<PAGE>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED NOVEMBER 24, 1995)
$1,500,000,000
(NationsBank Logo appears here)
SENIOR MEDIUM-TERM NOTES, SERIES E
SUBORDINATED MEDIUM-TERM NOTES, SERIES E
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
NationsBank Corporation ("NationsBank" or the "Corporation") may from time
to time offer its Senior Medium-Term Notes, Series E (the "Senior Notes"), and
Subordinated Medium-Term Notes, Series E (the "Subordinated Notes" and,
collectively with the Senior Notes, the "Notes"). NationsBank may sell up to
$1,500,000,000 in aggregate initial offering price of Notes, subject to
reduction from time to time after the date hereof at the option of NationsBank,
including reduction as a result of the sale of other Debt Securities or
Preferred Stock, or Common Stock (each as defined in the accompanying
Prospectus) of NationsBank. The Senior Notes will rank equally with all other
unsubordinated and unsecured indebtedness of the Corporation. The Subordinated
Notes will be subordinated in right of payment to all Senior Indebtedness (as
defined in the accompanying Prospectus) of the Corporation. Payment of principal
of the Subordinated Notes may be accelerated only in the case of the bankruptcy
of NationsBank. See "DESCRIPTION OF DEBT SECURITIES -- Subordination" and
"DESCRIPTION OF DEBT SECURITIES -- Defaults and Rights of Acceleration" in the
accompanying Prospectus.
Each Note will mature on a day nine months or more from its date of issue
and, as set forth in an applicable pricing supplement to this Prospectus
Supplement (a "Pricing Supplement"), may be subject to redemption at the option
of the Corporation or repaid at the option of the holder thereof prior to its
stated maturity. Each Note will bear interest at a fixed rate (a "Fixed Rate
Note") or at a floating rate (a "Floating Rate Note"), as set forth in the
applicable Pricing Supplement. The interest rate or interest rate formula for
each Note will be established by the Corporation at the time of issuance of such
Note (the "Original Issue Date") and will be set forth therein and specified in
the applicable Pricing Supplement. See "DESCRIPTION OF NOTES."
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will be issued only in minimum denominations of $1,000 and any integral multiple
in excess thereof, and Notes will be issued in book-entry form only, subject to
certain exceptions listed herein, and will be represented by one or more global
notes registered in the name of The Depository Trust Company ("DTC") or its
nominee. Beneficial interests in Notes issued in book-entry form will be shown
on, and transfer thereof will be effected only through, records maintained by
DTC or its nominee and its participants. See "DESCRIPTION OF NOTES -- Book-Entry
System."
THE NOTES ARE NOT SAVINGS ACCOUNTS OR 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, AND INVOLVE INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH
CAROLINA 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
PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT HERETO, OR THE
PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
[CAPTION]
<TABLE>
PRICE TO AGENT'S DISCOUNTS OR PROCEEDS TO THE
PUBLIC (1) COMMISSIONS (2)(3) CORPORATION (2)(4)
<S> <C> <C> <C>
Per Note.... 100% .125%-.750% 99.875%-99.250%
Total....... $1,500,000,000 $1,875,000-$11,250,000 $1,488,750,000-$1,498,125,000
</TABLE>
(1) Unless otherwise specified in the applicable Pricing Supplement, each Note
will be issued at 100% of its principal amount.
(2) The Corporation will pay a commission to NationsBanc Capital Markets, Inc.,
Lehman Brothers, Lehman Brothers Inc., Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated, or
Salomon Brothers Inc (each an "Agent" and together, the "Agents") in the
form of a discount to such Agent which, unless otherwise negotiated, will
range from .125% to .750% of the principal amount of the Note (depending on
its stated maturity date), for any Note sold through an Agent on an agency
basis. The Company may also sell Notes at a discount to an Agent, as
principal, for resale to investors and other purchasers. Unless otherwise
specified in an applicable Pricing Supplement, any Note sold to an Agent as
principal will be purchased by such Agent at a price equal to 100% of the
principal amount thereof less a percentage of the principal amount equal to
the commission applicable to an agency sale of a Note of identical maturity.
See "PLAN OF DISTRIBUTION."
(3) The Corporation has also agreed to indemnify the Agents against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(4) Before deducting expenses payable by the Corporation estimated at $250,000,
including reimbursement of certain expenses of the Agents.
The Notes are being offered on a continuing basis by the Corporation through
the Agents, each of which has agreed to use its reasonable efforts to solicit
offers to purchase the Notes. The Corporation also may sell Notes to any Agent
acting as principal for resale to investors or other purchasers, and has
reserved the right to sell Notes directly to or through additional agents and to
investors on its own behalf. The Notes will not be listed on any securities
exchange, and there can be no assurance that the Notes offered by this
Prospectus Supplement will be sold or that there will be a secondary market for
the Notes or liquidity in the secondary market if one develops. The Corporation
reserves the right to withdraw, cancel or modify the offer made hereby without
notice. The Corporation or any Agent, if it solicits an offer on an agency
basis, may reject any offer to purchase Notes, whether or not solicited, in
whole or in part. See "PLAN OF DISTRIBUTION."
NATIONSBANC CAPITAL MARKETS, INC.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
SALOMON BROTHERS INC
The date of this Prospectus Supplement is January 10, 1996.
<PAGE>
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes supplements,
and to the extent inconsistent therewith, replaces, the description of the
general terms and provisions of the Debt Securities (as defined in the
accompanying Prospectus) set forth under the heading "DESCRIPTION OF DEBT
SECURITIES" in the accompanying Prospectus. The following description will apply
to all the Notes unless otherwise specified in the applicable Pricing
Supplement.
GENERAL
The Notes will be limited to $1,500,000,000 in aggregate principal amount,
subject to reduction from time to time after the date hereof at the option of
NationsBank, including reduction as a result of the sale of other Debt
Securities or of Preferred Stock or Common Stock (each as defined in the
accompanying Prospectus) of NationsBank. The Notes will be either Senior Notes
or Subordinated Notes (referred to in the accompanying Prospectus as "Senior
Debt Securities" and "Subordinated Debt Securities," respectively). The Senior
Notes will constitute a single series of Senior Debt Securities to be issued
under the Indenture dated as of January 1, 1995 (such Indenture, as it may be
amended from time to time, the "Senior Indenture") between the Corporation and
First Trust of New York, N.A., as successor Trustee to BankAmerica National
Trust Company (the "Senior Trustee"). The Subordinated Notes will constitute a
single series of Subordinated Debt Securities to be issued under the Indenture
dated as of January 1, 1995 (such Indenture, as it may be amended from time to
time, the "Subordinated Indenture") between the Corporation and The Bank of New
York, as Trustee (the "Subordinated Trustee" and, together with the Senior
Trustee, the "Trustees"). The Senior Indenture and the Subordinated Indenture
are collectively referred to herein as the "Indentures."
The Senior Notes will be unsecured and unsubordinated obligations of the
Corporation and will rank equally with all unsecured senior debt of the
Corporation. The Subordinated Notes will be unsecured and will be subordinate
and junior in right of payment, to the extent and in the manner set forth in the
Subordinated Indenture, to all Senior Indebtedness (as defined in the
accompanying Prospectus) of the Corporation. See "DESCRIPTION OF DEBT
SECURITIES -- Subordination" in the accompanying Prospectus. The Corporation had
issued and outstanding $6.7 billion of senior debt instruments and $3.9 billion
of subordinated debt instruments at September 30, 1995, including medium-term
notes. The Corporation's subsidiaries had issued and outstanding $4.8 billion of
senior debt instruments and $.3 billion of subordinated debt instruments at
September 30, 1995. As of September 30, 1995, the Corporation had $2.6 billion
of commercial paper and other short-term notes payable outstanding. During the
nine months ended September 30, 1995, the amount of commercial paper and other
short-term notes payable outstanding averaged $2.6 billion and ranged from a
high of $2.8 billion to a low of $2.3 billion. At September 30, 1995, the
Corporation had unused lines of credit aggregating $1.5 billion, principally to
support commercial paper borrowings. There is no limitation in the Indentures on
the amount of Senior Indebtedness (as defined in the accompanying Prospectus),
Debt Securities or other obligations which may be issued by the Corporation.
There is no right of acceleration of the payment of principal of the
Subordinated Notes upon a default in the payment of principal of or interest on
such Notes or in the performance of any covenant of the Corporation contained in
the Subordinated Indenture. Payment of the principal of the Subordinated Notes
may be accelerated only in the case of the bankruptcy of the Corporation. See
"DESCRIPTION OF DEBT SECURITIES -- Defaults and Rights of Acceleration" in the
accompanying Prospectus.
Unless otherwise specified in an applicable Pricing Supplement, the Notes
will be issuable in denominations of $1,000 and integral multiples in excess
thereof. Unless otherwise specified in an applicable Pricing Supplement, Notes
will be issued in fully registered book-entry form only and will be represented
by one or more global securities registered in the name of DTC or its nominee.
Generally, owners of beneficial interests in Notes issued in book-entry form
will not be entitled to physical delivery of notes in certificated form and will
not be considered the holders thereof. With respect to Notes issued in
book-entry form, all references herein to "registered holders," "Registered
Holders," "holders" or "Holders" will be to DTC or its nominee and not to owners
of beneficial interests in such Notes. See "DESCRIPTION OF NOTES -- Book-Entry
System."
The Notes will be offered on a continuing basis and will mature on a day
nine months or more from date of issue, as selected by the purchaser thereof and
agreed to by the Corporation. In addition, Floating Rate Notes will mature on an
Interest Payment Date (as hereinafter defined). Unless otherwise specified in
the Pricing
S-2
<PAGE>
Supplement, "Business Day" with respect to any Note means any day, other than a
Saturday or Sunday, that (i) is not a day on which banking institutions are
generally authorized or obligated by law to close in the City of New York and
(ii) if such Note is a LIBOR Note (as hereinafter defined), is a London Banking
Day. "London Banking Day" with respect to any Note means any day on which
dealings in deposits in U.S. dollars are transacted in the London interbank
market.
The Pricing Supplement relating to a Note will describe the following
terms: (i) whether such Note is a Fixed Rate Note or a Floating Rate Note; (ii)
the price (expressed as a percentage of the aggregate principal amount thereof)
at which such Note will be issued; (iii) the Original Issue Date; (iv) the
stated maturity date and, if applicable, whether such stated maturity date may
be renewed at the option of the holder or extended by the Corporation, and if
so, the Final Maturity Date (as hereinafter defined) and other terms with
respect thereto; (v) if such Note is a Fixed Rate Note, the rate per annum at
which such Note will bear interest; (vi) if such Note is a Floating Rate Note,
the Base Rate, the Initial Interest Rate, the Interest Reset Period, the
Interest Payment Dates, the Index Maturities, the Maximum Interest Rate, if any,
the Minimum Interest Rate, if any, the Spread and/or Spread Multiplier, if any
(each as hereinafter defined), and any other terms relating to the particular
method of calculating the interest rate for such Note; (vii) whether the Note is
an original issue discount Note, and, if so, the yield to maturity; (viii)
whether such Note may be redeemed by the Corporation or repaid at the option of
the registered holder prior to its stated maturity date and, if so, the
provisions relating to such redemption or repayment; (ix) whether such Note is a
Senior Note or a Subordinated Note; and (x) any other terms of such Note not
inconsistent with the provisions of the applicable Indenture.
PAYMENT OF PRINCIPAL AND INTEREST
Unless otherwise specified in the applicable Pricing Supplement, (i)
payments of principal of (and premium, if any, on) and any interest on Notes
issued in book-entry form will be made in accordance with the arrangements from
time to time in place between the Paying Agent (as hereinafter defined) and DTC
or its nominee, as holder (see "DESCRIPTION OF NOTES -- Book-Entry System"), and
(ii) payments of interest on Notes in certificated form, if any (other than
interest payable at the Maturity Date (as hereinafter defined)), generally will
be made by check mailed to the holders of such Notes as of the applicable record
date at the address of the holders appearing on the Security Register of the
Corporation with respect to such Notes. Unless otherwise specified in the
applicable Pricing Supplement, principal (and premium, if any) and interest
payable at the Maturity Date of a Note issued in certificated form will be paid
by wire transfer of immediately available funds upon surrender of such Note at
the corporate trust office of the applicable Trustee or Paying Agent.
BOOK-ENTRY SYSTEM
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will be issued in book-entry form only and will be represented by one or more
fully registered global securities (each, a "Global Book-Entry Note") registered
in the name of Cede & Co., as nominee of DTC.
Under the book-entry system of DTC, purchases of Notes must be made by or
through persons that have accounts with DTC ("Participants") or persons that may
hold interests through Participants ("Indirect Participants"). Upon the issuance
of a Global Book-Entry Note, DTC will credit, on its book-entry registration and
transfer system, the respective principal amounts of the individual Notes
represented by such Global Book-Entry Note to the accounts of Participants as
designated by the applicable Agent. The ownership of beneficial interests in
such Global Book-Entry Note will be shown on, and the transfer of that ownership
will be effected only through, records maintained by DTC (with respect to
interests of Participants), the records of Participants (with respect to
interests of Indirect Participants) or on the records of Indirect Participants.
So long as DTC, or its nominee, is the registered holder of a Global Book-Entry
Note, DTC or its nominee will be considered the sole owner or holder of the
Notes represented by such Global Book-Entry Note for all purposes under the
applicable Indenture. Except as provided below, owners of beneficial interests
in a Global Book-Entry Note will not be entitled to have Notes that are
represented by such Global Book-Entry Note registered in their names, will not
receive or be entitled to receive physical delivery of such Notes in
certificated form and will not be considered the owners or holders thereof under
the applicable Indenture. The laws of some states require that certain
purchasers of securities take physical delivery of such securities in
certificated form. Such transfer restrictions and such laws may impair the
ability to own, transfer or pledge beneficial interests in a Global Book-Entry
Note.
S-3
<PAGE>
DTC has advised the Corporation and the Agents as follows: DTC is a
limited-purpose trust company organized under New York law, a "banking
organization" within the meaning of New York law, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the Uniform
Commercial Code as in effect in the State of New York and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended. DTC was created to hold securities deposited by its
Participants and to facilitate the clearance and settlement of securities
transactions among Participants in such securities through electronic
computerized book-entry changes in accounts of the Participants, thereby
eliminating the need for physical movement of securities certificates. DTC's
direct Participants include securities brokers and dealers (including one or
more of the Agents), banks (including certain subsidiaries of the Corporation),
trust companies, clearing corporations and certain other organizations, some of
whom (and/or their representatives) have ownership interests in DTC. DTC is
owned by a number of its Participants and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Indirect access to DTC's book-entry system is also available to
Indirect Participants, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Participant, either
directly or indirectly. The rules applicable to DTC and its Participants are on
file with the Securities and Exchange Commission.
To facilitate subsequent transfers, all securities deposited with DTC are
registered in the name of DTC's partnership nominee, Cede & Co. The deposit of
securities with DTC and their registration in the name of Cede & Co. effect no
change in beneficial ownership. DTC has no knowledge of the actual beneficial
owners of securities deposited with it such as the Notes; DTC's records reflect
only the identity of the Participants to whose accounts such securities are
credited, which may or may not be the beneficial owners. The Participants will
remain responsible for keeping account of their holdings on behalf of their
customers. Conveyance of notices and other communications by DTC to
Participants, by Participants to Indirect Participants, and by Participants and
Indirect Participants to beneficial owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time. Neither DTC nor Cede & Co. will consent or vote with
respect to securities held by DTC. Under its usual procedures, DTC mails an
omnibus proxy to an issuer as soon as possible after the record date. The
omnibus proxy assigns Cede & Co.'s consenting or voting rights to those
Participants to whose accounts the securities are credited on the record date
(identified in a listing attached to the omnibus proxy).
DTC can act only on behalf of Participants, who in turn act on behalf of
Indirect Participants. Owners of beneficial interests in a Global Book-Entry
Note that are not Participants or Indirect Participants but desire to purchase,
sell or otherwise transfer ownership of such interests may do so only through
Participants and Indirect Participants. In addition, the ability of owners of
beneficial interests in a Global Book-Entry Note to pledge such interests to
persons or entities that do not participate in the DTC system may be limited due
to the lack of certificates for the Notes. Currently, DTC may only transmit and
receive payments in U.S. dollars.
Except as otherwise provided herein, the holder of a Global Book-Entry Note
shall be the only person entitled to receive payments with respect to Notes
represented by such Global Book-Entry Note. Accordingly, payments of principal
of (and premium, if any, on) and any interest on individual Notes represented by
a Global Book-Entry Note will be made only to DTC or its nominee, as the case
may be, as the registered holder of the Global Book-Entry Note representing such
Notes. DTC has advised the Corporation and the Agents that it is DTC's practice
to credit Participants' accounts on the payable date in accordance with their
respective holdings with respect to a Global Book-Entry Note as shown on DTC's
records, unless DTC has reason to believe that it will not receive payment on
such date. Payments by Participants to beneficial owners are governed by
standing instructions and customary practices, as is the case with securities
held in "street name." Such instructions will be the responsibility of such
Participant and not of DTC, the Agents or the Corporation, subject to any
statutory or regulatory requirements as may be in effect from time to time. The
Corporation will in every case be discharged by payment to, or to the order of,
DTC or its nominee, as the holder of such Global Book-Entry Note, of the amount
so paid. Each of the persons shown in the records of DTC or its nominee as an
owner of a beneficial interest therein must look solely to DTC or its nominee,
as the case may be, for its share of any such payment so made by the
Corporation. Neither the Corporation, the Trustee for such Notes, nor any Paying
Agent, Security Registrar or Transfer Agent for such Notes will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of owners of beneficial interests in a Global
Book-Entry Note or for maintaining, supervising or reviewing any records
relating to such beneficial interests.
S-4
<PAGE>
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of beneficial interests in Global Book-Entry Notes among its
Participants, it is under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time.
