving more than
13 million customers in 16 states in the Southeast, Mid-Atlantic, Midwest and
Southwest. As a result of the merger, NationsBank will have pro forma combined
assets of approximately $225 billion, pro forma combined deposits of
approximately $139 billion and pro forma combined shareholders' equity of
approximately $19 billion.
The principal purpose of the proposed amendment to increase the authorized
number of shares of Common Stock is to permit potential future stock splits in
appropriate circumstances.
The matters to be voted on by NationsBank shareholders require for approval
the affirmative vote of a majority of the votes cast by holders of NationsBank
Common Stock and NationsBank ESOP Convertible Preferred Stock, Series C, voting
together as a single class. In addition, the proposal regarding the amendment to
the NationsBank Restated Articles of Incorporation also requires for approval
the affirmative vote of a majority of the votes cast by the holders of
NationsBank Common Stock, voting together as a separate group.
Shareholders are entitled to vote all shares of Common Stock and ESOP
Convertible Preferred Stock, Series C, held by them on October 22, 1996, which
is the record date for the Special Meeting.
WE URGE YOU TO CONSIDER CAREFULLY THESE IMPORTANT MATTERS, WHICH ARE
DESCRIBED IN THE ATTACHED JOINT PROXY STATEMENT-PROSPECTUS. In order to ensure
that your vote is represented at the meeting, please indicate your choice on the
proxy form, date and sign it, and promptly return it in the enclosed envelope.
You are, of course, welcome to attend the meeting and to vote your shares in
person.
/s/ HUGH L. McCOLL, JR.
--------------------------------------
Hugh L. McColl, Jr.
Chairman of the Board and
Chief Executive Officer
<PAGE> 1
EXHIBIT 99.5
BOATMEN'S BANCSHARES, INC.
A MISSOURI CORPORATION
---------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 20, 1996
---------------------
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Boatmen's Special Meeting") of Boatmen's Bancshares, Inc. ("Boatmen's") will be
held on December 20, 1996, at 10:00 a.m. local time at One Boatmen's Plaza,
800 Market Street, St. Louis, Missouri 63101, for the following purposes:
To consider and vote upon a proposal to approve the Agreement and Plan
of Merger, dated as of August 29, 1996, as amended (the "Agreement"), among
Boatmen's, NationsBank Corporation and NB Holdings Corporation, pursuant to
which (i) Boatmen's would merge with and into NB Holdings Corporation (the
"Merger"), (ii) each outstanding share of common stock, par value $1.00 per
share, of Boatmen's ("Boatmen's Common Stock") would be converted into the
right to receive 0.6525 of a share of NationsBank Common Stock or, at the
holder's election, an amount of cash based upon the closing prices of
NationsBank Common Stock during a ten-day period ending ten days prior to
the anticipated effective date of the Merger (subject to an aggregate
maximum of 40% of the total consideration paid to holders of Boatmen's
Common Stock in the Merger), (iii) each outstanding share of Boatmen's
Cumulative Convertible Preferred Stock, Series A, stated value $100 per
share, liquidation preference $400 per share ("Boatmen's Series A Preferred
Stock") would be converted into the right to receive one share of
Cumulative Convertible Preferred Stock, Series A, of NationsBank (the
"NationsBank New Series A Preferred Stock"), (iv) each outstanding share of
Boatmen's 7% Cumulative Redeemable Preferred Stock, Series B, stated value
$100 per share, liquidation preference $100 per share ("Boatmen's Series B
Preferred Stock") would be converted into the right to receive one share of
7% Cumulative Redeemable Preferred Stock, Series B, of NationsBank, and (v)
each outstanding Depositary Share of Boatmen's relating to the Boatmen's
Series A Preferred Stock ("Boatmen's Depositary Shares") would be converted
into the right to receive one Depositary Share of NationsBank relating to
the NationsBank New Series A Preferred Stock, all upon the terms and
subject to the conditions set forth in the Agreement, as such terms and
conditions are more fully described in the accompanying Joint Proxy
Statement-Prospectus.
A copy of the Agreement is set forth in Appendix A to the accompanying
Joint Proxy Statement-Prospectus.
