<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 19, 1997
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
NATIONSBANK CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
NORTH CAROLINA 6711 56-0906609
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
NATIONSBANK CORPORATE CENTER
100 NORTH TRYON STREET
CHARLOTTE, NORTH CAROLINA 28255
(704) 386-5000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------------
PAUL J. POLKING, EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
NATIONSBANK CORPORATION
NATIONSBANK CORPORATE CENTER
100 NORTH TRYON STREET
CHARLOTTE, NORTH CAROLINA 28255
(704) 386-5000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPIES TO:
<TABLE>
<S> <C> <C>
EDWARD D. HERLIHY FRED B. WHITE III
WACHTELL, LIPTON, ROSEN & KATZ SKADDEN, ARPS, SLATE,
51 WEST 52ND STREET AND MEAGHER & FLOM LLP
NEW YORK, NEW YORK 10019 919 THIRD AVENUE
NEW YORK, NEW YORK 10022
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective. If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
------------------------
CALCULATION OF REGISTRATION FEE
[CAPTION]
<TABLE>
<S> <C> <C> <C>
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES TO AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFER-
BE REGISTERED REGISTERED (1) SHARE ING PRICE
<S> <C> <C> <C>
Common Stock................ 265,000,000 $60.03 (3) $15,906,694,737 (3)
$2.50 Cumulative Convertible
Preferred Stock, Series
BB........................ 8,489 $25.00 (4) $212,225 (4)
Total.......................
<CAPTION>
TITLE OF EACH CLASS AMOUNT OF
OF SECURITIES TO REGISTRATION
BE REGISTERED FEE
<S> <C>
Common Stock................ $4,820,211
$2.50 Cumulative Convertible
Preferred Stock, Series
BB........................ $65
Total....................... $1,564,330 (2)
</TABLE>
(1) Based upon the maximum number of shares that may be issued upon consummation
of the merger described herein, and upon exercise of securities exercisable
for shares of common stock of NationsBank.
(2) In accordance with Rule 457(b), the filing fee of $3,255,946 paid pursuant
to Section 14(g) of the Securities Exchange Act of 1934, as amended, and
Rule 0-11 thereunder at the time of the filing of the Joint Proxy
Statement-Prospectus contained in this Registration Statement as preliminary
proxy materials of NationsBank Corporation and Barnett Banks, Inc. has been
credited to offset the $4,820,276 registration fee that would otherwise be
payable.
(3) Pursuant to Rule 457(f), and solely for the purpose of calculating the
registration fee, the proposed maximum offering price per share and maximum
aggregate offering price are based upon the average of the high and the low
sale prices of the common stock, par value $2.00 per share, of Barnett
Banks, Inc. on The New York Stock Exchange on November 17, 1997 and, in the
case of the maximum aggregate offering price, the number of shares of
NationsBank Corporation Common Stock being registered.
(4) Pursuant to Rule 457(f), and solely for the purpose of calculating the
registration fee, the proposed maximum offering price per share and maximum
aggregate offering price are based upon the $25 book value per share of the
Series B $2.50 Cumulative Convertible Preferred Stock, par value $.10 per
share, of Barnett Banks, Inc. as of November 17, 1997, and the number of
shares of $2.50 Cumulative Convertible Preferred Stock, Series BB, of
NationsBank Corporation being registered.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
(Logo appears here)
November 18, 1997
Dear Fellow Shareholder:
We are pleased to enclose information relating to a Special
Meeting of Shareholders of NationsBank Corporation to be held at
the International Trade Center, 200 North College Street, in the
city of Charlotte, North Carolina, at 9:30 a.m. local time on
December 19, 1997.
On August 29, 1997, NationsBank and Barnett Banks, Inc.
entered into a definitive agreement to combine NationsBank with
Barnett by merging Barnett into a wholly owned subsidiary of
NationsBank. The merger has been approved by the Boards of
Directors of both NationsBank and Barnett.
The purpose of our Special Meeting is to consider and vote
on (i) the issuance of NationsBank capital stock to Barnett
shareholders in the proposed merger and (ii) an amendment and
restatement of the NationsBank Corporation Key Employee Stock
Plan.
The merger with Barnett is extremely important for our
company. The merger will create the preeminent banking
institution in Florida, which we believe is one of the most
attractive markets in the United States. As a result of the
merger, NationsBank will have pro forma combined assets of
approximately $284 billion, pro forma combined deposits of
approximately $161 billion and pro forma combined shareholders'
equity of approximately $23 billion.
The matters to be voted on by the NationsBank shareholders
require for approval the affirmative vote of a majority of the
votes cast by holders of NationsBank Common Stock, NationsBank
ESOP Convertible Preferred Stock, Series C and NationsBank 7%
Cumulative Redeemable Preferred Stock, Series B, voting together
as a single class.
Shareholders are entitled to vote all shares of Common
Stock, ESOP Convertible Preferred Stock, Series C, and 7%
Cumulative Redeemable Preferred Stock, Series B, held by them on
October 31, 1997, which is the record date for the Special
Meeting.
WE URGE YOU TO CONSIDER CAREFULLY THESE IMPORTANT MATTERS,
WHICH ARE DESCRIBED IN THE ATTACHED JOINT PROXY
STATEMENT-PROSPECTUS. In order to ensure that your vote is
represented at the meeting, please indicate your choice on the
proxy form, date and sign it, and promptly return it in the
enclosed envelope. You are, of course, welcome to attend the
meeting and to vote your shares in person.
/s/ HUGH L. MCCOLL, JR.
HUGH L. MCCOLL, JR.
CHIEF EXECUTIVE OFFICER
<PAGE>
NATIONSBANK CORPORATION
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
A Special Meeting of Shareholders of NationsBank Corporation
("NationsBank") will be held at the International Trade Center, 200
North College Street, in the city of Charlotte, North Carolina, at 9:30
a.m. local time on December 19, 1997, to consider and act upon:
1. The issuance of shares of Common Stock of NationsBank ("Common
Stock") and a new series of NationsBank Cumulative Convertible
Preferred Stock pursuant to the merger (the "Merger") of Barnett
Banks, Inc. ("Barnett") with and into NB Holdings Corporation, a
wholly owned subsidiary of NationsBank ("NB Holdings"), upon the
terms and subject to the conditions set forth in the Agreement
and Plan of Merger, dated as of August 29, 1997, as amended
between NationsBank, Barnett and NB Holdings.
2. The amendment and restatement of the NationsBank Corporation Key
Employee Stock Plan.
3. The transaction of such other business as may properly come
before the meeting or any adjournments or postponements thereof.
Only holders of record of Common Stock, ESOP Convertible Preferred
Stock, Series C, and 7% Cumulative Redeemable Preferred Stock, Series B,
at the close of business on October 31, 1997, are entitled to notice of
and to vote at the Special Meeting or any adjournments or postponements
thereof. Approval of the matters to be voted on at the Special Meeting
requires the affirmative vote of a majority of the votes cast by holders
of Common Stock, ESOP Convertible Preferred Stock, Series C, and 7%
Cumulative Redeemable Preferred Stock, Series B, voting together as a
single class.
/s/ HUGH L. MCCOLL, JR.
HUGH L. MCCOLL, JR.
CHIEF EXECUTIVE OFFICER
November 18, 1997
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY,
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING.
THE BOARD OF DIRECTORS OF NATIONSBANK UNANIMOUSLY RECOMMENDS
THAT SHAREHOLDERS VOTE FOR APPROVAL OF THE MATTERS TO BE VOTED
UPON AT THE SPECIAL MEETING.
<PAGE>
(Logo appears here)
Dear Fellow Shareholder:
We are pleased to enclose information relating to a Special
Meeting of Shareholders of Barnett Banks, Inc. to be held at the
Barnett Office Park, 9000 Southside Blvd., Jacksonville,
Florida, at 9:30 a.m. local time on December 19, 1997.
At the Special Meeting, you will be asked to consider and
vote upon a proposal to approve an Agreement and Plan of Merger
dated August 29, 1997, as amended, by and among Barnett,
NationsBank Corporation and NB Holdings Corporation, a wholly
owned subsidiary of NationsBank. Under the terms of this
Agreement, Barnett will be merged with and into NB Holdings (the
"Merger"), and each outstanding share of common stock of Barnett
will be converted into the right to receive 1.1875 shares of
NationsBank common stock (and cash, without interest, in lieu of
fractional shares).
The Merger will provide you with the opportunity to
participate as a shareholder in a combined company that will be
one of the largest and most diversified financial services
organizations in the United States. We believe the resulting
company in the Merger will be well positioned to compete more
effectively in the increasingly competitive financial services
industry and to achieve Barnett's goals for continued revenue
growth, improved profitability and superior shareholder returns.
YOUR BOARD OF DIRECTORS HAS APPROVED THE MERGER AGREEMENT
AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE
MERGER AGREEMENT AND THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE MERGER. The enclosed Joint
Proxy Statement-Prospectus explains in detail the terms of the
proposed Merger and related matters. Please carefully review and
consider all of this information.
Consummation of the Merger is subject to certain
conditions, including but not limited to approval of the Merger
by the requisite vote of the shareholders of both Barnett and
NationsBank, and approval of the Merger by various regulatory
authorities.
It is very important that your shares are represented at
the Special Meeting, whether or not you plan to attend in
person. The affirmative vote of the holders of a majority of the
outstanding shares of Barnett common stock is required for
approval of the Merger. Your failure to vote for approval of the
Merger will have the same effect as a vote against the Merger.
In order to ensure that your vote is represented at the Special
Meeting, please sign, date and mail the proxy card in the
enclosed envelope.
Thank you for your cooperation and continued support.
/s/ Charles E. Rice
CHARLES E. RICE
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
<PAGE>
BARNETT BANKS, INC.
----------------------------------------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 19, 1997
----------------------------------------------------------------------
A Special Meeting of Shareholders of Barnett Banks, Inc.
("Barnett") will be held at the Barnett Office Park, 9000 Southside
Blvd., Jacksonville, Florida, at 9:30 a.m. local time on December 19,
1997, for the following purposes:
1. To consider and vote upon a proposal to approve the Agreement
and Plan of Merger, dated as of August 29, 1997, as amended
(the "Merger Agreement"), by and among Barnett, NationsBank
Corporation ("NationsBank"), and NB Holdings Corporation ("NB
Holdings"), a wholly owned subsidiary of NationsBank,
providing for the merger (the "Merger") of Barnett with and
into NB Holdings. A copy of the Merger Agreement is attached
as Appendix A to the accompanying Joint Proxy
Statement-Prospectus.
2. To transact such other business as may properly come before
the Special Meeting or any adjournments or postponements
thereof.
Only holders of record of Barnett common stock at the close of
business on October 31, 1997, are entitled to notice of and to vote at
such meeting or any adjournments or postponements thereof. The
affirmative vote of holders of a majority of the outstanding shares of
Barnett common stock is required for approval of the Merger Agreement
and the transactions contemplated thereby.
/s/ Charles E. Rice
CHARLES E. RICE
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
November 18, 1997
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY,
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING.
THE BOARD OF DIRECTORS OF BARNETT BANKS, INC. UNANIMOUSLY RECOMMENDS
THAT SHAREHOLDERS VOTE FOR APPROVAL OF THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY.
<PAGE>
JOINT PROXY STATEMENT
NATIONSBANK CORPORATION BARNETT BANKS, INC.
SPECIAL MEETING OF SHAREHOLDERS SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 19, 1997 TO BE HELD ON DECEMBER 19, 1997
------------------------
NATIONSBANK CORPORATION
PROSPECTUS
------------------------
This Joint Proxy Statement-Prospectus relates to up to 265,000,000 shares
of common stock ("NationsBank Common Stock") and up to 8,489 shares of $2.50
Cumulative Convertible Preferred Stock, Series BB ("NationsBank New Preferred
Stock") of NationsBank Corporation, a North Carolina corporation
("NationsBank"), offered hereby to the shareholders of Barnett Banks, Inc., a
Florida corporation ("Barnett"), upon consummation of the proposed merger (the
"Merger") of Barnett with and into NB Holdings Corporation, a Delaware
corporation and a wholly-owned subsidiary of NationsBank ("NB Holdings"), with
NB Holdings being the surviving corporation in the Merger (the "Surviving
Corporation"), pursuant to an Agreement and Plan of Merger, dated as of August
29, 1997, as amended (the "Agreement"), by and among NationsBank, NB Holdings
and Barnett. This Joint Proxy Statement-Prospectus also serves as the Joint
Proxy Statement of NationsBank and Barnett for use in connection with the
solicitation of proxies by the Boards of Directors of NationsBank and Barnett to
be used at the special meeting of shareholders of NationsBank (the "NationsBank
Special Meeting") and at the special meeting of shareholders of Barnett (the
"Barnett Special Meeting" and, together with the NationsBank Special Meeting,
the "Special Meetings"), respectively, to approve (in the case of NationsBank)
the issuance of NationsBank Common Stock and NationsBank New Preferred Stock in
connection with the Merger and certain other matters and (in the case of
Barnett) the Agreement and the transactions contemplated thereby. The Agreement
is attached to this Joint Proxy Statement-Prospectus as Appendix A and is
incorporated herein by reference.
Upon consummation of the Merger (the "Effective Time"), each share of
Barnett common stock, $2.00 par value per share, including the associated
preferred stock purchase rights (a "Barnett Right") issued pursuant to the
Rights Agreement, dated February 21, 1990, as amended (the "Barnett Rights
Agreement"), between Barnett and the Rights Agent named therein (such stock and
the accompanying Barnett Rights, "Barnett Common Stock"), will be converted into
the right to receive 1.1875 (as may be adjusted pursuant to the Agreement under
certain circumstances, the "Exchange Ratio") shares of NationsBank Common Stock
(and cash, without interest, in lieu of fractional shares). Based upon
information available as of the date hereof, immediately after the Merger
holders of Barnett Common Stock are expected to hold approximately 25.3% of the
shares of outstanding common stock of the combined company on a fully diluted
basis. In addition, in the Merger each share of Series B $2.50 Cumulative
Convertible Preferred Stock of Barnett (the "Barnett Preferred Stock") will be
converted into one share of NationsBank New Preferred Stock, which will have
rights, preferences and terms substantially identical to the rights, preferences
and terms of the Barnett Preferred Stock.
For a more complete description of the Agreement and the Merger, see "THE
MERGER."
The last reported sale price of NationsBank Common Stock on the New York
Stock Exchange, Inc. ("NYSE") Composite Transactions List on November 17, 1997
was $61.3125 per share and on August 28, 1997, the last trading day preceding
public announcement of the proposed Merger, was $63.3125 per share. The last
reported sale price of Barnett Common Stock as reported by the NYSE Composite
Transactions List on November 17, 1997 was $71.3125 per share and on August 28,
1997 was $54.8125 per share. Because the market price of NationsBank Common
Stock is subject to fluctuation, the value of the shares of NationsBank Common
Stock that holders of Barnett Common Stock will receive in the Merger may
increase or decrease prior to and after the Merger. See "SUMMARY -- Share
Information and Market Prices" and "PRICE RANGE OF COMMON STOCK AND DIVIDENDS."
THIS JOINT PROXY STATEMENT-PROSPECTUS AND FORMS OF PROXY ARE FIRST BEING
MAILED TO SHAREHOLDERS ON OR ABOUT NOVEMBER 20, 1997. THESE SECURITIES HAVE NOT
BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, THE
COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA (THE "COMMISSIONER") OR
ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION,
THE COMMISSIONER OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS JOINT PROXY STATEMENT-PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE. THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS
ACCOUNTS OR BANK DEPOSITS, ARE NOT OBLIGATIONS OF OR GUARANTEED BY ANY BANKING
OR NONBANKING AFFILIATE OF NATIONSBANK AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION (THE "FDIC") OR ANY OTHER GOVERNMENT AGENCY.
------------------------
The date of this Joint Proxy Statement-Prospectus is November 18, 1997.
------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
AVAILABLE INFORMATION.................................................................................................. 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................................................................ 1
SUMMARY................................................................................................................ 3
General.............................................................................................................. 3
The Companies........................................................................................................ 3
NationsBank Special Meeting and Vote Required........................................................................ 4
Barnett Special Meeting and Vote Required............................................................................ 4
The Merger........................................................................................................... 5
Conditions to the Merger............................................................................................. 5
Recommendations of Boards of Directors............................................................................... 5
Opinions of NationsBank's Financial Advisors......................................................................... 5
Opinions of Barnett's Financial Advisors............................................................................. 6
Effective Time of the Merger......................................................................................... 6
Waiver; Amendment; Termination; Expenses............................................................................. 6
Certain Federal Income Tax Consequences.............................................................................. 7
Accounting Treatment................................................................................................. 7
Interests of Certain Persons in the Merger........................................................................... 7
The Stock Option Agreements.......................................................................................... 8
Amendment to Barnett Rights Agreement................................................................................ 9
Dissenters' Rights................................................................................................... 9
Regulatory Approvals................................................................................................. 9
Share Information and Market Prices.................................................................................. 10
COMPARATIVE UNAUDITED PER SHARE DATA................................................................................... 11
SELECTED FINANCIAL DATA................................................................................................ 13
RATIOS OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS............................................. 18
NATIONSBANK SPECIAL MEETING............................................................................................ 19
General.............................................................................................................. 19
Matters to be Considered............................................................................................. 19
Proxies.............................................................................................................. 19
Record Date and Voting Rights........................................................................................ 19
Recommendation of the NationsBank Board.............................................................................. 20
BARNETT SPECIAL MEETING................................................................................................ 21
General.............................................................................................................. 21
Proxies.............................................................................................................. 21
Solicitation of Proxies.............................................................................................. 21
Record Date and Voting Rights........................................................................................ 21
Recommendation of the Barnett Board.................................................................................. 22
THE MERGER............................................................................................................. 23
Description of the Merger............................................................................................ 23
Background of the Merger............................................................................................. 25
Reasons of NationsBank for the Merger................................................................................ 27
Reasons of Barnett for the Merger.................................................................................... 28
Opinions of NationsBank's Financial Advisors......................................................................... 30
Opinions of Barnett's Financial Advisors............................................................................. 40
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
The Effective Time................................................................................................... 48
Exchange of Certificates............................................................................................. 49
Conduct of Business Prior to the Merger and Other Covenants.......................................................... 49
Conditions to the Merger............................................................................................. 51
Termination of the Agreement......................................................................................... 52
Waiver; Amendment; Expenses.......................................................................................... 54
Certain Federal Income Tax Consequences.............................................................................. 55
Interests of Certain Persons in the Merger........................................................................... 56
NationsBank and Barnett Stock Option Agreements...................................................................... 59
Amendment to Barnett Rights Agreement................................................................................ 63
Accounting Treatment................................................................................................. 63
Regulatory Matters................................................................................................... 64
Restrictions on Resales by Affiliates................................................................................ 65
Dividend Reinvestment and Stock Purchase Plan........................................................................ 65
MANAGEMENT AND OPERATIONS AFTER THE MERGER............................................................................. 66
PRICE RANGE OF COMMON STOCK AND DIVIDENDS.............................................................................. 67
Market Prices........................................................................................................ 67
Dividends............................................................................................................ 67
INFORMATION ABOUT NATIONSBANK.......................................................................................... 68
General.............................................................................................................. 68
Operations........................................................................................................... 68
Management and Additional Information................................................................................ 69
NB Holdings.......................................................................................................... 69
INFORMATION ABOUT BARNETT.............................................................................................. 69
General.............................................................................................................. 69
Operations........................................................................................................... 69
Recent Developments.................................................................................................. 69
Management and Additional Information................................................................................ 70
SUPERVISION AND REGULATION OF NATIONSBANK AND BARNETT.................................................................. 70
NATIONSBANK CAPITAL STOCK.............................................................................................. 72
NationsBank Common Stock............................................................................................. 72
NationsBank Preferred Stock.......................................................................................... 73
NationsBank ESOP Preferred Stock..................................................................................... 74
NationsBank Series B Preferred Stock................................................................................. 75
NationsBank New Preferred Stock...................................................................................... 76
COMPARATIVE RIGHTS OF SHAREHOLDERS OF NATIONSBANK AND BARNETT.......................................................... 80
Board of Directors................................................................................................... 80
Shareholder Vote Required for Business Combinations.................................................................. 80
Shareholder Rights Plan.............................................................................................. 81
Shareholder Proposal and Nomination Procedures....................................................................... 83
Dissenters' Rights................................................................................................... 84
Takeover Statutes.................................................................................................... 85
Consideration of Non-Shareholder Interests by Board of Directors..................................................... 86
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Special Meeting of Shareholders...................................................................................... 86
Certain Purchases of the Corporation's Securities.................................................................... 86
Director's Liability................................................................................................. 87
Amendments to Articles of Incorporation.............................................................................. 87
DISSENTERS' RIGHTS..................................................................................................... 87
AMENDMENT TO THE NATIONSBANK CORPORATION
KEY EMPLOYEE STOCK PLAN.............................................................................................. 88
Number of Shares..................................................................................................... 88
Administration....................................................................................................... 88
Eligibility.......................................................................................................... 89
Awards of Stock Options and Stock Appreciation Rights................................................................ 89
Awards of Restricted Stock and Performance Shares.................................................................... 89
Certain Post-Merger Awards of Restricted Stock and Options........................................................... 90
Code Section 162(m).................................................................................................. 90
Withholding for Payment of Taxes..................................................................................... 91
Changes in Capitalization and Similar Changes........................................................................ 91
Changes in Control................................................................................................... 91
Amendment and Termination of the Plan................................................................................ 91
Federal Income Tax Treatment......................................................................................... 91
LEGAL OPINION.......................................................................................................... 92
EXPERTS................................................................................................................ 92
SHAREHOLDER PROPOSALS.................................................................................................. 93
OTHER MATTERS.......................................................................................................... 93
UNAUDITED PRO FORMA CONDENSED FINANCIAL
INFORMATION.......................................................................................................... 94
APPENDIX A -- Agreement and Plan of Merger............................................................................. A-1
APPENDIX B -- Opinion of Goldman, Sachs & Co........................................................................... B-1
APPENDIX C -- Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated............................................ C-1
APPENDIX D -- Opinion of Morgan, Stanley & Co. Incorporated............................................................ D-1
APPENDIX E -- Opinion of J.P. Morgan Securities Inc.................................................................... E-1
</TABLE>
------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION
OTHER THAN THOSE CONTAINED OR INCORPORATED IN THIS JOINT PROXY
STATEMENT-PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY NATIONSBANK OR BARNETT.
THIS JOINT PROXY STATEMENT-PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO EXCHANGE
OR SELL, OR A SOLICITATION OF AN OFFER TO EXCHANGE OR PURCHASE, THE SECURITIES
OFFERED BY THIS JOINT PROXY STATEMENT-PROSPECTUS, OR THE SOLICITATION OF A
PROXY, IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR TO OR FROM ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. THE INFORMATION CONTAINED IN THIS JOINT PROXY STATEMENT-PROSPECTUS
SPEAKS AS OF THE DATE HEREOF UNLESS OTHERWISE SPECIFICALLY INDICATED.
INFORMATION CONTAINED IN THIS JOINT PROXY STATEMENT-PROSPECTUS REGARDING
NATIONSBANK, AND PRO FORMA INFORMATION, HAS BEEN FURNISHED BY NATIONSBANK, AND
INFORMATION HEREIN REGARDING BARNETT HAS BEEN FURNISHED BY BARNETT.
iii
<PAGE>
AVAILABLE INFORMATION
NationsBank has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (the "Registration Statement") on Form
S-4 under the Securities Act of 1933, as amended (the "Securities Act"),
relating to the securities to be issued in connection with the Merger. For
further information pertaining to the securities of NationsBank to which this
Joint Proxy Statement-Prospectus relates, reference is made to the Registration
Statement, including the exhibits and schedules filed as a part thereof. As
permitted by the rules and regulations of the Commission, certain information
included in the Registration Statement is omitted from this Joint Proxy
Statement-Prospectus. In addition, NationsBank and Barnett are subject to
certain of the informational requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and, in accordance therewith, file
certain reports, proxy statements and other information with the Commission.
Such reports, proxy statements and other information can be inspected and copied
at the public reference room of the Commission, 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549, and copies of such materials can be obtained by
mail from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, at prescribed rates. The Commission
maintains an Internet worldwide web site that contains reports, proxy and
information statements and other information regarding issuers, like NationsBank
and Barnett, who file electronically with the Commission. The address of that
site is http://www.sec.gov. In addition, copies of such materials are available
for inspection and reproduction at the public reference facilities of the
Commission at its New York Regional Office, 7 World Trade Center, Suite 1300,
New York, New York 10048; and at its Chicago Regional Office, Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Reports,
proxy statements and other information concerning NationsBank and Barnett also
may be inspected at the offices of the NYSE, 20 Broad Street, New York, New York
10005, and, in the case of NationsBank, at the offices of The Pacific Exchange,
Inc. (the "PSE"), 301 Pine Street, San Francisco, California 94104.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by NationsBank with the Commission
are hereby incorporated by reference in this Joint Proxy Statement-Prospectus:
(i) the NationsBank Annual Report on Form 10-K for the year ended December 31,
1996, as filed March 28, 1997; (ii) the NationsBank Quarterly Reports on Form
10-Q for the quarters ended March 31, 1997, as filed May 15, 1997, June 30,
1997, as filed August 14, 1997, and September 30, 1997, as filed November 14,
1997; (iii) the description of the NationsBank Common Stock contained in the
NationsBank registration statement filed pursuant to Section 12 of the Exchange
Act as modified by the NationsBank Current Report on Form 8-K filed September
21, 1994; and (iv) the NationsBank Current Reports on Form 8-K filed January 16,
1997, February 3, 1997, March 28, 1997, April 21, 1997, April 22, 1997, July 3,
1997, July 10, 1997, July 18, 1997, September 12, 1997, as amended as of
November 12, 1997, and October 20, 1997.
The following documents previously filed by Barnett with the Commission are
hereby incorporated by reference in this Joint Proxy Statement-Prospectus: (i)
the Barnett Annual Report on Form 10-K for the year ended December 31, 1996, as
filed on March 18, 1997; (ii) the Barnett Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1997, as filed on May 14, 1997, June 30, 1997, as filed
on August 13, 1997, and September 30, 1997, as filed November 14, 1997; (iii)
the description of the Barnett Common Stock and of the preferred stock purchase
rights set forth in registration statements filed by Barnett pursuant to Section
12 of the Exchange Act, including any amendment or report filed for purposes of
updating any such description; and (iv) the Barnett Current Reports on Form 8-K
filed January 14, 1997, January 24, 1997, April 7, 1997, September 12, 1997 and
September 24, 1997. The Barnett Annual Report on Form 10-K for the year ended
December 31, 1996 should be read in conjunction with the Barnett Current Reports
on Form 8-K filed September 12, 1997 and September 24, 1997.
In addition, all documents filed by NationsBank and Barnett with the
Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date hereof and prior to the time at which the Barnett Special Meeting
and the NationsBank Special Meeting have been finally adjourned are hereby
deemed to be incorporated by reference herein. Any statements contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Joint Proxy
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Statement-Prospectus to the extent that a statement contained herein or in any
other subsequently filed document that also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Joint Proxy
Statement-Prospectus.
THIS JOINT PROXY STATEMENT-PROSPECTUS INCORPORATES CERTAIN DOCUMENTS BY
REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THE DOCUMENTS
RELATING TO NATIONSBANK (OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH EXHIBITS
ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH DOCUMENTS) ARE AVAILABLE
WITHOUT CHARGE UPON WRITTEN OR ORAL REQUEST FROM JOHN E. MACK, SENIOR VICE
PRESIDENT AND TREASURER, NATIONSBANK CORPORATION, NATIONSBANK CORPORATE CENTER,
CHARLOTTE, NORTH CAROLINA 28255, TELEPHONE NUMBER (704) 386-5972. THE DOCUMENTS
RELATING TO BARNETT (OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH EXHIBITS ARE
NOT SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH DOCUMENTS) ARE AVAILABLE
WITHOUT CHARGE UPON WRITTEN OR ORAL REQUEST FROM CORPORATE COMMUNICATIONS,
BARNETT BANKS, INC., POST OFFICE BOX 40789, JACKSONVILLE, FLORIDA 32203-0789,
TELEPHONE NUMBER (904) 791-5516. NATIONSBANK OR BARNETT, AS THE CASE MAY BE,
WILL SEND THE REQUESTED DOCUMENTS BY FIRST-CLASS MAIL WITHIN ONE BUSINESS DAY OF
THE RECEIPT OF THE REQUEST. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS,
ANY REQUEST SHOULD BE MADE BY DECEMBER 12, 1997. PERSONS REQUESTING COPIES OF
EXHIBITS TO SUCH DOCUMENTS THAT ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE
IN SUCH DOCUMENTS WILL BE CHARGED THE COSTS OF REPRODUCTION AND MAILING OF SUCH
EXHIBITS.
THIS JOINT PROXY STATEMENT-PROSPECTUS CONTAINS CERTAIN FORWARD-LOOKING
STATEMENTS WITH RESPECT TO THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND
BUSINESS OF NATIONSBANK FOLLOWING THE CONSUMMATION OF THE MERGER, INCLUDING
STATEMENTS RELATING TO THE COST SAVINGS AND OTHER ADVANTAGES THAT ARE EXPECTED
TO BE REALIZED FROM THE MERGER, THE EXPECTED IMPACT OF THE MERGER ON
NATIONSBANK'S FINANCIAL PERFORMANCE AND EARNINGS ESTIMATES FOR THE COMBINED
COMPANY (SEE "THE MERGER -- REASONS OF NATIONSBANK FOR THE MERGER," AND
" -- REASONS OF BARNETT FOR THE MERGER," AND "MANAGEMENT AND OPERATIONS AFTER
THE MERGER"). THESE FORWARD-LOOKING STATEMENTS INVOLVE CERTAIN RISKS AND
UNCERTAINTIES. NEITHER NATIONSBANK OR BARNETT UNDERTAKE ANY OBLIGATION TO
REFLECT EVENTS AND CIRCUMSTANCES THAT ARISE AFTER THE DATE HEREOF. FACTORS THAT
MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH
FORWARD-LOOKING STATEMENTS INCLUDE, AMONG OTHERS, THE FOLLOWING POSSIBILITIES:
(1) EXPECTED COST SAVINGS FROM THE MERGER CANNOT BE FULLY REALIZED OR REALIZED
WITHIN THE EXPECTED TIME FRAME; (2) GREATER THAN EXPECTED DEPOSIT ATTRITION,
CUSTOMER LOSS OR REVENUE LOSS FOLLOWING THE MERGER; (3) COMPETITIVE PRESSURE IN
THE BANKING INDUSTRY INCREASES SIGNIFICANTLY; (4) GREATER THAN EXPECTED COSTS OR
DIFFICULTIES RELATED TO REGULATORY REQUIREMENTS ATTENDANT TO THE CONSUMMATION OF
THE MERGER OR THE INTEGRATION OF THE BUSINESSES OF NATIONSBANK AND BARNETT; (5)
CHANGES IN THE INTEREST RATE ENVIRONMENT REDUCE MARGINS; (6) GENERAL ECONOMIC
CONDITIONS, EITHER NATIONALLY OR REGIONALLY, ARE LESS FAVORABLE THAN EXPECTED,
RESULTING IN, AMONG OTHER THINGS, A DETERIORATION IN CREDIT QUALITY; (7)
LEGISLATION OR REGULATORY REQUIREMENTS OR CHANGES ADVERSELY AFFECT THE
BUSINESSES IN WHICH THE COMBINED COMPANY WOULD BE ENGAGED; (8) CHANGES IN
BUSINESS CONDITIONS AND INFLATION; AND (9) CHANGES IN THE SECURITIES MARKETS.
THE FORWARD-LOOKING EARNINGS ESTIMATES INCLUDED IN THIS JOINT PROXY
STATEMENT-PROSPECTUS HAVE NOT BEEN EXAMINED OR COMPILED BY THE INDEPENDENT
PUBLIC ACCOUNTANTS OF NATIONSBANK OR BARNETT NOR HAVE SUCH ACCOUNTANTS APPLIED
ANY PROCEDURES THERETO. ACCORDINGLY, SUCH ACCOUNTANTS DO NOT EXPRESS AN OPINION
OR ANY OTHER FORM OF ASSURANCE ON THEM. FURTHER INFORMATION ON OTHER FACTORS
WHICH COULD AFFECT THE FINANCIAL RESULTS OF NATIONSBANK AFTER THE MERGER IS
INCLUDED IN THE COMMISSION FILINGS INCORPORATED BY REFERENCE HEREIN.
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SUMMARY
THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN INFORMATION SET FORTH ELSEWHERE
IN THIS JOINT PROXY STATEMENT-PROSPECTUS AND IS NOT INTENDED TO BE COMPLETE. IT
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO MORE DETAILED INFORMATION CONTAINED
ELSEWHERE IN THIS JOINT PROXY STATEMENT-PROSPECTUS, THE ACCOMPANYING APPENDICES
AND THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE.
GENERAL
This Joint Proxy Statement-Prospectus, Notice of the Barnett Special
Meeting to be held on December 19, 1997, Notice of the NationsBank Special
Meeting to be held on December 19, 1997, and forms of proxy solicited in
connection therewith are first being mailed to holders of Barnett Common Stock
("Barnett Shareholders") and holders of NationsBank capital stock on or about
November 20, 1997. At the NationsBank Special Meeting, holders of shares of
NationsBank Common Stock, NationsBank ESOP Convertible Preferred Stock, Series C
(the "NationsBank ESOP Preferred Stock") and NationsBank 7% Cumulative
Redeemable Preferred Stock, Series B (the "NationsBank Series B Preferred
Stock") (collectively, the "NationsBank Shareholders") will consider and vote on
(i) the approval of the issuance of shares of NationsBank Common Stock and
NationsBank New Preferred Stock to Barnett shareholders pursuant to the
Agreement and the transactions contemplated thereby and (ii) the amendment and
restatement of the NationsBank Corporation Key Employee Stock Plan. At the
Barnett Special Meeting, holders of Barnett Common Stock will consider and vote
on a proposal to approve the Agreement and the transactions contemplated
thereby. A copy of the Agreement is attached to this Joint Proxy
Statement-Prospectus as Appendix A and is incorporated herein by reference.
THE COMPANIES
NATIONSBANK. NationsBank, a corporation organized under the laws of the
State of North Carolina in 1968, is a multi-bank holding company registered
under the Bank Holding Company Act of 1956, as amended (the "BHCA"), and has as
its principal assets the stock of its subsidiaries. Through its banking
subsidiaries and its various non-banking subsidiaries, NationsBank provides
banking and non-banking financial services, primarily throughout the
Mid-Atlantic, Midwest, Southeast and Southwest. As of September 30, 1997,
NationsBank had total assets of $242.4 billion, deposits of $130.4 billion and
shareholders' equity of $20.3 billion. The principal executive offices of
NationsBank are located at NationsBank Corporate Center, 100 North Tryon Street,
Charlotte, North Carolina 28255, and its telephone number is (704) 386-5000. All
references herein to NationsBank refer to NationsBank Corporation and its
subsidiaries, unless the context otherwise requires.
For additional information regarding NationsBank and the combined company
that would result from the Merger, see "THE MERGER," "MANAGEMENT AND OPERATIONS
AFTER THE MERGER" and "INFORMATION ABOUT NATIONSBANK."
BARNETT. Barnett, a Florida corporation organized in 1930, is a multi-bank
bank holding company registered under the BHCA. Barnett's retail delivery
network consists of 640 banking offices and 1,046 automated teller machines
throughout Florida and southern Georgia. Barnett's principal bank subsidiary is
Barnett Bank, N.A. Through its banking and non-banking subsidiaries, Barnett
engages in retail financial services, commercial banking, trust and investment
management services, indirect auto lending and leasing, mortgage lending and
consumer finance.
At September 30, 1997, Barnett had assets of $43.2 billion, deposits of
$32.9 billion and shareholders' equity of $3.6 billion. The principal executive
offices of Barnett are located at 50 North Laura Street, Jacksonville, Florida
32202, and its telephone number is (904) 791-7720.
All references herein to Barnett refer to Barnett Banks, Inc. and its
subsidiaries, unless the context otherwise requires. See "THE MERGER" and
"INFORMATION ABOUT BARNETT."
NB HOLDINGS. NB Holdings Corporation, a Delaware corporation, is a
wholly-owned subsidiary of NationsBank and is not engaged in any significant
business activity other than holding stock of other subsidiaries of NationsBank.
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NATIONSBANK SPECIAL MEETING AND VOTE REQUIRED
The NationsBank Special Meeting will be held on December 19, 1997 at 9:30
a.m., local time, at the International Trade Center, 200 North College Street,
Charlotte, North Carolina. At that time, the NationsBank Shareholders will be
asked to consider and vote upon (i) the approval of the issuance of shares of
NationsBank Common Stock and NationsBank New Preferred Stock to Barnett
Shareholders pursuant to the Agreement and the transactions contemplated thereby
(the "Issuance") and (ii) the amendment and restatement of the NationsBank
Corporation Key Employee Stock Plan (the "Plan Amendment," and together with the
Issuance, the "NationsBank Matters"). The record holders of NationsBank Common
Stock, NationsBank ESOP Preferred Stock and NationsBank Series B Preferred Stock
at the close of business on October 31, 1997 (the "NationsBank Record Date") are
entitled to notice of and to vote at the NationsBank Special Meeting. On the
NationsBank Record Date, there were approximately 128,870 holders of record of
NationsBank Common Stock and 711,154,172 shares of NationsBank Common Stock
outstanding, one holder of record of NationsBank ESOP Preferred Stock and
2,212,727 shares of NationsBank ESOP Preferred Stock outstanding and 50 holders
of record of NationsBank Series B Preferred Stock and 9,341 shares of
NationsBank Series B Preferred Stock outstanding.
Each share of NationsBank Common Stock and NationsBank Series B Preferred
Stock entitles its holder to one vote, and each share of NationsBank ESOP
Preferred Stock currently entitles its holder to two votes. All such shares vote
together as a single class and the affirmative vote of a majority of the votes
cast at the NationsBank Special Meeting is required to approve the NationsBank
Matters, PROVIDED THAT, in the case of the Issuance, at least 50% of the votes
entitled to be cast thereon are voted at the NationsBank Special Meeting and, in
the case of the Plan Amendment, a majority of the shares entitled to vote on
such matter are represented at the NationsBank Special Meeting in person or by
proxy. As of the NationsBank Record Date, directors and executive officers of
NationsBank beneficially owned 20,858,547 shares of NationsBank Common Stock,
978 shares of NationsBank ESOP Preferred Stock and no shares of NationsBank
Series B Preferred Stock, equivalent to approximately 2.9% of the votes entitled
to be cast at the NationsBank Special Meeting. It is currently expected that
each such director and executive officer of NationsBank will vote the shares of
NationsBank stock beneficially owned by him or her for approval of the
NationsBank Matters. In addition, as of the NationsBank Record Date, the
directors and executive officers of Barnett beneficially owned no shares of
NationsBank Common Stock, NationsBank ESOP Preferred Stock or NationsBank Series
B Preferred Stock. See "NATIONSBANK SPECIAL MEETING."
BARNETT SPECIAL MEETING AND VOTE REQUIRED
The Barnett Special Meeting will be held on December 19, 1997 at 9:30 a.m.,
local time, at the Barnett Office Park, 9000 Southside Blvd., Jacksonville,
Florida, at which time Barnett Shareholders will be asked to approve the
Agreement and the transactions contemplated thereby. Only record holders of
Barnett Common Stock at the close of business on October 31, 1997 (the "Barnett
Record Date") are entitled to notice of and to vote at the Barnett Special
Meeting. On the Barnett Record Date, there were approximately 45,931 holders of
record of Barnett Common Stock and 201,700,101 shares of Barnett Common Stock
entitled to vote at the Barnett Special Meeting.
The affirmative vote of the holders of a majority of the outstanding shares
of Barnett Common Stock is required to approve the Agreement and the
transactions contemplated thereby. As of the Barnett Record Date, directors and
executive officers of Barnett beneficially owned approximately 2,936,881 shares
of Barnett Common Stock, or approximately 1.46% of the Barnett stock entitled to
vote at the Barnett Special Meeting. It is currently expected that each such
director and executive officer of Barnett will vote the shares of Barnett stock
beneficially owned by him or her for approval of the Agreement and the
transactions contemplated thereby. In addition, as of the Barnett Record Date,
directors and executive officers of NationsBank beneficially owned significantly
less than 1% of the shares entitled to be voted at the Barnett Special Meeting.
It is currently expected that each such director and executive officer of
NationsBank will vote the shares of Barnett Common Stock beneficially owned by
him or her for approval of the Agreement and the transactions contemplated
thereby. See "BARNETT SPECIAL MEETING. "
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THE MERGER
In the Merger, subject to the terms of the Agreement, Barnett will merge
with and into NB Holdings, which will be the surviving entity, and each
outstanding share of Barnett Common Stock will be converted into the right to
receive 1.1875 shares of NationsBank Common Stock (subject to possible increase
under certain circumstances -- See "THE MERGER -- Termination of the
Agreement"), with cash to be paid in lieu of any resulting fractional shares of
NationsBank Common Stock.
In addition, at the Effective Time each share of Barnett Preferred Stock
issued and outstanding immediately prior to the Effective Time will be converted
into the right to receive one share of NationsBank New Preferred Stock, a newly
created series of preferred stock of NationsBank having terms substantially
identical to those of the Barnett Preferred Stock, except that each share of the
NationsBank New Preferred Stock will be convertible into NationsBank Common
Stock at a conversion rate adjusted to take into account the Exchange Ratio. See
"NATIONSBANK CAPITAL STOCK -- NationsBank New Preferred Stock." Each share of
NationsBank Capital Stock outstanding immediately prior to the Merger will
continue to be outstanding after the Effective Time.
CONDITIONS TO THE MERGER
The Merger is subject to the satisfaction of certain conditions, including
among others, an affirmative vote to approve the Agreement by holders of a
majority of the outstanding shares of Barnett Common Stock; the approval of the
Issuance by a majority of the votes cast at the NationsBank Special Meeting by
the NationsBank Shareholders, voting together as a single class and representing
at least 50% of the votes entitled to be cast thereat; the approval of
appropriate regulatory agencies; the effectiveness of the registration statement
of which this Joint Proxy Statement-Prospectus forms a part; receipt by Barnett
and NationsBank of opinions of counsel as to the tax-free nature of the Merger
for federal income tax purposes (except for cash paid in lieu of fractional
shares); the effectiveness under the North Carolina Business Corporation Act
(the "NCBCA") of a certificate of designations with respect to the NationsBank
New Preferred Stock; receipt by NationsBank of a letter from Price Waterhouse
LLP that the Merger will qualify for "pooling of interests" accounting
treatment; the listing, subject to notice of issuance, on the NYSE of the
NationsBank Common Stock to be issued in the Merger; and certain other customary
closing conditions. There can be no assurance as to when and if such conditions
will be satisfied (or, where permissible, waived) or that the Merger will be
consummated. See "THE MERGER -- Conditions to the Merger" and " -- Certain
Federal Income Tax Consequences."
For additional information relating to the Merger, see "THE MERGER."
RECOMMENDATIONS OF BOARDS OF DIRECTORS
THE BOARD OF DIRECTORS OF BARNETT (THE "BARNETT BOARD") AND THE BOARD OF
DIRECTORS OF NATIONSBANK (THE "NATIONSBANK BOARD") HAVE UNANIMOUSLY (IN THE CASE
OF BARNETT, WITH TWO DIRECTORS ABSENT) APPROVED THE AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY. THE BARNETT BOARD AND THE NATIONSBANK BOARD
BELIEVE THAT THE MERGER IS FAIR TO AND IN THE BEST INTERESTS OF BARNETT AND
NATIONSBANK AND THEIR RESPECTIVE SHAREHOLDERS AND UNANIMOUSLY RECOMMEND THAT
SUCH SHAREHOLDERS VOTE "FOR" THE MATTERS TO BE VOTED UPON BY SUCH SHAREHOLDERS
IN CONNECTION WITH THE MERGER. FOR A DISCUSSION OF THE FACTORS CONSIDERED BY THE
BARNETT BOARD AND THE NATIONSBANK BOARD IN REACHING THEIR RESPECTIVE
CONCLUSIONS, SEE "THE MERGER -- Background of the Merger," " -- Reasons of
NationsBank for the Merger" and " -- Reasons of Barnett for the Merger."
OPINIONS OF NATIONSBANK'S FINANCIAL ADVISORS
Each of Goldman, Sachs & Co. ("Goldman Sachs"), Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch") and Montgomery Securities has
served as financial advisor to NationsBank in connection with the Merger.
Merrill Lynch and Goldman Sachs each have rendered an opinion to the NationsBank
Board, dated as of the date of this Joint Proxy Statement-Prospectus, that the
Exchange Ratio pursuant to the Agreement is fair to the holders of NationsBank
Common Stock from a financial point of view. A copy of the opinions
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delivered by each of Goldman Sachs and Merrill Lynch on the date hereof is
attached to this Joint Proxy Statement-Prospectus as Appendix B and Appendix C,
respectively, and each should be read in its entirety with respect to
assumptions made, matters considered and limitations of the review undertaken by
Goldman Sachs or Merrill Lynch, as the case may be, in rendering its opinion.
See "THE MERGER -- Opinions of NationsBank's Financial Advisors."
OPINIONS OF BARNETT'S FINANCIAL ADVISORS
Each of Morgan, Stanley & Co. Incorporated ("Morgan Stanley") and J.P.
Morgan Securities Inc. ("J.P. Morgan" and, together with Morgan Stanley, the
"Barnett Financial Advisors"), which have served as financial advisors to
Barnett in connection with the Merger, has rendered its opinion to the Barnett
Board that the Exchange Ratio pursuant to the Agreement is fair from a financial
point of view to the holders of Barnett Common Stock. Such opinions were
delivered orally (and subsequently confirmed in writing) to the Barnett Board at
its meeting on August 29, 1997 and were delivered again in writing on the date
of this Joint Proxy Statement-Prospectus. Copies of the opinions delivered by
Morgan Stanley and J.P. Morgan on the date hereof are attached to this Joint
Proxy Statement-Prospectus as Appendix D and Appendix E, respectively, and each
should be read in its entirety with respect to assumptions made, matters
considered and limitations on the review undertaken by Morgan Stanley or J.P.
Morgan, as the case may be, in rendering its opinion. See "THE
MERGER -- Opinions of Barnett's Financial Advisors."
EFFECTIVE TIME OF THE MERGER
Subject to the satisfaction or waiver of certain conditions set forth in
the Agreement, the parties will cause the Effective Time to occur on (i) the
third business day after the last to occur of the satisfaction or waiver of the
conditions described under "THE MERGER -- Conditions to the Merger" or (ii) such
other date to which the parties may agree in writing. The date on which the
Effective Time occurs is referred to as the "Effective Date."
WAIVER; AMENDMENT; TERMINATION; EXPENSES
Prior to the Effective Time, and subject to compliance with applicable law,
any provision of the Agreement may be (i) waived by the party that benefits from
the provision, or (ii) amended or modified at any time by an agreement in
writing among the parties approved by their respective Boards of Directors and
executed in the same manner as the Agreement. Additionally, the Agreement
permits NationsBank at any time to change the method of effecting the
combination with Barnett if and to the extent that NationsBank deems such change
desirable. In any event, no such change may alter or change the amount or kind
of consideration to be issued to holders of Barnett stock as provided for in the
Agreement (the "Merger Consideration"), adversely affect the tax treatment of
Barnett shareholders as a result of receiving the Merger Consideration or
materially impede or delay consummation of the Merger. Pursuant to the
foregoing, NationsBank has specified that the Merger be effected in the manner
described under " -- The Merger."
The Agreement may be terminated and the Merger abandoned (i) by the mutual
consent of the parties, (ii) by either party if the other party materially
breaches its representations and warranties or fails to perform any of its
material covenants, in each case after inability or failure to cure within 30
days, (iii) by either party in the event that the Merger is not consummated by
September 1, 1998, except to the extent that the failure of the Merger then to
be consummated arises out of or results from the failure of the party seeking to
terminate to perform or observe the covenants of that party under the Agreement,
(iv) by either party, in the event (a) the approval of the Board of Governors of
the Federal Reserve System (the "Federal Reserve Board") required for
consummation of the Merger and the other transactions contemplated by the
Agreement has been denied by final, nonappealable action or (b) any required
shareholder approval is not obtained at the Barnett Special Meeting or the
NationsBank Special Meeting or any adjournments or postponements thereof, or (v)
by either party if the Board of Directors of the other party has withdrawn,
modified or changed in a manner adverse to the terminating party its approval or
recommendation of the Agreement and the transactions contemplated thereby.
In addition, the Agreement may be terminated by the Barnett Board, at its
sole option, by giving notice to NationsBank if both (i) the average closing
price of NationsBank Common Stock for the ten full trading days ending on the
date (the "Determination Date") the Federal Reserve Board approves the Merger
(the "Average
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Closing Price") is less than $50.65 and (ii) the number obtained by dividing the
Average Closing Price by $63.3125 (the closing price of NationsBank Common Stock
on August 28, 1997) is less than the number obtained by (a) dividing the average
of the closing prices of a specified index of bank stocks during the above
mentioned ten-day period by the closing price of such index on August 28, 1997
and (b) subtracting 0.15 (the satisfaction of both of the conditions set forth
in the foregoing clauses (i) and (ii) a "Termination Event"). Such termination
right will not apply, however, if NationsBank decides, within five days of
receiving notice of Barnett's intent to terminate the Agreement following a
Termination Event to increase the Exchange Ratio to a number calculated pursuant
to the Agreement, such that Barnett Shareholders would receive consideration
having the same implied market value (based on the Average Closing Price) as
they would have received if the Average Closing Price had been sufficient to
prevent Barnett from having a termination right under this provision. If
NationsBank elects to increase the Exchange Ratio as set forth in the Agreement
and as described above, it must give Barnett prompt notice of that election and
such increased Exchange Ratio, in which case no termination of the Agreement
would occur as a result of a Termination Event. See "THE MERGER -- Termination
of the Agreement."
Each party to the Agreement will bear all expenses incurred by it in
connection with the Agreement and the transactions contemplated thereby, except
that printing expenses and Commission registration fees will be shared equally
between Barnett and NationsBank.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Merger is intended to qualify as a reorganization under Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"). In connection
with the filing of the Registration Statement, Wachtell, Lipton, Rosen & Katz
has delivered to NationsBank its opinion, based upon certain customary
assumptions and representations, to the effect that, for United States federal
income tax purposes, the Merger will be treated as a reorganization within the
meaning of Section 368(a) of the Code; no gain or loss will be recognized by
NationsBank, NB Holdings or Barnett as a result of the Merger; no gain or loss
will be recognized by the holders of Barnett Common Stock who exchange all of
their Barnett Common Stock solely for NationsBank Common Stock pursuant to the
Merger (except with respect to cash received in lieu of a fractional share
interest in NationsBank Common Stock); and the aggregate tax basis of the
NationsBank Common Stock received by holders of Barnett Common Stock who
exchange all of their Barnett Common Stock solely for NationsBank Common Stock
pursuant to the Merger will be the same as the aggregate tax basis of the
Barnett Common Stock surrendered in exchange therefor (reduced by any basis
amount allocable to the fractional share interest in NationsBank Common Stock
for which cash is received). For a more complete description of the federal
income tax consequences of the Merger, see "THE MERGER -- Certain Federal Income
Tax Consequences."
ACCOUNTING TREATMENT
It is intended that the Merger will be accounted for as a
"pooling-of-interests" by NationsBank under generally accepted accounting
principles ("GAAP"). It is a condition to each party's obligation to consummate
the Merger that NationsBank receive a letter from Price Waterhouse LLP stating
its opinion that the Merger will qualify for "pooling-of-interests" accounting
treatment. See "THE MERGER -- Accounting Treatment."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Barnett management and of the Barnett Board have certain
arrangements with NationsBank, including those relating to the election of
Charles E. Rice, Chairman of the Barnett Board and Chief Executive Officer of
Barnett, as Chairman of the Board of Directors of NationsBank, the election or
appointment of four additional outside directors of Barnett, mutually agreed
upon by Barnett and NationsBank, to the NationsBank Board, certain benefits
under existing employment agreements and severance and benefit plans, and
certain post-Merger employment opportunities and compensation arrangements.
Employment agreements between NationsBank and the six most senior Barnett
executive officers to become effective as of the Effective Time provide for (i)
annual salaries, in the aggregate, of $3.2 million; (ii) minimum annual bonuses,
in the aggregate, of $5.1 million; and (iii) minimum annual NationsBank
retirement benefits, in the aggregate, of $3.67 million. Such six executive
officers hold, in the aggregate, employee stock options covering 1,481,350
shares of Barnett Common Stock that will become exercisable in connection with
the Merger and 37,500 restricted shares of Barnett Common Stock that will become
unrestricted in connection
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with the Merger (excluding restricted stock with respect to which restrictions
would otherwise lapse on January 1, 1998). Change-of-control related
enhancements under the Barnett supplemental retirement program that will be
realized in connection with the Merger will equal, for such six executives in
the aggregate, approximately $23.8 million. In addition, NationsBank has agreed
to indemnify directors, officers, employees and agents of Barnett and its
subsidiaries from and after the Effective Date against certain liabilities
arising prior to the Effective Date to the full extent permitted under law and
to maintain Barnett's existing directors' and officers' liability insurance
policy or a comparable policy for six years after the Merger. For a more
complete description of the benefits to be received by certain members of
Barnett management and certain members of the Barnett Board in connection with
the Merger, see "THE MERGER -- Interests of Certain Persons in the Merger."
The Barnett Board was aware of these interests and considered them, among
other matters, in approving the Agreement and the transactions contemplated
thereby.
THE STOCK OPTION AGREEMENTS
As an inducement to NationsBank to enter into the Agreement, Barnett (as
issuer) and NationsBank (as grantee) entered into the Stock Option Agreement,
dated August 29, 1997 (the "Barnett Stock Option Agreement"), pursuant to which
Barnett granted NationsBank an irrevocable option (the "Barnett Option") to
purchase from Barnett up to 39,379,343 shares of Barnett Common Stock (subject
to adjustment in certain circumstances, but in no event to exceed 19.9% of the
shares of Barnett Common Stock outstanding upon exercise thereof), at a price of
$54.8125 per share. The closing sale price of Barnett Common Stock on the last
trading day preceding the execution of the Agreement was $54.8125.
As an inducement to Barnett to enter into the Agreement, NationsBank (as
issuer) and Barnett (as grantee) entered into the Stock Option Agreement, dated
August 29, 1997 (the "NationsBank Stock Option Agreement" and, together with the
Barnett Stock Option Agreement, the "Stock Option Agreements"), pursuant to
which NationsBank granted Barnett an irrevocable option (the "NationsBank
Option" and, together with the Barnett Option, the "Options") to purchase from
NationsBank up to 70,654,895 shares of NationsBank Common Stock (subject to
adjustment in certain circumstances, but in no event to exceed 10.0% of the
shares of NationsBank Common Stock outstanding upon exercise thereof), at a
price of $63.3125 per share. The closing sale price of NationsBank Common Stock
on the last trading day preceding the execution of the Agreement was $63.3125.
The grantee of each of the Options may exercise such Option only under
certain limited and specifically defined circumstances (none of which, to the
best knowledge of NationsBank and Barnett, has occurred as of the date hereof).
At the request of the holder of each Option, under certain circumstances, the
issuer of that Option will repurchase for a formula price such Option and any
shares of the issuer's Common Stock purchased upon the exercise of the Option
and beneficially owned by such holder at that time. Notwithstanding anything in
the Stock Option Agreements to the contrary, the total profit that either
grantee may derive directly from the Option granted to it cannot exceed $400
million. See "THE MERGER -- NationsBank and Barnett Stock Option Agreements."
The purchase of any shares of Barnett Common Stock or NationsBank Common
Stock, as the case may be, pursuant to the Options is subject to compliance with
applicable law, including receipt of any necessary approvals under the BHCA,
and, in the case of the Barnett Option, any repurchase by Barnett of such Option
or the shares of Barnett Common Stock issued pursuant thereto is subject to the
requisite approval of Barnett Shareholders pursuant to the Amended and Restated
Articles of Incorporation of Barnett (the "Barnett Articles of Incorporation").
See "THE MERGER -- Regulatory Matters" and " -- NationsBank and Barnett Stock
Option Agreements."
Certain aspects of the Stock Option Agreements may have the effect of
discouraging parties who might now, or prior to the Effective Time, be
interested in acquiring all of or a significant interest in Barnett or
NationsBank, as the case may be, from considering or proposing such an
acquisition, even if such persons, in the case of an acquisition with respect to
Barnett, were prepared to offer to pay consideration to Barnett Shareholders
that had a higher current market price than the shares of NationsBank Common
Stock to be received for each share of Barnett Common Stock pursuant to the
Agreement.
8
<PAGE>
In the event that the shareholders of Barnett or NationsBank fail to
approve the Agreement or the Issuance, as the case may be, either NationsBank or
Barnett may terminate the Agreement. See "THE MERGER -- Termination of the
Agreement." If such termination occurs prior to the occurrence of an Initial
Triggering Event (as defined herein; see "THE MERGER -- NationsBank and Barnett
Stock Option Agreements") under the pertinent Stock Option Agreement, such Stock
Option Agreement will automatically terminate at such time. If an Initial
Triggering Event occurs under a Stock Option Agreement prior to the termination
of the Agreement, however, the grantee will be entitled to exercise the Option
in accordance with its terms upon the occurrence of a Subsequent Triggering
Event (as defined herein; see "THE MERGER -- NationsBank and Barnett Stock
Option Agreements") under the applicable Stock Option Agreement within the 12
months after the termination of the Agreement (subject to extension in certain
situations described in the Stock Option Agreements, but in no event more than
18 months after termination of the Agreement).
AMENDMENT TO BARNETT RIGHTS AGREEMENT
In connection with the execution of the Agreement, Barnett amended the
Barnett Rights Agreement so that the entering into of the Agreement and the
Barnett Stock Option Agreement and consummation of the Merger and the other
transactions contemplated thereby do not and will not result in the ability of
any person to exercise any Barnett Rights under the Barnett Rights Agreement or
enable or require the Barnett Rights to be separated from the shares of Barnett
Common Stock to which they are attached or to be triggered or become
exercisable, and so that the Barnett Rights Agreement and the Barnett Rights
will terminate upon consummation of the Merger. See "THE MERGER -- Amendment to
Barnett Rights Agreement" and "COMPARATIVE RIGHTS OF SHAREHOLDERS OF NATIONSBANK
AND BARNETT -- Shareholder Rights Plan."
DISSENTERS' RIGHTS
Neither holders of Barnett Common Stock nor holders of Barnett Preferred
Stock have dissenters' appraisal rights under the Florida 1989 Business
Corporation Act (the "FBCA") with respect to the Merger, and NationsBank
Shareholders do not have dissenters' appraisal rights under the NCBCA with
respect to the NationsBank Matters.
REGULATORY APPROVALS
The Merger is subject to the approval of the Federal Reserve Board with the
input of the United States Department of Justice. In addition, the Merger may be
subject to the approval of or notice to the bank regulatory authorities in
Florida, Texas and Georgia (collectively, the "State Authorities"). The Merger
may not be consummated until expiration of applicable waiting periods.
NationsBank and Barnett have filed all required applications for regulatory
review and approval or notice with the Federal Reserve Board and the State
Authorities in connection with the Merger. There can be no assurance that such
approvals will be obtained or as to the date of any such approvals. Divestitures
of certain assets or deposit liabilities may be required pursuant to antitrust
laws or Florida and federal statutory law limiting the amount of federally
insured deposits that may be held by the banking subsidiaries of a bank holding
company, and there can be no assurance as to the amount of such required
divestitures. See "THE MERGER -- Conditions to the Merger" and " -- Regulatory
Matters."
9
<PAGE>
SHARE INFORMATION AND MARKET PRICES
The NationsBank Common Stock is listed on the NYSE and the PSE under the
symbol "NB." The NationsBank Common Stock is also listed on the London Stock
Exchange ("LSE") and certain shares are listed on the Tokyo Stock Exchange. As
of the NationsBank Record Date, there were 711,154,172 shares of NationsBank
Common Stock outstanding held by approximately 128,870 holders of record,
2,212,727 shares of NationsBank ESOP Preferred Stock outstanding held by one
holder of record, and 9,341 shares of NationsBank Series B Preferred Stock held
by 50 holders of record. The Barnett Common Stock is listed on the NYSE under
the symbol "BBI." As of the Barnett Record Date, there were 201,700,101 shares
of Barnett Common Stock outstanding held by approximately 45,931 holders of
record. There is no active market for any shares of NationsBank ESOP Preferred
Stock or NationsBank Series B Preferred Stock, none of which are listed on a
national securities exchange or quoted on The Nasdaq Stock Market or any other
national securities quotation system, and there are no published bid and asked
quotations on any such shares.
The following table sets forth the last sale price reported on the NYSE
Composite Transactions List for shares of NationsBank Common Stock on August 28,
1997, the last trading day preceding public announcement of the proposed Merger,
and on November 17, 1997. It also sets forth the last sale prices per share
reported on the NYSE Composite Transactions List for shares of Barnett Common
Stock on August 28, 1997 and on November 17, 1997. The "Barnett Common Stock
Equivalent" represents the last sale price of a share of NationsBank Common
Stock on such date multiplied by the Exchange Ratio of 1.1875.
<TABLE>
<CAPTION>
BARNETT
NATIONSBANK BARNETT COMMON
COMMON COMMON STOCK
STOCK STOCK EQUIVALENT
----------- -------- ----------
<S> <C> <C> <C>
August 28, 1997........................................... $ 63.3125 $54.8125 $75.1836
November 17, 1997......................................... $ 61.3125 $71.3125 $72.8086
</TABLE>
For additional information regarding the market prices of the NationsBank
Common Stock and Barnett Common Stock during the previous two years, see "PRICE
RANGE OF COMMON STOCK AND DIVIDENDS -- Market Prices."
Barnett and NationsBank shareholders are advised to obtain current market
quotations for Barnett Common Stock and NationsBank Common Stock. It is expected
that the market price of NationsBank Common Stock will fluctuate between the
date of this Joint Proxy Statement-Prospectus and the date on which the Merger
is consummated and thereafter. Because the number of shares of NationsBank
Common Stock to be received by Barnett Shareholders in the Merger is fixed
(subject to possible increase in certain circumstances) and because the market
price of NationsBank Common Stock is subject to fluctuation, the values of the
shares of NationsBank Common Stock that Barnett Shareholders will receive in the
Merger may increase or decrease prior to the Merger. No assurance can be given
concerning the market price of NationsBank Common Stock before or after the
Effective Time.