If DTC is at any time unwilling, unable or ineligible to continue as a
depositary and a successor depositary is not appointed by the Corporation within
90 days, the Company will issue registered Notes in certificated form in
exchange for beneficial interests in each Global Book-Entry Note. In addition,
the Corporation may at any time determine not to have Notes represented by
Global Book-Entry Notes and, in such event, will issue registered Notes in
certificated form in exchange for Global Book-Entry Notes. In any such instance,
an owner of a beneficial interest in a Global Book-Entry Note will be entitled
to physical delivery in certificated form of Notes equal in principal amount to
such beneficial interest and to have such Notes registered in its name. Unless
otherwise indicated in the applicable Pricing Supplement, Notes so issued in
certificated form will be issued in denominations of $1,000 or any integral
multiple in excess thereof and will be issued in registered form only, without
coupons.
Notes issued in book-entry form through the facilities of DTC may be
transferred or exchanged through a participating member of DTC. No service
charge will be made for any registration of transfer or exchange of Notes issued
in certificated form, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
therewith.
PAYING AGENT, SECURITY REGISTRAR AND TRANSFER AGENT
Until the Notes are paid, the Corporation will at all times maintain a
Paying Agent, Security Registrar and Transfer Agent, which may or may not be the
same person, for the Senior Notes and the Subordinated Notes. The Corporation
has initially appointed The Bank of New York ("BNY"), as Paying Agent, Security
Registrar and Transfer Agent with respect to the Senior Notes. As Subordinated
Trustee, BNY will act in the same capacities for the Subordinated Notes. The
Corporation reserves the right at any time to vary or terminate the appointment
of any Paying Agent, Security Registrar and Transfer Agent, to appoint
additional Paying Agents, Security Registrars and Transfer Agents and to approve
any change in the office through which the Paying Agent, Security Registrar or
Transfer Agent shall act.
INTEREST AND INTEREST RATES
The Notes will bear interest at a fixed rate, at floating rates determined
by reference to one or more of the Base Rates described below (which may be
adjusted by a Spread and/or Spread Multiplier applicable to such Floating Rate
Notes) or at any combination of fixed and floating rates until the principal
thereof is paid. Interest, if any, will be payable as specified under "Fixed
Rate Notes" and "Floating Rate Notes" below. Interest payable and punctually
paid on any date on which interest is payable (an "Interest Payment Date") and
on the stated maturity date (or New Maturity Date or Extended Maturity Date, as
the case may be (each as hereinafter defined)) or upon earlier redemption or
repayment (such stated maturity date, New Maturity Date or Extended Maturity
Date, or date of redemption or repayment, as the case may be, being collectively
hereinafter referred to as the "Maturity Date"), or on a later date on which
payment may be made hereunder in respect of such Interest Payment Date, will be
paid to the registered holder at the close of business on the Regular Record
Date (as hereinafter defined) next preceding such Interest Payment Date;
PROVIDED, HOWEVER, that the first payment of interest on any Note with an
Original Issue Date (as set forth in the applicable Pricing Supplement) between
a Regular Record Date and an Interest Payment Date or on an Interest Payment
Date will be made on the Interest Payment Date following the next succeeding
Regular Record Date to the registered holder on such next succeeding Regular
Record Date; and PROVIDED, FURTHER, HOWEVER, that interest payable at the
Maturity Date will be payable to the person to whom principal shall be payable.
Unless otherwise specified in the applicable Pricing Supplement, the
"Regular Record Date" with respect to any Interest Payment Date for a Note will
be the date (whether or not a Business Day) 15 calendar days preceding such
Interest Payment Date, except that the Regular Record Date for a March 15
Interest Payment Date for a Fixed Rate Note will always be the February 28
(whether or not a Business Day) immediately preceding such Interest Payment
Date.
S-5
<PAGE>
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Original Issue Date at the
rate per annum stated on the face thereof, except as described below under
"DESCRIPTION OF NOTES -- Extension of Maturity," until the principal amount
thereof is paid. Unless otherwise specified in the applicable Pricing
Supplement, interest on each Fixed Rate Note will be computed on the basis of a
360-day year of twelve 30-day months and will be payable semi-annually in
arrears on June 15 and December 15 of each year during the term of the Note
(each an "Interest Payment Date") and on the Maturity Date. If any Interest
Payment Date or the Maturity Date of a Fixed Rate Note falls on a day that is
not a Business Day, the payment will be made on the next succeeding Business Day
as if it were made on the date such payment was due, and no additional interest
will accrue on the amount so payable for the period from and after such Interest
Payment Date or the Maturity Date, as the case may be. Interest payments will be
in the amount of interest accrued from and including the next preceding Interest
Payment Date (or from and including the Original Issue Date if no interest has
been paid or duly provided for with respect to such Note) to but excluding the
Interest Payment Date or Maturity Date, as the case may be.
FLOATING RATE NOTES
Each Floating Rate Note will bear interest from its Original Issue Date at
the rates determined as described below until the principal amount thereof is
paid. Unless otherwise specified in the applicable Pricing Supplement, interest
on Floating Rate Notes will be determined by reference to an interest rate basis
(the "Base Rate"), which may be (i) the CD Rate (a "CD Rate Note"), (ii) the
Commercial Paper Rate (a "Commercial Paper Rate Note"), (iii) LIBOR (a "LIBOR
Note"), (iv) the Federal Funds Rate (a "Federal Funds Rate Note"), (v) the Prime
Rate (a "Prime Rate Note"), (vi) the Treasury Rate (a "Treasury Rate Note"),
(vii) the CMT Rate (a "CMT Rate Note"), (viii) the Eleventh District Cost of
Funds Rate (an "Eleventh District Cost of Funds Rate Note"), or (ix) such other
Base Rate as may be set forth in the applicable Pricing Supplement and in such
Note. The Base Rate will be based upon one or more selected Index Maturities (as
hereinafter defined) and adjusted by a Spread and/or Spread Multiplier (each as
hereinafter defined), if any, as specified in the applicable Pricing Supplement.
The interest rate on each Floating Rate Note will be calculated by reference to
the specified Base Rate, plus or minus the Spread and/or multiplied by the
Spread Multiplier, if any. The "Index Maturity" is the period to maturity of the
instrument or obligation with respect to which the Base Rate is calculated. The
"Spread" is the number of basis points above or below the Base Rate applicable
to such Floating Rate Note, and the "Spread Multiplier" is the percentage of the
Base Rate applicable to the interest rate for such Floating Rate Note. The
Spread, Spread Multiplier, Index Maturity and other variable terms of the
Floating Rate Notes are subject to change by the Corporation from time to time,
but, except as described below under "DESCRIPTION OF NOTES -- Extension of
Maturity," no such change will affect any Floating Rate Note previously issued
or as to which an offer to purchase has been accepted by the Corporation.
As specified in the applicable Pricing Supplement, a Floating Rate Note may
also have either or both of the following (in each case expressed as a rate per
annum on a simple interest basis): (i) a maximum rate at which interest may
accrue during any interest period ("Maximum Interest Rate") and (ii) a minimum
rate at which interest may accrue during any interest period ("Minimum Interest
Rate"). In addition to any such Maximum Interest Rate, the interest rate on a
Floating Rate Note will in no event be higher than the maximum rate permitted by
applicable law, as the same may be modified by United States law of general
application. Under current New York law, the maximum rate of interest (for any
loan in the amount of $250,000 or more) is 25% per annum on a simple interest
basis. This limit may not apply to Notes in which $2,500,000 or more has been
invested.
The Corporation will appoint an agent (a "Calculation Agent") to calculate
interest rates on Floating Rate Notes. BNY has been appointed Calculation Agent
with respect to Floating Rate Notes unless otherwise specified in the applicable
Pricing Supplement.
The interest rate on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semi-annually or annually (such period being the "Interest
Reset Period" for such Note and the first day of each Interest Reset Period
being an "Interest Reset Date"), as specified in the applicable Pricing
Supplement. Unless otherwise specified in the applicable Pricing Supplement and
except as provided below, the Interest Reset Dates will be (i) in the case of
Floating Rate Notes that reset daily, each Business Day; (ii) in the case of
Floating Rate
S-6
<PAGE>
Notes (other than Treasury Rate Notes) that reset weekly, Wednesday of each
week; (iii) in the case of Treasury Rate Notes that reset weekly, Tuesday of
each week; (iv) in the case of Floating Rate Notes that reset monthly, the third
Wednesday of each month; (v) in the case of Floating Rate Notes that reset
quarterly, the third Wednesday of March, June, September and December of each
year; (vi) in the case of Floating Rate Notes that reset semi-annually, the
third Wednesday of each of two months of each year specified in the applicable
Pricing Supplement; and (vii) in the case of Floating Rate Notes that reset
annually, the third Wednesday of one month of each year specified in the
applicable Pricing Supplement. If an Interest Reset Date for any Floating Rate
Note would otherwise be a day that is not a Business Day, such Interest Reset
Date will be postponed to the next succeeding Business Day, except that in the
case of a LIBOR Note, if the next succeeding Business Day is in the next
succeeding calendar month, such Interest Reset Date will be the next preceding
Business Day. If a Treasury bill auction (as described below) will be held on
any day that would otherwise be an Interest Reset Date for a Treasury Rate Note,
then such Interest Reset Date will instead be the Business Day following such
auction date.
Unless otherwise specified in the applicable Pricing Supplement, the
interest rate in effect with respect to a Floating Rate Note during the period
commencing on an Interest Reset Date will be the rate determined on the
"Calculation Date" by reference to the "Interest Determination Date." Unless
otherwise provided in the applicable Pricing Supplement, the Interest
Determination Date with respect to an Interest Reset Date for a CD Rate Note,
Commercial Paper Rate Note, Federal Funds Rate Note, Prime Rate Note or CMT Rate
Note will be the second Business Day preceding such Interest Reset Date; the
Interest Determination Date with respect to an Interest Reset Date for a LIBOR
Note will be the second London Banking Day preceding such Interest Reset Date;
the Interest Determination Date with respect to an Interest Reset Date for an
Eleventh District Cost of Funds Rate Note will be the last Business Day of the
month immediately preceding such Interest Reset Date in which the Federal Home
Loan Bank (the "FHLB") of San Francisco publishes the Index (as hereinafter
defined); and the Interest Determination Date with respect to an Interest Reset
Date for a Treasury Rate Note will be the day of the week in which such Interest
Reset Date falls on which Treasury bills of the Index Maturity specified on the
face of such Treasury Rate Note are auctioned. Treasury bills are normally sold
at auction on Monday of each week. If such day is a legal holiday, the auction
is normally held on the following Tuesday, except that such auction may be held
on the preceding Friday. If, as the result of a legal holiday, an auction is so
held on the preceding Friday, such Friday will be the Interest Determination
Date with respect to the Interest Reset Date for a Treasury Note occurring in
the succeeding week. Unless otherwise specified in the applicable Pricing
Supplement, the "Calculation Date" pertaining to any Interest Determination Date
shall be the earlier of (i) the tenth calendar day after such Interest
Determination Date or, if such day is not a Business Day, the next succeeding
Business Day or (ii) the Business Day next preceding the applicable Interest
Payment Date or Maturity Date, as the case may be.
Unless otherwise specified in the applicable Pricing Supplement, the
interest rate in effect with respect to a Floating Rate Note on each day that is
not an Interest Reset Date will be the interest rate determined as of the
Interest Determination Date pertaining to the immediately preceding Interest
Reset Date, and the interest rate in effect on any day that is an Interest Reset
Date will be the interest rate determined as of the Interest Determination Date
pertaining to such Interest Reset Date, subject in either case to any Maximum or
Minimum Interest Rate limitation referred to above; PROVIDED, HOWEVER, that the
interest rate in effect with respect to a Floating Rate Note for the period from
the Original Issue Date to the initial Interest Reset Date (the "Initial
Interest Rate") will be specified in the applicable Pricing Supplement, if
available, and, unless otherwise specified in the applicable Pricing Supplement,
the interest rate in effect for the ten calendar days immediately prior to the
Maturity Date (with respect to any amount to be redeemed or repaid) will be the
interest rate in effect on the tenth calendar day preceding such Maturity Date.
The interest rate on a Floating Rate Note for the initial Interest Reset Period
(as hereinafter defined) and for the final Interest Reset Period may be based
upon a different Index Maturity and therefore may result in a different interest
rate for either or both of such Interest Reset Periods, as set forth in the
applicable Pricing Supplement.
Interest on each Floating Rate Note will be payable monthly, quarterly,
semi-annually or annually (the "Interest Payment Period"), as specified in the
applicable Pricing Supplement. Unless otherwise specified in the applicable
Pricing Supplement and except as provided below, the date or dates on which
interest will be payable (each an "Interest Payment Date") will be (i) in the
case of Floating Rate Notes with a monthly Interest Payment Period, the third
Wednesday of each month; (ii) in the case of Floating Rate Notes with a
quarterly
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Interest Payment Period, the third Wednesday of March, June, September and
December of each year; (iii) in the case of Floating Rate Notes with a
semi-annual Interest Payment Period, the third Wednesday of each of two months
of each year specified in the applicable Pricing Supplement; (iv) in the case of
Floating Rate Notes with an annual Interest Payment Period, the third Wednesday
of one month of each year specified in the applicable Pricing Supplement; and
(v) in each case, on the Maturity Date.
Interest payments will be in the amount of interest accrued from and
including the next preceding Interest Payment Date in respect of which interest
has been paid or duly provided for (or from and including the Original Issue
Date if no interest has been paid or duly provided for with respect to such
Note) to but excluding the Interest Payment Date or the Maturity Date, as the
case may be. However, in the case of Floating Rate Notes on which the interest
rate is reset daily or weekly, unless otherwise specified in the applicable
Pricing Supplement, interest payments on each Interest Payment Date will be in
the amount of interest accrued from but excluding the Regular Record Date
through which interest has been paid (or from and including the Original Issue
Date if no interest has been paid or duly provided for with respect to such
Note) to and including the Regular Record Date next preceding the applicable
Interest Payment Date, except that the interest payment due on the Maturity Date
will include interest accrued to but excluding such date.
If any Interest Payment Date (other than the Maturity Date) for any
Floating Rate Note would fall on a day that is not a Business Day with respect
to such Note, such Interest Payment Date will be the following day that is a
Business Day with respect to such Note, except that, in the case of a LIBOR
Note, if such Business Day is in the next succeeding calendar month, such
Interest Payment Date will be the immediately preceding day that is a Business
Day with respect to such LIBOR Note. If the Maturity Date of any Floating Rate
Note falls on a day that is not a Business Day, the payment of principal (and
premium, if any) or interest may be made on the next Business Day as if it were
made on the date such payment was due, and no additional interest will accrue on
the amount so payable for the period from and after the Maturity Date.
Unless otherwise specified in the applicable Pricing Supplement, accrued
interest on any Floating Rate Note will be calculated by multiplying the
principal amount of such Note by an accrued interest factor. Such accrued
interest factor will be computed by adding the interest factor calculated for
each day from and including the Original Issue Date, or from but excluding the
last date to which interest has been paid, as the case may be, to and including
the date for which accrued interest is being calculated. Unless otherwise
specified in the applicable Pricing Supplement, the interest factor (expressed
as a decimal) for each such day is computed by dividing the interest rate in
effect on such day by the actual number of days in the year, in the case of
Treasury Rate Notes or CMT Rate Notes, and by 360, in the case of other Floating
Rate Notes. Unless otherwise specified in the applicable Pricing Supplement, all
percentages resulting from any calculation on Floating Rate Notes will be
rounded to the nearest one hundred-thousandth of a percentage point, with five
one-millionths of a percentage point rounded upward (E.G., 9.876545% (or
.09876545) would be rounded to 9.87655% (or .0987655)), and all dollar amounts
used or resulting from such calculation on Floating Rate Notes will be rounded
to the nearest cent (with one-half cent being rounded upward).
Upon the request of the beneficial holder of any Floating Rate Note, the
Calculation Agent will provide the interest rate then in effect and, if
determined, the interest rate that will become effective as a result of a
determination made for the next Interest Reset Date with respect to such
Floating Rate Note. The Calculation Agent will also make certain calculations,
specified below, on or prior to the Calculation Date.
The interest rate that will become effective on each subsequent Interest
Reset Date will be determined by the Calculation Agent (calculated with
reference to the Base Rate and the Spread and/or Spread Multiplier, if any,
specified in the applicable Pricing Supplement) as follows (such determination,
in the absence of manifest error, to be binding upon all parties):
CD RATE:
Unless otherwise specified in the applicable Pricing Supplement, "CD Rate"
means, with respect to an Interest Determination Date relating to a CD Rate Note
(the "CD Rate Interest Determination Date"), the rate on such CD Rate Interest
Determination Date for negotiable certificates of deposit having the Index
Maturity specified in the applicable Pricing Supplement, as such rate is
published by the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board") in "Statistical Release H.15(519), Selected Interest
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Rates," or any successor publication of the Federal Reserve Board ("H.15(519)"),
under the heading "CDs (Secondary Market)." If H.15(519) is not so published by
3:00 p.m., New York City time, on the Calculation Date pertaining to such CD
Rate Interest Determination Date, the CD Rate will be the rate on such CD Rate
Interest Determination Date for negotiable certificates of deposit of the Index
Maturity specified in the applicable Pricing Supplement, as published by the
Federal Reserve Bank of New York in its daily statistical release "Composite
3:30 P.M. Quotations for U.S. Government Securities" ("Composite Quotations")
under the heading "Certificates of Deposit." If by 3:00 p.m., New York City
time, on such Calculation Date such rate is not yet published in Composite
Quotations, the CD Rate for such CD Rate Interest Determination Date will be
calculated by the Calculation Agent and will be the arithmetic mean of the
secondary market offered rates as of 10:00 a.m., New York City time, on such CD
Rate Interest Determination Date, of three leading nonbank dealers in negotiable
U.S. dollar certificates of deposit in The City of New York selected by the
Calculation Agent for negotiable certificates of deposit in denominations of
$5,000,000 of major United States money center banks with a remaining maturity
closest to the Index Maturity specified in the applicable Pricing Supplement.
However, if such dealers are not so quoting such rates, the CD Rate for such CD
Rate Interest Determination Date will be the CD Rate in effect on such CD Rate
Interest Determination Date.