The Board of Directors of Boatmen's has fixed the close of business on
October 22, 1996, as the record date for determination of shareholders entitled
to notice of and to vote at the Boatmen's Special Meeting or at any adjournments
or postponements thereof. Record holders of Boatmen's Common Stock and Boatmen's
Series B Preferred Stock as of the Boatmen's Record Date are entitled to vote at
the Boatmen's Special Meeting and the affirmative vote of the holders of
two-thirds of the outstanding shares of Boatmen's Common Stock and Boatmen's
Series B Preferred Stock, voting together as a single class, is required to
approve the Merger.
Holders of Boatmen's Common Stock, Boatmen's Series A Preferred Stock,
Boatmen's Series B Preferred Stock and Depositary Shares have dissenters'
appraisal rights in connection with the Merger. See "THE MERGER -- Dissenting
Shareholders" and "DISSENTERS' RIGHTS" in the accompanying Joint Proxy
Statement-Prospectus for a description of the manner in which such rights may be
exercised.
THE BOARD OF DIRECTORS OF BOATMEN'S HAS APPROVED THE AGREEMENT AND BELIEVES
THE MERGER IS FAIR TO, AND IS IN THE BEST INTERESTS OF, ITS SHAREHOLDERS.
ACCORDINGLY, THE BOARD UNANIMOUSLY RECOMMENDS THAT ITS SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE AGREEMENT.
EACH SHAREHOLDER IS URGED TO COMPLETE AND RETURN PROMPTLY THE ACCOMPANYING
PROXY WHETHER OR NOT HE OR SHE PLANS TO ATTEND THE BOATMEN'S SPECIAL MEETING.
The prompt return of each shareholder's signed proxy will help assure a quorum
and aid Boatmen's in reducing the expense of additional proxy solicitation. The
giving of such proxy does not affect a shareholder's right to vote in person in
the event the shareholder attends the Boatmen's Special Meeting.
By Order of the Board of Directors
/s/ Forrest S. FitzRoy
Forrest S. FitzRoy
Secretary
St. Louis, Missouri
November 15, 1996
<PAGE> 1
EXHIBIT 99.6
[BOATMEN'S LETTERHEAD]
November 15, 1996
Dear Fellow Shareholder:
We are pleased to invite you to attend a Special Meeting of Shareholders of
Boatmen's Bancshares, Inc. to be held at 10:00 a.m. on December 20, 1996, at
One Boatmen's Plaza, 800 Market Street, St. Louis, Missouri.
In connection with this meeting, holders of Boatmen's Common Stock and
holders of Boatmen's 7% Cumulative Redeemable Preferred Stock, Series B
("Boatmen's Series B Preferred Stock"), are being asked to consider and vote
upon a proposal to approve an Agreement and Plan of Merger (the "Merger
Agreement"), pursuant to which Boatmen's will merge with and into a subsidiary
of NationsBank Corporation (the "Merger").
For nearly 150 years, Boatmen's has provided excellent customer service and
strong commitment to its communities. The Merger allows this tradition to
continue with even greater focus on customer satisfaction and product
innovation. Boatmen's shareholders have the opportunity, through the Merger, to
align themselves with one of the premier financial institutions in the nation.
The combination of Boatmen's and NationsBank will result in a company that ranks
in size and profitability with the top companies in the world.
In the Merger, each outstanding share of Boatmen's Common Stock will be
converted into the right to receive 0.6525 of a share of NationsBank Common
Stock or, at the election of the holder, an equivalent amount in cash (based on
the average market value of such NationsBank Common Stock during a ten trading
day period prior to the consummation of the Merger), subject to an aggregate
maximum of 40% of the total consideration paid to holders of Boatmen's Common
Stock in the Merger. In addition, in the Merger, each share of Boatmen's
Convertible Preferred Stock, Series A ("Boatmen's Series A Preferred Stock") and
Boatmen's Series B Preferred Stock will be converted into one share of a
corresponding new series of NationsBank Preferred Stock having substantially
identical terms as the relevant series of Boatmen's Preferred Stock. Each of the
Boatmen's Depositary Shares, representing interests in Boatmen's Series A
Preferred Stock, will be converted into one Depositary Share representing a
comparable interest in the new NationsBank Series A Preferred Stock. It is
expected that the Merger generally will be tax free to Boatmen's shareholders
for federal income tax purposes, to the extent they receive stock rather than
cash consideration.