10
<PAGE>
COMPARATIVE UNAUDITED PER SHARE DATA
The following table presents (i) selected comparative per share data for
each of NationsBank and Barnett on a historical basis and (ii) selected
unaudited pro forma comparative per share data reflecting the consummation by
NationsBank of (a) the Merger, and (b) the Merger and the acquisition of
Boatmen's Bancshares, Inc. ("Boatmen's") completed January 7, 1997. The
unaudited pro forma comparative per share data assumes the Merger and the
Boatmen's acquisition had been consummated on January 1, 1994, for the Merger,
and on January 1, 1996, for the Boatmen's acquisition. The unaudited pro forma
data has been prepared giving effect to the Merger as a pooling-of-interests.
The Boatmen's acquisition is reflected in the unaudited pro forma data using the
purchase method of accounting, and, accordingly, is not reflected in the
unaudited per share data for the years ended December 31, 1995 and 1994.
Under the pooling-of-interests method of accounting, the historical basis
of the assets and liabilities of NationsBank and Barnett will be combined at the
effective time of the Merger and carried forward at their previously recorded
amounts. The shareholders' equity accounts of NationsBank and Barnett will be
combined on NationsBank's consolidated balance sheet, and no goodwill or other
intangible assets will be created. Financial statements of NationsBank issued
after the Merger will be restated retroactively to reflect the consolidated
operations of NationsBank and Barnett as if the Merger had taken place prior to
the periods covered by such financial statements.
The unaudited pro forma per share data does not reflect any anticipated
reorganization or restructuring expenses resulting from the Merger. The Barnett
pro forma equivalent amounts are presented with respect to each set of pro forma
information, and have been calculated by multiplying the corresponding pro forma
combined amounts per share of NationsBank Common Stock by the Exchange Ratio of
1.1875.
NationsBank and Barnett expect that the combined company will achieve
substantial benefits from the Merger in the form of operating cost savings.
However, the unaudited pro forma comparative per share data do not reflect any
direct costs or potential savings which are expected to result from the
consolidation of operations of NationsBank and Barnett, and, therefore, do not
purport to be indicative of the results of future operations. The 1996 pro forma
earnings also do not reflect any direct costs or potential savings from the
consolidation of operations of Boatmen's.
The comparative per share data presented herein is based on and derived
from, and should be read in conjunction with, the historical consolidated
financial statements and the related notes thereto of each of NationsBank and
Barnett incorporated by reference herein. See "AVAILABLE INFORMATION,"
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE," and "UNAUDITED PRO FORMA
CONDENSED FINANCIAL INFORMATION." Results of each of NationsBank and Barnett for
the nine months ended September 30, 1997 are not necessarily indicative of
results expected for the entire year, nor are pro forma amounts necessarily
indicative of results of operations or the combined financial position that
would have resulted had the Merger and the Boatmen's acquisition been
consummated at the beginning of the periods indicated. All adjustments,
consisting of only normal recurring adjustments, necessary for a fair statement
of results of interim periods have been included.
11
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED
ENDED DECEMBER 31,
SEPTEMBER 30, -----------------------
1997 1996 1995 1994
------------- ----- ----- -----
<S> <C> <C> <C> <C>
Earnings per common share (primary) (1)
NationsBank
Historical.................................................................. $3.13 $4.00 $3.56 $3.06
Pro forma combined for the Merger........................................... 2.81 3.53 3.13 2.72
Pro forma combined for the Merger and the Boatmen's
acquisition............................................................... 2.81 3.06 N/A N/A
Barnett
Historical.................................................................. 2.23 2.89 2.65 2.39
Pro forma equivalent for the Merger (2)..................................... 3.34 4.19 3.72 3.23
Pro forma equivalent for the Merger and the Boatmen's
acquisition (2)........................................................... 3.34 3.63 N/A N/A
Cash dividends declared per common share (1)
NationsBank
Historical.................................................................. 0.99 1.20 1.04 .94
Pro forma combined for the Merger (3)....................................... 0.99 1.20 1.04 .94
Pro forma combined for the Merger and the Boatmen's
acquisition (3)........................................................... 0.99 1.20 N/A N/A
Barnett
Historical.................................................................. 0.89 1.05 .91 .80
Pro forma equivalent for the Merger (2)..................................... 1.18 1.43 1.24 1.12
Pro forma equivalent for the Merger and the Boatmen's
acquisition (2)........................................................... 1.18 1.43 N/A N/A
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995 1994
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Shareholders' equity per common share
(period end) (1)
NationsBank
Historical........................................... $ 28.73 $23.69 $23.26 $19.85
Pro forma combined for the Merger.................... 25.13 20.71 20.08 17.26
Pro forma combined for the Merger and the Boatmen's
acquisition........................................ 25.13 24.63 N/A N/A
Barnett (4)
Historical........................................... 19.16 18.10 17.13 15.54
Pro forma equivalent for the Merger (2).............. 29.84 24.59 23.85 20.50
Pro forma equivalent for the Merger and the Boatmen's
acquisition (2).................................... 29.84 29.25 N/A N/A
</TABLE>
- ---------------
(1) Per share information has been restated to reflect 2-for-1 stock splits of
NationsBank and Barnett in February 1997 and September 1996, respectively.
(2) Pro forma equivalent amounts for the Merger are calculated by multiplying
the pro forma combined amounts by the Exchange Ratio of 1.1875.
(3) Pro forma combined dividends per share represent historical dividends per
share paid by NationsBank.
(4) Computed on equity before deduction of the employee stock ownership plan
obligation.
N/A Not applicable as the Boatmen's acquisition was accounted for as a purchase.
12
<PAGE>
SELECTED FINANCIAL DATA
The following tables present (i) summary selected financial data for each
of NationsBank and Barnett on a historical basis and (ii) summary unaudited pro
forma selected financial data reflecting the consummation by NationsBank of (a)
the Merger and (b) the Merger and the Boatmen's acquisition. The unaudited pro
forma selected financial data has been prepared giving effect to the Merger as a
pooling-of-interests. For a description of the effect of pooling-of-interests
accounting on the Merger and the historical financial statements of NationsBank,
see " -- Comparative Unaudited Per Share Data." The summary unaudited pro forma
selected financial data does not reflect any anticipated reorganization or
restructuring expenses resulting from the Merger.
The summary selected financial data for NationsBank is based on and derived
from, and should be read in conjunction with, the historical consolidated
financial statements and the related notes thereto of NationsBank, audited by
Price Waterhouse LLP, independent accountants, which are incorporated herein by
reference. The summary selected financial data for Barnett is based on and
derived from, and should be read in conjunction with, the historical
consolidated financial statements and the related notes thereto of Barnett,
audited by Arthur Andersen LLP, independent certified public accountants, which
are incorporated herein by reference. The information set forth in the unaudited
summary selected pro forma financial data should be read in connection with the
unaudited pro forma condensed financial information and notes thereto appearing
elsewhere herein. Results of each of NationsBank and Barnett for the nine months
ended September 30, 1997 are not necessarily indicative of results expected for
the entire year, nor are pro forma amounts necessarily indicative of results of
operations or the combined financial position that would have resulted had the
Merger been consummated at the beginning of the period indicated. All
adjustments, consisting of only normal recurring adjustments, necessary for a
fair statement of results of the unaudited historical interim periods have been
included. See "AVAILABLE INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE."
13
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF NATIONSBANK
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
---------------------- --------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN MILLIONS, EXCEPT PER-SHARE INFORMATION AND RATIOS)
Income statement:
Income from earning assets................. $ 12,291 $ 10,438 $ 13,796 $ 13,220 $ 10,529 $ 8,327 $ 7,780
Interest expense........................... 6,381 5,699 7,467 7,773 5,318 3,690 3,682
Net interest income........................ 5,910 4,739 6,329 5,447 5,211 4,637 4,098
Provision for credit losses................ 570 455 605 382 310 430 715
Gains (losses) on sales of securities...... 91 34 67 29 (13) 84 249
Noninterest income......................... 3,502 2,688 3,646 3,078 2,597 2,101 1,913
Merger-related charge...................... -- 118 118 -- -- 30 --
Noninterest expense (including OREO
expense)................................. 5,403 4,212 5,685 5,181 4,930 4,371 4,149
Income before income taxes and effect of
change in method of accounting for income
taxes.................................... 3,530 2,676 3,634 2,991 2,555 1,991 1,396
Income tax expense......................... 1,271 933 1,259 1,041 865 690 251
Income before effect of change in method of
accounting for income taxes.............. 2,259 1,743 2,375 1,950 1,690 1,301 1,145
Effect of change in method of accounting
for income taxes......................... -- -- -- -- -- 200 --
Net income................................. 2,259 1,743 2,375 1,950 1,690 1,501 1,145
Net income available to common
shareholders............................. 2,250 1,732 2,360 1,942 1,680 1,491 1,121
Per common share (1):
Earnings before effect of change in method
of accounting for income taxes........... 3.13 2.91 4.00 3.56 3.06 2.50 2.30
Earnings................................... 3.13 2.91 4.00 3.56 3.06 2.89 2.30
Cash dividends paid........................ .99 .87 1.20 1.04 .94 .82 .76
Shareholders' equity (period-end).......... 28.73 22.88 23.69 23.26 19.85 18.20 15.40
Balance sheet (period-end):
Total assets............................... 242,437 187,671 185,794 187,298 169,604 157,686 118,059
Total loans, leases and factored accounts
receivable, net of unearned income....... 139,582 122,078 122,630 117,033 103,371 92,007 72,714
Total deposits............................. 130,447 108,132 106,498 100,691 100,470 91,113 82,727
Long-term debt............................. 26,245 22,034 22,985 17,775 8,488 8,352 3,066
Common shareholders' equity................ 20,262 13,186 13,586 12,759 10,976 9,859 7,793
Total shareholders' equity................. 20,317 13,304 13,709 12,801 11,011 9,979 7,814
Average common shares issued (in thousands)
(1)........................................ 719,489 595,545 590,216 544,959 549,312 515,938 487,496
Performance ratios:
Return on average assets................... 1.25%(3) 1.15%(3) 1.18% 1.03% 1.02% .97%(4) 1.00%
Return on average common shareholders'
equity (2)............................... 15.03(3) 17.58(3) 17.95 17.01 16.10 15.00(4) 15.83
Risk-based capital ratios:
Tier 1..................................... 7.00 7.05 7.76 7.24 7.43 7.41 7.54
Total...................................... 11.56 12.05 12.66 11.58 11.47 11.73 11.52
Leverage capital ratio....................... 6.16 6.30 7.09 6.27 6.18 6.00 6.16
Total equity to total assets................. 8.38 7.09 7.38 6.83 6.49 6.33 6.62
Asset quality ratios:
Allowance for credit losses as a percentage
of loans, leases and factored accounts
receivable, net of unearned income
(period-end)............................. 1.99 1.90 1.89 1.85 2.11 2.36 2.00
Allowance for credit losses as a percentage
of nonperforming loans (period-end)...... 251.74 235.64 260.02 306.49 273.07 193.38 103.11
Net charge-offs as a percentage of average
loans, leases and factored accounts
receivable, net of unearned income....... .51(3) .48(3) .48 .38 .33 .51 1.25
Nonperforming assets as a percentage of net
loans, leases, factored accounts
receivable and other real estate owned
(period-end)............................. .91 .93 .85 .73 1.10 1.92 2.72
</TABLE>
- ---------------
(1) Restated to reflect 2-for-1 stock split completed in February 1997.
(2) Average common shareholders' equity does not include the effect of market
value adjustments to securities available for sale and marketable equity
securities.
(3) Annualized.
(4) In 1993, return on average assets and return on equity after the tax benefit
from the impact of adopting SFAS 109 (Accounting for Income Taxes) were
1.12% and 17.33%, respectively.
14
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF BARNETT
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
---------------------- ------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN MILLIONS, EXCEPT PER-SHARE INFORMATION AND RATIOS)
Income statement:
Income from earning assets................. $ 2,290 $ 2,266 $ 3,006 $ 2,961 $ 2,555 $ 2,531 $ 2,822
Interest expense (1)....................... 945 855 1,140 1,219 922 880 1,144
Net interest income........................ 1,345 1,411 1,866 1,742 1,633 1,651 1,678
Provision for credit losses................ 106 126 155 123 74 120 257
Gains (losses) on sales of securities...... 2 19 19 5 (13) (2) 34
Noninterest income......................... 772 585 791 714 556 601 586
Merger-related charge...................... -- -- -- -- -- -- 93
Noninterest expense (including OREO
expense)................................. 1,358 1,217 1,617 1,519 1,364 1,501 1,645
Income before income taxes................. 655 672 904 819 738 629 303
Income tax expense......................... 230 257 340 286 250 208 95
Net income................................. 425 415 564 533 488 421 208
Net income available to common
shareholders............................. 425 413 562 517 470 403 189
Per common share (2):
Earnings................................... 2.23 2.12 2.89 2.65 2.39 2.05 0.99
Cash dividends paid........................ .89 .78 1.05 .91 .80 .71 .66
Shareholders' equity (period-end) (3)...... 19.16 17.72 18.10 17.13 15.54 14.17 12.70
Balance sheet (period-end):
Total assets............................... 43,219 41,271 41,231 41,554 41,278 38,331 39,465
Total loans, leases and factored accounts
receivable, net of unearned income....... 30,835 30,638 30,253 30,486 28,521 25,930 26,051
Total deposits............................. 32,920 33,238 33,820 34,234 35,109 32,634 34,689
Long-term debt (1)......................... 1,819 1,227 1,227 1,191 777 682 701
Common shareholders' equity................ 3,696 3,387 3,432 3,249 3,007 2,761 2,455
Total shareholders' equity................. 3,641 3,323 3,370 3,272 3,134 2,874 2,556
Average common shares issued (in thousands)
(2)........................................ 190,890 194,292 194,298 195,095 196,162 196,366 191,684
Performance ratios:
Return on average assets (4)............... 1.32%(5) 1.40%(5) 1.42% 1.30% 1.28% 1.13% .55%
Return on average shareholders'
equity (4)............................... 16.96(5) 17.33(5) 17.44 16.08 16.11 15.42 8.27
Risk-based capital ratios:
Tier 1..................................... 9.77 8.84 10.97 8.25 9.68 10.32 8.63
Total...................................... 12.68 11.98 14.17 11.51 12.42 13.33 12.11
Leverage capital ratio....................... 7.82 6.84 8.21 6.16 6.97 7.29 6.18
Total equity to total assets................. 8.42 8.05 8.17 7.87 7.59 7.50 6.48
Asset quality ratios:
Allowance for credit losses as a percentage
of loans, leases and factored accounts
receivable, net of unearned income
(period-end)............................. 1.57 1.66 1.58 1.66 1.76 2.01 2.10
Allowance for credit losses as a percentage
of nonperforming loans (period-end)...... 262.50 264.06 250.37 296.59 250.07 170.69 114.08
Net charge-offs as a percentage of average
loans, leases and factored accounts
receivable, net of unearned income....... .46(5) .55(5) .51 .41 .34 .55 1.00
Nonperforming assets as a percentage of net
loans, leases, factored accounts
receivable and other real estate owned
(period-end)............................. .74 .82 .77 .78 1.02 1.76 3.19
</TABLE>
- ---------------
(1) Includes reclassification of Trust Preferred Securities from minority
interest in order to be consistent with NationsBank's presentation.
(2) Restated to reflect 2-for-1 stock split completed in September 1996.
(3) Computed on equity before deduction of employee stock ownership obligation.
(4) Ratios for 1996 exclude $24.5 million pre-tax SAIF assessment. Including the
assessment, return on assets and return on equity were 1.38% and 16.98%,
respectively, in 1996.
(5) Annualized.
15
<PAGE>
SELECTED PRO FORMA FINANCIAL DATA
OF NATIONSBANK AND BARNETT COMBINED
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, --------------------------------
1997 1996 1995 1994
----------------- -------- -------- --------
<S> <C> <C> <C> <C>
(DOLLARS IN MILLIONS, EXCEPT PER-SHARE
INFORMATION AND RATIOS)
Income statement:
Income from earning assets................................... $ 14,478 $ 16,665 $ 16,044 $ 12,947
Interest expense............................................. 7,286 8,554 8,939 6,187
Net interest income.......................................... 7,192 8,111 7,105 6,760
Provision for credit losses.................................. 676 760 505 384
Gains (losses) on sales of securities........................ 93 86 34 (26)
Noninterest income........................................... 4,263 4,423 3,778 3,139
Merger-related charge........................................ -- 118 -- --
Noninterest expense (including OREO expense)................. 6,717 7,243 6,641 6,235
Income before income taxes................................... 4,155 4,499 3,771 3,254
Income tax expense........................................... 1,490 1,585 1,313 1,101
Net income................................................... 2,665 2,914 2,458 2,153
Net income available to common shareholders.................. 2,656 2,897 2,434 2,125
Per common share:
Earnings..................................................... 2.81 3.53 3.13 2.72
Cash dividends paid (1)...................................... .99 1.20 1.04 .94
Shareholders' equity (period-end)............................ 25.13 20.71 20.08 17.26
Balance sheet (period-end):
Total assets................................................. 284,086 225,455 227,282 209,312
Total loans, leases and factored accounts receivable, net of
unearned income........................................... 169,277 151,743 146,379 130,752
Total deposits............................................... 161,467 138,418 133,025 133,679
Long-term debt............................................... 28,064 24,212 18,966 9,265
Common shareholders' equity.................................. 23,485 16,545 15,535 13,510
Total shareholders' equity................................... 23,485 16,606 15,600 13,672
Average common shares issued (in thousands) (1)................ 946,171 820,945 776,634 782,254
Performance ratios:
Return on average assets..................................... 1.26%(2) 1.21% 1.08% 1.06%
Return on average common shareholders'
equity (3)................................................ 15.52(2) 18.13 17.30 16.63
Risk-based capital ratios:
Tier 1....................................................... 7.23 8.06 7.19 7.58
Total........................................................ 11.56 12.71 11.36 11.40
Leverage capital ratio......................................... 6.29 7.13 6.07 6.14
Total equity to total assets................................... 8.27 7.37 6.86 6.53
Asset quality ratios:
Allowance for credit losses as a percentage of loans, leases
and factored accounts receivable, net of unearned income
(period-end).............................................. 1.93 1.84 1.82 2.06
Allowance for credit losses as a percentage of nonperforming
loans (period-end)........................................ 253.18 258.40 304.46 268.30
Net charge-offs as a percentage of average loans, leases and
factored accounts receivable, net of unearned income...... .51(2) .49 .39 .33
Nonperforming assets as a percentage of net loans, leases,
factored accounts receivable and other real estate owned
(period-end).............................................. .88 .84 .74 1.09
</TABLE>
- ---------------
(1) Pro forma combined dividends per common share represent the historical
dividends per common share paid by NationsBank.
(2) Annualized.
(3) Average common shareholders' equity does not include the effect of market
value adjustments to securities available for sale and marketable equity
securities.
16
<PAGE>
SELECTED PRO FORMA FINANCIAL DATA
OF NATIONSBANK, BARNETT AND BOATMEN'S COMBINED
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED
1997 DECEMBER 31, 1996
----------------- -----------------
<S> <C> <C>
(DOLLARS IN MILLIONS, EXCEPT PER-SHARE
INFORMATION AND RATIOS)
Income statement:
Income from earning assets.................................................... $ 14,478 $ 18,903
Interest expense.............................................................. 7,286 9,533
Net interest income........................................................... 7,192 9,370
Provision for credit losses................................................... 676 845
Gains on sales of securities.................................................. 93 88
Noninterest income............................................................ 4,263 5,256
Merger-related charge......................................................... -- 188
Noninterest expense (including OREO expense).................................. 6,717 8,982
Income before income taxes.................................................... 4,155 4,699
Income tax expense............................................................ 1,490 1,760
Net income.................................................................... 2,665 2,939
Net income available to common shareholders................................... 2,656 2,915
Per common share (1):
Earnings...................................................................... 2.81 3.06
Cash dividends paid (2)....................................................... .99 1.20
Shareholders' equity (period-end)............................................. 25.13 24.63
Balance sheet (period-end):
Total assets.................................................................. 284,086 263,835
Total loans, leases and factored accounts receivable, net of unearned
income..................................................................... 169,277 176,348
Total deposits................................................................ 161,467 170,372
Long-term debt................................................................ 28,064 24,858
Common shareholders' equity................................................... 23,485 22,924
Total shareholders' equity.................................................... 23,485 23,068
Average common shares issued (in thousands) (1)................................. 946,171 953,844
Performance ratios:
Return on average assets...................................................... 1.26%(3) 1.06%
Return on average common shareholders' equity (4)............................. 15.52(3) 13.02
Risk-based capital ratios:
Tier 1........................................................................ 7.23 6.85
Total......................................................................... 11.56 11.23
Leverage capital ratio.......................................................... 6.29 6.08
Total equity to total assets.................................................... 8.27 8.74
Asset quality ratios:
Allowance for credit losses as a percentage of loans, leases and factored
accounts receivable, net of unearned income (period-end)................... 1.93 1.84
Allowance for credit losses as a percentage of nonperforming loans
(period-end)............................................................... 253.18 254.65
Net charge-offs as a percentage of average loans, leases and factored accounts
receivable, net of unearned income......................................... .51(3) .47
Nonperforming assets as a percentage of net loans, leases, factored accounts
receivable and other real estate owned (period-end)........................ .88 .85
</TABLE>
- ---------------
(1) The unaudited Selected Pro Forma Financial Data reflects a 35% cash election
in the Boatmen's acquisition.
(2) Pro forma combined dividends per common share represent the historical
dividends per common share paid by NationsBank.
(3) Annualized.
(4) Average common shareholders' equity does not include the effect of market
value adjustments to securities available for sale and marketable equity
securities.
17
<PAGE>
RATIOS OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following are NationsBank's and Barnett's consolidated ratios of
earnings to combined fixed charges and preferred stock dividend requirements for
the nine months ended September 30, 1997 and for each of the years in the
five-year period ended December 31, 1996:
NATIONSBANK:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
NINE MONTHS ENDED ------------------------------------
SEPTEMBER 30, 1997 1996 1995 1994 1993 1992
------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends:
Excluding interest on deposits................................. 2.0 1.8 1.6 1.8 2.3 2.3
Including interest on deposits................................. 1.5 1.5 1.4 1.5 1.5 1.4
</TABLE>
For purposes of computing NationsBank's consolidated ratios, earnings
represent net income of NationsBank plus applicable income taxes and fixed
charges, less capitalized interest and the equity in undistributed earnings of
unconsolidated subsidiaries and associated companies. Fixed charges represent
interest expense (exclusive of interest on deposits in one case and inclusive of
such interest in the other), capitalized interest, amortization of debt discount
and appropriate issuance costs and one-third (the amount deemed to represent an
appropriate interest factor) of net rent expense under all lease commitments.
Preferred stock dividend requirements represent dividend requirements on the
outstanding preferred stock adjusted to reflect the pre-tax earnings that would
be required to cover such dividend requirements.
BARNETT:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
NINE MONTHS ENDED ------------------------------------
SEPTEMBER 30, 1997 1996 1995 1994 1993 1992
------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends:
Excluding interest on deposits................................. 3.3 4.6 3.8 4.3 5.0 2.7
Including interest on deposits................................. 1.7 1.8 1.6 1.7 1.6 1.2
</TABLE>
For the purposes of computing Barnett's consolidated ratios, earnings
represent net income plus applicable income taxes and fixed charges. Combined
fixed charges and preferred stock dividend requirements, excluding interest on
deposits, represent interest expense (except interest paid on deposits),
capitalized interest, minority interest, an amount equal to the pre-tax earnings
required to meet applicable preferred stock dividend requirements, and the
interest factor included in rents. Combined fixed charges and preferred stock
dividend requirements, including interest on deposits, represent all interest
expense, capitalized interest, minority interest, an amount equal to the pre-tax
earnings required to meet applicable preferred stock dividend requirements, and
the interest factor included in rents.
18
<PAGE>
NATIONSBANK SPECIAL MEETING
GENERAL
This Joint Proxy Statement-Prospectus is first being mailed to NationsBank
Shareholders on or about November 20, 1997 and is accompanied by the Notice of
Special Meeting and a form of proxy that is solicited by the NationsBank Board
for use at the NationsBank Special Meeting to be held on December 19, 1997, at
9:30 a.m., local time, at the International Trade Center, 200 North College
Street, Charlotte, North Carolina, and at any adjournments or postponements
thereof.
MATTERS TO BE CONSIDERED
At the NationsBank Special Meeting, NationsBank Shareholders will be asked,
in accordance with the requirements of the NYSE, to consider and vote upon the
Issuance. The NYSE requires shareholder approval of the Issuance because the
number of shares of NationsBank Common Stock to be issued in the Merger
(including the shares of NationsBank Common Stock issuable upon conversion of
the NationsBank New Preferred Stock) is expected to exceed 20% of the shares of
NationsBank Common Stock outstanding immediately prior to the Effective Time. In
addition, the NationsBank Shareholders will be asked to consider and vote upon
the Plan Amendment. (The NationsBank Shareholders may also be asked to vote upon
a proposal to adjourn or postpone the NationsBank Special Meeting, which
adjournment or postponement could be used for the purpose, among others, of
allowing additional time for the soliciting of additional votes to approve the
NationsBank Matters.)
PROXIES
The accompanying form of proxy is for use at the meeting if a NationsBank
Shareholder is unable to attend in person. The proxy may be revoked by the
NationsBank Shareholder at any time before it is exercised, either by submitting
to the Corporate Secretary of NationsBank written notice of revocation or a
properly executed proxy of a later date or by attending the meeting and electing
to vote in person. Written notices of revocation and other communications with
respect to the revocation of NationsBank proxies should be addressed to
NationsBank Corporation, NationsBank Corporate Center, 56th Floor, Charlotte,
North Carolina 28255, Attention: Corporate Secretary. All shares represented by
valid proxies received pursuant to this solicitation, and not revoked before
they are exercised, will be voted in the manner specified therein. If no
specification is made, the proxies will be voted in favor of the approval of the
NationsBank Matters; provided that no proxy that is voted against any of the
NationsBank Matters will be voted in favor of any adjournment or postponement of
the NationsBank Special Meeting for the purpose of soliciting additional
proxies.
The entire cost of soliciting the proxies from the NationsBank Shareholders
will be borne by NationsBank except that Barnett and NationsBank have each
agreed to pay one-half of the printing costs of this Joint Proxy
Statement-Prospectus and related materials. In addition to the solicitation of
the proxies by mail, NationsBank will request banks, brokers and other record
holders to send proxies and proxy material to the beneficial owners of the stock
and secure their voting instructions, if necessary. NationsBank will reimburse
such record holders for their reasonable expenses in so doing. NationsBank has
also made arrangements with Georgeson & Company Inc. to assist it in soliciting
proxies from banks, brokers and nominees and has agreed to pay $10,000, plus
expenses, for such services. If necessary, NationsBank may also use several of
its regular employees, who will not be specially compensated, to solicit proxies
from shareholders, either personally or by telephone, telegram, facsimile or
special delivery letter.
RECORD DATE AND VOTING RIGHTS
Pursuant to the provisions of the NCBCA, October 31, 1997 has been fixed as
the record date for determination of NationsBank Shareholders entitled to notice
of and to vote at the NationsBank Special Meeting. Accordingly, only holders of
shares of record at the close of business on that date of NationsBank Common
Stock, NationsBank ESOP Preferred Stock and NationsBank Series B Preferred Stock
will be entitled to notice of and to vote at said meeting. The number of
outstanding shares of NationsBank Common Stock, NationsBank ESOP Preferred Stock
and NationsBank Series B Preferred Stock entitled to vote at the NationsBank
Special Meeting is 711,154,172, 2,212,727 and 9,341, respectively. In accordance
with North Carolina law, abstentions from voting will be counted for purposes of
determining whether a quorum exists at the
19
<PAGE>
NationsBank Special Meeting. Furthermore, shares represented by proxies returned
by a broker holding such shares in nominee or "street" name will be counted for
purposes of determining whether a quorum exists, even if such shares are not
voted in matters where discretionary voting by the broker is not allowed
("broker non-votes"). In addition, abstentions from voting and broker non-votes
will not be deemed to have been cast either "for" or "against" the proposal
considered at the meeting and, since approval of the Issuance requires the vote
of a majority of the votes cast at the NationsBank Special Meeting, will have no
effect on the approval of the Issuance. Accordingly, the NationsBank Board urges
NationsBank Shareholders to complete, date and sign the accompanying proxy and
return it promptly in the enclosed postage-paid envelope.
Each share of NationsBank Common Stock and NationsBank Series B Preferred
Stock entitles its holder to one vote, and each share of NationsBank ESOP
Preferred Stock currently entitles its holder to two votes. All such shares vote
together as a single class, and the affirmative vote of a majority of the votes
cast at the NationsBank Special Meeting is required to approve the NationsBank
Matters, PROVIDED that, in the case of the Issuance, at least 50% of the votes
entitled to be cast thereon are voted at the NationsBank Special Meeting and, in
the case of the Plan Amendment, a majority of the shares entitled to vote on
such matters are represented at the NationsBank Special Meeting in person or by
proxy. As of the NationsBank Record Date, 20,858,547 shares of NationsBank
Common Stock, 978 shares of NationsBank ESOP Preferred Stock and no shares of
NationsBank Series B Preferred Stock, respectively, equivalent to approximately
2.9% of the votes entitled to be cast at the NationsBank Special Meeting, were
beneficially owned by directors and executive officers of NationsBank. It is
currently expected that each such director and executive officer of NationsBank
will vote the shares of NationsBank stock beneficially owned by him or her for
approval of the NationsBank Matters. In addition, as of the NationsBank Record
Date, directors and executive officers of Barnett beneficially owned no shares
of NationsBank Common Stock, NationsBank ESOP Preferred Stock or NationsBank
Series B Preferred Stock.
Additional information with respect to beneficial ownership of NationsBank
Common Stock, NationsBank ESOP Preferred Stock and NationsBank Series B
Preferred Stock by individuals and entities owning more than 5% of such stock
and more detailed information with respect to beneficial ownership of
NationsBank Common Stock by directors and executive officers of NationsBank is
incorporated by reference to the 1996 Annual Report on Form 10-K of NationsBank.
See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
RECOMMENDATION OF THE NATIONSBANK BOARD
The NationsBank Board has unanimously approved the Agreement and the
transactions contemplated thereby and the NationsBank Matters. The NationsBank
Board believes that the Agreement and the transactions contemplated thereby and
the NationsBank Matters are fair to and in the best interests of NationsBank and
the NationsBank Shareholders and recommends that the NationsBank Shareholders
vote "FOR" the NationsBank Matters. See "THE MERGER -- Reasons of NationsBank
for the Merger" and "AMENDMENT TO THE NATIONSBANK CORPORATION KEY EMPLOYEE STOCK
PLAN."
20
<PAGE>
BARNETT SPECIAL MEETING
GENERAL
This Joint Proxy Statement-Prospectus is first being mailed to the Barnett
Shareholders on or about November 20, 1997, and is accompanied by the Notice of
Special Meeting and a form of proxy that is solicited by the Barnett Board for
use at the Barnett Special Meeting to be held on December 19, 1997, at 9:30
a.m., local time, at the Barnett Office Park, 9000 Southside Blvd.,
Jacksonville, Florida, and at any adjournments or postponements thereof. The
purpose of the Barnett Special Meeting is to take action with respect to the
approval of the Agreement and the transactions contemplated thereby. (The
Barnett Shareholders may also be asked to vote upon a proposal to adjourn or
postpone the Barnett Special Meeting, which adjournment or postponement could be
used for the purpose, among others, of allowing additional time for the
soliciting of additional votes to approve the Agreement.)
PROXIES
A Barnett Shareholder may use the accompanying proxy if such Barnett
Shareholder is unable to attend the Barnett Special Meeting in person or wishes
to have his or her shares voted by proxy even if such shareholder does attend
the meeting. A shareholder may revoke any proxy given pursuant to this
solicitation by delivering to the Corporate Secretary of Barnett, prior to or at
the Barnett Special Meeting, a written notice revoking the proxy or a duly
executed proxy relating to the same shares bearing a later date or by attending
the meeting and electing to vote in person; however, attendance at the Barnett
Special Meeting will not in and of itself constitute a revocation of a proxy.
All written notices of revocation and other communications with respect to the
revocation of Barnett proxies should be addressed to Barnett Banks, Inc., 50
North Laura Street, P.O. Box 40789, Jacksonville, Florida 32203-0789, Attention:
Corporate Secretary. For such notice of revocation or later proxy to be valid,
however, it must actually be received by Barnett prior to the vote of the
Barnett Shareholders at the Barnett Special Meeting. All shares represented by
valid proxies received pursuant to this solicitation, and not revoked before
they are exercised, will be voted in the manner specified therein. If no
specification is made, the proxies will be voted in favor of approval of the
Agreement. The Barnett Board is unaware of any other matters that may be
presented for action at the Barnett Special Meeting. If other matters do
properly come before the Barnett Special Meeting, however, it is intended that
shares represented by proxies in the accompanying form will be voted or not
voted by the persons named in the proxies in their discretion, provided that no
proxy that is voted against approval and adoption of the Agreement will be voted
in favor of any adjournment or postponement of the Barnett Special Meeting for
the purpose of soliciting additional proxies.
SOLICITATION OF PROXIES
The entire cost of soliciting the proxies from the Barnett Shareholders
will be borne by Barnett; PROVIDED, HOWEVER, that NationsBank and Barnett have
each agreed to pay one-half of the printing costs of this Joint Proxy
Statement-Prospectus and related materials. In addition to the solicitation of
the proxies by mail, Barnett will request banks, brokers and other record
holders to send proxies and proxy material to the beneficial owners of the stock
and secure their voting instructions, if necessary. Barnett will reimburse such
record holders for their reasonable expenses in so doing. Barnett has also made
arrangements with Georgeson & Company Inc. to assist it in soliciting proxies
from banks, brokers and nominees and has agreed to pay approximately $8,500,
plus expenses, for such services. If necessary, Barnett may also use several of
its regular employees, who will not be specially compensated, to solicit proxies
from shareholders, either personally or by telephone, telegram, facsimile or
special delivery letter.
RECORD DATE AND VOTING RIGHTS
The Barnett Board has fixed October 31, 1997 as the Barnett Record Date for
the determination of the Barnett Shareholders entitled to receive notice of and
to vote at the Barnett Special Meeting. Accordingly, only Barnett Shareholders
of record at the close of business on the Barnett Record Date will be entitled
to notice of and to vote at the Barnett Special Meeting. At the close of
business on the Barnett Record Date, there were 201,700,101 shares of Barnett
Common Stock entitled to vote at the Barnett Special Meeting held by
approximately 45,931 holders of record. The presence, in person or by proxy, of
shares of Barnett Common Stock
21
<PAGE>
representing a majority of the total voting power of such shares entitled to
vote on the Barnett Record Date is necessary to constitute a quorum at the
Barnett Special Meeting. Each share of Barnett Common Stock outstanding on the
Record Date entitles its holder to one vote as to (i) the approval of the
Agreement and the transactions contemplated thereby and (ii) any other proposal
that may properly come before the Barnett Special Meeting.
Barnett intends to count shares of Barnett Common Stock present in person
at the Barnett Special Meeting but not voting, and shares of Barnett Common
Stock for which it has received proxies but with respect to which holders of
such shares have abstained, as present at the Barnett Special Meeting for
purposes of determining the presence or absence of a quorum for the transaction
of business. In addition, shares represented by proxies returned by a broker
holding such shares in "street" name will be counted for purposes of determining
whether a quorum exists, even if such shares are not voted in matters where
discretionary voting by the broker is not allowed ("broker non-votes"). Under
applicable NYSE rules, brokers who hold shares of Barnett Common Stock in
"street" name for customers who are the beneficial owners of such shares are
prohibited from giving a proxy to vote shares held for such customers with
respect to the matters to be considered and voted upon at the Barnett Special
Meeting without specific instructions from such customers.
Under the FBCA, approval of the Agreement requires the affirmative vote of
the holders of a majority of all votes entitled to be cast on the Agreement at
the Barnett Special Meeting.
BECAUSE APPROVAL OF THE AGREEMENT REQUIRES THE AFFIRMATIVE VOTE OF A
MAJORITY OF OUTSTANDING SHARES OF BARNETT COMMON STOCK, ABSTENTIONS AND BROKER
NON-VOTES WILL HAVE THE SAME EFFECT AS NEGATIVE VOTES. ACCORDINGLY, THE BARNETT
BOARD URGES BARNETT SHAREHOLDERS TO COMPLETE, DATE AND SIGN THE ACCOMPANYING
PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE-PAID ENVELOPE.
As of the Barnett Record Date, approximately 2,936,881 shares of Barnett
Common Stock, or approximately 1.46% of the shares entitled to vote at the
Barnett Special Meeting, were beneficially owned by directors and executive
officers of Barnett. It is currently expected that each such director and
executive officer of Barnett will vote the shares of Barnett stock beneficially
owned by him or her for approval of the Agreement and the transactions
contemplated thereby. As of the Barnett Record Date, directors and executive
officers of NationsBank beneficially owned significantly less than 1% of the
shares of Barnett Common Stock entitled to vote at the Barnett Special Meeting.
It is currently expected that each such director and executive officer of
NationsBank will vote the shares of Barnett Common Stock beneficially owned by
him or her for approval of the Agreement and the transactions contemplated
thereby.
Additional information with respect to beneficial ownership of Barnett
Common Stock by persons and entities owning more than 5% of such stock and more
detailed information with respect to beneficial ownership of Barnett Common
Stock by directors and executive officers of Barnett is incorporated by
reference to the 1996 Annual Report on Form 10-K of Barnett. See "INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE."
RECOMMENDATION OF THE BARNETT BOARD
The Barnett Board has unanimously (with two directors absent) approved the
Agreement and the transactions contemplated thereby. The Barnett Board believes
that the Merger is fair to and in the best interests of Barnett and the Barnett
Shareholders and unanimously recommends that the Barnett Shareholders vote "FOR"
approval of the Agreement and the transactions contemplated thereby. See "THE
MERGER -- Reasons of Barnett for the Merger."
22
<PAGE>
THE MERGER
THE FOLLOWING SUMMARY OF CERTAIN TERMS AND PROVISIONS OF THE AGREEMENT IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE AGREEMENT, WHICH IS INCORPORATED
HEREIN BY REFERENCE AND, WITH THE EXCEPTION OF CERTAIN EXHIBITS THERETO, IS
ATTACHED TO THIS JOINT PROXY STATEMENT-PROSPECTUS AS APPENDIX A.
DESCRIPTION OF THE MERGER
At the Effective Time, Barnett will merge with and into NB Holdings, the
separate corporate existence of Barnett will cease and NB Holdings will survive
and continue to exist as a Delaware corporation and a wholly-owned subsidiary of
NationsBank. Subject to the satisfaction or waiver of certain conditions set
forth in the Agreement and described more fully in " -- Conditions to the
Merger," the Merger will become effective upon the filing of a certificate of
merger in the office of the Secretary of State of Delaware and articles of
merger in the office of the Secretary of State of Florida, or at such later date
and time as may be set forth in the certificate and articles of merger, in
accordance with Section 607.1105 of the FBCA and Section 252 of the Delaware
General Corporation Law (the "DGCL"). The Merger will have the effects
prescribed in Section 607.1106 of the FBCA and Section 259 of the DGCL, and the
articles of incorporation and by-laws of the Surviving Corporation will be those
of NB Holdings, as in effect immediately prior to the Effective Time.
At the Effective Time, automatically by virtue of the Merger and without
any action on the part of any party or Barnett Shareholder, each share of
Barnett Common Stock (excluding shares of Barnett stock held by Barnett or any
of its subsidiaries or by NationsBank or any of its subsidiaries, in each case,
other than in a fiduciary capacity or as a result of debts previously contracted
("Treasury Shares")) issued and outstanding immediately prior to the Effective
Time will become and be converted into the right to receive 1.1875 (which
Exchange Ratio is subject to potential adjustment as described under
" -- Termination of the Agreement") shares of NationsBank Common Stock;
PROVIDED, HOWEVER, in the event NationsBank changes (or establishes a record
date for changing) the number of shares of NationsBank Common Stock issued and
outstanding prior to the Effective Date as a result of a stock split, stock
dividend, recapitalization or similar transaction with respect to the
outstanding NationsBank Common Stock and the record date of such transaction is
set prior to the Effective Date, the Exchange Ratio will be proportionately
adjusted.
It is expected that the market price of NationsBank Common Stock will
fluctuate between the date of this Joint Proxy Statement-Prospectus and the date
on which the Merger is consummated and thereafter. Because the number of shares
of NationsBank Common Stock to be received by Barnett shareholders in the Merger
is fixed (subject to possible increase in the circumstances described above) and
because the market price of NationsBank Common Stock is subject to fluctuation,
the value of the shares of NationsBank Common Stock that holders of Barnett
Common Stock would receive in the Merger may increase or decrease prior to the
Merger. For further information concerning the historical market prices of
NationsBank and Barnett Common Stock, see "PRICE RANGE OF COMMON STOCK AND
DIVIDENDS -- Market Prices." No assurance can be given concerning the market
price of NationsBank Common Stock before or after the Effective Time.
The Barnett Board may, at its sole option, terminate the Agreement by
giving notice to NationsBank if both (i) the average closing price of
NationsBank Common Stock for the ten full trading days ending on the date the
Federal Reserve Board approves the Merger (the "Average Closing Price") is less
than $50.65 and (ii) the number obtained by dividing the Average Closing Price
by $63.3125 (the closing price of NationsBank Common Stock on August 28, 1997)
is less than the number obtained by (a) dividing the average of the closing
prices of a specified index of bank stocks during the above mentioned ten-day
period by the closing price of such index on August 28, 1997 and (b) subtracting
0.15. Such termination right will not apply, however, if NationsBank decides,
within five days of receiving notice of Barnett's intent to terminate the
Agreement pursuant to the conditions set forth in the preceding sentence, to
increase the Exchange Ratio to a number calculated pursuant to the Agreement
such that Barnett Shareholders would receive consideration having the same
implied market value (based on the Average Closing Price) as they would have
received if the Average Closing Price had been sufficient to prevent Barnett
from having a termination right under this provision. See " -- Termination of
the Agreement."
Whether or not Barnett will have a right to terminate the Agreement
pursuant to the foregoing paragraph will not be known until the date that the
Average Closing Price can be determined. If such date were the date of
23
<PAGE>
this Joint Proxy Statement-Prospectus, no such right of termination would exist,
based on the prevailing market price of NationsBank Common Stock. The Barnett
Board has made no decision as to whether it would exercise its termination right
if such a right did arise, and the NationsBank Board has made no decision as to
whether it would exercise its correlative right to increase the Exchange Ratio.
In the event such a situation occurs, each of the NationsBank Board and the
Barnett Board would, consistent with its fiduciary duties, take into account all
relevant facts and circumstances as they exist at such time and would consult
with its respective financial advisors and legal counsel. Approval of the
Agreement by the Barnett Shareholders at the Barnett Special Meeting and by the
NationsBank Shareholders at the NationsBank Special Meeting will confer on the
Barnett Board and the NationsBank Board, respectively, the power, should such an
event occur and consistent with the fiduciary duties of such Boards, to elect to
consummate the Merger in such an event (in the case of the Barnett Board) or to
elect to increase the Exchange Ratio (in the case of the NationsBank Board)
without any further action by, or resolicitation of the votes of, the
shareholders of Barnett or NationsBank, as the case may be. The fairness
opinions received by each of Barnett and NationsBank are each dated as of the
date of this Joint Proxy Statement-Prospectus and are based on conditions in
effect on the date thereof. Accordingly, none of such opinions address the
circumstances that might arise if the matters contemplated by the previous
paragraph were to occur. In such an event, Barnett or NationsBank, as the case
may be, intends that it would obtain the reconfirmation of its respective
investment bankers with respect to the fairness of the revised transaction prior
to proceeding with the consummation of the Merger. See " -- Opinions of
Barnett's Financial Advisors" and " -- Opinions of NationsBank's Financial
Advisors."
In addition, at the Effective Time: (i) each share of Barnett Preferred
Stock issued and outstanding immediately prior to the Effective Time will become
and be converted into the right to receive one share of NationsBank New
Preferred Stock having terms substantially identical to those of the Barnett
Preferred Stock except that the NationsBank New Preferred Stock will be
convertible into shares of NationsBank Common Stock at a rate that will reflect
the Exchange Ratio; (ii) the shares of NationsBank and NB Holdings capital stock
outstanding immediately prior to the Effective Time will continue to be
outstanding after the Effective Time; (iii) each of the shares of Barnett
capital stock held as Treasury Shares immediately prior to the Effective Time
will be canceled and retired at the Effective Time and no consideration will be
issued in exchange therefor; and (iv) all employee and director stock options to
purchase shares of Barnett Common Stock (each, a "Barnett Employee Stock
Option"), which are then outstanding and unexercised, will cease to represent a
right to acquire shares of Barnett Common Stock and will be converted
automatically into options to purchase shares of NationsBank Common Stock, and
NationsBank will assume each Barnett Employee Stock Option subject to the terms
of any of the relevant stock option plans of Barnett (collectively, the "Barnett
Employee Stock Option Plans"), and the agreements evidencing grants thereunder,
including, but not limited to, the accelerated vesting of such options which
will occur in connection with and by virtue of the Merger as and to the extent
required by such plans and agreements; PROVIDED, HOWEVER, that, from and after
the Effective Time, (a) the number of shares of NationsBank Common Stock
purchasable upon exercise of such Barnett Employee Stock Option will be equal to
the number of shares of Barnett Common Stock that were purchasable under such
Barnett Employee Stock Option immediately prior to the Effective Time multiplied
by the Exchange Ratio, and rounding to the nearest whole share, and (b) the per
share exercise price under each such Barnett Employee Stock Option will be
adjusted by dividing the per share exercise price of each such Barnett Employee
Stock Option by the Exchange Ratio, and rounding down to the nearest cent. The
terms of each Barnett Employee Stock Option will, in accordance with its terms,
be subject to further adjustment as appropriate to reflect any stock split,
stock dividend, recapitalization or other similar transaction with respect to
NationsBank Common Stock on or subsequent to the Effective Date. Notwithstanding
the foregoing, the number of shares and the per share exercise price of each
Barnett Employee Stock Option which is intended to be an "incentive stock
option" (as defined in Section 422 of the Code) will be adjusted in accordance
with the requirements of Section 424 of the Code and, with respect to any such
incentive stock options, fractional shares will be rounded down to the nearest
whole number of shares and, where necessary, the per share exercise price will
be rounded up to the nearest cent. In connection with the conversion of the
Barnett Employee Stock Options in the Merger, NationsBank will reserve a
sufficient number of shares of NationsBank Common Stock, register such stock
under the Securities Act and comply with applicable state securities or "blue
sky" laws.
NationsBank may at any time change the method of effecting the combination
with Barnett if and to the extent it deems such change to be desirable,
including, without limitation, to provide for a merger of Barnett into
NationsBank; PROVIDED, HOWEVER, that no such change will (i) alter or change the
amount or kind of the
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Merger Consideration, (ii) adversely affect the tax treatment of the Barnett
Shareholders as a result of receiving the Merger Consideration, or (iii)
materially impede or delay consummation of the transactions contemplated by the
Agreement.
In connection with the NationsBank New Preferred Stock, the articles of
incorporation of NationsBank shall be amended to fix the preferences,
limitations and relative rights of the NationsBank New Preferred Stock and at or
prior to the Effective Time, NationsBank shall deliver to the Secretary of State
of North Carolina for filing, pursuant to the NCBCA, articles of amendment, in a
form mutually acceptable to NationsBank and Barnett, giving effect to the
foregoing and containing any other provisions with respect to the NationsBank
New Preferred Stock necessary to permit consummation of the Merger in accordance
with the terms of the Agreement (the "Articles of Amendment").
BACKGROUND OF THE MERGER
In late July 1997, Barnett contacted Morgan Stanley to request its
assistance in Barnett's evaluation of its strategic alternatives for enhancing
shareholder value. During late July and early August 1997, members of Barnett's
management and representatives of Morgan Stanley met several times to discuss
the process for evaluating Barnett's strategic alternatives and to review
preliminary analyses prepared by Morgan Stanley concerning the potential value
available to Barnett's shareholders through implementing various strategic
alternatives, including Barnett's continuing as an independent entity and
Barnett's engaging in a strategic business combination with another financial
institution. Also during that time, Barnett contacted J.P. Morgan to request its
assistance in Barnett's review and evaluation of its strategic alternatives.
On August 19, 1997, a special meeting of the Barnett Board (the "August 19
Meeting") was held at Barnett's headquarters in Jacksonville, Florida. At the
August 19 Meeting, representatives of Morgan Stanley made a presentation to the
Barnett Board which included a review and analysis of Barnett's strategic
alternatives, an overview of the competitive environment in the financial
institutions industry, an analysis of the current financial institutions merger
and acquisition market, financial data and information from selected recent
financial institution merger and acquisition transactions, and valuations of
Barnett both on a stand-alone basis (using various methodologies) and as a
strategic merger partner based on recent financial institution merger and
acquisition multiples. Morgan Stanley also reviewed selected financial data with
respect to several large regional and super-regional bank holding companies
(including NationsBank) which were believed to be most likely to be interested
in and financially and otherwise capable of engaging in a strategic business
combination with Barnett. The Barnett Board noted that the information presented
and discussed at the meeting concerning the current environment for financial
institutions, including the merger and acquisition market, generally suggested
that a strategic business combination might provide Barnett's shareholders with
greater value than that attainable through a stand-alone strategy. Members of
management and the Barnett Board also discussed the anticipated impact of a
strategic business combination transaction on Barnett's employees, customers and
communities.
At the conclusion of the August 19 Meeting, the Barnett Board authorized
Charles E. Rice, Barnett's Chairman and Chief Executive Officer, to formally
engage Barnett's Financial Advisors and to contact several bank holding
companies (including NationsBank) which were most likely to be both interested
in and financially and otherwise capable of engaging in a business combination
transaction with Barnett. During the next two days, each of such bank holding
companies (including NationsBank) was contacted, all but one of such companies
(including NationsBank) expressed interest in considering a strategic business
combination transaction with Barnett (such parties, the "Interested Parties"),
and each of the Interested Parties received from Morgan Stanley a package
containing publicly available financial information on Barnett and a
confidentiality and standstill agreement. Each of the Interested Parties was
requested to execute the confidentiality and standstill agreement as soon as
possible and to deliver to Morgan Stanley on or before August 27, 1997 a written
indication of interest containing the per share price and other proposed terms
upon which such party would be prepared to discuss the possibility of a business
combination transaction with Barnett. Each of the Interested Parties was advised
that the per share price indicated in its proposal would be the essential factor
considered by Barnett in its evaluation of the proposals. During the week that
followed the August 19 Meeting, six of the Interested Parties (including
NationsBank) executed confidentiality and standstill agreements and submitted
indications of interest to Morgan Stanley.
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On Wednesday, August 27, 1997, the Executive Committee of the NationsBank
Board (the "NationsBank Executive Committee") and certain members of
NationsBank's senior management together with NationsBank's financial and legal
advisors reviewed the terms of such a potential offer by NationsBank to enter
into a business combination with Barnett. At the meeting, NationsBank senior
management discussed the strategic and business issues in such a potential
combination and NationsBank's financial and legal advisors discussed with the
NationsBank Executive Committee the financial aspects of the NationsBank
proposal and the legal issues connected with a possible combination with
Barnett. At the conclusion of the meeting, the NationsBank Executive Committee,
on behalf of the NationsBank Board, authorized senior management of NationsBank
to make a proposal to and negotiate with Barnett in connection with a potential
business combination.
On Wednesday, August 27, 1997 Mr. Rice, other members of Barnett's
management and representatives from Barnett's legal and financial advisors
reviewed and discussed the terms of the indications of interest received by
Barnett. Each of the proposals contemplated a stock-for-stock transaction with a
fixed exchange ratio at which shares of Barnett Common Stock would be exchanged
for shares of the Interested Party's common stock. Of the six proposals,
NationsBank's proposal, in which each share of Barnett Common Stock would be
exchanged for 1.1875 shares of NationsBank Common Stock (having an indicated
value of $76.00 based on the then-current trading price of NationsBank Common
Stock on August 27, 1997), offered the highest per share consideration to the
holders of Barnett Common Stock (based on the then-current trading prices of
each of the other Interested Parties' common stocks on August 27, 1997).
NationsBank's proposal contemplated a tax-free reorganization which would be
accounted for as a pooling-of-interests. NationsBank's proposal also
contemplated that the combined company would maintain the headquarters for its
Florida operations in Jacksonville, that five of Barnett's current directors,
including Mr. Rice, would serve on the combined company's board of directors and
that NationsBank would enter into employment agreements with Mr. Rice and
certain other executive officers of Barnett.
Later in the evening on August 27, Barnett's management determined to
proceed with due diligence and commence discussions with NationsBank concerning
the terms of the proposed transaction with a view to negotiating definitive
transaction agreements and, subject to such due diligence and discussions,
recommending the NationsBank proposal to the Barnett Board for approval. Barnett
then informed NationsBank that its proposal had been selected from among the
indications of interest received. The parties and their respective legal and
financial advisors then met to further discuss the terms of the proposed
transaction and to begin the process of scheduling and conducting due diligence
and drafting and negotiating definitive agreements reflecting the terms of the
proposed transaction.
On Thursday, August 28, 1997, the parties continued their due diligence
investigations, and senior management of NationsBank and Barnett and their legal
representatives negotiated the terms of the Agreement and the Stock Option
Agreements. Further negotiation continued on the morning of Friday, August 29,
1997. That morning, several newspapers of nationwide circulation contained
reports speculating that Barnett was seeking a strategic business combination
and naming a variety of bank holding companies, including NationsBank, as
possible merger partners. After consultation with their respective legal and
financial advisors concerning these reports, the possible volatility in the
stock prices of Barnett and NationsBank that could result from such speculation
and the status of due diligence investigations and contract negotiations, and in
light of the fact that the terms of the Agreement and the Stock Option
Agreements had been substantially negotiated, NationsBank and Barnett requested
the NYSE to halt trading in the common stock of each of Barnett and NationsBank
pending an announcement to be made later on Friday, August 29, 1997 concerning a
potential business combination. Shortly thereafter, the Boards of Directors of
each of NationsBank and Barnett met to consider the terms of the Agreement and
the Stock Option Agreements and the transactions contemplated thereby.
At the meeting of the Barnett Board on August 29, 1997, Mr. Rice and
representatives of Barnett's Financial Advisors updated the Barnett Board on the
process that had taken place over the past ten days with respect to Barnett's
contacts with several bank holding companies concerning their interest in a
potential business combination transaction, including a review of each of the
six indications of interest received by Barnett. Mr. Rice and other members of
Barnett's management reviewed with the Barnett Board the terms of and the
reasons for the proposed merger with NationsBank. Members of Barnett's
management reviewed the results of
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Barnett's due diligence investigation of NationsBank. Barnett's legal advisors
reviewed the terms of the Agreement, the Stock Option Agreements and the related
agreements, and the legal standards applicable to the Barnett Board's
consideration of the proposed transaction with NationsBank. Representatives of
Barnett's Financial Advisors reviewed financial information concerning
NationsBank, Barnett and the proposed transaction, and rendered their respective
oral opinions that, as of such date, and subject to the assumptions made,
matters considered and limits on review undertaken, the Exchange Ratio pursuant
to the Agreement was fair from a financial point of view to the holders of
Barnett Common Stock. After discussion, the Barnett Board (with two directors
absent) unanimously approved the Agreement, the Stock Option Agreements and
related matters.
At the meeting of the NationsBank Board on August 29, 1997, senior
management of NationsBank, together with its legal and financial advisors,
reviewed for the NationsBank Board the discussions and contacts with Barnett to
date, the previous discussions with and actions of the NationsBank Executive
Committee of the NationsBank Board, the financial terms of the proposed merger
with Barnett and the other terms of the Agreement. Representatives of
NationsBank's Financial Advisors rendered their respective oral opinions that,
as of such date, the Exchange Ratio pursuant to the Agreement was fair to
NationsBank from a financial point of view. Following discussion of and
questions by the NationsBank Board to NationsBank senior management and its
financial and legal advisors, the members of the NationsBank Board voted
unanimously to approve the Agreement, the Stock Option Agreements and related
matters.
Shortly following the conclusion of the respective board meetings of
Barnett and NationsBank, the parties entered into the Agreement and the Stock
Option Agreements.
REASONS OF NATIONSBANK FOR THE MERGER
In reaching its determination to approve the Agreement and recommend
approval of the Issuance, the NationsBank Board considered a number of factors,
including, without limitation, the following:
(i) (a) its knowledge and analysis of the financial services industry
environment, including rapid consolidation and increasing nationwide
competition in the financial services industry and the need to anticipate
and best position NationsBank in light of industry trends, (b) its belief
that a combination of NationsBank and Barnett will enhance NationsBank's
ability to compete effectively with other bank holding companies and other
financial service providers and expand its banking franchise to serve a
significantly greater number of customers, and (c) Barnett's unique
franchise, especially its positioning in Florida, a location desirable to
NationsBank because of NationsBank's existing presence in Florida and
because of Florida's dynamic population growth environment and adjacent
position to other current NationsBank markets, as well as Barnett's
nationwide consumer finance businesses that complement NationsBank's own;
(ii) its knowledge and review of the financial condition, results of
operations and business operations and prospects of Barnett, as well as the
results of NationsBank's due diligence review of Barnett, and its belief
that Barnett is a high quality franchise with a respected and capable
management team with a compatible approach to customer service, credit
quality and shareholder value;
(iii) its evaluation of the financial terms of the Merger (see
" -- Description of the Merger") and their effect on the NationsBank
Shareholders and the NationsBank Board's belief that such terms are fair to
and in the best interests of NationsBank and the NationsBank Shareholders
and are consistent with NationsBank's long-term strategy of enhancing
shareholder value with expansion through selective acquisitions and taking
into account that while there would be some dilution in 1998 earnings per
share, the Merger is expected to have an accretive impact on earnings per
share in 1999. The foregoing is based on consensus "street" earnings per
share estimates published by Institutional Brokers Estimate System ("IBES")
for both NationsBank and Barnett. The combined company's ability to achieve
such results is dependent upon various factors, a number of which will be
beyond its control, including the regulatory environment, economic
conditions, unanticipated changes in business conditions and inflation, and
there can be no assurance in this regard;
(iv) its belief that the Merger represents an opportunity to leverage
NationsBank's infrastructure, technology, products, marketing, and lines of
business over a large consumer, business and corporate customer base
through Barnett's established distribution network, and the possibility of
achieving significant
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expense savings and operating efficiencies through, among other things, the
elimination of duplicate efforts, and that the Merger could provide revenue
growth opportunities based on the combined company's leadership in the
rapidly growing Florida market and in consumer finance nationally;
(v) the nonfinancial terms of the Agreement and related agreements,
including the fact that Mr. Rice and four other nonemployee directors of
Barnett would be elected to the NationsBank Board, that Mr. Rice would
become Chairman of the combined company following the retirement of Mr.
Andrew B. Craig, III, the current NationsBank Chairman, the employment
agreements with Mr. Rice and other executive officers of Barnett and
benefits potentially realizable by other affiliates of Barnett (see
" -- Interests of Certain Persons in the Merger") and the Stock Option
Agreements (see " -- Nations-Bank and Barnett Stock Option Agreements");
(vi) the likelihood that the Merger would receive requisite regulatory
approvals and that divestitures of certain assets or deposit liabilities
could be required in connection with the Merger (see " -- Regulatory
Matters"); and
(vii) the expectation that the Merger would constitute a
"reorganization" under Section 368(a) of the Code and that it would be
accounted for as a "pooling-of-interests" for accounting and financial
reporting purposes (see " -- Certain Federal Income Tax Consequences" and
" -- Accounting Treatment").
NationsBank also considered the fact that, based on market prices shortly
prior to announcement of the Merger, the Exchange Ratio reflected a premium to
Barnett stock price of approximately 37%. In addition, in recommending approval
of the Issuance by the NationsBank Shareholders, the NationsBank Board
considered the opinions of Goldman Sachs and Merrill Lynch (including the
assumptions and financial information relied upon by Goldman Sachs and Merrill
Lynch in arriving at such opinions, some of which financial information was
provided to Goldman Sachs and Merrill Lynch by the senior management of each of
NationsBank and Barnett). See " -- Opinions of NationsBank's Financial
Advisors".
The foregoing discussion of the information and factors considered by the
NationsBank Board is not intended to be exhaustive but is believed to include
all material factors considered by the NationsBank Board. In reaching its
determination to approve the Merger, the NationsBank Board did not assign any
relative or specific weights to the foregoing factors, and individual directors
may have given differing weights to differing factors. After deliberating with
respect to the Merger and other transactions contemplated by the Agreement and
the Stock Option Agreements, and considering, among other things, the matters
discussed above, the NationsBank Board unanimously approved the Agreement and
the transactions contemplated thereby as being in the best interests of
NationsBank and the NationsBank Shareholders.
BASED ON THE FOREGOING, AND THE OPINIONS OF GOLDMAN SACHS AND MERRILL LYNCH
REFERRED TO ABOVE, THE NATIONSBANK BOARD UNANIMOUSLY RECOMMENDS THAT NATIONSBANK
SHAREHOLDERS VOTE "FOR" THE ISSUANCE IN CONNECTION WITH THE MERGER.