COMMERCIAL PAPER RATE:
Unless otherwise specified in the applicable Pricing Supplement,
"Commercial Paper Rate" means, with respect to an Interest Determination Date
relating to a Commercial Paper Note (a "Commercial Paper Rate Interest
Determination Date"), the Money Market Yield (as hereinafter defined) of the
rate on such Commercial Paper Rate Interest Determination Date for commercial
paper having the Index Maturity specified in the applicable Pricing Supplement
as published in H.15(519) under the heading "Commercial Paper." If such rate is
not so published by 3:00 p.m., New York City time, on the Calculation Date
pertaining to such Commercial Paper Rate Interest Determination Date, the
Commercial Paper Rate will be the Money Market Yield on such Commercial Paper
Rate Interest Determination Date of the rate for commercial paper of the Index
Maturity specified in the applicable Pricing Supplement as published in
Composite Quotations under the heading "Commercial Paper." If by 3:00 p.m., New
York City time, on such Calculation Date such rate is not yet published in
Composite Quotations, the Commercial Paper Rate for such Commercial Paper Rate
Interest Determination Date will be calculated by the Calculation Agent and will
be the Money Market Yield of the arithmetic mean of the offered rates, as of
11:00 a.m., New York City time, on such Commercial Paper Rate Interest
Determination Date of three leading dealers of commercial paper in The City of
New York (which may include the Calculation Agent or its affiliates) selected by
the Calculation Agent for commercial paper of the Index Maturity specified in
the applicable Pricing Supplement placed for an industrial issuer whose bond
rating is "AA" or the equivalent by a nationally recognized securities rating
agency. However, if such dealers are not so quoting such rates, the Commercial
Paper Rate for such Commercial Paper Rate Interest Determination Date will be
the Commercial Paper Rate then in effect on such Commercial Paper Rate Interest
Determination Date.
"Money Market Yield" will be a yield calculated in accordance with the
following formula:
<TABLE>
<S> <C> <C> <C>
Money Market D x 360
Yield = 360 - (D x M) x 100
</TABLE>
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
LIBOR:
Unless otherwise specified in the applicable Pricing Supplement, "LIBOR"
means the rate determined by the Calculation Agent in accordance with the
following provisions:
(i) With respect to an Interest Determination Date relating to a LIBOR
Note (a "LIBOR Interest Determination Date"), LIBOR will be "LIBOR
Telerate" unless "LIBOR Reuters" is specified in the applicable pricing
supplement. "LIBOR Telerate" is the rate for deposits in the LIBOR Currency
(as defined below) having the Index Maturity designated in the applicable
Pricing Supplement that appears on the Designated LIBOR Page (as defined
below) specified in the applicable Pricing Supplement as of 11:00 a.m.
London time, on that LIBOR Interest Determination Date. "LIBOR Reuters" is
that rate which is the
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arithmetic mean of the offered rates (unless the specified Designated LIBOR
Page by its terms provides only for a single rate, in which case such
single rate shall be used) for deposits in the LIBOR Currency having the
Index Maturity designated in the applicable Pricing Supplement that appear
on the Designated LIBOR Page specified in the applicable Pricing Supplement
as of 11:00 a.m. London time, on that LIBOR Interest Determination Date, if
at least two such offered rates appear (unless, as aforesaid, only a single
rate is required) on such Designated LIBOR Page. If the applicable LIBOR
rate cannot be determined under this clause (i), LIBOR in respect of the
related LIBOR Interest Determination Date will be determined as if the
parties had specified the rate described in clause (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which the
applicable LIBOR rate cannot be determined under clause (i) above, the
Calculation Agent will request the principal London offices of each of four
major reference banks in the London interbank market, as selected by the
Calculation Agent, to provide the Calculation Agent with its offered
quotation for deposits in the LIBOR Currency for the period of the Index
Maturity designated in the applicable Pricing Supplement to prime banks in
the London interbank market commencing on the applicable Interest Reset
Date at approximately 11:00 a.m., London time, on such LIBOR Interest
Determination Date and in a principal amount that is representative for a
single transaction in such LIBOR Currency in such market at such time. If
at least two such quotations are provided, LIBOR determined on such LIBOR
Interest Determination Date will be the arithmetic mean of such quotations.
If fewer than two such quotations are provided, LIBOR for such LIBOR
Interest Determination Date will be the arithmetic mean of the rates quoted
at approximately 11:00 a.m. (or such other time specified in the applicable
Pricing Supplement), in the applicable Principal Financial Center (as
defined below), on such LIBOR Interest Determination Date by three major
banks in such Principal Financial Center selected by the Calculation Agent
for loans in the LIBOR Currency to leading European banks, having the Index
Maturity designated in the applicable Pricing Supplement commencing on the
applicable Interest Reset Date and in a principal amount that is
representative for a single transaction in such LIBOR Currency in such
market at such time; PROVIDED, HOWEVER, that if the banks so selected by
the Calculation Agent are not quoting as mentioned in this sentence, LIBOR
determined on such LIBOR Interest Determination Date will be LIBOR then in
effect on such LIBOR Interest Determination Date.
"LIBOR Currency" means the currency (including composite currencies)
specified in the applicable Pricing Supplement as the currency for which LIBOR
shall be calculated. If no such currency is specified in the applicable Pricing
Supplement, the LIBOR Currency shall be U.S. dollars.
"Designated LIBOR Page" means either (a) if "LIBOR Telerate" is designated
in the applicable Pricing Supplement, the display on the Dow Jones Telerate
Service for the purpose of displaying the London interbank offered rates of
major banks for the applicable LIBOR Currency, or (b) if "LIBOR Reuters" is
designated in the applicable Pricing Supplement, the display on the Reuters
Monitor Money Rates Service for the purpose of displaying the London interbank
rates of major banks for the applicable LIBOR Currency. If neither LIBOR
Telerate nor LIBOR Reuters is specified in the applicable Pricing Supplement,
LIBOR for the applicable LIBOR Currency will be determined as if LIBOR Telerate
(and, if the U.S. dollar is the LIBOR Currency, Page 3750) had been specified.
"Principal Financial Center" will generally be the capital city of the
country of the specified LIBOR Currency, except that with respect to U.S.
dollars, Deutsche marks and ECUs, the Principal Financial Center shall be The
City of New York, Frankfurt, and Luxembourg, respectively.
FEDERAL FUNDS RATE:
Unless otherwise specified in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to an Interest Determination Date relating to a
Federal Funds Rate Note (a "Federal Funds Rate Interest Determination Date"),
the rate on such Interest Determination Date for Federal Funds as published in
H.15(519) under the heading "Federal Funds (Effective)." If H.15(519) is not so
published by 3:00 p.m., New York City time, on the Calculation Date pertaining
to such Federal Funds Rate Interest Determination Date, the Federal Funds Rate
will be the rate on such Federal Funds Rate Interest Determination Date for
Federal Funds as published in Composite Quotations under the heading "Federal
Funds/Effective Rate." If by 3:00 p.m., New York City time, on such Calculation
Date such rate is not yet published in Composite Quotations, the
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Federal Funds Rate for such Federal Funds Rate Interest Determination Date will
be calculated by the Calculation Agent and will be the arithmetic mean of the
rates for the last transaction in overnight Federal Funds as of 9:00 a.m., New
York City time, on such Federal Funds Rate Interest Determination Date quoted by
each of three leading brokers of Federal Funds transactions in The City of New
York selected by the Calculation Agent. However, if fewer than three such
brokers are so quoting such rates, the Federal Funds Rate for such Federal Funds
Rate Interest Determination Date with respect to any Federal Funds Rate Note
will be the Federal Funds Rate then in effect on such Federal Funds Rate
Interest Determination Date.
PRIME RATE:
Unless otherwise specified in the applicable Pricing Supplement, "Prime
Rate" means, with respect to an Interest Determination Date relating to a Prime
Rate Note (a "Prime Rate Interest Determination Date"), the rate set forth on
such date in H.15(519) under the heading "Bank Prime Loan," or if not so
published prior to 9:00 a.m., New York City time, on the Calculation Date
pertaining to such Prime Rate Interest Determination Date, then the Prime Rate
will be determined by the Calculation Agent and will be the arithmetic mean of
the rates of interest publicly announced by each bank that appears on the
Reuters Screen U.S. Prime 1 (as defined below) as such bank's prime rate or base
lending rates as in effect for that Prime Rate Interest Determination Date. If
fewer than four such rates but more than one such rate appear on the Reuters
Screen U.S. Prime 1 for the Prime Rate Interest Determination Date, the Prime
Rate will be determined by the Calculation Agent and will be the arithmetic mean
of the prime rates, quoted on the basis of the actual number of days in the year
divided by a 360-day year, as of the close of business on such Prime Rate
Interest Determination Date by four major money center banks in The City of New
York selected by the Calculation Agent. If fewer than two such rates appear on
the Reuters Screen U.S. Prime 1, the Prime Rate will be determined by the
Calculation Agent, as of the close of business on the Prime Rate Interest
Determination Date, on the basis of the prime rates, as of the close of business
on the Prime Rate Interest Determination Date, furnished in The City of New York
by the appropriate number of substitute banks or trust companies organized and
doing business under the laws of the United States, or any State thereof, having
total equity capital of at least $500,000,000 and being subject to supervision
or examination by Federal or State authority, selected by the Calculation Agent,
to provide such rate or rates; PROVIDED, HOWEVER, that if the banks selected as
aforesaid are not quoting as mentioned in this sentence, the Prime Rate for such
Prime Rate Interest Determination Date will be the Prime Rate then in effect on
such Prime Rate Interest Determination Date.
"Reuters Screen U.S. Prime 1" means the display designated as page "U.S.
Prime 1" on the Reuters Monitor Money Rates Service (or such other page as may
replace the U.S. Prime 1 page on that service for the purpose of displaying
prime rates or base lending rates of major United States banks).
TREASURY RATE:
Unless otherwise specified in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to an Interest Determination Date relating to a
Treasury Rate Note (a "Treasury Rate Interest Determination Date"), the rate for
the auction held on such Treasury Rate Interest Determination Date of direct
obligations of the United States ("Treasury bills") having the Index Maturity
specified in the applicable Pricing Supplement, as published in H.15(519) under
the heading "U.S. Government Securities-Treasury bills-auction average
(investment)." If such rate is not published by 3:00 p.m., New York City time,
on the Calculation Date pertaining to such Treasury Rate Interest Determination
Date, the Treasury Rate will be the auction average rate (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and applied
on a daily basis) on such Treasury Rate Interest Determination Date as otherwise
announced by the United States Department of the Treasury, provided that if by
3:00 p.m., New York City time, on such Calculation Date, such rate is not yet
published or reported as provided above or if no such auction is held on such
Treasury Rate Interest Determination Date, then the Treasury Rate for such
Treasury Rate Interest Determination Date will be a yield to maturity (expressed
as a bond equivalent on the basis of a year of 365 or 366 days, as applicable,
and applied on a daily basis) of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 p.m., New York City time, on such Treasury Rate
Interest Determination Date, of three leading primary United States government
securities dealers selected by the Calculation Agent for the issue of Treasury
bills with a remaining maturity closest to the Index Maturity specified in the
applicable Pricing Supplement. However, if such dealers are not so quoting such
rates, the Treasury Rate for such Treasury Rate Interest Determination
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Date with respect to any Treasury Rate Note will be the Treasury Rate then in
effect on such Treasury Date Interest Determination Date.
CMT RATE:
Unless otherwise specified in the applicable Pricing Supplement, "CMT Rate"
means, with respect to an Interest Determination Date relating to a CMT Rate
Note or any Floating Rate Note for which the interest rate is determined by
reference to the CMT Rate (a "CMT Rate Interest Determination Date"), the rate
displayed on the designated CMT Telerate Page under the caption "Treasury
Constant Maturities. . . Federal Reserve Board Release H.15 . . . Mondays
approximately 3:45 p.m.," under the column for the Designated CMT Maturity Index
for (i) if the Designated CMT Telerate Page is 7055, the rate on such CMT Rate
Interest Determination Date and (ii) if the Designated CMT Telerate Page is
7052, the week, or the month, as specified in the applicable Pricing Supplement,
ended immediately preceding the week in which the Related CMT Rate Interest
Determination Date occurs. If such rate is no longer displayed on the relevant
page, or if not displayed by 3:00 p.m., New York City time, on the Calculation
Date pertaining to such CMT Rate Interest Determination Date, then the CMT Rate
for such CMT Rate Interest Determination Date will be such Treasury Constant
Maturity Rate for the Designated CMT Maturity Index as published in the relevant
H.15(519). If such rate is no longer published, or if not published by 3:00
p.m., New York City time, on such Calculation Date, then the CMT Rate for such
CMT Rate Interest Determination Date will be such Treasury Constant Maturity
Rate for the Designated CMT Maturity Index (or other United States Treasury rate
for the Designated CMT Maturity Index) for the CMT Rate Interest Determination
Date with respect to such Interest Reset Date as may then be published by either
the Board of Governors of the Federal Reserve System or the United States
Department of the Treasury that the Calculation Agent determines to be
comparable to the rate formerly displayed on the Designated CMT Telerate Page
and published in the relevant H.15(519). If such information is not provided by
3:00 p.m., New York City time, on such Calculation Date, then the CMT Rate for
the CMT Rate Interest Determination Date will be calculated by the Calculation
Agent and will be a yield to maturity, based on the arithmetic mean of the
secondary market closing offer side prices as of approximately 3:30 p.m., New
York City time, on the CMT Interest Determination Date reported, according to
their written records, by three leading primary United States government
securities dealers (each, a "Referenced Dealer") in The City of New York
selected by the Calculation Agent (from five such Referenced Dealers selected by
the Calculation Agent and eliminating the highest quotation (or, in the event of
equality, one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for the most recently issued direct, non-callable
fixed rate obligations of the United States ("Treasury Note") with an original
maturity of approximately the Designated CMT Maturity Index and a remaining term
to maturity of not less than such Designated CMT Maturity Index minus one year.
If the Calculation Agent cannot obtain three such Treasury Note quotations, the
CMT Rate for such CMT Rate Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity based on the arithmetic mean
of the secondary market offer side prices as of approximately 3:30 p.m., New
York City time, on the CMT Rate Interest Determination Date of three Referenced
Dealers in The City of New York (from five such Referenced Dealers selected by
the Calculation Agent and eliminating the highest quotation (or, in the event of
equality, one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for Treasury Notes with original maturity of the
number of years that is the next highest to the Designated CMT Maturity Index
and a remaining term to maturity closest to the Designated CMT Maturity Index
and in an amount of at least $100,000,000. If three or four (and not five) of
such Referenced Dealers are quoting as described above, then the CMT Rate will
be based on the arithmetic mean of the offer prices obtained and neither the
highest nor lowest of such quotes will be eliminated; PROVIDED, HOWEVER, that if
fewer than three Referenced Dealers selected by the Calculation Agent are
quoting as described herein, the CMT Rate will be the CMT Rate in effect on such
CMT Rate Interest Determination Date. If two Treasury Notes with an original
maturity as described in the third preceding sentence have remaining terms to
maturity equally close to the Designated CMT Maturity Index, the quotes for the
Treasury Rate Note with the shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page designated in the applicable Pricing Supplement (or any
other page as may replace such page on that service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519)), for the
purpose of displaying Treasury Constant Maturity as reported in H.15(519). If no
such page is specified in the applicable Pricing Supplement, the Designated CMT
Telerate Page shall be 7052, for the most recent week.
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"Designated CMT Maturity Index" means the original period to maturity of
the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20, or 30 years)
specified in the applicable Pricing Supplement with respect to which the CMT
Rate will be calculated. If no such maturity is specified in the applicable
Pricing Supplement, the Designated CMT Maturity Index shall be two years.
ELEVENTH DISTRICT COST OF FUNDS RATE:
Unless otherwise specified in the applicable Pricing Supplement, "Eleventh
District Cost of Funds Rate" means, with respect to an Interest Determination
Date relating to an Eleventh District Cost of Funds Rate Note or any Floating
Rate Note for which the interest rate is determined by reference to the Eleventh
District Cost of Funds Rate (an "Eleventh District Cost of Funds Rate Interest
Determination Date"), the rate equal to the monthly weighted average cost of
funds for the calendar month preceding such Eleventh District Cost of Funds Rate
Interest Determination Date as set forth under the caption "Eleventh District"
on Telerate page 7058 as of 11:00 a.m., San Francisco time, on such Eleventh
District Cost of Funds Rate Interest Determination Date. If such rate does not
appear on the Telerate page 7058 on any related Eleventh District Cost of Funds
Rate Interest Determination Date, the Eleventh District Cost of Funds Rate for
such Eleventh District Cost of Funds Rate Interest Determination Date shall be
the monthly weighted average cost of funds paid by member institutions of the
Eleventh Federal Home Loan Bank District that was most recently announced (the
"Index") by the FHLB of San Francisco as such cost of funds for the calendar
month preceding the date of such announcement. If the FHLB of San Francisco
fails to announce such rate for the calendar month next preceding such Eleventh
District Cost of Funds Rate Interest Determination Date, then the Eleventh
District Cost of Funds Rate for such Eleventh District Cost of Funds Rate
Interest Determination Date will be the Eleventh District Cost of Funds Rate in
effect on such Eleventh District Cost of Funds Rate Interest Determination Date.
"Telerate Page 7058" means the display on the Dow Jones Telerate Service on such
page (or such other page as may replace such page on that service for the
purpose of displaying the Eleventh District Cost of Funds Rate) for the purpose
of displaying the monthly average cost of funds paid by member institutions of
the Eleventh Federal Home Loan Bank District.
RENEWABLE NOTES
The Corporation may from time to time offer renewable Notes ("Renewable
Notes") that will mature on an Interest Payment Date as specified in an
applicable Pricing Supplement unless the maturity of all (or if so indicated in
such Pricing Supplement, a portion of) the principal amount of such Note is
renewed in accordance with the procedures described below. Renewable Notes will
be issued in book-entry form only. If the Corporation issues any such Renewable
Notes, the following procedures will apply, unless otherwise specified in the
applicable Pricing Supplement.
On the dates in each year specified in the applicable Pricing Supplement
(each such date, a "Renewal Date"), the maturity of such Renewable Note will be
automatically extended to the next maturity date (each, a "New Maturity Date")
specified in such Pricing Supplement, unless the holder of such Renewable Note
elects to terminate the automatic extension of the maturity of such Renewable
Note (or, if specified in the applicable Pricing Supplement, any portion
thereof) by delivering a notice to such effect to the applicable Trustee (or any
duly appointed Paying Agent) not less than 15 nor more than 30 days prior to the
Renewal Date. An election to terminate the automatic extension of the maturity
of a Renewable Note may be exercised with respect to less than the entire
principal amount of such Renewable Note only if so specified in the applicable
Pricing Supplement and only in such a principal amount, or integral multiple in
excess thereof, as is specified in the applicable Pricing Supplement.
