UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 7)
CHARTER BANCSHARES, INC.
(Name of Issuer)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(Title of class of securities)
1611571012
(CUSIP Number)
Paul J. Polking, Esq.
General Counsel
NationsBank Corporation
NationsBank Corporate Center
Charlotte, North Carolina 28255
(704) 386-5000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
January 25, 1996
(Date of Event Which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box:
[ ].
Check the following box if a fee is being paid with the statement [ ].
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.)
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 (the "Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act.
The total number of shares reported herein is 2,659,249 shares.
(Continued on following pages)
<PAGE>
===============================================================================
CUSIP NO. 1611571012
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
NationsBank Corporation
I.R.S. Identification No. 56-0906609
- - -------------------------------------------------------------------------------
2 Check The Appropriate Box If A Member Of A Group * (a) [ ]
(b) [x]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
Not applicable
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
Not applicable
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NUMBER OF 7 SOLE VOTING POWER
SHARES 2,659,249
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY None
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 2,659,249
WITH
10 SHARED DISPOSITIVE POWER
None
- - -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,659,249 (See Note 1)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [X]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
44%
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14 TYPE OF REPORTING PERSON*
HC, CO
===============================================================================
Note 1: Excludes up to 3,402,378 (which amount represents the balance of all
outstanding shares of Charter Bancshares, Inc. common stock) that could be
acquired upon consummation of the proposed merger of Charter Bancshares, Inc.
into a subsidiary of NationsBank Corporation pursuant to the "Merger Agreement."
See Items 4 and 5.
<PAGE>
This Amendment No. 7 to Schedule 13D of NationsBank Corporation relates
to the common stock, $1.00 par value per share, of Charter Bancshares, Inc. and
amends the Schedule 13D dated December 24, 1986 as filed with the Securities and
Exchange Commission and as subsequently amended. Except as set forth below, the
information in this Schedule 13D, as amended, is reaffirmed.
Item 1. Security and Issuer.
The class of equity securities to which this statement relates is
the Common Stock, $1.00 par value per share (the "Common Stock") of
Charter Bancshares, Inc. ("Charter") which has its principal
executive offices in Houston, Texas.
Item 2. Identity and Background.
This statement is filed by NationsBank Corporation, a North Carolina
corporation ("NationsBank"), the principal business and offices of
which are located at NationsBank Corporate Center, Charlotte, North
Carolina 28255. NationsBank is a bank holding company registered
under the Bank Holding Company Act of 1956, as amended, with its
principal assets being the stock of its subsidiaries. Through
its banking and nonbanking subsidiaries, NationsBank
provides banking and banking-related services
primarily throughout the Southeast and Mid-Atlantic States and
Texas. Effective December 31, 1991, NationsBank changed its name
from "NCNB Corporation" to "NationsBank Corporation."
Neither NationsBank, nor, to the best of the knowledge of
NationsBank, any of its directors or its executive officers has,
during the last five years, (a) been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or
(b) been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
Information as to the identity and background of the directors and
executive officers of NationsBank is set forth in Appendix I
attached hereto, which is incorporated herein by reference.
If the Merger Agreement (as defined in Item 4) is consummated, the
consideration for shares of Charter Bancshares, Inc. capital stock
will be authorized but unissued shares of NationsBank common stock.
See Item 4.
Item 4. Purpose of Transaction.
As more fully described in this Schedule 13D, as originally filed in
December 1986 and as subsequently amended, NationsBank and Charter
entered into an agreement dated December 17, 1986 (the "First
Investment Agreement"), pursuant to which NationsBank purchased
60,000 shares of the Series B Nonvoting Cumulative Convertible
Preferred Stock of Charter (the "Series B Preferred Stock"). The
shares of Series B Preferred Stock purchased under the First
Investment Agreement were convertible into 907,639 shares of Common
Stock and 29,602 shares of its Series C Special Common Stock. The
Series C Special Common Stock was convertible into Common Stock on a
one-for-one basis.
On November 9, 1987, NationsBank and Charter entered into an
agreement dated as of November 6, 1987 between NationsBank and
Charter (the "Second Investment Agreement") to purchase 1,238,750
newly issued shares of Common Stock and 11,250 shares of newly
issued Series C Special Common Stock, subject to various conditions,
including regulatory approvals required by law. On February 24,
1988, the purchase of these shares was closed at a purchase price
per share of $5.60, or an aggregate purchase price of $7,000,000.
<PAGE>
On May 31, 1990, Charter converted $1,181,500 of its mandatory
convertible debentures (the "Debentures") into 57,645 shares of
Common Stock and 91,804 shares of Class B Special Common Stock. As
contemplated in connection with the conversion of the Debentures by
Charter, on August 1, 1990, NationsBank converted 18,667 shares of
the Series B Preferred Stock into 282,382 shares of Common Stock and
9,210 shares of Series C Special Common Stock (the "Conversion").
On May 18, 1992, NationsBank entered into an agreement with Charter
(the "1992 Agreement") providing that for a period of three years
commencing on such date (the "Commitment Period"), NationsBank
agreed, at Charter's request and subject to certain conditions set
forth therein, would purchase and invest up to $10 million (the
"Additional Investment") in Common Stock (the "Additional Common
Stock") or subordinated debentures (the "Additional Debentures")
(the Additional Common Stock and the Additional Debentures together
referred to herein as the "Additional Securities").
On July 31, 1992, Charter declared a Common Stock dividend payable
in additional shares of Common Stock, which resulted in NationsBank
owning an additional 76,056 shares of Common Stock. On July 31,
1992, Charter also declared a Series C Special Common Stock dividend
payable in additional shares of Series C Special Common Stock, which
resulted in NationsBank owning an additional 1,023 shares of Series
C Special Common Stock.
NationsBank converted its Series B Preferred Stock into 652,918
shares of Common Stock and 21,294 shares of Series C Special Common
Stock effective September 30, 1992. NationsBank then exchanged,
pursuant to a Stock Exchange Agreement dated as of September 30,
1992 between Jerry E. Finger and NationsBank, the 21,483 shares of
Series C Special Common Stock it owned before the conversion plus
the 21,294 shares it acquired upon conversion of the Series B
Preferred Stock for 47,055 shares of Common Stock. Such exchange was
effective October 2, 1992. As a result of the conversion and
exchange, NationsBank owned an aggregate of 2,297,161 shares of
Common Stock (and no other shares of Charter capital stock) which
shares represented as of the date of the conversion approximately
27% of the combined voting power of all of Charter's capital stock.
Since that date, NationsBank has received 362,088 additional shares
of Common Stock as stock dividends, and continues to own shares
representing approximately 27% of the combined voting power of
Charter's capital stock. NationsBank has sole voting and investment
power with respect to all shares of Common Stock it owns.
At the request of Charter and pursuant to the terms of the 1992
Agreement, NationsBank purchased a $7.5 million debenture of Charter
on April 19, 1993 and a $2.5 million debenture of Charter on April
8, 1994, fulfilling its $10 million investment under the 1992
Agreement. On April 3, 1995, NationsBank entered into an agreement
with Charter (the "1995 Agreement") the terms of which were
substantially similar to those in the 1992 Agreement, providing for
a further "Additional Investment" of $10 million over a new three
year "Commitment Period" commencing on April 3, 1995. No investments
have been made under the 1995 Agreement.
On January 25, 1996, NationsBank and Charter entered into an
Agreement and Plan of Merger (the "Merger Agreement") providing for
Charter to be merged (the "Merger") with and into a subsidiary of
NationsBank and that upon consummation of the Merger each share of
Common Stock (other than shares held by NationsBank or Charter other
than in a fiduciary capacity or as a result of a debt previously
contracted) would be converted into the right to receive 0.385
shares of NationsBank Common Stock. Consummation of the transaction
contemplated by the Merger Agreement is subject to numerous
conditions, including approval by stockholders of Charter and by
state and federal banking regulators. Also on January 25, 1996,
Jerry E. Finger (Chairman of the Board and Chief Executive Officer
of Charter) and NationsBank entered into an agreement pursuant to
which Mr. Finger has agreed to vote on his behalf and as managing
general partner of Finger Interests Number One, Ltd. all shares of
Common Stock and Charter Special Common Stock owned by him or by
such entity (representing approximately 54.77% of the combined
voting power of all of Charter's capital stock) in favor of the
Merger.
<PAGE>
NationsBank intends to vote its 2,659,249 shares of Common Stock in
favor of the Merger Agreement and to use its best efforts to
consummate the Merger in accordance with the Merger Agreement.
Item 5. Interest in Securities of the Issuer.
NationsBank currently owns 2,659,249 shares of Common Stock, which
represents 44% of outstanding shares of Common Stock and 27.1% of
the combined voting power of all classes of Charter's capital stock
currently outstanding.
The share amounts and percentages set forth in this Schedule 13D do
not include any shares that may be issued to NationsBank pursuant to
the 1995 Agreement or shares to be received in the Merger because
NationsBank has no power to vote, or to direct the voting of, such
shares and no power to dispose of, or to direct the disposition of,
such shares, nor does NationsBank have the right to acquire the
beneficial ownership of such shares within 60 days and, in the case
of shares to be received in the Merger, such shares would be
cancelled in the Merger and the voting rights associated with such
shares would be extinguished prior to their receipt by NationsBank.
See Item 4 above.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
See response to Item 4 above, which is incorporated by reference in
response to this item.
Item 7. Material to be Filed as Exhibits.
Exhibit A Agreement and Plan of Merger between NationsBank
Corporation and Charter Bancshares, Inc. dated
January 25, 1996.
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief,
I have certified that the information set forth in this statement is true,
complete and correct.
Dated: February 6, 1996
NATIONSBANK CORPORATION
BY: /s/ Paul J. Polking
Paul J. Polking
Executive Vice President and General Counsel
<PAGE>
APPENDIX I
DIRECTORS OF NATIONSBANK*
<TABLE>
<CAPTION>
Business Address of Individual and
the Organization with which Present Principal Occupation
NAME Individual is Principally Employed or Employment
<S> <C> <C>
Ronald W. Allen Hartsfield Atlanta Int'l Airport Chairman of the Board, President
Atlanta, GA 30320 and Chief Executive Officer,
Delta Airlines, Inc.
William M. Barnhardt 6100 Fairview Road Chairman of the Board, Southern
Suite 970 Webbing Mills, Inc. (textile
Charlotte, NC 28210 manufacturing company)
Thomas E. Capps 901 East Byrd Street Chairman of the Board, President
Riverfront Plaza, West Tower and Chief Executive Officer,
Richmond, VA 23219-4072 Dominion Resources, Inc.
(electric utility holding company)
Charles W. Coker North Second Street Chairman and Chief Executive
Hartsville, SC 29550 Officer, Sonoco Products
Company (manufacturer of paper
and plastic products)
Thomas G. Cousins 2500 Windy Ridge Parkway Chairman and Chief Executive
Suite 1600 Officer, Cousins Properties
Atlanta, GA 30339 Incorporated (real estate
development company)
Alan T. Dickson Suite 2000 Chairman, Ruddick Corporation
Two First Union Center (diversified holding company)
Charlotte, NC 28282
W. Frank Dowd, Jr. 2109 Randolph Road Chairman of the Executive
Charlotte, NC 28207 Committee, Charlotte Pipe &
Foundry Company (manufacturer
of cast iron and plastic pipe and
fittings)
Paul Fulton University of North Carolina Dean, Kenan-Flagler Business
Campus Box 3490, Carroll Hall School, University of North
Chapel Hill, NC 27599-3490 Carolina
L. L. Gellerstedt, Jr. 70 Ellis Street, N.E. Chairman of the Executive
Atlanta, GA 30301 Committee, Beers Construction
Company (general contractor)
Timothy L. Guzzle 702 North Franklin Street Chairman of the Board and Chief
Tampa, FL 33602 Executive Officer, TECO Energy,
Inc. (electric utility holding
company)
<PAGE>
W. W. Johnson 1301 Gervais Street Chairman of the Executive
Columbia, SC 29201 Committee, NationsBank
Corporation
Hugh L. McColl, Jr. NationsBank Corporate Center Chairman of the Board and Chief
Charlotte, NC 28255 Executive Officer, NationsBank
Corporation
Buck Mickel 301 North Main Street Chairman of the Board and Chief
Greenville, SC 29601-2170 Executive Officer, R.S.I.
Holdings, Inc. (holding company
of corporations involved in
distribution and textiles)
John J. Murphy 2001 Ross Avenue Chairman of the Board, Dresser
Dallas, TX 75201 Industries, Inc. (supplier of
engineered products and services
utilized in energy-related
activities)
John C. Slane 313 South Centennial President, Slane Hosiery Mills,
High Point, NC 27260 Inc. (manufacturer of textile
products)
John W. Snow 901 East Cary Street Chairman of the Board, President
One James Center, 20th Floor and Chief Executive Officer, CSX
Richmond, VA 23219 Corporation (transportation
company)
Meredith R. Spangler 400 East Franklin Street Trustee and Board Member
Chapel Hill, NC 27514
Robert H. Spilman 235 Main Street Chairman of the Board and Chief
Bassett, VA 24055 Executive Officer, Bassett
Furniture Industries, Inc.
(furniture manufacturer)
Ronald Townsend 1100 Wilson Boulevard President/Gannett Television
Arlington, VA 22234 (communications company)
E. Craig Wall, Jr. 2431 Highway 501 President, Canal Industries, Inc.
Conway, SC 29526 (forest products)
Jackie M. Ward Building G, Fourth Floor President and Chief Executive
5775 Peachtree-Dunwoody Road Officer, Computer Generation
Atlanta, GA 30342 Incorporated (computer software
company)
<PAGE>
ADDITIONAL EXECUTIVE OFFICERS OF NATIONSBANK*
Business Address of Individual and
the Organization with which Present Principal Occupation
NAME Individual is Principally Employed or Employment
Fredric J. Figge, II NationsBank Corporate Center Chairman, Corporate Risk Policy,
Charlotte, NC 28255 NationsBank Corporation
James H. Hance, Jr. NationsBank Corporate Center Vice Chairman and Chief
Charlotte, NC 28255 Financial Officer, NationsBank
Corporation
Kenneth D. Lewis NationsBank Corporate Center President, NationsBank
Charlotte, NC 28255 Corporation
Marc D. Oken NationsBank Corporate Center Executive Vice President and
Charlotte, NC 28255 Chief Accounting Officer,
NationsBank Corporation
F. William Vandiver NationsBank Corporate Center President, Global Finance
Charlotte, NC 28255 NationsBank Corporation
</TABLE>
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* To the best knowledge of NationsBank, each of the listed directors and
executive officers is a citizen of the United States.