REASONS OF BARNETT FOR THE MERGER
In reaching its determination to approve and adopt the Agreement, the
Barnett Board consulted with Barnett's management and its financial and legal
advisors, and considered a number of factors, including, without limitation, the
following:
(i) the Barnett Board's familiarity with and review of Barnett's
business, operations, financial condition and earnings on an historical and
a prospective basis;
(ii) the Barnett Board's knowledge and review, based in part on
presentations by its financial advisors and Barnett's management, of (a)
the business, operations, financial condition and earnings of NationsBank
on an historical and a prospective basis and of the combined company on a
proforma basis and (b) the historical stock price performance of the
NationsBank Common Stock, the resulting relative interests of Barnett's
shareholders and NationsBank's shareholders in the common equity of the
combined company, the potential for increased earnings and dividends for
Barnett shareholders as shareholders of the combined company, and
NationsBank's substantial market capitalization;
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(iii) the presentation of Morgan Stanley to the Barnett Board on
August 19, 1997 and the financial information reviewed by Barnett's
Financial Advisors at the meeting of the Barnett Board on August 29, 1997,
and the opinions of Morgan Stanley and J.P. Morgan, each rendered on August
29, 1997, that, as of such date, the Exchange Ratio pursuant to the
Agreement was fair from a financial point of view to the holders of Barnett
Common Stock (see " -- Opinions of Financial Advisors -- Opinions of
Barnett's Financial Advisors");
(iv) the process conducted by Barnett's management and its financial
advisors in exploring and determining the potential value which could be
realized by Barnett's shareholders in a business combination transaction,
including (a) the contacts between Barnett and/or its financial advisors
and certain selected bank holding companies which were determined, based in
part on the advice of Barnett's financial advisors, to be the most likely
companies to be both interested in and financially and otherwise capable of
engaging in a business combination transaction with Barnett, (b) the fact
that each of such selected bank holding companies which expressed interest
in a business combination transaction with Barnett was afforded an
opportunity to submit a proposal for such a transaction to Barnett, (c) the
terms of the proposals received by Barnett from the Interested Parties,
including primarily the indicated per share value to Barnett shareholders
contained in such proposals, and (d) the fact that the indicated value of
the Exchange Ratio in the NationsBank proposal was higher as of August 29,
1997 than the indicated values of the per share consideration offered in
the other proposals submitted to Barnett (see " -- Background of the
Merger");
(v) the terms of the Agreement and the Merger, including the Exchange
Ratio, noting in particular that it reflected a 37% premium for the holders
of Barnett Common Stock based on the closing prices of NationsBank Common
Stock and Barnett Common Stock on August 28, 1997, the last trading day
prior to the approval by the Barnett Board of the Merger, and that the
price-to-1997 estimated earnings and price-to-book value multiples
represented by the Exchange Ratio, which were approximately 23.1x and 4.0x,
respectively, were among the highest observed in recent business
combination transactions involving large bank holding companies (see the
description of the Agreement set forth elsewhere under this caption);
(vi) the current and prospective economic and competitive environment
facing the financial services industry generally, and Barnett in
particular, including the continued rapid consolidation in the industry and
the increasing importance of operational scale and financial resources in
maintaining efficiency and remaining competitive over the long term and in
being able to capitalize on technological developments which significantly
impact industry competition. In this regard, the Barnett Board noted that
the combined company resulting from the Merger would be the third largest
banking institution in the United States in assets and the second largest
in market capitalization based on financial information and market prices
as of August 28, 1997, and likely would possess the financial resources and
economies of scale necessary to compete more effectively in the financial
services industry in the future;
(vii) the Barnett Board's review, based in part on the presentation of
Morgan Stanley at the August 19, 1997 meeting of the Barnett Board, of
alternatives to the Merger for enhancing shareholder value, the range of
possible values to Barnett's shareholders obtainable through implementation
of such alternatives, and the timing and likelihood of actually achieving
such value, and the Barnett Board's belief, based upon such review, that
such alternatives were not likely to result in greater value for Barnett
shareholders than the value to be realized in the Merger. In this regard,
the Barnett Board considered specifically, among other things, the factors
relating to Barnett's ability to continue to generate revenue growth,
improved profitability and superior shareholder returns on a stand-alone
basis, the perceived scarcity of attractive acquisition opportunities for
Barnett and the high cost of further investment in technology necessary to
improve Barnett's competitive posture;
(viii) the general impact that the Merger could be expected to have on
the constituencies served by Barnett, including its customers, employees
and communities. In this regard, the Barnett Board noted that the combined
company could be expected to offer a more extensive range of financial
products and services to Barnett's existing customers;
(ix) the expectation that the Merger will be tax-free for federal
income tax purposes to Barnett and Barnett's shareholders and will qualify
as a pooling-of-interests for accounting and financial reporting purposes
(see " -- Certain Federal Income Tax Consequences" and " -- Accounting
Treatment");
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(x) the anticipated cost savings, operating efficiencies and
opportunities for revenue enhancement available to the combined company
from the Merger, and the significant experience of the senior management of
NationsBank in the consummation of significant acquisition transactions and
its proven record of achieving cost savings, operating efficiencies and
revenue enhancements in connection with the integration of acquired
companies. In particular, the Barnett Board took into account the fact that
NationsBank's current management team has successfully integrated several
significant acquisitions in recent years, including the acquisition of Bank
South Corporation in 1995 and the acquisition of Boatmen's Bancshares, Inc.
in 1997;
(xi) the fact that Mr. Rice would be appointed as Chairman of the
Board of NationsBank following the retirement of its current chairman in
1998, and that Mr. Rice and four other current members of the Barnett Board
would become members of the NationsBank Board at the Effective Time. The
Barnett Board also considered that each of Barnett's other top five
executive officers would enter into employment contracts with NationsBank
as of the Effective Time, including Allen L. Lastinger, Jr., Barnett's
President and Chief Operating Officer who will serve as Chairman and Chief
Operating Officer of the combined company's Florida operations, which will
be headquartered in Jacksonville (see " -- Interests of Certain Persons in
the Merger");
(xii) the following additional factors which contributed to the
Barnett Board's conclusion that the Merger is in the best interests of
Barnett and its shareholders:
(A) the results of the due diligence investigation of NationsBank
conducted by Barnett's management;
(B) the Barnett Board's assessment, with the assistance of counsel,
concerning the likelihood that NationsBank would obtain all regulatory
approvals required for the Merger (see " -- Regulatory Matters"); and
(C) the terms of the Stock Option Agreements, including the risk
that the Barnett Stock Option Agreement might discourage third parties
from offering to acquire Barnett by increasing the cost of such an
acquisition (noting the $400 million cap on the value which could be
realized by NationsBank from the Barnett Stock Option), and recognizing
that the execution of the Barnett Stock Option Agreement was a condition
to NationsBank's willingness to enter into the Agreement (see
" -- Barnett Stock Option Agreement").
The foregoing discussion of the information and factors considered by the
Barnett Board is not intended to be exhaustive but is believed to include all
material factors considered by the Barnett Board. In reaching its determination
to approve and recommend the Merger, the Barnett Board did not assign any
relative or specific weights to the factors considered in reaching such
determination, and individual directors may have given differing weights to
different factors.
THE BARNETT BOARD BELIEVES THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS
OF, BARNETT AND ITS SHAREHOLDERS. THE BARNETT BOARD UNANIMOUSLY RECOMMENDS THAT
BARNETT SHAREHOLDERS VOTE FOR THE APPROVAL AND ADOPTION OF THE AGREEMENT AND THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED THEREBY.
OPINIONS OF NATIONSBANK'S FINANCIAL ADVISORS
OPINION OF GOLDMAN SACHS
Goldman Sachs was retained by NationsBank on August 25, 1997 to act as
NationsBank's financial advisor in connection with the Merger. Representatives
of Goldman Sachs participated in the telephonic meeting of the NationsBank Board
held on August 29, 1997, at which the NationsBank Board approved the Merger
Agreement. At that meeting, Goldman Sachs rendered its oral opinion to the
effect that, as of the date thereof, the Exchange Ratio was fair to NationsBank
from a financial point of view. Goldman Sachs has reconfirmed its oral opinion
of August 29, 1997 by delivering a written opinion to the NationsBank Board,
dated the date of this Joint Proxy Statement-Prospectus to the effect that, as
of the date thereof, the Exchange Ratio was fair to the holders of NationsBank
Common Stock from a financial point of view (the "Goldman Sachs Opinion").
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THE FULL TEXT OF THE GOLDMAN SACHS OPINION, DATED THE DATE OF THIS JOINT
PROXY STATEMENT-PROSPECTUS, WHICH SETS FORTH THE ASSUMPTIONS MADE, PROCEDURES
FOLLOWED, MATTERS CONSIDERED AND LIMITS ON THE REVIEW UNDERTAKEN, IS ATTACHED AS
APPENDIX B TO THIS JOINT PROXY STATEMENT-PROSPECTUS AND IS INCORPORATED HEREIN
BY REFERENCE. THE GOLDMAN SACHS OPINION WAS PROVIDED TO THE NATIONSBANK BOARD
FOR ITS INFORMATION, IS DIRECTED ONLY TO THE FAIRNESS OF THE EXCHANGE RATIO FROM
A FINANCIAL POINT OF VIEW AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY
NATIONSBANK SHAREHOLDER AS TO HOW SUCH SHAREHOLDER SHOULD VOTE AT THE
NATIONSBANK MEETING WITH RESPECT TO THE MERGER OR ANY OTHER MATTER RELATED
THERETO. THE DESCRIPTION OF THE GOLDMAN SACHS OPINION SET FORTH HEREIN IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO APPENDIX B. NATIONSBANK SHAREHOLDERS
ARE URGED TO READ THE GOLDMAN SACHS OPINION IN ITS ENTIRETY.
Goldman Sachs is an internationally recognized investment banking and
advisory firm and as part of its investment banking business is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. Goldman Sachs is
familiar with NationsBank, having provided it with certain investment banking
services from time to time, including having both acted as lead manager in a
$50,000,000 debt offering and executed a stock repurchase program, and having
acted as financial advisor in connection with, and having participated in
certain of the negotiations leading to, the Merger Agreement. Goldman Sachs has
also provided certain investment banking services to Barnett from time to time.
Goldman Sachs is a full service securities firm and in the course of its trading
activities may from time to time effect transactions, for its own account or the
account of customers, and hold positions in securities or options of NationsBank
and Barnett.
In connection with rendering the Goldman Sachs Opinion, Goldman Sachs,
among other things: (i) reviewed the Merger Agreement; (ii) reviewed Annual
Reports to Stockholders and Annual Reports on Form 10-K of NationsBank and
Barnett for the five years ended December 31, 1996, as well as certain interim
reports to stockholders and Quarterly Reports on Form 10-Q of NationsBank and
Barnett and certain other communications from NationsBank and Barnett to their
respective stockholders; (iii) reviewed certain internal financial analyses and
forecasts, including forecasts of certain cost savings expected by NationsBank
to be achieved as a result of the Merger ("Synergies"); (iv) discussed with
members of the senior management of NationsBank and Barnett the past and current
business operations, regulatory relationships, financial conditions and future
prospects of NationsBank and Barnett; (v) reviewed with members of senior
management of NationsBank the results of NationsBank's due diligence examination
of Barnett and the strategic benefits expected to be derived from the Merger;
(vi) reviewed the reported price and trading activity for NationsBank Common
Stock and Barnett Common Stock; (vii) compared certain financial and stock
market information for NationsBank and Barnett with similar information for
certain other companies, the securities of which are publicly traded; (viii)
reviewed the financial terms of certain recent business combinations in the
commercial banking industry; and (ix) performed such other studies and analyses
as it considered appropriate.
As set forth in the Goldman Sachs Opinion, Goldman Sachs relied upon the
accuracy and completeness of all of the financial and other information reviewed
by it and assumed such accuracy and completeness for purposes of the Goldman
Sachs Opinion. In that regard, Goldman Sachs assumed, with NationsBank's
consent, that the financial forecasts, including, without limitation, the
Synergies and projections regarding under-performing and non-performing assets
and net charge-offs had been reasonably prepared on a basis reflecting the best
then available judgments and estimates of NationsBank and Barnett and that such
forecasts will be realized in the amounts and at the times contemplated thereby.
Goldman Sachs is not an expert in the evaluation of loan and lease portfolios
for purposes of assessing the adequacy of the allowance for losses with respect
thereto and assumed, with NationsBank's consent, that such allowances for each
of NationsBank and Barnett are in the aggregate adequate to cover all such
losses. In addition, Goldman Sachs did not review individual credit files nor
did it make an independent evaluation or appraisal of the assets and liabilities
of NationsBank or Barnett or any of their respective subsidiaries and had not
been furnished with any such evaluation or appraisal. Goldman Sachs also
assumed, with NationsBank's consent, that the Merger will be accounted for as
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a pooling-of-interests under GAAP and that obtaining any necessary regulatory
approvals and third party consents for the Merger or otherwise will not have an
adverse effect on NationsBank, Barnett or the combined company pursuant to the
Merger.
The advisory services and the Goldman Sachs Opinion provided by Goldman
Sachs were for the information and assistance of the NationsBank Board in
connection with its consideration of the Merger and does not constitute a
recommendation as to how any NationsBank stockholder should vote with respect to
the Merger.
The following is a summary of the material financial analyses considered by
Goldman Sachs in arriving at its opinion and does not purport to be a complete
description of the analyses performed by Goldman Sachs.
SUMMARY OF TERMS OF PROPOSED TRANSACTION. Goldman Sachs reviewed the terms
of the proposed Merger, including the expected method of accounting, the
Exchange Ratio, the share price of NationsBank as of August 28, 1997, the
resulting indicated value per share of Barnett Common Stock (the "Indicated
Value") of the Merger and the resulting indicated aggregate consideration (the
"Indicated Aggregate Consideration") to be paid in the Merger. The proposed
method of accounting for the Merger was a pooling-of-interests in a tax-free
exchange. The Indicated Value was $75.18 per share of Barnett Common Stock,
determined by multiplying the Exchange Ratio by the closing price on the NYSE of
NationsBank Common Stock on August 28, 1997. The Indicated Aggregate
Consideration to be paid in the Merger was $14,979 million based on 199.2
million fully diluted shares outstanding (utilizing the treasury stock method at
the Indicated Value).
The analysis noted that the Indicated Value constituted: (i) a multiple of
24.4x Barnett's earnings for the twelve months ended June 30, 1997, (ii) a
multiple of 23.1x the Institutional Broker Estimate System ("IBES") median
estimates of Barnett's 1997 earnings, and (iii) a multiple of 20.9x the IBES
median estimates of Barnett's 1998 earnings. In addition, the Indicated Value
reflected a multiple of 12.2x the IBES median estimates of Barnett's 1997
earnings and 11.5x the IBES median estimates of Barnett's 1998 earnings after
taking Synergies into account (i.e., a fully phased-in pre-tax cost savings of
$915.2 million and a tax rate of 37%). The Indicated Value also reflected a
multiple of 4.1x Barnett's stated book value and a multiple of 6.1x Barnett's
tangible book value based on (a) a June 30, 1997 book value of $3,535.8 million
and tangible book value of $2,362.7 million (pro forma for the acquisition of
First of America Florida) and (b) 190.7 million shares outstanding at June 30,
1997. The Indicated Aggregate Consideration represented a deposit premium of
36.8%. In performing these analyses, Goldman Sachs used estimates based upon the
most recent median earnings estimates published by the IBES as of August 28,
1997. IBES is a data service that monitors and publishes compilations of
earnings estimates by selected research analysts regarding companies of interest
to institutional investors.
COMPARISON OF SELECTED COMPARABLE COMPANIES -- BARNETT. Based on publicly
available information and IBES earnings estimates, Goldman Sachs reviewed and
compared actual and estimated selected financial, operating and stock market
information and financial ratios of Barnett and a group of 10 additional banking
organizations which Goldman Sachs deemed to be relevant. The group consisted of
Fleet Financial Group, Inc.; SunTrust Banks, Inc.; PNC Bank Corporation;
KeyCorp; CoreStates Financial; National City Corporation; Wachovia Corporation
(pro forma for the acquisition of Jefferson Bancshares, Inc., Central Fidelity
Banks, Inc. and First United Bancshares, Inc.); BankBoston Corporation; Mellon
Bank Corporation; and Comerica, Inc. (the "Barnett Selected Banks"). This
comparison showed, among other things, that for the latest twelve months ended
June 30, 1997 (i) Barnett's ratio of non-interest expense to average assets was
3.8% compared to a median of 3.4% for the Barnett Selected Banks, (ii) Barnett's
ratio of non-interest income to average assets was 2.1% compared to a median of
2.0% for the Barnett Selected Banks, (iii) Barnett's net interest margin was
4.3% compared to a median of 3.4% for the Barnett Selected Banks, (iv) Barnett's
efficiency ratio (defined as non-interest expenses divided by the sum of
noninterest income and net interest income before provision for loan losses) was
59.7% compared to a median of 59.4% for the Barnett Selected Banks, (v)
Barnett's return on average assets was 1.35% compared to a median of 1.42% for
the Barnett Selected Banks, (vi) Barnett's return on average common equity was
17.0% compared to a median of 18.2% for the Barnett Selected Banks and (vii)
Barnett's ratio of non-interest income to revenues was 32.4% compared to a
median of 34.2% for the Barnett Selected Banks. This comparison also indicated
that as of August 27, 1997, (A) the ratio of Barnett's market price to estimated
earnings for the twelve month period ending December 31, 1997 was 16.1x compared
to a median of 15.2x for the Barnett Selected Banks, (B) the ratio of Barnett's
market price to estimated cash earnings for the twelve month period ending
December 31, 1997 was 14.6x compared to a median of 14.2x for the
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Barnett Selected Banks, (C) the ratio of Barnett's market price to estimated
earnings for twelve month period ending December 31, 1998 was 14.4x compared to
a median of 13.5x for the Barnett Selected Banks, (D) the ratio of Barnett's
market price to estimated cash earnings for the twelve month period ending
December 31, 1998 was 13.2x compared to a median of 12.7x for the Barnett
Selected Banks, (E) the ratio of Barnett's market price to stated book value per
share at June 30, 1997 was 2.83x compared to a median of 2.81x for the Barnett
Selected Banks, (F) the ratio of Barnett's market price to tangible book value
per share at June 30, 1997 was 4.12x compared to a median of 3.29x for the
Barnett Selected Banks, (G) Barnett's dividend yield was 2.4% compared to a
median of 2.8% for the Barnett Selected Banks, (H) Barnett's ratio of stock
price to 52-week high stock price was 92.1% compared to a median of 94.2% for
the Barnett Selected Banks, (I) Barnett's projected dividend payout ratio was
38.2% compared to a median of 41.9% for the Barnett Selected Banks, and (J)
Barnett had a market capitalization of $10 billion.
COMPARISON OF SELECTED COMPARABLE COMPANIES -- NATIONSBANK. Based on
publicly available information and IBES earnings estimates, Goldman Sachs
reviewed and compared actual and estimated selected financial, operating and
stock market information and financial ratios of Barnett and a group of nine
additional banking organizations which Goldman Sachs deemed to be relevant. The
group consisted of BankAmerica Corporation; Banc One Corporation; First Union
Corporation; Wells Fargo & Company; Norwest Corporation; Fleet Financial Group,
Inc.; PNC Bank Corporation; SunTrust Banks, Inc.; and Wachovia Corporation (pro
forma for the acquisition of Jefferson Bancshares, Inc., Central Fidelity Banks,
Inc. and First United Bancshares, Inc.)(the "NationsBank Selected Banks"). This
comparison showed, among other things, that for the latest twelve months ended
June 30, 1997 (i) NationsBank's ratio of noninterest expense to average assets
was 3.0% compared to a median of 3.3% for the NationsBank Selected Banks, (ii)
NationsBank's ratio of non-interest income to average assets was 1.9% compared
to a median of 2.2% for the NationsBank Selected Banks, (iii) NationsBank's net
interest margin was 2.9% compared to a median of 3.5% for the NationsBank
Selected Banks, (iv) NationsBank's efficiency ratio was 57.7% compared to a
median of 59.7% for the NationsBank Selected Banks, (v) NationsBank's return on
average assets was 1.26% compared to a median of 1.25% for the NationsBank
Selected Banks, (vi) NationsBank's return on average common equity was 16.1%
compared to a median of 18.0% for the NationsBank Selected Banks and (vii)
NationsBank's ratio of non-interest income to revenues was 36.7% compared to a
median of 35.0% for the NationsBank Selected Banks. This comparison also
indicated that as of August 27, 1997, (A) the ratio of NationsBank's market
price to estimated earnings for the twelve month period ending December 31, 1997
was 14.6x compared to a median of 15.6x for the NationsBank Selected Banks, (B)
the ratio of NationsBank's market price to estimated cash earnings for the
twelve month period ending December 31, 1997 was 12.8x compared to a median of
13.3x for the NationsBank Selected Banks, (C) the ratio of NationsBank's market
price to estimated earnings for the twelve month period ending December 31, 1998
was 12.3x compared to a median of 13.2x for the NationsBank Selected Banks, (D)
the ratio of NationsBank's market price to estimated cash earnings for the
twelve month period ending December 31, 1998 was 11.0x compared to a median of
11.9x for the NationsBank Selected Banks, (E) the ratio of NationsBank's market
price to stated book value per share at June 30, 1997 was 2.26x compared to a
median of 2.62x for the NationsBank Selected Banks, (F) the ratio of
NationsBank's market price to tangible book value per share June 30, 1997 was
3.94x compared to a median of 3.50x for the NationsBank Selected Banks, (G)
NationsBank's dividend yield was 2.1% compared to a median of 2.7% for the
NationsBank Selected Banks, (H) NationsBank's ratio of stock price to 52-week
high stock price was 88.9% compared to a median of 93.2% for the NationsBank
Selected Banks, (I) NationsBank's projected dividend payout ratio was 30.5%
compared to a median of 36.6% for the NationsBank Selected Banks, and (J)
NationsBank had a market capitalization of $45 billion.
SELECTED TRANSACTION ANALYSIS. Goldman Sachs reviewed certain information
relating to five announced or completed bank mergers since June 1995 in which
the aggregate consideration paid was in excess of $1 billion (the "Selected Bank
Mergers") and which it deemed to be relevant. The Selected Bank Mergers were
(identified by acquiror/acquiree): First Union/Signet; First Bank System/U.S.
Bancorp; NationsBank/Boatmen's; Wells Fargo/First Interstate; and First
Union/First Fidelity. The analysis indicated that the NationsBank/Barnett Merger
had: (i) a transaction forward earnings per share multiple of 21.4x as compared
with a median of 15.7x for the Selected Bank Mergers, (ii) a transaction forward
earnings per share multiple with Synergies of 11.7x as compared with a median of
10.9x for the Selected Bank Mergers, (iii) a buyer's forward earnings per share
multiple of 13.1x as compared with a median of 10.9x for the Selected Bank
Mergers, and (iv) as a percentage of buyer's multiple, (a) a transaction forward
earnings per share multiple of 164% as compared to a median of
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143% for the Selected Bank Mergers and (b) a transaction forward earnings per
share multiple with Synergies of 89% as compared with a median of 87% for the
Selected Bank Mergers.
STOCK TRADING ANALYSIS. Goldman Sachs reviewed and analyzed the historical
trading prices for each of NationsBank Common Stock and Barnett Common Stock on
a (i) daily basis from August 27, 1996 to August 27, 1997, (ii) weekly basis
from August 26, 1994 to August 22, 1997, and (iii) monthly basis from July 31,
1992 to July 31, 1997 as compared to the S&P 500 and the NationsBank Selected
Banks in the case of NationsBank and the Barnett Selected Banks in the case of
Barnett.
PRO FORMA ANALYSIS. Based on projections provided by NationsBank and
Barnett, Goldman Sachs analyzed the pro forma per share impact of the Merger on
a variety of measures including, among other things, earnings per share, cash
earnings per share, tangible book value per share and various profitability
measures. Share prices for NationsBank Common Stock and Barnett Common Stock
were based upon closing prices on August 27, 1997. The analysis was based on the
assumption that the combined companies would realize projected cost savings
assumptions within time periods specified by NationsBank and Barnett. The
analysis assumed net pre-tax cost savings of $915 million which represented 55%
of Barnett's projected non-interest expense base of $1,664 million. Barnett's
non-interest expense base was calculated based on analysts' forecasts of
Barnett's non-interest expense for 1997 less expenses which were assumed to be
associated with divested operations. It was assumed that NationsBank would
realize 50% of the cost savings in 1998 and 100% of the cost savings in 1999.
The analysis also assumed a $600 million restructuring charge to be taken by
NationsBank by the end of 1997. Adjustments were also made for assumed deposit
divestitures of $3.5 billion. NationsBank was also assumed to deploy capital in
excess of a tangible common equity to tangible assets ratio of 5.25% in
investments yielding 8%.
The analysis performed indicated that on a per share basis, the transaction
would be dilutive to NationsBank's estimated earnings per share by 4% in 1998
and accretive to NationsBank's estimated earnings per share by 2% in 1999. The
analysis also indicated that the transaction would be dilutive to NationsBank's
estimated cash earnings per share by 6% in 1998 and would break-even to
NationsBank's estimated cash earnings per share in 1999.
Goldman Sachs also performed a pro forma sensitivity analysis utilizing
sixteen different sets of assumptions with varying cost savings, changes in
revenue and capital management policies in order to analyze the pro forma
effects of the Merger.
The summary set forth above describes the material analyses that Goldman
Sachs performed in rendering the Goldman Sachs Opinion and does not purport to
be a complete description of such analyses. The preparation of a fairness
opinion is a complex process and is not necessarily susceptible to partial
analysis or a summary description.
Goldman Sachs believes that its analyses must be considered as a whole and
that selecting portions of its analyses without considering all factors and
analyses would create an incomplete view of the analyses and processes
underlying its opinion. In its analyses, Goldman Sachs relied upon numerous
assumptions made by NationsBank and Barnett with respect to industry
performance, general business and economic conditions, and other matters, many
of which are beyond the control of NationsBank or Barnett. Analyses based upon
forecasts of future results are not necessarily indicative of actual values,
which may be significantly more or less favorable than suggested by such
analyses. No company or transaction used as a comparison in the analyses is
identical to NationsBank or Barnett or to the Merger. Additionally, estimates of
the value of businesses do not purport to be appraisals or necessarily
reflective of the prices at which businesses actually may be sold. Because such
estimates are inherently subject to uncertainty, none of the NationsBank Board,
Goldman Sachs, nor any other person assumes responsibility for the accuracy of
such estimates. Goldman Sachs prepared the analyses solely for purposes of
rendering the Goldman Sachs Opinion regarding the fairness of the Exchange Ratio
to NationsBank from a financial point of view. The analyses do not purport to be
appraisals or necessarily reflect the prices at which Barnett Common Stock may
actually be sold.
For the services of Goldman Sachs as financial advisor to NationsBank in
connection with the Merger, NationsBank has agreed to pay Goldman Sachs a
minimum cash fee of $250,000 which was paid upon execution by NationsBank of an
engagement letter with Goldman Sachs on August 25, 1997, an additional cash fee
of $4,750,000 which was paid upon the execution of the Merger Agreement, and a
transaction cash fee of
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$18,000,000 (less the $5 million in fees already paid as described immediately
above) in the event that at least 50% of the outstanding common stock or at
least 50% of the assets (based on the book value thereof) of Barnett is acquired
in one or more transactions, payable upon the consummation of such acquisition.
NationsBank has also agreed to pay Goldman Sachs its reasonable out-of-pocket
expenses, including the reasonable fees and disbursements of its counsel, and to
indemnify Goldman Sachs against certain liabilities, including certain
liabilities arising under the federal securities laws.
OPINION OF MERRILL LYNCH
Merrill Lynch was retained by NationsBank on August 25, 1997 to act as
NationsBank's financial advisor in connection with the Merger. Representatives
of Merrill Lynch participated in the telephonic meeting of the NationsBank Board
held on August 29, 1997, at which the NationsBank Board approved the Merger
Agreement. At that meeting, Merrill Lynch rendered its oral opinion to the
effect that, as of the date thereof, the Exchange Ratio was fair to NationsBank
from a financial point of view. Merrill Lynch has reconfirmed its oral opinion
of August 29, 1997 by delivering a written opinion to the NationsBank Board,
dated the date of this Joint Proxy Statement-Prospectus to the effect that, as
of the date thereof, the Exchange Ratio was fair to the holders of NationsBank
Common Stock from a financial point of view (the "Merrill Lynch Opinion").
THE FULL TEXT OF THE MERRILL LYNCH OPINION, DATED THE DATE OF THIS JOINT
PROXY STATEMENT-PROSPECTUS, WHICH SETS FORTH THE ASSUMPTIONS MADE, PROCEDURES
FOLLOWED, MATTERS CONSIDERED AND LIMITS ON THE REVIEW UNDERTAKEN, IS ATTACHED AS
APPENDIX C TO THIS JOINT PROXY STATEMENT-PROSPECTUS AND IS INCORPORATED HEREIN
BY REFERENCE. THE MERRILL LYNCH OPINION WAS PROVIDED TO THE NATIONSBANK BOARD
FOR ITS INFORMATION, IS DIRECTED ONLY TO THE FAIRNESS OF THE EXCHANGE RATIO FROM
A FINANCIAL POINT OF VIEW AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY
NATIONSBANK SHAREHOLDER AS TO HOW SUCH SHAREHOLDER SHOULD VOTE AT THE
NATIONSBANK MEETING WITH RESPECT TO THE MERGER OR ANY OTHER MATTER RELATED
THERETO. THE DESCRIPTION OF THE MERRILL LYNCH OPINION SET FORTH HEREIN IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO APPENDIX C. NATIONSBANK SHAREHOLDERS
ARE URGED TO READ THE MERRILL LYNCH OPINION IN ITS ENTIRETY.
In arriving at its opinion, Merrill Lynch, among other things: (i) reviewed
certain publicly available business and financial information relating to
NationsBank and Barnett that it deemed to be relevant; (ii) reviewed certain
other information, including financial forecasts, relating to the respective
businesses, earnings, assets, liabilities and prospects of NationsBank and
Barnett furnished to it by the senior management of NationsBank and Barnett, as
well as the amount and timing of the cost savings and related expenses expected
to result from the Merger furnished to it by the senior management of
NationsBank and Barnett (the "Expected Synergies"); (iii) conducted discussions
with members of the senior management of NationsBank and Barnett concerning the
matters described in (i) and (ii) above, as well as their respective businesses
and prospects before and after giving effect to the Merger and the Expected
Synergies; (iv) reviewed the market prices and valuation multiples for the
shares of NationsBank Common Stock and Barnett Common Stock and compared them
with those of certain publicly traded companies which it deemed to be relevant;
(v) reviewed the respective financial condition and the results of operations of
NationsBank and Barnett and compared them with those of certain publicly traded
companies which it deemed relevant; (vi) compared the proposed financial terms
of the Merger with the financial terms of certain other transactions which it
deemed to be relevant; (vii) participated in certain discussions and
negotiations among representatives of NationsBank and Barnett and their
financial and legal advisors; (viii) reviewed the potential pro forma impact of
the Merger; (ix) reviewed the Merger Agreement and the Option Agreements; and
(x) reviewed such other financial studies and analyses and took into account
such other matters as it deemed necessary under the circumstances, including its
assessment of general economic, market and monetary conditions.
In preparing its opinion, Merrill Lynch relied on the accuracy and
completeness of all information supplied or otherwise made available to Merrill
Lynch, discussed with or reviewed by or for Merrill Lynch, or publicly
available. Merrill Lynch has not assumed responsibility for independently
verifying such information, has not undertaken an independent evaluation or
appraisal of the assets or liabilities of NationsBank and Barnett and has not
been furnished with any such evaluation or appraisal. Merrill Lynch is not an
expert in the evaluation
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of allowances for loan losses and has not made an independent evaluation of the
adequacy of the allowances for loan losses for each of NationsBank or Barnett,
nor has Merrill Lynch reviewed any individual credit files relating to
NationsBank or Barnett, and, as a result, Merrill Lynch assumed that the
aggregate allowance for loan losses for each of NationsBank and Barnett is
adequate to cover such losses and will be adequate on a pro forma basis for the
combined entity. In addition, Merrill Lynch has not assumed any obligation to
conduct, nor has Merrill Lynch conducted, any physical inspection of the
properties or facilities of NationsBank or Barnett. With respect to the
financial forecast information and Expected Synergies furnished to or discussed
with Merrill Lynch by NationsBank and Barnett, Merrill Lynch has assumed that
they were reasonably prepared and reflected the best currently available
estimates and judgments of the senior management of NationsBank and Barnett as
to the expected future financial performance of NationsBank, Barnett or the
combined entity, as the case may be. Merrill Lynch further assumed that the
Merger will be accounted for as a pooling of interests under GAAP and that it
will qualify as a tax-free reorganization for U.S. federal income tax purposes.
As set forth in the Merrill Lynch Opinion, the opinion was necessarily
based upon market, economic and other conditions as they existed and could be
evaluated, and on the information made available to Merrill Lynch, as of the
date the Merrill Lynch Opinion was rendered. Merrill Lynch assumed that in the
course of obtaining the necessary regulatory or other approvals (contractual or
otherwise) for the Merger, no restrictions, including any divestiture
requirements or amendments or modifications, will be imposed that will have a
material adverse affect on the contemplated benefits of the Merger, including
the Expected Synergies.
Merrill Lynch was retained by the NationsBank Board to act as NationsBank's
financial advisor in connection with the Merger, and Merrill Lynch has and will
receive a fee for its services, a significant portion of which is contingent
upon the consummation of the Merger. In addition, NationsBank has agreed to
indemnify Merrill Lynch for certain liabilities arising out of Merrill Lynch's
engagement. In the past two years, Merrill Lynch has provided financial
advisory, investment banking and other services to NationsBank and Barnett and
received customary fees for the rendering of such services. In the ordinary
course of Merrill Lynch's securities business, Merrill Lynch also may actively
trade debt and/or equity securities of NationsBank and Barnett and their
respective affiliates for Merrill Lynch's own account and the accounts of its
customers, and therefore may from time to time hold a long or short position in
such securities.
The Merrill Lynch Opinion is for the use and benefit of the NationsBank
Board, does not address the merits of the underlying decision by NationsBank to
engage in the Merger and does not constitute a recommendation to any stockholder
as to how such stockholder should vote on the proposed Merger. In having
delivered the Merrill Lynch Opinion, Merrill Lynch does not express any opinion
as to the prices at which shares of NationsBank Common Stock will trade
following the consummation of the Merger.
The following is a summary of the material financial analyses considered by
Merrill Lynch in arriving at its opinion and does not purport to be a complete
description of the analyses performed by Merrill Lynch.
SUMMARY OF PROPOSAL. Merrill Lynch reviewed the terms of the proposed
transaction, including the Exchange Ratio, the Indicated Value and the Indicated
Aggregate Consideration. Based on NationsBank's closing stock price of $63.81 on
August 27, 1997, Merrill Lynch calculated an Indicated Value per share of
Barnett Common Stock of $75.78, and an Indicated Aggregate Consideration of
approximately $15.1 billion. Merrill Lynch also calculated the Indicated Value
to market, Indicated Value to book, Indicated Value to tangible book, Indicated
Value to the last twelve months ("LTM") ended June 30, 1997 and projected First
Call 1997 and 1998 earnings multiples and projected First Call 1997 and 1998
earnings multiples including fully phased-in aftertax synergies for Barnett in
the Merger. This analysis yielded an Indicated Value to market multiple of
1.45x, an Indicated Value to fully diluted book value multiple of 4.27x, an
Indicated Value to fully diluted tangible book value multiple of 6.39x, an
Indicated Value to LTM earnings multiple of 24.6x, an Indicated Value to First
Call projected 1997 earnings multiple of 23.32x, an Indicated Value to First
Call projected 1998 earnings multiple of 21.05x, an Indicated Value to First
Call projected 1997 earnings multiple including fully phased-in after-tax
synergies of 12.73x and an Indicated Value to First Call projected 1998 earnings
multiple including fully phased-in after-tax synergies of 12.02x. First Call is
a data service that monitors and publishes compilations of earnings estimates by
selected research analysts regarding companies of interest to institutional
investors.
PRO FORMA MERGER ANALYSIS. Based on projections provided by NationsBank and
Barnett, Merrill Lynch analyzed the pro forma per share impact of the Merger on
a variety of measures including, among other things, earnings per share, book
value per share, tangible book value per share and various profitability
measures. The
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analysis was based on the assumption that the combined companies would realize
projected cost savings assumptions within the time periods specified by
NationsBank and Barnett. The analysis assumed net after-tax cost savings of $577
million, which represented 55% of Barnett's projected non-interest expense base
of $1,664 million. Barnett's non-interest expense base was calculated based on
analysts' forecasts of Barnett's non-interest expense for 1997 less expenses
which were assumed to be associated with divested operations. It was assumed
that NationsBank would realize 50% of the cost savings in 1998 and 100% of the
cost savings in 1999. The analysis also assumed after-tax merger and
reorganization charges approximately equal to 75% of fully phased-in synergies.
Adjustments were also made for assumed deposit divestitures of $3.5 billion.
NationsBank was also assumed to deploy capital in excess of a tangible common
equity to tangible assets ratio of 5.25% in assets yielding an after-tax return
of 8%.
The analysis performed indicated that on a per share basis the transaction
would be dilutive to NationsBank's estimated earnings per share by 4.7% in 1998
and accretive to NationsBank's estimated earnings per share by 2.6% in 1999. The
analysis also indicated that the transaction would be dilutive to NationsBank's
book value and tangible book value per share at the assumed closing of the
Merger (December 31, 1997).
DISCOUNTED DIVIDEND STREAM ANALYSIS -- BARNETT. Using a discounted dividend
stream analysis, Merrill Lynch estimated the present value of the future streams
of after tax cash flows that Barnett could produce and distribute to
stockholders ("dividendable net income") assuming an after-tax synergy
assumption of $577 million in 1999 and an after-tax restructuring charge of $433
million. Merrill Lynch assumed that Barnett performed in accordance with
earnings forecasts provided to Merrill Lynch by NationsBank's senior management
and that Barnett's tangible common equity to tangible asset ratio would be
maintained at a 5% level. Merrill Lynch estimated the terminal values for the
Barnett common stock at 12.0x and 13.0x Barnett's 2003 estimated operating
income (defined as net income before intangible amortization). The dividendable
net income streams and terminal values were then discounted to present values
using discount rates (ranging from 13% to 15%) chosen to reflect different
assumptions regarding required rates of return of holders or prospective buyers
of Barnett common stock. This discounted dividend stream analysis indicated a
reference range of $72.60 to $83.08 per share for Barnett Common Stock.
ANALYSIS OF SELECTED BANK MERGER TRANSACTIONS. Merrill Lynch reviewed
publicly available information regarding six bank merger transactions with a
value greater than $1 billion which had occurred in the United States since
January 1, 1996 that it deemed to be relevant (the "Comparable Transactions").
The Comparable Transactions were: First Union's proposed acquisition of Signet
Banking Corporation, Wachovia Corporation's proposed acquisition of Central
Fidelity Banks, Inc., First Bank System's acquisition of U.S. Bancorp, Allied
Irish Banks' acquisition of Dauphin Deposit Corp., NationsBank Corporation's
acquisition of Boatmen's Bancshares, Inc., and Wells Fargo and Company's
acquisition of First Interstate. Merrill Lynch compared the Indicated Value to
market, fully diluted book value, fully diluted tangible book value, LTM
earnings, projected earnings and projected earnings including fully phased-in
after-tax synergies ratios and the implied deposit premium paid in the Merger to
the corresponding ratios for the Comparable Transactions. This analysis yielded
a range of (i) Indicated Value to market multiple of 1.12x to 1.54x with a mean
of 1.34x and a median of 1.35x (compared with multiple of 1.45x for Barnett in
the Merger), (ii) Indicated Value to fully diluted book value multiples of 2.36x
to 3.49x with a mean of 2.94x and a median of 2.84x (compared with a multiple of
4.27x for Barnett in the Merger), (iii) Indicated Value to fully diluted
tangible book value multiples of 2.42x to 4.09x with a mean of 3.36x and a
median of 3.37x (compared with a multiple of 6.39x for Barnett in the Merger),
(iv) Indicated Value to trailing twelve months earnings multiples of 13.49x to
23.90x with a mean of 19.18x and a median of 19.28x (compared with a multiple of
24.60x for Barnett in the merger), (v) Indicated Value to projected earnings
multiples of 12.90x to 23.20x with a mean of 16.99x and a median of 16.83x
(compared with a multiple of 21.05x for Barnett in the merger), (iv) Indicated
Value to projected earnings multiples including after-tax fully phased-in
synergies of 9.29x to 12.20x with a mean of 10.60x and a median of 10.37x
(compared with a multiple of 12.02x for Barnett in the merger), and (v) implied
deposit premiums paid of 15.52% to 30.94% with a mean of 22.35% and a median of
20.86% (compared with an implied deposit premium of 37.09% for Barnett in the
merger).
No company or transaction used in the above analysis as a comparison is
identical to Barnett or the Merger respectively. Accordingly, an analysis of the
results of the foregoing necessarily involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the companies and
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other factors that could affect the public trading values or announced merger
transaction values, as the case may be, of Barnett and the companies to which it
is being compared.
COMPARISON OF SELECTED COMPARABLE COMPANIES -- BARNETT. Merrill Lynch
compared selected operating and stock market results of Barnett to the publicly
available corresponding data of certain other companies which Merrill Lynch
deemed to be relevant, including Fleet Financial Group, Inc., SunTrust Banks,
Inc., PNC Bank Corporation, KeyCorp, CoreStates Financial, BankBoston
Corporation, National City Corporation, Wachovia Corporation, Mellon Bank
Corporation, and Comerica, Inc. (collectively the "Barnett Composite"). This
comparison showed, among other things, that for the latest twelve months ended
June 30, 1997 (i) Barnett's ratio of non-interest expense to average assets was
3.97% compared to a mean of 3.61% and a median of 3.51% for the Barnett
Composite, (ii) Barnett's ratio of non-interest income to average assets was
2.48% compared to a mean of 2.31% and a median of 2.06% for the Barnett
Composite, (iii) Barnett's net interest margin was 5.04%, compared with a mean
4.49% and a median of 4.34% for the Barnett Composite, (iv) Barnett's efficiency
ratio was 56.74% compared with a mean of 56.02% and a median of 56.77% for the
Barnett Composite, (v) Barnett's return on average assets was 1.44% compared to
a mean of 1.49% and a median of 1.44% for the Barnett Composite, (vi) Barnett's
return on average common equity was 18.08% compared to a mean of 19.74% and a
median of 20.40% for the Barnett Composite and (vii) Barnett's ratio of fee
income to total revenues was 37.09% compared to a mean of 35.77% and a median of
34.57% for the Barnett Composite. This comparison also indicated that (i) at
June 30, 1997, (A) Barnett's tangible common equity to tangible asset ratio was
5.66% compared to a mean of 6.33% and a median of 5.91% for the Barnett
Composite, (B) Barnett's ratio of non-performing loans to total loans was 0.57%
compared with a mean of 0.55% and a median of 0.55% for the Barnett Composite,
(C) Barnett's ratio of non-performing assets to total assets was 0.52% compared
with a mean of 0.46% and a median of 0.49% for the Barnett Composite, (D)
Barnett's ratio of loan loss reserves to non-performing assets was 212.4%
compared with a mean of 308.8% and a median of 293.6% for the Barnett Composite,
(E) Barnett's ratio of loan loss reserves to gross loans was 1.56% compared with
a mean of 1.88% and a median of 1.95% for the Barnett Composite, (F) Barnett's
ratio of loans to deposits was 92.6% compared with a mean of 104.6% and a median
of 104.1% for the Barnett Composite, (G) Barnett's ratio of intangibles to
common equity was 31.28% compared with a mean of 15.45% and a median of 12.11%
for the Barnett Composite, (H) Barnett's ratio of equity to assets was 8.03%
compared with a mean of 7.73% and a median of 7.53% for the Barnett Composite,
(I) Barnett's Tier 1 leverage ratio was 7.56% compared to a mean of 7.64% and a
median of 7.46% for the Barnett Composite, (ii) as of August 27, 1997 (J) the
ratio of Barnett's market price to estimated earnings for the twelve month
period ending December 31, 1997 was 16.13x compared to a mean of 15.47x and a
median of 15.34x for the Barnett Composite (assuming reported average earnings
estimates based on data from First Call, for both Barnett and the Barnett
Composite), (K) the ratio of Barnett's market price to estimated cash earnings
for the twelve month period ending December 31, 1997 was 14.61x compared to a
mean of 14.63x and a median of 14.43x for the Barnett Composite, (L) the ratio
of Barnett's market price to estimated earnings for twelve month period ending
December 31, 1998 was 14.57x compared to a mean of 13.84x and a median of 13.54x
for the Barnett Composite, (M) the ratio of Barnett's market price to estimated
cash earnings for the twelve month period ending December 31, 1998 was 13.31x
compared to a mean of 13.16x and a median of 12.88x for the Barnett Composite,
(N) the ratio of Barnett's market price to stated book value per share at June
30, 1997 was 2.83x compared to a mean of 2.94x and a median of 2.80x for the
Barnett Composite, (O) the ratio of Barnett's market price to stated tangible
book value per share at June 30, 1997 was 4.23x compared to a mean of 3.54x and
a median of 3.30x for the Barnett Composite, and (iii) as of August 27, 1997,
(P) Barnett's dividend yield was 2.36% compared to a mean of 2.68% and a median
of 2.79% for the Barnett Composite, (Q) Barnett's ratio of stock price to
52-week high stock price was 92.4% compared to a mean of 94.0% and a median of
93.5% for the Barnett Composite and (R) Barnett's projected dividend payout
ratio was 38.15% compared to a mean of 40.55% and a median of 40.00% for the
Barnett Composite.
DISCOUNTED DIVIDEND STREAM ANALYSIS -- NATIONSBANK. Using a discounted
dividend stream analysis, Merrill Lynch estimated the present value of the
future streams of aftertax cash flows that NationsBank could produce and
distribute to shareholders ("dividendable net income") on a stand-alone basis.
Merrill Lynch assumed that NationsBank performed in accordance with the earnings
forecasts provided to Merrill Lynch by NationsBank's senior management and that
NationsBank's tangible common equity to tangible asset ratio would be maintained
at a minimum 5% level. Merrill Lynch estimated the terminal values for the
NationsBank common stock at 12.0x and 13.0x NationsBank's 2003 estimated
operating income (defined as net income
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before intangible amortization). The dividendable net income streams and
terminal values were then discounted to present values using different discount
rates (ranging from 13% to 15%) chosen to reflect different assumptions
regarding required rates of return of holders or prospective buyers of
NationsBank Common Stock. This discounted dividend stream analysis indicated a
reference range of $60.66 to $70.22 per share for NationsBank common stock.
COMPARISON OF SELECTED COMPARABLE COMPANIES -- NATIONSBANK. Merrill Lynch
compared selected operating and stock market results of NationsBank to the
publicly available corresponding data of certain other companies which Merrill
Lynch deemed to be relevant, including BankAmerica Corporation, Banc One
Corporation, First Union Corporation, Wells Fargo and Company, Norwest
Corporation, Fleet Financial Group, Inc., PNC Bank Corporation, SunTrust Banks,
Inc. and Wachovia Corporation (collectively the "NationsBank Composite"). This
comparison showed, among other things, that for the latest twelve months ended
June 30, 1997 (i) NationsBank's ratio of non-interest expense to average assets
was 3.00% compared to a mean of 3.59% and a median of 3.55% for the NationsBank
Composite, (ii) NationsBank's ratio of non-interest income to average assets was
1.94% compared to a mean of 2.71% and a median of 2.71% for the NationsBank
Composite, (iii) NationsBank's net interest margin was 3.88% compared to a mean
4.75% and a median of 4.35% for the NationsBank Composite, (iv) NationsBank's
efficiency ratio was 53.02% compared to a mean of 56.17% and a median of 56.29%
for the NationsBank Composite, (v) NationsBank's return on average assets was
1.26% compared to a mean of 1.30% and a median of 1.39% for the NationsBank
Composite, (vi) NationsBank's return on average common equity was 15.22%
compared to a mean of 16.53% and a median of 18.26% for the NationsBank
Composite and (vii) NationsBank's ratio of fee income to total revenues was
36.61% compared to a mean of 37.18% and a median of 37.08% for the NationsBank
Composite. This comparison also indicated that (i) at June 30, 1997, (A)
NationsBank's tangible common equity to tangible asset ratio was 4.93% compared
to a mean of 6.16% and a median of 5.78% for the NationsBank Composite, (B)
NationsBank's ratio of non-performing loans to total loans was 0.78% compared to
a mean of 0.60% and a median of 0.64% for the NationsBank Composite, (C)
NationsBank's ratio of non-performing assets to total assets was 0.53% compared
to a mean of 0.49% and a median of 0.50% for the NationsBank Composite, (D)
NationsBank's ratio of loan loss reserves to non-performing assets was 220.2%
compared to a mean of 296.6% and a median of 271.8% for the NationsBank
Composite, (E) NationsBank's ratio of loan loss reserves to gross loans was
1.87% compared to a mean of 2.97% and a median of 3.02% for the NationsBank
Composite, (F) NationsBank's ratio of loans to deposits was 110.6% compared to a
mean of 99.9% and a median of 103.7% for the NationsBank Composite, (G)
NationsBank's ratio of intangibles to common equity was 42.57% compared to a
mean of 24.01% and a median of 18.96% for the NationsBank Composite, (H)
NationsBank's ratio of equity to assets was 8.31% compared to a mean of 8.55%
and a median of 7.88% for the NationsBank Composite, (I) NationsBank's Tier 1
leverage ratio was 6.05% compared to a mean of 7.33% and a median of 7.21% for
the NationsBank Composite, (ii) as of August 27, 1997 (J) the ratio of
NationsBank's market price to estimated earnings for the twelve month period
ending December 31, 1997 was 15.27x compared to a mean of 15.80x and a median of
15.90x for the NationsBank Composite (assuming reported average earnings
estimates based on data from First Call, for both NationsBank and the
NationsBank Composite, (K) the ratio of NationsBank's market price to estimated
cash earnings for the twelve month period ending December 31, 1997 was 13.36x
compared to a mean of 14.24x and a median of 14.24x for the NationsBank
Composite, (L) the ratio of NationsBank's market price to estimated earnings for
the twelve month period ending December 31, 1998 was 12.76x compared to a mean
of 13.77x and a median of 13.59x for the NationsBank Composite, (M) the ratio of
NationsBank's market price to estimated cash earnings for the twelve month
period ending December 31, 1998 was 11.40x compared to a mean of 12.60x and a
median of 12.72x for the NationsBank Composite, (N) the ratio of NationsBank's
market price to stated book value per share at June 30, 1997 was 2.28x compared
to a mean of 2.67x and a median of 2.60x for the NationsBank Composite, (O) the
ratio of NationsBank's market price to stated tangible book value per share at
June 30, 1997 was 3.97x compared to a mean of 3.71x and a median of 3.51x for
the NationsBank Composite, and (iii) as of August 27, 1997, (P) NationsBank's
dividend yield was 2.07% compared to a mean of 2.38% and a median of 2.41% for
the NationsBank Composite, (Q) NationsBank's ratio of stock price to 52-week
high stock price was 89.0% compared to a mean of 91.5% and a median of 92.6% for
the NationsBank Composite, (R) NationsBank's projected dividend payout ratio was
31.58% compared to a mean of 36.60% and a median of 34.19% for the NationsBank
Composite.
The summary set forth above does not purport to be a complete description
of the analyses performed by Merrill Lynch underlying the Merrill Lynch Opinion.
The preparation of a fairness opinion involves various
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determinations as to the most appropriate and relevant methods of financial
analysis and the application of these methods to the particular circumstances
and, therefore, such an opinion is not readily susceptible to a partial analysis
or summary description. Accordingly, notwithstanding the separate factors
summarized above, Merrill Lynch believes that its analyses must be considered as
a whole and that selecting portions of its analyses and factors considered by
it, without considering all analyses and factors, or attempting to ascribe
relative weights to some or all such analyses and factors, could create an
incomplete view of the evaluation process underlying the Merrill Lynch Opinion.
In performing its analyses, Merrill Lynch made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of NationsBank, Barnett and
Merrill Lynch. The analyses performed by Merrill Lynch are not necessarily
indicative of actual values or actual future results, which may be significantly
more or less favorable than suggested by such analyses. With respect to the
comparison of selected companies analysis and the analysis of selected bank
merger transactions summarized above, no public company utilized as a comparison
is identical to NationsBank or Barnett. Accordingly, an analysis of publicly
traded comparable companies and comparable business combinations is not
mathematical; rather it involves complex considerations and judgments concerning
the differences in financial and operating characteristics of the companies and
other factors that could affect the public trading values of the companies
concerned. The analyses do not purport to be appraisals or to reflect the prices
at which NationsBank or Barnett might actually be sold or the prices at which
any securities may trade at the present time or at any time in the future.
Merrill Lynch was not asked to consider, and the Merrill Lynch Opinion does not
in any manner address, the price at which shares of common stock of NationsBank
will actually trade following consummation of the Merger. In addition, as
described above, the Merrill Lynch Opinion was among many factors taken into
consideration by the NationsBank Board in making its determination to approve
the Merger Agreement. Consequently, the Merrill Lynch analyses described above
should not be viewed as determinative of the decision of the NationsBank Board
or NationsBank's management with respect to the Merger.
NationsBank retained Merrill Lynch based upon Merrill Lynch's experience
and expertise. Merrill Lynch is an internationally recognized investment banking
and advisory firm, and, as part of its investment banking business, is
continuously engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for corporate and other purposes. Merrill Lynch is familiar with
NationsBank, having provided it with certain investment banking services from
time to time, including having acted as lead manager and co-manager on various
fixed income offerings, having executed stock repurchase programs in 1997 and
prior years and having acted as financial advisor in connection with, and having
participated in certain of the negotiations leading to, the Merger Agreement.
NationsBank and Merrill Lynch entered into a letter agreement dated August
25, 1997 relating to the services to be provided by Merrill Lynch in connection
with the Merger. NationsBank has agreed to pay Merrill Lynch fees as follows:
(i) a cash fee of $250,000 which was paid upon the execution of the letter
agreement, (ii) a cash fee of $4,750,000 which was paid upon the execution of
the Merger Agreement; and (iii) a cash fee of $18,000,000 (less the $5 million
in fees already paid as described immediately above) in the event that at least
50% of the outstanding common stock or at least 50% of the assets (based on the
book value thereof) of Barnett is acquired by NationsBank or a company affiliate
in one or more transactions, payable upon the consummation of such acquisition.
In such letter, NationsBank also agreed to reimburse Merrill Lynch for its
reasonable out-of-pocket expenses incurred in connection with its advisory work,
including the reasonable fees and disbursements of its legal counsel, and to
indemnify Merrill Lynch against certain liabilities relating to or arising out
of the Merger, including liabilities under the federal securities laws.
OPINIONS OF BARNETT'S FINANCIAL ADVISORS
Barnett retained each of Morgan Stanley and J.P. Morgan to render financial
advisory services in connection with the Merger. Each of Morgan Stanley and J.P.
Morgan was retained based upon its qualifications, expertise and reputation as
well as upon its prior investment banking relationship with Barnett.
At the August 29, 1997 meeting of the Barnett Board, at which meeting the
Barnett Board reviewed and considered the terms of the Merger, Morgan Stanley
rendered its oral opinion to the Barnett Board that, as of
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such date, the Exchange Ratio pursuant to the Agreement was fair from a
financial point of view to the holders of shares of Barnett Common Stock (other
than NationsBank and its affiliates), and J.P. Morgan rendered its oral opinion
to the Barnett Board that, as of such date, the Exchange Ratio was fair from a
financial point of view to the holders of Barnett Common Stock. Each of Morgan
Stanley and J.P. Morgan subsequently delivered to the Barnett Board a written
opinion dated as of August 29, 1997 confirming its oral opinion. Each of Morgan
Stanley and J.P. Morgan has also delivered to the Barnett Board a written
opinion dated the date of this Joint Proxy Statement-Prospectus which is
substantially identical to its August 29, 1997 opinion. No limitations were
imposed by the Barnett Board upon Morgan Stanley or J.P. Morgan with respect to
the investigations made or procedures followed by them in rendering their
respective opinions.
THE FULL TEXTS OF THE WRITTEN OPINIONS OF MORGAN STANLEY AND J.P. MORGAN,
DATED THE DATE OF THIS JOINT PROXY STATEMENT-PROSPECTUS, WHICH SET FORTH, AMONG
OTHER THINGS, THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED AND
LIMITS ON THE REVIEW UNDERTAKEN IN CONNECTION THEREWITH, ARE ATTACHED AS
APPENDIX D AND E, RESPECTIVELY, TO THIS JOINT PROXY STATEMENT-PROSPECTUS, AND
ARE INCORPORATED HEREIN BY REFERENCE. BARNETT SHAREHOLDERS ARE URGED TO, AND
SHOULD, READ THE OPINIONS IN THEIR ENTIRETY. THE OPINIONS OF MORGAN STANLEY AND
J.P. MORGAN ARE ADDRESSED TO THE BARNETT BOARD, ARE DIRECTED ONLY TO THE
FAIRNESS FROM A FINANCIAL POINT OF VIEW OF THE EXCHANGE RATIO PURSUANT TO THE
AGREEMENT TO THE HOLDERS OF BARNETT COMMON STOCK AND DO NOT ADDRESS ANY OTHER
ASPECT OF THE MERGER, NOR DO THEY CONSTITUTE RECOMMENDATIONS TO ANY BARNETT
SHAREHOLDER AS TO HOW SUCH SHAREHOLDER SHOULD VOTE AT THE BARNETT SPECIAL
MEETING. THE SUMMARIES OF THE OPINIONS OF MORGAN STANLEY AND J.P. MORGAN SET
FORTH IN THIS JOINT PROXY STATEMENT-PROSPECTUS DESCRIBE THE MATERIAL ASPECTS OF
SUCH OPINIONS AND ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE FULL TEXT
OF SUCH OPINIONS.
OPINION OF MORGAN STANLEY
In arriving at its opinions, Morgan Stanley, among other things: (i)
reviewed certain publicly available financial statements and other information
of Barnett and NationsBank, respectively; (ii) reviewed certain internal
financial statements and other financial and operating data concerning Barnett
prepared by the management of Barnett; (iii) analyzed certain financial
projections prepared by the management of Barnett; (iv) discussed the past and
current operations and financial conditions and the prospects of Barnett and
NationsBank with senior executives of Barnett and NationsBank, respectively; (v)
reviewed the reported prices and trading activity for the Barnett Common Stock
and the NationsBank Common Stock; (vi) compared the financial performance of
Barnett and NationsBank and the prices and trading activity of the Barnett
Common Stock and the NationsBank Common Stock with that of certain other
comparable publicly-traded companies and their securities; (vii) discussed the
results of regulatory examinations of Barnett and NationsBank with senior
management of the respective companies; (viii) discussed with senior managements
of Barnett and NationsBank the strategic objectives of the Merger and their
estimates of the synergies and other benefits of the Merger for the combined
company; (ix) analyzed the pro forma impact of the Merger on the combined
company's earnings per share, consolidated capitalization and financial ratios;
(x) reviewed the financial terms, to the extent publicly available, of certain
comparable merger transactions; (xi) participated in discussions and
negotiations among representatives of Barnett and NationsBank (and certain other
parties) and their financial and legal advisors; (xii) reviewed the Agreement
and certain related documents; and (xiii) performed such other analyses and
considered such other factors as it deemed appropriate.
Morgan Stanley assumed and relied upon, without independent verification,
the accuracy and completeness of the information reviewed by it for the purposes
of its opinions. With respect to the financial projections, including the
synergies and other benefits expected to result from the Merger, Morgan Stanley
assumed that they were reasonably prepared on bases reflecting the best
currently available estimates and judgments of the future financial performance
of Barnett and NationsBank. Morgan Stanley did not make any independent
valuation or appraisal of the assets or liabilities of Barnett or NationsBank,
nor was it furnished any such appraisals, and Morgan Stanley did not examine any
individual loan credit files of Barnett or NationsBank. In addition, Morgan
Stanley assumed the Merger will be consummated substantially in accordance with
the terms set forth in the Merger Agreement. Morgan Stanley's opinions are based
on economic, market and other conditions as in effect on, and the information
made available to it as of, the date of such opinions.
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The following is a summary of the material financial analyses performed by
Morgan Stanley in connection with its presentation to the Barnett Board on
August 19, 1997, its oral opinion to the Barnett Board on August 29, 1997 and
its written opinion to the Barnett Board dated August 29, 1997. The following
summary does not purport to be a complete description of the analyses underlying
the opinions of Morgan Stanley.
OVERVIEW OF BARNETT PROFITABILITY AND STOCK PRICE PERFORMANCE. Morgan
Stanley presented an overview of Barnett which included a comparison of
profitability and stock price performance data for Barnett to (x) corresponding
data for the nine members of a peer group comprised of the following nine bank
holding companies: NationsBank, First Union Corporation, Wachovia Corporation,
SunTrust Banks, Inc., BB&T Corporation, Crestar Financial Corporation, Regions
Financial Corporation, SouthTrust Corporation and AmSouth Bancorporation (the
"Regional Peer Group"); and (y) corresponding mean data for the 35 bank holding
companies comprising the Morgan Stanley Bank Index (the "Morgan Stanley Bank
Index"), including (i) net interest margin; (ii) non-interest income to average
earning assets; (iii) non-interest expense to average earning assets; (iv) price
to 1997 and 1998 estimated earnings per share; (v) price to book value; (vi)
current stock price as a percentage of 52-week high and low closing stock
prices; and (vii) one-year and ten-year stock price performance.
VALUATION METHODOLOGIES. As part of its financial analyses, Morgan Stanley
performed valuation analyses of Barnett using various methodologies. Morgan
Stanley evaluated the positions and strengths of Barnett on a stand-alone basis,
considered estimates by Barnett's management of the cost savings and synergies
which could be expected to be realized in an acquisition of Barnett and
determined an acquisition value based upon specified assumptions. The following
is a brief summary of the various methodologies underlying the valuation
analyses conducted by Morgan Stanley.
COMPARABLE COMPANY ANALYSIS. Comparable company analysis analyzes a
company's operating performance relative to a group of publicly traded peers.
Based on relative performance and outlook for a company versus its peers, this
analysis enables an implied unaffected market trading value to be determined.
Morgan Stanley analyzed the operating performance of Barnett relative to (x) the
nine bank holding companies in the Regional Peer Group; and (y) the Morgan
Stanley Bank Index.
Morgan Stanley analyzed the relative performance and value of Barnett by
comparing certain market trading statistics for Barnett with those of companies
comprising the Regional Peer Group and the Morgan Stanley Bank Index. Historical
financial information used in calculating the market price to book value
multiples for the comparable company analysis was as of June 30, 1997, and
market information used in calculating the multiples for the comparable company
analysis was as of August 15, 1997. Earnings per share estimates for Barnett and
for the companies comprising the Regional Peer Group and the Morgan Stanley Bank
Index were based on IBES median estimates as of August 15, 1997.