Notwithstanding the foregoing, the maturity of any Renewable Note may not be
extended beyond the final maturity date (the "Final Maturity Date") specified
for such Renewable Notes in the applicable Pricing Supplement. If a holder
elects to terminate the automatic extension of the maturity of any portion of
the principal amount of a Renewable Note on any Renewal Date, such portion will
become due and payable on the stated maturity date or New Maturity Date then in
effect with respect to such Note, as the case may be. An election to terminate
the automatic extension of the maturity of a Renewable Note shall be irrevocable
and shall be binding on each holder of the Note. The renewal of the maturity of
a Renewable Note will not affect the interest rate applicable to such Renewable
Note.
If a Note is represented by a Global Book-Entry Note, DTC or its nominee
will be the holder of such Note and therefore will be the only entity that can
exercise a right to terminate the automatic extension of a Note. In
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order to ensure that DTC or its nominee will timely exercise a right to
terminate the automatic extension with respect to a particular Note, the
beneficial owner of such Note must instruct the broker or other Participant or
Indirect Participant through which it holds an interest in such Note to notify
DTC of its desire to terminate the automatic extension of such Note. Different
firms have different cut-off times for accepting instructions from their
customers and, accordingly, each beneficial owner should consult the broker or
other Participant or Indirect Participant through which it holds an interest in
a Note in order to ascertain the cut-off time by which such an instruction must
be given in order for timely notice to be delivered to DTC or its nominee.
EXTENDIBLE NOTES
The Corporation may from time to time offer Notes whose stated maturity
date may be extended at the option of the Corporation (an "Extendible Note") for
one or more whole year periods (each an "Extension Period"), up to but not
beyond the final maturity date (the "Final Maturity Date") specified for such
Extendible Note in the applicable Pricing Supplement. If the Corporation issues
any such Extendible Notes, the following procedures will apply, unless otherwise
specified in the applicable Pricing Supplement.
The Corporation may exercise such option with respect to an Extendible Note
by notifying the applicable Trustee (or any duly appointed Paying Agent) of such
exercise at least 45 but not more than 60 days prior to the stated maturity date
originally in effect with respect to such Note (the "Initial Maturity Date") or,
if the stated maturity date of such Note has already been extended, prior to the
stated maturity date then in effect (an "Extended Maturity Date"). No later than
40 days prior to the Initial Maturity Date or an Extended Maturity Date, as the
case may be (each, a "Maturity Date"), the applicable Trustee (or any duly
appointed Paying Agent) will mail to the registered holder of such Extendible
Note a notice (the "Extension Notice") relating to such Extension Period, first
class mail, postage prepaid, setting forth (i) the election of the Corporation
to extend the maturity of such Extendible Note, (ii) the new Extended Maturity
Date, (iii) in the case of a Fixed Rate Note, the interest rate applicable to
the Extension Period or, in the case of a Floating Rate Note, the Spread and/or
Spread Multiplier applicable to the Extension Period, and (iv) the provisions,
if any, for redemption during the Extension Period, including the date or dates
on which, the period or periods during which and the price or prices at which
such redemption may occur during the Extension Period. Upon the mailing by the
applicable Trustee (or any duly appointed Paying Agent) of an Extension Notice
to the holder of an Extendible Note, the maturity of such Note shall be extended
automatically as set forth in the Extension Notice, and, except as modified by
the Extension Notice and as described in the next paragraph, such Extendible
Note will have the same terms as prior to the mailing of such Extension Notice.
Notwithstanding the foregoing, not later than 20 days prior to the Maturity
Date for an Extendible Note (or, if such date is not a Business Day, on the
immediately succeeding Business Day), the Corporation may, at its option, revoke
the interest rate, in the case of a Fixed Rate Note, or the Spread and/or Spread
Multiplier, in the case of a Floating Rate Note, provided for in the Extension
Notice and establish a higher interest rate, in the case of a Fixed Rate Note,
or a higher Spread and/or Spread Multiplier, in the case of a Floating Rate
Note, for the Extension Period by mailing or causing the applicable Trustee (or
any duly appointed Paying Agent) to mail notice of such higher interest rate or
higher Spread and/or Spread Multiplier, as the case may be, first class mail,
postage prepaid, to the holder of such Note. Such notice shall be irrevocable.
All Extendible Notes with respect to which the Maturity Date is extended will
bear such higher interest rate, in the case of a Fixed Rate Note, or higher
Spread and/or Spread Multiplier, in the case of a Floating Rate Note, for the
Extension Period.
If the Corporation elects to extend the maturity of an Extendible Note, the
holder of such Note will have the option to elect repayment of such Note by the
Corporation on the Maturity Date then in effect at a price equal to the
principal amount thereof plus any accrued and unpaid interest to such date. In
order for an Extendible Note to be so repaid on the Maturity Date, the
Corporation must receive, at least 15 days but not more than 30 days prior to
the Maturity Date then in effect with respect to the Note (i) the Note with the
form "Option to Elect Repayment" on the reverse of the Note duly completed or
(ii) a telegram, telex, facsimile transmission or a letter from a member of a
national securities exchange or the National Association of Securities Dealers,
Inc. (the "NASD") or a commercial bank or trust company in the United States
setting forth the name of the holder of the Note, the principal amount of the
Note, the principal amount of the Note to be repaid, the certificate number or a
description of the tenor and terms of the Note, a statement that the option to
elect
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repayment is being exercised thereby and a guarantee that the Note to be repaid,
together with the duly completed form entitled "Option to Elect Repayment" on
the reverse of the Note, will be received by the applicable Trustee (or any duly
appointed Paying Agent) not later than the fifth Business Day after the date of
such telegram, telex, facsimile transmission or letter, PROVIDED, HOWEVER, that
such telegram, telex, facsimile transmission or letter shall only be effective
if such Note and form duly completed are received by the applicable Trustee (or
any duly appointed Paying Agent) by such fifth Business Day. Such option may be
exercised by the holder of an Extendible Note for less than the aggregate
principal amount of the Note then outstanding, provided that the principal
amount of the Note remaining outstanding after repayment is an authorized
denomination.
If a Note is represented by a Global Book-Entry Note, DTC or its nominee
will be the holder of such Note and therefore will be the only entity that can
exercise a right to repayment. In order to ensure that DTC or its nominee will
timely exercise a right to repayment with respect to a particular Note, the
beneficial owner of such Note must instruct the broker or other Participant or
Indirect Participant through which it holds an interest in such Note to notify
DTC of its desire to exercise a right to repayment. Different firms have
different cut-off times for accepting instructions from their customers and,
accordingly, each beneficial owner should consult the broker or other
Participant or Indirect Participant through which it holds an interest in a Note
in order to ascertain the cut-off time by which such an instruction must be
given in order for timely notice to be delivered to DTC or its nominee.
REDEMPTION
The Pricing Supplement relating to each Note will indicate either that such
Note cannot be redeemed prior to its stated maturity date or that such Note will
be redeemable at the option of the Corporation on a date or dates specified
prior to its stated maturity date and at a price or prices as set forth in the
applicable Pricing Supplement, together with accrued interest to the date of
redemption. The Corporation may redeem any of the Notes that are redeemable and
remain outstanding either in whole or from time to time in part, upon not less
than 30 nor more than 60 days' notice. If less than all of the Notes of the
series with like tenor and terms are to be redeemed, the Notes to be redeemed
will be selected by the Corporation pursuant to the terms of the respective
Indentures.
The Notes will not be subject to any sinking fund.
REPAYMENT AND REPURCHASE
The Pricing Supplement relating to each Note will indicate either that such
Note cannot be repaid at the option of the holder prior to its stated maturity
date or that such Note will be repayable at the option of the holder on a date
or dates specified prior to its stated maturity date and at a price or prices as
set forth in the applicable Pricing Supplement, together with accrued interest
to the date of repayment.
The Corporation may at any time purchase Notes at any price in the open
market or otherwise. Notes so purchased by the Corporation may, at its
discretion, be held, resold or surrendered to the applicable Trustee for
cancellation.
OTHER PROVISIONS; ADDENDA
Any provisions with respect to the determination of a Base Rate, the
specification of Base Rates, calculation of the interest rate applicable to a
Floating Rate Note, its Interest Payment Dates or any other matter relating
thereto or to any Fixed Rate Note may be modified by the terms as specified
under "Other Provisions" on the face thereof or in an Addendum thereto, if so
specified on the face of such Note and in the applicable Pricing Supplement.
UNITED STATES TAXATION
The following summary of the principal United States federal income tax
consequences of the acquisition, ownership and disposition of Notes is based
upon laws, regulations, rulings and decisions now in effect, all of which are
subject to change. The following discussion does not purport to deal with the
federal tax consequences applicable to all categories of investors. In
particular, the discussion does not deal with persons in
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special tax situations, such as dealers in securities, insurance companies,
financial institutions or tax-exempt entities. It is based upon the United
States federal tax laws and regulations as now in effect and as currently
interpreted and does not take into account possible changes in such tax laws or
such interpretations. It does not include any description of the tax laws of any
state or local governments, or of any foreign government, that may be applicable
to the Notes or holders thereof. Investors should consult their own tax advisors
with respect to their particular circumstances.
UNITED STATES HOLDERS
The term "United States Holder," as used herein, means a holder of a
beneficial interest in a Note that is a United States person for United States
federal income tax purposes or any other holder of a beneficial interest in a
Note to the extent the income attributable to the Note is effectively connected
with the holder's United States trade or business.
PAYMENT OF INTEREST. Except as described below under "Original Issue
Discount" and "Short-Term Notes," interest on a Note generally will be taxable
to a holder that is a United States Holder as ordinary income at the time it
accrues or is received in accordance with the United States Holder's method of
accounting for tax purposes.
PURCHASE, SALE AND RETIREMENT OF NOTES. Upon the sale, exchange, retirement
or other disposition of a Note, a United States Holder will recognize gain or
loss equal to the difference between the amount realized and the United States
Holder's tax basis in the Note.
A United States Holder's tax basis in a Note generally will be the United
States Holder's cost for the Note, increased by any original issue discount or
market discount (if the holder has elected to include accrued market discount in
income on a current basis) previously included in income by such United States
Holder with respect to such Note, and decreased by the amount of any bond
premium previously amortized, and the amount of any payment (other than a
payment of qualified stated interest) previously received by such United States
Holder with respect to the Note. Gain or loss on the sale, exchange, retirement
or other disposition of a Note generally will be a long-term capital gain or
loss if the Note has been held for more than one year, except to the extent (as
discussed below) that gain represents market discount not previously included in
the holder's income.
If a United States Holder has a tax basis for a Note that is less than its
principal amount, the Note may be considered to have "market discount." As a
general matter, gain realized on the disposition of a Note (or on the repayment
of principal) is treated as ordinary income rather than capital gain to the
extent of market discount accrued while the holder held the Note, although
holders may elect to accrue market discount into income on a current basis. An
election to accrue market discount will apply to all market discount obligations
acquired by the holder on or after the first day of the first taxable year for
which the election is made and may not be revoked without the consent of the
Internal Revenue Service (the "IRS"). Market discount will be treated as
accruing on a ratable basis or, at the election of the holder, based on a
constant interest method. Furthermore, a holder of a Note having market discount
may be required to defer the deduction of all or a portion of the interest
expense on any indebtedness incurred or maintained to purchase or carry such
Note until the maturity date of the Note or its earlier disposition in a taxable
transaction unless the holder elects to include market discount in income on a
current basis as described above.
If a United States Holder has a tax basis for a Note that is greater than
its principal amount, the Note may be considered to have "bond premium." The
holder may elect to amortize such premium (as offsets to interest income) over
the remaining life of the Note under a constant interest method. However, if
such Note may be optionally redeemed after the holder acquires it at a price in
excess of its principal amount, special rules would apply that could result in a
deferral of the amortization of some bond premium until later in the term of the
Note. With respect to a holder that does not elect to amortize bond premium, the
amount of bond premium constitutes a capital loss when the bond matures or is
sold.
ORIGINAL ISSUE DISCOUNT. On January 27, 1994, the IRS issued final
regulations (the "Final Regulations") under Sections 1271 through 1275 of the
Internal Revenue Code of 1986, as amended (the "Code"), dealing with original
issue discount ("OID") effective for debt instruments issued after April 4,
1994. Subsequently, on
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December 15, 1994, the IRS released certain proposed regulations (the "Proposed
Contingent Debt Regulations") that also deal with the OID provisions of the Code
primarily as they apply to obligations with contingent interest. The Proposed
Contingent Debt Regulations do not apply to debt obligations issued prior to the
time, if at all, such proposed regulations are finally adopted. Since (i) such
Proposed Contingent Debt Regulations have not been finally adopted and will not
be effective until 60 days after final regulations are published in the Federal
Register and (ii) the form in which they are adopted, if at all, may differ
substantially from the Proposed Contingent Debt Regulations, the following
summary of the federal income tax consequences of the Notes with respect to OID
is based on the Final Regulations but not the Proposed Contingent Debt
Regulations. EACH POTENTIAL PURCHASER OF A NOTE SHOULD CONSULT ITS OWN TAX
ADVISOR WITH RESPECT TO THE PARTICULAR FEDERAL INCOME TAX CONSEQUENCES
APPLICABLE TO IT.
For United States federal income tax purposes, OID is the excess of the
stated redemption price at maturity of a debt instrument (the sum of all
payments required to be made on the debt instrument other than qualified stated
interest payments) over its issue price (the first offering price to the public
at which a substantial amount of the debt instrument is sold), if that excess
equals or exceeds 1/4 of 1% of the debt instrument's stated redemption price at
maturity multiplied by the number of complete years from its issue date to its
maturity. The term "qualified stated interest" generally means stated interest
that is unconditionally payable in cash or property (other than debt instruments
of the issuer) at least annually at a single fixed rate. In addition, under the
Final Regulations if a Note bears interest for one or more accrual periods at a
rate below the rate applicable for the remaining term of such Note (E.G., Notes
with teaser rates or interest holidays), and if the greater of either the
resulting foregone interest on such Note or the excess of the stated principal
amount over its issue price equals or exceeds a DE MINIMIS amount, then the
stated interest would be treated as OID rather than qualified stated interest.
A United States Holder of a Note is required to include payments of
qualified stated interest in income as interest at the time such payments are
accrued or are received (in accordance with the United States Holder's method of
accounting for tax purposes). A United States Holder of a Note with OID (an "OID
Note") with a maturity of more than one year is required to include the OID in
income before the receipt of cash attributable to that income, regardless of
such United States Holder's method of accounting for tax purposes. The amount of
OID includible in income by the initial United States Holder of an OID Note is
the sum of the daily portions of the OID with respect to the Note for each day
during the taxable year (or portion of the taxable year) in which the United
States Holder held such OID Note. The daily portion is determined by allocating
to each day in any "accrual period" a pro rata portion of the OID allocable to
that accrual period. An accrual period may be of any length and the accrual
periods may even vary in length over the term of the OID Note, provided that
each accrual period is no longer than one year and each scheduled payment of
principal or interest occurs either on the first day of an accrual period or on
the final day of an accrual period. The amount of OID allocable to an accrual
period is equal to the difference between (i) the product of the "adjusted issue
price" of the OID Note at the beginning of the accrual period and its yield to
maturity (computed generally on a constant yield method and compounded at the
end of each accrual period, appropriately taking into account the length of the
particular accrual period) and (ii) the amount of any qualified stated interest
allocable to the accrual period. The "adjusted issue price" of an OID Note at
the beginning of any accrual period is the sum of the issue price of the OID
Note plus the amount of OID allocable to all prior accrual periods reduced by
any payments on the Note that were not qualified stated interest. Under these
rules, a United States Holder will generally have to include in income
increasingly greater amounts of OID in successive accrual periods.
A United States Holder who purchases an OID Note for an amount that is
greater than its adjusted issue price as of the purchase date and less than or
equal to the sum of all amounts payable on the OID Note after the purchase date
other than payments of qualified stated interest, will be considered to have
purchased the OID Note at an "acquisition premium." Under the acquisition
premium rules, the amount of OID which such United States Holder must include in
its gross income with respect to such Note for any taxable year (or portion
thereof in which the United States Holder holds the Note) will be reduced (but
not below zero) by the portion of the acquisition premium properly allocable to
the period.