<PAGE>
Exhibit A
AGREEMENT AND PLAN OF MERGER
between
NATIONSBANK CORPORATION
AND
CHARTER BANCSHARES, INC.
January 25, 1996
<PAGE>
TABLE OF CONTENTS
ARTICLE I
CERTAIN DEFINITIONS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
1.01 Certain Definitions..................................................................................1
ARTICLE II
THE MERGER AND RELATED TRANSACTIONS
2.01 Merger...............................................................................................7
2.02 Time and Place of Closing............................................................................7
2.03 Effective Time.......................................................................................7
2.04 Reservation of Right to Revise Transaction...........................................................8
ARTICLE III
MANNER OF CONVERTING SHARES
3.01 Conversion...........................................................................................8
3.02 Anti-Dilution Provisions.............................................................................9
ARTICLE IV
EXCHANGE OF SHARES
4.01 Exchange Procedures.................................................................................10
4.02 Voting and Dividends................................................................................10
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CHARTER
5.01 Organization, Standing, and Authority...............................................................11
5.02 Charter Capital Stock...............................................................................11
5.03 Subsidiaries........................................................................................12
5.04 Authorization of Merger and Related Transactions....................................................13
5.05 Securities Reporting Documents and Financial Statements............................................14
5.06 Absence of Undisclosed Liabilities..................................................................14
5.07 Tax Matters.........................................................................................14
5.08 Allowance for Credit Losses.........................................................................15
5.09 Other Tax and Regulatory Matters....................................................................15
5.10 Properties..........................................................................................16
5.11 Compliance with Laws................................................................................16
5.12 Employee Benefit Plans..............................................................................17
5.13 Commitments and Contracts...........................................................................18
5.14 Material Contract Defaults..........................................................................19
5.15 Legal Proceedings...................................................................................19
5.16 Absence of Certain Changes or Events................................................................19
5.17 Reports.............................................................................................19
5.18 Statements True and Correct.........................................................................20
5.19 Insurance...........................................................................................20
5.20 Labor...............................................................................................20
-i-
<PAGE>
Page
5.21 Material Interests of Certain Persons...............................................................21
5.22 Registration Obligations............................................................................21
5.23 Brokers and Finders.................................................................................21
5.24 State Takeover Laws.................................................................................21
5.25 Environmental Matters...............................................................................21
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF NATIONSBANK
6.01 Organization, Standing and Authority................................................................22
6.02 NationsBank Capital Stock...........................................................................22
6.03 Authorization of Merger and Related Transactions....................................................23
6.04 Financial Statements................................................................................23
6.05 NationsBank SEC Reports.............................................................................24
6.06 Statements True and Correct.........................................................................24
6.07 Common Stock........................................................................................24
6.08 Tax and Regulatory Matters..........................................................................24
6.09 Litigation..........................................................................................24
6.10 Brokers and Finders.................................................................................24
ARTICLE VII
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
7.01 Conduct of Business Prior to the Effective Time.....................................................25
7.02 Forbearances........................................................................................25
7.03 Plan Termination....................................................................................27
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.01 Access and Information..............................................................................27
8.02 Registration Statement; Regulatory Matters..........................................................28
8.03 Stockholders' Approval..............................................................................29
8.04 Press Releases......................................................................................29
8.05 Notice of Defaults..................................................................................29
8.06 Miscellaneous Agreements and Consents; Affiliates Agreements........................................29
8.07 Indemnification.....................................................................................30
8.08 SAR Plan; Restricted Stock..........................................................................31
8.09 Certain Change of Control Matters...................................................................31
8.10 Stock Exchange Listing..............................................................................32
8.11 Declaration of Dividends............................................................................32
8.12 Employee Benefits...................................................................................32
8.13 Certain Actions.....................................................................................32
8.14 Acquisition Proposals...............................................................................33
8.15 Termination Fee.....................................................................................33
8.16 Accruals............................................................................................34
8.17 Post-Closing Actions................................................................................34
8.18 Prepayment of Indebtedness..........................................................................34
-ii-
<PAGE>
Page
8.19 Waiver of Restrictions in Investment Agreements.....................................................34
ARTICLE IX
CONDITIONS
9.01 Conditions to Each Party's Obligation to Effect the Merger..........................................34
9.02 Conditions to Obligations of Charter to Effect the Merger..........................................35
9.03 Conditions to Obligations of NationsBank to Effect the Merger.......................................35
ARTICLE X
TERMINATION
10.01 Termination.........................................................................................36
10.02 Effect of Termination...............................................................................39
10.03 Non-Survival of Representations, Warranties and Covenants
Following the Effective Time........................................................................39
Page
ARTICLE XI
GENERAL PROVISIONS
11.01 Expenses............................................................................................39
11.02 Entire Agreement....................................................................................39
11.03 Amendments..........................................................................................40
11.04 Waivers.............................................................................................40
11.05 No Assignment.......................................................................................40
11.06 Notices.............................................................................................40
11.07 Specific Performance................................................................................41
11.08 Governing Law.......................................................................................41
11.09 Counterparts........................................................................................41
11.10 Captions............................................................................................41
11.11 Severability........................................................................................41
</TABLE>
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<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of
January 25, 1996, between NATIONSBANK CORPORATION ("NationsBank"), a North
Carolina corporation and a registered bank holding company under the Bank
Holding Company Act of 1956, as amended (the "BHCA"), and CHARTER BANCSHARES,
INC., a Texas corporation and a registered bank holding company under the BHCA
("Charter"). Capitalized terms not otherwise defined herein shall have the
meanings ascribed in Article I.
W I T N E S S E T H:
WHEREAS, pursuant to the terms and subject to the conditions of this
Agreement, NationsBank will acquire Charter through the merger of Charter with
and into NB Holdings Corporation, a Delaware corporation and a wholly owned
subsidiary of NationsBank ("Holdings") or a newly formed direct wholly owned
subsidiary of NationsBank (Holdings or such new subsidiary being referred to
herein as the "Merger Subsidiary"), or by such other means as provided for
herein (the "Merger"); and
WHEREAS, the Merger is intended to qualify as a tax-free reorganization
pursuant to Section 368 of the Code; and
WHEREAS, the respective Boards of Directors of NationsBank and Charter
have resolved that the transactions described herein are in the best interests
of the parties and their respective stockholders and have approved the
transactions described herein; and
WHEREAS, NationsBank and Charter desire to provide for certain
undertakings, conditions, representations, warranties and covenants in
connection with the transactions contemplated by this Agreement;
NOW THEREFORE, in consideration of the premises and the mutual
representations, warranties and agreements contained herein, the parties hereto
agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 Certain Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below:
(a) "Acquisition Proposal" shall have the meaning set
forth in Section 8.14.
(b) "Acquisition Transaction" shall have the meaning set
forth in Section 8.14.
<PAGE>
(c) "Affiliate" shall mean, with respect to any Person,
any Person that, directly or indirectly, controls or is controlled by
or is under common control with such Person.
(d) "Agreement" shall have the meaning set forth in the
introduction to this Agreement.
(e) "Allowance" shall have the meaning set forth in
Section 5.08.
(f) "Approvals" shall mean any and all permits, consents,
authorizations and approvals of any governmental or regulatory
authority or of any other third person necessary to give effect to the
arrangement contemplated by this Agreement or necessary to consummate
the Merger.
(g) "Authorizations" shall have the meaning set forth in
Section 5.01.
(h) "BHCA" shall have the meaning set forth in the
introduction to this Agreement.
(i) "Charter" shall have the meaning set forth in the
introduction to this Agreement.
(j) "Charter Benefit Plans" shall have the meaning set
forth in Section 5.12(a).
(k) "Charter Board" shall mean the Board of Directors of
Charter.
(l) "Charter Capital Stock" shall mean collectively the
Charter Common Stock, Charter Special Common Stock and Charter
Preferred Stock.
(m) "Charter Common Stock" shall mean the common stock,
par value $1.00 per share, of Charter.
(n) "Charter Disclosure Schedule" shall mean that
document containing the written detailed information prepared by
Charter and delivered by Charter to NationsBank.
(o) "Charter ERISA Plan" shall have the meaning set forth
in Section 5.12(a).
(p) "Charter Financial Statements" shall have the meaning
set forth in Section 5.05.
(q) "Charter Preferred Stock" shall mean the Preferred
Stock, $50.00 par value, of Charter.
(r) "Charter Special Common Stock" shall mean the Class B
Special Common Stock, par value $1.00 per share, and the Class C
Special Common Stock, par value $1.00 per share, of Charter.
2
<PAGE>
(s) "Charter Stock Plan" shall have the meaning set forth
in Section 5.12.
(t) "Closing" shall have the meaning set forth in Section
2.02.
(u) "Code" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations thereunder.
(v) "Commissioner" shall mean the Commissioner of the
Texas Savings and Loan Department and, if its approval of the
transactions described herein is required by law, the Texas Banking
Commissioner.
(w) "Condition" shall have the meaning set forth in
Section 5.01.
(x) "DGCL" shall mean the Delaware General Corporation
Law.
(y) "Department" shall mean the Texas Savings and Loan
Department and, if its approval of the transactions described herein is
required by law, the Texas Department of Banking.
(z) "Dissenting Shares" shall have the meaning set forth
in Section 3.01.
(aa) "Effective Time" shall have the meaning set forth in
Section 2.03.
(ab) "Employee" shall mean any current or former employee,
officer or director, independent contractor or retiree of Charter or
its Subsidiaries and any dependent or spouse thereof.
(ac) "Environmental Law" shall have the meaning set forth
in Section 5.25.
(ad) "ERISA" shall have the meaning set forth in Section
5.12.
(ae) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
(af) "Exchange Agent" shall have the meaning set forth in
Section 3.01(e).
(ag) "Exchange Ratio" shall mean 0.385 shares of
NationsBank Common Stock for each share of Charter Common Stock or
Charter Special
Common Stock.
(ah) "Expenses" shall have the meaning set forth in
Section 8.15.
(ai) "FDIC" shall mean the Federal Deposit Insurance
Corporation.
(aj) "Federal Reserve Board" shall mean the Board of
Governors of the Federal Reserve System and any Federal Reserve Bank.
3
<PAGE>
(ak) "GAAP" shall mean generally accepted accounting
principles in the United States.
(al) "Holdings" shall have the meaning set forth in the
recitals to this Agreement.
(am) "Indemnified Party" shall have the meaning set forth
in Section 8.07.
(an) "Liens" shall have the meaning set forth in Section
5.03.
(ao) "Material Adverse Effect" shall have the meaning set
forth in Section 5.01.
(ap) "Maximum Amount" shall have the meaning set forth in
Section 8.07.
(aq) "Merger" shall have the meaning set forth in the
recitals to this Agreement.
(ar) "Merger Consideration" shall mean the combination of
(i) NationsBank Common Stock and (ii) cash in lieu of fractional shares
to be issued by NationsBank in the Merger.
(as) "Merger Subsidiary" shall have the meaning set forth
in the recitals of this Agreement.
(at) "NASD" shall mean the National Association of
Securities Dealers, Inc.
(au) "NationsBank" shall have the meaning set forth in the
introduction to this Agreement.
(av) "NationsBank Common Stock" shall mean the common
stock of NationsBank.
(aw) "NationsBank Financial Statements" shall have the
meaning set forth in Section 6.04.
(ax) "NationsBank SEC Documents" shall have the meaning
set forth in Section 6.04.
(ay) "NYSE" shall mean the New York Stock Exchange, Inc.
(az) "OCC" shall mean the Office of the Comptroller of the
Currency.
(ba) "OTS" shall mean the Office of Thrift Supervision.
(bb) "Permitted Liens" are (i) Liens for current taxes not
yet due and payable and incurred in the ordinary course of business,
(ii) with respect to a lease, the interest of the lessor thereunder,
including any Liens on the interest of such lessor, and (iii) such
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imperfections of title, Liens, restrictions and easements that do not
materially impair the use or value of the properties or assets or
otherwise materially impair the current operations relating to the
business of Charter or its
Subsidiaries.
(bc) "Person" or "person" shall mean any individual,
corporation, association, partnership, group (as defined in Section
13(d)(3) of the Exchange Act), joint venture, trust or unincorporated
organization, or a government or any agency or political subdivision
thereof.
(bd) "Proxy Statement" shall have the meaning set forth in
Section 5.18.
(be) "Redemption" shall have the meaning set forth in Section
3.01.
(bf) "Registration Statement" shall have the meaning set forth
in Section 5.18.
(bg) "Regulatory Agreement" shall have the meaning set forth
in Section 5.11(b).
(bh) "Regulatory Authorities" shall have the meaning set forth
in Section 5.11(b).
(bi) "Remedies Exception" shall mean any bankruptcy,
reorganization, insolvency, fraudulent conveyance or transfer,
moratorium or similar laws affecting creditors' rights generally and
general principles of equity (regardless of whether enforcement is
considered in a proceeding at law or in equity).
(bj) "Reports" shall have the meaning set forth in Section
5.17.
(bk) "Restricted Stock" shall have the meaning set forth in
Section 8.08.
(bl) "SAR Plan" shall mean the 1991 Charter Bancshares, Inc.
Stock Appreciation Rights Plan.
(bm) "SEC" shall mean the Securities and Exchange Commission.
(bn) "Securities Act" shall mean the Securities Act of 1933,
as amended.
(bo) "Securities Laws" shall have the meaning set forth in
Section 5.04(c).
(bp) "Securities Reporting Documents" shall have the meaning
set forth in Section 5.05.
(bq) "State Regulatory Commissioners" shall have the meaning
set forth in Section 5.04(c).
(br) "Stockholders' Meeting" shall have the meaning set forth
in Section 5.18.
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(bs) "Subsidiary" shall mean, in the case of either
NationsBank or Charter, any corporation, association or other entity in
which it owns or controls, directly or indirectly, 25% or more of the
outstanding voting securities or 25% or more of the total equity
interest; provided, however, that (i) the term shall not include any
such entity in which such voting securities or equity interest is owned
or controlled in a fiduciary capacity, without sole voting power, or
was acquired in securing or collecting a debt previously contracted in
good faith and (ii) in the case of NationsBank, the term shall not
include Charter.
(bt) "Subsidiary Bank Merger(s)" shall have the meaning set
forth in Section 2.04.
(bu) "Surviving Corporation" shall have the meaning set forth
in Section 2.01.