Based on the $95.125 last reported sale price per share of NationsBank
Common Stock on the New York Stock Exchange Composite Transactions List on
November 14, 1996, each share of Boatmen's Common Stock would have been
converted into the right to receive NationsBank Common Stock having a market
price of $62.069 at such time. The actual value of the NationsBank Common
Stock to be received in exchange for Boatmen's Common Stock will depend on the
market price of the NationsBank Common Stock at the time the Merger is
consummated.
Consummation of the Merger is subject to certain conditions, including
obtaining the requisite approvals of Boatmen's and NationsBank's shareholders
and appropriate regulatory authorities. As further described in the accompanying
Joint Proxy Statement-Prospectus, the Board of Directors of Boatmen's has the
right to terminate the Merger Agreement in certain circumstances involving a
substantial decrease in the price of NationsBank Common Stock, unless
NationsBank elects to increase the exchange ratio as provided in the Merger
Agreement.
BOATMEN'S SHAREHOLDERS ARE URGED TO READ CAREFULLY THE ACCOMPANYING JOINT
PROXY STATEMENT-PROSPECTUS, INCLUDING THE APPENDICES THERETO, WHICH CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. Copies of the Joint Proxy
Statement-Prospectus are also being furnished to holders of shares of Boatmen's
Series A Preferred Stock and related Depositary Shares, but such holders are not
entitled to vote at the meeting.
<PAGE> 2
Whether or not you personally attend the meeting, holders of Boatmen's
Common Stock and Boatmen's Series B Preferred Stock should complete, sign and
date the enclosed proxy card and return it in the enclosed prepaid envelope as
soon as possible. This action will not limit a holder's right to vote in person
should such holder wish to attend the meeting and vote in person.
THE BOARD OF DIRECTORS OF BOATMEN'S HAS APPROVED THE MERGER AGREEMENT AND
BELIEVES THE MERGER IS FAIR TO, AND IS IN THE BEST INTERESTS OF, ITS
SHAREHOLDERS. ACCORDINGLY, THE BOARD UNANIMOUSLY RECOMMENDS THAT ITS
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT.
Sincerely,
/s/ Andrew B. Craig, III
Andrew B. Craig, III
Chairman of the Board and
Chief Executive Officer
<PAGE> 1
EXHIBIT 99.7
FORM
OF
PROXY NATIONSBANK CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS, DECEMBER 20, 1996
The undersigned shareholder of NationsBank Corporation hereby appoints
Edward J. Brown, III, Eileen M. Friars and Anthony T. Grant or any of them
acting by majority or acting singly in the absence of the others, attorneys and
proxies, with full power of substitution, to represent the undersigned and vote
all of the shares of Common Stock of NationsBank Corporation which the
undersigned is entitled to vote at the Special Meeting of Shareholders to be
held in the International Trade Center, 200 North College Street, Charlotte,
North Carolina, on Friday, December 20, 1996, at 11:00 A.M. (local time) or any
adjournment(s) thereof:
The shares represented by this proxy will be voted as directed by the
shareholder. If no direction is given when the duly executed proxy is returned,
such shares will be voted "FOR" Proposals 1, 2 and 3.
1. Approval of the Issuance of Common Stock and Cumulative Convertible Preferred
Stock, Series A, of NationsBank Corporation in the Merger of Boatmen's
Bancshares, Inc. and NationsBank Corporation.
For [ ] Against [ ] Abstain
2. Adoption of the Amendment to the Restated Articles of Incorporation of
NationsBank Corporation.
For [ ] Against [ ] Abstain
PLEASE SIGN ON REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
(This Proxy is continued on the reverse side)
(This Proxy is continued from other side)
3. Adoption of the Amended and Restated NationsBank Corporation Key Employee
Stock Plan.
For [ ] Against [ ] Abstain
The undersigned hereby authorizes the proxies to vote in their discretion on
any other business which may properly be brought before the meeting or any
adjournment thereof.
----------------------------------
Signature
----------------------------------
Signature
Date
------------------------------
Please mark, date and sign as your
name appears above and return in
the enclosed envelope. If acting
as executor, administrator,
trustee, guardian, etc., you
should so indicate when signing.