The market price to estimated 1997 and 1998 earnings per share multiples
for Barnett were 16.3x and 14.6x, respectively, compared to median multiples of
15.5x and 13.8x, respectively, for the Regional Peer Group and multiples of
15.8x and 14.0x, respectively, for the Morgan Stanley Bank Index. The market
price to book value multiple for Barnett was 2.8x, compared to a median multiple
of 2.5x for the Regional Peer Group and a multiple of 2.7x for the Morgan
Stanley Bank Index. The implied range of values for Barnett Common Stock derived
from the comparable company analysis, based on a range of market price to book
value multiples of 2.6x to 3.0x and market price to 1997 earnings per share
multiples of 15x to 17x, was approximately $49.00 to approximately $57.00 per
share.
DIVIDEND DISCOUNT ANALYSIS. Morgan Stanley performed a dividend discount
analysis to determine a range of present values per share of Barnett Common
Stock assuming Barnett continued to operate as a stand-alone entity. This range
was determined by adding (i) the present value of the estimated future dividend
stream that Barnett could generate over the five-year period from 1997 through
2001 and (ii) the present value of the "terminal value" of Barnett Common Stock
at the end of 2001. To determine a projected dividend stream, Morgan Stanley
assumed a tangible equity to assets ratio of 6.0%. Morgan Stanley used IBES mean
earnings per share estimates for Barnett for 1997 and 1998 and assumed an 11%
growth rate in earnings per share thereafter (based on IBES median long-term
growth rate estimates for Barnett). The "terminal value" of Barnett Common Stock
at the end of the five-year period was determined by applying two
price-to-earnings multiples (12x and 14x) to projected net income for Barnett in
2002. The dividend stream and terminal value were discounted to present values
using a discount rate of 12%, which Morgan Stanley viewed as the appropriate
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discount rate for a company with Barnett's risk characteristics. Using this
analysis, the fully diluted stand-alone value of Barnett Common Stock ranged
from approximately $53.00 per share to approximately $60.00 per share.
VALUE OF POTENTIAL COST SAVINGS AND REVENUE ENHANCEMENTS. In order to
estimate an implied acquisition value of the Barnett Common Stock (see
" -- IMPLIED ACQUISITION VALUE"), the potential value of future cost savings was
estimated by Morgan Stanley using the same present value calculation as used in
the dividend discount analysis. Based on discussions with Barnett management,
Morgan Stanley determined the net theoretical present value of the cost savings
that could result if Barnett were acquired. The estimates for such cost savings
ranged from 20-30% of Barnett's core non-interest expense base (I.E., excluding
expenses for other real estate owned ("OREO"), amortization of intangibles and
any non-recurring charges) of $1.7 billion estimated for 1997. Such a range
would imply annual pre-tax cost savings between approximately $340 million and
approximately $510 million. Based on a discount rate of 12%, full phase-in of
cost savings by 1998, a perpetual annual expense growth rate of 4.0%, a marginal
tax rate of 40%, and a restructuring charge equal to 100% of fully-phased in
cost savings incurred in the first year following an acquisition, and applying a
terminal multiple of 11.5x to the year 2002 projected cost savings, the range of
present values for the cost savings was approximately $12.00 to approximately
$18.00 per share of Barnett Common Stock. Assuming, in addition to such cost
savings, a range of between 5% and 10% in revenue enhancements, the upper limit
of the range of present values for the cost savings plus revenue enhancements
together would increase to between $21.00 and $24.00 per share of Barnett Common
Stock.
IMPLIED ACQUISITION VALUE. As part of its analysis of the acquisition
valuation, Morgan Stanley assumed that the net present value of the estimated
cost savings described above was added to a stand-alone value of Barnett Common
Stock of $52.94 (the closing stock price of Barnett Common Stock on August 15,
1997). Based on this analysis, Morgan Stanley estimated the implied acquisition
value of Barnett Common Stock to range from $65.00 to $71.00 per share.
Assuming, in addition to such cost savings, a range of revenue enhancements of
between 5% and 10%, the upper limit of the range of acquisition values would
increase to between $74.00 and $77.00 per share of Barnett Common Stock.
COMPARABLE TRANSACTION ANALYSIS. Using publicly available information,
Morgan Stanley performed an analysis of certain merger and acquisition
transactions involving selected bank holding companies that, in Morgan Stanley's
judgment, were deemed comparable for purposes of this analysis in order to
obtain a valuation range for Barnett Common Stock. Morgan Stanley also compared
the multiples of market value, book value and estimated earnings per share
implied by the consideration to be received by Barnett shareholders in the
Merger with corresponding multiples indicated for 14 bank holding company merger
and acquisition transactions announced in 1995 (the "1995 Transactions"), 6 bank
holding company merger and acquisition transactions announced in 1996 (the "1996
Transactions"), and 5 bank holding company merger and acquisition transactions
announced in 1997 (the "1997 Transactions", and together with the 1995
Transactions and the 1996 Transactions, the "Comparable Transactions"). The 1995
Transactions consisted of the following (acquiror/acquiree): NAB-Michigan
National, Fleet/Shawmut, US Bancorp/West One, First Union/First Fidelity,
PNC/Midlantic, First Bank System/FirsTier, Boatmen's/Fourth Financial, National
City/Integra, NationsBank/Bank South, UJB/Summit, CoreStates/Meridian,
Regions/First National, Bank of Boston/BayBanks and Fleet/NatWest Bancorp. The
1996 Transactions consisted of the following (acquiror/acquiree): Wells
Fargo/First Interstate, NationsBank/Boatmen's, Crestar/Citizens, Mercantile/Mark
Twain, Southern National/UCB and Banc One/Liberty Bancorp. The 1997 Transactions
consisted of the following (acquiror/acquiree): Allied Irish/Dauphin Deposit,
First Bank System/US Bancorp, Huntington/First Michigan, Wachovia/Central
Fidelity and First Union/Signet.
The indicated price to book value multiple in the Merger was 4.0x compared
to median price to book value multiples of 2.0x, 2.8x and 3.1x for the 1995
Transactions, the 1996 Transactions and the 1997 Transactions, respectively. The
indicated price to estimated earnings per share multiple in the Merger was 23.2x
compared to median price to estimated earnings per share multiples of 12.4x,
16.0x and 18.0x for the 1995 Transactions, the 1996 Transactions and the 1997
Transactions, respectively. The indicated premium to market price multiple in
the Merger was approximately 1.4x, compared to median premium to market price
multiples of 1.2x, 1.4x and 1.2x for the 1995 Transactions, the 1996
Transactions and the 1997 Transactions, respectively. For the Comparable
Transactions, the price to book value multiples ranged from 1.1x to 3.5x, the
price to estimated earnings per share multiples ranged from 10.2x to 22.9x, and
the premium to market value multiples ranged from 1.0x
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to 1.6x. Using a range of price to estimated earnings per share multiples of 20x
to 23x, and a range of price to book value multiples of 3.3x to 3.5x, Morgan
Stanley estimated a range for the present value of Barnett Common Stock of
$62.00 to $75.00 per share.
The price to projected earnings per share multiples used in the comparable
transaction analysis were computed based on IBES estimates of the acquired
company's earnings per share at the date of announcement of the transaction. The
premium to market value multiples used in the comparable transaction analysis
were computed based on the closing price of the acquired company's common stock
on the date immediately preceding the announcement date of the transaction. The
price to book value, price to projected earnings per share and premium to market
value multiples indicated in the Merger were calculated based on the Exchange
Ratio of 1.1875, the closing prices of NationsBank Common Stock and Barnett
Common Stock on the NYSE as August 28, 1997 of $63.31 and $54.81, respectively,
and IBES estimates for Barnett's 1997 earnings per share of $3.24.
No company or transaction used in the comparable company or comparable
transaction analyses is identical to Barnett or the Merger. Accordingly, an
analysis of the results of the foregoing necessarily involves complex
considerations and judgments concerning differences in financial and operating
characteristics of Barnett and other factors that could affect the public
trading value of the companies to which they are being compared. Mathematical
analysis (such as determining the average or median) is not in itself a
meaningful method of using comparable company or comparable transaction data.
STRATEGIC ALTERNATIVES ANALYSIS. Morgan Stanley performed an analysis
involving hypothetical acquisition transactions between Barnett and eleven
selected bank holding companies. The analysis examined the impact on each
potential acquiror's 1998 earnings per share of a hypothetical business
combination transaction in which Barnett shareholders received stock of the
acquiror at a value of $70 for each share of Barnett Common Stock. For purposes
of the analysis, Morgan Stanley assumed that each transaction would be a
stock-for-stock merger transaction accounted for as a pooling of interests and
that costs savings of 20% (30% in the case of certain in-market acquirors) of
Barnett's core non-interest expense (I.E., excluding OREO expenses, amortization
of intangibles and non-recurring charges) could be achieved as a result of the
transaction and would be fully phased in by 1998. Morgan Stanley's assumptions
concerning the level of cost savings which could be achieved in the various
hypothetical transactions were based upon its review of the estimated cost
savings achieved in a number of large bank holding company merger transactions
which Morgan Stanley deemed comparable to the hypothetical transactions and the
range of potential divestitures which might be required by regulators in
connection with a potential acquisition of Barnett.
In connection with its opinion dated as of the date of this Joint Proxy
Statement-Prospectus, Morgan Stanley confirmed the appropriateness of its
reliance on the analyses used to render its August 29, 1997 opinion by
performing procedures to update certain of such analyses and by reviewing the
assumptions upon which such analyses were based and the factors considered in
connection therewith.
OPINION OF J.P. MORGAN
In arriving at its opinions, J.P. Morgan reviewed, among other things, (i)
the Agreement and, in the case of its opinion dated the date of this Joint Proxy
Statement-Prospectus, this Joint Proxy Statement-Prospectus; (ii) certain
publicly available information concerning the business of Barnett and of certain
other companies engaged in businesses comparable to those of Barnett, and the
reported market prices for certain other companies' securities deemed
comparable; (iii) publicly available terms of certain transactions involving
companies comparable to Barnett and the consideration received for such
companies; (iv) current and historical market prices of the common stock of
Barnett and NationsBank; (v) the audited financial statements of Barnett and
NationsBank for the fiscal year ended December 31, 1996; and (vi) the unaudited
financial statements of Barnett and NationsBank for the period ended June 30,
1997. In addition, J.P. Morgan held discussions with certain members of the
management of Barnett and NationsBank with respect to certain aspects of the
Merger, and the past and current business operations of Barnett and NationsBank,
the financial condition and future prospects and operations of Barnett and
NationsBank, the effects of the Merger on the financial condition and future
prospects of Barnett and NationsBank, and certain other matters it believed
necessary or appropriate to its inquiry. J.P. Morgan also reviewed such other
financial studies and analyses and considered such other information as it
deemed appropriate for the purposes of its opinions.
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In giving its opinions, J.P. Morgan relied upon and assumed, without
independent verification, the accuracy and completeness of all information that
was publicly available or otherwise reviewed by it, and did not assume any
responsibility or liability therefor. J.P. Morgan did not conduct any valuation
or appraisal of any assets or liabilities, nor were any such valuations or
appraisals provided to it. J.P. Morgan was not requested to review individual
credit files or to make any independent assessment as to the future performance
or non-performance of Barnett's or NationsBank's assets. J.P. Morgan assumed
that current allowances and reserves for loan losses for both Barnett and
NationsBank are sufficient to cover all such losses. J.P. Morgan also assumed
that, in the course of obtaining regulatory and third party consents for the
Merger and the other transactions contemplated by the Agreement, no restriction
will be imposed that will have a material adverse effect on the future results
of operations or financial condition of Barnett or NationsBank. J.P. Morgan also
assumed that the Merger will have the tax consequences described in discussions
with, and materials furnished to it by, representatives of Barnett, and that the
other transactions contemplated by the Agreement will be consummated as
described in the Agreement. J.P. Morgan relied as to all legal matters relevant
to rendering its opinions upon the advice of counsel.
J.P. Morgan's opinions are necessarily based on economic, market and other
conditions as in effect on, and the information made available to it as of, the
date of such opinions. Subsequent developments may affect J.P. Morgan's opinion
dated the date of this Joint Proxy Statement-Prospectus, and J.P. Morgan does
not have any obligation to update, revise, or reaffirm such opinion. J.P. Morgan
expressed no opinion as to the price at which NationsBank's stock will trade at
any future time.
The following is a summary of the material analyses performed by J.P.
Morgan in connection with its opinions:
(a) OFFER VALUATION. J.P. Morgan reviewed the terms of the proposed
Merger, including the Exchange Ratio and the aggregate transaction value,
and also reviewed the implied value of the consideration offered based upon
the closing share price of NationsBank Common Stock of $63.31 on August 28,
1997 (the last trading day prior to the August 29, 1997 meeting of the
Barnett Board) (the "NationsBank Stock Price"), which indicated that the
implied value of the consideration offered in the NationsBank proposal was
approximately $75.18 per share of Barnett Common Stock, representing a
37.2% premium to the August 28, 1997 Barnett Common Stock closing market
price of $54.81 per share. J.P. Morgan further calculated the premiums
implied by the Exchange Ratio to the average market price of Barnett Common
Stock for the period five, ten and 30 trading days prior to August 29,
1997, based on the average market price of NationsBank Common Stock for the
same periods, and determined that the implied premiums were 43.3%, 44.0%
and 46.1%, respectively.
(b) PRO FORMA MERGER ANALYSIS. Based on IBES earnings estimates, J.P.
Morgan analyzed certain pro forma effects expected to result from the
Merger during the calendar years of 1998 and 1999. This analysis indicated
that relative to Barnett on a stand-alone basis the Merger would be
accretive to Barnett's earnings per share, dividends per share and tangible
book value per share in each of the years analyzed. Additionally, this
analysis indicated that the transaction would be slightly accretive to
estimated earnings per share of NationsBank Common Stock in 1999.
(c) CONTRIBUTION ANALYSIS. J.P. Morgan reviewed the relative
contributions to be made by Barnett and NationsBank to the combined entity.
The financial and operating information reviewed in such analysis included,
among other things, total assets, loans, deposits, common equity, tangible
common equity, net income attributable to common shareholders for the
twelve-month period ended June 30, 1997, and estimated net income for 1998.
This analysis showed that, based upon the Exchange Ratio, the stockholders
of Barnett would own approximately 25.3% of the fully-diluted outstanding
shares of common stock of the combined company immediately following the
Merger and that Barnett would be contributing 15.5% of total assets, 17.2%
of loans, 19.8% of deposits, 15.1% of common equity, 17.7% of tangible
common equity, 17.5% of net income attributable to common shareholders for
the twelve month period ended June 30, 1997, and 16.4% of estimated 1998
net income.
(d) DISCOUNTED CASH FLOW ANALYSIS. Using a discounted cash flow
analysis, J.P. Morgan estimated the net present value of the future streams
of after-tax cash flows that Barnett could produce on a stand-alone basis
from 1997 through 2001 and distribute to Barnett's stockholders
("Dividendable Net Income"). In this analysis, J.P. Morgan assumed that
Barnett performed in accordance with J.P. Morgan's estimates
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and projected the after-tax distributions to stockholders such that
Barnett's tangible common equity ratio would be maintained at a 6.0% level.
J.P. Morgan calculated the sum of (i) the terminal values per share of
Barnett Common Stock based on assumed multiples of Barnett's projected 2002
earnings ranging from 12.0x to 14.0x plus (ii) the projected 1998-2001
Dividendable Net Income streams per share, in each case, discounted to
present values at assumed discount rates ranging from 10% to 11%. This
discounted cash flow analysis indicated a reference range of $49.46 to
$58.06 per share of Barnett. In addition, J.P. Morgan tested the
sensitivity of these values by varying certain assumptions. The reference
range was not materially changed by reasonable variations of key
assumptions. J.P. Morgan also performed a discounted cash flow analysis
assuming certain cost savings and revenue enhancements estimated to result
from the Merger are achieved. This analysis indicated a reference range of
$72.79 to $85.40. As indicated above, this analysis did not purport to be
indicative of actual future results and did not purport to reflect the
prices at which shares of Barnett Common Stock may trade. Discounted cash
flow analysis was included because it is a widely used valuation
methodology, but the results of such methodology are highly dependent upon
the numerous assumptions that must be made, including earnings growth
rates, dividend payout rates, terminal values and discount rates.
(e) ANALYSIS OF SELECTED ACQUISITION TRANSACTIONS. J.P. Morgan
reviewed publicly available information regarding selected bank
acquisitions in the United States with a value greater than $500 million
which had been announced since January 1, 1996 (including First Union
Corporation/Signet Banking Corporation, Wachovia Corporation/Central
Fidelity Banks Inc., Wachovia Corporation/Jefferson Bankshares Inc.,
Huntington Bancshares, Inc./First Michigan Bank Corporation, First Bank
System, Inc./U.S. Bancorp, Allied Irish Banks p.l.c./Dauphin Deposit
Corporation, Banc One Corporation/Liberty Bancorp, Inc., BB&T
Corporation/United Carolina Bancshares Corp., Mercantile Bancorporation,
Inc./Mark Twain Bancshares Inc., Crestar Financial Corporation/Citizens
Bancorporation, NationsBank Corporation/Boatmen's Bancshares, Inc. and
Wells Fargo & Company/First Interstate Bancorp). J.P. Morgan calculated the
premium represented by the purchase price paid in such acquisitions to the
closing market price on the day prior to the announcement and the closing
price five days prior to announcement (excluding the Wells Fargo &
Company/First Interstate Bancorp transaction), last 12 months' earnings per
share, estimates of the next 12 months' projected earnings per share and
estimates of the subsequent 12 months' earnings per share, book value per
share, tangible book value per share, and assets, which J.P. Morgan
determined resulted in relevant ranges of premiums of (i) with respect to
the market price on the day prior to the announcement and to the closing
price five days prior to announcement, 2.4% to 58.9% and 10.5% to 68.0%,
respectively, with a median of 26.3% and 31.3%, respectively (resulting in
imputed values per share of Barnett Common Stock, based on the market price
of Barnett Common Stock on the day prior to announcement of $56.13, $87.10
and $69.23, respectively and based on the closing price of Barnett Common
Stock five days prior to announcement of $57.74, $87.78 and $68.60,
respectively); (ii) with respect to the last twelve-months' earnings per
share, 13.8x to 34.6x, with a median of 19.7x (resulting in imputed values
per share of Barnett Common Stock of $41.32, $103.36, and $58.89
respectively); (iii) with respect to estimates of the next 12 months'
projected earnings per share and to estimates of the subsequent 12 months'
projected earnings per share, 13.3x to 21.6x and 12.6x to 18.2x,
respectively, with medians of 17.5x and 16.2x, respectively (resulting in
imputed values per share of Barnett Common Stock of $46.27, $75.26 and
$60.98 respectively, based on estimates for the next 12 months, and $48.53,
$70.26 and $62.62, respectively, based on estimates for the subsequent 12
months); (iv) with respect to book value per share, 1.82x to 3.46x, with a
median of 2.81x (resulting in imputed values per share of Barnett Common
Stock of $34.36, $65.15 and $52.95, respectively); (v) with respect to
tangible book value per share, 1.87x to 3.98x, with a median of 2.97x
(resulting in imputed values per share of Barnett Common Stock of $24.41,
$51.96 and $38.75, respectively); and (vi) with respect to assets, 18.1% to
28.0%, with a median of 23.3% (resulting in imputed values per share of
Barnett Common Stock of $41.84, $64.69 and $53.88, respectively). In
performing the above analysis, J.P. Morgan used results for Barnett as of
or for the period ended June 30, 1997, except with respect to the market
price of Barnett Common Stock, which was as of August 28, 1997, and
earnings per share estimates as reported by IBES.
No company or transaction used in the above analysis as a comparison
is identical to Barnett or the Merger. Accordingly, an analysis of the
results of the foregoing necessarily involves complex considerations and
judgments concerning differences in financial and operating characteristics
of the companies and
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other factors that could affect the value of the companies to which they
are being compared. Mathematical analysis (such as determining the median)
is not, in itself, a meaningful method of using comparable data.
(f) COMPARISON OF SELECTED COMPANIES. J.P. Morgan reviewed and
compared certain public market multiples relating to Barnett to the
publicly available corresponding data for two peer groups of selected banks
which J.P. Morgan deemed to be relevant. The group of selected Southeastern
banks (the "Barnett Selected Southeastern Banks") consisted of Regions
Financial Corporation, South Trust Corporation, AmSouth Bancorporation,
BB&T Corporation, Crestar Financial, First Union Corporation, NationsBank,
SunTrust Banks Inc., and Wachovia Corporation. The group of selected banks
located in all regions of the United States (the "Barnett Selected National
Banks" and together with the Barnett Selected Southeastern Banks, the
"Barnett Selected Banks") consisted of all of the Barnett Selected
Southeastern Banks as well as Citicorp, BankAmerica Corporation, The Chase
Manhattan Corporation, Banc One Corporation, Wells Fargo & Company, First
Chicago NBD Corporation, Norwest Corporation, U.S. Bancorp, The Bank of New
York Company, Inc., Fleet Financial Group, PNC Bank Corporation, KeyCorp,
National City Corporation, CoreStates Financial Corporation, BankBoston
Corporation, Mellon Bank Corporation, Fifth Third Bancorp, Comerica Inc.,
Huntington Bancshares Inc., Northern Trust Corporation and Mercantile
Bancorporation.
Based on a review of such information for the Barnett Selected Banks,
J.P. Morgan determined (in each case based on company data as of or for the
twelve months ended June 30, 1997, and closing stock prices as of August
28, 1997): (i) that, with respect to the ratio of price to earnings per
share for the twelve-month period ended June 30, 1997, the Barnett Selected
Southeastern Banks and Barnett Selected National Banks had a median of
17.5x and 17.5x, respectively, compared to 18.3x for Barnett; (ii) that,
with respect to the multiple of stock price to estimated earnings per share
for 1997, the Barnett Selected Southeastern Banks and Barnett Selected
National Banks (based on projected earnings per share for 1997 as reported
by IBES for Barnett Selected Banks and Barnett) had a median of 15.2x and
15.4x, respectively, compared to 16.9x for Barnett; (iii) that, with
respect to the multiple of stock price to estimated earnings per share for
1998, the Barnett Selected Southeastern Banks and the Barnett Selected
National Banks (based on projected earnings per share for 1998 as reported
by IBES for Barnett Selected Banks and Barnett) had a median of 13.7x and
13.7x, respectively, compared to 15.2x for Barnett; (iv) that, with respect
to the multiple of stock price to book value, the Barnett Selected
Southeastern Banks and the Barnett Selected National Banks had a median of
2.53x and 2.78x, respectively, compared to 2.91x for Barnett; and (v) that,
with respect to the multiple of stock price to tangible book value, the
Barnett Selected Southeastern Banks and the Barnett Selected National Banks
had a median of 2.96x and 3.46x, respectively, compared to 4.20x for
Barnett.
J.P. Morgan also calculated a range of imputed values for a share of
Barnett Common Stock based on a 30% equity control premium and certain of
the ratios for the Barnett Selected Southeastern Banks and Barnett Selected
National Banks specified above, including the ratio of closing price of the
common stock on August 28, 1997, to each of book value, tangible book
value, earnings per share for the twelve months ended June 30, 1997, and
estimated earnings per share for 1997 and 1998, in each case as reported by
IBES for Barnett Selected Banks and Barnett. This analysis, including a 30%
equity control premium, resulted in a range of imputed values for Barnett
Common Stock of between $50.19 and $68.11.
In connection with its opinion dated the date of this Joint Proxy
Statement-Prospectus, J.P. Morgan reviewed the analyses used to render its
August 29, 1997 opinion by performing procedures to update certain of such
analyses and by reviewing the assumptions upon which such analyses were based
and the factors considered in connection therewith.
The summaries set forth above do not purport to be complete descriptions of
the analyses conducted by the Barnett Financial Advisors. The preparation of a
fairness opinion is a complex process and is not necessarily susceptible to a
partial analysis or summary description. Each of the Barnett Financial Advisors
believes that its analyses must be considered as a whole and that selecting
portions of its analyses, without considering the analyses taken as a whole,
would create an incomplete view of the analyses underlying its opinions. In
addition, each of the Barnett Financial Advisors considered the results of all
such analyses and did not assign relative weights to any of the analyses, so
that the ranges of valuations resulting from any particular analysis described
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above should not be taken to be the Barnett Financial Advisors' view of the
actual value of Barnett Common Stock.
In performing its analyses, each of the Barnett Financial Advisors made
numerous assumptions with respect to industry performance, general business,
economic and regulatory conditions and other matters, many of which are beyond
the control of Barnett or NationsBank. The analyses performed by the Barnett
Financial Advisors are not necessarily indicative of actual values, trading
values or actual future results that might be achieved, all of which may be
significantly more of less favorable than suggested by such analyses. Such
analyses were prepared solely as part of each Barnett Financial Advisor's
analysis of the fairness of the Exchange Ratio to the holders of Barnett Common
Stock from a financial point of view and do not purport to be appraisals or to
reflect the prices at which a company might be sold. In addition, as described
above, the opinions of the Barnett Financial Advisors were one of many factors
taken into consideration by the Barnett Board in making its determination to
approve the Merger. Consequently, the analyses described above should not be
viewed as determinative of the Barnett Board's or management's opinion with
respect to the value of Barnett or a combination of Barnett and NationsBank, or
of whether the Barnett Board or Barnett management would have been willing to
agree to a different exchange ratio.
Each Barnett Financial Advisor is an internationally recognized investment
banking and advisory firm. Each, as part of its investment banking business, is
continuously engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for corporate and other purposes. In the course of its market
making and other trading activities, each may, from time to time, have a long or
short position in, and may buy and sell, securities of Barnett, NationsBank and
other financial institutions. In the past, each of the Barnett Financial
Advisors and certain of their affiliates have provided financial advisory and
financial services to Barnett and NationsBank and have received and contemplate
receiving customary fees for the rendering of these types of financial services.
In the future, the Barnett Financial Advisors may provide additional financial
advisory and financial services to NationsBank.
Barnett has agreed to pay Morgan Stanley an advisory fee of up to $200,000,
an additional fee of $5,000,000 in consideration for rendering its fairness
opinion and a transaction fee of $31,000,000, which will become payable prior to
the consummation of the Merger and against which any previously paid or
currently payable advisory fees and opinion fees related to this transaction
will be credited. In addition, Barnett has agreed, among other things, to
reimburse Morgan Stanley for its expenses incurred in connection with the
services provided by Morgan Stanley, which expense reimbursements will be
credited against the transaction fee payable upon consummation of the Merger,
and to indemnify and hold harmless Morgan Stanley and certain related parties
from and against liabilities and expenses, including certain liabilities under
the federal securities laws, in connection with its engagement.
For services rendered in connection with the Merger, Barnett has agreed to
pay J.P. Morgan a retainer fee of $50,000, payable quarterly in arrears, an
additional fee of $1,000,000 in consideration for rendering its fairness
opinion, and a transaction fee of $9,000,000, which will become payable prior to
the consummation of the Merger and against which the aggregate amount of the
retainer fees and opinion fee previously paid or currently payable by Barnett
will be credited. Barnett also has agreed, among other things, to reimburse J.P.
Morgan for its expenses incurred in connection with the performance of its
engagement in the event that the Merger is not consummated, and to indemnify and
hold harmless J.P. Morgan and certain related parties from and against
liabilities and expenses, including certain liabilities under the federal
securities laws, in connection with its engagement.
THE EFFECTIVE TIME
Subject to the satisfaction or waiver of certain conditions contained in
the Agreement, the parties will cause the Effective Time to occur on (i) the
third business day after the last to occur of the satisfaction or waiver of the
conditions described under " -- Conditions to the Merger," including, without
limitation: (a) the receipt of the required shareholder approvals of NationsBank
and Barnett, (b) the receipt of all regulatory approvals required to consummate
the transactions contemplated by the Agreement, (c) the receipt of all consents
or approvals of third parties (other than regulatory authorities) required for
consummation of the Merger
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other than those that, if not received, would not reasonably be likely to have a
material adverse effect on Barnett or NationsBank, and (d) the listing on the
NYSE of the NationsBank Common Stock to be issued in the Merger; or (ii) such
other date to which the parties may agree in writing.
At the Effective Time, holders of Barnett Common Stock will cease to be,
and will have no rights as shareholders of Barnett, other than to receive (i)
any dividend or other distribution with respect to such Barnett Common Stock
with a record date occurring prior to the Effective Time and (ii) the Merger
Consideration. After the Effective Time, there will be no transfers on the stock
transfer books of Barnett or the Surviving Corporation of shares of Barnett
Common Stock.
EXCHANGE OF CERTIFICATES
At or prior to the Effective Time, NationsBank will deposit, or will cause
to be deposited, with the Exchange Agent, certificates representing the shares
of NationsBank Common Stock and NationsBank New Preferred Stock (collectively,
"NationsBank Certificates") and an estimated amount of cash to be paid in lieu
of fractional shares to which a holder of certificates formerly representing
Barnett Common Stock or Barnett Preferred Stock, as the case may be
(collectively, "Barnett Certificates") would otherwise be entitled based on the
Exchange Ratio (such cash and NationsBank Certificates, together with any
dividends or distributions with respect thereto (without any interest thereon),
the "Exchange Fund").
Prior to, or as promptly as practicable after, the Effective Date,
NationsBank will send or cause to be sent to each holder of record of shares of
Barnett Common Stock and Barnett Preferred Stock transmittal materials for use
in exchanging such shareholder's Barnett Certificates for the consideration due
in respect thereof. NationsBank will cause the NationsBank Certificates into
which shares of a shareholder's shares of Barnett Common Stock or Barnett
Preferred Stock are converted into the right to receive on the Effective Date
and/or any check in respect of any fractional share interests or dividends or
distributions which such person will be entitled to receive to be delivered to
such shareholder upon delivery to the Exchange Agent of Barnett Certificates (or
indemnity reasonably satisfactory to NationsBank and the Exchange Agent, if any
of such Barnett Certificates are lost, stolen or destroyed) owned by such
shareholder. No interest will be paid on any such cash to be paid upon such
delivery.
BARNETT SHAREHOLDERS SHOULD NOT SEND IN THEIR BARNETT CERTIFICATES UNTIL
THEY RECEIVE THE TRANSMITTAL MATERIALS FROM THE EXCHANGE AGENT.
No fractional shares of NationsBank Common Stock and no certificates or
scrip therefor, or other evidence of ownership thereof, will be issued in the
Merger; instead, NationsBank will pay to each Barnett Shareholder who would
otherwise be entitled to a fractional share of NationsBank Common Stock (after
taking into account all Barnett Certificates delivered by such Barnett
Shareholder) an amount in cash to be paid in lieu of fractional shares (without
interest) determined by multiplying such fraction by the average of the last
sale prices of NationsBank Common Stock, as reported by the NYSE Composite
Transactions reporting system (as reported in THE WALL STREET JOURNAL or, if not
reported therein, in another authoritative source), for the five NYSE trading
days immediately preceding the Effective Date.
Notwithstanding the foregoing, neither the Exchange Agent nor any party to
the Agreement will be liable to any holder of Barnett Common Stock or Barnett
Preferred Stock (or, if after the Effective Time, former holder of Barnett
Common Stock or Barnett Preferred Stock) for any amount properly delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
No dividends or other distributions with respect to NationsBank stock with
a record date occurring after the Effective Time will be paid to the holder of
any unsurrendered Barnett Certificate until the holder thereof will surrender
such Barnett Certificate in accordance with the terms of the Agreement. After
the proper surrender of a Barnett Certificate, the record holder thereof will be
entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to shares of
NationsBank Stock represented by such Barnett Certificate.
CONDUCT OF BUSINESS PRIOR TO THE MERGER AND OTHER COVENANTS
Prior to the Effective Time, except as expressly contemplated by the
Agreement, (i) without the prior written consent of NationsBank (which consent
will not be unreasonably withheld or delayed) Barnett will not, and
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will cause each of its subsidiaries not to, and (ii) without the prior written
consent of Barnett (which consent will not be unreasonably withheld or delayed)
NationsBank will not, and will cause each of its subsidiaries not to: (a)
conduct the business of it and its subsidiaries other than in the ordinary and
usual course or, to the extent consistent therewith, fail to use reasonable
efforts to preserve intact their business organizations and assets and maintain
their rights, franchises and existing relations with customers, suppliers,
employees and business associates, or take any action that would (1) adversely
affect the ability of any party to obtain any necessary approvals of any
regulatory authorities required for the transactions contemplated by the
Agreement or (2) adversely affect its ability to perform any of its material
obligations under the Agreement; (b) in the case of Barnett, other than pursuant
to the conversion or exchange of convertible or exchangeable securities or stock
options or stock-based awards previously disclosed to NationsBank, the
conversion of the Barnett Preferred Stock pursuant to its terms, the Barnett
Stock Option Agreement, the Barnett Rights Agreement or as otherwise previously
disclosed to NationsBank, (1) issue, sell or otherwise permit to become
outstanding, or authorize the creation of, any additional shares of capital
stock, any stock appreciation rights or any convertible, exchangeable or
derivative securities, (2) enter into any agreement with respect to the
foregoing, or (3) permit any additional shares of capital stock to become
subject to new grants of employee stock options, stock appreciation rights, or
similar stock-based employee rights; (c) (1) make, declare or pay any dividend
(other than (A) in the case of Barnett, (x) quarterly cash dividends on Barnett
Common Stock at a rate not to exceed the rate in effect as of the date of the
Agreement, (y) dividends payable on Barnett Preferred Stock at a rate not
exceeding the rate provided for in the terms thereof, and (z) dividends from
greater than 95%-owned subsidiaries to Barnett or another greater than 95%-owned
subsidiary of Barnett, as applicable, and (B) in the case of NationsBank, (x)
regular quarterly cash dividends on NationsBank Common Stock in the ordinary
course consistent with past practice, (y) semi-annual cash dividends on the
NationsBank ESOP Preferred Stock and cash dividends on any other outstanding
issues of preferred stock of NationsBank in accordance with the terms thereof,
and (z) dividends from subsidiaries to NationsBank or another subsidiary of
NationsBank, as applicable) on or in respect of, or declare or make any
distribution on, any shares of its capital stock, or (2) directly or indirectly
combine, redeem, reclassify, purchase or otherwise acquire any shares of its
capital stock, other than (A) as previously disclosed to the other party, (B) in
the case of Barnett, pursuant to the terms of the Barnett Preferred Stock or
pursuant to the redemption thereof prior to the Effective Time, if requested by
NationsBank or (C) in the ordinary course pursuant to employee benefit plans
(and after the date of the Agreement, each of NationsBank and Barnett will
coordinate with the other the declaration of any dividends in respect of
NationsBank Common Stock and Barnett Common Stock and the record dates and
payment dates relating thereto, it being the intention of the parties that
holders of NationsBank Common Stock or Barnett Common Stock will not receive two
dividends, or fail to receive one dividend, for any single calendar quarter with
respect to their shares of NationsBank Common Stock and/or Barnett Common Stock
and any shares of NationsBank Common Stock any such holder receives in exchange
therefor in the Merger); (d) in the case of Barnett and its subsidiaries, except
as otherwise agreed by Barnett and NationsBank, enter into or amend any written
employment, severance or similar agreements or arrangements with any of its
directors, officers or employees, or grant any salary or wage increase or
increase any employee benefit (including incentive or bonus payments), except
for (1) normal individual increases in compensation to employees in the ordinary
course of business consistent with past practice, or (2) other changes as are
provided for in the Agreement or as may be required by law or to satisfy
contractual obligations existing as of the date of the Agreement or additional
grants of awards to newly hired employees consistent with past practice or such
changes that, either individually or in the aggregate, would not reasonably be
expected to result in a material liability to Barnett or its subsidiaries; (e)
in the case of Barnett and its subsidiaries, except as otherwise agreed to by
Barnett and NationsBank, enter into or amend (except as may be required by
applicable law, to satisfy contractual obligations existing as of the date of
the Agreement or amendments which, either individually or in the aggregate,
would not reasonably be expected to result in a material liability to Barnett or
its subsidiaries) any pension, retirement, stock option, stock purchase,
savings, profit sharing, deferred compensation, consulting, bonus, group
insurance or other employee benefit, incentive or welfare contract, plan or
arrangement, or any trust agreement related thereto, in respect of any of its
directors, officers or other employees, including without limitation taking any
action that accelerates the vesting or exercise of any benefits payable
thereunder; (f) in the case of Barnett, except as previously disclosed to
NationsBank, dispose of or discontinue any portion of its assets, business or
properties which is material to it and its subsidiaries taken as a whole, or
acquire (other than by way of foreclosures or acquisitions of control in a BONA
FIDE fiduciary capacity or in satisfaction of debts previously contracted in
good faith, in each case, in the ordinary and usual course of business
consistent with
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past practice) all or any portion of the business or property of any other
entity which is material to it and its subsidiaries taken as a whole, and in the
case of NationsBank, make any acquisition or take any other action which would
materially adversely affect its ability to consummate the transactions
contemplated by the Agreement; (g) in the case of Barnett, amend the Barnett
Articles of Incorporation or Bylaws of Barnett, as amended (the "Barnett
Bylaws") in a manner that would materially and adversely affect either party's
ability to consummate the Merger or the economic benefits of the Merger to
either party, or amend or waive any rights under the Barnett Rights Agreement;
(h) implement or adopt any change in its accounting principles, practices or
methods, other than as may be required by GAAP; (i) knowingly take any action
that would, or would be reasonably likely to, prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code
or for "pooling of interests" accounting treatment under GAAP, or knowingly take
any action that is intended or is reasonably likely to result in (1) any of its
representations and warranties set forth in the Agreement being or becoming
untrue in any material respect at any time prior to the Effective Time, (2) any
of the conditions to the Merger not being satisfied or (3) a material violation
of any provision of the Agreement except, in each case, as may be required by
applicable law; or (j) agree or commit to do anything prohibited by (a)-(i)
above.
The Agreement also contains certain other agreements relating to the
conduct of the parties prior to the Effective Time, including those requiring
the parties (i) to use their good faith, reasonable best efforts to take
necessary actions to effect the Merger; (ii) to obtain all necessary shareholder
approvals; (iii) to cooperate in the preparation of the Registration Statement
and this Joint Proxy Statement-Prospectus; (iv) to cooperate in preparing,
filing and obtaining all necessary regulatory approvals; (v) to refrain from
issuing press releases regarding the Merger without the other party's prior
approval (except as otherwise required by applicable law, regulation or NYSE
rules); (vi) to provide the other party with reasonable access to information
regarding such party (except insofar as such access would violate or prejudice
the rights of customers, jeopardize the attorney-client privilege or contravene
certain legal or contractual obligations) under the condition that no such
confidential information be shared with any third party except as required by
applicable law; (vii) with respect to Barnett, to refrain from soliciting or
encouraging any alternative business combination transactions (subject in
certain respects to the fiduciary obligations of the Barnett Board); and (viii)
to take steps necessary to ensure that the Agreement and the Merger will not
trigger any special shareholder rights contained in the corporate governance
documents of such party or pursuant to any contract.
In addition, NationsBank has agreed to provide indemnification to the
officers, directors and employees of Barnett to the full extent permitted by law
and to maintain for six years following the Effective Time the indemnification
rights of such persons under the Barnett Articles of Incorporation and the
Barnett Bylaws, as well as directors' and officers' liability insurance for the
officers and of Barnett. NationsBank has also covenanted to list the shares of
NationsBank Common Stock to be issued in the Merger on the NYSE.
NationsBank has also agreed to cause Mr. Rice and four additional
nonemployee directors of Barnett mutually agreed upon by Barnett and NationsBank
to be elected or appointed directors of NationsBank at the Effective Time and to
cause Mr. Rice to be elected or appointed as a member of the NationsBank
Executive Committee. Additionally, it is expected that Mr. Rice will become
Chairman of NationsBank in spring of 1998. See "MANAGEMENT AND OPERATIONS AFTER
THE MERGER" and " -- Interest of Certain Persons in the Merger."
CONDITIONS TO THE MERGER
The obligation of each of the parties to consummate the Merger is
conditioned upon the satisfaction at or prior to the Effective Time of each of
the following: (i) approval of the Agreement by the requisite vote of the
Barnett Shareholders and of the Issuance by the requisite vote of the
NationsBank Shareholders; (ii) the receipt of all regulatory approvals required
to consummate the transactions contemplated by the Agreement; (iii) all consents
or approvals of all persons required for the consummation of the Merger will
have been obtained and will be in full force and effect, unless the failure to
obtain any such consent or approval is not reasonably likely to have,
individually or in the aggregate, a material adverse effect on Barnett or
NationsBank; (iv) no order, decree or injunction of any court or agency of
competent jurisdiction will be in effect, and no law, statute or regulation will
have been enacted or adopted, that enjoins, prohibits or makes illegal
consummation of any of the transactions contemplated by the Agreement, provided
that each of NationsBank and Barnett will have used its best efforts to prevent
any such rule, regulation, injunction, decree or other order, and to appeal as
promptly as possible any injunction, decree or other order that may be entered;
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(v) with respect to the obligations of each party, the representations and
warranties of the other party contained in the Agreement will be true and
correct at the time of the Agreement and at the Effective Time, other than any
inaccuracies which would not be reasonably likely, individually or in the
aggregate, to have a material adverse effect on the financial condition or
results of operations of the party to whom such representations and warranties
were made (and the covenants of the other party will have been performed or
complied with in all material respects); (vi) no stop order suspending the
effectiveness of the Registration Statement will have been issued and no
proceedings for that purpose will have been initiated or threatened by the
Commission or any other regulatory authority; (vii) NationsBank shall have
received from Wachtell, Lipton, Rosen & Katz, its counsel, and Barnett shall
have received from Skadden, Arps, Slate, Meagher & Flom LLP, its counsel, an
opinion, in each case dated as of the Effective Time as described under
" -- Certain Federal Income Tax Consequences"; (viii) the Articles of Amendment
shall have become effective in accordance with the NCBCA; (ix) the shares of
NationsBank Common Stock issuable pursuant to the Agreement will have been
approved for listing on the NYSE, subject to official notice of issuance; (x)
with respect to NationsBank's obligations to consummate the Merger, the Barnett
Rights will not have been triggered and (xi) NationsBank shall have received
from Price Waterhouse LLP, its independent public accountants, its opinion that
the Merger will qualify for "pooling-of-interests" accounting treatment.
No assurance can be provided as to if or when the regulatory approvals
necessary to consummate the Merger will be obtained or whether all of the other
conditions precedent to the Merger will be satisfied or waived by the party
permitted to do so. If the Merger is not effected on or before September 1,
1998, the Agreement may be terminated by either NationsBank or Barnett, except
to the extent the failure to effect the Merger by such date is due to the
failure of the party seeking to terminate the Agreement to perform or observe
its covenants and agreements set forth therein.
TERMINATION OF THE AGREEMENT
The Agreement may be terminated, and the Merger may be abandoned: (i) at
any time prior to the Effective Time, by the mutual written consent of the
parties, if the Board of Directors of each so determines by vote of a majority
of the members of its entire Board of Directors; (ii) at any time prior to the
Effective Time, by either party if its Board of Directors so determines by vote
of a majority of the members of its entire Board of Directors, in the event of
either a material breach by the other party of any of its representations or
warranties contained in the Agreement, which breach cannot be or has not been
cured within 30 days after the giving of written notice to the breaching party
of such breach, or a material breach by the other party of any of its covenants
or agreements contained in the Agreement, which breach cannot be or has not been
cured within 30 days after the giving of written notice to the breaching party
of such breach (provided that the terminating party is not in material breach of
the Agreement); (iii) at any time prior to the Effective Time, by either party,
if its Board of Directors so determines by vote of a majority of the members of
its entire Board of Directors, in the event that the Merger is not consummated
by September 1, 1998, except to the extent that the failure of the Merger then
to be consummated arises out of or results from the failure of the party seeking
to terminate the Agreement to perform or observe its covenants and agreements
set forth in the Agreement; (iv) by either party, if its Board of Directors so
determines by a vote of a majority of its members, in the event (a) the approval
of the Federal Reserve Board required for consummation of the Merger and the
other transactions contemplated by the Agreement has been denied by final
nonappealable action or any governmental entity of competent jurisdiction has
issued a final order enjoining the Merger, PROVIDED, HOWEVER, that the party
seeking termination shall have taken all necessary action to secure regulatory
approval, or (b) any required shareholder approval is not obtained at the
Barnett Special Meeting or the NationsBank Special Meeting; (v) by either
NationsBank or Barnett, if the Board of Directors of the other party to the
Agreement has withdrawn, modified or changed in a manner adverse to the
terminating party its approval or recommendation of the Agreement and the
transactions contemplated thereby; and (vi) by Barnett, if the Barnett Board so
determines by a vote of a majority of its members, at any time during the
ten-day period commencing two days after the Determination Date (as defined
herein), if both of the following conditions are satisfied (a "Termination
Event"):
(a) the Average Closing Price is less than $50.65, and
(b) (1) the number obtained by dividing the Average Closing Price by
the Starting Price (as defined herein) (such number being referred to
herein as the "NationsBank Ratio") is less than (2) the number obtained by
dividing the Average Index Price (as defined herein) by the Index Price (as
defined herein) on
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the Starting Date (as defined herein) and subtracting 0.15 from the
quotient (such number being referred to herein as the "Index Ratio");
PROVIDED, HOWEVER, that, if Barnett elects to exercise this termination right,
it will give prompt written notice to NationsBank (which notice may be withdrawn
at any time within the aforementioned ten-day period) and during the five days
commencing with its receipt of such notice, NationsBank will have the option of
increasing the Exchange Ratio to equal the lesser of (i) a fraction, the
numerator of which is the product of $50.65 and the Exchange Ratio (as then in
effect) and the denominator of which is the Average Closing Price, and (ii) the
quotient obtained by dividing the product of the Index Ratio and the Exchange
Ratio (as then in effect) by the NationsBank Ratio (and, if NationsBank makes an
election contemplated by the preceding sentence within such five-day period, it
will give prompt written notice to Barnett of such election and the revised
Exchange Ratio, whereupon no termination will have occurred as a result of this
right of termination and the Agreement will remain in effect in accordance with
its terms (except as the Exchange Ratio will have been so modified), and any
references in the Agreement to "Exchange Ratio" will thereafter be deemed to
refer to the Exchange Ratio as so adjusted).
Whether a Termination Event will occur will not be known until the date
that the Average Closing Price can be determined. If such date were the date of
this Joint Proxy Statement-Prospectus, no such right of termination would exist
based on the prevailing market price of NationsBank Common Stock. The Barnett
Board has made no decision as to whether it would exercise its termination right
in the event of a Termination Event, and the NationsBank Board has made no
decision as to whether it would exercise its correlative right to increase the
Exchange Ratio. In the event a Termination Event occurs, each of the NationsBank
Board and the Barnett Board would, consistent with its fiduciary duties, take
into account all relevant facts and circumstances as they exist at such time,
and would consult with its respective financial advisors and legal counsel.
Approval of the Agreement by the Barnett Shareholders at the Barnett Special
Meeting, and by the NationsBank Shareholders at the NationsBank Special Meeting,
will confer on the Barnett Board and the NationsBank Board, respectively, the
power, consistent with the fiduciary duties of such Boards, to elect to
consummate the Merger notwithstanding the occurrence of a Termination Event (in
the case of the Barnett Board) or to elect to increase the Exchange Ratio should
Barnett exercise its termination right (in the case of the NationsBank Board)
without any further action by, or resolicitation of the votes of, the
shareholders of Barnett or NationsBank, as the case may be. The fairness
opinions received by each of Barnett and NationsBank are each dated as of the
date of this Joint Proxy Statement-Prospectus and are based on conditions in
effect on the date thereof. Accordingly, none of such opinions address the
circumstances that might arise if the matters contemplated by clause (vi) of the
previous paragraph were to occur. In such an event, Barnett or NationsBank, as
the case may be, intends that it would obtain the reconfirmation of its
respective investment bankers with respect to the fairness of the revised
transaction prior to proceeding with the consummation of the Merger. See
" -- Opinions of Barnett's Financial Advisors" and " -- Opinions of
NationsBank's Financial Advisors."
For purposes of the right of termination and adjustment described in (vi)
above, the following terms are defined in the Agreement as follows: "Average
Closing Price" means the average of the daily last sale prices of NationsBank
Common Stock as reported on the NYSE Composite Transactions reporting system (as
reported in THE WALL STREET JOURNAL or, if not reported therein, in another
mutually agreed upon authoritative source) for the ten consecutive full trading
days in which such shares are traded on the NYSE ending at the close of trading
on the Determination Date; "Average Index Price" means the average of the Index
Prices for the ten consecutive full NYSE trading days ending at the close of
trading on the Determination Date; and "Determination Date" means the date on
which the approval of the Federal Reserve Board required for consummation of the
Merger will be received.
"Index Group" means the 15 bank holding companies listed below, the common
stock of each of which must be publicly traded and as to which there must 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 as of the Starting Date. In the
event that the common stock of any such company ceases to be publicly traded or
such an announcement is made, such company will be removed from the Index Group,
and the weights (which have been determined based on the number of outstanding
shares of common stock)
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redistributed proportionately for purposes of determining the Index Price. The
15 bank holding companies and the weights attributed to them are as follows:
<TABLE>
<CAPTION>
BANK HOLDING COMPANY WEIGHTING
- ----------------------------------------------------------------------------- ---------
<S> <C>
Citicorp..................................................................... 8.7%
Chase Manhattan Corp......................................................... 8.0%
BankAmerica Corporation...................................................... 13.3%
Banc One Corporation......................................................... 11.0%
First Union Corporation...................................................... 10.7%
Wells Fargo & Co............................................................. 1.7%
First Chicago NBD Corporation................................................ 5.7%
Norwest Corporation.......................................................... 7.1%
Bank of New York Company, Inc................................................ 7.2%
Fleet Financial Group........................................................ 4.8%
PNC Bank Corporation......................................................... 5.8%
SunTrust Banks, Inc.......................................................... 4.0%
KeyCorp...................................................................... 4.1%
Mellon Bank Corporation...................................................... 4.8%
Wachovia Corporation......................................................... 3.0%
</TABLE>
"Index Price" on a given date means the weighted average (weighted in
accordance with the factors listed above) of the closing prices on such date of
the companies composing the Index Group; "Starting Date" means August 28, 1997,
the last full day on which the NYSE was open for trading prior to the execution
of the Agreement; "Starting Price" means $63.3125, the last sale price per share
of NationsBank Common Stock on the Starting Date, as reported by the NYSE
Composite Transactions reporting system (as reported in THE WALL STREET JOURNAL
or, if not reported therein, in another mutually agreed upon authoritative
source). If any company belonging to the Index Group or NationsBank declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares or similar transaction between the Starting Date
and the Determination Date, the prices for the common stock of such company or
NationsBank will be appropriately adjusted for use in the index.
In the event of termination of the Agreement pursuant to its terms and the
abandonment of the Merger, no party to the Agreement will have any liability or
further obligation to any other party except (i) for the breach of certain
representations, warranties and covenants which survive termination and (ii)
that termination will not relieve a breaching party from liability for any
willful breach of the Agreement giving rise to such termination.
WAIVER; AMENDMENT; EXPENSES
Prior to the Effective Time, and subject to compliance with applicable law,
any provision of the Agreement may be (i) waived by the party benefited by the
provision, or (ii) amended or modified at any time, by an agreement in writing
among the parties approved by their respective Boards of Directors and executed
in the same manner as the Agreement. Florida law prohibits any amendment to any
of the terms and conditions of the Agreement subsequent to stockholder approval
which would, among other things, change the amount or kind of consideration to
be received by the Barnett Shareholders in the Merger. In addition, the
Agreement permits NationsBank at any time to change the method of effecting the
combination with Barnett if and to the extent that NationsBank deems such change
desirable. In any event, no such change may alter or change the Merger
Consideration, adversely affect the tax treatment of Barnett shareholders as a
result of receiving the Merger Consideration or materially impede or delay
consummation of the Merger. Pursuant to the foregoing, NationsBank has specified
that the Merger be effected as described under "THE MERGER -- Description of the
Merger."
Each party to the Agreement will bear all expenses incurred by it in
connection with the Agreement and the transactions contemplated thereby, except
that printing expenses and Commission registration fees will be shared equally
between Barnett and NationsBank.
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<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material anticipated U.S. federal income
tax consequences of the Merger to holders of Barnett Common Stock who hold such
stock as a capital asset. This summary is based on the Code, Treasury
regulations thereunder, and administrative rulings and court decisions in effect
as of the date hereof, all of which are subject to change at any time, possibly
with retroactive effect. This summary is not a complete description of all of
the consequences of the Merger and, in particular, may not address U.S. federal
income tax considerations applicable to shareholders subject to special
treatment under U.S. federal income tax law (including, for example, non-U.S.
persons, holders of Barnett Preferred Stock, financial institutions, dealers in
securities, insurance companies or tax-exempt entities, holders who acquired
Barnett Common Stock pursuant to the exercise of an employee stock option or
right or otherwise as compensation, and holders who hold Barnett Common Stock as
part of a hedge, straddle or conversion transaction). In addition, no
information is provided herein with respect to the tax consequences of the
Merger under applicable foreign, state or local laws. HOLDERS OF BARNETT COMMON
STOCK ARE URGED TO CONSULT WITH THEIR TAX ADVISORS REGARDING THE TAX
CONSEQUENCES OF THE MERGER TO THEM, INCLUDING THE EFFECTS OF FEDERAL, STATE,
LOCAL, FOREIGN AND OTHER TAX LAWS.
In connection with the filing of the Registration Statement, Wachtell,
Lipton, Rosen & Katz, counsel to NationsBank, has delivered to NationsBank its
opinion, dated the date hereof and based upon certain customary assumptions and
representations, to the effect that, and at the Effective Time each of Wachtell,
Lipton, Rosen & Katz and Skadden, Arps, Slate, Meagher & Flom LLP, counsel to
Barnett, will, subject to the qualifications discussed in the following
paragraph, deliver to NationsBank and Barnett, respectively, its opinion (each,
a "Tax Opinion"), dated as of the Effective Time, to the effect that, in each
case for U.S. federal income tax purposes:
(i) The Merger will be treated as a reorganization within the meaning of
Section 368(a) of the Code;
(ii) No gain or loss will be recognized by NationsBank, NB Holdings or
Barnett as a result of the Merger;
(iii) No gain or loss will be recognized by the holders of Barnett Common
Stock who exchange all of their Barnett Common Stock solely for NationsBank
Common Stock pursuant to the Merger (except with respect to cash received in
lieu of a fractional share interest in NationsBank Common Stock); and
(iv) The aggregate tax basis of the NationsBank Common Stock received by
holders of Barnett Common Stock who exchange all of their Barnett Common Stock
solely for NationsBank Common Stock pursuant to the Merger will be the same as
the aggregate tax basis of the Barnett Common Stock surrendered in exchange
therefor (reduced by any basis amount allocable to the fractional share interest
in NationsBank Common Stock for which cash is received).
Each party's obligation to consummate the Merger is conditioned upon the
receipt by each of NationsBank and Barnett of its respective Tax Opinion in
form and substance reasonably satisfactory to the party to whom such Tax Opinion
is addressed. Each of Wachtell, Lipton, Rosen & Katz and Skadden, Arps, Slate,
Meagher & Flom LLP will render its respective Tax Opinion on the basis of
facts, representations and assumptions set forth or referred to in such opinion
which are consistent with the state of facts existing at the Effective Time. In
rendering the Tax Opinions, each such counsel may require and rely upon
representations and covenants including those contained in certificates of
officers of NationsBank, NB Holdings, Barnett and others, reasonably
satisfactory in form and substance to such counsel. The Tax Opinions are not
binding on the Internal Revenue Service (the "IRS") or the courts, and the
parties do not intend to request a ruling from the IRS with respect to the
Merger. Accordingly, there can be no assurance that the IRS will not challenge
such conclusion or that a court will not sustain such challenge.
In the event that (i) either Barnett or NationsBank fails to receive its
Tax Opinion, (ii) Barnett determines to waive the condition to its obligation to
consummate the Merger relating thereto, and (iii) the material federal income
tax consequences to Barnett Shareholders are different from those described
above, Barnett will resolicit the Barnett Shareholders prior to proceeding with
consummation of the Merger.
Based upon the current ruling position of the IRS, cash received by a
holder of Barnett Common Stock in lieu of a fractional share interest in
NationsBank Common Stock will be treated as received in redemption of such
fractional share interest, and a Barnett stockholder should generally recognize
capital gain or loss for
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<PAGE>
federal income tax purposes measured by the difference between the amount of
cash received and the portion of the tax basis of the share of Barnett Common
Stock allocable to such fractional share interest. Such gain or loss should
be a long-term capital gain or loss if the holding period for such share of
Barnett Common Stock is greater than one year at the Effective Time. In
certain circumstances, holders of Barnett Common Stock that are individuals
may be entitled to preferential treatment for net long-term capital gains,
including, as a result of recently enacted legislation, in the case of a capital
asset held for more than 18 months at the time of the disposition. The holding
period of a share of NationsBank Common Stock received in the Merger (including
fractional share interests deemed received and redeemed as described
above) will include the holder's holding period in the Barnett Common Stock
surrendered in exchange therefor.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
GENERAL. As described below, certain members of Barnett management and of
the Barnett Board have certain arrangements with respect to the NationsBank
management and NationsBank Board composition following the Merger, certain
benefits under existing employment agreements and severance and benefit plans
and certain post-Merger employment opportunities with NationsBank. In addition,
the Agreement contains certain provisions relating to the indemnification of
Barnett directors and officers and directors' and officers' liability insurance.
The Barnett Board was aware of these interests and considered them, among other
matters, in approving the Agreement and the transactions contemplated thereby.
BOARD COMPOSITION AND RELATED MATTERS POST-MERGER. NationsBank has agreed
to cause Mr. Rice to be appointed to the NationsBank Board and to the Executive
Committee of the NationsBank Board and to be elected Chairman of the NationsBank
Board commencing upon the retirement of Andrew B. Craig, III, the current
Chairman of the NationsBank Board, at the NationsBank Annual Shareholders
Meeting in 1998. NationsBank has also agreed that four additional individuals
who are nonemployee members of the Barnett Board and who are mutually agreed
upon by Barnett and NationsBank (in addition to Mr. Rice) will be elected to the
NationsBank Board following consummation of the Merger. The four additional
Barnett designees have not yet been identified. See "MANAGEMENT AND OPERATIONS
AFTER THE MERGER."
EXISTING EMPLOYMENT AGREEMENTS WITH BARNETT EXECUTIVE OFFICERS. Barnett is
a party to employment agreements (each, an "Existing Employment Agreement") with
Mr. Rice; Mr. Lastinger; Hinton F. Nobles, Jr., Executive Vice President;
Charles W. Newman, Chief Financial Officer; Richard A. Anderson, Chief Credit
Policy Executive; and Judith S. Beaubouef, Chief Legal Executive (each a
"Barnett Executive" and collectively, the "Barnett Executives"), as well as with
twelve other executive officers of Barnett (the "Other Executive Officers"). The
Existing Employment Agreements provide certain benefits to the Barnett
Executives and the Other Executive Officers in the event of the actual or
constructive termination of employment of such Barnett Executives or Other
Executive Officers other than for "cause" (as defined in the Existing Employment
Agreements) during the two-year period following a "change in control" of the
Company (as defined in the Existing Employment Agreements). In the event of such
a termination, the Existing Employment Agreements provide for a lump sum payment
of two times (three times in the case of Messrs. Rice and Lastinger and one time
in the case of one of the Other Executive Officers) the sum of the base salary
in effect immediately before the termination of the affected Barnett Executive
or Other Executive Officer and the highest annual incentive compensation of such
Barnett Executive or Other Executive Officer for the three-year period preceding
termination of employment. The Existing Employment Agreements also provide,
among other things, that the Barnett Executives and Other Executive Officers
will (i) during the two-year period (or three-year period in the case of Messrs.
Rice and Lastinger and one-year period in the case of one of the Other Executive
Officers) following
such termination of employment, continue to participate in employee benefit
plans of Barnett at the same level as in effect prior to such termination; and
(ii) be entitled to additional payments sufficient to make them whole for any
excise taxes imposed under Section 4999 of the Code and any income taxes
resulting from payments made, or benefits received, pursuant to the Existing
Employment Agreements. Shareholder Approval of the Agreement will constitute a
"change of control" under the Existing Employment Agreements.
NEW EMPLOYMENT ARRANGEMENTS WITH BARNETT EXECUTIVES. In connection with the
execution and delivery of the Agreement, the Barnett Executives agreed to waive
their rights under the Existing Employment Agreements and to enter into new
employment agreements with NationsBank (the "New Employment Agreements"). Each
of the New Employment Agreements is dated as of October 10, 1997, will become
effective as of
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<PAGE>
the Effective Time, will terminate on the third anniversary of the Effective
Date and will upon effectiveness supersede the corresponding Existing
Employment Agreement.
Mr. Rice's New Employment Agreement provides that Mr. Rice will serve as a
member of the NationsBank Board and of the Executive Committee thereof, and that
immediately upon the retirement of Mr. Craig, the current Chairman of the
NationsBank Board, Mr. Rice will serve in that capacity as well. Mr. Lastinger's
New Employment Agreement provides that Mr. Lastinger will serve as Executive
Vice President of NationsBank and as the Chairman of NationsBank-Florida. Each
New Employment Agreement of the Barnett Executives other than Mr. Rice and Mr.
Lastinger provides that such Barnett Executive will serve as an Executive Vice
President of NationsBank.
In connection with the employment described above, each of the Barnett
Executives will receive an annual salary (in the case of Mr. Rice, the greater
of $1.0 million or the annual base salary in effect from time to time of the
Chief Executive Officer of NationsBank; in the case of Mr. Lastinger, $600,000;
and in the case of each of the remaining Barnett Executives, $400,000) as well
as an annual bonus (in the case of Mr. Rice, equal to at least 100% of the bonus
awarded to the Chief Executive Officer of NationsBank, but in no event less than
$2.5 million; in the case of Mr. Lastinger, not less than $1.0 million; and in
the case of each of the remaining Barnett Executives, not less than $400,000).