(bv) "Tax" or "Taxes" shall mean all federal, state, local and
foreign taxes, charges, fees, levies, imposts, duties or other
assessments, including, without limitation, income, gross receipts,
excise, employment, sales, use, transfer, license, payroll, franchise,
severance, stamp, occupation, windfall profits, environmental, federal
highway use, commercial rent, customs duties, capital stock, paid up
capital, profits, withholding, Social Security, single business and
unemployment, disability, real property, personal property,
registration, ad valorem, value added, alternative or add-on minimum,
estimated, or other tax or governmental fee of any kind whatsoever,
imposed or required to be withheld by the United States or any state,
local, foreign government or subdivision or agency thereof, including,
without limitation, any interest, penalties or additions thereto.
(bw) "Taxable Period" shall mean any period prescribed by any
governmental authority, including, but not limited to, the United
States or any state, local, foreign government or subdivision or agency
thereof for which a Tax Return is required to be filed or Tax is
required to be paid.
(bx) "Tax Return" shall mean any report, return, information
return or other information required to be supplied to a taxing
authority in connection with Taxes, including, without limitation, any
return of an affiliated or combined or unitary group that includes
Charter or any of its Subsidiaries.
(by) "TBCA" shall mean the Texas Business Corporation Act, as
amended.
(bz) "Termination Fee" shall have the meaning set forth in
Section 8.15.
(ca) "Voting Power" shall mean the right to vote generally in
the election of Directors of Charter through the beneficial ownership
of Charter Capital Stock or other securities entitled to vote generally
in the election of directors of Charter.
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ARTICLE II
THE MERGER AND RELATED TRANSACTIONS
2.01 Merger.
(a) Upon the terms and subject to the conditions set
forth in this Agreement and in accordance with the DGCL and the TBCA,
at the Effective Time, Charter shall be merged with and into Merger
Subsidiary. As a result of the Merger, the separate existence of
Charter shall thereupon cease, and Merger Subsidiary shall continue as
the surviving corporation of the Merger (the "Surviving Corporation").
NationsBank shall cause the Board of Directors of Merger Subsidiary (i)
to approve this Agreement and the transactions contemplated hereunder
and (ii) to authorize and direct an officer of Merger Subsidiary to
execute and deliver a counterpart of this Agreement.
(b) The certificate of incorporation of Merger Subsidiary
as in effect on the Effective Time (a copy of which at the date of this
Agreement is set forth as Exhibit A hereto) shall be the certificate of
incorporation of the Surviving Corporation.
(c) The bylaws of Merger Subsidiary as in effect on the
Effective Time shall be the bylaws of the Surviving Corporation.
(d) The directors of Merger Subsidiary immediately prior
to the Effective Time shall be the directors of the Surviving
Corporation and the officers of Merger Subsidiary immediately prior to
the Effective Time shall be the officers of the Surviving Corporation,
in each case until their respective successors are duly elected and
qualified.
(e) The Merger shall have the effects set forth in
Sections 259 and 261 of the DGCL and Section 5.06 of the TBCA.
2.02 Time and Place of Closing. The closing of the transactions
contemplated hereby (the "Closing") will take place at the offices of counsel to
Charter in Houston, Texas at 10:00 A.M. on the date that the Effective Time
occurs, or at such other time, and at such place, as may be mutually agreed upon
by NationsBank and Charter.
2.03 Effective Time. On the business day selected by NationsBank
occurring within 10 business days following the date on which the expiration of
all applicable waiting periods in connection with approvals of governmental
authorities necessary to effectuate the Merger occurs and all conditions to the
consummation of this Agreement are satisfied or waived, unless an earlier or
later date has been agreed by the parties, appropriate articles of merger or
certificates of merger shall be executed in accordance with all appropriate
legal requirements and shall be filed as required by law, and the Merger
provided for herein shall become effective upon such filing or at such time as
may be specified in such articles or certificates of merger. The time of such
filing or such later effective time is herein called the "Effective Time."
2.04 Reservation of Right to Revise Transaction; Further Actions. (a)
NationsBank may at any time change the method of effecting the acquisition of
Charter by NationsBank (including,
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without limitation, the provisions as set forth in Article III) if and to the
extent that it deems such a change to be desirable; provided, however, that no
such change shall (A) alter or change the amount or the kind of the
consideration to be received by the holders of Charter Common Stock or Charter
Special Common Stock as provided for in this Agreement; (B) adversely affect the
tax treatment to Charter stockholders as a result of receiving the Merger
Consideration (in the opinion of Charter's tax counsel); (C) take the form of an
asset purchase agreement; or (D) adversely affect the timing of the transaction
described herein.
(b) To facilitate the Merger and the acquisition, each of the parties
will execute such additional agreements and documents and take such other
actions as NationsBank determines necessary or appropriate, including, without
limitation, if NationsBank so elects, entering into agreements to facilitate the
merger(s) of Charter's banking Subsidiaries with and into each other or
NationsBank of Texas, National Association, simultaneously with, or promptly
following, the consummation of the Merger (the "Subsidiary Bank Merger(s)").
ARTICLE III
MANNER OF CONVERTING SHARES
3.01 Conversion.
(a) Subject to the provisions of this Article III, at the
Effective Time, by virtue of the Merger and without any action on the
part of the holders thereof, the shares of the constituent corporations
shall be converted as follows:
(i) Each of the shares of common stock of Merger
Subsidiary issued and outstanding immediately prior to the
Effective Time shall remain outstanding as one share of common
stock of the Surviving Corporation; and
(ii) Except as provided in Section 3.01(c), each
share of Charter Common Stock and Charter Special Common Stock
issued and outstanding immediately prior to the Effective Time
shall be converted into and become the right to receive a
fractional number of shares of NationsBank Common Stock equal
to the Exchange Ratio.
(b) Each share of Charter Preferred Stock issued and
outstanding at the date of this Agreement shall be redeemed prior to
the Effective Time at the $50.00 plus accrued unpaid dividend per share
price and in the manner provided in the Charter Restated Articles of
Incorporation, as amended (the "Redemption").
(c) Each of the shares of Charter Capital Stock held by
NationsBank or any of its wholly owned Subsidiaries or by Charter or
its wholly owned Subsidiaries, other than shares held by NationsBank or
any of its wholly owned Subsidiaries or Charter or its wholly
owned Subsidiaries in a fiduciary capacity or as a result of debts
previously contracted, shall be canceled and retired at the Effective
Time and no consideration shall be issued in exchange therefor.
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(d) Notwithstanding any other provision of this
Agreement, each holder of shares of Charter Common Stock or Charter
Special Common Stock exchanged pursuant to the Merger, who would
otherwise have been entitled to receive or purchase a fraction of a
share of NationsBank Common Stock (after taking into account all
certificates delivered by such holder) shall receive, in lieu thereof,
cash (without interest) in an amount equal to such fractional part of a
share of NationsBank Common Stock multiplied by the closing price for
such share reported by The Wall Street Journal on the last business day
prior to the Closing Date. No such holder will be entitled to
dividends, voting rights or any other rights as a stockholder in
respect of any fractional share.
(e) At the Effective Time, the stock transfer books of
Charter shall be closed as to holders of Charter Common Stock and
Charter Special Common Stock immediately prior to the Effective Time
and no transfer of Charter Common Stock and Charter Special Common
Stock by any such holder shall thereafter be made or recognized. If,
after the Effective Time, certificates are properly presented in
accordance with Article IV of this Agreement to the exchange agent,
which shall be selected by NationsBank (the "Exchange Agent"), such
certificates shall be canceled and exchanged for certificates
representing the number of whole shares of NationsBank Common Stock and
a check representing the amount of cash in lieu of fractional shares,
if any, into which the Charter Common Stock or Charter Special Common
Stock represented thereby was converted in the Merger. Any other
provision of this Agreement notwithstanding, neither NationsBank, the
Surviving Corporation nor the Exchange Agent shall be liable to a
holder of Charter Capital Stock for any amount paid or property
delivered in good faith to a public official pursuant to any applicable
abandoned property, escheat, or similar law.
(f) Shares held by each holder of Charter Common Stock or
Charter Special Common Stock who has not voted such shares in favor of
the Merger and with respect to which payment for such shares shall have
been duly demanded in accordance with Section 5.12 of the TBCA
("Dissenting Shares") shall not be converted into and represent the
right to receive Merger Consideration; provided, however, that if any
such stockholder shall withdraw his or her demand for payment or shall
fail to perfect his or her dissenter's rights in accordance with the
TBCA, then such holder's Dissenting Shares shall cease to be Dissenting
Shares and shall, subject to the terms of this Agreement, be converted
into and represent the right to receive the Merger Consideration.
3.02 Anti-Dilution Provisions. The Exchange Ratio shall be adjusted
appropriately to reflect any stock dividends, splits, recapitalizations or other
similar transactions with respect to the NationsBank Common Stock where the
record date occurs prior to the Effective Time.
ARTICLE IV
EXCHANGE OF SHARES
4.01 Exchange Procedures. Before or promptly after the Effective Time,
NationsBank and Charter shall cause the Exchange Agent to mail appropriate
transmittal materials (which shall specify that delivery shall be effected, and
risk of loss and title to the certificates theretofore representing shares of
Charter Common Stock or Charter Special Common Stock shall pass, only
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<PAGE>
upon proper delivery of such certificates to the Exchange Agent) to the former
stockholders of Charter. After the Effective Time, each holder of shares of
Charter Common Stock or Charter Special Common Stock issued and outstanding at
the Effective Time (other than shares to be canceled pursuant to Section
3.01(b)) shall surrender the certificate or certificates theretofore
representing such shares, together with such transmittal materials properly
executed, to the Exchange Agent and promptly upon surrender shall receive in
exchange therefor the consideration provided in Section 3.01 of this Agreement,
together with all declared but unpaid dividends in respect of such shares. The
certificate or certificates for Charter Common Stock or Charter Special Common
Stock so surrendered shall be duly endorsed as the Exchange Agent may require.
To the extent provided by Section 3.01(c), each holder of shares of Charter
Common Stock or Charter Special Common Stock issued and outstanding at the
Effective Time also shall receive, upon surrender of the certificate or
certificates representing such shares, cash in lieu of any fractional shares of
NationsBank Common Stock to which such holder would otherwise be entitled.
NationsBank shall not be obligated to deliver the consideration to which any
former holder of Charter Common Stock or Charter Special Common Stock is
entitled as a result of the Merger until such holder surrenders his certificate
or certificates representing shares of Charter Common Stock or Charter Special
Common Stock for exchange as provided in this Article IV. In addition,
certificates surrendered for exchange by any person constituting an "affiliate"
of Charter for purposes of Rule 145(c) under the Securities Act shall not be
exchanged for certificates representing whole shares of NationsBank Common Stock
until NationsBank has received a written agreement from such person as provided
in Section 8.06. If any certificate for shares of NationsBank Common Stock, or
any check representing cash or declared but unpaid dividends, is to be issued in
a name other than that in which a certificate surrendered for exchange is
issued, the certificate so surrendered shall be properly endorsed and otherwise
in proper form for transfer and the person requesting such exchange shall affix
any requisite stock transfer tax stamps to the certificate surrendered or
provide funds for their purchase or establish to the satisfaction of the
Exchange Agent that such taxes are not payable.
4.02 Voting and Dividends. Former stockholders of record of Charter
shall be entitled to vote after the Effective Time at any meeting of NationsBank
stockholders the number of whole shares of NationsBank Common Stock into which
their respective shares of Charter Capital Stock are converted, regardless of
whether such holders have exchanged their certificates representing Charter
Capital Stock for certificates representing NationsBank Common Stock in
accordance with the provisions of this Agreement. Until surrendered for exchange
in accordance with the provisions of Section 4.01, each certificate theretofore
representing shares of Charter Capital Stock (other than shares to be canceled
pursuant to Section 3.01) shall from and after the Effective Time represent for
all purposes only the right to receive shares of NationsBank Common Stock and
cash, as set forth in this Agreement. No dividend or other distribution payable
to the holders of record of NationsBank Common Stock, at or as of any time after
the Effective Time, shall be paid to the holder of any certificate representing
shares of Charter Capital Stock issued and outstanding at the Effective Time
until such holder physically surrenders such certificate for exchange as
provided in Section 4.01, promptly after which time all such dividends or
distributions shall be paid (without interest).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CHARTER
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Charter represents and warrants to NationsBank, subject to such
exceptions and limitations as are set forth below or in the Charter Disclosure
Schedule, as follows:
5.01 Organization, Standing, and Authority. Charter is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Texas. Charter is duly qualified to do business and in good standing in
all jurisdictions (whether federal, state, local or foreign) where its ownership
or leasing of property or the conduct of its business requires it to be so
qualified and in which the failure to be duly qualified would have a material
adverse effect on the financial condition, results of operations or business
(the "Condition") of Charter and its Subsidiaries on a consolidated basis or on
the ability of Charter or its Subsidiaries to consummate the transactions
contemplated hereby (a "Material Adverse Effect"). Charter has all requisite
corporate power and authority to carry on its business as now conducted and to
own, lease and operate its assets, properties and business, except where the
failure to have such power and authority would not have a Material Adverse
Effect, and to execute and deliver this Agreement and perform the terms of this
Agreement. Charter is duly registered as a bank holding company under the BHCA.
Charter has in effect all federal, state, local and foreign governmental,
regulatory and other authorizations, permits and licenses (collectively,
"Authorizations") necessary for it to own or lease its properties and assets and
to carry on its business as now conducted, the absence of which, either
individually or in the aggregate, would have a Material Adverse Effect.
5.02 Charter Capital Stock.
(a) At December 31, 1995, the authorized and the issued and
outstanding Charter Capital Stock consisted of the following:
Issued and
Authorized Outstanding
Charter Common Stock: 12,000,000 6,061,627
Charter Special Common Stock:
Class B 250,000 219,718
Series C 50,000 49,518
Additional (undesignated) 2,700,000 0
Charter Preferred Stock 400,000 14,201
Since December 31, 1995, Charter has issued no additional Charter
Capital Stock and has no commitments, options or agreements to issue
any additional shares. At the same date, Charter had outstanding shares
with a par value of $7,220,000, capital surplus of $41,107,000 and
undivided profits of approximately $13,480,000. All of the issued and
outstanding shares of Charter Capital Stock are duly and validly issued
and outstanding and are fully paid and nonassessable. None of the
outstanding shares of the Charter Capital Stock has been issued in the
violation of any preemptive rights or any provision of Charter's
Restated Articles of Incorporation, as amended. As of the date of this
Agreement, no shares of Charter Capital Stock have been reserved for
any purpose.