Under the Final Regulations, Floating Rate Notes are subject to special
rules whereby a Floating Rate Note will qualify as a "variable rate debt
instrument" if (a) its issue price does not exceed the total noncontingent
principal payments by more than a specified DE MINIMIS amount and (b) it
provides for stated interest, paid or compounded at least annually, at current
values of (i) one or more qualified floating rates, (ii) a single
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fixed rate and one or more qualified floating rates, (iii) a single objective
rate or (iv) a single fixed rate and a single objective rate that is a qualified
inverse floating rate. A "qualified floating rate" is any floating rate where
variations in such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
Floating Rate Note is denominated (E. G., the CD Rate, the Commercial Paper
Rate, the Federal Funds Rate, LIBOR, the Prime Rate, the Treasury Rate, the CMT
Rate or the Eleventh District Cost of Funds Rate). Although a multiple of a
qualified floating rate will generally not itself constitute a qualified
floating rate, a variable rate equal to the product of a qualified floating rate
and a fixed multiple that is greater than zero but not more than 1.35 will
constitute a qualified floating rate. A variable rate equal to the product of a
qualified floating rate and a fixed multiple that is greater than zero but not
more than 1.35, increased or decreased by a fixed rate, will also constitute a
qualified floating rate. In addition, under the Final Regulations, two or more
qualified floating rates that can reasonably be expected to have approximately
the same values throughout the term of the Floating Rate Note (e.g., two or more
qualified floating rates with values within 25 basis points of each other as
determined on the Floating Rate Note's issue date) will be treated as a single
qualified floating rate. Notwithstanding the foregoing, a variable rate that
would otherwise constitute a qualified floating rate but which is subject to one
or more restrictions such as a maximum numerical limitation (i.e., a cap) or a
minimum numerical limitation (i.e., a floor) may, under certain circumstances,
fail to be treated as a qualified floating rate under the Final Regulations. An
"objective rate" is a rate that is not itself a qualified floating rate but
which is determined using a single formula and which is based upon (i) one or
more qualified floating rates, (ii) one or more rates where each rate would be a
qualified floating rate for a debt instrument denominated in a currency other
than the currency in which the Floating Rate Note is denominated, (iii) either
the yield or changes in the price of one or more items of actively traded
personal property (other than stock or debt of the issuer or a related party) or
(iv) a combination of such rates. The Final Regulations also provide that other
variable interest rates may be treated as objective rates if so designated by
the IRS in the future. Despite the foregoing, a variable rate of interest on a
Floating Rate Note will not constitute an objective rate if it is reasonably
expected that the average value of such rate during the first half of the
Floating Rate Note's term will be either significantly less than or
significantly greater than the average value of the rate during the final half
of the Floating Rate Note's term. A "qualified inverse floating rate" is any
objective rate where such rate is equal to a fixed rate minus a qualified
floating rate, as long as variations in the rate can reasonably be expected to
inversely reflect contemporaneous variations in the cost of newly borrowed
funds. The Final Regulations also provide that if a Floating Rate Note provides
for stated interest at a fixed rate for an initial period of less than one year
followed by a variable rate that is either a qualified floating rate or an
objective rate and if the variable rate on the Floating Rate Note's issue date
is intended to approximate the fixed rate (E.G., the value of the variable rate
on the issue date does not differ from the value of the fixed rate by more than
25 basis points), then the fixed rate and the variable rate together will
constitute either a single qualified floating rate or objective rate, as the
case may be.
If a Floating Rate Note that provides for stated interest at either a
single qualified floating rate or a single objective rate throughout the term
thereof qualifies as a "variable rate debt instrument" under the Final
Regulations, then any stated interest on such Note which is unconditionally
payable in cash or property (other than debt instruments of the issuer) at least
annually will constitute qualified stated interest and will be taxed
accordingly. Thus, a Floating Rate Note that provides for stated interest at
either a single qualified floating rate or a single objective rate throughout
the term thereof and that qualifies as a "variable rate debt instrument" under
the Final Regulations will generally not be treated as having been issued with
OID unless the Floating Rate Note is issued at a "true" discount (i.e., at a
price below the Note's stated principal amount) in excess of a specified DE
MINIMIS amount. OID on such a Floating Rate Note arising from "true" discount is
allocated to an accrual period using the constant yield method described above
by assuming that the variable rate is a fixed rate equal to (i) in the case of a
qualified floating rate or qualified inverse floating rate, the value as of the
issue date of the qualified floating rate or qualified inverse floating rate, or
(ii) in the case of an objective rate (other than a qualified inverse floating
rate), a fixed rate that reflects the yield that is reasonably expected for the
Floating Rate Note.
In general, any other Floating Rate Note that qualifies as a "variable rate
debt instrument" will be converted into an "equivalent" fixed rate debt
instrument for purposes of determining the amount and accrual of OID and
qualified stated interest on the Floating Rate Note. The Final Regulations
generally require that such a Floating Rate Note be converted into an
"equivalent" fixed rate debt instrument by substituting any qualified floating
rate or qualified inverse floating rate provided for under the terms of the
Floating Rate Note with
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a fixed rate equal to the value of the qualified floating rate or qualified
inverse floating rate, as the case may be, as of the Floating Rate Note's issue
date. Any objective rate (other than a qualified inverse floating rate) provided
for under the terms of the Floating Rate Note is converted into a fixed rate
that reflects the yield that is reasonably expected for the Floating Rate Note.
In the case of a Floating Rate Note that qualifies as a "variable rate debt
instrument" and provides for stated interest at a fixed rate in addition to
either one or more qualified floating rates or a qualified inverse floating
rate, the fixed rate is initially converted into a qualified floating rate (or a
qualified inverse floating rate, if the Floating Rate Note provides for a
qualified inverse floating rate). Under such circumstances, the qualified
floating rate or qualified inverse floating rate that replaces the fixed rate
must be such that the fair market value of the Floating Rate Note as of the
Floating Rate Note's issue date is approximately the same as the fair market
value of an otherwise identical debt instrument that provides for either the
qualified floating rate or qualified inverse floating rate rather than the fixed
rate. Subsequent to converting the fixed rate into either a qualified floating
rate or a qualified inverse floating rate, the Floating Rate Note is then
converted into an "equivalent" fixed rate debt instrument in the manner
described above.
Once the Floating Rate Note is converted into an "equivalent" fixed rate
debt instrument pursuant to the foregoing rules, the amount of OID and qualified
stated interest, if any, are determined for the "equivalent" fixed rate debt
instrument by applying the general OID rules to the "equivalent" fixed rate debt
instrument, and a United States Holder of the Floating Rate Note will account
for tax purposes for such OID and qualified stated interest as if the United
States Holder held the "equivalent" fixed rate debt instrument. Each accrual
period, appropriate adjustments will be made to the amount of qualified stated
interest or OID assumed to have been accrued or paid with respect to the
"equivalent" fixed rate debt instrument in the event that such amounts differ
from the actual amount of interest accrued or paid on the Floating Rate Note
during the accrual period.
If a Floating Rate Note does not qualify as a "variable rate debt
instrument" under the Final Regulations, then the Floating Rate Note may be
treated as a contingent payment debt obligation.
Certain of the Notes (i) may be redeemable at the option of the Corporation
prior to their stated maturity (a "call option") and/or (ii) may be repayable at
the option of the holder prior to their stated maturity (a "put option"). Notes
containing such features may be subject to rules that differ from the general
rules discussed above. Prospective purchasers of Notes with such features should
consult their tax advisors because the OID consequences will depend, in part, on
the particular terms and features of such Notes.
A United States Holder may elect to include in gross income all interest
that accrues on a Note by using the constant yield method applicable to OID,
subject to certain limitations and exceptions. For purposes of this election,
interest includes stated interest, acquisition discount, OID, DE MINIMIS OID,
market discount, DE MINIMIS market discount and unstated interest, as adjusted
by any amortizable bond premium or acquisition premium.
SHORT-TERM NOTES. Certain United States Holders (including banks,
securities dealers, regulated investment companies and taxpayers that elect
under Code Section 1282(b)(2) and that otherwise use the cash method of tax
accounting, as well as all accrual method United States Holders) will be
required to accrue into income on a current basis qualified stated interest and
any OID with respect to Notes having a maturity of not more than one year
("Short-Term Notes"). (In that regard it should be noted that the Final
Regulations treat none of the stated interest on a Short-Term Note as qualified
stated interest, but instead treat such interest as part of the Short-Term
Note's stated redemption price at maturity, thereby giving rise to OID.) OID on
a Short-Term Note will be treated as accruing on a ratable basis or, at the
election of the holder, on a constant interest basis. Other cash method holders
of Short-Term Notes generally will not be required, but may elect under Section
1282(b)(2) of the Code, to accrue qualified stated interest and OID into income
on a current basis. However, unless such holder so elects, such holder may not
be allowed to deduct all of the interest paid or accrued on any indebtedness
incurred or maintained to purchase or carry such Short-Term Note until the
maturity date of the Note or its earlier disposition in a taxable transaction.
In addition, such a non-electing cash method holder will be required to treat
any gain realized on a sale, exchange or retirement of the Short-Term Note as
ordinary income to the extent such gain does not exceed the OID accrued with
respect to the Note during the period the holder held the Short-Term Note. In
determining OID for such purposes, OID will be deemed to accrue on a ratable
basis unless the holder elects accrual on a constant interest basis.
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A United States Holder of a Short-Term Note can elect to apply the rules in
the preceding paragraph dealing with the current accrual of OID and the deferral
of interest deductions by taking into account the amount of "acquisition
discount," if any, with respect to the Note (rather than the amount of OID, if
any, with respect to such Short-Term Note). Acquisition discount is the excess
of the remaining stated redemption price at maturity of the Short-Term Note over
the holder's tax basis in the Short-Term Note at the time of the acquisition.
Acquisition discount will be treated as accruing on a ratable basis or, at the
election of the holder, on a constant interest basis.
A United States Holder's tax basis for a Short-Term Note generally will be
the holder's purchase price for the Note, increased by any stated interest, OID
or acquisition discount that the holder is required or has elected to accrue,
into income currently under the rules described above and decreased by the
amount of any bond premium previously amortized by such holder with respect to
such Note, the amount of any payment of principal received by such holder with
respect to the Note and, if the holder is required or has elected to accrue
interest into income currently with respect to the Note, the amount of any
payment of stated interest received by such holder with respect to the Note.
The market discount rules will not apply to a Short-Term Note.
Certain of the Notes may be redeemable prior to their maturity date at the
option of either the Corporation or the holder. This redemption feature may
affect the determination of whether a Note has a maturity of not more than one
year and is thus a Short-Term Note. Purchasers of Notes with such features
should carefully examine the applicable Pricing Supplement and should consult
their own tax advisors with respect to such features.
RENEWABLE NOTES AND EXTENDIBLE NOTES. The applicable Pricing Supplement
will contain a discussion of any special United States Federal income tax rules
with respect to any Renewable Notes or Extendible Notes.
NON-UNITED STATES HOLDERS
Except as otherwise discussed in the applicable Pricing Supplement, under
the United States federal income tax laws as in effect on the date of this
Prospectus Supplement and subject to the discussion of backup withholding below,
payments of principal (and premium, if any) and interest, including any OID, by
the Corporation or its agent (acting in its capacity as such) to any beneficial
owner of a Note who is not a United States person (a "Non-United States Holder")
will be not subject to United States federal withholding tax; PROVIDED, HOWEVER,
that, in the case of interest, including any OID, (i) such beneficial owner does
not actually or constructively own 10% or more of the total combined voting
power of all classes of stock of the Corporation entitled to vote, (ii) such
beneficial owner is not a controlled foreign corporation for United States tax
purposes that is related to the Corporation (directly or indirectly) through
stock ownership, and (iii) either (A) the beneficial owner of the Note certifies
to the Corporation or its agent, under penalties of perjury, that it is a
Non-United States Holder and provides its name and address, or (B) a securities
clearing organization, bank or other financial institution, that holds
customers' securities in the ordinary course of its trade or business (a
"financial institution") and holds the Note, certifies to the Corporation or its
agent under penalties of perjury that such statement has been received from the
beneficial owner by it or by a financial institution and furnishes the
Corporation with a copy thereof. In the event a Floating Rate Note is issued
which bears interest at a rate other than a rate determined by reference to a
Base Rate explicitly referred to under "Floating Rate Notes," the applicable
Pricing Supplement will describe whether interest (including OID) on such Note
will be subject to federal withholding tax.
If a Non-United States Holder is engaged in a trade or business in the
United States and interest, including any OID, on the Note is effectively
connected with the conduct of such trade or business, such holder, although
exempt from the withholding tax discussed in the preceding paragraph (upon
delivery of a properly executed IRS Form 4224), may be subject to United States
federal income tax on such interest, and any OID, in the same manner as if it
were a United States person. In addition, if such a holder is a foreign
corporation, it may be subject to a branch profits tax equal to 30% of its
effectively connected earnings and profits for the taxable year, subject to
certain adjustments. In lieu of the certification described in the preceding
paragraph, a Non-United States Holder with effectively connected interest income
must provide the payor with a properly executed IRS Form 4224 to claim an
exemption from United States federal withholding tax.
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<PAGE>
Any capital gain or market discount realized upon retirement or disposition
of a Note by a Non-United States Holder will not be subject to United States
federal income or withholding taxes if (i) such gain is not effectively
connected with a United States trade or business of the holder, and (ii) in the
case of an individual, such holder is not present in the United States for 183
days or more in the taxable year of the retirement or disposition.
BACKUP WITHHOLDING AND INFORMATION REPORTING
The payment of principal and interest and the accrual of OID, if any, are
generally subject to information reporting and possibly to "backup withholding"
at a rate of 31%. Backup withholding may be required in respect of any payment
on a Note to a beneficial owner who is a United States person (other than
corporations and certain other exempt persons) if the beneficial owner fails to
supply an accurate taxpayer identification number and to certify that such
taxpayer identification number is correct, or if the United States Secretary of
the Treasury determines that the beneficial owner has not reported all interest
and dividend income required to be shown on his federal income tax return. Under
current Treasury Regulations, backup withholding and information reporting will
not apply to payments made to a Non-United States Holder of a Note with respect
to which the beneficial owner has provided required certification that it is not
a United States person as set forth in clause (iii) in the first paragraph under
"Non-United States Holders," or has otherwise established an exemption (provided
that the payor does not have actual knowledge that the beneficial owner is a
United States person or that the conditions of any exemption are not in fact
satisfied). Payments of the proceeds from the sale of a Note to or through a
foreign office of a broker or the foreign office of a custodian, nominee or
other dealer acting on behalf of the beneficial owner of a Note will not be
subject to information reporting or backup withholding, except that if the
broker, custodian, nominee or other dealer is a United States person, a
controlled foreign corporation for United States tax purposes or a foreign
person 50% or more of whose gross income is from a United States trade or
business, information reporting will be required with respect to payments made
to such owner unless the broker has documentary evidence in its files of the
beneficial owner's foreign status and the broker has no actual knowledge to the
contrary (or the beneficial owner otherwise establishes any exemption from such
information reporting). Payment of the proceeds from a sale of a Note to or
through the United States office of a broker is subject to information reporting
and backup withholding, unless the beneficial owner certifies as to its
non-United States status or otherwise establishes an exemption from information
reporting and backup withholding.
Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be refundable or allowable as a credit against such
beneficial owner's United States federal income tax liability.
For purposes of the preceding discussion, the term "United States person"
means a citizen or resident of the United States, a corporation, partnership or
other entity created or organized under the laws of the United States or an
estate or trust the income of which is subject to United States federal income
taxation regardless of its source, and "United States" means the United States
of America (including the States and the District of Columbia).
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR
SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF OWNERSHIP AND DISPOSITION OF THE NOTES, INCLUDING THE
TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE
EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
STATE AND LOCAL TAXATION
The beneficial owners may be subject to state or local taxation in various
state or local jurisdictions, including those in which it or they transact
business or reside. Consequently, prospective beneficial owners should consult
their own tax advisors regarding the effect of state and local tax laws on
purchase of the Notes.
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PLAN OF DISTRIBUTION
Under the terms of a Master United States Distribution Agreement dated as
of January 10, 1996 (the "Distribution Agreement") between the Corporation and
the Agents named therein or to be appointed thereunder, Notes are being offered
on a continuing basis for sale by the Corporation through the Agents. Each Agent
has agreed to utilize its reasonable efforts on an agency basis to solicit
offers to purchase the Notes at 100% of the principal amount thereof, unless
otherwise specified in an applicable Pricing Supplement. For each Note sold
through an Agent as agent, and unless otherwise negotiated, the Corporation will
pay a commission in the form of a discount to such Agent, ranging up to .750% of
the principal amount of the Note. If agreed to by the Corporation and an Agent,
an Agent may purchase a specified amount of the Notes, as principal, from the
Corporation. Unless otherwise specified in an applicable Pricing Supplement, any
Note sold to an Agent as principal will be purchased by such Agent at a price
equal to 100% of the principal amount thereof less a percentage of the principal
amount equal to the negotiated commission. The Corporation may also sell Notes
directly to investors and other purchasers on its own behalf in those
jurisdictions where it is authorized to do so, and, upon such sale, no Agent
will be entitled to any commission as set forth herein. The Corporation also may
appoint, and sell Notes from time to time to or through, one or more additional
agents, acting either as agent or principal, on substantially the same terms as
those applicable to the Agents. Any such additional agent shall, with respect to
any such Notes, be deemed to be included in all references to an "agent" or
"Agents" hereunder. In addition, the Corporation may sell Notes on an
underwritten basis to a group of Agents acting as a syndicate of underwriters
pursuant to a terms agreement; the terms and conditions of any such syndicated
underwriting will be described in the Pricing Supplement relating to any such
transaction.
Notes purchased by the Agents as principal may be resold to investors and
other purchasers at varying prices relating to prevailing market prices at the
time of resale as determined by the Agent or, if so specified in an applicable
Pricing Supplement, for resale at a fixed public offering price. An Agent may
offer Notes it has purchased from the Corporation as principal to other dealers
for resale to investors, and may allow any portion of the discount received in
connection with such purchases from the Corporation to such dealers. After the
initial public offering of Notes to be resold to investors and other purchasers,
the public offering price (in the case of Notes to be resold on a fixed public
offering price basis), the concession and the discount may be changed.
Each Pricing Supplement will also contain the terms of the related Notes,
including the names of any Agents, the method of distribution of such Notes, the
price of the Notes, the net proceeds to the Corporation and any commissions or
discounts paid or allowed with respect to the Notes.
The Corporation reserves the right to withdraw, cancel or modify the offer
made hereby without notice and may reject orders in whole or in part whether
placed directly with the Corporation or through one of the Agents. Each Agent
will have the right, in its discretion reasonably exercised, to reject any offer
to purchase Notes received by it on an agency basis, in whole or in part.
Unless otherwise provided in a Pricing Supplement, payment of the purchase
price of the Notes will be required to be made in immediately available funds on
the date of settlement.
No Note will have an established trading market when issued. The Notes will
not be listed on any securities exchange. The Agents may from time to time
purchase and sell Notes in the secondary market, but are not obligated to do so,
and there can be no assurance that there will be a secondary market for the
Notes or liquidity in the secondary market if one develops. From time to time,
the Agents may make a market in the Notes, but no Agent is obligated to do so,
and may discontinue any market-making activity at any time.
The Agents, whether acting as agent or principal, may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"). The Corporation has agreed to indemnify the Agents against
and to contribute to payments that the Agents may be required to make relating
to certain liabilities, including liabilities under the Securities Act. The
Corporation has also agreed to reimburse the Agents for certain expenses.