The New Employment Agreements also provide for a grant on the Effective Date of
restricted shares of NationsBank Common Stock to the Barnett Executives of
250,000 in the case of Mr. Rice, 125,000 in the case of Mr. Lastinger, and
50,000 in the case of each of the remaining Barnett Executives (with
restrictions lapsing as to one-third of such shares on each anniversary of the
Effective Date) and a grant on the Effective Date and the first anniversary
thereof (and, in addition, on the second anniversary thereof in the case of
Messrs. Rice and Lastinger) of an option to purchase shares of NationsBank
Common Stock (each vesting in three equal annual installments commencing on the
date of grant, except that options not yet exercisable at the end of the term of
a New Employment Agreement will vest on such date). The number of shares of
NationsBank Common Stock subject to each yearly option grant is 200,000 (in the
case of Mr. Rice), 100,000 (in the case of Mr. Lastinger) and 30,000 (in the
case of each of the remaining Barnett Executives). In addition, each of the New
Employment Agreements provides for the reimbursement of reasonable business
expenses, participation in employee benefit plans and arrangements, perquisites,
vacation time and special benefits provided by NationsBank to similarly situated
employees (and, in the case of Mr. Rice, continuing entitlement to perquisites
generally at the same level as currently provided by Barnett). Pursuant to the
New Employment Agreements, the Barnett Executives will be designated
participants in the NationsBank Corporation and Designated Subsidiaries
Supplemental Executive Retirement Plan ("SERP I") with a target annual
retirement benefit of 60% of the participant's final five-year average earnings,
offset by certain annual retirement benefits received from plans of NationsBank
or Barnett or from social security. The minimum annual retirement benefit under
SERP I payable to the Barnett Executives will be $1,825,000 in the case of Mr.
Rice, $840,000 in the case of Mr. Lastinger and $250,000 in the case of each of
the remaining Barnett Executives. Each Barnett Executive's SERP I benefit is
payable in a lump sum (if elected) within 30 days following the date of
termination of employment and is subject to an income tax gross-up. Each New
Employment Agreement provides NationsBank will pay to the Barnett Executive
covered thereby an amount sufficient to cover any excise taxes imposed under
Section 4999 of the Code, including any taxes imposed on any such excise tax
payments. The Barnett Executives will also be entitled to indemnification by
NationsBank to the fullest extent permitted by the laws of NationsBank's state
of incorporation as in effect from time to time or by the NationsBank Articles
of Incorporation or By-Laws, whichever affords greater protection, to any
insurance policies NationsBank may maintain generally for the benefit of its
directors and officers and to reimbursement for any legal fees or expenses in
connection with certain disputes arising in connection with their respective New
Employment Agreement.
Under the New Employment Agreements, each Barnett Executive has agreed
(subject to certain limited exceptions pertaining to passive beneficial
ownership of 5% or less of a class of capital stock of a corporation that
competes with NationsBank), during the term of such Barnett Executive's
employment pursuant thereto and for a period of two years thereafter, not to
engage in "Competition" (as defined in the New Employment Agreement) with
NationsBank. Each Barnett Executive has also agreed to certain confidentiality,
nondisclosure and other obligations with respect to trade secrets, confidential
information and nonpublic knowledge or data relating to NationsBank obtained by
such Barnett Executive during his or her employment with
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NationsBank. In consideration of the agreement of the Barnett Executives to
enter into the foregoing noncompetition and confidentiality covenants, the New
Employment Agreements provide that if a Barnett Executive's employment is
terminated as a result of death, by NationsBank for any reason other than Cause
(as defined in the New Employment Agreement) or by the Barnett Executive for
Good Reason (as defined in the New Employment Agreement), the Barnett
Executive will be entitled to (a) a pro rata portion of the bonus payable with
respect to the year in which the date of termination occurs; (b) a cash lump
sum payment equal to the sum of the Barnett Executive's annual base salary and
minimum bonus, multiplied by the number of years (including fractions thereof)
remaining in the term of the New Employment Agreement (with respect to the
Barnett Executives other than Mr. Rice, not to exceed one year in the event of
termination of employment due to death or Disability (as defined in the New
Employment Agreements)); and (c) the other benefits described in the preceding
paragraph for the remainder of the term of the New Employment Agreement; and
in addition to the foregoing, in such event all equity-based awards granted
under the New Employment Agreement will become fully vested and exercisable,
and restrictions with respect thereto will lapse, as the case may be, and all
outstanding options will remain exercisable for the three-year period
commencing on the date of termination.
OUTSTANDING STOCK-BASED AWARDS. All of the executive officers and directors
of Barnett hold Barnett Employee Stock Options and/or restricted shares of
Barnett Common Stock ("Barnett Restricted Shares"). Pursuant to the Agreement,
at the Effective Time each outstanding Barnett Employee Stock Option, whether or
not exercisable, will automatically be converted into an option to acquire
shares of NationsBank Common Stock adjusted to account for the Exchange Ratio.
See " -- Description of the Merger."
Pursuant to existing provisions of Barnett's 1989 Long-Term Incentive Plan
and 1997 Performance-Based Incentive Plan, upon approval of the Merger by
Barnett's shareholders at the Barnett Special Meeting ("Shareholder Approval"),
all outstanding Barnett Employee Stock Options will become immediately
exercisable in full and all restrictions on outstanding Barnett Restricted
Shares will lapse. As of the Barnett Record Date, Messrs. Rice, Lastinger,
Newman, Nobles and Anderson and Ms. Beaubouef held unexercisable options to
purchase 645,000, 322,500, 135,000, 137,000, 132,350 and 109,500 shares of
Barnett Common Stock, respectively, which will become exercisable as a result of
Shareholder Approval. In addition, as of the Barnett Record Date, the Other
Executive Officers as a group held unexercisable options to purchase an
aggregate of 1,036,000 shares of Barnett Common Stock which will become
exercisable upon Shareholder Approval. As of the Barnett Record Date, Barnett
Executives held Barnett Restricted Shares in the following amounts: Messrs.
Rice, Lastinger, Newman, Nobles, Anderson, and Ms. Beaubouef held 15,000, 7,500,
4,000, 4,000, 3,000 and 4,000 Barnett Restricted Shares, respectively (not
counting for this purpose Restricted Shares that would otherwise vest on January
1, 1998), all of which will become unrestricted as a result of Shareholder
Approval and all of which will be converted in the Merger into shares of
NationsBank Common Stock based on the Exchange Ratio. In addition, as of the
Barnett Record Date, the Other Executive Officers as a group held an aggregate
of 10,000 Barnett Restricted Shares (not counting for this purpose Restricted
Shares that would otherwise vest on January 1, 1998) which will become
unrestricted upon Shareholder Approval and which will be converted in the Merger
into shares of NationsBank Common Stock based on the Exchange Ratio.
In addition, under the 1997 Performance-Based Incentive Plan, the Barnett
Executives are eligible for the award of additional shares of Barnett Restricted
Shares, which will also become vested upon Shareholder Approval. The number of
such shares to be awarded will be based upon the financial performance of
Barnett and the financial performance of Barnett relative to a peer group, as
set forth in such plan. The following Barnett Executives will be entitled to the
following share awards: Mr. Rice, up to 45,000; Mr. Lastinger, up to
22,500; the remaining Barnett Executives, up to 10,500 each; and the Other
Executive Officers as a group, up to 100,200.
SEVERANCE PAY PLAN. Effective as of January 1, 1996, Barnett adopted an
amended and restated Severance Pay Plan, pursuant to which eligible employees
are entitled to receive up to two weeks of base pay for each year of service
with Barnett or its subsidiaries in the event of an involuntary termination of
employment in connection with a change in control (as defined in the Severance
Pay Plan). Shareholder Approval will constitute a change in control under the
Severance Pay Plan. Each of the Barnett Executives has waived all rights to
benefits under the Severance Pay Plan, and the Other Executive Officers would,
as a group, be entitled in the aggregate to approximately $1,300,000 under the
terms of the Severance Pay Plan if their employment were involuntarily
terminated in connection with the Merger.
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INDEMNIFICATION AND INSURANCE. The Agreement provides that NationsBank
will, for six years after the Effective Time, indemnify directors, officers and
employees of Barnett or any of its subsidiaries against certain liabilities in
connection with such persons' status as such or in connection with the
Agreement, the Stock Option Agreements or any of the transactions contemplated
thereby. Pursuant to the Agreement, NationsBank will also, for six years after
the Effective Time and with respect to events occurring prior to the Effective
Time, honor all rights to indemnification and limitations of liability existing
in favor of the foregoing persons as provided in the Barnett Articles of
Incorporation, the Barnett Bylaws or similar governing documents of Barnett's
subsidiaries. NationsBank has also agreed, for six years after the Effective
Time, to use its best efforts to cause the directors and officers of Barnett to
be covered (with respects to acts or omissions taking place prior to the
Effective Time) by Barnett's directors' and officers' liability insurance
policy, or a substantially similar policy in substitution therefor. See
" -- Conduct of Business Prior to the Merger and Other Covenants."
OTHER COMPENSATION MATTERS. Under the terms of the Barnett Supplemental
Executive Retirement Plan (the "Barnett SERP"), the Barnett Executives and the
Other Executive Officers became vested in their benefits thereunder as of the
date of the Agreement, subject to Shareholder Approval. Pursuant to the terms of
the Barnett SERP, Messrs. Rice and Lastinger, each of whose benefits became
vested prior to the date of the Agreement as a result of their having attained
the requisite age and years of service under the Barnett SERP, will be paid, as
soon as practicable following Shareholder Approval, the lump sum value of an
annual benefit determined by multiplying their "final average earnings" (defined
in the Barnett SERP as average base salary and bonuses, including amounts
deferred, over the two years during the last five years that produce the highest
average) by 60%, reduced by certain other employer-provided retirement plan and
Social Security benefits. The lump sum value of the Barnett SERP benefits
payable to Messrs. Rice and Lastinger will be enhanced by approximately $0.9
million and $2.9 million, respectively, as a result of Shareholder Approval. The
lump sum amount to be paid pursuant to the Barnett SERP, as soon as practicable
following Shareholder Approval, to each remaining Barnett Executive is estimated
to be approximately $5 million and to the Other Executive Officers as a group is
estimated to be approximately $40 million. The Barnett Executives and the Other
Executive Officers may also be entitled to certain supplemental excise tax
gross-up payments under the Existing Employment Agreements with respect to the
foregoing benefits.
NATIONSBANK AND BARNETT STOCK OPTION AGREEMENTS
Concurrently with the execution of the Merger Agreement, NationsBank
executed and delivered the NationsBank Stock Option Agreement, pursuant to which
NationsBank granted to Barnett the NationsBank Option. At the same time, Barnett
executed and delivered the Barnett Stock Option Agreement, pursuant to which
Barnett granted to NationsBank the Barnett Option. NationsBank and Barnett
approved and entered into the NationsBank Stock Option Agreement and the Barnett
Stock Option Agreement, respectively, as an inducement to the other to enter
into the Agreement.
Except as otherwise noted below, the terms and conditions of the
NationsBank Stock Option Agreement and the Barnett Stock Option Agreement are
identical in all material respects. For purposes of this section, except as
otherwise noted, (i) the NationsBank Stock Option Agreement or the Barnett Stock
Option Agreement, as the case may be, is sometimes referred to as the "Issuer
Option Agreement," (ii) NationsBank, as issuer of the NationsBank Common Stock,
and Barnett, as issuer of the Barnett Common Stock, upon the exercise of the
NationsBank Stock Option and the Barnett Stock Option, respectively, are
sometimes individually referred to as the "Issuer," (iii) NationsBank and
Barnett, as the holder of the Barnett Stock Option and the NationsBank Stock
Option, respectively, are sometimes individually referred to as the "Optionee,"
(iv) the NationsBank Option or the Barnett Option, as the case may be, is
sometimes referred to as the "Issuer Option" and (v) NationsBank Common
Stock and Barnett Common Stock is referred to as "Issuer Common Stock."
The Stock Option Agreements are intended to increase the likelihood that
the Merger will be consummated in accordance with the terms of the Agreement.
Consequently, certain aspects of the Stock Option Agreements may have the effect
of discouraging persons who might now or at any other time prior to the
Effective Time be interested in acquiring all of or a significant interest in
NationsBank or Barnett from considering or proposing such an acquisition, even
if, in the case of Barnett, such persons were prepared to offer to pay
consideration to the Barnett Shareholders which had a higher current market
price than the shares of NationsBank Common Stock to be received per share of
Barnett Common Stock pursuant to the Agreement. The acquisition of NationsBank
or Barnett could cause the NationsBank Option or the Barnett Option, as the
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case may be, to become exercisable. The existence of the Issuer Options could
significantly increase the cost to a potential acquiror of acquiring either
Issuer compared to its cost had the Stock Option Agreements and the Agreement
not been entered into. Such increased cost might discourage a potential acquiror
from considering or proposing an acquisition or might result in a potential
acquiror proposing to pay a lower per share price to acquire such Issuer than it
might otherwise have proposed to pay. Moreover, following consultation with
their respective independent accountants, Barnett and NationsBank believe that
the exercise or repurchase of either of the Issuer Options is likely to prohibit
any other acquiror of an Issuer from accounting for an acquisition of such
Issuer using the pooling of interests accounting method for a period of two
years.
The NationsBank Stock Option Agreement provides for the purchase by Barnett
of 70,654,895 shares (the "NationsBank Option Shares" or the "Issuer Option
Shares," as the case may be) of NationsBank Common Stock at an exercise price of
$63.3125 per share (the closing price of NationsBank Common Stock on the last
trading day preceding the execution of the Agreement), payable in cash. The
NationsBank Option Shares, if issued pursuant to the NationsBank Stock Option
Agreement, will in no event exceed 10.0% of the NationsBank Common Stock issued
and outstanding without giving effect to the issuance of any NationsBank Common
Stock subject to the NationsBank Option.
The Barnett Stock Option Agreement provides for the purchase by NationsBank
of 39,379,343 shares (the "Barnett Option Shares" or the "Issuer Option Shares,"
as the case may be) of Barnett Common Stock at an exercise price of $54.8125 per
share (the closing price of Barnett Common Stock on the last trading day
preceding the execution of the Agreement), payable in cash. The Barnett Option
Shares, if issued pursuant to the Barnett Stock Option Agreement, will in no
event exceed 19.9% of the Barnett Common Stock issued and outstanding without
giving effect to the issuance of any Barnett Common Stock subject to the Barnett
Option.
The number of shares of Issuer Common Stock subject to the applicable
Issuer Option will be increased or decreased, as appropriate, to the extent that
additional shares of Issuer Common Stock are either (i) issued or otherwise
become outstanding (other than pursuant to the Issuer Option Agreement or as
permitted under the Merger Agreement) or (ii) redeemed, repurchased, retired or
otherwise cease to be outstanding after August 29, 1997, such that, after such
issuance, the number of Barnett Option Shares will continue to equal 19.9% of
the Barnett Common Stock then issued and outstanding in the case of the Barnett
Stock Option and the number of NationsBank Option Shares will continue to equal
10.0% of the NationsBank Common Stock then issued and outstanding in the case of
the NationsBank Option, in each case, without giving effect to the issuance of
any stock subject to the applicable Issuer Option. In the event of any change
in, or distributions in respect of, the number of shares of Issuer Common Stock
by reason of a stock dividend, split-up, merger, recapitalization, combination,
subdivision, conversion, exchange of shares, distribution on or in respect of
such Issuer Common Stock that would be prohibited by the Merger Agreement, or
similar transaction, the type and number of Issuer Option Shares purchasable
upon exercise of the applicable Issuer Option, and the applicable option price
will also be adjusted in such a manner as will fully preserve the economic
benefits of the Option.
Each Issuer Option Agreement provides that the Optionee or any other holder
or holders of the Issuer Option (as used in this section, collectively, the
"Holder") may exercise the Issuer Option, in whole or in part, subject to
regulatory approval, if both an Initial Triggering Event (as defined herein) and
a Subsequent Triggering Event (as defined herein) has occurred prior to the
occurrence of an Exercise Termination Event (as defined herein); PROVIDED that
the Holder has sent to the Issuer written notice of such exercise within 90 days
following such Subsequent Triggering Event (subject to extension as provided in
each Issuer Option Agreement). The terms "Initial Triggering Event" and
"Subsequent Triggering Event" generally relate to attempts by one or more third
parties to acquire a significant interest in the Issuer. Any exercise of the
Issuer Option will be deemed to occur on the date such notice is sent.
For purposes of each Issuer Option Agreement:
(i) The term "Initial Triggering Event" means the occurrence of any of
the following events or transactions after August 29, 1997: (a) the Issuer
or any subsidiary of the Issuer, without the Optionee's prior written
consent, enters into an agreement to engage in, or the Issuer's Board of
Directors recommends that shareholders of the Issuer approve or accept, an
Acquisition Transaction (as defined herein) with any person or group (other
than as contemplated by the Agreement); (b) the Issuer or any subsidiary of
the Issuer, without the Optionee's prior written consent, authorizes,
recommends, proposes or publicly announces its intention to authorize,
recommend or propose to engage in an Acquisition Transaction, or
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the Issuer's Board of Directors publicly withdraws or modifies, or publicly
announces its intention to withdraw or modify, in any manner adverse to the
Optionee, its recommendation that its shareholders approve the Agreement in
anticipation of engaging in an Acquisition Transaction; (c) any person,
other than the Optionee, any subsidiary of the Optionee or any Issuer
subsidiary acting in a fiduciary capacity in the ordinary course of
business acquires beneficial ownership, or the right to acquire beneficial
ownership, of 10% or more of the outstanding shares of the Issuer's Common
Stock; (d) any person other than the Optionee or any subsidiary of the
Optionee made a BONA FIDE proposal to the Issuer or its shareholders by
public announcement or written communication that becomes the subject of
public disclosure to engage in an Acquisition Transaction; (e) the Issuer
breaches any covenant or obligation in the Agreement after any person,
other than the Optionee or any subsidiaries of the Optionee, has proposed
an Acquisition Transaction, and such breach (1) would entitle the Optionee
to terminate the Agreement and (2) is not remedied prior to the date of the
Optionee's notice to the Issuer of the exercise of the Option; or (f) any
person other than the Optionee or any subsidiary of the Optionee, other
than in connection with a transaction to which the Optionee has given its
prior written consent, files an application or notice with the Federal
Reserve Board, or other federal or state bank regulatory authority, which
application or notice has been accepted for processing, for approval to
engage in an Acquisition Transaction.
(ii) For purposes of each Issuer Option Agreement, the term
"Acquisition Transaction" means (a) a merger or consolidation, or any
similar transaction with the Issuer or any of its Significant Subsidiaries
(as defined in Rule 1-02 of Regulation S-X of the Commission); (b) a
purchase, lease or other acquisition or assumption of all or substantially
all of the assets or deposits of the Issuer or any of its Significant
Subsidiaries; (c) a purchase or other acquisition of securities
representing 10% or more of the voting power of the Issuer; or (d) any
substantially similar transaction, PROVIDED, HOWEVER, that in no event will
any merger, consolidation, purchase or similar transaction involving only
the Issuer and one or more of its subsidiaries or involving only any two or
more of such subsidiaries, be deemed to be an Acquisition Transaction,
PROVIDED that any such transaction is not entered into in violation of the
terms of the Agreement.
(iii) The term "Subsequent Triggering Event" means the occurrence of
either of the following events or transactions after August 29, 1997: (a)
the acquisition by any person of beneficial ownership of 20% or more of the
then outstanding shares of Issuer Common Stock; or (b) the occurrence of
the Initial Triggering Event described above in clause (i)(a), except that
the percentage referred to in clause (ii)(c) of the definition of
"Acquisition Transaction" set forth above will be 20%.
Each Issuer Option will expire upon the occurrence of an "Exercise
Termination Event," which includes: (i) the Effective Time of the Merger; (ii)
termination of the Agreement in accordance with the provisions thereof if such
termination occurs prior to the occurrence of an Initial Triggering Event,
except in the case of the termination of the Agreement by the Optionee as a
result of an uncured material breach by the Issuer of any of its
representations, warranties, covenants or agreements unless the breach by the
Issuer is non-volitional; or (iii) the date that is 12 months after the
termination of the Agreement if such termination occurs after the occurrence of
an Initial Triggering Event or is a termination by the Optionee as a result of
an uncured material breach by the Issuer of any of its representations,
warranties, covenants or agreements unless the breach by the Issuer is
non-volitional (PROVIDED that, if an Initial Triggering Event continues or
occurs beyond such termination of the Agreement and prior to the passage of such
12-month period, the Issuer Option will
terminate 12 months from the expiration of the last Initial Triggering Event to
expire, but in no event more than 18 months after such termination of the
Agreement).
As of the date of this Joint Proxy Statement-Prospectus, to the best
knowledge of NationsBank and Barnett, no Initial Triggering Event or Subsequent
Triggering Event has occurred.
Immediately prior to the occurrence of a Repurchase Event (as defined
herein), (i) following a request of a Holder, delivered prior to an Exercise
Termination Event, the Issuer (or any successor thereto) will repurchase the
Issuer Option from the Holder at a price (the "Issuer Option Repurchase Price")
equal to the amount by which (a) the market/offer price (as defined herein)
exceeds (b) the option price, multiplied by the number of shares for which the
Issuer Option may then be exercised and (ii) at the request of the owner of
Issuer Option Shares from time to time (the "Owner"), delivered within 90 days
of such occurrence (or such later period as provided in Section 10 of each of
the Stock Option Agreements), the Issuer will repurchase such number of the
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Issuer Option Shares from the Owner as the Owner will designate at a price (the
"Issuer Option Share Repurchase Price") equal to the market/offer price
multiplied by the number of Option Shares so designated. Any repurchase by
Barnett of any Barnett Stock Options, Substitute Stock Options (as defined
herein), or any Barnett Common Stock underlying the Barnett Stock Option may
require the approval of the Barnett Shareholders in accordance with the
provisions of the Barnett Articles of Incorporation. See "COMPARATIVE RIGHTS OF
SHAREHOLDERS OF NATIONSBANK AND BARNETT -- Certain Purchases of the
Corporation's Securities."
The term "market/offer price" means the highest of (i) the price per share
of Issuer Common Stock at which a tender offer or exchange offer therefor has
been made, (ii) the price per share of Issuer Common Stock to be paid by any
third party pursuant to an agreement with Issuer, (iii) the highest closing
price for shares of Issuer Common Stock within the six-month period immediately
preceding the date the Holder gives notice of the required repurchase of the
Issuer Option or the Owner gives notice of the required repurchase of Issuer
Option Shares, as the case may be, or (iv) in the event of a sale of all or a
substantial portion of the Issuer's assets, the sum of the price paid in such
sale for such assets and the current market value of the remaining assets of the
Issuer as determined by a nationally recognized investment banking firm selected
by the Holder or the Owner, as the case may be, and the Issuer, divided by the
number of shares of Issuer Common Stock outstanding at the time of such sale. In
determining the market/offer price, the value of consideration other than cash
will be determined by a nationally recognized investment banking firm selected
by the Holder or Owner, as the case may be, and the Issuer. However, if the
Issuer at any time after delivery of a notice of repurchase as described in this
paragraph is prohibited under applicable law or regulation from delivering to
the Holder and/or the Owner, as appropriate, the Issuer Option Repurchase Price
and the Issuer Option Share Repurchase Price, respectively, in full, the Holder
or Owner may revoke its notice of repurchase of the Issuer Option or the Issuer
Option Shares, either in whole or to the extent of the prohibition, whereupon,
in the latter case, the Issuer will promptly (i) deliver to the Holder and/or
the Owner, as appropriate, that portion of the Issuer Option Repurchase Price or
the Issuer Option Share Repurchase Price that the Issuer is not prohibited from
delivering and (ii) deliver, as appropriate, (a) to the Holder, a new Issuer
Option Agreement evidencing the right of the Holder to purchase that number of
shares of the Issuer Common Stock obtained by multiplying the number of shares
of the Issuer Common Stock for which the surrendered Issuer Option Agreement was
exercisable at the time of delivery of the notice of repurchase by a fraction,
the numerator of which is the Issuer Option Repurchase Price less the portion
thereof theretofore delivered to the Holder and the denominator of which is the
Issuer Option Repurchase Price, and (b) to the Owner, a certificate for the
Issuer Option Shares it is then so prohibited from repurchasing. A "Repurchase
Event" is deemed to have occurred (i) upon the consummation of an Acquisition
Transaction or (ii) upon the acquisition by any person of the beneficial
ownership of 50% or more of the then outstanding Issuer Common Stock, provided
that a Subsequent Triggering Event has occurred prior to an Exercise Termination
Event.
In the event that, prior to an Exercise Termination Event, the Issuer
enters into any agreement (i) to consolidate with or merge into any person,
other than the Optionee or one of its subsidiaries, such that Issuer is not the
continuing or surviving corporation of such consolidation or merger; (ii) to
permit any person, other than the Optionee or one of its subsidiaries, to merge
into the Issuer and the Issuer is the continuing or surviving corporation, but,
in connection with such consolidation or merger, the outstanding shares of the
Issuer Common Stock are changed into or exchanged for stock or other securities
of any other person or cash or any other property, or the then outstanding
shares of Issuer Common Stock after such merger will represent less than 50% of
the outstanding voting shares and voting share equivalents of the merged
corporation; or (iii) to sell or otherwise transfer all or substantially all
of its assets to any person, other than the Optionee or any of its subsidiaries,
then, and in each such case, the agreement governing such transaction must
provide that, upon consummation of such transaction and upon terms and
conditions set forth in the Issuer Option Agreement, the Option will be
converted into, or exchanged for, an option having substantially the same
terms as the Option (the "Substitute Option") to purchase securities, at the
election of the Holder, of either the acquiring person or any person that
controls the acquiring person. At the request of the Holder of the Substitute
Option, the issuer of the Substitute Option will repurchase it at a price, and
subject to such other terms and conditions, as set forth in the Issuer Option
Agreement.
The Optionee may in no event obtain Total Profit or Notional Total Profit
(as defined herein) in excess of $400 million. "Total Profit" means the
aggregate amount (before taxes) of the following: (i) the amount received by the
Optionee pursuant to Issuer's repurchase of the Issuer Option (or any portion
thereof), (ii) (a)
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the amount received by Optionee pursuant to Issuer's repurchase of Issuer
Option Shares, less (b) Optionee's purchase price for such Option Shares, (iii)
(a) the net cash amounts received by Optionee pursuant to the sale of Option
Shares (or any other securities into which such Option Shares shall be converted
or exchanged) to any unaffiliated party, less (b) Optionee's purchase price of
such Option Shares, (iv) any amounts received by Optionee on the transfer of
the Option (or any portion thereof) to any unaffiliated party, and (v) any
equivalent amount with respect to the Substitute Option. "Notional Total
Profit" with respect to any number of shares as to which Optionee may propose
to exercise the Option shall be the Total Profit determined as of the date
of such proposed exercise assuming that the Option were exercised on such
date for such number of shares and assuming that such shares, together with all
other Option Shares held by Optionee and its affiliates as of such date, were
sold for cash at the closing market price for the Issuer Common Stock as of the
close of business on the preceding trading day (less customary brokerage
commissions).
Within 90 days after the occurrence of a Subsequent Triggering Event that
occurs prior to an Exercise Termination Date (subject to extension as provided
in the Issuer Option Agreement), the Optionee may request the Issuer to prepare,
file and keep current with respect to the Option Shares, a registration
statement with the Commission. The Issuer is required to use its reasonable best
efforts to cause such registration statement to become effective and then to
remain effective for 180 days or such shorter time as may be reasonably
necessary to effect such sales or other disposition of Option Shares. The
Optionee has the right to demand two such registrations.
Neither the Issuer nor the Optionee may assign any of its rights and
obligations under the Issuer Option Agreements or the Issuer Option to any other
person without the express written consent of the other party, except that, if a
Subsequent Triggering Event occurs prior to an Exercise Termination Event, the
Optionee, subject to the terms of the Issuer Option Agreement, may assign, in
whole or in part, its rights and obligations thereunder, within 90 days (subject
to extension as provided in the Issuer Option Agreement) of such Subsequent
Triggering Event; provided that, until the date 15 days after the date on which
the Federal Reserve Board approves an application by the Optionee to acquire the
Issuer Option Shares, the Optionee may not assign its rights under the Issuer
Option except in (i) a widely dispersed public distribution, (ii) a private
placement in which no one party acquires the right to purchase in excess of 2%
of the voting shares of the Issuer, (iii) an assignment to a single party for
the purpose of conducting a widely dispersed public distribution on the
Optionee's behalf, or (iv) any other manner approved by the Federal Reserve
Board.
Certain rights and obligations of the Optionee and the Issuer under the
Stock Option Agreements are subject to receipt of required regulatory approvals.
The approval of the Federal Reserve Board is required for the acquisition by the
Optionee of more than 5% of the outstanding shares of Issuer Common Stock.
Accordingly, the Optionee has included or will include in its applications with
the Federal Reserve Board a request for approval of the right of the Optionee to
exercise its rights under the Issuer Option Agreement, including its right to
purchase more than 5% of the outstanding shares of Issuer Common Stock. See
" -- Regulatory Matters."
AMENDMENT TO BARNETT RIGHTS AGREEMENT
Each share of Barnett Common Stock has attached to it a Barnett Right
issued pursuant to the Barnett Rights Agreement. In connection with the
execution of the Agreement, Barnett amended the Barnett Rights
Agreement to provide, among other things, that (i) the execution and delivery of
the Agreement and consummation of the Merger and execution and delivery of the
Barnett Stock Option Agreement and any acquisition of shares of Barnett Common
Stock by NationsBank (and certain related persons) upon exercise thereof, or as
contemplated by the Agreement, will not cause the Barnett Rights to become
exercisable, or cause the Barnett Rights to be separated from the shares of
Barnett Common Stock to which they are attached, and (ii) the Barnett Rights may
not become exercisable at any time from and after, and the Barnett Rights
Agreement will terminate at, the Effective Time. See "COMPARATIVE RIGHTS OF
SHAREHOLDERS OF NATIONSBANK AND BARNETT -- Shareholder Rights Plan."
ACCOUNTING TREATMENT
It is intended that the Merger will be accounted for as a
"pooling-of-interests" under GAAP and the receipt of an opinion of NationsBank's
independent accountants that the Merger will qualify for such accounting
treatment is a condition to the parties' obligations to consummate the Merger.
To conform to the provisions of Staff
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Accounting Bulletin 96, "Treasury Stock Acquisitions Following Consummation of
a Business Combination Accounted for as a Pooling of Interests," each of
NationsBank and Barnett have terminated their respective share repurchase
programs. The unaudited pro forma financialinformation included in this Joint
Proxy Statement-Prospectus reflects the Merger using the "pooling-of-interests"
method of accounting. See "COMPARATIVE UNAUDITED PER SHARE DATA," "SELECTED
FINANCIAL DATA" and "UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION."
REGULATORY MATTERS
FEDERAL RESERVE BOARD. The Merger is subject to prior approval by the
Federal Reserve Board under the BHCA. The BHCA requires the Federal Reserve
Board, when approving a transaction such as the Merger, to take into
consideration the financial and managerial resources (including the competence,
experience and integrity of the officers, directors and principal shareholders)
and future prospects of the existing and proposed institutions and the
convenience and needs of the communities to be served. In considering financial
resources and future prospects, the Federal Reserve Board will, among other
things, evaluate the adequacy of the capital levels of the parties to a proposed
transaction.
The BHCA prohibits the Federal Reserve Board from approving a merger if it
would result in a monopoly or be in furtherance of any combination or conspiracy
to monopolize or to attempt to monopolize the business of banking in any part of
the United States, or if its effect in any section of the country would be
substantially to lessen competition or to tend to create a monopoly, or if it
would in any other manner result in a restraint of trade, unless the Federal
Reserve Board finds that the anti-competitive effects of a merger are clearly
outweighed in the public interest by the probable effect of the transaction in
meeting the convenience and needs of the communities to be served. In addition,
under the Community Reinvestment Act of 1977, as amended, the Federal Reserve
Board must take into account the record of performance of the existing
institutions in meeting the credit needs of the entire community, including low-
and moderate-income neighborhoods, served by such institutions.
Applicable United States federal law provides for the publication of notice
and public comment on applications filed with the Federal Reserve Board and
authorizes such agency to permit interested parties to intervene in the
proceedings. If an interested party is permitted to intervene, such intervention
could delay the regulatory approvals required for consummation of the Merger.
The Merger generally may not be consummated until 30 days (which may be
shortened to 15 days with the consent of the United States Department of
Justice) following the date of applicable United States federal regulatory
approval, during which time the United States Department of Justice may
challenge the Merger on antitrust grounds. The commencement of an antitrust
action by the United States Department of Justice would stay the effectiveness
of the regulatory agency's approval unless a court specifically ordered
otherwise. NationsBank and Barnett expect that a certain moderate level of
divestitures may be required in connection with antitrust review by the United
States Department of Justice and Florida statutory limitations on the percentage
of Florida federally insured deposits that may be held by the subsidiaries of
one bank holding company. Other than the foregoing, NationsBank and Barnett
believe that the Merger does not raise substantial antitrust or other
significant regulatory concerns and that any divestitures that may be required
in order to consummate the Merger will not be material to the financial
condition or results of operations of NationsBank after the Effective Time.
STATE AUTHORITIES. The Merger may be subject to the approval of or notice
to the State Authorities.
STATUS OF REGULATORY APPROVALS AND OTHER INFORMATION. NationsBank and
Barnett have filed (or will promptly file) all applications and notices and have
taken (or will promptly take) other appropriate action with respect to any
requisite approvals or other action of any governmental authority. The Agreement
provides that the obligation of each of NationsBank and Barnett to consummate
the Merger is conditioned upon the receipt of all requisite regulatory
approvals, including the approvals of the Federal Reserve Board and the State
Authorities. There can be no assurance that any governmental agency will approve
or take any other required action with respect to the Merger, and, if approvals
are received or action is taken, there can be no assurance as to the date of
such approvals or action, that such approvals or action will not be conditioned
upon matters that would cause the parties to mutually consent to abandon the
Merger or that no action will be brought challenging such approvals or action,
including a challenge by the United States Department of Justice or, if such a
challenge is made, the result thereof. To date, applications or notifications
have been filed with the Federal
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Reserve Board, the Texas Department of Banking, the Florida Department of
Banking and Finance, the Georgia Commissioner of Banking and the North
Carolina Insurance Commissioner. All of the foregoing applications are pending
at this time.
NationsBank and Barnett are not aware of any governmental approvals or
actions that may be required for consummation of the Merger other than as
described above. Should any other approval or action be required, NationsBank
and Barnett currently contemplate that such approval or action would be sought.
THE MERGER CANNOT PROCEED IN THE ABSENCE OF THE REQUISITE REGULATORY
APPROVALS. THERE CAN BE NO ASSURANCES THAT SUCH REGULATORY APPROVALS WILL BE
OBTAINED OR AS TO THE DATES OF ANY SUCH APPROVALS. SEE " -- CONDITIONS TO THE
MERGER." THERE CAN LIKEWISE BE NO ASSURANCE THAT THE UNITED STATES DEPARTMENT OF
JUSTICE WILL NOT CHALLENGE THE MERGER, OR, IF SUCH A CHALLENGE IS MADE, AS TO
THE RESULT THEREOF.
See " -- The Effective Time," " -- Conditions to the Merger" and
" -- Termination of the Agreement."
RESTRICTIONS ON RESALES BY AFFILIATES
The shares of NationsBank Common Stock issuable to Barnett Shareholders
upon consummation of the Merger have been registered under the Securities Act.
Such securities may be traded freely without restriction by those shareholders
who are not deemed to be "affiliates" of NationsBank or Barnett, as that term is
defined in the rules promulgated under the Securities Act.
Shares of NationsBank Common Stock received by those Barnett Shareholders
who are deemed to be "affiliates" of Barnett at the time of the Barnett Special
Meeting may be resold without registration under the Securities Act only as
permitted by Rule 145 under the Securities Act or as otherwise permitted
thereunder. Commission guidelines regarding qualifying for the
"pooling-of-interests" method of accounting also limit sales of shares of the
acquiring and acquired company by affiliates of either company in a business
combination. Commission guidelines also indicate that the "pooling-of-interests"
method of accounting generally will not be challenged on the basis of sales by
affiliates of the acquiring or acquired company if such affiliates do not
dispose of any of the shares of the corporation they own, or shares of a
corporation they receive in connection with a merger, during the period
beginning 30 days before the merger is consummated and ending when financial
results covering at least 30 days of post-merger operations of the combined
companies have been published.
Each of NationsBank and Barnett has agreed in the Agreement to use its
reasonable best efforts to cause each person who is an affiliate (for purposes
of Rule 145 under the Securities Act and for purposes of qualifying the Merger
for "pooling-of-interests" accounting treatment) of such party to deliver to the
other party a written agreement intended to ensure compliance with the
Securities Act (in the case of Barnett affiliates) and to preserve the ability
of the Merger to be accounted for as a "pooling-of-interests."
NationsBank has agreed in the Agreement to use its best efforts to publish,
not later than 45 days after the end of the month in which the Effective Time
occurs, financial results covering at least 30 days of post-Merger combined
operations, as contemplated by and in accordance with the terms of Accounting
Series Release No. 135 issued by the Commission.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
NationsBank has a dividend reinvestment and stock purchase plan that
provides, for those shareholders who elect to participate, that dividends on
NationsBank Common Stock will be used to purchase either original issue shares
or shares in the open market at market value of NationsBank Common Stock on a
quarterly basis. The plan also permits participants to invest in additional
shares of NationsBank Common Stock through optional cash payments, within
certain dollar limitations, at the then-current market price of such stock at
the time of purchase on any of 12 monthly investment dates each year. It is
anticipated that NationsBank will continue its dividend reinvestment and stock
purchase plan and that shareholders of Barnett who receive shares of NationsBank
Common Stock in the Merger will have the right to participate therein.
Barnett has a direct purchase dividend reinvestment plan that provides
investors the opportunity to participate without first becoming shareholders by
completing and returning the appropriate form together with a specified minimum
initial payment which is used to purchase shares of Barnett Common Stock on the
next investment date after receipt of the funds. Barnett Shareholders may also
participate by completing and returning the appropriate form. The plan allows
participants to invest in additional shares through optional
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cash payments within certain dollar limitations at the then current market
price of such stock at the time of purchase ony any of twenty-four bi-monthly
investment dates each year. In addition, participants may reinvest dividends
on all, a portion of, or none of their shares participating in the plan.
Barnett Common Stock issued to the plan may be either original issue shares or
shares purchased in the open market. It is anticipated that Barnett will
terminate the plan prior to the Effective Date of the Merger.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
In the Agreement, NationsBank agreed to cause five persons mutually agreed
upon by NationsBank and Barnett, which will include Mr. Rice and four
non-employee directors of Barnett, to be elected or appointed as directors of
NationsBank at the Effective Time. Pursuant to the Agreement, Mr. Rice will be
elected Chairman of the NationsBank Board following the retirement of current
Chairman Andrew B. Craig, III at the NationsBank Annual Meeting of Shareholders
in 1998. NationsBank also agreed to cause Mr. Rice to be elected or appointed as
a member of the Executive Committee of the Board of Directors of NationsBank at
the Effective Time. See "THE MERGER -- Interests of Certain Persons in the
Merger."
While no assurance can be given, NationsBank and Barnett, based on
information available at this time, expect to achieve substantial expense
savings as a result of the Merger. The combined company expects to achieve these
cost savings in the areas of Delivery Systems Optimization, Corporate Overhead,
Business Line Consolidation, Infrastructure Leverage and Vendor Leverage.
Delivery Systems Optimization is maximizing the efficiency of the branch network
by closing overlapping facilities and increasing usage of alternative delivery
channels such as ATMs and in-store facilities. It also includes leveraging the
combined call centers. Corporate Overhead cost savings are expected to result
from combining staff areas such as finance, accounting, personnel and legal, and
consolidating marketing and risk management staff areas. The pay scale for these
positions is typically higher than average. Business Line Consolidations
generate savings from combining businesses where economies of scale can be
gained. These areas include treasury and trade, mortgage, credit card, asset
management and consumer, small business and corporate lending. Infrastructure
Leverage is obtained in the transaction processing and technology units. Savings
are generated by running the combined volumes through the existing
infrastructure while downsizing the overlapped facilities. Examples include
check processing, wire transfer, ACH, transportation networks, data processing,
systems support and telecommunications. Vendor Leverage savings are generated by
working with suppliers to obtain a lower per unit cost resulting from increased
volume of the combined entities. Specific areas are checks, ATMs, record storage
and real estate management services. The extent to which such expense savings
will be achieved is dependent upon various factors, a number of which are beyond
the control of NationsBank and Barnett, including regulatory requirements
attendant to the consummation of the Merger, the general regulatory environment,
economic conditions, unanticipated changes in business conditions and inflation,
and no assurances can be given with respect to the ultimate level and
composition of expense savings to be realized or that such savings will be
realized in the time frame currently anticipated. These amounts have not been
included in any of the unaudited pro forma financial information included in
this Joint Proxy Statement-Prospectus.
For additional information regarding management and operations of the
combined company, see "INFORMATION ABOUT NATIONSBANK" and "INFORMATION ABOUT
BARNETT."
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PRICE RANGE OF COMMON STOCK AND DIVIDENDS
MARKET PRICES
NationsBank Common Stock is listed on the NYSE and the PSE under the
trading symbol "NB." NationsBank Common Stock is also listed on the LSE and
certain shares are listed on the Tokyo Stock Exchange. As of October 31, 1997,
NationsBank Common Stock was held of record by approximately 128,870 persons.
The following table sets forth the high and low closing sale prices of the
NationsBank Common Stock as reported on the NYSE Composite Transactions List for
the periods indicated.
Barnett Common Stock is listed on the NYSE under the symbol "BBI." The
following table sets forth the high and low sale prices for Barnett Common Stock
as reported by the NYSE Composite Transactions List for the periods indicated.
As of October 31, 1997 Barnett Common Stock was held of record by approximately
45,931 persons.
<TABLE>
<CAPTION>
BARNETT
NATIONSBANK SALES
SALES PRICES(1) PRICES(2)
------------------------------ ------------
HIGH LOW HIGH
------------- ------------- ------------
<S> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1995:
First Quarter................................................................... $ 25 7/8 $ 22 5/16 $ 22 7/8
Second Quarter.................................................................. 28 7/8 24 13/16 26 1/8
Third Quarter................................................................... 34 7/16 26 7/8 29 7/16
Fourth Quarter.................................................................. 37 3/8 32 30 3/4
YEAR ENDED DECEMBER 31, 1996:
First Quarter................................................................... 40 11/16 32 3/16 31 7/8
Second Quarter.................................................................. 42 5/16 37 3/8 32 1/16
Third Quarter................................................................... 47 1/16 38 3/16 34 1/16
Fourth Quarter.................................................................. 52 5/8 43 1/8 44
YEAR ENDED DECEMBER 31, 1997:
First Quarter................................................................... 65 48 50 7/8
Second Quarter.................................................................. 70 54 55 3/8
Third Quarter................................................................... 71 11/16 56 5/8 73 9/16
Fourth Quarter (through November 17, 1997)...................................... 66 3/8 55 76 15/16
<CAPTION>
LOW
------------
<S> <C>
YEAR ENDED DECEMBER 31, 1995:
First Quarter................................................................... $ 19 3/8
Second Quarter.................................................................. 22 3/4
Third Quarter................................................................... 25 5/8
Fourth Quarter.................................................................. 27 1/4
YEAR ENDED DECEMBER 31, 1996:
First Quarter................................................................... 27 3/4
Second Quarter.................................................................. 29 1/2
Third Quarter................................................................... 29 1/4
Fourth Quarter.................................................................. 34 1/2
YEAR ENDED DECEMBER 31, 1997:
First Quarter................................................................... 40
Second Quarter.................................................................. 44 3/4
Third Quarter................................................................... 51 5/8
Fourth Quarter (through November 17, 1997)...................................... 62 1/2
</TABLE>
- ---------------
(1) Adjusted to reflect 2-for-1 stock split completed in February 1997.
(2) Adjusted to reflect 2-for-1 stock split completed in September 1996.
DIVIDENDS
The following table sets forth dividends declared per share of NationsBank
Common Stock and Barnett Common Stock, respectively, for the periods indicated.
The ability of either NationsBank or Barnett to pay dividends to its respective
shareholders is subject to certain restrictions. See "SUPERVISION AND REGULATION
OF NATIONSBANK AND BARNETT."
<TABLE>
<CAPTION>
NATIONSBANK BARNETT
DIVIDENDS(1) DIVIDENDS(2)
-- ---
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1995:
First Quarter............................................................................... $.25 $.21
Second Quarter.............................................................................. .25 .23
Third Quarter............................................................................... .25 .23
Fourth Quarter.............................................................................. .29 .24
YEAR ENDED DECEMBER 31, 1996:
First Quarter............................................................................... .29 .24
Second Quarter.............................................................................. .29 .27
Third Quarter............................................................................... .29 .27
Fourth Quarter.............................................................................. .33 .27
YEAR ENDED DECEMBER 31, 1997:
First Quarter............................................................................... .33 .27
Second Quarter.............................................................................. .33 .31
Third Quarter............................................................................... .33 .31
</TABLE>
- ---------------
(1) Adjusted to reflect 2-for-1 stock split completed in February 1997.
(2) Adjusted to reflect 2-for-1 stock split completed in September 1996.
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INFORMATION ABOUT NATIONSBANK
GENERAL
NationsBank is a multi-bank holding company established as a North Carolina
corporation in 1968 and is registered under the BHCA, with its principal assets
being the stock of its subsidiaries. Through its banking subsidiaries (the
"Banks") and its various non-banking subsidiaries, NationsBank provides banking
and banking-related services, primarily throughout the Mid-Atlantic, Midwest,
Southeast and Southwest. The principal executive offices of NationsBank are
located at NationsBank Corporate Center in Charlotte, North Carolina 28255. Its
telephone number is (704) 386-5000. NationsBank and its subsidiaries are subject
to regulation by various federal and state regulatory authorities. See
"SUPERVISION AND REGULATION OF NATIONSBANK AND BARNETT."
OPERATIONS
NationsBank provides a diversified range of banking and certain non-banking
financial services and products through its various subsidiaries. NationsBank
manages its activities through three major business units: the General Bank,
Global Finance and Financial Services.
The General Bank provides comprehensive services in the commercial and
retail banking fields, including the origination and servicing of home mortgage
loans, the issuance and servicing of credit cards (through a Delaware
subsidiary), indirect lending, dealer finance and certain insurance services.
The General Bank also provides full service and discount brokerage services and
investment advisory services, including advising the Nations Fund family of
mutual funds, as well as private banking, fiduciary and investment management
services through subsidiaries of NationsBank. As of September 30, 1997, the
General Bank operated 2,583 banking offices in the states of Arkansas, Florida,
Georgia, Illinois, Iowa, Kansas, Kentucky, Maryland, Missouri, New Mexico, North
Carolina, Oklahoma, South Carolina, Tennessee, Texas and Virginia and the
District of Columbia. The General Bank also provides fully automated, 24-hour
cash dispensing and depositing services throughout the states in which it is
located, through 6,052 automated teller machines.
Global Finance provides comprehensive corporate and investment banking, as
well as trading and distribution services, to domestic and international
customers. Global Finance serves as a principal lender and investor, as well as
an advisor, arranger and underwriter, and manages treasury and trade
transactions for clients and customers. Loan origination and syndication,
asset-backed lending, leasing, factoring, project finance and mergers and
acquisitions are representative of the services provided. These services are
provided through various domestic offices as well as offices located in London,
Singapore, Bogota, Mexico City, Grand Cayman, Nassau, Seoul, Tokyo, Osaka,
Mumbai (formerly Bombay), Jakarta, Taipei, Sao Paulo, Frankfurt and Hong Kong.
Global Finance also underwrites, distributes and makes markets in high-grade and
high yield securities, is a primary dealer of U.S. Government securities and is
a market maker in derivatives products, including swap agreements, option
contracts, forward settlement contracts, financial futures and other derivative
products in certain interest rate, foreign exchange, commodity and equity
markets. In support of these activities, Global Finance takes positions to
support client demands and its own account. Major centers for such activities
are Charlotte, Chicago, London, New York, Singapore and Tokyo.
Financial Services is primarily comprised of NationsCredit Corporation, a
holding company, which includes NationsCredit Consumer Corporation and
NationsCredit Commercial Corporation. NationsCredit Consumer Corporation, which
has approximately 265 offices located in 41 states, provides personal, mortgage
and automobile loans to consumers and retail finance programs to dealers.
NationsCredit Commercial Corporation consists of seven divisions that specialize
in one or more of the following areas: equipment loans and leasing; loans for
debt restructuring, mergers and acquisitions and working capital; real estate,
golf/recreational and health care financing; and inventory financing to
manufacturers, distributors and dealers.
On June 28, 1997, NationsBank entered into an agreement pursuant to which
NationsBank agreed to acquire Montgomery Securities, an investment banking and
institutional brokerage firm focusing on growth companies, with offices in San
Francisco, New York and Boston. The acquisition closed on October 1, 1997. See
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
As part of its operations, NationsBank regularly evaluates the potential
acquisition of, and holds discussions with, various financial institutions and
other businesses of a type eligible for bank holding company
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investment. In addition, NationsBank regularly analyzes the values of, and
submits bids for, the acquisition of customer-based funds and other liabilities
and assets of such financial institutions and other businesses. As a general
rule, NationsBank publicly announces such material acquisitions when a
definitive agreement has been reached.
MANAGEMENT AND ADDITIONAL INFORMATION
Certain information relating to the executive compensation, various benefit
plans (including stock option plans), voting securities and the principal
holders thereof, certain relationships and related transactions and other
related matters as to NationsBank is incorporated by reference or set forth in
the NationsBank Annual Report on Form 10-K for the year ended December 31, 1996,
incorporated herein by reference. Shareholders of NationsBank and Barnett
desiring copies of such documents may contact NationsBank at its address or
telephone number indicated under "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE."
NB HOLDINGS
NB Holdings, a Delaware corporation, is a wholly-owned subsidiary of
NationsBank and is not engaged in any significant business activity other than
holding stock of other subsidiaries of NationsBank.
INFORMATION ABOUT BARNETT
GENERAL
Barnett is a multi-bank holding company established as a Florida
corporation in 1930 and is registered under the BHCA, with its principal asset
being the stock of its subsidiaries. Barnett offers a comprehensive line of
banking and related financial services to retail and business customers in its
primary markets of Florida and southern Georgia. The principal executive office
of Barnett is located at 50 North Laura Street, Jacksonville, Florida 32202. Its
telephone number is (904) 791-7720. Barnett and its subsidiaries are subject to
regulation by various federal and state regulatory authorities. See "SUPERVISION
AND REGULATION OF NATIONSBANK AND BARNETT."
OPERATIONS
Barnett, through its bank and non-bank subsidiaries, engages in retail
financial services, commercial banking, trust and investment management
services, indirect auto lending and leasing, mortgage lending and consumer
finance. Barnett is organized and managed through three major business groups:
Asset Management, Consumer Credit and Business Banking.
Barnett's Asset Management group serves the money management and related
needs of customers, including deposit accounts and services, mutual funds,
annuities, trust services, insurance, brokerage and private banking products.
These products and services are delivered primarily through Barnett's retail
delivery network, consisting of 640 banking offices and 1,046 automated teller
machines ("ATMs") throughout Florida and southern Georgia. Barnett Bank, N.A. is
the principal bank subsidiary of Barnett.
The Consumer Credit group offers products and services from mortgage to
automobile loans and leases, home equity loans, credit cards and education
financing. Barnett provides these services through its banking offices as well
as nationally through its wholly-owned subsidiaries: EquiCredit Corporation,
Barnett Mortgage Company, Dealer Financial Services, Inc., Loan America
Financial Corporation and Oxford Resources Corp.
The Business Banking group meets the needs of companies of all sizes by
providing financial services ranging from small business loans to international
banking to capital market products. The group also offers non-financial products
such as employee leasing, payroll and discounted telephone services.
RECENT DEVELOPMENTS
On September 19, 1997, Barnett consummated the sale of its
Georgia-chartered banking subsidiary, Barnett Bank of Southwest Georgia, to
SouthTrust of Alabama, Inc., a second tier holding company subsidiary of
SouthTrust Corporation ("SouthTrust"), for a cash purchase price of $47.7
million. On October 1, 1997, Barnett consummated its acquisition of First of
America Bank-Florida, FSB ("FOA Florida") from First of America Bank Corporation
at a cash purchase price of $160 million. FOA Florida is headquartered in Tampa,
Florida
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and operates 58 branch offices and 47 ATM terminals located throughout the State
of Florida. On October 25, 1997, Barnett, in anticipation of divestiture
requirements of antitrust authorities in connection with the Merger, entered
into a stock purchase agreement with SouthTrust pursuant to which Barnett will
sell FOA Florida to SouthTrust for a cash purchase price of $160 million. The
transaction is subject to regulatory approval and is expected to close in the
first quarter of 1998.
MANAGEMENT AND ADDITIONAL INFORMATION
Certain information relating to the executive compensation, various benefit
plans (including stock option plans), voting securities and the principal
holders thereof, certain relationships and related transactions and certain
biographical information regarding Mr. Rice and other related matters as to
Barnett is incorporated by reference or set forth in Barnett Annual Report on
Form 10-K for the year ended December 31, 1996, incorporated herein by
reference. Shareholders of Barnett and NationsBank desiring copies of such
documents may contact Barnett at its address or phone number indicated under
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
SUPERVISION AND REGULATION OF NATIONSBANK AND BARNETT
GENERAL. As registered bank holding companies, NationsBank and Barnett are
subject to the supervision of, and to regular inspection by, the Federal Reserve
Board. The bank subsidiaries of both NationsBank and Barnett are organized as
national banking associations, which are subject to regulation, supervision and
examination by the Officer of the Comptroller of the Currency (the
"Comptroller"), and as state chartered banks, which are subject to regulation,
supervision and examination by the relevant state regulators. These banks are
also subject to regulation by either the Federal Reserve Board or the FDIC, and
other federal regulatory agencies. NationsBank owns a federal savings bank or
banks subject to supervision, regulation and examination by the OTS. In addition
to banking laws, regulations and regulatory agencies, NationsBank and Barnett
and their subsidiaries and affiliates are subject to various other laws and
regulations and supervision and examination by other regulatory agencies, all of
which directly or indirectly affect the operations and management of NationsBank
and Barnett and their ability to make distributions. The following discussion
summarizes certain aspects of those laws and regulations that affect NationsBank
and Barnett.
The activities of NationsBank and Barnett and those of companies which each
controls or in which either holds more than 5% of the voting stock are limited
to banking, managing or controlling banks, furnishing services to or performing
services for their subsidiaries or any other activity which the Federal Reserve
Board determines to be so closely related to banking or managing or controlling
banks as to be a proper incident thereto. In making such determinations, the
Federal Reserve Board is required to consider whether the performance of such
activities by a bank holding company or its subsidiaries can reasonably be
expected to produce benefits to the public such as greater convenience,
increased competition or gains in efficiency that outweigh possible adverse
effects, such as undue concentration of resources, decreased or unfair
competition, conflicts of interest or unsound banking practices. Generally, bank
holding companies, such as NationsBank and Barnett, are required to obtain prior
approval of the Federal Reserve Board to engage in any new activity or to
acquire more than 5% of any class of voting stock of any company.
Bank holding companies are also required to obtain the prior approval of
the Federal Reserve Board before acquiring more than 5% of any class of voting
stock of any bank which is not already majority-owned by the bank holding
company. Pursuant to the Riegle-Neal Interstate Banking and Branching Efficiency
Act of 1994 (the "Interstate Banking and Branching Act"), bank holding companies
became able to acquire banks in states other than its home state beginning
September 29, 1995, without regard to the permissibility of such acquisitions
under state law, but subject to any state requirement that the bank has been
organized and operating for a minimum period of time, not to exceed five years,
and the requirement that the bank holding company, prior to or following the
proposed acquisition, controls no more than 10% of the total amount of deposits
of insured depository institutions in the United States and less than 30% of
such deposits in that state (or such lesser or greater amount set by state law).
The Interstate Banking and Branching Act also authorizes banks to merge
across state lines, thereby creating interstate branches. This provision, which
was effective June 1, 1997, allowed each state, prior to the effective date, the
opportunity to "opt out" of this provision, thereby prohibiting interstate
branching within
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that state. Of those states in which NationsBank's banking subsidiaries are
located, only Texas has adopted legislation to "opt out" of the interstate
branching provisions (which Texas law currently expires on September 2, 1999).
Furthermore, pursuant to the Interstate Banking and Branching Act, a bank is now
able to open new branches in a state in which it does not already have banking
operations if such state enacts a law permitting such de novo branching. To the
extent permitted under these laws, NationsBank plans to consolidate its banking
subsidiaries (with the exception of NationsBank of Delaware, N.A.) into a single
bank as soon as practicable. NationsBank currently operates one interstate bank
(i.e., a bank with banking centers in more than one state) which is NationsBank,
N.A., headquartered in Charlotte, North Carolina, with offices in Arkansas,
Florida, Georgia, Illinois, Iowa, Kansas, Maryland, Missouri, New Mexico, North
Carolina, Oklahoma, South Carolina, Virginia and the District of Columbia.
Separate banks continue to operate in Delaware, Kentucky, Tennessee and Texas.
In addition, NationsBank has a federal savings bank in Arkansas. As previously
described, NationsBank regularly evaluates merger and acquisition opportunities,
and it anticipates that it will continue to evaluate such opportunities in light
of the new legislation.
Barnett merged its Georgia banking subsidiary into its primary Florida bank
in September, 1997. As a result, Barnett Bank, N.A., headquartered in
Jacksonville, Florida, operates offices in Florida and Georgia.
Proposals to change the laws and regulations governing the banking industry
are frequently introduced in Congress, in the state legislatures and before the
various bank regulatory agencies. The likelihood and timing of any such
proposals or bills being enacted and the impact they might have on NationsBank,
Barnett and their subsidiaries cannot be determined at this time.
CAPITAL AND OPERATIONAL REQUIREMENTS. The Federal Reserve Board, the
Comptroller and the FDIC have issued substantially similar risk-based and
leverage capital guidelines applicable to United States banking organizations.
In addition, those regulatory agencies may from time to time require that a
banking organization maintain capital above the minimum levels, whether because
of its financial condition or actual or anticipated growth. The Federal Reserve
Board risk-based guidelines define a two-tier capital framework. Tier 1 capital
consists of common and qualifying preferred shareholders' equity, less certain
intangibles and other adjustments. Tier 2 capital consists of subordinated and
other qualifying debt, and the allowance for credit losses up to 1.25% of
risk-weighted assets. The sum of Tier 1 and Tier 2 capital less investments in
unconsolidated subsidiaries represents qualifying total capital, at least 50% of
which must consist of Tier 1 capital. Risk-based capital ratios are calculated
by dividing Tier 1 and total capital by risk-weighted assets. Assets and off-
balance sheet exposures are assigned to one of four categories of risk weights,
based primarily on relative credit risk. The minimum Tier 1 capital ratio is 4%
and the minimum total capital ratio is 8%. NationsBank's Tier 1 and total
risk-based capital ratios under these guidelines at September 30, 1997 were
7.00% and 11.56%, respectively and Barnett's were 9.77% and 12.68%,
respectively.
The leverage ratio is determined by dividing Tier 1 capital by adjusted
average total assets. Although the stated minimum ratio is 3%, most banking
organizations are required to maintain ratios of at least 100 to 200 basis
points above 3%. NationsBank's and Barnett's leverage ratios at September 30,
1997 were 6.16% and 7.82%, respectively.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), among other things, identifies five capital categories for insured
depository institutions (well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized) and requires the respective Federal regulatory agencies to
implement systems for "prompt corrective action" for insured depository
institutions that do not meet minimum capital requirements within such
categories. FDICIA imposes progressively more restrictive constraints on
operations, management and capital distributions, depending on the category in
which an institution is classified. Failure to meet the capital guidelines could
also subject a banking institution to capital raising requirements. An
"undercapitalized" bank must develop a capital restoration plan and its parent
holding company must guarantee that bank's compliance with the plan. The
liability of the parent holding company under any such guarantee is limited to
the lesser of 5% of the bank's assets at the time it became "undercapitalized"
or the amount needed to comply with the plan. Furthermore, in the event of the
bankruptcy of the parent holding company, such guarantee would take priority
over the parent's general unsecured creditors. In addition, FDICIA requires the
various regulatory agencies to prescribe certain non-capital standards for
safety and soundness related generally to operations and management, asset
quality and executive compensation and permits regulatory action against a
financial institution that does not meet such standards.
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The various regulatory agencies have adopted substantially similar
regulations that define the five capital categories identified by FDICIA, using
the total risk-based capital, Tier 1 risk-based capital and leverage capital
ratios as the relevant capital measures. Such regulations establish various
degrees of corrective action to be taken when an institution is considered
undercapitalized. Under the regulations, a "well capitalized" institution must
have a Tier 1 capital ratio of at least 6%, a total capital ratio of at least
10% and a leverage ratio of a least 5% and not be subject to a capital directive
order. An "adequately capitalized" institution must have a Tier 1 capital ratio
of at least 4%, a total capital ratio of at least 8% and a leverage ratio of at
least 4%, or 3% in some cases. Under these guidelines, each of the banking
subsidiaries of NationsBank and Barnett is considered well capitalized.
Banking agencies have also adopted final regulations which mandate that
regulators take into consideration concentrations of credit risk and risks from
non-traditional activities, as well as an institution's ability to manage those
risks, when determining the adequacy of an institution's capital. That
evaluation will be made as a part of the institution's regular safety and
soundness examination. Banking agencies also have adopted final regulations
requiring regulators to consider interest rate risk (when the interest rate
sensitivity of an institution's assets does not match the sensitivity of its
liabilities or its off-balance sheet position) in the determination of a bank's
capital adequacy. Concurrently, banking agencies have proposed a methodology for
evaluating interest rate risk. After gaining experience with the proposed
measurement process, those banking agencies intend to propose further
regulations to establish an explicit risk-based capital charge for interest rate
risk.
DISTRIBUTIONS. NationsBank and Barnett both derive funds for cash
distributions to their respective shareholders from a variety of sources,
including cash and temporary investments. The primary source of such funds,
however, is dividends received from their banking subsidiaries. Each of their
banking subsidiaries is subject to various general regulatory policies and
requirements relating to the payment of dividends, including requirements to
maintain capital above regulatory minimums. The appropriate federal regulatory
authority is authorized to determine under certain circumstances relating to the
financial condition of the bank or bank holding company that the payment of
dividends would be an unsafe or unsound practice and to prohibit payment
thereof.