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(b) Except as set forth above or in Section 5.02 of the
Charter Disclosure Schedule, there are no shares of Charter Capital
Stock, or other equity securities of Charter outstanding and no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of the capital
stock of Charter or contracts, commitments, understandings or
arrangements by which Charter is or may be bound to issue additional
shares of its capital stock or options, warrants or rights to purchase
or acquire any additional shares of its capital stock. There are no
contracts, commitments, understandings or arrangements by which Charter
or any of its Subsidiaries is or may be bound to transfer any shares of
the capital stock of any Subsidiary of Charter, except for a transfer
to Charter or any of its wholly owned Subsidiaries and except as set
forth in the Charter Disclosure Schedule, and there are no agreements,
understandings or commitments relating to the right of Charter to vote
or to dispose of such shares, other than such as are held in a
fiduciary capacity.
(c) The Charter Board has duly authorized and approved the
Redemption.
(d) Except as set forth in Section 5.02(d) of the Charter
Disclosure Schedule, there are no securities required to be issued by
Charter under any Charter Stock Plan, dividend reinvestment or similar
plan.
5.03 Subsidiaries. Section 5.03 of the Charter Disclosure Schedule
contains a complete list of Charter's Subsidiaries. Except as provided in the
Charter Disclosure Schedule, all of the outstanding shares of each Subsidiary
are owned by Charter and no equity securities are or may become required to be
issued by reason of any options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of any Subsidiary, and there are no
contracts, commitments, understandings or arrangements by which any Subsidiary
is bound to issue additional shares of its capital stock or options, warrants or
rights to purchase or acquire any additional shares of its capital stock. All of
the shares of capital stock of each Subsidiary are fully paid and nonassessable
and are owned free and clear of any claim, lien, pledge or encumbrance of
whatsoever kind ("Liens"). Each Subsidiary (i) is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated or organized, (ii) is duly qualified to do business and in good
standing in all jurisdictions (whether federal, state, local or foreign) where
its ownership or leasing of property or the conduct of its business requires it
to be so qualified and in which the failure to be so qualified would have a
Material Adverse Effect, (iii) has all requisite corporate power and authority
to own or lease its properties and assets and to carry on its business as now
conducted and (iv) has in effect all Authorizations necessary for it to own or
lease its properties and assets and to carry on its business as now conducted,
the absence of which Authorizations, individually or in the aggregate, would
have a Material Adverse Effect.
5.04 Authorization of Merger and Related Transactions.
(a) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby (including,
without limitation, the consummation of the Merger, if any) have been
duly and validly authorized by all necessary corporate
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action in respect thereof on the part of Charter, including (i) waiver
by the Charter Board of all restrictions upon ownership by NationsBank
of Charter Capital Stock contained in any agreement between the parties
hereto and (ii) approval of the Merger by the Charter Board, subject to
the approval of the Merger by the stockholders of Charter to the extent
required by the applicable law. The only stockholder approval required
for the approval of the Merger is the approval of two-thirds of the
outstanding shares of Charter Capital Stock voting together as if a
single class (and in which voting, each share of Charter Special Common
Stock shall be entitled to 14 votes). This Agreement, subject to any
requisite stockholder approval hereof with respect to the Merger,
represents a valid and legally binding obligation of Charter,
enforceable against Charter in accordance with its terms, except as
such enforcement may be limited by the Remedies Exception.
(b) Except as set forth in Section 5.04 of the Charter
Disclosure Schedule, neither the execution and delivery of this
Agreement by Charter, nor the consummation by Charter of the
transactions contemplated hereby or thereby nor compliance by Charter
with any of the provisions hereof or thereof will (i) conflict with or
result in a breach of any provision of Charter's Restated Articles of
Incorporation, as amended, or amended and restated bylaws or (ii)
constitute or result in a breach of any term, condition or provision
of, or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give rise to any right
of termination, cancellation or acceleration with respect to, or result
in the creation of any Lien upon, any property or assets of any of
Charter or its Subsidiaries pursuant to any note, bond, mortgage,
indenture, license, agreement, lease or other instrument or obligation
to which any of them is a party or by which any of them or any of their
properties or assets may be subject and that would have in any such
event, a Material Adverse Effect, or (iii) subject to receipt of the
requisite approvals referred to in Sections 9.01(a) and 9.01(b) of this
Agreement, violate any order, writ, injunction, decree, statute, rule
or regulation applicable to Charter or its Subsidiaries or any of their
properties or assets.
(c) Other than (i) in connection or compliance with the
provisions of applicable state corporate and securities laws, the
Securities Act, the Exchange Act, and the rules and regulations of the
SEC promulgated thereunder (the "Securities Laws"), and (ii) consents,
authorizations, approvals or exemptions required from the Commissioner
and necessary state insurance commissioners (collectively, the "State
Regulatory Commissioners"), the OCC, the OTS, or the Federal Reserve
Board, no notice to, filing with, authorization of, exemption by, or
consent or approval of any public body or authority is necessary for
the consummation by Charter of the Merger and the other transactions
contemplated in this Agreement.
5.05 Securities Reporting Documents and Financial Statements. Charter
(i) has delivered to NationsBank copies of the consolidated balance sheets and
the related consolidated statements of earnings, changes in shareholders' equity
and cash flows (including related notes and schedules) of Charter and its
consolidated Subsidiaries as of and for the periods ended September 30, 1995 and
December 31, 1994 included in a quarterly report on Form 10-Q or an annual
report on Form 10-K, as the case may be, filed by Charter pursuant to the
Securities Laws, and (ii) has furnished NationsBank with a true and complete
copy of each material report, schedule, registration statement and definitive
proxy statement filed by Charter with the SEC
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from and after January 1, 1993 (each a "Securities Reporting Document"), which
are all the material documents (other than preliminary material) that Charter
was required to file with the SEC since such date and all of which complied when
filed in all material respects with all applicable laws and regulations (clauses
(i) and (ii), and the financial statements and related notes and schedules
included in the Securities Reporting Documents, collectively, the "Charter
Financial Statements"). The Charter Financial Statements (as of the dates
thereof and for the periods covered thereby) (A) are or will be in accordance
with the books and records of Charter and its Subsidiaries, which are or will be
complete and accurate in all material respects and which have been or will have
been maintained in accordance with good business practices, and (B) present or
will present fairly the consolidated financial position and the consolidated
results of operations, changes in stockholders' equity and cash flows of Charter
and its Subsidiaries as of the dates and for the periods indicated, in
accordance with GAAP consistently applied except as disclosed, subject in the
case of interim financial statements to normal recurring year-end adjustments
and except for the absence of certain footnote information in the unaudited
statements. Charter has delivered to NationsBank (i) copies of all management
letters prepared by Deloitte & Touche LLP (and any predecessor thereto)
delivered to Charter since January 1, 1993 and (ii) copies of audited balance
sheets and related statements of income, changes in stockholders' equity and
cash flows for any Subsidiary of Charter since January 1, 1993 for which a
separate audit has been performed.
5.06 Absence of Undisclosed Liabilities. Except as set forth in the
Charter Disclosure Schedule, neither Charter nor any of its Subsidiaries has any
obligations or liabilities (contingent or otherwise) in the amount of $500,000
in the aggregate, except obligations and liabilities (i) which are fully accrued
or reserved against in the consolidated balance sheet of Charter and its
Subsidiaries as of September 30, 1995 included in the Charter Financial
Statements or reflected in the notes thereto, or (ii) which were incurred after
September 30, 1995 in the ordinary course of business consistent with past
practice. Except as set forth in the Charter Disclosure Schedule, since
September 30, 1995, neither Charter nor any of its Subsidiaries has incurred or
paid any obligation or liability which would have a Material Adverse Effect.
5.07 Tax Matters. Except as set forth in Section 5.07 of the
Charter Disclosure Schedule:
(a) All Tax Returns required to be filed by or on behalf of
Charter or any of its Subsidiaries have been timely filed, or requests
for extensions have been timely filed, granted and have not expired,
for periods ending on or before December 31, 1995, and all such returns
filed are complete and accurate in all material respects.
(b) There is no audit examination, deficiency or refund
litigation or matter in controversy with respect to any Taxes that
might reasonably be expected to result in a determination the effect of
which would have a Material Adverse Effect. All Taxes due with respect
to completed and settled examinations or concluded litigation have been
paid or adequately reserved for.
(c) Neither Charter nor any of its Subsidiaries has executed
an extension or waiver of any statute of limitations on the assessment
or collection of any Tax due that is currently in effect.
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(d) Adequate provision for any Taxes due or to become due for
Charter and any of its Subsidiaries for any period or periods through
and including September 30, 1995, has been made and is reflected on the
September 30, 1995 financial statements included in the Charter
Financial Statements. Deferred Taxes of Charter and its Subsidiaries
have been provided for in the Charter Financial Statements in
accordance with GAAP, applied on a consistent basis.
(e) Charter and its Subsidiaries have collected and withheld
all Taxes which they have been required to collect or withhold and have
timely submitted all such collected and withheld amounts to the
appropriate authorities. Charter and its Subsidiaries are in compliance
with the back-up withholding and information reporting requirements
under (1) the Code, and (2) any state, local or foreign laws, and the
rules and regulations, thereunder.
(f) Neither Charter nor any of its Subsidiaries has made any
payments, is obligated to make any payments, or is a party to any
contract, agreement or other arrangement that could obligate it to make
any payments that would not be deductible under Section 280G of the
Code.
5.08 Allowance for Credit Losses. The allowance for credit losses (the
"Allowance") shown on the consolidated statement of condition of Charter and its
Subsidiaries as of September 30, 1995 included in the Charter Financial
Statements and the Allowance shown on the consolidated statement of condition of
Charter and its Subsidiaries, as of such date comply in all material respects
with OCC Banking Circular 201 (and comparable regulations applicable to Charter
Bank, S.S.B.).
5.09 Other Tax and Regulatory Matters. Neither Charter nor any of its
Subsidiaries has taken or agreed to take any action or has any knowledge of any
fact or circumstance that would (i) prevent the transactions contemplated
hereby, including the Merger, from qualifying as a reorganization within the
meaning of Section 368 of the Code, or (ii) materially impede or delay receipt
of any approval referred to in Section 9.01(b).
5.10 Properties. Except as disclosed in any Securities Reporting
Document filed since December 31, 1994 and prior to the date hereof and except
for Permitted Liens and Liens arising in the ordinary course of business after
the date hereof, Charter and its Subsidiaries have good and marketable title,
free and clear of all Liens that are material to the Condition of Charter and
its Subsidiaries on a consolidated basis, to all their material properties and
assets whether tangible or intangible, real, personal or mixed, reflected in the
Charter Financial Statements as being owned by Charter and its Subsidiaries as
of the date hereof. All buildings, and all fixtures, equipment and other
property and assets which are material to its business on a consolidated basis,
held under leases or subleases by any of Charter or its Subsidiaries are held
under valid instruments enforceable in accordance with their respective terms,
subject to the Remedies Exception. Except where a failure to maintain would not
have a Material Adverse Effect, substantially all of Charter's and Charter's
Subsidiaries' equipment in regular use has been well maintained and is in good
serviceable condition, reasonable wear and tear excepted.
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5.11 Compliance with Laws.
(a) Except as set forth in Section 5.11 of the Charter
Disclosure Schedule, to the best knowledge of Charter, each of Charter
and its Subsidiaries is in compliance with all laws, rules,
regulations, policies, guidelines, reporting and licensing requirements
and orders applicable to its business or to its employees conducting
its business, and with its internal policies and procedures except for
failures to comply which will not result in a Material Adverse Effect.
(b) Except as set forth in Section 5.11 of the Charter
Disclosure Schedule, neither Charter nor any of its Subsidiaries has
received any notification or communication from any agency or
department of any federal, state or local government, including the
Federal Reserve Board, or the OCC, the OTS, the FDIC, the State
Regulatory Commissioners, the SEC and the NASD and the staffs thereof
(collectively, the "Regulatory Authorities") (i) asserting that since
January 1, 1993, any of Charter or its Subsidiaries is not in
substantial compliance with any of the statutes, regulations, or
ordinances which such agency, department or Regulatory Authority
enforces, or the internal policies and procedures of such company, (ii)
threatening to revoke any license, franchise, permit or governmental
authorization which is material to the Condition of Charter and its
Subsidiaries on a consolidated basis, (iii) requiring or threatening to
require Charter or any of its Subsidiaries, or indicating that Charter
or any of its Subsidiaries may be required to enter into a cease and
desist order, agreement or memorandum of understanding or any other
agreement restricting or limiting or purporting to restrict or limit in
any manner the operations of Charter or any of its Subsidiaries,
including, without limitation, any restriction on the payment of
dividends, or (iv) directing, restricting or limiting, or purporting to
direct, restrict or limit in any manner the operations of Charter or
any of its Subsidiaries, including, without limitation, any restriction
on the payment of dividends (any such notice, communication,
memorandum, agreement or order described in this sentence herein
referred to as a "Regulatory Agreement").
(c) Except as set forth in Section 5.11 of the Charter
Disclosure Schedule, since January 1, 1993, neither Charter nor any of
its Subsidiaries has been a party to any effective Regulatory Agreement
or memorandum of understanding.
(d) Neither Charter nor any of its Subsidiaries is required by
Section 32 of FDIA to give prior notice to a federal banking agency of
the proposed addition of an individual to its board of directors or the
employment of an individual as a senior executive officer.
5.12 Employee Benefit Plans.
(a) Charter has delivered or made available to NationsBank
prior to the execution of this Agreement true and complete copies (or,
in the case of bonus or other incentive plans, summaries thereof and
financial data with respect thereto) of all material pension,
retirement, profit-sharing, deferred compensation, stock option,
employee stock ownership, severance pay, vacation, bonus or other
material incentive plans, all other
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material employee programs, arrangements or agreements, whether arrived
at through collective bargaining or otherwise, all material medical,
vision, dental or other health plans, all life insurance plans and all
other material employee benefit plans or fringe benefit plans,
including, without limitation, all "employee benefit plans" as that
term is defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), currently adopted by,
maintained by, sponsored in whole or in part by, or contributed to by
Charter or any of its Subsidiaries or any affiliate thereof for the
benefit of any Employee or under which any Employee is eligible to
participate and under which Charter or any of its Subsidiaries could
have any liability contingent or otherwise (collectively, the "Charter
Benefit Plans"). Any of the Charter Benefit Plans which is an "employee
pension benefit plan," as that term is defined in Section 3(2) of
ERISA, is referred to herein as a "Charter ERISA Plan." Any of the
Charter Benefit Plans pursuant to which Charter is or may become
obligated to, or obligated to cause any of its Subsidiaries or any
other Person to, issue, deliver or sell shares of capital stock of
Charter or any of its Subsidiaries, or grant, extend or enter into any
option, warrant, call, right, commitment or agreement to issue, deliver
or sell shares, or any other interest in respect of capital stock of
Charter or any of its Subsidiaries, is referred to herein as a "Charter
Stock Plan." No Charter Benefit Plan is or has been a multiemployer
plan within the meaning of Section 3(37) of ERISA. Charter has set
forth in Section 5.12 of the Charter Disclosure Schedule (i) a list of
all of the Charter Benefit Plans, (ii) a list of Charter Benefit Plans
that are Charter ERISA Plans, (iii) a list of Charter Benefit Plans
that are Charter Stock Plans and (iv) a list of the number of shares
covered by, exercise prices for, and holders of, all stock options
granted and available for grant under the Charter Stock Plans.