NationsBanc Capital Markets, Inc. ("NCMI") is a direct, wholly owned
subsidiary of NationsBank. Under Schedule E to the By-Laws ("Schedule E") of the
NASD, when an NASD member, such as NCMI, participates in the distribution of an
affiliated company's securities, the offering must be conducted in accordance
with the applicable provisions of Schedule E. NationsBank is considered to be an
"affiliate" (as such term is defined in
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<PAGE>
Schedule E) of NCMI. The offer and sale of any Notes by NCMI will comply with
the requirements of Schedule E regarding the underwriting of securities of
affiliates and with any restrictions as may be imposed on NCMI by the Board of
Governors of the Federal Reserve System. In addition, under Schedule E, no NASD
member participating in offers and sales of the Notes may execute a transaction
in the Notes in a discretionary account without the specific prior written
approval of the member's customer.
The Agents may from time to time engage in transactions with, or perform
services for, the Corporation in the ordinary course of business.
The Corporation may, in its sole discretion, suspend solicitations of
purchases of the Notes through the Agents, acting as agent, for any period of
time or permanently.
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<PAGE>
PROSPECTUS
(NationsBank Logo appears here)
Debt Securities
NationsBank Corporation ("NationsBank" or the "Corporation") may offer from
time to time its unsecured debt securities, which may be either senior (the
"Senior Debt Securities") or subordinated (the "Subordinated Debt Securities"
and, together with the Senior Debt Securities, the "Debt Securities").
NationsBank may sell up to $3,000,000,000 in aggregate initial offering price of
Debt Securities (or the U.S. dollar equivalent thereof if any of the Debt
Securities are denominated in a foreign currency or currency unit), which may be
offered, separately or together, in one or more series, in amounts, at prices
and on terms to be determined at the time of sale and set forth in an
accompanying supplement to this Prospectus (a "Prospectus Supplement"). Pursuant
to the terms of the Registration Statement of which this Prospectus constitutes
a part, NationsBank may also offer and sell shares of its preferred stock (the
"Preferred Stock"), which may be represented by depositary shares (the
"Depositary Shares"), and shares of its common stock (the "Common Stock"). Any
such Preferred Stock, Depositary Shares or Common Stock will be offered and
issued pursuant to the terms of a separate Prospectus contained in such
Registration Statement. The aggregate amount of Debt Securities that may be
offered and sold pursuant hereto is subject to reduction as the result of the
sale of any Preferred Stock, Depositary Shares or Common Stock pursuant to such
separate Prospectus.
The Senior Debt Securities will rank equally with all other unsubordinated
and unsecured indebtedness of the Corporation. The Subordinated Debt Securities
will be subordinate in right of payment to all existing and future Senior
Indebtedness (as defined herein) of the Corporation.
The Debt Securities may be denominated in U.S. dollars or in another
currency or currency unit (such as the European Currency Unit), and the
principal of (and premium, if any, on) or interest on the Debt Securities may be
payable in U.S. dollars or such foreign currency or currency unit. The specific
terms of each series of Debt Securities offered pursuant to this Prospectus,
including the specific designation, aggregate principal amount, currency or
currency unit in which the principal and any premium or interest may be payable,
authorized denominations, maturity, any premium, any interest rate (which may be
fixed or variable), any interest payment dates, any optional or mandatory
redemption terms, any sinking fund provisions, any subordination terms, any
terms for conversion (in the event that such series is convertible at the option
of the holder or NationsBank into Preferred Stock, Depositary Shares, Common
Stock or other Debt Securities), the form of such series, any securities
exchange on which such Debt Securities may be listed, and any other terms of
such series of Debt Securities will be set forth in the Prospectus Supplement
relating to such series.
The Debt Securities may be sold (i) through underwriting syndicates
represented by managing underwriters, or by underwriters without a syndicate,
with such underwriters to be designated at the time of sale; (ii) through agents
designated from time to time; or (iii) directly by the Corporation. The names of
any underwriters or agents of NationsBank involved in the sale of the Debt
Securities, the public offering price or purchase price and any commissions or
discounts will be set forth in the applicable Prospectus Supplement or a pricing
supplement thereto. The net proceeds to the Corporation from such sale also will
be set forth in such Prospectus Supplement.
This Prospectus may not be used to consummate sales of Debt Securities
unless accompanied by a Prospectus Supplement.
THESE SECURITIES 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 (THE "FDIC") OR ANY OTHER GOVERNMENT AGENCY.
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 PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is November 24, 1995.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, previously filed by the Corporation with the
Securities and Exchange Commission (the "Commission") pursuant to Section 13 of
the Securities Exchange Act of 1934, as amended (the "1934 Act"), are
incorporated herein by reference:
(a) The Corporation's Annual Report on Form 10-K for the year ended
December 31, 1994;
(b) The Corporation's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1995, June 30, 1995 and September 30, 1995;
(c) The Corporation's Current Reports on Form 8-K filed January 26,
1995, February 21, 1995, March 2, 1995 (two reports on this date), March
21, 1995 (amended by Form 8-K/A Amendment No. 1 filed March 21, 1995),
March 27, 1995, April 24, 1995, April 25, 1995, May 16, 1995, July 10,
1995, July 24, 1995, August 31, 1995, September 20, 1995, October 20, 1995
(two reports on this date) and November 9, 1995.
(d) The description of the Corporation's Common Stock contained in its
registration statement filed pursuant to Section 12 of the 1934 Act, and
any amendment or report filed for the purpose of updating such description,
including the Corporation's Current Report on Form 8-K filed on September
21, 1994.
All reports and any definitive proxy or information statements filed by the
Corporation with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of
the 1934 Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Debt Securities offered hereby shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement 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 Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which 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 Prospectus.
THE CORPORATION WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A
COPY OF ANY OR ALL OF THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE (OTHER THAN
EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE
IN SUCH DOCUMENTS). WRITTEN REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO JOHN
E. MACK, SENIOR VICE PRESIDENT AND TREASURER, NATIONSBANK CORPORATION,
NATIONSBANK CORPORATE CENTER, CORPORATE TREASURY DIVISION, CHARLOTTE, NORTH
CAROLINA 28255. TELEPHONE REQUESTS MAY BE DIRECTED TO (704) 386-5972.
AVAILABLE INFORMATION
NationsBank is subject to the informational requirements of the 1934 Act
and, in accordance therewith, files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information can be inspected and copied at the following public reference
facilities maintained by the Commission: 450 Fifth Street, N.W., Washington,
D.C. 20549; 7 World Trade Center, Suite 1300, New York, New York 10048; and the
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such material may also be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, upon payment of prescribed rates. In addition, reports,
proxy statements and other information concerning NationsBank may be inspected
at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York,
New York 10005 and at the offices of The Pacific Stock Exchange Incorporated,
301 Pine Street, San Francisco, California 94104.
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<PAGE>
NATIONSBANK CORPORATION
GENERAL
NationsBank is a bank holding company established as a North Carolina
corporation in 1968 and is registered under the Bank Holding Company Act of
1956, as amended (the "BHCA"), with its principal assets being the stock of its
subsidiaries. Through its national banking association 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, the
Global Finance unit and the Financial Services unit.
The General Bank provides comprehensive services in the commercial and
retail banking fields, including trust and private banking operations, the
origination and servicing of home mortgage loans, the issuance and servicing of
credit cards (through a Delaware subsidiary) and certain insurance services. The
General Bank also offers full service brokerage services and discount brokerage
services for its customers through subsidiaries of NationsBank. As of September
30, 1995, the General Bank had banking operations in the following jurisdictions
(listed in declining order of total assets, with the approximate number of
banking offices in parentheses): North Carolina and South Carolina (395); Texas
(274); Maryland, Virginia and the District of Columbia (493); Florida (372);
Georgia (187); and Tennessee and Kentucky (100). NationsBank also has a banking
subsidiary in Delaware that issues and services credit cards. The General Bank
also provides fully automated, 24-hour cash dispensing and depositing services
throughout the states in which it is located through approximately 2,200
automated teller machines.
The Global Finance unit provides to domestic and international customers
comprehensive corporate banking and investment banking services, including loan
syndication, treasury management and leasing; underwriting, trading or
distributing a wide range of securities (including bank-eligible securities and,
to a limited extent, bank-ineligible securities as authorized by the Federal
Reserve Board under Section 20 of the Glass-Steagall Act); and options, futures,
forwards and swaps on certain interest rate and commodity products, and spot and
forward foreign exchange contracts. The Global Finance unit provides its
services through various domestic offices as well as offices located in London,
Frankfurt, Singapore, Mexico City, Grand Cayman, Nassau, Tokyo, Osaka, Paris and
Hong Kong. In addition to these offices, the Global Finance unit has loan
production offices located in New York City, Chicago, Los Angeles, Denver and
Birmingham, Alabama.
The Financial Services unit consists of NationsCredit Corporation,
primarily a consumer finance subsidiary, and Greyrock Capital Group Inc.
(formerly named Nations Financial Capital Corporation), primarily a commercial
finance subsidiary. NationsCredit Corporation, which has approximately 300
offices located in 32 states, provides consumer and retail loan programs and
also offers inventory financing to manufacturers, importers and distributors.
Greyrock Capital Group Inc., which has approximately 79 offices located in 24
states, engages in commercial equipment leasing and makes commercial loans for
debt restructuring, merger and acquisition, real estate financing, equipment
acquisition and working capital purposes; it also acquires consumer loans
secured by automobiles and real estate.
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 general rule, NationsBank
publicly announces such material acquisitions when a definitive agreement has
been reached.
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<PAGE>
SUPERVISION AND REGULATION
GENERAL. As a registered bank holding company, NationsBank is subject to
the supervision of, and to regular inspection by, the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board"). The Banks are organized as
national banking associations, which are subject to regulation, supervision and
examination by the Office of the Comptroller of the Currency (the
"Comptroller"). The Banks are also subject to regulation by the Federal Deposit
Insurance Corporation (the "FDIC") and other federal 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
will be able to acquire banks in states other than its home state beginning
September 29, 1995.
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, Maryland, North Carolina and Virginia
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).
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. In 1995, several bills have been introduced in
Congress that would have the effect of broadening the securities underwriting
powers of bank holding companies and possibly permitting bank holding companies
to engage in nonfinancial activities. The likelihood and timing of any such
proposals or bills being enacted and the impact they might have on NationsBank
and its subsidiaries cannot be determined at this time.
CAPITAL AND OPERATIONAL REQUIREMENTS. The Federal Reserve Board, the
Comptroller and the FDIC have issued substantially similar risk-based and
leverage capital guidelines applicable to United States banking organizations.
In addition, 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.
4
<PAGE>
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%.
The Corporation's Tier 1 and total risk-based capital ratios under these
guidelines at September 30, 1995 were 7.16% and 11.23%, 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%. The Corporation's leverage ratio at September 30, 1995 was
5.96%. 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%, or 3% in some cases. Under these guidelines, each
of the Banks is considered adequately or 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. The Corporation's 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. In 1995, the Banks can
initiate dividend payments without prior regulatory approval
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of up to $1.0 billion plus an additional amount equal to their net profits for
1995 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.
USE OF PROCEEDS
The net proceeds from the sale of the Debt Securities will be used for
general corporate purposes, including the Corporation's working capital needs,
the funding of investments in, or extensions of credit to, its banking and
nonbanking subsidiaries, possible acquisitions of other financial institutions
or their assets or liabilities, possible acquisitions of or investments in other
businesses of a type eligible for bank holding companies and possible reduction
of outstanding indebtedness or repurchase of outstanding equity securities of
the Corporation. Pending such use, the Corporation may temporarily invest the
net proceeds in investment grade securities. The Corporation may, from time to
time, engage in additional capital financings of a character and in amounts to
be determined by the Corporation in light of its needs at such time or times and
in light of prevailing market conditions. If the Corporation elects at the time
of issuance of Debt Securities to make different or more specific use of
proceeds other than that set forth herein, such use will be described in the
applicable Prospectus Supplement.
RATIOS OF EARNINGS TO FIXED CHARGES
The following are the Corporation's consolidated ratios of earnings to
fixed charges for the nine months ended September 30, 1995 and for each of the
years in the five-year period ended December 31, 1994:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1995 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits...................................... 1.6 1.9 2.3 2.4 1.1 1.3
Including interest on deposits...................................... 1.4 1.5 1.5 1.4 1.0 1.1
</TABLE>
For purposes of computing the consolidated ratios, earnings represent net
income of the Corporation 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.
PLAN OF DISTRIBUTION
The Corporation may offer and sell the Debt Securities in one or more of
the following ways: (i) through underwriters or dealers; (ii) through agents; or
(iii) directly by the Corporation to one or more purchasers. Such underwriters,
dealers or agents may be affiliates of NationsBank. The Prospectus Supplement
with respect to a particular offering of a series of Debt Securities will set
forth the terms of the offering of such Debt
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Securities, including the name or names of any underwriters or agents with whom
NationsBank has entered into arrangements with respect to the sale of such Debt
Securities, the public offering or purchase price of such Debt Securities and
the proceeds to the Corporation from such sales, and any underwriting discounts,
agency fees or commissions and other items constituting underwriters'
compensation, the initial public offering price, any discounts or concessions to
be allowed or reallowed or paid to dealers and the securities exchange, if any,
on which such Debt Securities may be listed.
If underwriters are used in the offer and sale of Debt Securities, the Debt
Securities will be acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. The Debt Securities may be offered to the public either
through underwriting syndicates represented by managing underwriters, or by
underwriters without a syndicate, all of which underwriters in either case will
be designated in the applicable Prospectus Supplement. Unless otherwise set
forth in the applicable Prospectus Supplement, under the terms of the
underwriting agreement, the obligations of the underwriters to purchase Debt
Securities will be subject to certain conditions precedent and the underwriters
will be obligated to purchase all the Debt Securities if any are purchased. Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
Debt Securities may be offered and sold directly by the Corporation or
through agents designated by the Corporation from time to time. Any agent
involved in the offer or sale of the Debt Securities with respect to which this
Prospectus is delivered will be named in, and any commissions payable by the
Corporation to such agent will be set forth in or calculable from, the
applicable Prospectus Supplement or a pricing supplement thereto. Unless
otherwise indicated in the Prospectus Supplement, any such agent will be acting
on a best-efforts basis for the period of its appointment.
If so indicated in the applicable Prospectus Supplement, the Corporation
may authorize underwriters, dealers or agents to solicit offers by certain
institutions to purchase Debt Securities from the Corporation at the public
offering price set forth in such Prospectus Supplement pursuant to delayed
delivery contracts ("Delayed Delivery Contracts") providing for payment and
delivery on the date or dates stated in the Prospectus Supplement. Each Delayed
Delivery Contract will be for an amount of Debt Securities not less than and,
unless the Corporation otherwise agrees, the aggregate amount of Debt Securities
sold pursuant to Delayed Delivery Contracts shall be not more than the
respective minimum and maximum amounts stated in the Prospectus Supplement.
Institutions with which Delayed Delivery Contracts, when authorized, may be made
include commercial and savings banks, insurance companies, pension funds,
investment companies and educational and charitable institutions, but shall in
all cases be subject to the approval of the Corporation in its sole discretion.
The obligations of the purchaser under any Delayed Delivery Contract to pay for
and take delivery of Debt Securities will not be subject to any conditions
except that (i) the purchase of Debt Securities by such institution shall not at
the time of delivery be prohibited under the laws of the jurisdiction to which
such institution is subject; and (ii) any related sale of Debt Securities to
underwriters shall have occurred. A commission set forth in the Prospectus
Supplement will be paid to underwriters soliciting purchases of Debt Securities
pursuant to Delayed Delivery Contracts accepted by the Corporation. The
underwriters will not have any responsibility in respect of the validity or
performance of Delayed Delivery Contracts.
Any series of Debt Securities offered and sold pursuant to this Prospectus
and the applicable Prospectus Supplement will be new issues of securities with
no established trading market. Any underwriters to whom Debt Securities are sold
by the Corporation for public offering and sale may make a market in such Debt
Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for any Debt Securities.
Any underwriter, dealer or agent participating in the distribution of any
Debt Securities may be deemed to be an underwriter, as that term is defined in
the Securities Act of 1933, as amended (the "1933 Act"), of the Debt Securities
so offered and sold, and any discounts or commissions received by them from
NationsBank and any profit realized by them on the sale or resale of the Debt
Securities may be deemed to be underwriting discounts and commissions under the
1933 Act.
Under agreements entered into with the Corporation, underwriters, dealers
and agents may be entitled to indemnification by the Corporation against certain
civil liabilities, including liabilities under the 1933 Act, or to
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<PAGE>
contribution with respect to payments which the underwriters or agents may be
required to make in respect thereof.
The participation of an affiliate or subsidiary of NationsBank in the offer
and sale of the Debt Securities will comply with the requirements of Schedule E
to the By-laws of the National Association of Securities Dealers, Inc. (the
"NASD") regarding the participation in a distribution of securities by an
affiliate. No NASD member participating in offers and sales of the Debt
Securities will execute a transaction in the Debt Securities in a discretionary
account without the prior written specific approval of the member's customer.
Underwriters, dealers and agents also may be customers of, engage in
transactions with, or perform other services for the Corporation in the ordinary
course of business.
DESCRIPTION OF DEBT SECURITIES
THE FOLLOWING DESCRIPTION OF THE TERMS OF THE DEBT SECURITIES SETS FORTH
CERTAIN GENERAL TERMS AND PROVISIONS OF THE DEBT SECURITIES TO WHICH ANY
PROSPECTUS SUPPLEMENT MAY RELATE. THE PARTICULAR TERMS OF THE DEBT SECURITIES
OFFERED BY ANY PROSPECTUS SUPPLEMENT AND THE EXTENT, IF ANY, TO WHICH SUCH
GENERAL PROVISIONS MAY APPLY TO THE DEBT SECURITIES SO OFFERED WILL BE DESCRIBED
IN THE PROSPECTUS SUPPLEMENT RELATING TO SUCH DEBT SECURITIES.
Any Senior Debt Securities offered hereby are to be issued under an
Indenture dated as of January 1, 1995 (such Indenture, as it may be amended from
time to time, the "Senior Indenture") between the Corporation and BankAmerica
National Trust Company, Trustee (the "Senior Trustee"). Any Subordinated Debt
Securities offered hereby are to be issued under an Indenture dated as of
January 1, 1995 (such Indenture, as it may be amended from time to time, the
"Subordinated Indenture") between the Corporation and The Bank of New York,
Trustee (the "Subordinated Trustee" and, together with the Senior Trustee, the
"Trustees"). A copy of the Senior Indenture and the Subordinated Indenture
(each, an "Indenture" and together, the "Indentures") is incorporated by
reference in the Registration Statement of which this Prospectus forms a part.