In addition to the foregoing, the ability of NationsBank, Barnett and their
respective banking subsidiaries to pay dividends may be affected by the various
minimum capital requirements and the capital and non-capital standards
established under FDICIA, as described above. The right of NationsBank, Barnett,
their respective shareholders and their respective creditors to participate in
any distribution of the assets or earnings of their respective subsidiaries is
further subject to the prior claims of creditors of the respective subsidiaries.
"SOURCE OF STRENGTH" POLICY. According to Federal Reserve Board policy,
bank holding companies are expected to act as a source of financial strength to
each subsidiary bank and to commit resources to support each such subsidiary.
This support may be required at times when a bank holding company may not be
able to provide such support. Similarly, under the cross-guarantee provisions of
the Federal Deposit Insurance Act, in the event of a loss suffered or
anticipated by the FDIC -- either as a result of default of a banking or thrift
subsidiary of a bank holding company such as NationsBank or Barnett or related
to FDIC assistance provided to a subsidiary in danger of default -- the other
banking subsidiaries of such bank holding company may be assessed for the FDIC's
loss, subject to certain exceptions.
NATIONSBANK CAPITAL STOCK
NATIONSBANK COMMON STOCK
GENERAL. NationsBank is authorized to issue 1,250,000,000 shares of
NationsBank Common Stock, of which 711,154,172 shares were outstanding as of
October 31, 1997. NationsBank Common Stock is traded on the NYSE and the PSE
under the trading symbol "NB." NationsBank Common Stock is also listed on the
LSE and certain shares are listed and traded on the Tokyo Stock Exchange. As of
October 31, 1997, 370,728,276 million shares of NationsBank Common Stock were
reserved for issuance under various employee benefit plans of NationsBank and
upon conversion of the NationsBank ESOP Preferred Stock, pursuant to the
NationsBank Dividend Reinvestment and Stock Purchase Plan and in connection with
the Merger. After taking into account the shares reserved as described above,
the number of authorized shares of NationsBank Common Stock available for other
corporate purposes as of October 31, 1997 was approximately 168 million.
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VOTING AND OTHER RIGHTS. The holders of NationsBank Common Stock are
entitled to one vote per share, and, in general, a majority of votes cast with
respect to a matter is sufficient to authorize action upon routine matters.
Directors are elected by a plurality of the votes cast, and each shareholder
entitled to vote in such election is entitled to vote each share of stock for as
many persons as there are directors to be elected. In elections for directors,
such shareholders do not have the right to cumulate their votes, so long as
NationsBank has a class of shares registered under Section 12 of the Exchange
Act (unless action is taken to provide otherwise by charter amendment, which
action management does not currently intend to propose). In general, (i)
amendments to the Articles of Incorporation of NationsBank (the "NationsBank
Articles of Incorporation") must be approved by each voting group entitled to
vote separately thereon by a majority of the votes cast by that voting group,
unless the amendment creates dissenters' rights for a particular voting group,
in which case such amendment must be approved by a majority of the votes
entitled to be cast by such voting group; (ii) a merger or share exchange
required to be approved by the shareholders must be approved by each voting
group entitled to vote separately thereon by a majority of the votes entitled to
be cast by that voting group; and (iii) the dissolution of NationsBank, or the
sale of all or substantially all of the property of NationsBank other than in
the usual and regular course of business, must be approved by a majority of all
votes entitled to be cast thereon.
In the event of liquidation, holders of NationsBank Common Stock would be
entitled to receive PRO RATA any assets legally available for distribution to
shareholders with respect to shares held by them, subject to any prior rights of
any NationsBank preferred stock (as described below) then outstanding.
NationsBank Common Stock does not have any preemptive rights, redemption
privileges, sinking fund privileges or conversion rights. All the outstanding
shares of NationsBank Common Stock are, and upon issuance the shares of
NationsBank Common Stock to be issued to Barnett Shareholders will be, validly
issued, fully paid and nonassessable.
ChaseMellon Shareholder Services, L.L.C. acts as transfer agent and
registrar for NationsBank Common Stock.
DISTRIBUTIONS. The holders of NationsBank Common Stock are entitled to
receive such dividends or distributions as the NationsBank Board may declare out
of funds legally available for such payments. The payment of distributions by
NationsBank is subject to the restrictions of North Carolina law applicable to
the declaration of distributions by a business corporation. A corporation
generally may not authorize and make distributions if, after giving effect
thereto, it would be unable to meet its debts as they become due in the usual
course of business or if the corporation's total assets would be less than the
sum of its total liabilities plus the amount that would be needed, if it were to
be dissolved at the time of distribution, to satisfy claims upon dissolution of
shareholders who have preferential rights superior to the rights of the holders
of its common stock. In addition, the payment of distributions to shareholders
is subject to any prior rights of outstanding preferred stock. Share dividends,
if any are declared, may be paid from authorized but unissued shares.
The ability of NationsBank to pay distributions is affected by the ability
of its banking subsidiaries to pay dividends. The ability of such banking
subsidiaries, as well as of NationsBank, to pay dividends in the future
currently is, and could be further, influenced by bank regulatory requirements
and capital guidelines. See "SUPERVISION AND REGULATION OF NATIONSBANK AND
BARNETT."
NATIONSBANK PREFERRED STOCK
NationsBank has authorized 45,000,000 shares of preferred stock and may
issue such preferred stock in one or more series, each with such preferences,
limitations, designations, conversion rights, voting rights, distribution
rights, voluntary and involuntary liquidation rights and other rights as it may
determine. NationsBank has designated 35,045 shares of NationsBank Series B
Preferred Stock, of which 9,341 shares were issued and outstanding as of October
31, 1997, and 3,000,000 shares of NationsBank ESOP Preferred Stock, of which
2,212,727 shares were issued and outstanding as of October 31, 1997.
THE FOLLOWING SUMMARIES OF THE NATIONSBANK ESOP PREFERRED STOCK AND
NATIONSBANK SERIES B PREFERRED STOCK, WHICH SUMMARIES DESCRIBE THE MATERIAL
PROVISIONS THEREOF, ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE
DESCRIPTIONS THEREOF CONTAINED IN THE NATIONSBANK ARTICLES OF INCORPORATION
ATTACHED
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AS EXHIBIT 3.1 TO NATIONSBANK'S CURRENT REPORT ON FORM 8-K, DATED DECEMBER 31,
1996, INCORPORATED HEREIN BY REFERENCE.
NATIONSBANK ESOP PREFERRED STOCK
The NationsBank ESOP Preferred Stock was first issued in the transaction by
which NationsBank was formed from the merger of NCNB Corporation and C&S/Sovran
Corporation in 1991 upon the conversion of shares of ESOP Convertible Preferred
Stock, Series C of C&S/Sovran Corporation. All shares of NationsBank ESOP
Preferred Stock are held by the trustee under the NationsBank Corporation
Retirement Savings Plan (the "ESOP"). The NationsBank ESOP Preferred Stock ranks
senior to the NationsBank Common Stock, but ranks junior to the NationsBank
Series B Preferred Stock with respect to dividends and distributions upon
liquidation.
PREFERENTIAL RIGHTS. Shares of NationsBank ESOP Preferred Stock have no
preemptive or preferential rights to purchase or subscribe for shares of
NationsBank capital stock of any class, and are not subject to any sinking fund
or other obligation of NationsBank to repurchase or retire the series, except as
discussed below.
DIVIDENDS. Each share of NationsBank ESOP Preferred Stock is entitled to an
annual dividend, subject to certain adjustments, of $3.30 per share, payable
semiannually. Unpaid dividends accumulate as of the date on which they first
became payable, without interest. So long as any shares of NationsBank ESOP
Preferred Stock are outstanding, no dividend may be declared, paid or set apart
for payment on any other series of stock ranking on a parity with NationsBank
ESOP Preferred Stock as to dividends, unless like dividends have been declared
and paid, or set apart for payment, on the NationsBank ESOP Preferred Stock for
all dividend payment periods ending on or before the dividend payment date for
such parity stock, ratably in proportion to their respective amounts of
accumulated and unpaid dividends. NationsBank generally may not declare, pay or
set apart for payment any dividends (except for, among other things, dividends
payable solely in shares of stock ranking junior to the NationsBank ESOP
Preferred Stock as to dividends or upon liquidation) on, make any other
distribution on, or make payment on account of the purchase, redemption or other
retirement of, any other class or series of NationsBank capital stock ranking
junior to the NationsBank ESOP Preferred Stock as to dividends or upon
liquidation, until full cumulative dividends on the NationsBank ESOP Preferred
Stock have been declared and paid or set apart for payment when due.
VOTING RIGHTS. The holder of the NationsBank ESOP Preferred Stock is
entitled to vote on all matters submitted to a vote of the holders of
NationsBank Common Stock and votes together with the holders of NationsBank
Common Stock as one class. Except as otherwise required by applicable law, the
holder of the NationsBank ESOP Preferred Stock has no special voting rights. To
the extent that the holder of such shares is entitled to vote, each share is
entitled to the number of votes equal to the number of shares of NationsBank
Common Stock into which such share of NationsBank ESOP Preferred Stock could be
converted on the record date for determining the shareholders entitled to vote,
rounded to the nearest whole vote.
Shares of the NationsBank ESOP Preferred Stock currently are convertible
(giving effect to a 2-for-1 split of the NationsBank Common Stock effective
February, 1997) into NationsBank Common Stock at a conversion rate equal to 1.68
shares of NationsBank Common Stock per share of NationsBank ESOP Preferred Stock
subject to certain customary anti-dilution adjustments.
DISTRIBUTIONS. In the event of any voluntary or involuntary dissolution,
liquidation or winding-up of NationsBank, the holder of the NationsBank ESOP
Preferred Stock will be entitled to receive out of the assets of NationsBank
available for distribution to shareholders, subject to the rights of the holders
of any NationsBank preferred stock ranking senior to or on a parity with the
NationsBank ESOP Preferred Stock as to distributions upon liquidation,
dissolution or winding-up but before any amount will be paid or distributed
among the holders of NationsBank Common Stock or any other shares ranking junior
to the NationsBank ESOP Preferred Stock as to such distributions, liquidating
distributions of $42.50 per share plus all accrued and unpaid dividends thereon
to the date fixed for distribution. If, upon any voluntary or involuntary
dissolution, liquidation or winding-up of NationsBank, the amounts payable with
respect to the NationsBank ESOP Preferred Stock and any other stock ranking on a
parity therewith as to any such distribution are not paid in full, the holder of
the NationsBank ESOP Preferred Stock and such other stock will share ratably in
any distribution of assets in proportion to the full respective preferential
amounts to which they are entitled. After payment of the full amount of the
liquidating distribution to which it is entitled, the holder of the NationsBank
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ESOP Preferred Stock will not be entitled to any further distribution of assets
by NationsBank. Neither a merger or consolidation of NationsBank with or into
any other corporation, nor a merger or consolidation of any other corporation
with or into NationsBank nor a sale, transfer or lease of all or any portion of
NationsBank's assets, will be deemed to be a dissolution, liquidation or
winding-up of NationsBank.
REDEMPTION. The NationsBank ESOP Preferred Stock is redeemable, in whole or
in part, at the option of NationsBank, at any time. The redemption price for the
shares of the NationsBank ESOP Preferred Stock will depend upon the time of
redemption. Specifically, the redemption price for the 12-month period that
began on July 1, 1997, is $43.16 per share; on each succeeding July 1, the
redemption price will be reduced by $.33 per share, except that, on and after
July 1, 1999, the redemption price will be $42.50 per share, and the redemption
price may be paid in cash or shares of NationsBank Common Stock. In each case,
the redemption price also must include all accrued and unpaid dividends to the
date of redemption. To the extent that the NationsBank ESOP Preferred Stock is
treated as Tier 1 capital for bank regulatory purposes, the approval of the
Federal Reserve Board may be required for redemption of the NationsBank ESOP
Preferred Stock.
NationsBank is required to redeem shares of the NationsBank ESOP Preferred
Stock at the option of the holder of such shares to the extent necessary either
to provide for distributions required to be made under the ESOP or to make
payments of principal, interest or premium due and payable on any indebtedness
incurred by the holder of the shares for the benefit of the ESOP. The redemption
price in such case will be the greater of $42.50 per share plus accrued and
unpaid dividends to the date of redemption or the fair market value of the
aggregate number of shares of NationsBank Common Stock into which a share of
NationsBank ESOP Preferred Stock then is convertible.
NATIONSBANK SERIES B PREFERRED STOCK
The NationsBank Series B Preferred Stock was issued in connection with the
merger of NationsBank and Boatmen's Bancshares, Inc.
PREFERENTIAL RIGHTS. NationsBank may, without the consent of holders of
NationsBank Series B Preferred Stock, issue preferred stock with superior or
equal rights or preferences. The shares of the NationsBank Series B Preferred
Stock rank prior to the NationsBank ESOP Preferred Stock and NationsBank Common
Stock.
DIVIDENDS. Holders of shares of NationsBank Series B Preferred Stock are
entitled to receive, when and as declared by the NationsBank Board, out of any
funds legally available for such purpose, cumulative cash dividends at an annual
dividend rate per share of 7% of the stated value thereof, payable quarterly.
Dividends on NationsBank Series B Preferred Stock are cumulative, and no cash
dividends can be declared or paid on any shares of NationsBank Common Stock
unless full cumulative dividends on NationsBank Series B Preferred Stock have
been paid or declared and funds sufficient for the payment thereof set apart.
VOTING RIGHTS. Each share of NationsBank Series B Preferred Stock has equal
voting rights, share for share, with each share of NationsBank Common Stock.
DISTRIBUTIONS. In the event of the dissolution, liquidation or winding up
of NationsBank, the holders of NationsBank Series B Preferred Stock are entitled
to receive, after payment of the full liquidation preference on shares of any
class of preferred stock ranking superior to NationsBank Series B Preferred
Stock (if any such shares are then outstanding) but before any distribution on
shares of NationsBank Common Stock, liquidating dividends of $100 per share plus
accumulated dividends.
REDEMPTION. Shares of NationsBank Series B Preferred Stock are redeemable,
in whole or in part, at the option of the holders thereof, at the redemption
price of $100 per share plus accumulated dividends, PROVIDED that (i) full
cumulative dividends have been paid, or declared and funds sufficient for
payment set apart, upon any class or series of preferred stock ranking superior
to NationsBank Series B Preferred Stock; and (ii) NationsBank is not then in
default or arrears with respect to any sinking or analogous fund or call for
tenders obligation or agreement for the purchase or any class or series of
preferred stock ranking superior to NationsBank Series B Preferred Stock.
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NATIONSBANK NEW PREFERRED STOCK
The shares of NationsBank New Preferred Stock, as described below, will be
substantially similar to the shares of Barnett Preferred Stock. The shares of
NationsBank New Preferred Stock will rank prior to the shares of Series B
Preferred Stock and the shares of ESOP Preferred Stock as to dividends and upon
liquidation. Upon consummation of the Merger, each share of Barnett Preferred
Stock will be converted into the right to receive one share of NationsBank New
Preferred Stock. See "THE MERGER -- Exchange of Certificates." The form of
Articles of Amendment setting forth the rights, designations and preferences of
the NationsBank New Preferred Stock is set forth as an exhibit to the
Registration Statement, and the following summary of the terms of the
NationsBank New Preferred Stock is qualified in its entirety by reference to
such exhibit. See "AVAILABLE INFORMATION."
DIVIDENDS. Holders of the NationsBank New Preferred Stock will be entitled
to receive, when and as declared by the NationsBank Board, out of assets of
NationsBank legally available for payment, cash dividends at the rate of $2.50
per annum per share. Dividends will be payable quarterly on January 1, April 1,
July 1, and October 1 of each year. Dividends on the NationsBank New Preferred
Stock will be cumulative from the date of issue. Each dividend will be payable
to holders of record as they appear on the stock register of NationsBank on the
record dates fixed by the NationsBank Board.
If at any time there are outstanding shares of any other series of
preferred stock ranking junior to or on a parity with the NationsBank New
Preferred Stock as to dividends, no dividends will be declared or paid or set
apart for payment on any such other series for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for such payment on the
NationsBank New Preferred Stock for all dividend payment periods terminating on
or prior to the date of payment of such dividends.
All dividends declared on shares of NationsBank New Preferred Stock and any
other class of preferred stock or series thereof ranking on a parity as to
dividends with the NationsBank New Preferred Stock will be declared pro rata, so
that the amounts of dividends declared on the NationsBank New Preferred Stock
and such other preferred stock for the same dividend period, or for the dividend
period of the NationsBank New Preferred Stock ending within the dividend period
of such other stock, will, in all cases, bear to each other the same ratio that
accrued dividends on the shares of NationsBank New Preferred Stock and such
other stock bear to each other.
No interest, or sum of money in lieu of interest, will be payable in
respect of any dividend payment or payments on the NationsBank New Preferred
Stock which may be in arrears.
CONVERSION RIGHTS. Subject to the terms and conditions set forth below, the
holders of shares of NationsBank New Preferred Stock will have the right, at
their option, to convert such shares into shares of NationsBank Common Stock at
any time into fully paid and nonassessable shares of NationsBank Common Stock
(calculated as to each conversion to the nearest 1/1,000 of a share) at the rate
of 6.17215 shares of NationsBank Common Stock for each share of NationsBank New
Preferred Stock surrendered for conversion (the "Conversion Rate"). The
Conversion Rate will be subject to adjustment from time to time as described
below.
No payment or adjustment will be made on account of any accrued and unpaid
dividends on shares of NationsBank New Preferred Stock surrendered for
conversion prior to the record date for the determination of shareholders
entitled to such dividends or on account of any dividends on the NationsBank
Common Stock issued upon such conversion subsequent to the record date for the
determination of shareholders entitled to such dividends. If any shares of
NationsBank New Preferred Stock are called for redemption, the right to convert
the shares designated for redemption will terminate at the close of business on
the 15th day prior to the redemption date (or the next succeeding business day,
if the 15th day is not a business day) unless a default is made in the payment
of the Redemption Price. In the event of default in the payment of the
Redemption Price, the right to convert the shares designated for redemption will
terminate at the close of business on the business day immediately preceding the
date that such default is cured.
In order to convert shares of NationsBank New Preferred Stock into
NationsBank Common Stock, the holder of such shares will surrender the
certificate(s) therefor, duly endorsed if NationsBank so requires, or
accompanied by appropriate instruments of transfer satisfactory to NationsBank,
at the office of the Transfer
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Agent(s) for the NationsBank New Preferred Stock, or at such other office as may
be designated by NationsBank, together with written notice that the holder of
shares irrevocably elects to convert such shares. Such notice must also state
the name(s) and address(es) in which such holder wishes the certificate(s) for
the shares of NationsBank Common Stock issuable upon conversion to be issued. As
soon as practicable after receipt of the certificate(s) representing the shares
of NationsBank New Preferred Stock to be converted and the notice of election to
convert the same, NationsBank will issue and deliver at the Transfer Agent's
office (or other designated officer) a certificate or certificates for the
number of whole shares of NationsBank Common Stock issuable upon conversion of
the shares of NationsBank New Preferred Stock surrendered for conversion,
together with a cash payment in lieu of any fraction of a share to the person(s)
entitled to receive the same.
No fractional shares of NationsBank Common Stock will be issued upon
conversion of any shares of NationsBank New Preferred Stock. If more than one
share of NationsBank New Preferred Stock is surrendered at one time by the same
holder, the number of full shares issuable upon conversion thereof will be
computed on the basis of the aggregate number of shares so surrendered. If the
conversion of any shares of NationsBank New Preferred Stock results in a
fractional share of NationsBank Common Stock, NationsBank will pay cash in lieu
thereof in an amount equal to such fraction multiplied times the closing price
of the NationsBank Common Stock on the date on which the shares of NationsBank
New Preferred Stock were duly surrendered for conversion, or if such date is not
a trading date, on the next succeeding trading date. The closing price of the
NationsBank Common Stock for any day means the last reported sales price regular
way on such day or, in case no such sale takes place on such day, the average of
the reported closing bid and asked prices regular way, on the NYSE, or, if the
NationsBank Common Stock is not then listed on NYSE, on the principal national
securities exchange on which the NationsBank Common Stock is listed for trading,
or, if not then listed for trading on any national securities exchange, the
average of the closing bid and asked prices of the NationsBank Common Stock as
furnished by the National Quotation Bureau, Inc., or if the National Quotation
Bureau, Inc. ceases to furnish such information, by a comparable independent
securities quotation service.
In the event NationsBank at any time (i) pays a dividend or make a
distribution to holders of NationsBank Common Stock in shares of NationsBank
Common Stock, (ii) subdivides its outstanding shares of NationsBank Common Stock
into a larger number of shares, or (iii) combines its outstanding shares of
NationsBank Common Stock into a smaller number of shares, the Conversion Rate in
effect at the time of the record date for such dividend or distribution or the
effective date of such subdivision or combination will be adjusted so that the
holder of any shares of NationsBank New Preferred Stock surrendered for
conversion after such record date or effective date will be entitled to receive
the number of shares of NationsBank Common Stock which he would have owned or
have been entitled to receive immediately following such record date or
effective date had such shares of NationsBank New Preferred Stock been converted
immediately prior thereto.
Whenever the Conversion Rate adjusts as described in the preceding
paragraph (i) NationsBank will keep available at the office of the Transfer
Agent(s) for the NationsBank New Preferred Stock a statement describing in
reasonable detail the adjustment, the facts requiring such adjustment and the
method of calculation used; and (ii) NationsBank will cause to be mailed by
first class mail, postage prepaid, as soon as practicable to each holder of
record of shares of NationsBank New Preferred Stock a notice stating that the
Conversion Rate has been adjusted and setting forth the adjusted Conversion
Rate.
In the event of any consolidation of NationsBank with or merger of
NationsBank into any other corporation (other than a merger in which NationsBank
is the surviving corporation) or a sale of the assets of NationsBank
substantially as an entirety, the holder of each share of NationsBank New
Preferred Stock will have the right, after such consolidation, merger or sale to
convert such share into the number and kind of shares of stock or other
securities and the amount and kind of property receivable upon such
consolidation, merger or sale by a holder of the number of shares of NationsBank
Common Stock issuable upon conversion of such share of NationsBank New Preferred
Stock immediately prior to such consolidation, merger or sale. Provision will be
made for adjustments in the Conversion Rate which will be as nearly equivalent
as may be practicable to the adjustments described herein.
NationsBank will pay any taxes that may be payable in respect of the
issuance of shares of NationsBank Common Stock upon conversion of shares of
NationsBank New Preferred Stock, but NationsBank will not be required to pay any
taxes which may be payable in respect of any transfer involved in the issuance
of shares of
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NationsBank Common Stock in a name other than that in which the shares of
NationsBank New Preferred Stock so converted are registered, and NationsBank
will not be required to issue or deliver any such shares unless and until the
person(s) requesting such issuance will have paid to NationsBank the amount of
any such taxes, or will have established to the satisfaction of NationsBank that
such taxes have been paid.
NationsBank will at all times reserve and keep available out of its
authorized but unissued Common Stock the full number of shares of NationsBank
Common Stock issuable upon the conversion of all shares of NationsBank New
Preferred Stock then outstanding.
In the event that NationsBank (i) declares a dividend or any other
distribution on NationsBank Common Stock, payable otherwise than in cash out of
retained earnings, (ii) authorizes the granting to the holders of NationsBank
Common Stock of rights to subscribe for or purchase any shares of capital stock
of any class or of any other rights, (iii) proposes to effect any consolidation
of NationsBank with or merger of NationsBank with or into any other corporation
or a sale of the assets of NationsBank substantially as an entirety which would
result in an adjustment to the Conversion Rate, NationsBank will cause to be
mailed to the holders of record of NationsBank New Preferred Stock at least 20
days prior to the applicable date hereinafter specified a notice stating (x) the
date on which a record is to be taken for the purpose of such dividend,
distribution or rights or, if a record is not to be taken, the date as of which
the holders of NationsBank Common Stock of record to be entitled to such
dividend, distribution or rights are to be determined or (y) the date on which
such consolidation, merger or sale is expected to become effective, and the date
as of which it is expected that holders of NationsBank Common Stock of record
will be entitled to exchange their shares of NationsBank Common Stock for
securities or other property deliverable upon such consolidation, merger or
sale. Failure to give such notice, or any defect therein, will not affect the
legality or validity of such dividend, distribution, consolidation, merger or
sale.
REDEMPTION. Shares of NationsBank New Preferred Stock will be redeemable at
the option of NationsBank, in whole or in part, at a redemption price of $25 per
share plus accrued and unpaid dividends to the redemption date (the "Redemption
Price").
Notice of any redemption will be given by first class mail, postage
prepaid, mailed not less than 60 nor more than 90 days prior to the date fixed
for redemption to the holders of record of the shares of NationsBank New
Preferred Stock to be redeemed, at their respective addresses appearing on the
books of NationsBank. Notice so mailed will be conclusively presumed to have
been duly given whether or not actually received. The notice will state: (1) the
date fixed for redemption; (2) the Redemption Price; (3) the right of the
holders of NationsBank New Preferred Stock to convert such stock into Common
Stock until the close of business on the 15th day prior to the redemption date
(or the next succeeding business day, if the 15th day is not a business day);
(4) if less than all the shares held by such holder are to be redeemed, the
number of shares to be redeemed from such holder; and (5) the place(s) where
certificates for such shares are to be surrendered for payment of the Redemption
Price. If such notice is mailed as aforesaid, and if on or before the date fixed
for redemption funds sufficient to redeem the shares called for redemption are
set aside by NationsBank in trust for the account of the holders of the shares
to be redeemed, notwithstanding the fact that any certificate for shares called
for redemption will not have been surrendered for cancellation, on and after the
redemption date the shares represented thereby so called for redemption will be
deemed to be no longer outstanding, dividends thereon will cease to accrue, and
all rights of the holders of such shares as shareholders of NationsBank will
cease, except the right to receive the Redemption Price, without interest, upon
surrender of the certificate(s) representing such shares. Upon surrender in
accordance with the aforesaid notice of the Certificate(s) for any shares so
redeemed (duly endorsed or accompanied by appropriate instruments of transfer,
if so required by NationsBank in such notice), the holders of record of such
shares will be entitled to receive the Redemption Price, without interest.
At the option of NationsBank, if notice of redemption is mailed as
aforesaid, and if prior to the date fixed for redemption funds sufficient to pay
in full the Redemption Price are deposited in trust, for the account of the
holders of the shares to be redeemed, with a bank or trust company named in such
notice doing business in the Borough of Manhattan, The City of New York, State
of New York or the City of Charlotte, State of North Carolina and having
capital, surplus and undivided profits of at least $3 million, which bank or
trust company
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also may be the Transfer Agent and/or Paying Agent for the NationsBank New
Preferred Stock, notwithstanding the fact that any certificates for shares
called for redemption will not have been surrendered for cancellation, on and
after such date of deposit the shares represented thereby so called for
redemption will be deemed to be no longer outstanding, and all rights of the
holders of such shares as shareholders of NationsBank will cease, except the
right of the holders thereof to convert such shares at any time prior to the
close of business on the 15th day prior to the redemption date (or the next
succeeding business day, if the 15th day is not a business day), and the right
of the holders thereof to receive out of the funds so deposited in trust the
Redemption Price, without interest, upon surrender of the certificate(s)
representing such shares. Any funds so deposited with such bank or trust company
in respect of shares of NationsBank New Preferred Stock converted before the
close of business on the 15th day prior to the redemption date (or the next
succeeding business day, if the 15th day is not a business day) will be returned
to NationsBank upon such conversion. Any funds so deposited with such a bank or
trust company which will remain unclaimed by the holders of shares called for
redemption at the end of six years after the redemption date will be repaid to
NationsBank, on demand, and thereafter the holder of any such shares will look
only to NationsBank for the payment, without interest, of the Redemption Price.
In the event that any quarterly dividend payable on the NationsBank New
Preferred Stock will be in arrears and until all such dividends in arrears will
have been paid or declared and set apart for payment, NationsBank will not
redeem any shares of NationsBank New Preferred Stock unless all outstanding
shares of NationsBank New Preferred Stock are simultaneously redeemed and will
not purchase or otherwise acquire any shares of NationsBank New Preferred Stock
except in accordance with a purchase offer made by NationsBank on the same terms
to all holders of record of NationsBank New Preferred Stock for the purchase of
all outstanding shares thereof.
Shares of NationsBank New Preferred Stock are not subject to a sinking
fund.
LIQUIDATION RIGHTS. In the event of any liquidation, dissolution or winding
up of the affairs of NationsBank, whether voluntary or involuntary, the holders
of NationsBank New Preferred Stock will be entitled to receive out of the assets
of NationsBank available for distribution to shareholders an amount equal to $25
per share plus an amount equal to accrued and unpaid dividends thereon to and
including the date of such distribution, and no more, before any distribution
will be made to the holders of any class of stock of NationsBank ranking junior
to the NationsBank New Preferred Stock as to the distribution of assets.
In the event the assets of NationsBank available for distribution to
shareholders upon any liquidation, dissolution or winding up of the affairs of
NationsBank, whether voluntary or involuntary, are insufficient to pay in full
the amounts payable with respect to the NationsBank New Preferred Stock and any
other shares of preferred stock of NationsBank ranking on a parity with the
NationsBank New Preferred Stock as to the distribution of assets, the holders of
NationsBank New Preferred Stock and the holders of such other preferred stock
will share ratably in any distribution of assets of NationsBank in proportion to
the full respective preferential amounts to which they are entitled.
The merger or consolidation of NationsBank into or with any other
corporation, the merger or consolidation of any other corporation into or with
NationsBank or the sale of the assets of NationsBank substantially as an
entirety will not be deemed a liquidation, dissolution or winding up of the
affairs of NationsBank.
VOTING. Holders of NationsBank New Preferred Stock will have no voting
rights except as required by law and in the event that any quarterly dividend
payable on the NationsBank New Preferred Stock is in arrears, the holders of
NationsBank New Preferred Stock will be entitled to vote together with the
holders of Common Stock at the Company's next meeting of shareholders and at
each subsequent meeting of shareholders unless all dividends in arrears have
been paid or declared and set apart for payment prior to the date of such
meeting. In those cases where holders of NationsBank New Preferred Stock are
entitled to vote, each holder will be entitled to cast the number of votes equal
to the number of whole shares of NationsBank Common Stock into which his
NationsBank New Preferred Stock is then convertible.
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COMPARATIVE RIGHTS OF SHAREHOLDERS
OF NATIONSBANK AND BARNETT
NationsBank is a North Carolina corporation subject to the provisions of
the NCBCA. Barnett is a Florida corporation subject to the provisions of the
FBCA. Barnett Shareholders, whose rights are governed by the Barnett Articles of
Incorporation, by the Barnett Bylaws, and by the FBCA, will, upon consummation
of the Merger, become shareholders of NationsBank. As shareholders of
NationsBank, their rights will then be governed by the NationsBank Articles of
Incorporation, the Bylaws of NationsBank (the "NationsBank Bylaws") and by the
NCBCA.
Set forth below are the material differences between the rights of Barnett
Shareholders under the Barnett Articles of Incorporation and Bylaws and under
the FBCA, on the one hand, and the rights of NationsBank Shareholders under the
NationsBank Articles of Incorporation, NationsBank Bylaws and the NCBCA, on the
other hand.
BOARD OF DIRECTORS
ELECTION. The Barnett Board is divided into three classes, and the
directors are elected by classes to three-year terms, so that approximately
one-third of the directors of Barnett will be elected at each annual meeting of
the shareholders. The NationsBank Board is not classified. Each director of each
of NationsBank and Barnett must be elected at the annual meeting of directors by
a plurality of the votes cast, and in neither case may votes cast in the
election of directors be cumulated.
REMOVAL. The FBCA provides that shareholders may remove a director with or
without cause unless the articles of incorporation provide that any director or
the entire Board of Directors may be removed only for cause. The Barnett
Articles of Incorporation provide that directors may be removed only for cause
and only by the affirmative vote, at a meeting of shareholders called for that
purpose, of the holders of 80% or more of the voting power of all of the then
outstanding shares of capital stock entitled to vote on the election of
directors, voting together as a single class.
The NCBCA provides that, in the absence of cumulative voting or a contrary
provision in a corporation's governance documents, a director may be removed
with or without cause by the affirmative vote of the holders of a majority of
votes cast for such purpose. Additionally, the entire board of directors may be
removed with or without cause by the holders of a majority of the shares
entitled to elect such directors. The NationsBank Articles of Incorporation and
the NationsBank Bylaws do not provide otherwise. In addition, the NCBCA provides
that an appropriate court can remove a director upon petition of the holders of
at least 10% of the outstanding shares of any class of stock of a corporation
upon certain findings by such court.
SHAREHOLDER VOTE REQUIRED FOR BUSINESS COMBINATIONS
The FBCA generally requires that any merger, consolidation or sale of
substantially all the assets of a corporation be approved by a vote of the
holders of a majority of all outstanding shares entitled to vote thereon. The
articles of incorporation of a Florida corporation may provide for a greater
vote.
The Barnett Articles of Incorporation require a vote of at least 80% of the
voting power of the then-outstanding shares of capital stock of Barnett entitled
to vote generally in the election of directors for approval of certain business
combinations with an Interested Shareholder (as defined herein), including
certain mergers, asset sales, security issuances, recapitalizations and
liquidations. An "Interested Shareholder" generally means any person who is the
beneficial owner of more than 10% of the outstanding voting stock of Barnett.
The special voting requirement does not apply if the business combination has
been approved by a majority of the Continuing Directors (as defined herein) of
Barnett or if certain fair price and other procedural requirements similar to
those contained in Section 607.0901 and described below under " -- Takeover
Statutes" are satisfied. A "Continuing Director" is a director of Barnett who is
not affiliated with an Interested Shareholder and who was a member of the
Barnett Board prior to the time the Interested Shareholder became such, and any
successor to such Continuing Director who is not affiliated with the Interested
Shareholder and who was recommended to succeed a Continuing Director by a
majority of the Continuing Directors then on the Barnett Board. Because the
Barnett Board approved the Merger unanimously (with two directors absent), this
80% approval requirement is inapplicable to the Merger.
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The NCBCA provides that, unless a corporation's governance documents
provide otherwise, certain business combinations (including mergers) require the
approval of a majority of the outstanding shares of each voting group of the
corporation entitled to vote on the subject transaction. The NationsBank
Articles of Incorporation and the NationsBank Bylaws do not require otherwise.
Accordingly, depending on the circumstance, it may be easier for the NationsBank
Shareholders to cast sufficient votes to approve a merger or similar business
combination than it is for the Barnett Shareholders.
SHAREHOLDER RIGHTS PLAN
On February 21, 1990, the Barnett Board declared a dividend distribution of
one Barnett Right for each outstanding share of Barnett Common Stock to
shareholders of record at the close of business on March 12, 1990 and authorized
the issuance of one Barnett Right for each share of Barnett Common Stock issued
between the record date and the date on which Barnett Rights are independently
tradable (the "Distribution Date"). Each Barnett Right entitles the registered
holder to purchase from Barnett a unit consisting of one one-hundredth of a
share (a "Unit") of Junior Participating Preferred Stock, $.10 par value, of
Barnett (the "Junior Participating Preferred Stock") at a Purchase Price of
$125.00 per Unit, subject to adjustment. The description and terms of the Rights
are set forth in the Barnett Rights Agreement. Unless otherwise defined herein,
all capitalized terms used herein shall have the meanings set forth in the
Barnett Rights Agreement.
Initially, the Rights will be attached to all Barnett Certificates
representing shares then outstanding, and no separate Rights Certificates will
be distributed. The Rights will separate from the Barnett Common Stock and a
Distribution Date will occur upon the earlier of (i) the close of business on
the tenth day following a public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") has acquired beneficial
ownership of 20% or more of the outstanding shares of Barnett Common Stock or
voting securities representing 20% or more of the voting power of Barnett (the
"Stock Acquisition Date"), (ii) the close of business on the tenth business day
(or such later date as the Barnett Board may determine) following the
commencement of a tender offer or exchange offer that would result in a person
or group beneficially owning 20% or more of such outstanding shares of Barnett
Common Stock or voting power of Barnett then outstanding, or (iii) the close of
business on the tenth business day after a majority of the members of the
Barnett Board who are not officers of Barnett determine, after reasonable
inquiry and investigation, including consultation with such persons as such
directors shall deem appropriate, that, with respect to any person who has,
alone or together with his affiliates or associates, become the beneficial owner
of 10% or more of the outstanding shares of Barnett Common Stock or voting power
of Barnett then outstanding, (a) such beneficial ownership by such person is
intended to cause Barnett to repurchase Barnett Common Stock or voting power of
Barnett beneficially owned by such person or to cause pressure on Barnett to
take action or enter into a transaction or series of transactions intended to
provide such person with short-term financial gain under circumstances where
such directors determine that the best long-term interests of Barnett and its
shareholders would not be served by taking such action or entering into such
transaction or series of transactions at that time or (b) such beneficial
ownership is causing or is reasonably likely to cause a material adverse impact
on the business or prospects of Barnett (including, but not limited to,
impairment of Barnett's relationships with customers, impairment of Barnett's
ability to maintain its competitive position, impairment of Barnett's capital
position, impairment of Barnett's ability to meet the convenience and needs of
the communities it serves, or impairment of Barnett's business reputation or
ability to deal with governmental agencies) to the detriment of Barnett's
shareholders (any such person being referred to herein and in the Barnett Rights
Agreement as an "Adverse Person"). Until the Distribution Date, (i) the Rights
will be evidenced by the Barnett Certificates and will be transferred with and
only with such Barnett Certificates, (ii) new Barnett Certificates issued after
March 12, 1990 will contain a notation incorporating the Barnett Rights
Agreement by reference and (iii) the surrender for transfer of any certificates
for Barnett Common Stock outstanding will also constitute the transfer of the
Barnett Rights associated with the Barnett Common Stock represented by such
certificate. Pursuant to the Barnett Rights Agreement, Barnett reserves the
right to require prior to the occurrence of a Triggering Event (as defined
herein) that, upon any exercise of Barnett Rights, a number of Barnett Rights be
exercised so that only whole shares of Junior Participating Preferred Stock will
be issued.
The Barnett Rights are not exercisable until after the Distribution Date
and will expire at the close of business on March 11, 2000, unless earlier
redeemed by Barnett as described below.
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As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of Barnett Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Barnett Board, only shares of Barnett Common Stock issued prior to the
Distribution Date will be issued with Rights.
In the event that (i) a person becomes the beneficial owner of 20% or more
of the then outstanding shares of Barnett Common Stock or voting power of
Barnett (except pursuant to an offer for all outstanding shares of Barnett
Common Stock and all other Voting Securities which the independent directors
determine to be fair to and otherwise in the best interests of Barnett and its
shareholders (a "Fair Offer")) or (ii) any person is determined to be an Adverse
Person (either (i) or (ii) being a "Flip-in Event"), each holder of a Right will
thereafter have the right to receive, upon exercise, Barnett Common Stock (or,
in certain circumstances, cash, property or other securities of Barnett) having
a value (based on the lowest closing price of the Barnett Common Stock during
the twelve-month period preceding the Flip-in Event) equal to two times the
exercise price of the Right.
Notwithstanding any of the foregoing, following the occurrence of a Flip-in
Event, all rights that are, or (under certain circumstances specified in the
Barnett Rights Agreement) were, beneficially owned by any Acquiring Person or an
Adverse Person (or certain related persons) will be null and void. However,
Barnett Rights are not exercisable following the occurrence of a Flip-in Event
until such time as the Barnett Rights are no longer redeemable by Barnett as set
forth below.
In the event that, at any time following the Stock Acquisition Date, (i)
Barnett is acquired in a merger or other business combination transaction in
which Barnett is not the surviving corporation (other than a merger which
follows a Fair Offer), (ii) any person consolidates with, or merges with or
into, Barnett and Barnett is the continuing or surviving corporation of such
consolidation or merger (other than a merger which follows a Fair Offer) and, in
connection with such consolidation or merger, all or part of the outstanding
shares of Barnett Common Stock shall be changed into or exchanged for stock or
other securities of any other person or cash or any other property, or (iii) 50%
or more of Barnett's assets or earning power is sold or transferred, each holder
of a Barnett Right (except Barnett Rights which previously have been voided as
set forth above) shall thereafter have the right to receive, upon exercise,
common stock of the acquiring company having a value equal to two times the
exercise price of the Barnett Right. The events set forth in this paragraph and
the Flip-in Events are referred to as the "Triggering Events."
The Purchase Price payable, and the number of Units of Junior Participating
Preferred Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Junior Participating Preferred Stock, (ii) if holders
of the Junior Participating Preferred Stock are granted certain rights, options
or warrants to subscribe for Junior Participating Preferred Stock or securities
convertible into Junior Participating Preferred Stock at less than the current
market price of the Junior Participating Preferred Stock, or (iii) upon the
distribution to holders of the Junior Participating Preferred Stock of evidences
of indebtedness, cash (excluding regular quarterly cash dividends), assets
(other than dividends payable in Junior Participating Preferred Stock, but
including dividends payable in stock other than Junior Participating Preferred
Stock) or subscription rights or warrants (other than those referred to in (ii)
above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Units will be issued and, in lieu thereof, an adjustment in
cash will be made based on the market price of the Junior Participating
Preferred Stock on the last trading date prior to the date of exercise.
At any time until the earlier of (i) the close of business on the tenth day
following the Stock Acquisition Date, or (ii) March 11, 2000, Barnett may redeem
the Barnett Rights in whole, but not in part, at a price of $.01 per Barnett
Right (payable in cash, Barnett Common Stock or other consideration deemed
appropriate by the Barnett Board). Immediately upon the action of the Barnett
Board ordering redemption of the Barnett Rights, the Barnett Rights will
terminate and the only right of the holders of Barnett Rights will be to receive
the $.01 redemption price. Notwithstanding the foregoing, the Barnett Board may
not redeem the Barnett Rights following a determination that any person is an
Adverse Person.
At any time after the occurrence of a Flip-in Event, the Barnett Board may
exchange the Barnett Rights (other than Barnett Rights owned by an Acquiring
Person or an Adverse Person, or an affiliate or associate of
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any such person, which have become void), in whole or in part, at an exchange
ratio of one share of Barnett Common Stock (and/or other equity securities
deemed to have the same value as one share of Barnett Common Stock) per Barnett
Right, subject to adjustment.
Until a Barnett Right is exercised, the holder thereof, as such, will have
no rights as a shareholder of Barnett, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Barnett Rights
will not be taxable to shareholders or to Barnett, shareholders may, depending
upon the circumstances, recognize taxable income in the event that the Barnett
Rights become exercisable for Barnett Common Stock (or other consideration) of
Barnett or for common stock of the acquiring company as set forth above, or are
exchanged as provided in the preceding paragraph.
Other than those provisions relating to the principal economic terms of the
Barnett Rights, any of the provisions of the Barnett Rights Agreement may be
amended by the Barnett Board prior to the Distribution Date. After the
Distribution Date, the provisions of the Barnett Rights Agreement may be amended
by the Barnett Board to cure any ambiguity, to cure any defective or
inconsistent provisions, to make changes which do not adversely affect the
interests of holders of Barnett Rights (excluding the interests of any Acquiring
Person or Adverse Person), or to shorten or lengthen any time period under the
Barnett Rights Agreement; provided, however, that no amendment to adjust the
time period governing redemption shall be made at such time as the Barnett
Rights are not redeemable.
Until a Barnett Right is exercised, the holder thereof, as such, will have
no rights as a shareholder of Barnett, including, without limitation, the right
to vote or to receive dividends.
In connection with Barnett entering into the Agreement and the Barnett
Stock Option Agreement, Barnett amended the Barnett Rights Agreement to exempt
the Agreement, the Barnett Stock Option Agreement and the Merger and certain
transactions relating thereto. See "THE MERGER -- Amendment to Barnett Rights
Agreement."
NationsBank does not have a shareholder rights plan. This may make it less
difficult for a potential acquiror to effect a non-negotiated business
combination with NationsBank than with Barnett.
SHAREHOLDER PROPOSAL AND NOMINATION PROCEDURES
The FBCA does not contain any specific provisions regarding notice of
shareholders' proposals or nominations for directors.
The Barnett Bylaws establish certain procedures that must be followed for
Barnett Shareholders to nominate individuals to the Barnett Board or to propose
business at an annual meeting of shareholders.
In order to nominate individuals to the Barnett Board, a shareholder must,
among other things, provide timely notice of such nomination in writing to the
Secretary of Barnett. A shareholder's notice must set forth (i) as to each
person whom the shareholder proposed to nominate for election as a director (a)
the name, age, business address and residence address of each person, (b) the
principal occupation or employment of the person, (c) the class or series and
number of shares of Barnett held by the person as of the record date of the
meeting (if such date shall have been made publicly available and shall have
occurred) and as of the date of such notice and (d) any other information
relating to the person that is required to be disclosed in a proxy statement or
other filing required to be made in connection with solicitations of proxies for
election of directors pursuant to Section 14 of the Exchange Act, and the rules
and regulations promulgated thereunder; and (ii) as to the shareholder giving
such notice (a) the name and record address of such shareholder, (b) the class
or series and number of shares of capital stock of Barnett which are owned
beneficially or of record by such shareholder, as of the record date of the
meeting (if such date shall have been made publicly available and shall have
occurred) and as of the date of such notice, (c) a description of all
arrangements or understandings between such shareholder and each proposed
nominee and any other person or persons (including their names) pursuant to
which the nomination(s) are to be made by such shareholder, (d) a representation
that such shareholder intends to appear in person or by proxy at the annual
meeting to nominate the persons named in its notice, and (e) any other
information relating to such shareholder that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Exchange Act and the rules and regulations promulgated thereunder. Such notice
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must be accompanied by a written consent of each proposed nominee to being named
as a nominee and to serve as a director if elected.
No business may be transacted at any meeting of shareholders of Barnett
other than business that is (a) specified in the notice of meeting given by or
at the direction of the Barnett Board (or any duly authorized committee
thereof), (b) otherwise properly brought before such meeting of shareholders by
or at the direction of the Barnett Board (or any duly authorized committee
thereof) or (c) in the case of an annual meeting of shareholders, otherwise
properly brought before such meeting by any shareholder (i) who is a shareholder
of record on the date of the giving of the notice and on the record date for the
determination of shareholders entitled to vote at such annual meeting of
shareholders and (ii) who complies with the notice procedures described herein.
In order to properly propose that an item of business come before the annual
meeting of shareholders, such shareholder must, among other things, provide
timely notice in writing to the Secretary of Barnett, which notice must include
(i) a brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting, (ii)
the name, record address, class or series and number of shares of Barnett
capital stock owned beneficially or of record by such shareholder as of the
record date of the meeting (if such date shall have been made publicly available
and shall have occurred) and as of the date of such notice, (iii) a description
of all arrangements or understandings between such shareholder and any other
person or persons (including their names) in connection with the proposal of
such business by such shareholder and any material interest of such shareholder
in such business, (iv) any other information which would be required to be
disclosed in a proxy statement or other filings required to be made in
connection with the solicitations of proxies for the proposal pursuant to
Section 14 of the Exchange Act and the rules and regulations promulgated
thereunder, if such shareholder were engaged in such a solicitation, and (v) a
representation that such shareholder intends to appear in person or by proxy at
the annual meeting to bring such business before the meeting.
To be timely, a shareholder's notice of a director nominee or proposed item
of business to the Secretary must be delivered to or mailed and received at the
principal executive offices of Barnett, (i) in the case of an annual meeting of
shareholders, not less than 60 days nor more than 90 days prior to the
anniversary date of the immediately preceding annual meeting of shareholders;
PROVIDED, HOWEVER, that, in the event that the annual meeting is called for a
date that is not within 30 days before or after such anniversary date, notice by
the shareholder in order to be timely must be so received not later than the
close of business on the tenth day following the day on which such notice of the
date of the annual meeting was mailed or such public disclosure of the date of
the annual meeting was made, whichever first occurs; and (ii) in the case of a
special meeting of shareholders called for the purpose of electing directors,
not later than the close of business on the tenth day following the day on which
such notice of the date of the special meeting of shareholders was mailed or
public disclosure of the date of the special meeting of shareholders was made,
whichever first occurs.
Neither the NCBCA nor the NationsBank Articles of Incorporation or
NationsBank Bylaws contain any specific provisions regarding notice of
shareholders' proposals or nominations for directors.
The provisions of the Barnett Bylaws make it more difficult for the
shareholders of Barnett than for those of NationsBank to nominate persons for
election to the board of directors or to present proposals for business to be
transacted at shareholder meetings.
DISSENTERS' RIGHTS
Under the FBCA, appraisal rights are available in connection with the
consummation of a plan of merger or share exchange that requires a shareholder
vote, a sale or exchange of all, or substantially all, of the assets of a
corporation that requires a shareholder vote, certain amendments to the articles
of incorporation if the shareholder is entitled to vote on the amendment and if
such amendment may adversely affect the rights or preferences of such
shareholder, and a Control-Share acquisition (as described below). However,
unless otherwise provided in the articles of incorporation, no appraisal rights
are available in connection with a plan of merger, share exchange, or sale or
exchange of property, to holders of shares of any class or series which is
either: (i) listed on a national securities exchange or designated as a national
market system security on an inter-dealer quotation system by the National
Association of Securities Dealers, Inc. or (ii) held of record by more than
2,000 shareholders. The Barnett Articles of Incorporation have no provisions
regarding appraisal rights,
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and, because the Barnett Common Stock was listed on the NYSE on the Barnett
Record Date, Barnett Shareholders will not have appraisal rights in connection
with the Merger.
The NCBCA generally provides dissenters' rights for mergers and share
exchanges that require shareholder approval, sales of substantially all the
assets (other than sales that are in the usual and regular course of business
and certain liquidations and court-ordered sales), and certain types of
amendments to the articles of incorporation of a North Carolina corporation.
Because NationsBank is not merging directly with Barnett, NationsBank
Shareholders are not entitled to dissenters' rights in connection with the
Merger.
TAKEOVER STATUTES
Section 607.0901 of the FBCA provides that the approval of the holders of
two-thirds of the voting shares of a corporation, other than the shares owned by
an Interested Shareholder (generally, any person who is the beneficial owner of
10% or more of the outstanding voting stock of the corporation), would be
required in order to effectuate certain transactions, including, among others, a
merger, sale of assets, sale of shares and reclassification of securities
involving the corporation and an Interested Shareholder (an "Affiliate
Transaction").
The special voting requirement does not apply in any of the following five
circumstances: (i) the Affiliated Transaction is approved by a majority of the
corporation's disinterested directors; (ii) the corporation has not had more
than 300 shareholders of record at any time during the preceding three years;
(iii) the Interested Shareholder has beneficially owned 80% of the corporation's
voting shares for five years; (iv) the Interested Shareholder beneficially owns
90% of the corporation's voting shares; or (v) all of the following conditions
are met (a) the cash and fair value of other consideration to be paid per share
to all holders of the voting shares equals the highest per share price
calculated pursuant to various methods set forth in Section 607.0901 of the
FBCA, (b) the consideration to be paid in the Affiliated Transaction is in the
same form as previously paid by the Interested Shareholder, and (c) during the
portion of the three years preceding the announcement date that the Interested
Shareholder has been an Interested Shareholder, except as approved by a majority
of the disinterested directors, there shall have been no failure to pay at the
regular date therefor any full periodic dividends, whether or not cumulative, on
any outstanding shares of the corporation, no increase in the voting shares
owned by the Interested Shareholder, and no benefit to the Interested
Shareholder from loans, guarantees or other financial assistance or tax
advantages provided by the corporation.
A corporation may "opt-out" of the provisions of Section 607.0901 by
electing to do so in its articles of incorporation. Barnett has not elected to
"opt-out" of Section 607.0901 of the FBCA.
In addition, Section 607.0902 of the FBCA provides that the voting rights
to be accorded Control Shares (as defined below) of a Florida corporation that
has (i) 100 or more shareholders, (ii) its principal place of business, its
principal office, or substantial assets in Florida, and (iii) either (a) more
than 10% of its shareholders residing in Florida, (b) more than 10% of its
shares owned by Florida residents, or (c) 1,000 shareholders residing in
Florida, must be approved by a majority of each class of voting securities of
the corporation, excluding those shares held by interested persons, before the
Control Shares will be granted any voting rights.
"Control Shares" are defined in the FBCA to be shares acquired by a person,
either directly or indirectly, that when added to all other shares of the
issuing corporation owned by such person, would entitle such person to exercise,
either directly or indirectly, voting power within any of the following ranges:
(i) 20% or more but less than 33% of all voting power of the corporation's
voting securities, (ii) 33% or more but less than a majority all voting power of
the corporation's voting securities, or (iii) a majority or more of all of the
voting power of the corporation's voting securities. Such provisions do not
apply to shares acquired pursuant to, among other things, an agreement or plan
of merger or share exchange effected in compliance with the relevant provisions
of the FBCA and to which the corporation is a party or an acquisition of shares
previously approved by the board of directors of the corporation.
In addition, unless otherwise provided in a corporation's articles of
incorporation or bylaws, in the event Control Shares acquired in a Control-Share
acquisition are accorded full voting rights and the acquiring person has
acquired Control Shares with a majority or more of all voting power, all
shareholders of the issuing public corporation shall have dissenters' rights.
The Barnett Board has approved the Merger Agreement and the Stock Option
Agreements and the transactions contemplated thereby such that the provisions of
Sections 607.0901 and 607.0902 of the FBCA will not
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apply to the Merger and any of the other transactions contemplated by the Merger
Agreement and the Stock Option Agreements.
North Carolina has two anti-takeover statutes in force, the North Carolina
Shareholder Protection Act and the North Carolina Control Share Acquisition Act,
which restrict business combinations with, and the accumulation of shares of
voting stock of, North Carolina corporations. NationsBank has taken action to
irrevocably "opt out" of the restrictions imposed by these statutes.
CONSIDERATION OF NON-SHAREHOLDER INTERESTS BY BOARD OF DIRECTORS
The Barnett Articles of Incorporation provide that the Board of Directors,
when evaluating an offer by any person (other than Barnett) to (i) make a tender
or exchange offer for any equity security of Barnett; (ii) merge or consolidate
Barnett with another person; or (iii) purchase or otherwise acquire
substantially all the property or assets of Barnett, shall, in exercising its
business judgment in determining the best interests of Barnett and its
shareholders, give due consideration to several relevant factors. These factors
include: (i) the consideration being offered in relation to the current market
prices and the current value of Barnett in a freely negotiated transaction and
in relation to the Barnett Board's estimate of the future value of Barnett as an
independent entity; (ii) the social and economic effects on the employees,
customers, suppliers, depositors, creditors, and any other constituents of
Barnett and its subsidiaries and on the communities in which Barnett and its
subsidiaries operate or are located; (iii) the desirability of maintaining an
independence from any other entity; (iv) the business condition, financial
condition and earnings prospects of the acquiring person, including, but not
limited to, debt service and other existing or likely financial obligations of
the acquiring person, and the possible effect of such conditions upon Barnett
and its subsidiaries; and (vii) the competence, experience, and integrity of the
acquiring person and its management.
Neither the NCBCA nor the NationsBank Articles of Incorporation or the
NationsBank Bylaws contain any similar provisions.
SPECIAL MEETING OF SHAREHOLDERS
Under the FBCA, special shareholder meetings of a corporation may be called
by its board of directors, by any person or persons authorized to do so by its
articles of incorporation or bylaws and by holders of not less than 10%, unless
a greater percentage (not to exceed 50%) is required by the articles of
incorporation, of all the votes entitled to be cast on any issue proposed to be
considered at the proposed special meeting. The Barnett Articles of
Incorporation provide that a special meeting of shareholders may be called only
by Barnett's Chairman or President, or by the holders of not less than 35% of
the shares outstanding and entitled to vote on any proposal to be submitted at
such meeting.
Under the NCBCA, unless provided in the articles of incorporation or bylaws
of a corporation, shareholders of such corporation do not have the right to call
a special meeting of shareholders. The NationsBank Articles of Incorporation and
Bylaws provide that a special meeting of NationsBank Shareholders may be called
for any purpose by the NationsBank Board, by the Chairman of NationsBank or by
the NationsBank Chief Executive Officer or President.
CERTAIN PURCHASES OF THE CORPORATION'S SECURITIES
The Barnett Articles of Incorporation provide that any purchase or
acquisition by Barnett of any "Equity Security" (within the meaning of Section
3(a)(11) of the Exchange Act) of any class of Barnett from an Interested
Securityholder who has beneficially owned such security for less than two years
prior to the date of such purchase (or any agreement in respect thereof) from
Barnett shall require the affirmative vote of the holders of at least a majority
of the voting power of the then-outstanding shares of capital stock of Barnett
entitled to vote generally in the election of directors (the "Voting Stock"),
excluding Voting Stock beneficially owned by the Interested Securityholder (as
defined herein), voting together as a single class, except in the case of tender
or exchange offers by Barnett made on the same terms to all holders of a
security and made in compliance with the Exchange Act and the rules and
regulations thereunder. The term "Interested Securityholder" for purposes of
such provision refers to persons (other than Barnett and any corporation in
which Barnett owns at least a majority of any class of Equity Security) that is
the beneficial owner, directly or indirectly, of 5% or more of the class of
securities that Barnett is to acquire, or a person who holds such securities
that, within the two years
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prior to the date of the proposed purchase by Barnett, were beneficially owned
by an Interested Securityholder, if the transaction or transactions pursuant to
which such person became the holder of such securities did not involve a public
offering within the meaning of the Securities Act.
The NationsBank Articles of Incorporation and the NationsBank Bylaws
contain no similar provision.
DIRECTOR'S LIABILITY
The FBCA generally provides that a director is not personally liable for
monetary damages to the corporation or any other person for any statement, vote,
decision or failure to act regarding corporate management or policy, unless: (1)
the director breached or failed to perform his duties as a director and (2) the
director's breach of or failure to perform those duties constitutes: (i) a
violation of the criminal law, unless the director had reasonable cause to
believe his conduct was lawful or had no reasonable cause to believe his conduct
was unlawful; (ii) a transaction from which the director derived an improper
personal benefit, either directly or indirectly; (iii) an unlawful distribution;
(iv) conscious disregard for the best interest of the corporation, or willful
misconduct; or (v) recklessness or an act or omission which was committed in bad
faith or with malicious purpose or in a manner exhibiting wanton and willful
disregard of human rights, safety or property.
Under the NCBCA, a director's personal liability for any monetary damages
for breach of duty may be limited or eliminated by the articles of
incorporation, except that the articles of incorporation may not limit or
eliminate liability for (i) acts or omissions that the director at the time of
such breach knew or believed were clearly in conflict with the best interests of
the corporation, (ii) unlawful distributions, or (iii) any transaction from
which the director derived an improper personal benefit. Nationsbank's Articles
of Incorporation provide that to the fullest extent permitted by the NCBCA, a
director of Nationsbank shall not be personally liable to Nationsbank, its
shareholders or otherwise for monetary damages for breach of his duty as a
director.
AMENDMENTS TO ARTICLES OF INCORPORATION
Under the FBCA, a corporation may amend its articles of incorporation upon
the submission of a proposed amendment to shareholders by the board of directors
and the subsequent receipt of the affirmative vote of the holders of a majority
of its voting shares and the affirmative vote of the holders of a majority of
the outstanding shares of each class entitled to vote thereon as a class. The
FBCA permits the articles of incorporation or the board of directors to require
a greater percentage of affirmative votes for any amendment.
Barnett may amend, alter, change or repeal provisions of the Barnett
Articles of Incorporation in the manner provided by law, with the exception,
however, of the provisions of the Barnett Articles of Incorporation relating to
(i) the classification, number, removal and indemnification of directors, (ii)
the approval of Business Combinations (which provision is described under
" -- Shareholder Vote Required for Business Combinations"), (iii) the
prohibition on the ability of shareholders to act by written consent and (iv)
the right to call special meetings of Barnett shareholders, which require the
affirmative vote of the holders of 80% of Barnett Common Stock then entitled to
vote at a meeting of shareholders called for that purpose.
The NCBCA provides that a corporation's board of directors may adopt
several minor amendments to a corporation's articles of incorporation without a
shareholder vote. Other proposed amendments to the articles of incorporation
must be submitted to the shareholders by the board of directors. Such amendments
must be approved by (i) a majority of the votes entitled to be cast on the
amendment by any voting group with respect to which the amendment would create
dissenters rights; and (ii) for shares entitled to vote as a separate voting
group, a majority of those shares, provided that a quorum of the voting group is
present. The NationsBank Articles of Incorporation do not contain any special
provisions regarding their amendment.
DISSENTERS' RIGHTS
Neither NationsBank Shareholders nor Barnett Shareholders will have
appraisal rights under the NCBCA or the FBCA, respectively, or any other
statute, with respect to the Merger. See "COMPARATIVE RIGHTS OF SHAREHOLDERS OF
NATIONSBANK AND BARNETT -- Dissenters' Rights."
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AMENDMENT TO THE NATIONSBANK CORPORATION
KEY EMPLOYEE STOCK PLAN
NationsBank maintains the NationsBank Corporation Key Employee Stock Plan
(the "Stock Plan"). The Stock Plan reserves a number of shares of NationsBank
Common Stock for issuance to certain key employees of NationsBank in the form of
stock options, stock appreciation rights ("SARs"), restricted stock and
performance shares.
In the event of the consummation of the Merger, the number of key employees
of NationsBank will be significantly increased. As a result, the Stock Plan's
formula for determining the number of shares of NationsBank Common Stock
reserved for issuance (which was designed without the Merger in mind) would not
result in an adequate pool of shares of NationsBank Common Stock. The
NationsBank Board has therefore approved, subject to shareholder approval, an
amendment and restatement of the Stock Plan that would add 10 million additional
shares of NationsBank Common Stock to the shares of NationsBank Common Stock
otherwise available for issuance for grants under the Stock Plan (which
represents the approximate number of shares currently available for grants under
the various Barnett stock incentive plans after adjustment for the Exchange
Ratio). NationsBank's obligation to consummate the Merger is not conditioned
upon shareholder approval of the Stock Plan.
The following is a summary of the material terms of the Stock Plan as
proposed to be amended.
NUMBER OF SHARES
Under the Stock Plan as originally approved by the NationsBank
Shareholders, the number of shares of NationsBank Common Stock authorized for
issuance under the Stock Plan was 0.75% of the outstanding shares of NationsBank
Common Stock as of the first business day of each calendar year beginning with
calendar year 1995 and continuing through calendar year 2004. An additional
7,224,102 shares of NationsBank Common Stock were authorized for issuance under
the Stock Plan in connection with the termination of the NationsBank Corporation
1986 Restricted Stock Award Plan (the "Restricted Stock Plan") effective January
31, 1995, and an additional 10 million shares of NationsBank Common Stock were
authorized for issuance under the Stock Plan in connection with the acquisition
of Boatmen's Bancshares, Inc.