(b) To the best knowledge of Charter, all Charter Benefit
Plans are in substantial compliance with the applicable terms of ERISA
and the Code and any other applicable laws, rules and regulations the
breach or violation of which could reasonably be expected to result in
a Material Adverse Effect.
(c) All liabilities under any Charter Benefit Plan are fully
accrued or reserved against in the Charter Financial Statements in
accordance with GAAP. No Charter ERISA Plan is a defined benefit
pension plan subject to Title IV of ERISA.
(d) Neither Charter nor any of its Subsidiaries has any
obligations for retiree health and life benefits under any Charter
Benefit Plan or otherwise, except as set forth in the Charter
Disclosure Schedule. There are no restrictions on the rights of Charter
or its Subsidiaries to amend or terminate any such Charter Benefit Plan
without incurring any material liability thereunder, except for such
restrictions as would not have a Material Adverse Effect.
(e) Except as set forth in Section 5.12 of the Charter
Disclosure Schedule, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby
or thereby will (i) result in any payment (including, without
limitation, severance, golden parachute or otherwise) becoming due to
any Employees under any Charter Benefit Plan or otherwise, (ii)
increase any benefits
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otherwise payable under any Charter Benefit Plan or (iii) result in any
acceleration of the time of payment or vesting of any such benefits.
5.13 Commitments and Contracts. Except as set forth in Section 5.13 of
the Charter Disclosure Schedule, neither Charter nor any of its Subsidiaries is
a party or subject to, or has amended or waived any rights under, any of the
following (whether written or oral, express or implied):
(a) any employment contract or understanding (including any
understandings or obligations with respect to severance or termination
pay liabilities or fringe benefits) with any Employees, including in
any such person's capacity as a consultant (other than those which
either (i) are terminable at will by Charter or such Subsidiary or (ii)
do not involve payments with a present value of more than $50,000 by
Charter or such Subsidiary during the remaining term thereof without
giving effect to extensions or renewals made after the date hereof;
(b) any labor contract or agreement with any labor union;
(c) any contract not made in the usual, regular and ordinary
course of business containing non-competition covenants which limit the
ability of Charter or any of its Subsidiaries to compete in any line of
business or which involve any restriction of the geographical area in
which Charter or its Subsidiaries may carry on its business (other than
as may be required by law or applicable Regulatory Authorities);
(d) any other contract or agreement which would be required to
be disclosed as an exhibit to Charter's annual report on Form 10-K and
which has not been so disclosed;
(e) any real property lease with annual rental payments
aggregating $25,000 or more;
(f) any employment or other contract requiring the payment of
additional amounts as "change of control" payments as a result of
transactions contemplated by this Agreement;
(g) any agreement with respect to (i) the acquisition of the
bank branches or other assets or stock of another financial institution
or (ii) the sale of one or more bank branches which would require
additional payments by Charter after the date of this Agreement; or
(h) any outstanding interest rate exchange or other derivative
contracts.
5.14 Material Contract Defaults. Except as set forth in Section 5.14 of
the Charter Disclosure Schedule, neither Charter nor any of its Subsidiaries is,
or has received any notice or has any knowledge that any party is, in default in
any respect under any contract, agreement, commitment, arrangement, lease,
insurance policy or other instrument to which Charter or any of its Subsidiaries
is a party or by which Charter or any of its Subsidiaries or the assets,
business
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or operations thereof may be bound or affected or under which it or its
respective assets, business or operations receives benefits, except for those
defaults which would not have, individually or in the aggregate, a Material
Adverse Effect; and there has not occurred any event that with the lapse of time
or the giving of notice of both would constitute such a default.
5.15 Legal Proceedings. Except as set forth in Section 5.15 of the
Charter Disclosure Schedule, there are no claims or charges filed with, or
proceedings or investigations by, Regulatory Authorities or actions or suits
instituted or pending or, to the best knowledge of Charter's management,
threatened against Charter or any of its Subsidiaries, or against any property,
asset, interest or right of any of them, that might reasonably be expected to
result in a judgment in excess of $100,000 or that might reasonably be expected
to threaten or impede the consummation of the transactions contemplated by this
Agreement. Neither Charter nor any of its Subsidiaries is a party to any
agreement or instrument or is subject to any charter or other corporate
restriction or any judgment, order, writ, injunction, decree, rule, regulation,
code or ordinance that, individually or in the aggregate, might reasonably be
expected to have a Material Adverse Effect or, might reasonably be expected to
threaten or impede the consummation of the transactions contemplated by this
Agreement.
5.16 Absence of Certain Changes or Events. Since December 31, 1994,
except (i) as disclosed in any Securities Reporting Document filed since
December 31, 1994 and prior to the date hereof or (ii) as set forth in Section
5.16 of the Charter Disclosure Schedule, neither Charter nor any of its
Subsidiaries has (A) incurred any liability which has had a Material Adverse
Effect, (B) suffered any change in its Condition which would have a Material
Adverse Effect, other than changes after the date hereof which affect the
banking industry as a whole, (C) failed to operate its business consistent in
all material respects with past practice or (D) changed any accounting
practices.
5.17 Reports. Since January 1, 1992, Charter and each of its
Subsidiaries have filed on a timely basis all reports and statements, together
with all amendments required to be made with respect thereto (collectively
"Reports"), that they were required to file with (i) the SEC, including,
without limitation, all Forms 10-K, 10-Q and 8-K, (ii) the Federal Reserve
Board, (iii) the Commissioner, (iv) any other applicable federal, state,
municipal, local or foreign government, securities, banking, savings and loan or
other governmental or regulatory authority and (v) the NASD. No Securities
Reporting Document with respect to periods beginning on or after January 1,
1992, contained any information that was false or misleading with respect to any
material fact or omitted to state any material fact necessary in order to make
the statements therein not misleading.
5.18 Statements True and Correct. None of the information supplied or
to be supplied by Charter for inclusion in the registration statement on Form
S-4, or other appropriate form, to be filed with the SEC by NationsBank under
the Securities Act in connection with the transactions contemplated by this
Agreement (the "Registration Statement"), or the proxy statement to be used by
Charter to solicit any required approval of its stockholders as contemplated by
this Agreement (the "Proxy Statement") will, in the case of the Proxy Statement,
when it is first mailed to the stockholders of Charter, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which such statements are made, not misleading, or, in the
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case of the Registration Statement, when it becomes effective, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein not misleading, or, in the
case of the Proxy Statement or any amendment thereof or supplement thereto, at
the time of the meeting of the stockholders of Charter to be held pursuant to
Section 8.03 of this Agreement, including any adjournments thereof (the
"Stockholders' Meeting"), be false or misleading with respect to any material
fact or omit to state any material fact necessary to correct any statement or
remedy any omission in any earlier communication with respect to the
solicitation of any proxy for the Stockholders' Meeting. All documents that
Charter is responsible for filing with any Regulatory Authority in connection
with the transactions contemplated hereby will comply as to form in all material
respects with the provisions of applicable law, including applicable provisions
of the Securities Laws. The information which is deemed to be set forth in the
Charter Disclosure Schedule by Charter for the purposes of this Agreement is
true and accurate in
all material respects.
5.19 Insurance. Charter and each of its Subsidiaries are presently
insured, and during each of the past five calendar years have been insured, for
reasonable amounts against such risks as companies engaged in a similar business
would, in accordance with good business practice, customarily be insured. The
policies of fire, theft, liability (including directors and officers liability
insurance) and other insurance maintained with respect to the assets or
businesses of Charter and its Subsidiaries provide adequate coverage against all
pending or threatened claims, and the fidelity bonds in effect as to which any
of Charter or any of its Subsidiaries is a named insured are sufficient for
their purpose, except where the failure to have such coverage would not have a
Material Adverse Effect.
5.20 Labor. No material work stoppage involving Charter or its
Subsidiaries is pending or, to the best knowledge of Charter's management,
threatened. Neither Charter nor any of its Subsidiaries is involved in, or, to
the best knowledge of Charter's management, threatened with or affected by, any
labor or other employment-related dispute, arbitration, lawsuit or
administrative proceeding which might reasonably be expected to have a Material
Adverse Effect. Employees of Charter and its Subsidiaries are not represented by
any labor union, and, to the best knowledge of Charter's management, no labor
union is attempting to organize employees of Charter or any of its
Subsidiaries.
5.21 Material Interests of Certain Persons. Except as disclosed in
Charter's Proxy Statement for its 1995 Annual Meeting of Stockholders or as set
forth in Section 5.21 of the Charter Disclosure Schedule, no executive officer
or director of Charter, or any "associate" (as such term is defined in Rule
14a-1 under the Exchange Act) of any such executive officer or director, has any
material interest in any material contract or property (real or personal),
tangible or intangible, used in or pertaining to the business of Charter or any
of its Subsidiaries.
5.22 Registration Obligations. Neither Charter nor any of its
Subsidiaries is under any obligation, contingent or otherwise, presently in
effect or which will survive the Merger by reason of any agreement to register
any of its securities under the Securities Act.
5.23 Brokers and Finders. Except as set forth in Section 5.23 of the
Charter Disclosure Schedule, neither Charter nor any of its Subsidiaries nor any
of their respective officers, directors or employees has employed any broker or
finder or incurred any liability for any financial
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advisory fees, brokerage fees, commissions or finder's fees, and no broker or
finder has acted directly or indirectly for Charter or any of its Subsidiaries
in connection with this Agreement or the transactions contemplated hereby.
5.24 State Takeover Laws. To the best of Charter's knowledge, the
transactions contemplated by this Agreement are exempt from any applicable state
takeover law and from any applicable charter or contractual provision containing
change of control or anti-takeover provisions.
5.25 Environmental Matters. To Charter's best knowledge, neither
Charter, any of its Subsidiaries, nor any properties owned or operated by
Charter or any of its Subsidiaries or held as collateral by any of its
Subsidiaries has been or is in violation of or liable under any Environmental
Law (as hereinafter defined), except for such violations or liabilities that,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect. There are no actions, suits or proceedings, or demands, claims,
notices or investigations (including without limitation notices, demand letters
or requests for information from any environmental agency) instituted or
pending, or to the best knowledge of Charter's management, threatened relating
to the liability of any properties owned or operated by Charter or any of its
Subsidiaries under any Environmental Law, except for liabilities or violations
that would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect.
"Environmental Law" means any federal, state, local or foreign law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, injunction or agreement with any
Regulatory Authority relating to (i) the protection, preservation or restoration
of the environment (including, without limitation, air, water vapor, surface
water, groundwater, drinking water supply, surface soil, subsurface soil, plant
and animal life or any other natural resource), and/or (ii) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of any substance presently listed,
defined, designated or classified as hazardous, toxic radioactive or
dangerous, or otherwise regulated, whether by type or by quantity,
includingany material containing any such substance as a component.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF NATIONSBANK
NationsBank represents and warrants to Charter as follows:
6.01 Organization, Standing and Authority.
(a) NationsBank is a corporation duly organized, validly
existing and in good standing under the laws of the State of North
Carolina. NationsBank is duly qualified to do business and in good
standing in all jurisdictions (whether federal, state, local or
foreign) where its ownership or leasing of property or the conduct of
its business requires it to be so qualified and in which the failure to
be duly qualified would have a Material Adverse Effect on the Condition
of NationsBank and its Subsidiaries taken as a whole.
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NationsBank has all requisite corporate power and authority to carry on
its business as now conducted and to own, lease and operate its assets,
properties and business, and to execute and deliver this Agreement and
perform the terms of this Agreement. NationsBank is duly registered as
a bank holding company under the BHCA. NationsBank has in effect all
Authorizations necessary for it to own or lease its properties and
assets and to carry on its business as now conducted, the absence of
which, either individually or in the aggregate, would have a material
adverse effect on the Condition of NationsBank and its Subsidiaries on
a consolidated basis. At the Effective Time, NationsBank will directly
own all of the issued and outstanding shares of Merger Subsidiary's
capital stock.
(b) Holdings is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to carry on its business as
now conducted and to perform the terms of this Agreement.
6.02 NationsBank Capital Stock. The authorized capital stock of
NationsBank consists of 800,000,000 shares of NationsBank Common Stock and
45,000,000 shares of Preferred Stock. At December 31, 1995, there were
outstanding approximately 274,269,000 shares of NationsBank Common Stock and
approximately 2,473,000 shares of NationsBank Preferred Stock and no other
shares of capital stock of any class. All of the issued and outstanding shares
of NationsBank Common Stock are duly and validly issued and outstanding and are
fully paid and nonassessable.
6.03 Authorization of Merger and Related Transactions.
(a) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action in respect thereof
on the part of NationsBank, to the extent required by applicable law.
This Agreement represents a valid and legally binding obligation of
NationsBank, enforceable against NationsBank in accordance with its
terms except as such enforcement may be limited by the Remedies
Exception.
(b) Neither the execution and delivery of this Agreement by
NationsBank, nor the consummation by NationsBank of the transactions
contemplated hereby or thereby nor compliance by NationsBank with any
of the provisions hereof or thereof will (i) conflict with or result in
a breach of any provision of NationsBank's Articles of Incorporation or
bylaws or (ii) constitute or result in a breach of any term, condition
or provision of, or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give rise to
any right of termination, cancellation or acceleration with respect to,
or result in the creation of any Lien upon any property or assets of
any of NationsBank or its Subsidiaries pursuant to any note, bond,
mortgage, indenture, license, agreement, lease or other instrument or
obligation to which any of them is a party or by which any of them or
any of their properties or assets may be subject, and that would, in
any such event, have a Material Adverse Effect on the Condition of
NationsBank and its Subsidiaries on a consolidated basis or the
transactions contemplated hereby or thereby or (iii) subject to receipt
of the requisite approvals referred to in Section 9.01 of this
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Agreement, violate any order, writ, injunction, decree, statute, rule
or regulation applicable to NationsBank or any of its Subsidiaries or
any of their properties or assets.