If the signer is a corporation,
please sign in full corporate name
by duly authorized officer.
I PLAN TO ATTEND THE SPECIAL MEETING: Yes [ ] No [ ]
Your vote is important to us. Whether or not you expect to attend the
Special Meeting, please complete, sign and return the attached proxy card
promptly in the accompanying envelope. The envelope requires no postage if
mailed in the United States.
<PAGE> 1
EXHIBIT 99.8
FORM OF
PROXY
FRONT
[LOGO]
BOATMEN'S BANCSHARES, INC.
Dear Shareholder:
A Special Meeting of shareholders of Boatmen's Bancshares, Inc. will be
held at One Boatmen's Plaza, 800 Market Street, St. Louis, Missouri
63101, on Friday, December 20, 1996, at 10:00 a.m. At the Special Meeting,
shareholders will act upon a proposal to approve the Agreement and Plan of
Merger, dated as of August 29, 1996, as amended (the "Agreement"), among
Boatmen's, NationsBank Corporation and NB Holdings Corporation, and the
consummation of the transactions contemplated thereby, pursuant to which
Boatmen's would be merged with and into NB Holdings Corporation, upon the terms
and subject to the conditions set forth in the Agreement.
It is important that your shares are represented at the Special Meeting.
Whether or not you plan to attend the Special Meeting, please review the
enclosed Joint Proxy Statement-Prospectus, complete the attached proxy form
below, and return it promptly in the envelope provided.
PLEASE DETACH PROXY HERE, SIGN AND MAIL
- --------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED "FOR" THE PROPOSAL ON THE REVERSE SIDE IF NO
INSTRUCTION TO THE CONTRARY IS INDICATED. IF ANY OTHER BUSINESS IS
PRESENTED AT THE SPECIAL MEETING, THIS PROXY WILL BE VOTED IN ACCORDANCE
WITH THE RECOMMENDATIONS OF MANAGEMENT.
The undersigned hereby ratifies and confirms all that said proxies, or any
of them or their substitutes may lawfully do or cause to be done by virtue
hereof, and acknowledges receipt of the notice of the Special Meeting and the
Joint Proxy Statement-Prospectus accompanying it.
Dated 1996
----------------------,
--------------------------------------
--------------------------------------
Please insert date of signing. Sign
exactly as name appears at left. Where
stock is issued in two or more names,
all should sign. If signing as
attorney, administrator, executor,
trustee or guardian, give full title
as such. A corporation should sign by
an authorized officer and affix seal.
<PAGE> 2
BACK
(LOGO)(R)
BOATMEN'S BANCSHARES, INC.
PLEASE DETACH PROXY HERE, SIGN AND MAIL
- --------------------------------------------------------------------------------
P R O X Y BOATMEN'S BANCSHARES, INC.
SPECIAL MEETING DECEMBER 20, 1996
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE CORPORATION
The undersigned shareholder of Boatmen's Bancshares, Inc., a Missouri
corporation ("Boatmen's"), appoints ________________________ and
________________________ , or either of them, with full power to act alone, the
true and lawful attorneys-in-fact of the undersigned, with full power of
substitution and revocation, to vote all shares of stock of Boatmen's which the
undersigned is entitled to vote at the Special Meeting of shareholders of
Boatmen's to be held at One Boatmen's Plaza, 800 Market Street, St. Louis,
Missouri 63101, on Friday, December 20, 1996, at 10:00 a.m. and at any
adjournment thereof, with all powers the undersigned would possess if personally
present, as follows:
1. Proposal to approve the Agreement and Plan of Merger, dated as of
August 29, 1996, as amended (the "Agreement"), among Boatmen's,
NationsBank Corporation and NB Holdings Corporation, and the
consummation of the transactions contemplated thereby, pursuant
to which Boatmen's would be merged with and into NB Holdings
Corporation, upon the terms and subject to the conditions set
forth in the Agreement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. Any other matter that may be submitted to a vote of shareholders
at the Special Meeting.
(YOU ARE REQUESTED TO COMPLETE, SIGN AND RETURN THIS PROXY PROMPTLY)