Under the Stock Plan as amended and restated, the formula described above
would remain unchanged. However, if the Merger is consummated, an additional 10
million shares (which represents the approximate number of shares currently
available for grants under the various Barnett stock incentive plans after
adjustment for the Exchange Ratio) would be authorized for issuance under the
Stock Plan for the reasons discussed above (in addition to the additional shares
authorized in connection with the acquisition of Boatmen's Bancshares, Inc.).
All shares of NationsBank Common Stock available for granting awards in any
year that are not used, as well as shares of NationsBank Common Stock allocated
to awards under both the Stock Plan and the Restricted Stock Plan that are
canceled or forfeited, are available for use in subsequent years.
ADMINISTRATION
The Stock Plan is administered by the Stock Option Committee of the
NationsBank Board (the "Committee"). It is intended that the Committee at all
times comply with the disinterested administration provisions of Rule 16b-3
promulgated under Section 16(b) of the Exchange Act and that all of its members
be "outside directors" within the meaning of Code Section 162(m). Under the
Stock Plan, the Committee (i) selects the key employees to receive awards from
time to time, (ii) makes awards in such amounts as it determines, (iii) imposes
such limitations, restrictions and conditions upon awards as it deems
appropriate, (iv) establishes performance targets and allocation formulas for
awards of restricted stock or performance shares intended to be "qualified
performance-based compensation" under Code Section 162(m), (v) certifies the
attainment of performance goals, if applicable, as required by Code Section
162(m), (vi) interprets the Stock Plan and adopts, amends and rescinds
administrative guidelines and other rules and regulations relating to the Stock
Plan, (vii)
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corrects any defect or omission or reconciles any inconsistency in the Stock
Plan or any award granted thereunder and (viii) makes all other determinations
and takes all other actions necessary or advisable for the implementation and
administration of the Stock Plan. The Committee also has the authority to
accelerate the vesting and/or waive any restrictions of any outstanding awards.
No awards would be made under the Stock Plan after December 31, 2004. In no
event may an individual receive awards under the Stock Plan for a given calendar
year covering in excess of 500,000 shares.
ELIGIBILITY
Only "key employees" of NationsBank may participate in the Stock Plan. "Key
employees" are those employees of NationsBank who occupy managerial or other
important positions and who have made important contributions to the business of
NationsBank, as determined by the Committee, including persons employed outside
the United States. After the consummation of the Merger, approximately 16,000
employees are expected to be eligible to participate. As mentioned above, the
Committee in its discretion selects which key employees would in fact receive
any awards from time to time.
AWARDS OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The Stock Plan provides for the grant of options to purchase shares of
NationsBank Common Stock at option prices which are not less than the fair
market value of shares of NationsBank Common Stock at the close of business on
the date of grant. (The fair market value of a share of NationsBank Common Stock
as of November 17, 1997 was $61.3125.) The Stock Plan also provides for the
grant of SARs (either in tandem with stock options or freestanding), which
entitle holders upon exercise to receive either cash or shares of NationsBank
Common Stock or a combination thereof, as the Committee in its discretion shall
determine, with a value equal to the difference between (i) the fair market
value on the exercise date of the shares with respect to which an SAR is
exercised and (ii) fair market value of such shares on the date of grant (or, if
different, the exercise price of the related option in the case of a tandem
SAR).
Awards of options under the Stock Plan, which may be either incentive stock
options (which qualify for special tax treatment) or non-qualified stock
options, are determined by the Committee. However, over the ten year term of the
Stock Plan the total number of shares of NationsBank Common Stock that may be
issued in the aggregate as incentive stock options is limited to 0.75% of the
outstanding shares of NationsBank Common Stock as of the first business day of
1995 multiplied by ten. The terms and conditions of each option and of any SAR
are to be determined by the Committee at the time of grant.
Exercise of an option (or SAR) will result in the cancellation of any
related SAR (or option) to the extent of the number of shares of NationsBank
Common Stock in respect of which such option or SAR has been exercised. Options
and SARs granted under the Stock Plan will expire not more than 10 years from
the date of grant, and the option agreements entered into with the optionees
will specify the extent to which options and SARs may be exercised during their
respective terms, including in the event of the optionee's death, disability or
termination of employment.
Payment for shares of NationsBank Common Stock issuable pursuant to the
exercise of an option may be made either in cash or by tendering shares of
NationsBank Common Stock with a fair market value at the date of the exercise
equal to the portion of the exercise price which is not paid in cash.
AWARDS OF RESTRICTED STOCK AND PERFORMANCE SHARES
The Stock Plan provides for the issuance of shares of NationsBank Common
Stock subject to certain restrictions (the "Restricted Stock") to such key
employees and on such terms and conditions as determined from time to time by
the Committee. The Restricted Stock award agreement with the participant will
set forth the terms of the award, including the applicable restrictions. Such
restrictions may include the continued service of the participant with
NationsBank, the attainment of specified performance goals or any other
conditions deemed appropriate by the Committee.
The stock certificates evidencing the Restricted Stock will bear an
appropriate legend and will be held in the custody of NationsBank until the
applicable restrictions have been satisfied. The participant cannot sell,
transfer, pledge, assign or otherwise alienate or hypothecate shares of
Restricted Stock until the applicable restrictions have been satisfied. Once the
restrictions are satisfied, the shares of NationsBank Common Stock
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will be delivered to the participant. During the period of restriction, the
participant may exercise full voting rights with respect to the Restricted
Stock. The participant will also be credited with dividends with respect to the
Restricted Stock. Such dividends may be payable currently or subject to
additional restrictions as determined by the Committee and set forth in the
award agreement.
In addition to Restricted Stock, the Committee may award performance shares
("Performance Shares") to selected key employees. The value of a Performance
Share will equal the fair market value of a share of NationsBank Common Stock.
The Stock Plan provides that the number of Performance Shares granted and/or the
vesting of granted Performance Shares can be contingent on the attainment of
certain goals or other conditions over a period of time (called the "performance
period"), all as determined by the Committee and evidenced by an award
agreement. During the performance period, the Committee would determine what
number (if any) of Performance Shares have been earned. Earned Performance
Shares may be paid in cash, shares of NationsBank Common Stock or a combination
thereof having an aggregate fair market value equal to the value of the earned
Performance Shares as of the payment date. Shares of NationsBank Common Stock
used to pay earned Performance Shares may have additional restrictions as
determined by the Committee. In addition, the Committee may cancel any earned
Performance Shares and replace them with stock options determined by the
Committee to be of equivalent value based on a conversion formula specified in
the participant's Performance Share award agreement. Earned but unpaid
Performance Shares may have dividend equivalents rights as determined by the
Committee and evidenced in the award agreement.
CERTAIN POST-MERGER AWARDS OF RESTRICTED STOCK AND OPTIONS
Following the consummation of the Merger, it is anticipated that certain of
Barnett Executive Officers will be awarded shares of Restricted Stock and
options under the Stock Plan in connection with accepting positions of
employment with NationsBank as follows: Charles E. Rice, 250,000 shares of
restricted stock on the Effective Date and an annual option grant for 200,000
shares of restricted stock during the term of his New Employment Agreement;
Allen L. Lastinger, Jr., 125,000 shares of restricted stock on the Effective
Date and an annual option grant for 100,000 shares of restricted stock during
the term of his New Employment Agreement; and each of Charles W. Newman, Hinton
F. Nobles, Richard Anderson and Judith S. Beaubouef, 50,000 shares of restricted
stock each on the Effective Date and two option grants for 30,000 shares of
restricted stock each. See "THE MERGER -- Interests of Certain Persons in the
Merger." Because awards under the Stock Plan are discretionary, no other awards
are determinable at this time.
CODE SECTION 162(m)
Code Section 162(m) precludes a publicly held corporation from claiming a
compensation deduction for compensation in excess of $1 million paid to the
chief executive officer or any of the four most highly compensated officers
other than the chief executive officer. This limitation does not apply, however,
to "qualified performance-based compensation." Because stock options and SARs
granted under the Stock Plan must have an exercise price equal at least to fair
market value at the date of grant and because the Stock Plan limits the number
of shares that may be the subject of awards granted to any employee during any
calendar year, compensation from the exercise of stock options and SARs should
be treated as "qualified performance-based compensation" for Code Section 162(m)
purposes.
In addition, the Stock Plan authorizes the Committee to make awards of
Restricted Stock or Performance Shares that are conditioned on the satisfaction
of certain performance criteria. For such awards intended to result in
"qualified performance-based compensation," the Committee will establish prior
to or within 90 days after the start of the applicable performance period the
applicable performance conditions. The Committee may select from the following
performance measures for such purpose: (i) return on average common
shareholders' equity of NationsBank, (ii) return on average assets of
NationsBank, (iii) net income of NationsBank, (iv) earnings per common share of
NationsBank or (v) total shareholder return of NationsBank. The performance
conditions will be stated in the form of an objective, nondiscretionary formula,
and the Committee will certify in writing the attainment of such performance
conditions prior to any payout with respect to such awards. The Committee in its
discretion may adjust downward any such award.
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WITHHOLDING FOR PAYMENT OF TAXES
The Stock Plan provides for the withholding and payment by a participant of
any payroll or withholding taxes required by applicable law. The Stock Plan
permits a participant to satisfy such requirement, with the approval of the
Committee and subject to the terms of the Stock Plan, by having the Corporation
withhold from the participant a number of shares of NationsBank Common Stock
otherwise issuable under the award having a fair market value equal to the
amount of the applicable payroll and withholding taxes.
CHANGES IN CAPITALIZATION AND SIMILAR CHANGES
In the event of any change in the outstanding shares of NationsBank Common
Stock by reason of any stock dividend, split, spin-off, recapitalization,
merger, consolidation, combination, exchange of shares or otherwise, the
aggregate number of shares of NationsBank Common Stock with respect to which
awards may be made under the Stock Plan, the annual limit on individual awards
and the limit on incentive stock options and the terms, types of shares and
number of shares of any outstanding awards under the Stock Plan may be equitably
adjusted by the Committee in its discretion to preserve the benefit of the award
for NationsBank and the participant.
CHANGES IN CONTROL
The Stock Plan provides that in the event of a change in control of
NationsBank, all options and SARs will be fully exercisable as of the date of
the change in control and shall remain exercisable through their full term.
Outstanding awards of Restricted Stock and Performance Shares will become
immediately vested, and any applicable performance conditions shall be deemed
satisfied (at the target performance condition, if applicable) as of the date of
the change in control.
AMENDMENT AND TERMINATION OF THE PLAN
The NationsBank Board has the power to amend, modify or terminate the Stock
Plan on a prospective basis. Shareholder approval will be obtained for any
change to the material terms of the Stock Plan to the extent required by Code
Section 162(m) or other applicable law.
FEDERAL INCOME TAX TREATMENT
INCENTIVE STOCK OPTIONS. Incentive stock options ("ISOs") granted under the
Stock Plan will be subject to the applicable provisions of the Internal Revenue
Code, including Code Section 422. If shares of NationsBank Common Stock are
issued to an optionee upon the exercise an ISO, and if no "disqualifying
disposition" of such shares is made by such optionee within one year after the
exercise of the ISO or within two years after the date the ISO was granted, then
(i) no income will be recognized by the optionee at the time of the grant of the
ISO, (ii) no income, for regular income tax purposes, will be realized by the
optionee at the date of exercise, (iii) upon sale of the shares of NationsBank
Common Stock acquired by exercise of the ISO, any amount realized in excess of
the option price will be taxed to the optionee, for regular income tax purposes,
as a capital gain (at varying rates depending upon the optionee's holding period
in the shares and income level) and any loss sustained will be a capital loss,
and (iv) no deduction will be allowed to NationsBank for federal income tax
purposes. If a "disqualifying disposition" of such shares is made, the optionee
will realize taxable ordinary income in an amount equal to the excess of the
fair market value of the shares purchased at the time of exercise over the
option price (the bargain purchase element) and NationsBank will be entitled to
a federal income tax deduction equal to such amount. The amount of any gain in
excess of the bargain purchase element realized upon a "disqualifying
disposition" will be taxable as capital gain to the holder (at varying rates
depending upon such holder's holding period in the shares and income level), for
which NationsBank will not be entitled a federal income tax deduction. Upon
exercise of an ISO, the optionee may be subject to alternative minimum tax.
NONQUALIFIED STOCK OPTIONS. With respect to nonqualified stock options
("NQSOs") granted to optionees under the Stock Plan, (i) no income is realized
by the optionee at the time the NQSO is granted, (ii) at exercise, ordinary
income is realized by the optionee in an amount equal to the difference between
the option price and the fair market value of the shares on the date of
exercise, and NationsBank receives a tax deduction for the
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same amount, and (iii) on disposition, appreciation or depreciation after the
date of exercise is treated as capital gain or loss and taxed at varying rates
depending upon the holder's holding period in the shares and income level.
RESTRICTED STOCK. Upon becoming entitled to receive shares at the end of
the applicable restriction period without a forfeiture, the recipient has
ordinary income in an amount equal to the fair market value of the shares at
that time. However, a recipient who elects under Code Section 83(b) within 30
days of the date of the grant will have ordinary income on the date of the grant
equal to the fair market value of the shares of Restricted Stock as if the
shares were unrestricted and could be sold immediately. If the shares subject to
such election are forfeited, the recipient will not be entitled to any
deduction, refund or loss for tax purposes. Upon sale of the shares after the
forfeiture period has expired, the holding period to determine whether the
recipient has long-term or short-term capital gain or loss begins when the
restriction period expires, and the tax basis will be equal to the fair market
value of the shares when the restriction period expires. However, if the
recipient timely elects to be taxed as of the date of grant, the holding period
commences on the date of the grant and the tax basis will be equal to the fair
market value of the shares on date of the grant as if the shares were then
unrestricted and could be sold immediately. NationsBank generally will be
entitled to a deduction equal to the amount that is taxable as ordinary
compensation income to the recipient.
PERFORMANCE SHARES. A participant who is awarded Performance Shares will
not recognize income and NationsBank will not be allowed a deduction at the time
the award is made. When a participant receives payment for Performance Shares in
cash or shares of NationsBank Common Stock, the amount of the cash and the fair
market value of the shares of NationsBank Common Stock received will be ordinary
income to the participant and will be allowed as a deduction for federal income
tax purposes to NationsBank. However, if there is a substantial risk that any
shares of NationsBank Common Stock used to pay out earned Performance Shares
will be forfeited (for example, because the Committee conditions such shares on
the performance of future services), the taxable event is deferred until the
risk of forfeiture lapses. In this case, the participant can elect to make a
Code Section 83(b) election as previously described. NationsBank can take the
deduction at the time the income is recognized by the participant.
The affirmative vote of a majority of the votes cast is required for
approval of the Plan Amendment, subject to the applicable quorum requirements.
See "NationsBank Special Meeting."
THE NATIONSBANK BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL TO AMEND AND RESTATE THE STOCK PLAN.
LEGAL OPINION
The legality of the NationsBank stock to be issued in connection with the
Merger will be passed upon by Paul J. Polking, Executive Vice President and
General Counsel of NationsBank. As of the date of this Joint Proxy
Statement-Prospectus, Mr. Polking beneficially owned less than 97,000 shares of
NationsBank Common Stock.
EXPERTS
The consolidated financial statements of NationsBank incorporated in this
Joint Proxy Statement-Prospectus by reference to the NationsBank Annual Report
on Form 10-K for the year ended December 31, 1996, have been so incorporated in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in auditing and accounting.
The consolidated financial statements of Barnett incorporated in this Joint
Proxy Statement-Prospectus by reference to the Barnett Annual Report on Form
10-K for the year ended December 31, 1996, have been audited by Arthur Andersen
LLP, independent certified public accountants, as indicated in their reports
with respect thereto, and are included herein in reliance upon the authority of
said firm as experts in giving said reports.
Representatives of Price Waterhouse LLP are expected to be present at the
NationsBank Special Meeting, and representatives of Arthur Andersen LLP are
expected to be present at the Barnett Special Meeting. In each
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case, such representatives will have the opportunity to make a statement if they
desire to do so and are expected to be available to respond to appropriate
questions.
SHAREHOLDER PROPOSALS
Shareholders of NationsBank may submit proposals to be considered for
shareholder action at the 1998 Annual Meeting of Shareholders of NationsBank if
they do so in accordance with applicable regulations of the Commission. Any such
proposals must be submitted to the Secretary of NationsBank no later than
November 28, 1997, in order to be considered for inclusion in the NationsBank
1998 proxy materials.
Barnett will hold a 1998 Annual Meeting of Shareholders only if the Merger
is not consummated before the time of such meeting. In the event that such a
meeting is held, any proposals of shareholders intended to be presented at the
1998 Annual Meeting must have been received by the Secretary of Barnett no later
than October 30, 1997 in order to be considered for inclusion in the Barnett
1998 proxy materials.
OTHER MATTERS
As of the date of this Joint Proxy Statement-Prospectus, the Barnett Board
and the NationsBank Board know of no matters that will be presented for
consideration at the Special Meetings other than as described in this Joint
Proxy Statement-Prospectus. If any other matters shall properly come before
either Special Meeting or any adjournments or postponements thereof and be voted
upon, the enclosed proxies will be deemed to confer discretionary authority on
the individuals named as proxies therein to vote the shares represented by such
proxies as to any such matters. The persons named as proxies intend to vote or
not to vote in accordance with the recommendation of the respective managements
of Barnett and NationsBank.
93
<PAGE>
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
The following Unaudited Pro Forma Condensed Balance Sheet as of September
30, 1997, combines the historical consolidated balance sheets of NationsBank and
Barnett as if the Merger had been effective on September 30, 1997, after giving
effect to certain adjustments described in the attached Notes to Unaudited Pro
Forma Condensed Financial Information. NationsBank's acquisition of Boatmen's
Bancshares Inc. ("Boatmen's") was completed on January 7, 1997 and is reflected
in NationsBank's September 30, 1997 unaudited historical balance sheet.
The Unaudited Pro Forma Condensed Statements of Income for the nine months
ended September 30, 1997, and the year ended December 31, 1996 present the
combined results of operations of NationsBank, Barnett and Boatmen's as if the
Merger and the Boatmen's acquisition had been effective at January 1, 1996,
after giving effect to certain adjustments described in the attached Notes to
Unaudited Pro Forma Condensed Financial Information. The Unaudited Pro Forma
Condensed Statements of Income for the years ended December 31, 1995 and 1994
present the combined results of operations of only NationsBank and Barnett as if
the Merger had been effective at the beginning of each period, after giving
effect to certain adjustments described in the attached Notes to Unaudited Pro
Forma Condensed Financial Information.
The unaudited Pro Forma Condensed Financial Information and accompanying
notes reflect the application of the pooling-of-interests method of accounting
for the Merger. Under this method of accounting, the recorded assets,
liabilities, shareholders' equity, income and expenses of NationsBank and
Barnett are combined and reflected at their historical amounts.
The Boatmen's transaction was accounted for using the purchase method of
accounting. Accordingly, the results of operations of Boatmen's have been
included in the NationsBank historical financial statements from the date of
acquisition. Under the purchase method of accounting, the purchase price was
allocated to assets acquired and liabilities assumed based on their estimated
fair values at the closing date of the transaction. The amount of the purchase
accounting adjustments included in these unaudited Pro Forma Condensed Financial
Statements are based on actual information known to date.
The combined company expects to achieve substantial merger benefits in the
form of operating cost savings. The pro forma earnings, which do not reflect any
direct costs or potential savings which are expected to result from the
consolidation of operations of NationsBank and Barnett, are not indicative of
the results of future operations. The 1996 pro forma earnings do not reflect any
direct costs or potential savings from the consolidation of operations of
Boatmen's. No assurances can be given with respect to the ultimate level of
expense savings.
The pro forma condensed financial information does not include the effects
of NationsBank's acquisition of First Federal Savings Bank of Brunswick, Georgia
which was completed April 15, 1997, or its acquisition of Montgomery Securities,
which was completed on October 1, 1997. These acquisitions are not significant
to the historical financial position or results of operations of NationsBank
either individually or in the aggregate.
94
<PAGE>
PRO FORMA CONDENSED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1997
----------------------------------------------------
NATIONSBANK
PRO FORMA BARNETT
NATIONSBANK BARNETT ADJUSTMENTS COMBINED
----------- ------- ----------- -----------
<S> <C> <C> <C> <C>
(DOLLARS IN MILLIONS)
ASSETS
Cash and cash equivalents....................................... $ 9,273 $ 2,297 $ (250)(2) $ 10,895
(425)(3)
Time deposits placed............................................ 2,070 -- -- 2,070
Investment securities........................................... 35,540 4,111 -- 39,651
Federal funds sold and securities purchased under agreements to
resell....................................................... 9,301 2 -- 9,303
Trading account assets.......................................... 24,259 -- -- 24,259
Loans, leases and factored accounts receivable, net of unearned
income....................................................... 139,582 30,835 (1,140)(3) 169,277
Allowance for credit losses..................................... (2,783) (483) -- (3,266)
----------- ------- ----------- -----------
Loans, leases and factored accounts receivable, net of
unearned income and allowance for credit losses............ 136,799 30,352 (1,140) 166,011
Premises, equipment and lease rights, net....................... 3,144 1,188 (50)(3) 4,282
Customers' acceptance liability................................. 1,179 208 -- 1,387
Intangible assets............................................... 9,590 1,102 -- 10,692
Other assets.................................................... 11,282 3,959 295(2) 15,536
----------- ------- ----------- -----------
Total assets................................................. $ 242,437 $43,219 $(1,570) $ 284,086
----------- ------- ----------- -----------
----------- ------- ----------- -----------
LIABILITIES
Deposits........................................................ $ 130,447 $32,920 $(1,900)(3) $ 161,467
Borrowed funds.................................................. 43,777 2,826 -- 46,603
Trading account liabilities..................................... 13,033 -- -- 13,033
Acceptances outstanding......................................... 1,179 208 -- 1,387
Accrued expenses and other liabilities.......................... 5,484 1,055 700(2) 7,342
103(3)
Trust preferred securities...................................... 1,955 750 -- 2,705
Long-term debt.................................................. 26,245 1,819 -- 28,064
----------- ------- ----------- -----------
Total liabilities............................................ $ 222,120 $39,578 $(1,097) $ 260,601
----------- ------- ----------- -----------
----------- ------- ----------- -----------
SHAREHOLDERS' EQUITY
Preferred stock................................................... $ 95 $ -- $ -- $ 95
Common stock...................................................... 8,833 402 540(4) 9,775
Surplus........................................................... -- 540 (540)(4) --
Retained earnings................................................. 11,209 2,741 (473)(2,3) 13,477
Other including loan to ESOP trust................................ 180 (42) -- 138
----------- ------- ----------- -----------
Total shareholders' equity................................... 20,317 3,641 (473) 23,485
----------- ------- ----------- -----------
Total liabilities and shareholders' equity................... $ 242,437 $43,219 $(1,570) $ 284,086
----------- ------- ----------- -----------
----------- ------- ----------- -----------
</TABLE>
95
<PAGE>
PRO FORMA CONDENSED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
-----------------------------------------------------
NATIONSBANK
PRO FORMA BARNETT
NATIONSBANK BARNETT ADJUSTMENTS COMBINED
----------- -------- ----------- -----------
<S> <C> <C> <C> <C>
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Income from Earning Assets
Interest and fees on loans and leases......................... $ 9,451 $ 2,045 $ (72)(3) $ 11,424
Interest and dividends on securities.......................... 1,182 232 (31)(3) 1,383
Interest on federal funds sold and securities purchased under
agreements to resell....................................... 515 13 -- 528
Trading account securities.................................... 1,001 -- -- 1,001
Other......................................................... 142 -- -- 142
----------- -------- ----------- -----------
Total income from earning assets........................... 12,291 2,290 (103) 14,478
Interest Expense
Deposits...................................................... 2,973 690 (40)(3) 3,623
Borrowed funds................................................ 1,604 123 -- 1,727
Long-term debt................................................ 1,316 132 -- 1,448
Other......................................................... 488 -- -- 488
----------- -------- ----------- -----------
Total interest expense..................................... 6,381 945 (40) 7,286
----------- -------- ----------- -----------
Net interest income............................................. 5,910 1,345 (63) 7,192
Provision for credit losses..................................... 570 106 -- 676
----------- -------- ----------- -----------
Net credit income............................................. 5,340 1,239 (63) 6,516
Gains on sales of securities.................................... 91 2 -- 93
Noninterest income.............................................. 3,502 772 (11)(3) 4,263
Noninterest expense............................................. 5,403 1,358 (44)(3) 6,717
----------- -------- ----------- -----------
Income before income taxes...................................... 3,530 655 (30) 4,155
Income taxes.................................................... 1,271 230 (11)(7) 1,490
----------- -------- ----------- -----------
Net income before preferred dividends........................... 2,259 425 (19) 2,665
Preferred dividends............................................. 9 -- -- 9
----------- -------- ----------- -----------
Net income available to common shareholders..................... $ 2,250 $ 425 $ (19) $ 2,656
----------- -------- ----------- -----------
----------- -------- ----------- -----------
Primary earnings per common share............................... $ 3.13 $ 2.81
----------- -----------
----------- -----------
Fully diluted earnings per common share......................... $ 3.04 $ 2.74
----------- -----------
----------- -----------
Average Common Shares -- Primary................................ 719,489 946,171
----------- -----------
----------- -----------
Average Common Shares -- Fully Diluted.......................... 741,455 971,474
----------- -----------
----------- -----------
</TABLE>
96
<PAGE>
PRO FORMA CONDENSED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
-------------------------------------------------------------------------------------------
NATIONSBANK NATIONSBANK
PRO FORMA BOATMEN'S PRO FORMA BARNETT
NATIONSBANK BOATMEN'S ADJUSTMENTS COMBINED BARNETT ADJUSTMENTS COMBINED
----------- ---------- ----------- ----------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Income from Earning Assets
Interest and fees on loans and
leases...................... $ 10,440 $ 2,110 $ -- $ 12,550 $ 2,657 $ (96)(3) $ 15,111
Interest and dividends on
securities.................. 1,306 737 7(6) 1,400 325 (41)(3) 1,684
(650)(6)
Interest on federal funds sold
and securities purchased
under agreements to
resell...................... 666 24 -- 690 24 -- 714
Trading account securities.... 1,225 4 -- 1,229 -- -- 1,229
Other......................... 159 6 -- 165 -- -- 165
----------- ---------- ----------- ----------- -------- ----------- -----------
Total income from earning
assets.................... 13,796 2,881 (643) 16,034 3,006 (137) 18,903
Interest Expense
Deposits...................... 3,322 994 -- 4,316 924 (53)(3) 5,187
Borrowed funds................ 2,155 249 (617)(6) 1,787 119 -- 1,906
Long-term debt................ 1,337 53 300(6) 1,690 97 -- 1,787
Other......................... 653 -- -- 653 -- -- 653
----------- ---------- ----------- ----------- -------- ----------- -----------
Total interest expense...... 7,467 1,296 (317) 8,446 1,140 (53) 9,533
----------- ---------- ----------- ----------- -------- ----------- -----------
Net interest income............. 6,329 1,585 (326) 7,588 1,866 (84) 9,370
Provision for credit losses..... 605 85 -- 690 155 -- 845
----------- ---------- ----------- ----------- -------- ----------- -----------
Net credit income............. 5,724 1,500 (326) 6,898 1,711 (84) 8,525
Gains on sales of securities.... 67 2 -- 69 19 -- 88
Noninterest income.............. 3,646 839 (6)(6) 4,479 791 (14)(3) 5,256
Merger related charge........... 118 70 -- 188 -- -- 188
Noninterest expense............. 5,685 1,453 286(6) 7,424 1,617 (59)(3) 8,982
----------- ---------- ----------- ----------- -------- ----------- -----------
Income before income taxes...... 3,634 818 (618) 3,834 904 (39) 4,699
Income taxes.................... 1,259 295 (120) 1,434 340 (14)(7) 1,760
----------- ---------- ----------- ----------- -------- ----------- -----------
Net income before preferred
dividends..................... 2,375 523 (498) 2,400 564 (25) 2,939
Preferred dividends............. 15 7 -- 22 2 -- 24
----------- ---------- ----------- ----------- -------- ----------- -----------
Net income available to common
shareholders.................. $ 2,360 $ 516 $ (498) $ 2,378 $ 562 $ (25) $ 2,915
----------- ---------- ----------- ----------- -------- ----------- -----------
----------- ---------- ----------- ----------- -------- ----------- -----------
Primary earnings per common
share......................... $ 4.00 $ 3.29 $ 3.06
----------- ----------- -----------
----------- ----------- -----------
Fully diluted earnings per
common share.................. $ 3.92 $ 3.26 $ 3.03
----------- ----------- -----------
----------- ----------- -----------
Average Common Shares --
Primary....................... 590,216 723,115 953,844
----------- ----------- -----------
----------- ----------- -----------
Average Common Shares -- Fully
Diluted....................... 603,530 736,429 970,788
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
97
<PAGE>
PRO FORMA CONDENSED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1995
-----------------------------------------------------
NATIONSBANK
PRO FORMA BARNETT
NATIONSBANK BARNETT ADJUSTMENTS COMBINED
----------- -------- ----------- -----------
<S> <C> <C> <C> <C>
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Income from Earning Assets
Interest and fees on loans and leases.......................... $ 9,552 $ 2,580 $ (96)(3) $ 12,036
Interest and dividends on securities........................... 1,468 376 (41)(3) 1,803
Interest on federal funds sold and securities purchased under
agreements to resell......................................... 937 5 -- 942
Trading account securities..................................... 1,097 -- -- 1,097
Other.......................................................... 166 -- -- 166
----------- -------- ----------- -----------
Total income from earning assets............................. 13,220 2,961 (137) 16,044
Interest Expense
Deposits....................................................... 3,281 993 (53)(3) 4,221
Borrowed funds................................................. 2,710 148 -- 2,858
Long-term debt................................................. 886 78 -- 964
Other.......................................................... 896 -- -- 896
----------- -------- ----------- -----------
Total interest expense....................................... 7,773 1,219 (53) 8,939
----------- -------- ----------- -----------
Net interest income.............................................. 5,447 1,742 (84) 7,105
Provision for credit losses...................................... 382 123 -- 505
----------- -------- ----------- -----------
Net credit income............................................ 5,065 1,619 (84) 6,600
Gains on sales of securities..................................... 29 5 -- 34
Noninterest income............................................... 3,078 714 (14)(3) 3,778
Merger related charge............................................ -- -- -- --
Noninterest expense.............................................. 5,181 1,519 (59)(3) 6,641
----------- -------- ----------- -----------
Income before income taxes....................................... 2,991 819 (39) 3,771
Income taxes..................................................... 1,041 286 (14)(7) 1,313
----------- -------- ----------- -----------
Net income before preferred dividends............................ 1,950 533 (25) 2,458
Preferred dividends.............................................. 8 16 -- 24
----------- -------- ----------- -----------
Net income available to common shareholders...................... $ 1,942 $ 517 $ (25) $ 2,434
----------- -------- ----------- -----------
----------- -------- ----------- -----------
Primary earnings per common share................................ $ 3.56 $ 3.13
----------- -----------
----------- -----------
Fully diluted earnings per common share.......................... $ 3.52 $ 3.07
----------- -----------
----------- -----------
Average Common Shares -- Primary................................. 544,959 776,634
----------- -----------
----------- -----------
Average Common Shares -- Fully Diluted........................... 554,267 801,218
----------- -----------
----------- -----------
</TABLE>
98
<PAGE>
PRO FORMA CONDENSED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1994
-----------------------------------------------------
NATIONSBANK
PRO FORMA BARNETT
NATIONSBANK BARNETT ADJUSTMENTS COMBINED
----------- -------- ----------- -----------
<S> <C> <C> <C> <C>
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Income from Earning Assets
Interest and fees on loans and leases.......................... $ 7,727 $ 2,164 $ (96)(3) $ 9,795
Interest and dividends on securities........................... 1,378 388 (41)(3) 1,725
Interest on federal funds sold and securities purchased under
agreements to resell......................................... 547 3 -- 550
Trading account securities..................................... 764 -- -- 764
Other.......................................................... 113 -- -- 113
----------- -------- ----------- -----------
Total income from earning assets............................. 10,529 2,555 (137) 12,947
Interest Expense
Deposits....................................................... 2,415 762 (53)(3) 3,124
Borrowed funds................................................. 1,618 99 -- 1,717
Long-term debt................................................. 550 61 -- 611
Other.......................................................... 735 -- -- 735
----------- -------- ----------- -----------
Total interest expense....................................... 5,318 922 (53) 6,187
----------- -------- ----------- -----------
Net interest income.............................................. 5,211 1,633 (84) 6,760
Provision for credit losses...................................... 310 74 -- 384
----------- -------- ----------- -----------
Net credit income............................................ 4,901 1,559 (84) 6,376
Losses on sales of securities.................................... (13) (13) -- (26)
Noninterest income............................................... 2,597 556 (14)(3) 3,139
Merger related charge............................................ -- -- -- --
Noninterest expense.............................................. 4,930 1,364 (59)(3) 6,235
----------- -------- ----------- -----------
Income before income taxes....................................... 2,555 738 (39) 3,254
Income taxes..................................................... 865 250 (14)(7) 1,101
----------- -------- ----------- -----------
Net income before preferred dividends............................ 1,690 488 (25) 2,153
Preferred dividends.............................................. 10 18 -- 28
----------- -------- ----------- -----------
Net income available to common shareholders...................... $ 1,680 $ 470 $ (25) $ 2,125
----------- -------- ----------- -----------
----------- -------- ----------- -----------
Primary earnings per common share................................ $ 3.06 $ 2.72
----------- -----------
----------- -----------
Fully diluted earnings per common share.......................... $ 3.03 $ 2.67
----------- -----------
----------- -----------
Average Common Shares -- Primary................................. 549,312 782,254
----------- -----------
----------- -----------
Average Common Shares -- Fully Diluted........................... 557,146 805,965
----------- -----------
----------- -----------
</TABLE>
99
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA
CONDENSED FINANCIAL INFORMATION
(DOLLARS IN MILLIONS, SHARES IN THOUSANDS, PER SHARE AMOUNTS ACTUAL)
NOTE 1 -- BASIS OF PRESENTATION
On August 29, 1997, NationsBank entered into an agreement and plan of
merger pursuant to which Barnett Banks, Inc. ("Barnett") will be merged with a
wholly-owned subsidiary of NationsBank (the "Merger"). Barnett is a multi-bank
holding company headquartered in Jacksonville, Florida with approximately $43.2
billion in assets, $32.9 billion in deposits and $3.6 billion in shareholders'
equity at September 30, 1997. The agreement calls for a tax-free exchange of
1.1875 shares of NationsBank common stock for each share of Barnett common
stock.
The unaudited Pro Forma Condensed Financial Information has been prepared
assuming that the Merger will be accounted for under the pooling-of-interests
method and is based on the historical consolidated financial statements of
NationsBank and Barnett. Certain amounts in the historical financial statements
of Barnett have been reclassified to conform with NationsBank's historical
financial statement presentation.
On January 7, 1997 NationsBank completed the acquisition of Boatmen's
Bancshares, Inc. ("Boatmen's"), headquartered in St. Louis, Missouri, resulting
in the issuance of approximately 195 million shares of NationsBank's common
stock valued at $9.4 billion and aggregate cash payments of $371 million to
Boatmen's shareholders. At the acquisition date, Boatmen's total assets and
deposits were approximately $41.2 billion and $32.0 billion, respectively. The
acquisition was accounted for under the purchase method of accounting.
The pro forma adjustments represent management's best estimate based on
available information at this time. Actual adjustments will differ from those
reflected in the unaudited Pro Forma Condensed Financial Information.
NationsBank and Barnett are still in the process of reviewing their respective
accounting policies relative to those followed by the other entity. As a result
of this review, it might be necessary to restate certain amounts in
NationsBank's or Barnett's financial statements to conform to those accounting
policies that are most appropriate. In management's opinion, any such
restatements will not be material.
The unaudited Pro Forma Condensed Financial Information should be read in
conjunction with the historical consolidated financial statements and the
related notes thereto of each of NationsBank and Barnett incorporated by
reference herein. The Barnett Annual Report on Form 10-K for the year ended
December 31, 1996 should be read in conjunction with the Barnett Current Reports
on Form 8-K filed September 12, 1997 and September 24, 1997.
NOTE 2 -- MERGER AND INTEGRATION COSTS
In connection with the Merger, NationsBank expects to incur pre-tax
merger-related costs of approximately $700 million ($495 million after-tax),
which will include approximately $240 million in severance, relocation and
change in control payments, $270 million of conversion costs and occupancy and
equipment expenses (primarily lease exit costs and the elimination of duplicate
facilities and other capitalized assets), $100 million of exit costs related to
contract terminations and $90 million of other Merger costs (including legal and
investment banking fees).
In connection with the Merger, Barnett expects to incur a pre-tax charge of
approximately $250 million ($160 million after-tax) related to the Barnett
Supplemental Executive Retirement Plan (which becomes vested and accruable on a
change in control), investment banking fees and other Merger costs. The approval
of the Merger by Barnett's shareholders constitutes a change in control under
the Barnett Supplemental Executive Retirement Plan. These amounts, including the
related tax effect, have been reflected in the Unaudited Pro Forma Condensed
Balance Sheet as of September 30, 1997 and are not reflected in the Unaudited
Pro Forma Condensed Statements of Income as they are not expected to have a
continuing impact on the combined company.
100
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA
CONDENSED FINANCIAL INFORMATION -- CONTINUED
NOTE 3 -- DIVESTITURES
NationsBank anticipates that, in order to comply with what the Federal
Reserve Board, the Department of Justice and certain Florida authorities may
require in connection with their review of the Merger, the combined company will
divest branches of Barnett with loans and deposits aggregating approximately
$1.1 billion and $1.9 billion, respectively, in various markets in Florida.
NationsBank expects to receive a premium of 15 percent of deposits on such
divestitures. Such divestitures have been included in the unaudited Pro Forma
Condensed Balance Sheet. The amount of any required divestitures has not yet
been finally determined, and there can be no assurance that divestitures
exceeding $1.9 billion will not be required.
The estimated impact of anticipated branch divestitures on net income
included in the unaudited Pro Forma Statements of Income for the nine months
ended September 30, 1997 and the years ended December 31, 1996, 1995 and 1994 is
based on information available at this time and was estimated using Barnett's
historical interest yields and rates, ratio of service charges on deposit
accounts to average deposits and costs directly related to operating the
branches to be divested. The actual impact of anticipated branch divestitures
will differ from that reflected in the unaudited Pro Forma Statements of
Income for the nine months ended September 30, 1997 and the years ended
December 31, 1996, 1995 and 1994.
NOTE 4 -- SHAREHOLDERS' EQUITY
In conjunction with the Merger, NationsBank will exchange 1.1875 shares of
its common stock for each share of common stock of Barnett. Barnett had
192,870,753 shares of common stock outstanding as of September 30, 1997. The
common stock in the Unaudited Pro Forma Condensed Balance Sheet has been
adjusted to reflect the reclassification of Barnett's surplus to conform to
NationsBank's presentation. Pro forma condensed retained earnings reflects the
adjustments for anticipated merger-related costs and divestitures as described
above.
NOTE 5 -- OPERATING COST SAVINGS
The combined company expects to achieve substantial cost savings through
the optimization of delivery systems, reduction of corporate overhead,
elimination of redundant staff functions, consolidation of business lines, data
processing and back office operations, infrastructure and vendor leverage and
the elimination of certain duplicate or excess office facilities. Approximately
50 percent of the operating cost savings are expected to be achieved by the end
of 1998 with the remainder achieved in 1999. No adjustment has been included in
the unaudited pro forma financial information for the anticipated operating cost
savings. There can be no assurance that anticipated operating cost savings will
be achieved in the expected amounts or at the times anticipated.
NOTE 6 -- BOATMEN'S ACQUISITION
The unaudited Pro Forma Financial Information reflects the Boatmen's
acquisition using the purchase method of accounting. The cash component of the
purchase price is assumed to equal 35% of the purchase price (the actual amount
paid at closing plus share repurchases completed through August 1997) and is
funded through the issuance of additional debt securities. The Unaudited Pro
Forma Income Statement for the year ended December 31, 1996 also reflects the
impact of the purchase accounting adjustments including the fair value
adjustments related to investment securities, accrued expenses and other
liabilities, other intangible assets and mortgage servicing rights.
101
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA
CONDENSED FINANCIAL INFORMATION -- CONTINUED
NOTE 6 -- BOATMEN'S ACQUISITION -- Continued
Purchase accounting adjustments related to the acquisition of Boatmen's
reflected in the unaudited Pro Forma Condensed Statement of Income for the year
ended December 31, 1996 are summarized as follows:
<TABLE>
<S> <C>
Interest income
Accretion of securities fair value adjustment............................................... $ 7
Noninterest income
Amortization of mortgage servicing rights................................................... 6
Noninterest expense
Amortization of intangibles................................................................. 286
Interest Income
Decrease in interest income from reduction in discretionary investment security portfolio... 650
Interest Expense
Increase in interest expense on debt securities to fund cash component of purchase price.... 300
Reduction in funding cost due to reduction in investment security portfolio................... 617
</TABLE>
The following assumptions were used in establishing the purchase accounting
adjustments reflected in the unaudited Pro Forma Condensed Statement of Income:
Securities -- Accrete the discount into interest income on a straight-line
method over the estimated maturities of the affected securities, 3 years.
Mortgage Servicing Rights -- Amortize the excess of fair value over
carrying value on a straight-line method over the estimated maturities of the
underlying mortgages, 7 years.
Intangibles -- Amortize the identifiable intangible value as noninterest
expense over 10 years and goodwill on a straight-line basis over 25 years.
NOTE 7 -- INCOME TAXES
Income tax expense on pro forma adjustments is reflected using a 36% tax
rate.
102
<PAGE>
APPENDIX A
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
BARNETT BANKS, INC.
AND
NATIONSBANK CORPORATION
DATED AS OF AUGUST 29, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I. CERTAIN DEFINITIONS............................................................................ 1
1.1. Certain Definitions............................................................................ 1
ARTICLE II. THE MERGER; EFFECTS OF THE MERGER.............................................................. 4
2.1. The Merger..................................................................................... 4
2.2. Effective Date And Effective Time.............................................................. 4
2.3. Amendment Of NationsBank Articles.............................................................. 4
2.4. Tax Consequences............................................................................... 5
2.5. Accounting Treatment........................................................................... 5
ARTICLE III. MERGER CONSIDERATION; EXCHANGE PROCEDURES...................................................... 5
3.1. Merger Consideration........................................................................... 5
3.2. Rights As Stockholders; Stock Transfers........................................................ 5
3.3. Fractional Shares.............................................................................. 5
3.4. Exchange Procedures............................................................................ 5
3.5. Anti-Dilution Provisions....................................................................... 6
3.6. Treasury Shares................................................................................ 6
3.7. Options........................................................................................ 6
ARTICLE IV. ACTIONS PENDING MERGER......................................................................... 7
4.1. Ordinary Course................................................................................ 7
4.2. Capital Stock.................................................................................. 7
4.3. Dividends, Etc................................................................................. 7
4.4. Compensation; Employment Agreements; Etc....................................................... 8
4.5. Benefit Plans.................................................................................. 8
4.6. Acquisitions And Dispositions.................................................................. 8
4.7. Amendments..................................................................................... 8
4.8. Accounting Methods............................................................................. 8
4.9. Adverse Actions................................................................................ 8
4.10. Agreements..................................................................................... 8
ARTICLE V. REPRESENTATIONS AND WARRANTIES................................................................. 9
5.1. Disclosure Schedules........................................................................... 9
5.2. Standard....................................................................................... 9
5.3. Representations And Warranties................................................................. 9
ARTICLE VI. COVENANTS...................................................................................... 14
6.1. Best Efforts................................................................................... 14
6.2. Stockholder Approvals.......................................................................... 14
6.3. Registration Statement......................................................................... 15
6.4. Press Releases................................................................................. 15
6.5. Access; Information............................................................................ 15
6.6. Acquisition Proposals.......................................................................... 16
6.7. Affiliate Agreements........................................................................... 16
6.8. Takeover Laws.................................................................................. 16
6.9. No Rights Triggered............................................................................ 17
6.10. Shares Listed.................................................................................. 17
6.11. Regulatory Applications........................................................................ 17
6.12. Indemnification; Directors' and Officers' Insurance............................................ 17
6.13. Benefits Plans................................................................................. 19
6.14. Certain Director And Officer Positions......................................................... 19
6.15. Notification Of Certain Matters................................................................ 19
6.16. Redemption of Company Preferred Stock.......................................................... 19
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE VII. CONDITIONS TO CONSUMMATION OF THE MERGER....................................................... 19
7.1. Shareholder Vote............................................................................... 19
7.2. Regulatory Approvals........................................................................... 19
7.3. Third Party Consents........................................................................... 19
7.4. No Injunction, Etc............................................................................. 19
7.5. Representations, Warranties And Covenants Of NationsBank....................................... 20
7.6. Representations, Warranties And Covenants Of The Company....................................... 20
7.7. Effective Registration Statement............................................................... 20
7.8. Tax Opinion.................................................................................... 20
7.9. Articles Of Amendment.......................................................................... 21
7.10. NYSE Listing................................................................................... 21
7.11. Company Rights Agreement....................................................................... 21
7.12. Accounting Treatment........................................................................... 21
ARTICLE VIII. TERMINATION.................................................................................... 21
8.1. Termination.................................................................................... 21
8.2. Effect Of Termination And Abandonment.......................................................... 23
ARTICLE IX. MISCELLANEOUS.................................................................................. 23
9.1. Survival....................................................................................... 23
9.2. Waiver; Amendment.............................................................................. 23
9.3. Counterparts................................................................................... 23
9.4. Governing Law.................................................................................. 23
9.5. Expenses....................................................................................... 23
9.6. Confidentiality................................................................................ 23
9.7. Notices........................................................................................ 23
9.8. Entire Understanding; No Third Party Beneficiaries............................................. 24
9.9. Headings....................................................................................... 24
EXHIBIT A Form of Stock Option Agreement with respect to Option Issued by Barnett Banks, Inc.
EXHIBIT B Form of Stock Option Agreement with respect to Option Issued by NationsBank Corporation
EXHIBIT C Form of Affiliate Letter Addressed to NationsBank Corporation
EXHIBIT D Form of Affiliate Letter Addressed to Barnett Banks, Inc.
</TABLE>
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AGREEMENT AND PLAN OF MERGER, dated as of August 29, 1997 (this
"Agreement"), by and between Barnett Banks, Inc., a Florida corporation (the
"Company"), and NationsBank Corporation, a North Carolina corporation
("NationsBank").
WITNESSETH:
WHEREAS, the Boards of Directors of the Company and NationsBank have
determined that it is in the best interests of their respective companies and
their stockholders to consummate the strategic business combination transaction
provided for herein in which the Company will, subject to the terms and
conditions set forth herein, merge (the "Merger") with and into NationsBank so
that NationsBank is the surviving corporation in the Merger;
WHEREAS, in connection with the execution of this Agreement, the Company
and NationsBank will enter into a stock option agreement, with the Company as
issuer and NationsBank as Grantee (the "Company Stock Option Agreement") in the
form attached hereto as Exhibit A; and
WHEREAS, in connection with the execution of this Agreement, NationsBank
and the Company will enter into a stock option agreement, with NationsBank as
issuer and the Company as Grantee (the "NationsBank Stock Option Agreement" and,
together with the Company Stock Option Agreement, the "Stock Option Agreements")
in the form attached hereto as Exhibit B; and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I.
CERTAIN DEFINITIONS
1.1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings set forth below:
"Affiliate" shall have the meaning set forth in Section 6.7(a).
"Agreement" shall have the meaning set forth in the recitals to this
Agreement.
"Articles of Amendment" shall have the meaning set forth in Section 2.3.
"BCA" shall have the meaning set forth in Section 2.1(b).
"Certificate of Merger" shall have the meaning set forth in Section 2.1(b).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning set forth in the recitals to this
Agreement.
"Company Common Stock" shall have the meaning set forth in Section 3.1(a).
"Company Directors" shall have the meaning set forth in Section 6.14.
"Company Meeting" shall have the meaning set forth in Section 6.2.
"Company Preferred Stock" shall have the meaning set forth in Section 2.3.
"Company Right" shall have the meaning set forth in Section 3.1(a).
"Company Rights Agreement" shall have the meaning set forth in Section
3.1(a).
"Company Stock" shall mean Company Common Stock and Company Preferred
Stock.
"Company Stock Option" shall have the meaning set forth in Section 3.7.
"Company Stock Option Agreement" shall have the meaning set forth in the
recitals hereto.
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"Company Stock Option Plans" shall have the meaning set forth in Section
3.7.
"Compensation and Benefit Plans" shall have the meaning set forth in
Section 5.3(l).
"Confidentiality Agreement" shall mean the Confidentiality Agreement, dated
August 20, 1997, between the Company and NationsBank.
"Costs" shall have the meaning set forth in Section 6.12(a).
"Disclosure Schedule" shall have the meaning set forth in Section 5.1.
"Effective Date" shall have the meaning set forth in Section 2.2.
"Effective Time" shall have the meaning set forth in Section 2.2.
"Employee Benefit Plans" shall have the meaning set forth on Section 6.13
of the Company Disclosure Schedule.
"Environmental Laws" shall have the meaning set forth in Section 5.3(o).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall have the meaning set forth in Section 5.3(l).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Exchange Agent" shall have the meaning set forth in Section 3.2.
"Exchange Fund" shall have the meaning set forth in Section 3.5(a).
"Exchange Ratio" shall have the meaning set forth in Section 3.1(a).
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve Board" shall mean the Board of Governors of the Federal
Reserve System.
"Indemnified Party" shall have the meaning set forth in Section 6.12(a).
"Joint Proxy Statement" shall have the meaning set forth in Section 6.3.
"Liens" shall mean any charge, mortgage, pledge, security interest,
restriction, claim, lien, or encumbrance.
"Material Adverse Effect" shall mean with respect to the Company or
NationsBank, respectively, any effect that (i) is material and adverse to the
financial position, results of operations or business of the Company and its
Subsidiaries taken as a whole, or NationsBank and its Subsidiaries taken as a
whole, respectively, or (ii) would materially impair the ability of the Company
or NationsBank, respectively, to perform its obligations under this Agreement or
otherwise materially threaten or materially impede the consummation of the
Merger and the other transactions contemplated by this Agreement; provided,
however, that Material Adverse Effect shall not be deemed to include the impact
of (a) changes in banking and similar laws of general applicability or
interpretations thereof by courts or governmental authorities, (b) changes in
generally accepted accounting principles or regulatory accounting requirements
applicable to banks or savings associations and their holding companies
generally, (c) actions or omissions of the Company or NationsBank taken with the
prior written consent of the Company or NationsBank, as applicable, in
contemplation of the transactions contemplated hereby, (d) circumstances
affecting banks or savings associations and their holding companies generally,
and (e) the effects of the Merger and compliance by either party with the
provisions of this Agreement on the business, financial condition or results of
operations of such party and its Subsidiaries, or the other party and its
Subsidiaries, as the case may be.
"Meeting" shall have the meaning set forth in Section 6.2.
"Merger" shall have the meaning set forth in the recitals to this Agreement
and in Section 2.1(a).
"Merger Consideration" shall have the meaning set forth in Section 2.1.
"Multiemployer Plans" shall have the meaning set forth in Section 5.3(l).
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"NationsBank" shall have the meaning set forth in the recitals to this
Agreement.
"NationsBank Common Stock" shall have the meaning set forth in Section
3.1(a).
"NationsBank ESOP Preferred Stock" shall have the meaning set forth in
Section 4.3(1).
"NationsBank Meeting" shall have the meaning set forth in Section 6.2.
"NationsBank New Preferred Stock" shall have the meaning set forth in
Section 3.1(b).
"NationsBank Series B Preferred Stock" shall mean the 7% Cumulative
Redeemable Preferred Stock, Series B, stated value $100.00 per share, of
NationsBank.
"NationsBank Stock" shall mean NationsBank Common Stock and NationsBank
Preferred Stock.
"NationsBank Stock Option Agreement" shall have the meaning set forth in
the recitals hereto.
"New Certificates" shall have the meaning set forth in Section 3.5(a).
"NYSE" shall mean The New York Stock Exchange, Inc.
"OCC" shall mean the Office of the Comptroller of the Currency.
"Old Certificates" shall have the meaning set forth in Section 3.2.
"OTS" shall mean the Office of Thrift Supervision.
"Pension Plan" shall have the meaning set forth in Section 5.3(l).
"Person" or "person" shall mean any individual, bank, corporation,
partnership, association, joint-stock company, business trust or unincorporated
organization.
"Plans" shall have the meaning set forth in Section 5.3(l).
"Previously Disclosed" by a party shall mean information set forth in its
Disclosure Schedule.
"Registration Statement" shall have the meaning set forth in Section 6.3.
"Regulatory Authorities" shall have the meaning set forth in Section
5.3(h).
"Rights" shall mean, with respect to any person, securities or obligations
convertible into or exchangeable for, or giving any person any right to
subscribe for or acquire, or any options, calls or commitments relating to,
shares of capital stock of such person.
"SEC" shall mean the Securities and Exchange Commission.
"SEC Documents" shall have the meaning set forth in Section 5.3(g).
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Stock Option Agreements" shall have the meaning set forth in the recitals
to this Agreement.
"Subsidiary" and "Significant Subsidiary" shall have the meanings ascribed
to them in Rule 1-02 of Regulation S-X of the SEC.
"Surviving Corporation" shall have the meaning set forth in Section 2.1(a).
"Takeover Laws" shall have the meaning set forth in Section 5.3(n).
"Takeover Proposal" shall mean, with respect to any person, any tender or
exchange offer, proposal for a merger, consolidation or other business
combination involving the Company or any of its Significant Subsidiaries or any
proposal or offer to acquire in any manner a substantial equity interest in, or
a substantial portion of the assets of, the Company or any of its Significant
Subsidiaries other than the transactions contemplated or permitted by this
Agreement.
"Tax Returns" shall have the meaning set forth in Section 5.3(p).
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"Taxes" shall mean all taxes, charges, fees, levies or other assessments,
including, without limitation, all net income, gross income, gross receipts,
sales, use, ad valorem, goods and services, capital, transfer, franchise,
profits, license, withholding, payroll, employment, employer health, excise,
estimated, severance, stamp, occupation, property or other taxes, custom duties,
fees, assessments or charges of any kind whatsoever, together with any interest
and any penalties, additions to tax or additional amounts imposed by any taxing
authority.
"Treasury Shares" shall have the meaning set forth in Section 3.1(a).
ARTICLE II.
THE MERGER; EFFECTS OF THE MERGER
2.1. THE MERGER. (a) THE SURVIVING CORPORATION. At the Effective Time, the
Company shall merge with and into NationsBank (the "Merger"), the separate
corporate existence of the Company shall cease and NationsBank shall survive and
continue to exist as a North Carolina corporation (NationsBank, as the surviving
corporation in the Merger, sometimes being referred to herein as the "Surviving
Corporation"). NationsBank may at any time change the method of effecting the
combination with the Company (including without limitation the provisions of
this Article II) if and to the extent it deems such change to be desirable,
including without limitation to provide for a merger of the Company into a
wholly-owned subsidiary of NationsBank; provided, however, that no such change
shall (A) alter or change the amount or kind of consideration to be issued to
holders of Company Stock as provided for in this Agreement (the "Merger
Consideration"), (B) adversely affect the tax treatment of the Company's
stockholders as a result of receiving the Merger Consideration or (C) materially
impede or delay consummation of the transactions contemplated by this Agreement.
(b) EFFECTIVENESS AND EFFECTS OF THE MERGER. Subject to the satisfaction or
waiver of the conditions set forth in Article VII in accordance with this
Agreement, the Merger shall become effective upon the occurrence of both (i) the
filing in the office of the Secretary of State of North Carolina of a
certificate of merger (the "Certificate of Merger") and (ii) the filing with the
Department of State of Florida of articles of merger (the "Articles of Merger"),
or such later date and time as may be set forth in the Certificate of Merger and
the Articles of Merger, in accordance with Section 11-05 of the General and
Business Corporation Act of North Carolina (the "NCBCA") and Section 607.1105 of
the 1989 Business Corporation Act of Florida (the "BCA"). The Merger shall have
the effects prescribed in Section 11-06 of the NCBCA and Section 607.1106 of the
BCA.
(c) CERTIFICATE OF INCORPORATION AND BY-LAWS. The certificate of
incorporation and by-laws of the Surviving Corporation shall be those of
NationsBank, as in effect immediately prior to the Effective Time.
2.2. EFFECTIVE DATE AND EFFECTIVE TIME. Subject to the satisfaction or
waiver of the conditions as set forth in Article VII in accordance with this
Agreement, the parties shall cause the effective date of the Merger (the
"Effective Date") to occur on (1) the third business day to occur after the last
of the conditions set forth in Sections 7.1, 7.2, 7.3 and 7.10 shall have been
satisfied or waived in accordance with the terms of this Agreement or (2) such
other date to which the parties may agree in writing. The time on the Effective
Date when the Merger shall become effective is referred to as the "Effective
Time."
2.3. AMENDMENT OF NATIONSBANK ARTICLES. Unless the Company's Series B $2.50
Cumulative Convertible Preferred Stock, par value $.10 per share, liquidation
preference $25 per share (the "Company Preferred Stock"), has earlier been
called for redemption by the Company as contemplated by Section 6.16 hereof, at
the Effective Time, (i) the articles of incorporation of NationsBank shall be
amended to fix the preferences, limitations and relative rights of the series of
NationsBank Preferred Stock, shares of which are to be issued in the Merger
pursuant to Section 3.1(b) and (ii) at or prior to the Effective Time,
NationsBank shall deliver to the Secretary of State of North Carolina for
filing, pursuant to Section 6-02 of the North Carolina Business Corporation Act,
articles of amendment, in a form mutually acceptable to NationsBank and the
Company, giving effect to the foregoing and containing any other provisions with
respect to the aforementioned series of NationsBank Preferred Stock necessary to
permit consummation of the Merger in accordance with the terms of this Agreement
(the "Articles of Amendment").
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2.4. TAX CONSEQUENCES. It is intended that the Merger shall qualify as a
reorganization under Section 368(a) of the Code, and that the Agreement shall
constitute a "plan of reorganization" for purposes of Section 368 of the Code.
2.5. ACCOUNTING TREATMENT. It is intended that the Merger be accounted for
as a "pooling of interests" under generally accepted accounting principles.
ARTICLE III.
MERGER CONSIDERATION; EXCHANGE PROCEDURES
3.1. MERGER CONSIDERATION. Subject to the provisions of this Agreement
(including, without limitation, Section 8.1(f) hereof), at the Effective Time,
automatically by virtue of the Merger and without any action on the part of any
party or stockholder:
(a) OUTSTANDING COMPANY COMMON STOCK. Each share (excluding (i) shares held
by the Company or any of its Subsidiaries or by NationsBank or any of its
Subsidiaries, in each case other than in a fiduciary capacity or as a result of
debts previously contracted ("Treasury Shares")) of the common stock, par value
$2.00 per share, of the Company, including each attached right (a "Company
Right") issued pursuant to the Rights Agreement, dated February 21, 1990, as
amended (the "Company Rights Agreement"), between the Company and the Rights
Agent named therein (the "Company Common Stock"), issued and outstanding
immediately prior to the Effective Time shall become and be converted into the
right to receive 1.1875 shares (subject to adjustment as set forth herein, the
"Exchange Ratio") of common stock (the "NationsBank Common Stock") of
NationsBank.
(b) OUTSTANDING COMPANY PREFERRED STOCK. Unless the Company Preferred Stock
has earlier been called for redemption by the Company as contemplated by Section
6.16 hereof, each share of the Company Preferred Stock, excluding any Treasury
Shares, issued and outstanding immediately prior to the Effective Time, shall
become and be converted into the right to receive one share of newly created
series of preferred stock of NationsBank ("NationsBank New Preferred Stock")
having terms (to be set forth in the Articles of Amendment) substantially
identical to those of the Company Preferred Stock, except that each share of
NationsBank New Preferred Stock shall be convertible into NationsBank Common
Stock at a conversion rate adjusted to take into account the Exchange Ratio.
3.2. RIGHTS AS STOCKHOLDERS; STOCK TRANSFERS. At the Effective Time,
holders of Company Stock shall cease to be, and shall have no rights as,
stockholders of the Company, other than to receive any dividend or other
distribution with respect to such Company Stock with a record date occurring
prior to the Effective Time and the consideration provided under this Article
III. After the Effective Time, there shall be no transfers on the stock transfer
books of the Company of shares of Company Stock.
3.3. FRACTIONAL SHARES. Notwithstanding any other provision hereof, no
fractional shares of NationsBank Common Stock and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in the Merger;
instead, NationsBank shall pay to each holder of Company Common Stock who would
otherwise be entitled to a fractional share of NationsBank Common Stock (after
taking into account all Old Certificates delivered by such holder) an amount in
cash to be paid in lieu of fractional shares (without interest) determined by
multiplying such fraction by the average of the last sale prices of NationsBank
Common Stock, as reported by the NYSE Composite Transactions reporting system
(as reported in The Wall Street Journal or, if not reported therein, in another
authoritative source), for the five NYSE trading days immediately preceding the
Effective Date.
3.4. EXCHANGE PROCEDURES. (a) At or prior to the Effective Time,
NationsBank shall deposit, or shall cause to be deposited, with the Exchange
Agent, for the benefit of the holders of Old Certificates (which for purposes of
this Section 3.4 shall include certificates formerly representing shares of
Company Preferred Stock, to the extent the Company Preferred Stock has not been
called for redemption by the Company as contemplated by Section 6.16 of this
Agreement), for exchange in accordance with this Article III, certificates
representing the shares of NationsBank Stock ("New Certificates") and an
estimated amount of cash to be paid in lieu of fractional shares (such cash and
New Certificates, together with any dividends or distributions with
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respect thereto (without any interest thereon), being hereinafter referred to as
the "Exchange Fund") to be paid pursuant to this Article III in exchange for
outstanding shares of Company Stock.