6.04 Financial Statements. NationsBank (i) has delivered to Charter
copies of the consolidated balance sheets and the related consolidated
statements of income, consolidated statements of changes in shareholders' equity
and consolidated statements of cash flows (including related notes and
schedules) of NationsBank and its consolidated Subsidiaries as of and for the
periods ended September 30, 1995 and December 31, 1994 included in a quarterly
report filed on Form 10-Q or an annual report filed on Form 10-K, as the case
may be, filed by NationsBank pursuant to the Securities Laws (a "NationsBank SEC
Document"), and (ii) until the Closing will deliver to Charter promptly upon the
filing thereof with the SEC copies of the consolidated balance sheets and
related consolidated statements of income, consolidated statements of changes in
shareholders' equity and consolidated statements of cash flows (including
related notes and schedules) included in any NationsBank SEC Documents filed
subsequent to the execution of this Agreement (clauses (i) and (ii)
collectively, the "NationsBank Financial Statements"). The NationsBank Financial
Statements (as of the dates thereof and for the periods covered thereby) (A) are
or will be in accordance with the books and records of NationsBank and its
Consolidated Subsidiaries, which are or will be complete and accurate in all
material respects and which have been or will have been maintained in accordance
with good business practices, and (B) present or will present fairly the
consolidated financial position and the consolidated results of operations,
changes in shareholders' equity and cash flows of NationsBank and its
Subsidiaries as of the dates and for the periods indicated, in accordance with
GAAP, subject in the case of interim financial statements to normal recurring
year-end adjustments and except for the absence of certain footnote
information in the unaudited statements.
6.05 NationsBank SEC Reports. Since January 1, 1993, NationsBank has
filed on a timely basis all reports and statements, together with all amendments
required to be made with respect thereto that as an issuer it is required to
file with the SEC. No NationsBank SEC Document with respect to periods beginning
on or after January 1, 1993 and until the Closing contained or will contain any
information that was false or misleading with respect to any material fact or
omitted or will omit to state any material fact necessary in order to make the
statements therein not misleading.
6.06 Statements True and Correct. None of the information supplied or
to be supplied by NationsBank for inclusion in the Registration Statement or the
Proxy Statement will, in the case of the Proxy Statement, when it is first
mailed to the stockholders of Charter, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which such
statements are made, not misleading or, in the case of the Registration
Statement, when it becomes effective, be false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make the
statements therein not misleading, or, in the case of the Proxy Statement or any
amendment thereof or supplement thereto, at the time of the Stockholders'
Meeting, be false or misleading with respect to any material fact or omit to
state any material fact necessary to correct any statement or remedy any
omission in any earlier communication with respect to the solicitation of any
proxy for the Stockholders' Meeting. All documents that NationsBank is
responsible for filing with any Regulatory Authority in connection with the
transactions
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contemplated hereby will comply as to form in all material respects with the
provisions of applicable law, including applicable provisions of the Securities
Laws.
6.07 Common Stock. At the Effective Time, the NationsBank Common Stock
issued pursuant to the Merger will be duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights.
6.08 Tax and Regulatory Matters. Neither NationsBank nor any of its
Subsidiaries has taken or agreed to take any action or has any knowledge of any
fact or circumstance that would (i) prevent the transactions contemplated
hereby, including the Merger, from qualifying as a reorganization within the
meaning of Section 368 of the Code, or (ii) materially impede or delay receipt
of any approval referred to in Section 9.01(b).
6.09 Litigation. There are no judicial proceedings of any kind or
nature pending or, to the knowledge of NationsBank, threatened against
NationsBank before any court or arbitral tribunal or before or by any
governmental department, agency or instrumentality involving the validity of the
NationsBank Common Stock or the transactions contemplated by this Agreement.
6.10 Brokers and Finders. Except as previously disclosed to Charter,
neither NationsBank nor any of its Subsidiaries nor any of their respective
officers, directors or employees has employed any broker or finder or incurred
any liability for any financial advisory fees, brokerage fees, commissions or
finder's fees, and no broker or finder has acted directly or indirectly for
NationsBank or any of its Subsidiaries in connection with this Agreement or the
transactions contemplated hereby.
ARTICLE VII
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
7.01 Conduct of Business Prior to the Effective Time. During the period
from the date of this Agreement to the Effective Time, Charter shall, and shall
cause each of its Subsidiaries to, (i) conduct its business in the usual,
regular and ordinary course consistent with past practice (other than
transactions made pursuant to contracts in existence on the date hereof and
described in Sections 7.01 or 7.02 of the Charter Disclosure Schedule), (ii) use
its best efforts to maintain and preserve intact its business organization,
employees and advantageous business relationships and retain the services of its
officers and key Employees and (iii) in accordance with the terms of the
applicable transaction agreements, diligently proceed to take all appropriate
action to complete those pending transactions listed on Section 5.13 of the
Charter Disclosure Schedule and (iv) diligently proceed to obtain approvals for
and to complete the Redemption.
7.02 Forbearances. Except as described in Section 7.02 of the Charter
Disclosure Schedule, during the period from the date of this Agreement to the
Effective Time, Charter shall not, and shall not permit any of its Subsidiaries
to, without the prior written consent of NationsBank, which consent (in the case
of subparagraphs (c), (d), (e), (h) and (p)) shall not be unreasonably withheld
(and Charter shall provide NationsBank with prompt notice of any events referred
to in this Section 7.02 occurring after the date hereof):
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(a) other than in the ordinary course of business consistent
with past practice, incur any indebtedness for borrowed money (other
than short-term indebtedness incurred to refinance short-term
indebtedness and indebtedness of Charter or any of its Subsidiaries to
Charter or any of its Subsidiaries; it being understood and agreed that
incurrence of indebtedness in the ordinary course of business shall
include, without limitation, the creation of deposit liabilities,
purchases of federal funds, sales of certificates of deposit and
entering into Federal Home Loan Bank loans with a term of six months or
less or repurchase agreements), assume, guarantee, endorse or otherwise
as an accommodation become responsible for the obligations of any other
individual, corporation or other entity, or make any loan or advance
other than in the ordinary course of business consistent with past
practice;
(b) adjust, split, combine or reclassify any capital stock;
make, declare or pay any dividend (other than regular quarterly cash
dividends at a rate not in excess of $0.08 per share through June 30,
1996 and $0.10 per share thereafter) or make any other distribution on,
or (other than the Redemption) directly or indirectly redeem, purchase
or otherwise acquire, any shares of its capital stock or any securities
or obligations convertible into or exchangeable for any shares of its
capital stock, or grant any stock appreciation rights or grant any
individual, corporation or other entity any right to acquire any shares
of its capital stock; or issue any additional shares of capital stock,
or any securities or obligations convertible into or exchangeable for
any shares of its capital stock;
(c) sell, transfer, mortgage, encumber or otherwise dispose of
any of its properties or assets to any individual, corporation or other
entity, or cancel, release or assign any indebtedness to any such
person or any claims held by any such person, except in the ordinary
course of business consistent with past practice or pursuant to
contracts or agreements in force at the date of this Agreement;
(d) make any material investment (other than trades in
investment securities in the ordinary course) either by purchase of
stock or securities, contributions to capital, property transfers, or
purchase of any property or assets of any other individual, corporation
or other entity;
(e) enter into, terminate or fail to exercise any material
right under, any contract or agreement involving annual payments in
excess of $50,000 and which cannot be terminated without penalty upon
30 days notice, or make any change in, or extension of (other than
automatic extensions), any of its leases or contracts involving annual
payments in excess of $50,000 and which cannot be terminated without
penalty upon 30 days notice;
(f) modify the terms of any Charter Benefit Plan (including
any severance pay plan) or increase or modify in any manner the
compensation or fringe benefits of any of its Employees or pay any
pension or retirement allowance not required by any existing plan or
agreement to any such Employees, or become a party to, amend or commit
itself to any pension, retirement, profit-sharing or welfare benefit
plan or agreement or employment agreement with or for the benefit of
any Employee other than routine
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adjustments in compensation and fringe benefits in the ordinary course
of business consistent with past practice or accelerate the vesting of
any stock options or other stock-based compensation;
(g) take any action that would prevent or impede the Merger
from qualifying as a reorganization within the meaning of Section 368
of the Code;
(h) settle any claim, action or proceeding involving the
payment of money damages in excess of $50,000, except in the ordinary
course of business consistent with past practice;
(i) amend its Restated Articles of Incorporation, as amended,
or its amended and restated bylaws;
(j) fail to maintain its Regulatory Agreements, material
licenses and permits or to file in a timely fashion all federal, state,
local and foreign tax returns;
(k) make any capital expenditures of more than $50,000
individually or $300,000 in the aggregate;
(l) fail to maintain each Charter Benefit Plan or timely make
all contributions or accruals required thereunder in accordance with
GAAP applied on a consistent basis;
(m) issue any additional shares of Charter Capital Stock;
(n) agree to, or make any commitment to, take any of the
actions prohibited by this Section 7.02;
(o) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set
forth in this Agreement being or becoming untrue in any material
respect at any time prior to the Effective Time, or in any of the
conditions to the Merger set forth in Article IX not being satisfied or
in a violation of any provision of this Agreement, except, in every
case, as may be required by applicable law; or
(p) change any methods of accounting from those used in the
Charter Financial Statements.
7.03 Plan Termination. Prior to the Effective Time, Charter shall have
taken all steps necessary to terminate the SAR Plan and all Charter executive
deferred compensation plans.
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ARTICLE VIII
ADDITIONAL AGREEMENTS
8.01 Access and Information.
(a) During the period from the date of this Agreement through
the Effective Time:
(i) Charter shall, and shall cause its Subsidiaries
to, afford NationsBank, and its accountants, counsel and other
representatives, full access during normal business hours to
the properties, books, contracts, tax returns, commitments and
records of Charter and its Subsidiaries at any time, and from
time to time, for the purpose of conducting any review or
investigation reasonably related to the Merger, and Charter
and its Subsidiaries will cooperate fully with all such
reviews and investigations.
(ii) NationsBank shall upon reasonable notice make
personnel and copies of its SEC reports available to Charter
and its advisors for purposes of any review or report to its
Board of Directors in evaluating the Merger.
(b) During the period from the date of this Agreement through
the Effective Time, Charter shall furnish to NationsBank (i) all
Reports referred to in Section 5.17 promptly upon the filing thereof,
(ii) a copy of each Tax Return filed by it and (iii) monthly and other
interim financial statements in the form prepared by Charter for its
internal use.
During this period, Charter also shall notify NationsBank promptly of
any material change in the Condition of Charter or any of its
Subsidiaries.
(c) Notwithstanding the foregoing provisions of this Section
8.01, no investigation by the parties hereto made heretofore or
hereafter shall affect the representations and warranties of the
parties (as modified by information (i) furnished to NationsBank
pursuant to the terms of any investment agreement, (ii) disclosed in
writing to NationsBank in its due diligence process or (iii) included
in the Charter Disclosure Schedule) which are contained herein and each
such representation and warranty shall survive such investigation.
(d) NationsBank agrees that it will keep confidential any
information furnished to it in connection with the transactions
contemplated by this Agreement which is reasonably designated as
confidential at the time of delivery, except to the extent that such
information (i) was already known to NationsBank and was received from
a source other than Charter or any of its Subsidiaries, directors,
officers, employees or agents, (ii) thereafter was lawfully obtained
from another source, or (iii) is required to be disclosed to the SEC,
the NASD, the OCC, the OTS, the Federal Reserve Board, FDIC or any
other governmental agency or authority, or is otherwise required to be
disclosed by law. NationsBank agrees not to use such information, and
to implement safeguards and procedures that are reasonably designed to
prevent such information from being used, for any purpose other than in
connection with the transactions contemplated by this
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Agreement. Upon any termination of this Agreement, NationsBank will
return to Charter all documents furnished NationsBank for its review
and all copies of such documents made by NationsBank.
(e) Charter shall cooperate, and shall cause its Subsidiaries,
accountants, counsel and other representatives to cooperate, with
NationsBank and its accountants, counsel and other representatives, in
connection with the preparation by NationsBank of any applications and
documents required to obtain the Approvals which cooperation shall
include providing all information, documents and appropriate
representations as may be necessary in connection therewith and, when
requested by NationsBank, preparing and filing of regulatory
applications.
(f) From and after the date of this Agreement, each of
NationsBank and Charter shall use its reasonable best efforts to
satisfy or cause to be satisfied all conditions to their respective
obligations under this Agreement. While this Agreement is in effect,
neither NationsBank nor Charter shall take any actions, or omit to take
any actions, which would cause this Agreement to become unenforceable
in accordance with its terms.
8.02 Registration Statement; Regulatory Matters.
(a) NationsBank shall (i) prepare and file the Registration
Statement and the Proxy Statement with the SEC as soon as is reasonably
practicable, (ii) use its best efforts to cause the Registration
Statement to become effective and (iii) take any action required to be
taken under any applicable state blue sky or securities laws in
connection therewith. Charter and its Subsidiaries shall furnish
NationsBank with all information concerning Charter, its Subsidiaries
and the holders of Charter Capital Stock as NationsBank may reasonably
request in connection with the foregoing.
(b) NationsBank and Charter shall cooperate and use their
respective best efforts (i) to prepare all documentation, to effect all
filings and to obtain all permits, consents, approvals and
authorizations of all third parties, Regulatory Authorities and other
governmental authorities necessary to consummate the transactions
contemplated by this Agreement, including, without limitation, any such
approvals or authorizations required by the Federal Reserve, the OCC,
the OTS and the Commissioner and (ii) to cause the Merger to be
consummated as expeditiously as reasonably practicable.
8.03 Stockholders' Approval. Charter shall call a meeting of its
stockholders to be held as soon as practicable for the purpose of voting upon
the Merger and related matters. The Board of Directors of Charter shall, submit
for approval of its stockholders the matters to be voted upon at the
Stockholders' Meeting, and shall recommend approval of such matters and use its
best efforts (including, without limitation, soliciting proxies for such
approvals) to obtain such stockholder approvals. The covenants under this
Section 8.03 are subject to the exercise by the Charter Board of its fiduciary
obligations.
8.04 Press Releases. Prior to the public dissemination of any press
release or other public disclosure of information about this Agreement, the
Merger or any other transaction
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contemplated hereby, the parties to this Agreement shall mutually agree as to
the form and substance of such release or disclosure.