The following summaries of certain provisions of the Indentures do not
purport to be complete and are subject to and qualified in their entirety by
reference to the provisions of the applicable Indentures. Whenever particular
sections or defined terms of the Indentures are referred to, it is intended that
such sections or defined items shall be incorporated herein by reference. Unless
otherwise indicated, capitalized terms shall have the meanings ascribed to them
in the Indentures.
GENERAL
The respective Indentures provide that there is no limitation on the amount
of debt securities that may be issued thereunder from time to time. The amount
of Debt Securities that may be offered and sold pursuant to this Prospectus,
however, is limited to the aggregate initial offering price of the securities
registered under the Registration Statement of which this Prospectus forms a
part, subject to reduction as the result of the sale by the Corporation of other
securities under the Registration Statement.
The Debt Securities will be direct, unsecured obligations of the
Corporation. The Senior Debt Securities of each series will rank equally with
all unsecured senior debt of the Corporation. The Subordinated Debt Securities
of each series will be subordinate and junior in right of payment to the prior
payment in full of all Senior Indebtedness (as hereinafter defined) of the
Corporation. See "DESCRIPTION OF DEBT SECURITIES -- Subordination."
The Debt Securities will be issued in fully registered form without
coupons. Unless otherwise set forth in the applicable Prospectus Supplement, the
Debt Securities denominated in U.S. dollars will be issued in denominations of
$1,000 or an integral multiple thereof.
The Debt Securities may be denominated in U.S. dollars or in another
currency or currency unit. If any of the Debt Securities are denominated in a
foreign currency or currency unit, or if principal of (or premium, if any) or
any interest on any of the Debt Securities is payable in any foreign currency or
currency unit, the authorized denominations, restrictions, tax consequences,
specific terms and other information with respect to such issue of Debt
Securities and such foreign currency or currency unit will be set forth in the
Prospectus Supplement relating thereto.
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<PAGE>
The Debt Securities may be issued in one or more series with the same or
various maturities. Certain Debt Securities may be issued which provide for an
amount less than the principal amount thereof to be due and payable in the event
of an acceleration of the maturity thereof (each an "Original Issue Discount
Security"). Original Issue Discount Securities may bear no interest or may bear
interest at a rate which at the time of issuance is below market rates and will
be sold at a discount (which may be substantial) below their stated principal
amount. Certain Debt Securities may be deemed to be issued with original issue
discount for United States Federal income tax purposes. The Prospectus
Supplement with respect to any series of Debt Securities issued with such
original issue discount will contain a discussion of Federal income tax
considerations with respect thereto.
The particular terms of each series of Debt Securities to be offered and
sold will be described in the Prospectus Supplement relating to such Debt
Securities, including: (1) the designation of the particular series; (2) the
aggregate principal amount of such series which may be authenticated and
delivered under the applicable Indenture; (3) the person to whom any interest on
any Debt Security of the series shall be payable, if other than the person in
whose name that Debt Security (or one or more predecessor Debt Securities) is
registered at the close of business on the regular record date for such
interest; (4) the date or dates on which the principal of the Debt Securities of
such series is payable; (5) the rate or rates, and if applicable the method used
to determine the rate, at which the Debt Securities of such series shall bear
interest, if any, the date or dates from which such interest shall accrue, the
date or dates on which such interest shall be payable and the record date or
dates for the interest payable on any Debt Securities on any interest payment
date; (6) the place or places at which, subject to the provisions of the
applicable Indenture, the principal of (and premium, if any, on) and any
interest on Debt Securities of such series shall be payable, any Debt Securities
of the series may be surrendered for registration of transfer, and notices and
demands to or upon the Corporation in respect of the Debt Securities of the
series and the Indenture may be served; (7) the obligation, if any, of the
Corporation to redeem or purchase Debt Securities of such series, at the option
of the Corporation or at the option of a holder thereof, pursuant to any sinking
fund or other redemption provisions and the period or periods within which, the
price or prices at which and the terms and conditions upon which Debt Securities
of the series may be so redeemed or purchased, in whole or in part; (8) if other
than denominations of $1,000 and any integral multiple thereof, the
denominations in which any Debt Securities of such series shall be issuable; (9)
if other than the principal amount thereof, the portion of the principal amount
of Debt Securities of such series which shall be payable upon declaration of
acceleration of the maturity thereof; (10) the currency, currencies or currency
units, in which payment of the principal of (and premium, if any, on) and any
interest on any Debt Securities of the series shall be payable if other than the
currency of the United States of America and the manner of determining the
equivalent thereof in the currency of the United States of America for purposes
of the applicable Indenture; (11) if the principal of (and premium, if any, on)
or any interest on the Debt Securities of the series are to be payable, at the
election of the Corporation or a holder thereof, in one or more currencies or
currency units, other than that or those in which the Debt Securities are stated
to be payable, the currency or currencies in which payment of the principal of
(and premium, if any, on) and any interest on Debt Securities of such series as
to which such election is made shall be payable, and the periods within which
and the terms and conditions upon which such election is to be made; (12) if the
amount of payments of principal of (and premium, if any, on) or any interest on
the Debt Securities of the series may be determined with reference to an index,
the manner in which such amounts shall be determined; (13) whether the Debt
Securities will be issued in book-entry only form; (14) the identification or
method of selection of any interest rate calculation agents, exchange rate
calculation agents or other agents with respect to Debt Securities of such
series; (15) if either or both of Section 14.02 (defeasance) or Section 14.03
(covenant defeasance) of the applicable Indenture do not apply to the Debt
Securities of the series; (16) any provisions relating to the extension of
maturity of, or the renewal of, Debt Securities of such series and (17) any
other terms of the Debt Securities of such series (which terms shall not be
inconsistent with the provisions of the applicable Indenture).
The ability of NationsBank to make payments of principal of and premium, if
any, and interest on the Debt Securities may be affected by the ability of the
Banks to pay dividends. The ability of the Banks, as well as of the Corporation,
to pay dividends in the future currently is, and could be further, influenced by
bank regulatory requirements and capital guidelines. See "SUPERVISION AND
REGULATION."
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Neither the Senior Indenture nor the Subordinated Indenture contains
provisions that would provide protection to holders of Debt Securities against a
decline in credit quality resulting from takeovers, recapitalizations, the
incurrence of additional indebtedness or similar restructurings by the
Corporation. If credit quality declines as a result of such an event, or
otherwise, the ratings of any Debt Securities then outstanding may be withdrawn
or downgraded.
CONVERSION
The Debt Securities of any series may be convertible at the option of the
holder or the Corporation, into Preferred Stock, Depositary Shares, Common Stock
or other Debt Securities if the Prospectus Supplement relating to such series of
Debt Securities so provides. In such case, the Prospectus Supplement relating to
such series of Debt Securities will set forth (i) the period(s) during which
such conversion may be elected, (ii) the conversion price payable and the number
of shares or amount of Preferred Stock, Depositary Shares, Common Stock or other
Debt Securities purchaseable upon conversion, and adjustments thereto, if any,
in certain events, (iii) the procedures for electing such conversion and (iv)
all other terms for such conversion (which terms shall not be inconsistent with
the provisions of the applicable Indenture).
EXCHANGE, REGISTRATION AND TRANSFER
At the option of the holder, subject to the terms of the applicable
Indenture, Debt Securities of any series (other than Debt Securities issued in
book-entry form) will be exchangeable for other Debt Securities of the same
series and of an equal aggregate principal amount and tenor of any authorized
denominations.
Debt Securities may be presented for exchange as provided above, and Debt
Securities may be presented for registration of transfer (with the form of
transfer endorsed thereon duly executed), at the office of the Security
Registrar or at the office of any transfer agent of the Corporation designated
and maintained for such purpose with respect to Debt Securities of a series
pursuant to the terms of the applicable Indenture, as referred to in an
applicable Prospectus Supplement. Such transfer or exchange will be effected
upon the Security Registrar or transfer agent, as the case may be, being
satisfied with the documents of title and identity of the person making the
request. No service charge shall be made for any exchange or registration of
transfer of Debt Securities, but the Corporation may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith.
If a Prospectus Supplement refers to any transfer agents (in addition to
the Security Registrar) designated by the Corporation with respect to any series
of Debt Securities, the Corporation may at any time rescind the designation of
any such transfer agent or approve a change in the location through which any
such transfer agent acts, except that the Corporation will be required to
maintain a transfer agent in each place of payment for such series. The
Corporation may at any time designate additional transfer agents with respect to
any series of Debt Securities.
The Corporation shall not be required to (i) issue, exchange, or register
the transfer of any Debt Security of any series to be redeemed for a period of
15 days next preceding any selection of such Debt Securities to be redeemed; or
(ii) exchange or register the transfer of any Debt Security so selected, called
or being called for redemption, except the unredeemed portion of any Debt
Security being redeemed in part.
For a discussion of restrictions on the exchange, registration and transfer
of Book-Entry Securities, see "DESCRIPTION OF DEBT SECURITIES -- Book-Entry
Securities."
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement,
principal of (and premium, if any, on) and any interest on Debt Securities will
be payable, subject to any applicable laws and regulations, at the offices of
such paying agents as the Corporation may designate from time to time pursuant
to the applicable Indenture, except that, at the option of the Corporation,
payment of any interest may be made by check mailed to the address of the person
entitled thereto as such address shall appear in the Security Register. Unless
otherwise indicated in an applicable Prospectus Supplement, payment of interest
on a Debt Security on any interest payment date generally will be made to the
person in whose name such Debt Security is registered at the close of business
on the regular record date for such interest payment date.
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The Corporation has designated the principal corporate trust offices of the
Senior Trustee and the Subordinated Trustee in the City of New York as the
places where the Senior Debt Securities and Subordinated Debt Securities,
respectively, may be presented for payment. The Corporation may at any time
designate additional paying agents or rescind the designation of any paying
agent or approve a change in the office through which any paying agent acts. Any
other paying agents designated by the Corporation for the Debt Securities of
each series will be named in an applicable Prospectus Supplement.
BOOK-ENTRY SECURITIES
If so specified in an applicable Prospectus Supplement, all or any portion
of the Debt Securities of a series may be issued in book-entry form represented
by one or more global Debt Securities in registered form ("Book-Entry
Securities") to be deposited with, or on behalf of a depositary (a "Depositary")
identified in the Prospectus Supplement relating to such series, for credit to
the respective accounts of the beneficial owners of such Debt Securities (or to
such other accounts as they may direct). The specific terms of the depositary
arrangement with respect to any such series of Debt Securities will be described
in the Prospectus Supplement relating to such series. Unless otherwise specified
in the applicable Prospectus Supplement, the Corporation anticipates that the
following provisions will apply to all depositary arrangements with a
Depositary.
Upon the issuance of a Book-Entry Security, the Depositary will credit, on
its book-entry registration and transfer system, the respective principal
amounts of the Debt Securities represented by such Book-Entry Security to the
accounts of institutions that have accounts with such depositary or its nominee
("participants"). The accounts to be credited shall be designated by the
underwriters or agents of such Debt Securities or by the Corporation, if such
Debt Securities are offered and sold directly by the Corporation. Ownership of
beneficial interests in such Book-Entry Security will be limited to participants
or persons that may hold interests through participants. Ownership of a
beneficial interest in such a Book-Entry Security will be shown on, and the
transfer of that ownership will be effected only through, records maintained by
the Depositary or its nominee (with respect to participants' interests) for such
Book-Entry Security or by participants or persons that hold through
participants. The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to acquire or transfer beneficial
interests in a Book-Entry Security.
So long as the Depositary for a Book-Entry Security, or its nominee, is the
registered owner of such Book-Entry Security, such depositary or such nominee,
as the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Book-Entry Security for all purposes under the
Indenture governing such Debt Securities. Except as set forth below, owners of
beneficial interests in such Book-Entry Security will not be entitled to have
Debt Securities of the series represented by such Book-Entry Security registered
in their names, will not receive or be entitled to receive physical delivery of
Debt Securities of such series in definitive form and will not be considered the
owners or holders thereof under the Indenture. Accordingly, each person owning a
beneficial interest in a Book-Entry Security must rely on the procedures of the
Depositary and, if such person is not a participant, on the procedures of the
participant and, if applicable, the indirect participant, through which such
person owns its interest, to exercise any rights of a holder under the
Indenture.
Payment of principal of (and premium, if any) and any interest on Debt
Securities registered in the name of or held by a Depositary or its nominee will
be made to the Depositary or its nominee, as the case may be, as the registered
owner or the holder of the Book-Entry Security representing such Debt
Securities. None of the Corporation, the Trustee, any paying agent, any
authenticating agent or the Security Registrar for such Debt Securities will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in a Book-Entry
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
The Corporation expects that the Depositary for Debt Securities of a
series, upon receipt of any payment of principal of (and premium, if any) and
any interest on the Debt Securities represented by such Book-Entry Security,
will credit immediately participants' accounts with payments in amounts
proportionate to their respective holdings in principal amount of beneficial
interest in such Book-Entry Security as shown on the records of such Depositary.
The Corporation also expects that payments by participants to owners of
beneficial interests in such Book-Entry Security held through such participants
will be governed by standing instructions
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and customary practices, as is now the case with securities held for the
accounts of customers in bearer form or registered in "street name." Such
payments will be the responsibility of such participants.
Unless and until it is exchanged in whole for Debt Securities in definitive
form, a Book-Entry Security may not be transferred except as a whole by the
Depositary for such Book-Entry Security to a nominee of such depositary or to
another depositary or a nominee for such other depositary. If a Depositary for
Debt Securities is at any time unwilling or unable to continue as depositary and
a successor depositary is not appointed by the Corporation within 90 days, the
Corporation will issue Debt Securities in definitive form in exchange for the
Book-Entry Security or Book-Entry Securities representing all such Debt
Securities. In addition, the Corporation may at any time and in its sole
discretion determine not to have any Debt Securities represented by a Book-Entry
Security and, in such event, will issue such Debt Securities in definitive form
in exchange for the Book-Entry Security or Book-Entry Securities representing
all such Debt Securities. In any such instance, an owner of a beneficial
interest in a Book-Entry Security will be entitled to physical delivery in
definitive form of Debt Securities of the series represented by such Book-Entry
Security equal in principal amount to such beneficial interest and to have such
Debt Securities registered in the name of the owner of such beneficial interest.
SUBORDINATION
The Subordinated Debt Securities are subordinate and subject, to the extent
and in the manner set forth in the Subordinated Indenture, in right of payment
to the prior payment in full of all Senior Indebtedness of the Corporation.
"Senior Indebtedness" is defined by the Subordinated Indenture as any
indebtedness for money borrowed (including all indebtedness of the Corporation
for borrowed and purchased money of the Corporation, all obligations of the
Corporation arising from off-balance sheet guarantees by the Corporation and
direct credit substitutes, and obligations of the Corporation associated with
derivative products such as interest and foreign exchange rate contracts and
commodity contracts) that is outstanding on the date of execution of the
Subordinated Indenture, or is thereafter created, incurred or assumed, for the
payment of which the Corporation is at the time of determination responsible or
liable as obligor, guarantor or otherwise, and all deferrals, renewals,
extensions and refundings of any such indebtedness or obligations, other than
the Subordinated Debt Securities or any other indebtedness as to which, in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such indebtedness is subordinate in right of
payment to any other indebtedness of the Corporation. The Prospectus Supplement
relating to each series of Subordinated Debt Securities will set forth the
aggregate amount of then outstanding Senior Indebtedness of the Corporation and
any limitation on the issuance of additional Senior Indebtedness.
No payment on account of principal of (and premium, if any, on) or
interest, if any, on the Subordinated Debt Securities shall be made, and no
Subordinated Debt Securities shall be purchased, either directly or indirectly,
by the Corporation or any of its subsidiaries, if any default or event of
default with respect to any Senior Indebtedness shall have occurred and be
continuing and the Corporation and the Subordinated Trustee shall have received
written notice thereof from the holders of at least 10 percent in principal
amount of any kind or category of any Senior Indebtedness (or the representative
or representatives of such holders) or the Subordinated Trustee shall have
received written notice thereof from the Corporation.
In the event that any Subordinated Debt Security is declared due and
payable before the date specified therein as the fixed date on which the
principal thereof is due and payable pursuant to the Subordinated Indenture, or
upon any payment or distribution of assets of the Corporation of any kind or
character to creditors upon any dissolution or winding up or total or partial
liquidation or reorganization of the Corporation, all principal of (and premium,
if any, on) and interest due or to become due upon all Senior Indebtedness shall
first be paid in full before the holders of the Subordinated Debt Securities
(the "Subordinated Debt Holders"), or the Subordinated Trustee, shall be
entitled to retain any assets (other than shares of stock of the Corporation as
reorganized or readjusted or securities of the Corporation or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated, at least to the same extent as the
Subordinated Debt Securities, to the payment of all Senior Indebtedness which
may at the time be outstanding, provided that the rights of the holders of the
Senior Indebtedness are not altered by such reorganization or readjustment) so
paid or distributed in respect of the Subordinated Debt Securities (for
principal or interest, if any). Upon such dissolution or winding up or
liquidation or reorganization, any payment or distribution of assets of the
Corporation of any kind or character, whether in cash, property or securities
(other than shares of stock of the Corporation as reorganized or readjusted or
securities of the Corporation or any other
12
<PAGE>
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated, at least to the same extent as the
Subordinated Debt Securities, to the payment of all Senior Indebtedness which
may at the time be outstanding, provided that the rights of the holders of the
Senior Indebtedness are not altered by such reorganization or readjustment), to
which the Subordinated Debt Holders or the Subordinated Trustee would be
entitled, except for the subordination provisions of the Subordinated Indenture,
shall be paid by the Corporation or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other person making such payment or distribution,
or by the Subordinated Debt Holders or the Subordinated Trustee if received by
them or it, directly to the holders of the Senior Indebtedness (pro rata to each
such holder on the basis of the respective amounts of Senior Indebtedness held
by such holder) or their representatives, to the extent necessary to pay all
Senior Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness, before any payment or
distribution is made to the Subordinated Debt Holders or to the Subordinated
Trustee.