8.05 Notice of Defaults. Charter shall promptly notify NationsBank of
(i) any material change in its business, operations or prospects, (ii) any
complaints, investigations or hearings (or communications indicating that the
same may be contemplated) of any Regulatory Authority, (iii) the institution or
the threat of material litigation involving such party, or (iv) any event or
condition that might be reasonably expected to cause any of its representations,
warranties or covenants set forth herein not to be true and correct in all
material respects as of the Effective Time. For purpose of this paragraph, the
term material litigation shall mean any claim involving $50,000 or more. Upon
any such notice, if any event or condition stated in such notice shall entitle
NationsBank to terminate this Agreement pursuant to Section 10.01(c),
NationsBank shall not be entitled to terminate this Agreement by reason thereof
unless NationsBank exercises such right on or before the later of (i) the date
ten business days after such notification or (ii) the expiration of the cure
period described in such Section 10.01(c).
8.06 Miscellaneous Agreements and Consents; Affiliates Agreements.
Subject to the terms and conditions of this Agreement, each of the parties
hereto agrees to use its respective best efforts to take, or cause to be taken,
all action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement as expeditiously as reasonably
practicable, including, without limitation, using their respective best efforts
to lift or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions
contemplated hereby. NationsBank and Charter shall, and shall cause each of
their respective Subsidiaries to, use their best efforts to obtain consents of
all third parties and Regulatory Authorities necessary or, in the reasonable
opinion of NationsBank or Charter, desirable for the consummation of the
transactions contemplated by this Agreement. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of NationsBank
shall be deemed to have been granted authority in the name of Charter to take
all such necessary or desirable action.
Without limiting the foregoing, Charter will take such actions as may
be reasonably necessary to identify each of its "affiliates" for purposes of
Rule 145 under the Securities Act and to cause each person so identified to
deliver to NationsBank within 10 days after the execution of this Agreement a
written agreement in form and substance satisfactory to NationsBank providing
that such person shall not sell, pledge, transfer or otherwise dispose of any
capital stock to be received by such person as part of the Merger Consideration
except in compliance with the applicable provisions of the Securities Act. For a
period of three years after the date hereof, NationsBank will continue to file
in a timely manner all securities reports required to be filed by it pursuant to
Section 13 and Section 15(d) of the Exchange Act.
8.07 Indemnification.
(a) NationsBank shall indemnify, defend, and hold harmless the
present and former directors, officers, employees, and agents of
Charter or its Subsidiaries (each, an "Indemnified Party") against all
losses, expenses (including reasonable attorneys' fees),
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claims, damages or liabilities and amounts paid in settlement arising
out of actions or omissions or alleged acts or omissions occurring at
or prior to the Effective Time (including the transactions contemplated
by this Agreement) to the full extent permitted under the TBCA and by
Charter's Restated Articles of Incorporation, as amended, and amended
and restated bylaws as in effect on the date hereof, including
provisions relating to advances of expenses incurred in the defense of
any proceeding to the full extent permitted by the TCBA upon receipt of
any undertaking required by the TCBA, except the right to
indemnification shall not arise in those instances in which the party
seeking indemnification has participated in the breach of any covenant
or agreement contained herein or knowingly caused any representation or
warranty of Charter contained herein to be false or inaccurate in any
respect and the claim arises principally from such breach or the
falsity or inaccuracy of such representation or warranty. Without
limiting the foregoing, in any case in which a determination by
NationsBank is required to effectuate any indemnification, NationsBank
shall direct, at the election of the Indemnified Party, that the
determination shall be made by independent counsel mutually agreed upon
between NationsBank and the Indemnified Party.
(b) NationsBank shall use its reasonable efforts (and Charter
shall cooperate prior to the Effective Time in these efforts) to
maintain in effect for a period of six years after the Effective Time
Charter's existing directors' and officers' liability insurance policy
(provided that NationsBank may substitute therefor (i) policies of at
least the same coverage and amounts containing terms and conditions
which are substantially no less advantageous or (ii) with the consent
of Charter given prior to the Effective Time, any other policy) with 31
respect to claims arising from facts or events which occurred prior to
the Effective Time and covering persons who are currently covered by
such insurance; provided, that NationsBank shall not be obligated to
make premium payments for such six-year period in respect of such
policy (or coverage replacing such policy) which exceed, for the
portion related to Charter's directors and officers, 200% of the annual
premium payments on Charter's current policy in effect as of the date
of this Agreement (the "Maximum Amount"). If the amount of the premiums
necessary to maintain or procure such insurance coverage exceeds the
Maximum Amount, NationsBank shall use its reasonable efforts to
maintain the most advantageous policies of directors' and officers'
liability insurance obtainable for a premium equal to the Maximum
Amount.
(c) If NationsBank or any of its successors or assigns shall
consolidate with or merge into any other person and shall not be the
continuing or surviving person of such consolidation or merger or shall
transfer all or substantially all of its assets to any person, then and
in each case, proper provision shall be made so that the successors and
assigns of NationsBank shall assume the obligations set forth in this
Section 8.07.
(d) The provisions of this Section 8.07 are intended to be for
the benefit of and shall be enforceable by, each Indemnified Party, his
or her heirs and representatives.
(e) NationsBank shall pay all expenses, including reasonable
attorneys' fees, that may be incurred by any Indemnified Party in
successfully enforcing the indemnity and other obligations provided for
in this Section 8.07 if NationsBank has been finally determined to have
acted in bad faith in refusing such indemnity. The Indemnified Party
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shall pay all expenses, including reasonable attorneys' fees, incurred
by NationsBank if the indemnification or other obligations provided in
this Section 8.07 are denied by a court of competent jurisdiction by
final and nonappealable order and such court determines that the
assertion of such claims for indemnification was made in bad faith.
8.08 SAR Plan; Restricted Stock.
(a) All restrictions or limitations on transfer with respect
to Charter Common Stock awarded under a Charter Stock Plan or any other
plan, program or arrangement ("Restricted Stock"), to the extent that
such restrictions or limitations shall not have already lapsed, shall
remain in full force and effect with respect to the NationsBank Common
Stock into which such Restricted Stock is converted pursuant to Section
3.01.
(b) Except as provided herein or as otherwise agreed in
writing by the parties, the provisions of the SAR Plan and any other
plan, program or arrangement pursuant to which Charter may, or may be
required to, make payments based upon the value of the Charter Capital
Stock or issue stock or stock-based compensation, shall be terminated
by the Effective Time in accordance with the terms of the SAR Plan.
8.09 Certain Change of Control Matters. From and after the date hereof,
Charter shall take all action necessary so that the execution and delivery of
this Agreement will not increase any benefits otherwise payable under any
Charter Benefit Plan except as set forth in Sections 5.12 and 5.13 of the
Charter Disclosure Schedule or increases made with the prior written consent of
NationsBank.
8.10 Stock Exchange Listing. NationsBank shall use its best efforts to
list, prior to the Effective Time, on the NYSE and the Pacific Stock Exchange,
upon official notice of issuance, the shares of NationsBank Common Stock to be
issued to holders of Charter Common Stock in the Merger.
8.11 Declaration of Dividends. After the date of this Agreement,
Charter shall coordinate with NationsBank the declaration of any dividends in
respect of NationsBank Common Stock and Charter Common Stock and Charter Special
Common Stock and the record dates and payment dates relating thereto, it being
the intention of the parties hereto that holders of Charter Common Stock and
Charter Special Common Stock shall not receive two dividends, or fail to receive
one dividend, for any single calendar quarter with respect to their shares of
Charter Common Stock or Charter Special Common Stock.
8.12 Employee Benefits. As soon as practicable following the Effective
Time, NationsBank shall provide generally to officers and employees of Charter
and its Subsidiaries employee benefits, including without limitation pension
benefits, health and welfare benefits, life insurance and vacation arrangements,
on terms and conditions which when taken as a whole are substantially similar to
those provided from time to time by NationsBank and its Subsidiaries to their
similarly situated officers and employees. In that regard, such officers and
employees of Charter shall be credited under the employee benefit plans of
NationsBank for their years of "eligibility service" and "vesting service"
earned under the Charter Benefit Plans as if such service had been earned with
NationsBank, while such officers and employees of Charter shall
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be credited with "benefit service" under the employee benefit plans of
NationsBank only with respect to their period of employment with NationsBank and
its Subsidiaries after the Effective Time in accordance with the terms and
conditions of such employee benefit plans. As of the Effective Time, the
employees and their dependents, if any, previously covered as of the Effective
Time under Charter's health insurance plan shall be covered under NationsBank's
health insurance plan and, to the extent possible under the terms of
NationsBank's then current health insurance plan, will not be subject to any
pre-existing condition limitations or exclusions, except those excluded under
NationsBank's health insurance plan. Charter's employees shall not be required
to satisfy the deductible and employee payments required by NationsBank's
comprehensive medical and/or dental plans for the calendar year of the Effective
Time to the extent of amounts previously credited during such calendar year
under comparable plans maintained by Charter.
8.13 Certain Actions. No party shall take any action which would
adversely affect or delay the ability of either NationsBank or Charter to obtain
any necessary approvals of any Regulatory Authority or other governmental
authority required for the transactions contemplated hereby or to perform its
covenants and agreements under this Agreement. No party shall take any action
that would prevent or impede the Merger from qualifying as a reorganization
within the meaning of Section 368 of the Code.
8.14 Acquisition Proposals. Charter shall not, and shall use its best
efforts to cause its officers, directors and employees and any investment
banker, attorney, accountant, or other agent retained by it or its Subsidiaries
not to (i) initiate, encourage or solicit, directly or indirectly, the making of
any proposal or offer (an "Acquisition Proposal") to acquire all or any
significant part of the business and properties or capital stock of Charter or
its Subsidiaries, whether by merger, purchase of securities or assets, tender
offer or otherwise (an "Acquisition Transaction"), or initiate, directly or
indirectly, any contact with any person in an effort to or with a view towards
soliciting any Acquisition Proposal or (ii) participate in any discussions or
negotiations regarding, or furnish to any other person any information with
respect to, an Acquisition Proposal. Notwithstanding the foregoing, Charter may
(i) furnish or cause to be furnished information subject to an appropriate
confidentiality agreement, (ii) in response to an Acquisition Proposal, issue a
communication to its security holders of the type contemplated by Rule 14d-9(e)
under the Exchange Act, and (iii) participate in discussions and negotiations
directly and through its representatives with persons who have sought the same
if the Charter Board determines, based as to legal matters on the written advice
of outside legal counsel, that the failure to furnish such information or to
negotiate with such entity or group or to take and disclose such position would
be inconsistent with the proper exercise of the fiduciary duties of the Charter
Board. In the event Charter receives an Acquisition Proposal or such discussions
are sought to be initiated or continued with Charter, it shall promptly inform
NationsBank as to the material terms thereof.
8.15 Termination Fee. To compensate NationsBank for entering into this
Agreement, taking action to consummate the transactions hereunder and incurring
the costs and expenses related thereto and other losses and expenses, including
the foregoing by NationsBank of other opportunities, Charter and NationsBank
agree as follows:
(a) Provided that NationsBank shall not be in material breach
of its obligations under this Agreement (which breach has not been
cured promptly following receipt of
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written notice thereof by Charter specifying in reasonable detail the
basis of such alleged breach), Charter shall pay to NationsBank the sum
of $2,000,000 (the "Termination Fee") plus reasonable out-of-pocket
expenses, not in excess of $500,000 (including, without limitation,
amounts paid or payable to banks and investment bankers, fees and
expenses of counsel and printing expenses) (such expenses are
hereinafter referred to as the "Expenses") incurred by NationsBank or
any of its affiliates in connection with or arising out of transactions
contemplated by this Agreement, regardless of when those expenses are
incurred, if this Agreement is terminated by Charter under the
provisions of Section 10.01(f). NationsBank shall provide Charter with
an itemization of Expenses.
(b) Any payment required by paragraph (a) of this Section
shall become payable within two business days after termination of the
Agreement.
(c) Charter acknowledges that the agreements contained in this
Section 8.15 are an integral part of the transactions contemplated in
this Agreement, and that, without these agreements, NationsBank would
not enter into this Agreement; accordingly, if Charter fails to
promptly pay the Termination Fee or Expenses when due, Charter shall in
addition thereto pay to NationsBank all costs and expenses (including
fees and disbursements of counsel) incurred in collecting such
Termination Fee or Expenses, as the case may be, together with interest
on the amount of the Termination Fee or Expenses (or any unpaid portion
thereof) from the date such payment was required to be made until the
date such payment is received by NationsBank at the prime rate of
NationsBank Texas, National Association as in effect from time to time
during such period.
8.16 Accruals. Prior to the Effective Time and after consultation with
NationsBank, Charter shall, consistent with GAAP, make such changes and
modifications to its loan, accrual and reserve policies and practices (including
loan classification and allowance for credit losses levels) to bring such
policies and practices into line with those presently followed by NationsBank,
including appropriate increases in its allowance for credit losses; provided,
that all such changes or modifications shall be disregarded in determining the
truth or correctness of the representations and warranties contained herein.
8.17 Post-Closing Actions. None of the parties shall take, or permit
any of their Subsidiaries or Affiliates to take, any action after the Closing
that would disqualify the Merger as a reorganization within the meaning of
Section 368(a) of the Code.
8.18 Prepayment of Indebtedness. Prior to the Effective Time, Charter
shall have prepaid, or caused its Subsidiaries to prepay, all indebtedness owed
by Charter and its Subsidiaries to (i) American National Insurance Company and
(ii) First City Texas-Houston, N.A.
8.19 Waiver of Restrictions in Investment Agreements. Charter hereby
waives any restrictions or limitations on the investment in or ownership of
Charter or the Charter Capital Stock contained in any agreement between the
parties including (i) the Investment Agreement by and between Charter
Bancshares, Inc. and NCNB Corporation dated as of December 17, 1986 and (ii) the
Investment Agreement by and between Charter Bancshares, Inc. and NCNB
Corporation dated as of November 6, 1987.
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ARTICLE IX
CONDITIONS
9.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each of NationsBank and Charter to effect the Merger
and the other transactions contemplated hereby shall be subject to the
fulfillment or waiver at or prior to the Effective Time of the following
conditions:
(a) Stockholders of Charter shall have approved all matters
relating to the Merger required under applicable law at the
Stockholders' Meeting.
(b) This Agreement, the Merger and the other transactions
contemplated hereby shall have been approved by the Federal Reserve
Board, the OCC, the OTS and any other Regulatory Authorities whose
approval is required for consummation of the transactions contemplated
hereby and all applicable waiting periods shall have expired. No such
approval or consent shall be conditioned or restricted in any manner
(including requirements relating to the disposition of assets) which in
the good faith judgment of NationsBank would so adversely impact the
economic or business benefits of the transactions contemplated by this
Agreement that, had such condition or restriction been known, it would
not have entered into this Agreement.
(c) The Registration Statement shall have been declared
effective and shall not be subject to a stop order or any threatened
stop order.
(d) Neither NationsBank nor Charter shall be subject to any
active litigation which seeks any order, decree or injunction of a
court or agency of competent jurisdiction to enjoin or prohibit the
consummation of the Merger.
(e) The shares of NationsBank Common Stock issuable pursuant
to the Merger shall have been authorized for listing on the NYSE upon
official notice of issuance.
(f) Each of NationsBank and Charter shall have received an
opinion of Blanchfield, Cordle and Moore, P.A., tax counsel to
NationsBank, or other counsel to NationsBank reasonably acceptable to
Charter, to the effect that the Merger will constitute a reorganization
within the meaning of Section 368 of the Code and no gain or loss will
be recognized by the stockholders of Charter to the extent that they
receive NationsBank Common Stock solely in exchange for their Charter
Common Stock and Charter Special Common Stock in the Merger, which
opinion shall be confirmed as of the date of Closing.
9.02 Conditions to Obligations of Charter to Effect the Merger. The
obligations of Charter to effect the Merger shall be subject to the fulfillment
or waiver at or prior to the Effective Time of the following additional
conditions:
(a) Representations and Warranties. The representations and
warranties of NationsBank set forth in Article VI hereof shall be true
and correct in all material
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respects as of the date of this Agreement and as of the Effective Time
(as though made on and as of the Effective Time except to the extent
such representations and warranties are by their express provisions
made as of a specified date) and Charter shall have received a
certificate signed by the chairman and chief executive officer,
executive vice president or other duly authorized officer of
NationsBank to that effect.
(b) Performance of Obligations. NationsBank shall have
performed in all material respects all obligations required to be
performed by it under this Agreement prior to the Effective Time, and
Charter shall have received a certificate signed by the chairman and
chief executive officer, executive vice president or other duly
authorized officer of NationsBank to that effect and as to the absence
of litigation as described in Section 9.01(d).
9.03 Conditions to Obligations of NationsBank to Effect the Merger. The
obligations of NationsBank to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Time of the following additional
conditions:
(a) Representations and Warranties. The representations and
warranties of Charter set forth in Article V hereof shall be true and
correct in all material respects as of the date of this Agreement and
as of the Effective Time (as though made on and as of the Effective
Time except to the extent such representations and warranties are by
their express provisions made as of a specified date) and NationsBank
shall have received a certificate signed by the chairman or the chief
executive officer or other duly authorized officer of Charter to that
effect.
(b) Performance of Obligations. Charter shall have performed
in all material respects all obligations required to be performed by it
under this Agreement prior to the Effective Time, and NationsBank shall
have received a certificate signed by the chairman or the chief
executive officer or other duly authorized officer of Charter to that
effect and as to the absence of litigation as described in Section
9.01(d).
(c) Completion of Redemption. Charter shall have completed the
Redemption.
(d) Prepayment of Indebtedness. Charter shall have prepaid the
indebtedness described in Section 8.18.
(e) Opinion of Counsel. NationsBank shall have received an
opinion of counsel for Charter addressed to NationsBank and in form
reasonably satisfactory to it as to the validity of (i) the approvals
of the Merger by the directors and stockholders of Charter and (ii) the
Redemption.
ARTICLE X
TERMINATION
10.01 Termination. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement, the Merger and
the other transactions
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contemplated hereby by the stockholders of NationsBank and Charter or both, this
Agreement may be terminated and the Merger abandoned at any time prior to the
Effective Time:
(a) by mutual consent of the Board of Directors of NationsBank
and the Board of Directors of Charter; or
(b) by the Board of Directors of NationsBank or the Board of
Directors of Charter if (i) the Federal Reserve or the OCC has denied
approval of the Merger and such denial has become final and
nonappealable or has approved the Merger subject to conditions that in
the judgment of NationsBank would restrict it or its Subsidiaries or
affiliates in their respective spheres of operations and business
activities after the Effective Time or (ii) the Effective Time does not
occur by December 31, 1996; or
(c) by NationsBank (if it is not in breach of any of its
obligations hereunder) pursuant to notice in the event of a breach or
failure by Charter that would cause a failure of the conditions in
Section 9.03, which breach or failure has not been, or cannot be, cured
within 30 days after written notice of such breach is given to Charter;
or
(d) by Charter (if it is not in breach of any of its
obligations hereunder) pursuant to notice in the event of a breach or
failure by NationsBank that would cause a failure of the conditions in
Section 9.02, which breach or failure has not been, or cannot be, cured
within 30 days after written notice of such breach is given to
NationsBank; or
(e) by NationsBank if the stockholders of Charter fail to
approve the Merger at the Stockholder's Meeting; or
(f) by Charter if (i) there shall not have been a material
breach of any covenant or agreement on the part of Charter under this
Agreement and (ii) prior to the Effective Time, a corporation,
partnership, person or other entity or group shall have made a bona
fide Acquisition Proposal that the Charter Board determines in its good
faith judgment and in the exercise of its fiduciary duties, based as to
legal matters on the written opinion of legal counsel and as to
financial matters on the written opinion of an investment banking firm
of national reputation, is more favorable to the Charter stockholders
than the Exchange Ratio and the Merger and that the failure to
terminate this Agreement and accept such alternative Acquisition
Proposal would be inconsistent with the proper exercise of such
fiduciary duties; provided, however, that termination under this clause
(ii) shall not be deemed effective until payment of the Termination Fee
required by Section 8.15; or
(g) By Charter, if its Board of Directors determines by a vote
of a majority of the members of its entire Board, at any time during
the ten-day period commencing two days after the Determination Date, if
either:
(x) both of the following conditions are satisfied:
(1) the Average Closing Price on the
Determination Date of shares of NationsBank Common
Stock shall be less than $56.419; and
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(2) (i) the quotient obtained by dividing
the Average Closing Price on the Determination Date
by $66.375 (such number being referred to herein as
the "NationsBank Ratio") shall be less than (ii) the
quotient obtained by dividing the Index Price on the
Determination Date by the Index Price on the Starting
Date and subtracting 0.15 from the quotient in this
clause (x)(2)(ii) (such number being referred to
herein as the "Index Ratio"); or
(y) the Average Closing Price on the Determination Date of
shares of NationsBank Common Stock shall be less than $53.100;
For purposes of this Section 10.01(g), the following terms shall have the
meanings indicated:
"Average Closing Price" shall mean the average of the daily
closing sales prices of NationsBank Common Stock as reported on the
NYSE-Composite Transactions List (as reported by The Wall Street
Journal or, if not reported thereby, another authoritative source as
chosen by NationsBank) for the ten consecutive full trading days in
which such shares are traded on the NYSE ending at the close of trading
on the Determination Date.
"Determination Date" shall mean the date on which the Federal
Reserve Board (or its delegate) shall have issued its order approving
the Merger.
"Index Group" shall mean the 20 bank holding companies listed
below, the common stocks of all of which shall be publicly traded and
as to which there shall not have been, since the Starting Date and
before the Determination Date, any public announcement of a proposal
for such company to be acquired or for such company to acquire another
company or companies in transactions with a value exceeding 25% of the
acquiror's market capitalization. In the event that any such company or
companies are removed from the Index Group, the weights (which have
been determined based upon the number of outstanding shares of common
stock) will be redistributed proportionately for purposes of
determining the Index Price. The 20 bank holding companies and the
weights attributed to them are as follows:
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Bank Holding Companies Weighting
Boatman's Bancshares, Inc......................... 2.72%
Citicorp.......................................... 9.01
BankAmerica Corporation........................... 7.84
Chase Manhattan Corporation....................... 9.29
J.P. Morgan & Co. Incorporated.................... 3.98
BancOne Corporation............................... 8.29
Norwest Corporation............................... 7.16
First Union Corporation........................... 5.89
Bank of New York Company.......................... 4.09
KeyCorp........................................... 5.03
SunTrust Banks, Inc............................... 2.40
Wachovia Corporation.............................. 3.61
Mellon Bank Corporation........................... 2.99
First Bank System, Inc............................ 2.70
PNC Bank Corp..................................... 7.12
First Chicago NBD Corporation..................... 6.75
Barnett Banks, Inc................................ 2.01
Bankers Trust New York Corp....................... 1.67
Fleet Financial Group............................. 3.00
Corestates Financial Corp......................... 4.44
------
Total............................................. 100.00%
=======
"Index Price" on a given date shall mean the weighted average
(weighted in accordance with the factors listed above) of the closing
prices of the companies composing the Index Group.
"Index Price on the Starting Date" shall mean $48.67.
"Starting Date" shall mean January 17, 1996.
If any company belonging to the Index Group or NationsBank declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares, or similar transaction between the Starting
Date and the Determination Date, the prices for the common stock of such company
or NationsBank shall be appropriately adjusted for the purposes of applying this
Section 10.01(g).
10.02 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.01, this Agreement shall
become void and have no effect, except that (i) the provisions of Section
8.01(d), 8.15 and Section 11.01 shall survive any such termination and
abandonment; (ii) no party shall be relieved or released from any liability
arising out of an intentional breach of any provision of this Agreement; (iii)
in the event Charter shall have completed the Redemption, at the request of
Charter, NationsBank will purchase up to $700,000 of Charter's 8% subordinated
notes with the shortest maturity and bearing such other terms as shall be
necessary for such indebtedness to qualify for Tier 2 treatment under Federal
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Reserve Board risk-based guidelines and (iv) if Charter has prepaid the American
National Insurance Company loan as required by Section 8.18, NationsBank will
reimburse Charter any prepayment premium and, at Charter's request, will make or
cause a Subsidiary to make a loan to Charter in the amount and on substantially
the terms as the prepaid loan.
10.03 Non-Survival of Representations, Warranties and Covenants
Following the Effective Time. Except for Articles III and IV and Sections 8.07,
8.08 and 8.17, none of the respective representations, warranties, obligations,
covenants and agreements of the parties shall survive the Effective Time.
ARTICLE XI
GENERAL PROVISIONS
11.01 Expenses. Except as provided in Section 8.15, Unless otherwise
agreed by the parties in writing, each party hereto shall bear its own expenses
incident to preparing, entering into and carrying out this Agreement and to
consummating the Merger and NationsBank shall pay all printing expenses and
filing fees incurred in connection with this Agreement, the Registration
Statement and the Proxy Statement.
11.02 Entire Agreement. Except as otherwise expressly provided herein,
this Agreement contains the entire agreement between the parties hereto with
respect to the transactions contemplated hereunder and thereunder, and such
agreements supersede all prior arrangements or understandings with respect
thereto, written or oral. The terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors. Other than Section 8.07, nothing in this Agreement, expressed or
implied, is intended to confer upon any individual, corporation or other entity,
other than NationsBank, Charter and the Bank or their respective successors, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
11.03 Amendments. To the extent permitted by law, this Agreement may be
amended by a subsequent writing signed by each of NationsBank and Charter;
provided, however, that the provisions hereof relating to the manner or basis in
which shares of Charter Common Stock or Charter Special Common Stock will be
exchanged for the Merger Consideration shall not be amended after the
Stockholders' Meeting without any requisite approval of the holders of the
issued and outstanding shares of Charter capital stock entitled to vote thereon.
11.04 Waivers. Prior to or at the Effective Time, each of NationsBank
and Charter shall have the right to waive any default in the performance of any
term of this Agreement by the other, to waive or extend the time for the
compliance or fulfillment by the other of any and all of the other's obligations
under this Agreement and to waive any or all of the conditions precedent to its
obligations under this Agreement, except any condition which, if not satisfied,
would result in the violation of any law or applicable governmental regulation.
11.05 No Assignment. None of the parties hereto may assign any of its
rights or delegate any of its obligations under this Agreement to any other
person or entity. Any such purported
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assignment or delegation that is made without the prior written consent of the
other parties to this Agreement shall be void and of no effect.
11.06 Notices. All notices or other communications which are required
or permitted hereunder shall be in writing and sufficient if delivered by hand,
by facsimile transmission, or by registered or certified mail, postage prepaid
to the persons at the addresses set forth below (or at such other address as may
be provided hereunder), and shall be deemed to have been delivered as of the
date so delivered:
Charter: Charter Bancshares, Inc.
2600 Citadel Plaza Drive
Houston, Texas 77008
Attention: Jerry E. Finger, Chairman
Telecopy: (713) 691-7578
Copy to Counsel: L. Proctor Thomas III
Baker & Botts, L.L.P.
One Shell Plaza
Houston, Texas 77002
Telecopy: (713) 229-1522
Michael A. Roy
General Counsel
Charter Bancshares, Inc.
2600 Citadel Plaza Drive, Suite 600
Houston, Texas 77008
Telecopy: (713) 691-7578
NationsBank: NationsBank Corporation
NationsBank Corporate Center
Charlotte, North Carolina 28255
Attention: Frank L. Gentry
Executive Vice President
Telecopy: (704) 386-6416
Copy to Counsel: NationsBank Corporation
NationsBank Corporate Center
Charlotte, North Carolina 28255
Attention: Paul J. Polking
General Counsel
Telecopy: (704) 386-6453
11.07 Specific Performance. The parties hereby acknowledge and agree
that the failure of either party to fulfill any of its covenants and agreements
hereunder, including the failure to
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take all such actions as are necessary on its part to cause the consummation of
the Merger, will cause irreparable injury for which damages, even if available,
will not be an adequate remedy. Accordingly, each party hereby consents to the
issuance of injunctive relief by any court of competent jurisdiction to compel
performance of the other party's obligations or any arbitration award hereunder
and to the granting by any such court of the remedy of the specific performance
hereunder.
11.08 Governing Law. This Agreement shall in all respects be governed
by and construed in accordance with the laws of the State of Delaware.
11.09 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original, but all
of which together shall constitute one and the same instrument.
11.10 Captions. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
11.11 Severability. In the event that any one or more of the provisions
contained in this Agreement, or in any other instrument referred to herein,
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement or any other such instrument.
IN WITNESS WHEREOF, NationsBank and Charter have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
NATIONSBANK CORPORATION
By: /s/ Frank L. Gentry
Executive Vice President
CHARTER BANCSHARES, INC.
By: /s/ Jerry E. Finger
Chairman and Chief Executive Officer
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