Subject to the payment in full of all Senior Indebtedness, the Subordinated
Debt Holders shall be subrogated (equally and ratably with the holders of all
indebtedness of the Corporation which, by its express terms, ranks on a parity
with the Subordinated Debt Securities and is entitled to like rights of
subrogation) to the rights of the holders of Senior Indebtedness to receive
payments or distributions of assets of the Corporation applicable to the Senior
Indebtedness until the Subordinated Debt Securities shall be paid in full.
SALE OR ISSUANCE OF CAPITAL STOCK OF BANKS
The Senior Indenture prohibits the issuance, sale or other disposition of
capital stock, or securities convertible into or options, warrants or rights to
acquire capital stock, of any Principal Subsidiary Bank (as defined below) or of
any subsidiary which owns shares of capital stock, or securities convertible
into or options, warrants or rights to acquire capital stock, of any Principal
Subsidiary Bank, with the following exceptions: (a) sales of directors'
qualifying shares; (b) sales or other dispositions for fair market value, if,
after giving effect to such disposition and to conversion of any shares or
securities convertible into capital stock of a Principal Subsidiary Bank, the
Corporation would own directly or indirectly not less than 80% of each class of
the capital stock of such Principal Subsidiary Bank (or any successor
corporation thereto); (c) sales or other dispositions made in compliance with an
order of a court or regulatory authority of competent jurisdiction; (d) any sale
by a Principal Subsidiary Bank (or any successor corporation thereto) of
additional shares of its capital stock to its shareholders at any price, so long
as (i) prior to such sale the Corporation owns, directly or indirectly, shares
of the same class and (ii) immediately after such sale, the Corporation owns,
directly or indirectly, at least as great a percentage of each class of capital
stock of such Principal Subsidiary Bank as it owned prior to such sale of
additional shares; (e) any sale by a Principal Subsidiary Bank (or any successor
corporation thereto) of additional securities convertible into shares of its
capital stock to its shareholders at any price, so long as (i) prior to such
sale the Corporation owns, directly or indirectly, securities of the same class
and (ii) immediately after such sale the Corporation owns, directly or
indirectly, at least as great a percentage of each class of such securities
convertible into shares of capital stock of such Principal Subsidiary Bank as it
owned prior to such sale of additional securities; (f) any sale by a Principal
Subsidiary Bank (or any successor corporation thereto) of additional options,
warrants or rights to subscribe for or purchase shares of its capital stock to
its shareholders at any price, so long as (i) prior to such sale the Corporation
owns, directly or indirectly, options, warrants or rights, as the case may be,
of the same class and (ii) immediately after such sale, the Corporation owns,
directly or indirectly, at least as great a percentage of each class of such
options, warrants or rights, as the case may be, to subscribe for or purchase
shares of capital stock of such Principal Subsidiary Bank as it owned prior to
such sale of additional options, warrants or rights; or (g) any issuance of
shares of capital stock, or securities convertible into or options, warrants or
rights to subscribe for or purchase shares of capital stock, of a Principal
Subsidiary Bank or any subsidiary which owns shares of capital stock, or
securities convertible into or options, warrants or rights to acquire capital
stock, of any Principal Subsidiary Bank, to the Corporation or a wholly owned
subsidiary of the Corporation.
A Principal Subsidiary Bank is defined in the Senior Indenture as any Bank
(other than NationsBank of Delaware, National Association) with total assets
equal to more than 10% of the Corporation's total consolidated assets.
13
<PAGE>
WAIVER OF COVENANTS
Under the terms of either Indenture, compliance with certain covenants or
conditions of such Indenture may be waived by the holders of a majority in
principal amount of the Debt Securities of all series to be affected thereby and
at the time outstanding under that Indenture (including, in the case of holders
of Senior Debt Securities, the covenant described above).
MODIFICATION OF THE INDENTURES
Each Indenture contains provisions permitting the Corporation and the
applicable Trustee to modify such Indenture or the rights of the holders of Debt
Securities or coupons, if any, thereunder, with the consent of the holders of
not less than 66 2/3% in aggregate principal amount of the Debt Securities of
all series at the time outstanding under that Indenture and to be affected
thereby (voting as one class), except that no such modification shall (a) extend
the fixed maturity of, reduce the principal amount or redemption premium, if
any, of, or reduce the rate of or extend the time of payment of interest on, any
Debt Security without the consent of the holder of each security so affected, or
(b) reduce the aforesaid percentage of Debt Securities, the consent of holders
of which is required for any such modification, without the consent of the
holders of all Debt Securities then outstanding under that Indenture. Each
Indenture also provides that the Corporation and the respective Trustee may,
from time to time, execute supplemental indentures in certain limited
circumstances without the consent of any holders of outstanding Debt Securities.
Each Indenture provides that in determining whether the holders of the
requisite principal amount of the Debt Securities outstanding have given any
request, demand, authorization, direction, notice, consent or waiver thereunder,
(i) the principal amount of an Original Issue Discount Security that shall be
deemed to be outstanding shall be the amount of the principal thereof that would
be due and payable upon an event of default, and (ii) the principal amount of a
Debt Security denominated in a foreign currency or currency unit shall be the
U.S. dollar equivalent, determined on the date of original issuance of such Debt
Security.
MEETINGS AND ACTION BY SECURITYHOLDERS
Each Indenture contains provisions for convening meetings of the holders of
Debt Securities for certain purposes. A meeting may be called at any time by the
Trustee in its discretion and shall be called by the Trustee upon request by the
Corporation or the holders of at least 10% in aggregate principal amount of the
Debt Securities outstanding of such series, in any case upon notice given in
accordance with "Notices" below. Any resolution passed or decision taken at any
meeting of holders of Debt Securities of any series duly held in accordance with
the applicable Indenture, or such other action taken in accordance with the
terms of the applicable Indenture, will be binding on all holders of Debt
Securities of that series and the related coupons.
DEFAULTS AND RIGHTS OF ACCELERATION
An Event of Default is defined in the Subordinated Indenture generally as
bankruptcy of the Corporation under Federal bankruptcy laws. An Event of Default
is defined in the Senior Indenture generally as (i) the Corporation's failure to
pay principal (or premium, if any) when due on any securities of a series, (ii)
the Corporation's failure to pay interest on any securities of a series, within
30 days after the same becomes due, (iii) the Corporation's breach of any of its
other covenants contained in the Senior Debt Securities or the Senior Indenture,
which breach is not cured within 90 days after written notice by the Senior
Trustee or by the holders of at least 25% in principal amount of the Senior Debt
Securities then outstanding under the Senior Indenture and affected thereby, and
(iv) certain events involving the bankruptcy, insolvency or liquidation of the
Corporation.
Each Indenture provides that if an Event of Default under the respective
Indenture occurs and is continuing, either the respective Trustee or the holders
of 25% in principal amount, or, if any such Debt Securities are Original Issue
Discount Debt Securities, such lesser amounts as may be described in an
applicable Prospectus Supplement, of the Debt Securities then outstanding under
that Indenture (or, with respect to an Event of Default under the Senior
Indenture due to a default in the payment of principal (or premium, if any) or
interest or performance of any other covenant, the outstanding Debt Securities
of all series affected by such default) may declare the principal amount of all
of such Debt Securities to be due and payable immediately. Payment of principal
of the Subordinated Debt Securities may not be accelerated in the case of a
default in the payment of principal (or premium, if any) or interest or the
performance of any other covenant of the Corporation. Upon
14
<PAGE>
certain conditions a declaration of an Event of Default may be annulled and past
defaults may be waived by the holders of a majority in principal amount of the
Debt Securities then outstanding (or of such series affected, as the case may
be).
COLLECTION OF INDEBTEDNESS, ETC.
Each Indenture also provides that in the event of a failure by the
Corporation to make payment of principal of or interest on the Debt Securities
(and, in the case of payment of interest, such failure to pay shall have
continued for 30 days), the Corporation will, upon demand of the respective
Trustee, pay to it, for the benefit of the holders of the Debt Securities the
amount then due and payable on the Debt Securities for principal and interest,
with interest on the overdue principal and, to the extent payment of interest
shall be legally enforceable, upon overdue installments of interest at the rate
borne by the Debt Securities. Each Indenture further provides that if the
Corporation fails to pay such amount forthwith upon such demand, the respective
Trustee may, among other things, institute a judicial proceeding for the
collection thereof. However, each Indenture provides that notwithstanding any
other provision of the Indenture, the holder of any Debt Security shall have the
right to institute suit for the enforcement of any payment of principal of and
interest on such Debt Security on the respective stated maturities expressed in
such Debt Security and that such right shall not be impaired without the consent
of such holder.
The holders of a majority in principal amount of the Debt Securities then
outstanding under an Indenture shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
under that Indenture, provided that the holders shall have offered to the
Trustee reasonable indemnity against expenses and liabilities. Each Indenture
requires the annual filing by the Corporation with the respective Trustee of a
certificate as to the absence of default and as to compliance with the terms of
that Indenture.
NOTICES
Except as otherwise provided in the applicable Indenture, notices to
holders of Debt Securities will be given by first-class mail to the addresses of
such holders as they appear in the Security Register.
CONCERNING THE TRUSTEES
The Corporation and the Banks have from time to time maintained deposit
accounts and conducted other banking transactions with The Bank of New York and
BankAmerica National Trust Company and their affiliated entities in the ordinary
course of business. Each of the Trustees also serves as trustee for certain
series of the Corporation's outstanding indebtedness under other indentures.
LEGAL OPINIONS
The legality of the Debt Securities will be passed upon for the Corporation
by Smith Helms Mulliss & Moore, L.L.P., Charlotte, North Carolina, and for the
underwriters or agents by Stroock & Stroock & Lavan, New York, New York. As of
the date of this Prospectus, certain members of Smith Helms Mulliss & Moore,
L.L.P. beneficially own approximately 50,000 shares of the Corporation's Common
Stock.
EXPERTS
The consolidated financial statements of the Corporation incorporated in
this Prospectus by reference to the Corporation's Annual Report on Form 10-K for
the year ended December 31, 1994, 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.
15
<PAGE>
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT AND PROSPECTUS IN CONNECTION WITH THE OFFERING MADE HEREBY
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION OR BY THE AGENTS. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE CORPORATION SINCE THE DATE HEREOF. THIS PROSPECTUS
SUPPLEMENT AND PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE
IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PROSPECTUS SUPPLEMENT
Description of Notes.......................... S-2
United States Taxation........................ S-15
Plan of Distribution.......................... S-22
PROSPECTUS
Incorporation of Certain Documents by
Reference................................... 2
Available Information......................... 2
NationsBank Corporation....................... 3
Use of Proceeds............................... 6
Ratios of Earnings to Fixed Charges........... 6
Plan of Distribution.......................... 6
Description of Debt Securities................ 8
Legal Opinions................................ 15
Experts....................................... 15
</TABLE>
$1,500,000,000
(NationsBank Logo appears here)
SENIOR MEDIUM-TERM NOTES,
SERIES E
SUBORDINATED MEDIUM-TERM
NOTES, SERIES E
DUE NINE MONTHS OR MORE
FROM DATE OF ISSUE
PROSPECTUS SUPPLEMENT
NATIONSBANC CAPITAL MARKETS, INC.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
SALOMON BROTHERS INC
JANUARY 10, 1996
<PAGE>
PROSPECTUS SUPPLEMENT [ALTERNATE PAGE--DEBT]
(TO PROSPECTUS DATED NOVEMBER 24, 1995)
$1,500,000,000
(NationsBank Logo appears here)
SENIOR MEDIUM-TERM NOTES, SERIES E
SUBORDINATED MEDIUM-TERM NOTES, SERIES E
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
NationsBank Corporation ("NationsBank" or the "Corporation") may from time
to time offer its Senior Medium-Term Notes, Series E (the "Senior Notes"), and
Subordinated Medium-Term Notes, Series E (the "Subordinated Notes" and,
collectively with the Senior Notes, the "Notes"). NationsBank may sell up to
$2,000,000,000 in aggregate initial offering price of Notes, subject to
reduction from time to time after the date hereof at the option of NationsBank,
including reduction as a result of the sale of other Debt Securities (as defined
in the accompanying Prospectus) of NationsBank pursuant to the accompanying
Prospectus. The Senior Notes will rank equally with all other unsubordinated and
unsecured indebtedness of the Corporation. The Subordinated Notes will be
subordinated in right of payment to all Senior Indebtedness (as defined in the
accompanying Prospectus) of the Corporation. Payment of principal of the
Subordinated Notes may be accelerated only in the case of the bankruptcy of
NationsBank. See "DESCRIPTION OF DEBT SECURITIES -- Subordination" and
"DESCRIPTION OF DEBT SECURITIES -- Defaults and Rights of Acceleration" in the
accompanying Prospectus.
Each Note will mature on a day nine months or more from its date of issue
and, as set forth in an applicable pricing supplement to this Prospectus
Supplement (a "Pricing Supplement"), may be subject to redemption at the option
of the Corporation or repaid at the option of the holder thereof prior to its
stated maturity. Each Note will bear interest at a fixed rate (a "Fixed Rate
Note") or at a floating rate (a "Floating Rate Note"), as set forth in the
applicable Pricing Supplement. The interest rate or interest rate formula for
each Note will be established by the Corporation at the time of issuance of such
Note (the "Original Issue Date") and will be set forth therein and specified in
the applicable Pricing Supplement. See "DESCRIPTION OF NOTES."
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will be issued only in minimum denominations of $1,000 and any integral multiple
in excess thereof, and Notes will be issued in book-entry form only, subject to
certain exceptions listed herein, and will be represented by one or more global
notes registered in the name of The Depository Trust Company ("DTC") or its
nominee. Beneficial interests in Notes issued in book-entry form will be shown
on, and transfer thereof will be effected only through, records maintained by
DTC or its nominee and its participants. See "DESCRIPTION OF NOTES -- Book-Entry
System."
THE NOTES ARE NOT SAVINGS ACCOUNTS OR 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, AND INVOLVE INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH
CAROLINA 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
PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT HERETO, OR THE
PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS SUPPLEMENT IS TO BE USED BY NATIONSBANC CAPITAL MARKETS, INC.
("NCMI"), A BROKER-DEALER AND A DIRECT WHOLLY-OWNED SUBSIDIARY OF
NATIONSBANK, IN CONNECTION WITH OFFERS AND SALES RELATED TO SECONDARY
MARKET TRANSACTIONS IN THE NOTES. NCMI OR ITS AFFILIATES MAY ACT AS
PRINCIPAL OR AGENT IN SUCH TRANSACTIONS. ANY SUCH SALES WILL BE
MADE AT NEGOTIATED PRICES RELATING TO PREVAILING MARKET
PRICES AT THE TIME OF SALE OR OTHERWISE.
NATIONSBANC CAPITAL MARKETS, INC.
The date of this Prospectus Supplement is January 10, 1996.
<PAGE>
[ALTERNATE PAGE -- DEBT]
PLAN OF DISTRIBUTION
This Prospectus Supplement and related Prospectus are to be used by
NationsBanc Capital Markets, Inc. ("NCMI"), a broker-dealer and a direct
wholly-owned subsidiary of NationsBank, in connection with offers and sales of
the Notes in secondary market transactions at negotiated prices relating to
prevailing prices at the time of sale or otherwise. NCMI may act as principal or
agent in such transactions. The participation of NCMI in the offer and sale of
the Notes complies with the requirements of Schedule E to the By-laws of the
NASD regarding underwriting of securities of an affiliate. NCMI will not execute
a transaction in the Notes in a discretionary account without the prior written
specific approval of NCMI's customer. NCMI has no obligation to make a market in
the Notes, and if commenced, may discontinue its market-making activities at any
time without notice, at its sole discretion. Furthermore, NCMI may be required
to discontinue its market-making activities during periods when the Corporation
is seeking to sell certain of its securities or when NCMI, such as by means of
its ownership by the Corporation, learns of material non-public information
relating to the Corporation. NCMI would not be able to recommence its
market-making activities until such sale has been completed or such information
has become publicly available. It is not possible to forecast the impact, if
any, that any such discontinuance may have on the market for the Notes. While
other broker-dealers may make a market in the Notes from time to time, there can
be no assurance that any other broker-dealer will do so at any time when NCMI
discontinues its market-making activities. In addition, any such broker-dealer
that is engaged in market-making activities may thereafter discontinue such
activities at any time at its sole discretion.
<PAGE>
[ALTERNATE PAGE -- DEBT]
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT AND PROSPECTUS IN CONNECTION WITH THE OFFERING MADE HEREBY
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION, THE AGENTS OR NATIONSBANC
CAPITAL MARKETS, INC. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CORPORATION
SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT AND PROSPECTUS DO NOT
CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER
OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. THIS PROSPECTUS SUPPLEMENT AND THE RELATED
PROSPECTUS ARE TO BE USED BY NATIONSBANC CAPITAL MARKETS, INC., A BROKER-DEALER
AND A DIRECT WHOLLY-OWNED SUBSIDIARY OF THE CORPORATION, IN CONNECTION WITH
OFFERS AND SALES RELATED TO SECONDARY MARKET TRANSACTIONS.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PROSPECTUS SUPPLEMENT
Description of Notes.......................... S-2
United States Taxation........................ S-15
Plan of Distribution.......................... S-22
PROSPECTUS
Incorporation of Certain Documents by
Reference................................... 2
Available Information......................... 2
NationsBank Corporation....................... 3
Use of Proceeds............................... 6
Ratios of Earnings to Fixed Charges........... 6
Plan of Distribution.......................... 6
Description of Debt Securities................ 8
Legal Opinions................................ 15
Experts....................................... 15
</TABLE>
$1,500,000,000
(NationsBank Logo appears here)
SENIOR MEDIUM-TERM NOTES,
SERIES E
SUBORDINATED MEDIUM-TERM
NOTES, SERIES E
DUE NINE MONTHS OR MORE
FROM DATE OF ISSUE
PROSPECTUS SUPPLEMENT
NATIONSBANC CAPITAL MARKETS, INC.
JANUARY 10, 1996