(b) As promptly as practicable after the Effective Date, NationsBank shall
send or cause to be sent to each former holder of record of shares (other than
Treasury Shares) of Company Stock immediately prior to the Effective Time
transmittal materials for use in exchanging such stockholder's Old Certificates
for the consideration set forth in this Article III. NationsBank shall cause the
New Certificates into which shares of a stockholder's Company Stock are
converted on the Effective Date and/or any check in respect of any fractional
share interests or dividends or distributions which such person shall be
entitled to receive to be delivered to such stockholder upon delivery to the
Exchange Agent of Old Certificates representing such shares of Company Stock (or
indemnity reasonably satisfactory to NationsBank and the Exchange Agent, if any
of such certificates are lost, stolen or destroyed) owned by such stockholder.
No interest will be paid on any such cash to be paid pursuant to this Article
III upon such delivery.
(c) Notwithstanding the foregoing, neither the Exchange Agent nor any party
hereto shall be liable to any former holder of Company Stock for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(d) No dividends or other distributions with respect to NationsBank Stock
with a record date occurring after the Effective Time shall be paid to the
holder of any unsurrendered Old Certificate representing shares of Company Stock
converted in the Merger into shares of such NationsBank Stock until the holder
thereof shall surrender such Old Certificate in accordance with this Article
III. After the surrender of an Old Certificate in accordance with this Article
III, the record holder thereof shall be entitled to receive any such dividends
or other distributions, without any interest thereon, which theretofore had
become payable with respect to shares of NationsBank Stock represented by such
Old Certificate.
(e) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of the Company for twelve months after the Effective Time shall be
paid to NationsBank. Any stockholders of the Company who have not theretofore
complied with this Article III shall thereafter look only to NationsBank for
payment of the shares of NationsBank Stock, cash in lieu of any fractional
shares and unpaid dividends and distributions on the NationsBank Stock
deliverable in respect of each share of Company Stock such stockholder holds as
determined pursuant to this Agreement, in each case, without any interest
thereon.
3.5. ANTI-DILUTION PROVISIONS. In the event NationsBank changes (or
establishes a record date for changing) the number of, or provides for the
exchange of, shares of NationsBank Common Stock issued and outstanding prior to
the Effective Date as a result of a stock split, stock dividend,
recapitalization, reclassification, reorganization or similar transaction with
respect to the outstanding NationsBank Common Stock and the record date therefor
shall be prior to the Effective Date, the Exchange Ratio shall be
proportionately adjusted.
3.6. TREASURY SHARES. Each of the shares of Company Stock constituting
Treasury Shares immediately prior to the Effective Time shall be canceled and
retired at the Effective Time and no consideration shall be issued in exchange
therefor.
3.7. OPTIONS. (a) At the Effective Time, all employee and director stock
options to purchase shares of Company Common Stock (each, a "Company Stock
Option"), which are then outstanding and unexercised, shall cease to represent a
right to acquire shares of Company Stock and shall be converted automatically
into options to purchase shares of NationsBank Common Stock, and NationsBank
shall assume each such Company Stock Option subject to the terms of any of the
stock option plans listed under "Stock Option Plans" in Section 5.3(l) (i) of
the Company's Disclosure Schedule (collectively, the "Company Stock Option
Plans"), and the agreements evidencing grants thereunder, including but not
limited to the accelerated vesting of such options which shall occur in
connection with and by virtue of the Merger as and to the extent required by
such plans and agreements; provided, however, that from and after the Effective
Time, (i) the number of shares of NationsBank Common Stock purchasable upon
exercise of such Company Stock Option shall be equal to the number of shares of
Company Common Stock that were purchasable under such Company Stock Option
immediately prior to the Effective Time multiplied by the Exchange Ratio, and
rounding to the nearest whole share, and (ii) the per share exercise price under
each such Company Stock Option shall be adjusted by dividing the per share
exercise price of each such Company Stock Option by the Exchange Ratio, and
rounding down to the
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nearest cent. The terms of each Company Stock Option shall, in accordance with
its terms, be subject to further adjustment as appropriate to reflect any stock
split, stock dividend, recapitalization or other similar transaction with
respect to NationsBank Common Stock on or subsequent to the Effective Date.
Notwithstanding the foregoing, the number of shares and the per share exercise
price of each Company Stock Option which is intended to be an "incentive stock
option" (as defined in Section 422 of the Code) shall be adjusted in accordance
with the requirements of Section 424 of the Code. Accordingly, with respect to
any incentive stock options, fractional shares shall be rounded down to the
nearest whole number of shares and where necessary the per share exercise price
shall be rounded up to the nearest cent.
(b) Prior to the Effective Time, NationsBank shall reserve for issuance the
number of shares of NationsBank Common Stock necessary to satisfy NationsBank's
obligations under Section 3.7(a). Promptly after the Effective Time, NationsBank
shall file with the SEC a registration statement on an appropriate form under
the Securities Act with respect to the shares of NationsBank Common Stock
subject to options to acquire NationsBank Common Stock issued pursuant to
Section 3.07(a) hereof, and shall use its best efforts to maintain the current
status of the prospectus contained therein, as well as comply with any
applicable state securities or "blue sky" laws, for so long as such options
remain outstanding.
ARTICLE IV.
ACTIONS PENDING MERGER
From the date hereof until the Effective Time, except as expressly
contemplated by this Agreement, (i) without the prior written consent of
NationsBank (which consent shall not be unreasonably withheld or delayed) the
Company will not, and will cause each of its Subsidiaries not to, and (ii)
without the prior written consent of the Company (which consent shall not be
unreasonably withheld or delayed) NationsBank will not, and will cause each of
its Subsidiaries not to:
4.1. ORDINARY COURSE. Conduct the business of it and its Subsidiaries other
than in the ordinary and usual course or, to the extent consistent therewith,
fail to use reasonable efforts to preserve intact their business organizations
and assets and maintain their rights, franchises and existing relations with
customers, suppliers, employees and business associates, or take any action that
would (i) adversely affect the ability of any party to obtain any necessary
approvals of any Regulatory Authorities required for the transactions
contemplated hereby or (ii) adversely affect its ability to perform any of its
material obligations under this Agreement.
4.2. CAPITAL STOCK. In the case of the Company, other than (i) pursuant to
Rights or other stock options or stock-based awards Previously Disclosed in its
Disclosure Schedule, (ii) upon conversion of shares of Company Preferred Stock
pursuant to the terms thereof, (iii) pursuant to the Company Option Agreement,
(iv) pursuant to the Company Rights Agreement or (v) as otherwise set forth on
Section 6.13 of the Company Disclosure Schedule, (x) issue, sell or otherwise
permit to become outstanding, or authorize the creation of, any additional
shares of capital stock, any stock appreciation rights or any Rights, (y) enter
into any agreement with respect to the foregoing, or (z) permit any additional
shares of capital stock to become subject to new grants of employee stock
options, stock appreciation rights, or similar stock-based employee rights.
4.3. DIVIDENDS, ETC. (1) Make, declare or pay any dividend (other than (i)
in the case of the Company, (A) quarterly cash dividends on Company Common Stock
in an amount not to exceed the rate payable on such Company Common Stock as of
the date hereof and, to the extent not inconsistent with Section 6.16 hereof,
dividends payable on Company Preferred Stock at a rate not exceeding the rate
provided for in the terms thereof, and (B) dividends from greater than 95%-owned
Subsidiaries to the Company or another greater than 95%-owned Subsidiary of the
Company, as applicable, and (ii) in the case of NationsBank, regular quarterly
cash dividends on NationsBank Common Stock in the ordinary course consistent
with past practice, semi-annual cash dividends on the ESOP Convertible Preferred
Stock, Series C (the "NationsBank ESOP Preferred Stock") and cash dividends on
any other outstanding issues of preferred stock in accordance with the terms
thereof and dividends from Subsidiaries to NationsBank or another Subsidiary of
NationsBank, as applicable) on or in respect of, or declare or make any
distribution on any shares of its capital stock, or (2) other than (A) as
Previously Disclosed in its Disclosure Schedule, (B) in the case of the Company,
pursuant to the terms of the Company Preferred Stock or as expressly
contemplated by Section 6.16 of this Agreement, or (C) in the
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ordinary course pursuant to employee benefit plans, directly or indirectly
combine, redeem, reclassify, purchase or otherwise acquire, any shares of its
capital stock. After the date of this Agreement, each of NationsBank and the
Company shall coordinate with the other the declaration of any dividends in
respect of NationsBank Common Stock and Company Common Stock and the record
dates and payment dates relating thereto, it being the intention of the parties
hereto that holders of NationsBank Common Stock or Company Common Stock shall
not receive two dividends, or fail to receive one dividend, for any single
calendar quarter with respect to their shares of NationsBank Common Stock and/or
Company Common Stock and any shares of NationsBank Common Stock any such holder
receives in exchange therefor in the Merger.
4.4. COMPENSATION; EMPLOYMENT AGREEMENTS; ETC. In the case of the Company
and its Subsidiaries, except as set forth on Section 6.13 of the Company
Disclosure Schedule, enter into or amend any written employment, severance or
similar agreements or arrangements with any of its directors, officers or
employees, or grant any salary or wage increase or increase any employee benefit
(including incentive or bonus payments), except for (i) normal individual
increases in compensation to employees in the ordinary course of business
consistent with past practice or (ii) other changes as are provided for herein
or as may be required by law or to satisfy contractual obligations existing as
of the date hereof or additional grants of awards to newly hired employees
consistent with past practice or such changes that, either individually or in
the aggregate, would not reasonably be expected to result in a material
liability to the Company or its Subsidiaries.
4.5. BENEFIT PLANS. In the case of the Company and its Subsidiaries, except
as set forth on Section 6.13 of the Company Disclosure Schedule, enter into or
amend (except as may be required by applicable law, to satisfy contractual
obligations existing as of the date hereof or amendments which, either
individually or in the aggregate, would not reasonably be expected to result in
a material liability to the Company or its Subsidiaries) any pension,
retirement, stock option, stock purchase, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
related thereto, in respect of any of its directors, officers or other
employees, including without limitation taking any action that accelerates the
vesting or exercise of any benefits payable thereunder.
4.6. ACQUISITIONS AND DISPOSITIONS. In the case of the Company, except as
Previously Disclosed in its Disclosure Schedule, dispose of or discontinue any
portion of its assets, business or properties, which is material to it and its
Subsidiaries taken as a whole, or acquire (other than by way of foreclosures or
acquisitions of control in a bona fide fiduciary capacity or in satisfaction of
debts previously contracted in good faith, in each case in the ordinary and
usual course of business consistent with past practice) all or any portion of,
the business or property of any other entity which is material to it and its
Subsidiaries taken as a whole. NationsBank will not, and will cause its
Subsidiaries not to, make any acquisition or take any other action which would
materially adversely affect its ability to consummate the transactions
contemplated by this Agreement.
4.7. AMENDMENTS. In the case of the Company, amend its Articles of
Incorporation or By-laws in a manner that would materially and adversely affect
either party's ability to consummate the Merger or the economic benefits of the
Merger to either party or amend or waive any rights under the Company Rights
Agreement.
4.8. ACCOUNTING METHODS. Implement or adopt any change in its accounting
principles, practices or methods, other than as may be required by generally
accepted accounting principles.
4.9. ADVERSE ACTIONS. (1) Knowingly take any action that would, or would be
reasonably likely to, prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code or for "pooling
of interests" accounting treatment under generally accepted accounting
principles; or (2) knowingly take any action that is intended or is reasonably
likely to result in (x) any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect at any time
prior to the Effective Time, (y) any of the conditions to the Merger set forth
in Article VII not being satisfied or (z) a material violation of any provision
of this Agreement except, in each case, as may be required by applicable law.
4.10. AGREEMENTS. Agree or commit to do anything prohibited by Sections 4.1
through 4.9.
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ARTICLE V.
REPRESENTATIONS AND WARRANTIES
5.1. DISCLOSURE SCHEDULES. On or prior to the date hereof, NationsBank has
delivered to the Company and the Company has delivered to NationsBank a schedule
(respectively, its "Disclosure Schedule") setting forth, among other things,
items the disclosure of which is necessary or appropriate in relation to any or
all of its representations and warranties; provided, that (i) no such item is
required to be set forth in a Disclosure Schedule as an exception to a
representation or warranty if its absence is not reasonably likely to result in
the related representation or warranty being deemed untrue or incorrect under
the standard established by Section 5.2, and (ii) the mere inclusion of an item
in a Disclosure Schedule shall not be deemed an admission by a party that such
item represents a material exception or fact, event or circumstance or that such
item is reasonably likely to result in a Material Adverse Effect.
5.2. STANDARD. No representation or warranty of NationsBank or the Company
contained in Section 5.3 shall be deemed untrue or incorrect, and no party
hereto shall be deemed to have breached a representation or warranty, as a
consequence of the existence of any fact, circumstance or event unless such
fact, circumstance or event, individually or taken together with all other
facts, circumstances or events inconsistent with any paragraph of Section 5.3,
has had or is reasonably expected to have a Material Adverse Effect.
5.3. REPRESENTATIONS AND WARRANTIES. Subject to Sections 5.1 and 5.2 and
except as Previously Disclosed in its Disclosure Schedule, the Company hereby
represents and warrants to NationsBank, and NationsBank hereby represents and
warrants to the Company, to the extent applicable, in each case with respect to
itself and its Subsidiaries, as follows:
(a) ORGANIZATION, STANDING AND AUTHORITY. Such party is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. Such party is duly qualified to do business
and is in good standing in the states of the United States and foreign
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified. It has in effect all federal, state,
local, and foreign governmental authorizations necessary for it to own or lease
its properties and assets and to carry on its business as it is now conducted.
(b) SHARES. (i) As of the date hereof, the authorized capital stock of the
Company consists solely of 400,000,000 shares of Company Common Stock, of which,
as of the date hereof, 197,886,147 shares were outstanding, 20,000,000 shares of
company preferred stock, of which 8,489 shares designated as Company Preferred
Stock were outstanding as of the date hereof. As of the date hereof, the
authorized capital stock of NationsBank consists solely of 1,250,000,000 shares
of NationsBank Common Stock, of which, as of August 26, 1997, 706,548,955 shares
were outstanding, and 45,000,000 shares of preferred stock (the "NationsBank
Preferred Stock"), of which, as of June 30, 1997, 2,319,060 shares were
outstanding. As of the date hereof, no shares of Company Common Stock and no
shares of NationsBank Common Stock were held in treasury. The outstanding shares
of such party's capital stock are validly issued and outstanding, fully paid and
nonassessable, and subject to no preemptive rights (and were not issued in
violation of any preemptive rights). As of the date hereof, there are no shares
of such party's capital stock authorized and reserved for issuance, such party
does not have any Rights issued or outstanding with respect to its capital
stock, and such party does not have any commitment to authorize, issue or sell
any such shares or Rights, except pursuant to this Agreement, the Stock Option
Agreements and the Company Rights Agreement, as the case may be. Since June 30,
1997, the Company has issued no shares of its capital stock or rights in respect
thereof or reserved any shares for such purposes except pursuant to plans or
commitments Previously Disclosed in its Disclosure Schedule.
(ii) The number of shares of Company Common Stock which are issuable and
reserved for issuance upon exercise of Company Stock Options as of the date
hereof are Previously Disclosed in the Company's Disclosure Schedule, and the
number of shares of NationsBank Common Stock which are issuable and reserved for
issuance upon exercise of any employee or director stock options to purchase
shares of NationsBank Common Stock as of the date hereof are Previously
Disclosed in NationsBank's Disclosure Schedule.
(c) SUBSIDIARIES. (i) (A) Such party has Previously Disclosed in its
Disclosure Schedule a list of all of its Subsidiaries together with the
jurisdiction of organization of each such Subsidiary, (B) it owns, directly or
indirectly at least 99% of the issued and outstanding shares of each of its
Significant Subsidiaries, (C) no equity
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securities of any of its Significant Subsidiaries are or may become required to
be issued (other than to it or a Subsidiary of it) by reason of any Rights, (D)
there are no contracts, commitments, understandings or arrangements by which any
of such Significant Subsidiaries is or may be bound to sell or otherwise
transfer any shares of the capital stock of any such Significant Subsidiaries
(other than to it or a Subsidiary of it), (E) there are no contracts,
commitments, understandings, or arrangements relating to its rights to vote or
to dispose of such shares (other than to it or a Subsidiary of it), and (F) all
of the shares of capital stock of each such Significant Subsidiary held by it or
its Subsidiaries are fully paid and (except pursuant to 12 U.S.C. Sec. 55 or
equivalent state statutes in the case of bank Subsidiaries) nonassessable and
are owned by it or its Subsidiaries free and clear of any Liens.
(ii) In the case of the representations and warranties of the Company, the
Company does not own (other than in a bona fide fiduciary capacity or in
satisfaction of a debt previously contracted) beneficially, directly or
indirectly, any shares of any equity securities or similar interests of any
person, or any interest in a partnership or joint venture of any kind.
(iii) Each of such party's Significant Subsidiaries has been duly organized
and is validly existing in good standing under the laws of the jurisdiction of
its organization, and is duly qualified to do business and in good standing in
the jurisdictions where its ownership or leasing of property or the conduct of
its business requires it to be so qualified. Each of such Significant
Subsidiaries has in effect all federal, state, local, and foreign governmental
authorizations necessary for it to own or lease its properties and assets and to
carry on its business as it is now conducted.
(d) CORPORATE POWER. Such party and each of its Significant Subsidiaries
has the corporate power and authority to carry on its business as it is now
being conducted and to own all its properties and assets; and it has the
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and the Stock Option Agreements and to consummate the
transactions contemplated hereby and thereby.
(e) CORPORATE AUTHORITY. Subject in the case of this Agreement to approval
by the holders of a majority of the shares of Company Common Stock entitled to
vote thereon and, if required, the requisite vote of the holders of the Company
Preferred Stock (in the case of the Company) and by the holders of a majority of
the shares of NationsBank Common Stock, NationsBank ESOP Preferred Stock and
NationsBank Series B Preferred Stock entitled to vote thereon, voting as a
single group (in the case of NationsBank), each of this Agreement and the Stock
Option Agreements and the transactions contemplated hereby and thereby have been
authorized by all necessary corporate action of it, and each of this Agreement
and the Stock Option Agreements is a legal, valid and binding agreement of it,
enforceable in accordance with its terms (except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles).
(f) NO DEFAULTS. Subject to receipt of the regulatory approvals, and
expiration of the waiting periods, referred to in Section 7.2, the required
filings under federal and state securities laws and the approvals contemplated
by Sections 7 and 9 of the Company Stock Option Agreement (in the case of the
representations and warranties of the Company) and of the NationsBank Stock
Option Agreement (in the case of the representations and warranties of
NationsBank), the execution, delivery and performance of this Agreement and the
Stock Option Agreements and the consummation of the transactions contemplated
hereby and thereby by it do not and will not (i) constitute a breach or
violation of, or a default under, any law, rule or regulation or any judgment,
decree, order, governmental permit or license, or agreement, indenture or
instrument of it or of any of its Significant Subsidiaries or to which it or any
of its Significant Subsidiaries or properties is subject or bound, (ii)
constitute a breach or violation of, or a default under, its articles or
certificate of incorporation or by-laws, or (iii) require any consent or
approval under any such law, rule, regulation, judgment, decree, order,
governmental permit or license agreement, indenture or instrument.
(g) FINANCIAL REPORTS AND SEC DOCUMENTS. Its Annual Report on Form 10-K for
the fiscal year ended December 31, 1996, and all other reports, registration
statements, definitive proxy statements or information statements filed or to be
filed by it or any of its Subsidiaries subsequent to December 31, 1994 under the
Securities Act, or under Sections 13(a), 13(c), 14 and 15(d) of the Exchange
Act, in the form filed, or to be filed (collectively, its "SEC Documents"), with
the SEC (i) complied or will comply in all material respects as to form with the
applicable requirements under the Securities Act or the Exchange Act, as the
case may be, and (ii) did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be
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stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading; and each of the
balance sheets contained in or incorporated by reference into any such SEC
Document (including the related notes and schedules thereto) fairly presents and
will fairly present the financial position of the entity or entities to which it
relates as of its date, and each of the statements of income and changes in
stockholders' equity and cash flows or equivalent statements in such SEC
Documents (including any related notes and schedules thereto) fairly presents
and will fairly present the results of operations, changes in stockholders'
equity and changes in cash flows, as the case may be, of the entity or entities
to which it relates for the periods to which it relates, in each case in
accordance with generally accepted accounting principles consistently applied
during the periods involved, except in each case as may be noted therein,
subject to normal year-end audit adjustments in the case of unaudited
statements.
(h) LITIGATION; REGULATORY ACTION. (i) No litigation, claim or other
proceeding before any court or governmental agency is pending against it or any
of its Subsidiaries and, to the best of its knowledge, no such litigation, claim
or other proceeding has been threatened.
(ii) Neither it nor any of its Subsidiaries or properties is a party
to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or
similar submission to, any federal or state governmental agency or
authority charged with the supervision or regulation of financial
institutions or issuers of securities or engaged in the insurance of
deposits (including, without limitation, the OCC, the Federal Reserve
Board, the FDIC and the OTS) or the supervision or regulation of it or any
of its Subsidiaries (collectively, the "Regulatory Authorities").
(iii) Neither it nor any of its Subsidiaries has been advised by any
Regulatory Authority that such Regulatory Authority is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of understanding,
commitment letter or similar submission.
(i) COMPLIANCE WITH LAWS. It and each of its Subsidiaries:
(i) in the conduct of its business, is in compliance with all
applicable federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees applicable thereto or to
the employees conducting such businesses, including, without limitation,
the Equal Credit Opportunity Act, the Fair Housing Act, the Community
Reinvestment Act, the Home Mortgage Disclosure Act and all other applicable
fair lending laws and other laws relating to discriminatory business
practices;
(ii) has all permits, licenses, authorizations, orders and approvals
of, and have made all filings, applications and registrations with, all
Regulatory Authorities that are required in order to permit them to conduct
their businesses substantially as presently conducted; all such permits,
licenses, certificates of authority, orders and approvals are in full force
and effect and, to the best of its knowledge, no suspension or cancellation
of any of them is threatened; and
(iii) has received, since December 31, 1994, no notification or
communication from any Regulatory Authority (A) asserting that it or any of
its Subsidiaries is not in compliance with any of the statutes,
regulations, or ordinances which such Regulatory Authority enforces, (B)
threatening to revoke any license, franchise, permit, or governmental
authorization, (C) threatening or contemplating revocation or limitation
of, or which would have the effect of revoking or limiting, federal deposit
insurance (nor, to its knowledge, do any grounds for any of the foregoing
exist) or (D) failing to approve any proposed acquisition, or stating its
intention not to approve acquisitions proposed to be effected by it within
a certain time period or indefinitely.
(j) DEFAULTS. Neither it nor any of its Subsidiaries is in default under
any contract, agreement, commitment, arrangement, lease, insurance policy, or
other instrument to which it is a party, by which its respective assets,
business, or operations may be bound or affected, or under which it or its
respective assets, business, or operations receives benefits, and there has not
occurred any event that, with the lapse of time or the giving of notice or both,
would constitute such a default.
(k) NO BROKERS. No action has been taken by it that would give rise to any
valid claim against any party hereto for a brokerage commission, finder's fee or
other like payment with respect to the transactions contemplated by this
Agreement, excluding, in the case of the Company, fees to be paid to Morgan
Stanley, Dean
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Witter, Discover & Co. and J.P. Morgan Securities Inc. and, in the case of
NationsBank, fees to be paid to Goldman, Sachs & Co. and Merrill Lynch, Pierce,
Fenner & Smith, in each case pursuant to letter agreements which have been
heretofore disclosed to the other party.
(l) EMPLOYEE BENEFIT PLANS. (i) Such Party's Disclosure Schedule contains a
complete list of all material written bonus, vacation, deferred compensation,
pension, retirement, profit-sharing, thrift, savings, employee stock ownership,
stock bonus, stock purchase, restricted stock and stock option plans, all
employment or severance contracts, all medical, dental, disability, health and
life insurance plans, all other employee benefit and fringe benefit plans,
contracts or arrangements and any applicable "change of control" or similar
provisions in any plan, contract or arrangement maintained or contributed to by
it or any of its Subsidiaries for the benefit of officers, former officers,
employees, former employees, directors, former directors, or the beneficiaries
of any of the foregoing (collectively, "Compensation and Benefit Plans").
(ii) True and complete copies of its Compensation and Benefit Plans,
including, but not limited to, any trust instruments and/or insurance contracts,
if any, forming a part thereof, and all amendments thereto have been made
available to the other party.
(iii) Each of its Compensation and Benefit Plans has been administered in
all material respects in accordance with the terms thereof. All "employee
benefit plans" within the meaning of Section 3(3) of ERISA, other than
"multiemployer plans" within the meaning of Section 3(37) of ERISA
("Multiemployer Plans"), covering employees or former employees of it and its
Subsidiaries (its "Plans"), to the extent subject to ERISA, are in material
compliance with ERISA, the Code, the Age Discrimination in Employment Act and
other applicable laws. Each Compensation and Benefit Plan of it or its
Subsidiaries which is an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA ("Pension Plan") and which is intended to be qualified
under Section 401(a) of the Code has received a favorable determination letter
from the Internal Revenue Service, and it is not aware of any circumstances
reasonably likely to result in the revocation or denial of any such favorable
determination letter. There is no pending or, to its knowledge, threatened
litigation or governmental audit, examination or investigation relating to the
Plans.
(iv) No material liability under Title IV of ERISA has been or is expected
to be incurred by it or any of its Subsidiaries with respect to any ongoing,
frozen or terminated "single-employer plan", within the meaning of Section
4001(a)(15) of ERISA, currently or formerly maintained by any of them, or the
single-employer plan of any entity which is considered one employer with it
under Section 4001(a)(15) of ERISA or Section 414 of the Code (an "ERISA
Affiliate"). Neither it nor any of its Subsidiaries presently contributes to a
Multiemployer Plan, nor have they contributed to such a plan within the past
five calendar years. No notice of a "reportable event", within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Pension Plan of it or any of its
Subsidiaries or by any ERISA Affiliate within the past 12 months.
(v) All contributions, premiums and payments required to be made under the
terms of any Compensation and Benefit Plan of it or any of its Subsidiaries have
been made. Neither any Pension Plan of it or any of its Subsidiaries nor any
single-employer plan of an ERISA Affiliate of it or any of its Subsidiaries has
an "accumulated funding deficiency" (whether or not waived) within the meaning
of Section 412 of the Code or Section 302 of ERISA. Neither it nor any of its
Subsidiaries has provided, or is required to provide, security to any Pension
Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
(vi) Under each Pension Plan of it or any of its Subsidiaries which is a
single-employer plan, as of the last day of the most recent plan year ended
prior to the date hereof, the actuarially determined present value of all
"benefit liabilities", within the meaning of Section 4001(a)(16) of ERISA (as
determined on the basis of the actuarial assumptions contained in the Plan's
most recent actuarial valuation) did not exceed the then current value of the
assets of such Plan, and there has been no adverse change in the financial
condition of such Plan (with respect to either assets or benefits) since the
last day of the most recent Plan year.
(vii) Neither it nor any of its Subsidiaries has any obligations under any
Compensation and Benefit Plans to provide benefits, including death or medical
benefits, with respect to employees of it or its Subsidiaries beyond their
retirement or other termination of service other than (i) coverage mandated by
Part 6 of Title I of ERISA or Section 4980B of the Code, (ii) retirement or
death benefits under any employee pension benefit plan
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(as defined under Section 3(2) of ERISA), (iii) disability benefits under any
employee welfare plan that have been fully provided for by insurance or
otherwise, or (iv) benefits in the nature of severance pay.
(viii) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including, without limitation, severance, unemployment compensation,
golden parachute or otherwise) becoming due to any director or any employee of
it or any of its Subsidiaries under any Compensation and Benefit Plan or
otherwise from it or any of its Subsidiaries, (ii) increase any benefits
otherwise payable under any Compensation and Benefit Plan or (iii) result in any
acceleration of the time of payment or vesting of any such benefit.
(m) LABOR MATTERS. Neither it nor any of its Subsidiaries is a party to, or
is bound by any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization, nor is it or any of its
Subsidiaries the subject of a proceeding asserting that it or any such
Subsidiaries has committed an unfair labor practice (within the meaning of the
National Labor Relations Act) or seeking to compel it or such Subsidiaries to
bargain with any labor organization as to wages and conditions of employment.
(n) TAKEOVER LAWS; RIGHTS PLANS. (i) It has taken all action required to be
taken by it in order to exempt this Agreement and the Stock Option Agreements
and the transactions contemplated hereby and thereby from, and this Agreement
and the Stock Option Agreements and the transactions contemplated hereby and
thereby are exempt from, the requirements of any "moratorium", "control share",
"fair price" or other anti-takeover laws and regulations (collectively,
"Takeover Laws") of (i) the State of Florida in the case of the representations
and warranties of the Company, including Sections 607.0901 and 607.0902 of the
BCA, and (ii) the State of North Carolina in the case of the representations and
warranties of NationsBank, including Sections 55-9-02 and 55-9A-01. In the case
of the representations and warranties of the Company, the transactions
contemplated by this Agreement have been approved by the Board of Directors of
the Company for purposes of Article VII of the Company's Amended and Restated
Articles of Incorporation.
(ii) In the case of the representations and warranties of the Company, it
has (A) duly entered into an appropriate amendment to the Company Rights
Agreement and (B) taken all other action necessary or appropriate so that the
entering into of this Agreement, and the consummation of the transactions
contemplated hereby (including, without limitation, the Merger) do not and will
not result in the ability of any person to exercise any Rights under the Company
Rights Agreement or enable or require the Company Rights to separate from the
shares of Company Common Stock to which they are attached or to be triggered or
become exercisable.
(iii) In the case of the representations and warranties of the Company, no
"Distribution Date" or "Shares Acquisition Date" (as such terms are defined in
the Company Rights Plan) has occurred.
(o) ENVIRONMENTAL MATTERS. (i) As used in this Plan, "Environmental Laws"
means all applicable local, state and federal environmental, health and safety
laws and regulations, including, without limitation, the Resource Conservation
and Recovery Act, the Comprehensive Environmental Response, Compensation, and
Liability Act, the Clean Water Act, the Federal Clean Air Act, and the
Occupational Safety and Health Act, each as amended, regulations promulgated
thereunder, and state counterparts.
(ii) Neither the conduct nor operation of such party or its Subsidiaries
nor any condition of any property presently or previously owned, leased or
operated by any of them violates or violated Environmental Laws and no condition
has existed or event has occurred with respect to any of them or any such
property that, with notice or the passage of time, or both, is reasonably likely
to result in liability under Environmental Laws. Neither such party nor any of
its Subsidiaries has received any notice from any person or entity that it or
its Subsidiaries or the operation or condition of any property ever owned,
leased, operated, held as collateral or held as a fiduciary by any of them are
or were in violation of or otherwise are alleged to have liability under any
Environmental Law, including but not limited to responsibility (or potential
responsibility) for the cleanup or other remediation of any pollutants,
contaminants, or hazardous or toxic wastes, substances or materials at, on,
beneath, or originating from any such property.
(p) TAX MATTERS. (A) All material returns, declarations, reports,
estimates, information returns and statements required to be filed under
federal, state, local or any foreign tax laws ("Tax Returns") with respect to it
or any of its Subsidiaries, have been timely filed, or requests for extensions
have been timely filed and have not
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expired; (B) all Tax Returns filed by it are complete and accurate in all
material respects; (C) all Taxes shown to be due on such Tax Returns have been
paid or adequate reserves have been established for the payment of such Taxes;
and (D) no material (1) audit or examination or (2) refund litigation with
respect to any Tax Return is pending.
(q) TAX TREATMENT; ACCOUNTING TREATMENT. As of the date hereof, it is aware
of no reason why the Merger will fail to qualify as a reorganization under
Section 368(a) of the Code or may not be accounted for as a "pooling of
interests" under generally accepted accounting principles.
(r) REGULATORY APPROVALS. The approval of the following regulatory
authorities is necessary to consummate the Merger: the Federal Reserve Board and
the regulatory authorities of the States in which the Company and its
Subsidiaries operate. As of the date hereof, neither of the Company nor
NationsBank is aware of any reason why the approvals of such regulatory
authorities will not be received.
(s) NO MATERIAL ADVERSE EFFECT. Since June 30, 1997, except as disclosed in
its SEC Documents filed with the SEC on or before the date hereof, (i) it and
its Subsidiaries have conducted their respective businesses in the ordinary and
usual course (excluding the incurrence of expenses related to this Agreement and
the transactions contemplated hereby) and (ii) no event has occurred or
circumstance arisen that, individually or taken together with all other facts,
circumstances and events (described in any paragraph of Section 5.03 or
otherwise), is reasonably likely to have a Material Adverse Effect with respect
to it.
ARTICLE VI.
COVENANTS
The Company hereby covenants to and agrees with NationsBank, and
NationsBank hereby covenants to and agrees with the Company, that:
6.1. BEST EFFORTS. (a) Subject to the terms and conditions of this
Agreement, it shall use its reasonable best efforts in good faith to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or desirable, or advisable under applicable laws, so as to
permit consummation of the Merger as promptly as practicable and otherwise to
enable consummation of the transactions contemplated hereby including, without
limitation, obtaining (and cooperating with the other party hereto to obtain)
any consent, authorization, order or approval of, or any exemption by, any
Regulatory Authority and any other third party that is required to be obtained
by the Company or NationsBank or any of their respective Subsidiaries in
connection with the Merger and the other transactions contemplated by this
Agreement, and using reasonable 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, and using reasonable efforts
to defend any litigation seeking to enjoin, prevent or delay the consummation of
the transactions contemplated hereby or seeking material damages, and each shall
cooperate fully with the other parties hereto to that end.
(b) Notwithstanding anything in this Agreement to the contrary, each of
NationsBank and the Company shall promptly take, or cause its affiliates to
take, if required by or necessary to resolve any objection of the Department of
Justice or its staff, the Federal Reserve Board or its staff, any state attorney
general or its staff or any other governmental entity, in each case in order to
consummate the transactions contemplated hereby, all steps (including executing
agreements and submitting to judicial or administrative orders) to secure
regulatory approval or government clearance (including by avoiding or setting
aside any preliminary or permanent injunction or other order of any United
States federal or state court of competent jurisdiction or any other
governmental authority), including, without limitation, all steps to make
arrangements for or to effect the divestiture of particular assets or deposit
liabilities or categories of assets or deposit liabilities or businesses of
NationsBank or any of its affiliates or the Company or any of its Subsidiaries.
Each of NationsBank and the Company represents and warrants that such party's
affiliates have full power and authority to effect the transactions contemplated
by this Section 6.01(b).
6.2. STOCKHOLDER APPROVALS. Each of them shall take, in accordance with
applicable law, applicable stock exchange rules and its respective articles or
certificate of incorporation and by-laws, all action necessary to convene,
respectively, an appropriate meeting of stockholders of NationsBank to consider
and vote upon the approval of this Agreement and any other matters required to
be approved by NationsBank stockholders for
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consummation of the Merger (including any adjournment or postponement, the
"NationsBank Meeting"), and an appropriate meeting of stockholders of the
Company to consider and vote upon the approval of this Agreement and any other
matters required to be approved by the Company's stockholders for consummation
of the Merger (including any adjournment or postponement, the "Company Meeting";
and each of the NationsBank Meeting and the Company Meeting, a "Meeting"),
respectively, as promptly as practicable after the date hereof. The Board of
Directors of each of NationsBank and the Company shall (subject in the case of
the Company to compliance with its fiduciary duties as advised by counsel)
recommend such approval, and each of NationsBank and the Company shall take all
reasonable lawful action to solicit such approval by its respective
stockholders.
6.3. REGISTRATION STATEMENT. (a) Each of NationsBank and the Company agrees
to cooperate in the preparation of a registration statement on Form S-4 (the
"Registration Statement") to be filed by NationsBank with the SEC in connection
with the issuance of NationsBank Stock in the Merger (including the joint proxy
statement and prospectus and other proxy solicitation materials of NationsBank
and the Company constituting a part thereof (the "Joint Proxy Statement") and
all related documents). Provided the Company has cooperated as required above,
NationsBank agrees to file the Registration Statement with the SEC as promptly
as practicable, but in no event later than 45 days after the date of this
Agreement. Each of the Company and NationsBank agrees to use all reasonable
efforts to cause the Registration Statement to be declared effective under the
Securities Act as promptly as reasonably practicable after filing thereof.
NationsBank also agrees to use all reasonable efforts to obtain all necessary
state securities law or "Blue Sky" permits and approvals required to carry out
the transactions contemplated by this Agreement. The Company agrees to furnish
to NationsBank all information concerning the Company, its Subsidiaries,
officers, directors and stockholders as may be reasonably requested in
connection with the foregoing.
(b) Each of the Company and NationsBank agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in (i) the Registration Statement will,
at the time the Registration Statement and each amendment or supplement thereto,
if any, becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and (ii) the
Joint Proxy Statement and any amendment or supplement thereto will, at the date
of mailing to stockholders and at the times of the NationsBank Meeting and the
Company Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading or any statement which, in the light of the
circumstances under which such statement is made, will be false or misleading
with respect to any material fact, or which will omit to state any material fact
necessary in order to make the statements therein not false or misleading or
necessary to correct any statement in any earlier statement in the Joint Proxy
Statement or any amendment or supplement thereto. Each of the Company and
NationsBank further agrees that if it shall become aware prior to the Effective
Date of any information that would cause any of the statements in the Joint
Proxy Statement to be false or misleading with respect to any material fact, or
to omit to state any material fact necessary to make the statements therein not
false or misleading, to promptly inform the other party thereof and to take the
necessary steps to correct the Joint Proxy Statement.
(c) In the case of NationsBank, NationsBank will advise the Company,
promptly after NationsBank receives notice thereof, of the time when the
Registration Statement has become effective or any supplement or amendment has
been filed, of the issuance of any stop order or the suspension of the
qualification of the NationsBank Stock for offering or sale in any jurisdiction,
of the initiation or threat of any proceeding for any such purpose, or of any
request by the SEC for the amendment or supplement of the Registration Statement
or for additional information.
6.4. PRESS RELEASES. It will not, without the prior approval of the other
party hereto, issue any press release or written statement for general
circulation relating to the transactions contemplated hereby, except as
otherwise required by applicable law or regulation or the rules of the NYSE.
6.5. ACCESS; INFORMATION. (a) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, it shall, and shall
cause its Subsidiaries to, afford the other parties and their officers,
employees, counsel, accountants and other authorized representatives, access,
during normal business hours throughout the period prior to the Effective Date,
to all of its properties, books, contracts, commitments and records, and to its
officers, employees, accountants, counsel or other representatives, and, during
such period,
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it shall, and shall cause its Subsidiaries to, furnish promptly to such other
parties and representatives (i) a copy of each material report, schedule and
other document filed by it pursuant to the requirements of federal or state
securities or banking laws (other than reports or documents that NationsBank or
the Company, or their respective Subsidiaries, as the case may be, are not
permitted to disclose under applicable law), and (ii) all other information
concerning the business, properties and personnel of it as the other may
reasonably request. Neither NationsBank nor the Company nor any of their
respective Subsidiaries shall be required to provide access to or to disclose
information where such access or disclosure would violate or prejudice the
rights of its customers, jeopardize the attorney-client privilege of the
institution in possession or control of such information or contravene any law,
rule, regulation, order, judgment, decree, fiduciary duty or binding agreement
entered into prior to the date of this Agreement. The parties hereto will make
appropriate substitute disclosure arrangements under the circumstances in which
the restrictions of the preceding sentence apply.
(b) It will not use any information obtained pursuant to this Section 6.05
for any purpose unrelated to the consummation of the transactions contemplated
by this Agreement and, if this Agreement is terminated, will hold all
information and documents obtained pursuant to this paragraph in confidence (as
provided in, and subject to the provisions of, the Confidentiality Agreement, as
if it were the Receiving Party, as defined therein). No investigation by either
party of the business and affairs of the other shall affect or be deemed to
modify or waive any representation, warranty, covenant or agreement in this
Agreement, or the conditions to either party's obligation to consummate the
transactions contemplated by this Agreement.
6.6. ACQUISITION PROPOSALS. Without the prior written consent of
NationsBank, the Company shall not, and shall cause its Subsidiaries and its and
its Subsidiaries' officers, directors, agents, advisors and affiliates not to,
solicit or encourage inquiries or proposals with respect to, or engage in any
negotiations concerning, or provide any confidential information to, or have any
discussions with, any such person relating to, any tender offer or exchange
offer for, or any proposal for the acquisition of a substantial equity interest
in, or a substantial portion of the assets of, or any merger or consolidation
with, the Company or any of its Significant Subsidiaries; provided, however,
that the Company may, and may authorize and permit its officers, directors,
employees or agents to, furnish or cause to be furnished confidential
information and may participate in such discussions and negotiations if the
Company's Board of Directors, after having consulted with and considered the
advice of outside counsel, has determined that the failure to provide such
information or participate in such negotiations and discussions could cause the
members of such Board of Directors to breach their fiduciary duties under
applicable laws. The Company shall promptly (within 24 hours) advise NationsBank
of its receipt of any such proposal or inquiry, of the substance thereof, and of
the identity of the person making such proposal or inquiry.
6.7. AFFILIATE AGREEMENTS. (a) Not later than the 15th day prior to the
mailing of the Joint Proxy Statement, the Company shall deliver to NationsBank
and NationsBank shall deliver to the Company, a schedule of each person that, to
the best of its knowledge, is or is reasonably likely to be, as of the date of
the relevant Meeting, deemed to be an "affiliate" of it (each, an "Affiliate")
as that term is used in SEC Accounting Series Releases 130 and 135 and, in the
case of the Company only, in Rule 145 under the Securities Act.
(b) The Company and NationsBank shall use its respective reasonable best
efforts to cause each person who may be deemed to be an Affiliate of the Company
or NationsBank, as the case may be, to execute and deliver to the Company and
NationsBank on or before the date of mailing of the Joint Proxy Statement an
agreement in the form attached hereto as Exhibit C (in the case of affiliates of
the Company) or Exhibit D (in the case of affiliates of NationsBank).
(c) NationsBank shall use its reasonable best efforts to publish, not later
than 45 days after the end of the month in which the Effective Time occurs,
financial results covering at least thirty (30) days of post-Merger combined
operations as contemplated by and in accordance with the terms of SEC Accounting
Series Release No. 135.
6.8. TAKEOVER LAWS. Neither party shall take any action that would cause
the transactions contemplated by this Agreement and the Stock Option Agreements
to be subject to requirements imposed by any Takeover Law and each of them shall
take all necessary steps within its control to exempt (or ensure the continued
exemption of) the transactions contemplated by this Agreement and the Stock
Option Agreements from, or if necessary challenge the validity or applicability
of, any applicable Takeover Law, as now or hereafter in effect, including,
without limitation, Sections 607.0901 and 607.0902 of the BCA and Takeover Laws
of any other
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State that purport to apply to this Agreement, the Stock Option Agreements or
the transactions contemplated hereby or thereby.
6.9. NO RIGHTS TRIGGERED. Each of Company and NationsBank shall take all
steps necessary to ensure that the entering into of this Agreement and the
consummation of the transactions contemplated hereby and any other action or
combination of actions, or any other transactions contemplated hereby, do not
and will not result in the grant of any rights to any person (i) under its
articles or certificate of incorporation or by-laws, (ii) under any material
agreement to which it or any of its Subsidiaries is a party (including without
limitation, in the case of the Company, the Company Rights Agreement) or (iii)
in the case of the Company, to exercise or receive certificates for Rights, or
acquire any property in respect of Rights, under the Company Rights Agreement.
6.10. SHARES LISTED. In the case of NationsBank, NationsBank shall use its
best efforts to list, prior to the Effective Date, on the NYSE, upon official
notice of issuance, the shares of NationsBank Common Stock to be issued to the
holders of Company Common Stock in the Merger.
6.11. REGULATORY APPLICATIONS. (a) NationsBank and the Company and their
respective Subsidiaries shall cooperate and use their respective reasonable best
efforts (i) to prepare all documentation, to effect all filings, to obtain all
permits, consents, approvals and authorizations of all third parties and
Regulatory Authorities necessary to consummate the transactions contemplated by
this Agreement, including, without limitation, any such approvals or
authorizations required by the Federal Reserve Board and the regulatory
authorities of the States in which the Company and its Subsidiaries operate, and
to comply with the terms and conditions of such permits, consents, approvals and
authorizations and (ii) to cause the Merger to be consummated as expeditiously
as practicable. Provided the Company has cooperated as required above,
NationsBank agrees to file the requisite applications to be filed by it with the
Federal Reserve Board and the regulatory authorities of the States in which the
Company and its Subsidiaries operate as promptly as practicable, but in no event
later than 45 days after the date of this Agreement. Each of NationsBank and the
Company shall have the right to review in advance, and to the extent practicable
each will consult with the other, in each case subject to applicable laws
relating to the exchange of information, with respect to, all material written
information submitted to any third party or any Regulatory Authorities in
connection with the transactions contemplated by this Agreement. In exercising
the foregoing right, each of the parties hereto agrees to act reasonably and as
promptly as practicable. Each party hereto agrees that it will consult with the
other parties hereto with respect to the obtaining of all material permits,
consents, approvals and authorizations of all third parties and Regulatory
Authorities necessary or advisable to consummate the transactions contemplated
by this Agreement and each party will keep the other parties apprised of the
status of material matters relating to completion of the transactions
contemplated hereby.
(b) Each party agrees, upon request, to furnish the other party with all
information concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with the Registration Statement, the Joint Proxy Statement or any
filing, notice or application made by or on behalf of such other party or any of
its Subsidiaries to any Regulatory Authority in connection with the transactions
contemplated hereby.
6.12. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. (a) In the event
of any threatened or actual claim, action, suit, proceeding or investigation,
whether civil, criminal or administrative, including, without limitation, any
such claim, action, suit, proceeding or investigation in which any person who is
now, or has been at any time prior to the date of this Agreement, or who becomes
prior to the Effective Time, a director, officer or employee of the Company or
any of its Subsidiaries (the "Indemnified Parties") is, or is threatened to be,
made a party based in whole or in part on, or arising in whole or in part out
of, or pertaining to (i) the fact that he is or was a director, officer or
employee of the Company, any of the Company Subsidiaries or any of their
respective predecessors or was prior to the Effective Time serving at the
request of any such party as a director, officer, employee, fiduciary or agent
of another corporation, partnership, trust or other enterprise or (ii) this
Agreement, the Stock Option Agreements, or any of the transactions contemplated
hereby and thereby and all actions taken by an Indemnified Party in connection
herewith or therewith, whether in any case asserted or arising before or after
the Effective Time, the parties hereto agree to cooperate and use their best
efforts to defend against and respond thereto. It is understood and agreed that
after the Effective Time, NationsBank shall indemnify and hold harmless, as and
to the fullest extent permitted by law,
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each such Indemnified Party against any losses, claims, damages, liabilities,
costs, expenses (including reasonable attorney's fees and expenses in advance of
the final disposition of any claim, suit, proceeding or investigation to each
Indemnified Party to the fullest extent permitted by law upon receipt of an
undertaking from such Indemnified Party to repay such advanced expenses if it is
finally and unappealably determined that such Indemnified Party was not entitled
to indemnification hereunder), judgments, fines and amounts paid in settlement
in connection with any such threatened or actual claim, action, suit, proceeding
or investigation, and in the event of any such threatened or actual claim,
action, suit, proceeding or investigation (whether asserted or arising before or
after the Effective Time), the Indemnified Parties may retain counsel reasonably
satisfactory to them after consultation with NationsBank; PROVIDED, HOWEVER,
that (1) NationsBank shall have the right to assume the defense thereof and upon
such assumption NationsBank shall not be liable to any Indemnified Party for any
legal expenses of other counsel or any other expenses subsequently incurred by
any Indemnified Party in connection with the defense thereof, except that if
NationsBank elects not to assume such defense, or counsel for the Indemnified
Parties reasonably advises the Indemnified Parties that there are or may be
(whether or not any have yet actually arisen) issues which raise conflicts of
interest between NationsBank and the Indemnified Parties, the Indemnified
Parties may retain counsel reasonably satisfactory to them, and NationsBank
shall pay the reasonable fees and expenses of such counsel for the Indemnified
Parties, (2) NationsBank shall be obligated pursuant to this paragraph to pay
for only one firm of counsel for all Indemnified Parties, (3) NationsBank shall
not be liable for any settlement effected without its prior written consent
(which consent shall not be unreasonably withheld) and (4) NationsBank shall
have no obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination shall
have become final and nonappealable, that indemnification of such Indemnified
Party in the manner contemplated hereby is prohibited by applicable law. Any
Indemnified Party wishing to claim indemnification under this Section 6.12, upon
learning of any such claim, action, suit, proceeding or investigation, shall
notify NationsBank thereof, provided that the failure to so notify shall not
affect the obligations of NationsBank under this Section 6.12 except (and only)
to the extent such failure to notify materially prejudices NationsBank.
NationsBank's obligations under this Section 6.12 shall continue in full force
and effect for a period of six (6) years from the Effective Time; PROVIDED,
HOWEVER, that all rights to indemnification in respect of any claim (a "Claim")
asserted or made within such period shall continue until the final disposition
of such Claim.
(b) Without limiting any of the obligations under paragraph (a) of this
Section 6.12, NationsBank agrees that all rights to indemnification and all
limitations of liability existing in favor of the Indemnified Parties as
provided in the Company's Amended and Restated Articles of Incorporation or
Bylaws or in the similar governing documents of any of the Company's
Subsidiaries as in effect as of the date of this Agreement with respect to
matters occurring on or prior to the Effective Time shall survive the Merger and
shall continue in full force and effect, without any amendment thereto, for a
period of six (6) years from the Effective Time; PROVIDED, HOWEVER, that all
rights to indemnification in respect of any Claim asserted or made within such
period shall continue until the final disposition of such Claim; PROVIDED
FURTHER, HOWEVER, that nothing contained in this Section 6.12(b) shall be deemed
to preclude the liquidation, consolidation or merger of the Company or any
Company Subsidiary, in which case all of such rights to indemnification and
limitations on liability shall be deemed to so survive and continue
notwithstanding any such liquidation, consolidation or merger and shall
constitute rights which may be asserted against NationsBank. Nothing contained
in this Section 6.12(b) shall be deemed to preclude any rights to
indemnification or limitations on liability provided in the Company's Amended
and Restated Articles of Incorporation or Bylaws or the similar governing
documents of any of the Company's Subsidiaries with respect to matters occurring
subsequent to the Effective Time to the extent that the provisions establishing
such rights or limitations are not otherwise amended to the contrary.
(c) NationsBank shall use its best efforts to cause the persons serving as
officers and directors of the Company immediately prior to the Effective Time to
be covered for a period of six (6) years from the Effective Time by the
directors' and officers' liability insurance policy maintained by the Company
(provided that NationsBank may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are not less
advantageous to such directors and officers of the Company than the terms and
conditions of such existing policy) with respect to acts or omissions occurring
prior to the Effective Time which were committed by such officers and directors
in their capacity as such.
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(d) In the event NationsBank or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of NationsBank
shall assume the obligations set forth in this Section 6.12.
(e) The provisions of this Section 6.12 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and his or her heirs and
representatives.
6.13. BENEFITS PLANS. The parties agree to take such actions with respect
to compensation and employee benefit plans, programs, arrangements and other
perquisites as are set forth on Section 6.13 of the Company Disclosure Schedule.
6.14. CERTAIN DIRECTOR AND OFFICER POSITIONS. (a) NationsBank agrees to
cause Mr. Charles E. Rice and four additional persons who are nonemployee
directors of the Company as of the Effective Time and on whom NationsBank and
the Company mutually agree to be elected or appointed as directors of
NationsBank at the Effective Time. NationsBank agrees to cause Mr. Charles E.
Rice to be elected or appointed as a member of the Executive Committee of the
Board of Directors of NationsBank at the Effective Time.
(b) NationsBank agrees, prior to the Effective Time, to enter into
employment agreements with Mr. Charles E. Rice and the other officers of the
Company substantially in the form attached as Schedule 6.14(b) hereto, provided
such persons have not terminated their employment with the Company at or prior
to the Effective Time.
6.15. NOTIFICATION OF CERTAIN MATTERS. Each of the Company and NationsBank
shall give prompt notice to the other of any fact, event or circumstance known
to it that (i) is reasonably likely, individually or taken together with all
other facts, events and circumstances known to it, to result in any Material
Adverse Effect with respect to it or (ii) would cause or constitute a material
breach of any of its representations, warranties, covenants or agreements
contained herein.
6.16. REDEMPTION OF COMPANY PREFERRED STOCK. Subject to the Company's
obligations under Section 4.09, at the request of NationsBank, the Company (i)
shall promptly, but in no event later than 10 business days following the date
of such request, give notice of redemption of all of the then outstanding shares
of Company Preferred Stock to the holders thereof, and (ii) shall at the time
such notice is given irrevocably deposit in trust, for the account of such
holders, funds sufficient to pay in full the redemption price in respect of such
shares of Company Preferred Stock, in each case in the manner contemplated by
and pursuant to the terms and procedures set forth in Section 4 of the
Certificate of Designation, Preferences, Rights and Limitations with respect to
such Company Preferred Stock as in effect on the date hereof.
ARTICLE VII.
CONDITIONS TO CONSUMMATION OF THE MERGER
The obligations of each of the parties to consummate the Merger is
conditioned upon the satisfaction at or prior to the Effective Time of each of
the following:
7.1. SHAREHOLDER VOTE. Approval of the Plan of Merger contained in this
Agreement by the requisite votes of the stockholders of the Company and of
NationsBank, respectively.
7.2. REGULATORY APPROVALS. All regulatory approvals required to consummate
the transactions contemplated hereby, including, without limitation, those
specified in Section 5.03(r), shall have been obtained and shall remain in full
force and effect and all statutory waiting periods in respect thereof shall have
expired.
7.3. THIRD PARTY CONSENTS. All consents or approvals of all persons (other
than Regulatory Authorities) required for the consummation of the Merger shall
have been obtained and shall be in full force and effect, unless the failure to
obtain any such consent or approval is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the Company or
NationsBank, as the case may be.
7.4. NO INJUNCTION, ETC. No order, decree or injunction of any court or
agency of competent jurisdiction shall be in effect, and no law, statute or
regulation shall have been enacted or adopted, that enjoins, prohibits
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or makes illegal consummation of any of the transactions contemplated hereby
PROVIDED, HOWEVER, that each of NationsBank and the Company shall have used its
best efforts to prevent any such rule, regulation, injunction, decree or other
order, and to appeal as promptly as possible any injunction, decree or other
order that may be entered, including, without limitation, by proffering its
willingness to accept an order embodying any arrangement required to be made by
such party pursuant to Section 6.01(b) of this Agreement (and notwithstanding
anything in this Section 7.04 to the contrary, no terms, conditions or
provisions of an order embodying such an arrangement shall constitute a basis
for such party asserting nonfulfillment of the conditions contained in this
Section 7.04).
7.5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF NATIONSBANK. In the case
of the Company's obligation to consummate the Merger: (i) each of the
representations and warranties contained herein of NationsBank shall be true and
correct as of the date of this Agreement and upon the Effective Date with the
same effect as though all such representations and warranties had been made on
the Effective Date, except for any such representations and warranties made as
of a specified date, which shall be true and correct as of such date, in any
case subject to the standard set forth in Section 5.02, (ii) each and all of the
agreements and covenants of NationsBank to be performed and complied with
pursuant to this Agreement on or prior to the Effective Date shall have been
duly performed and complied with in all material respects, and (iii) the Company
shall have received a certificate signed by the Chief Financial Officer of
NationsBank, dated the Effective Date, to the effect set forth in clauses (i)
and (ii) of this Section 7.05.
7.6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. In the case
of NationsBank's obligation to consummate the Merger: (i) each of the
representations and warranties contained herein of the Company shall be true and
correct as of the date of this Agreement and upon the Effective Date with the
same effect as though all such representations and warranties had been made on
the Effective Date, except for any such representations and warranties made as
of a specified date, which shall be true and correct as of such date, in any
case subject to the standard set forth in Section 5.02, (ii) each and all of the
agreements and covenants of the Company to be performed and complied with
pursuant to this Agreement on or prior to the Effective Date shall have been
duly performed and complied with in all material respects, and (iii) NationsBank
shall have received a certificate signed by the Chief Financial Officer of the
Company, dated the Effective Date, to the effect set forth in clauses (i) and
(ii) of this Section 7.06.
7.7. EFFECTIVE REGISTRATION STATEMENT. The Registration Statement shall
have become effective and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC or any other
Regulatory Authority.
7.8. TAX OPINION. NationsBank and the Company shall have received an
opinion from Wachtell, Lipton, Rosen & Katz, in the case of NationsBank, and
Skadden, Arps, Slate, Meagher & Flom LLP, in the case of the Company, dated in
each case as of the Effective Time, substantially to the effect that, on the
basis of the facts, representations and assumptions set forth in such opinions
which are consistent with the state of facts existing at the Effective Time, the
Merger will be treated for Federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code and that accordingly:
(i) No gain or loss will be recognized by NationsBank or the Company as a
result of the Merger;
(ii) No gain or loss will be recognized by the stockholders of the Company
who exchange all of their Company Common Stock solely for NationsBank
Common Stock pursuant to the Merger (except with respect to cash
received in lieu of a fractional share interest in NationsBank Common
Stock); and
(iii) The aggregate tax basis of the NationsBank Common Stock received by
stockholders who exchange all of their Company Common Stock solely
for NationsBank Common Stock in the Merger will be the same as the
aggregate tax basis of the Company Common Stock surrendered in
exchange therefor (reduced by any amount allocable to a fractional
share interest for which cash is received).
In rendering such opinions, such counsel may require and rely upon
representations and covenants including those contained in certificates of
officers of NationsBank, the Company and others, reasonably satisfactory in form
and substance to such counsel.
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7.9. ARTICLES OF AMENDMENT. Provided that NationsBank has not requested
that the Company call for redemption the Company Preferred Stock pursuant to
Section 6.16 hereof, the Articles of Amendment shall have become effective in
accordance with the North Carolina Business Corporation Act.
7.10. NYSE LISTING. The shares of NationsBank Common Stock issuable
pursuant to this Agreement shall have been approved for listing on the NYSE,
subject to official notice of issuance.
7.11. COMPANY RIGHTS AGREEMENT. There shall exist no "Stock Acquisition
Date", "Distribution Date" or "Triggering Event" (as each of such terms is
defined in the Company Rights Agreement).
7.12. ACCOUNTING TREATMENT. NationsBank shall have received from Price
Waterhouse LLP, independent public accountants for NationsBank, a letter, dated
as of or shortly before the Effective Date, stating its opinion that the Merger
shall qualify for "pooling of interests" accounting treatment.
It is specifically provided, however, that a failure to satisfy any of the
conditions set forth in Section 7.06 or 7.11 shall only constitute conditions if
asserted by NationsBank, and a failure to satisfy the condition set forth in
Section 7.05 shall only constitute a condition if asserted by the Company.
ARTICLE VIII.
TERMINATION
8.1. TERMINATION. This Agreement may be terminated, and the Merger may be
abandoned:
(a) MUTUAL CONSENT. At any time prior to the Effective Time, by the mutual
consent of NationsBank and the Company in a written instrument, if the Board of
Directors of each so determines by vote of a majority of the members of its
entire Board.
(b) BREACH. At any time prior to the Effective Time, by NationsBank or the
Company (provided that the terminating party is not then in material breach of
any representation, warranty, covenant or other agreement contained herein), if
its Board of Directors so determines by vote of a majority of the members of its
entire Board, in the event of either: (i) a breach by the other party of any
representation or warranty contained herein (subject to the standard set forth
in Section 5.02), which breach cannot be or has not been cured within 30 days
after the giving of written notice to the breaching party of such breach; or
(ii) a material breach by the other party of any of the covenants or agreements
contained herein, which breach cannot be or has not been cured within 30 days
after the giving of written notice to the breaching party of such breach.
(c) DELAY. At any time prior to the Effective Time, by NationsBank or the
Company, if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event that the Merger is not consummated by
September 1, 1998, except to the extent that the failure of the Merger then to
be consummated arises out of or results from the failure of the party seeking to
terminate this Agreement to perform or observe the covenants and agreements of
such party set forth herein.
(d) NO APPROVAL. By the Company or NationsBank, if its Board of Directors
so determines by a vote of a majority of the members of its entire Board, in the
event (i) the approval of the Federal Reserve Board required for consummation of
the Merger and the other transactions contemplated by the Merger shall have been
denied by final nonappealable action of such Regulatory Authority or any
governmental entity of competent jurisdiction shall have issued a final
nonappealable order enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement; PROVIDED, HOWEVER, the party
seeking termination shall have complied fully with its obligations under Section
6.01(b) of this Agreement; or (ii) any stockholder approval required by Section
7.01 herein is not obtained at the Company Meeting or the NationsBank Meeting.
(e) by either the Board of Directors of NationsBank or the Board of
Directors of the Company, if the Board of Directors of the other party shall
have withdrawn, modified or changed in a manner adverse to the terminating party
its approval or recommendation of this Agreement and the transactions
contemplated hereby; and
(f) by the Board of Directors of the Company, upon written notice to
NationsBank at any time during the ten-day period commencing two days after the
Determination Date (as defined below), if both of the following conditions are
satisfied:
(i) the Average Closing Price shall be less than the product of 0.80
and the Starting Price; and
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(ii) (A) the quotient obtained by dividing the Average Closing Price
by the Starting Price (such number being referred to herein as the
"NationsBank Ratio") shall be less than (B) the quotient obtained by
dividing the Average Index Price by the Index Price on the Starting Date
and subtracting 0.15 from the quotient in this clause (ii)(B) (such number
being referred to herein as the "Index Ratio");
SUBJECT, HOWEVER, to the following provisions. If the Company elects to
exercise its termination right pursuant to the immediately preceding sentence,
it shall give prompt written notice to NationsBank; PROVIDED, HOWEVER, that such
notice of election to terminate may be withdrawn at any time within the
aforementioned ten-day period. During the five-day period commencing with its
receipt of such notice, NationsBank shall have the option to elect to increase
the Exchange Ratio to equal the lesser of (i) the quotient obtained by dividing
(A) the product of 0.80, the Starting Price and the Exchange Ratio (as then in
effect) by (B) the Average Closing Price, and (ii) the quotient obtained by
dividing (A) the product of the Index Ratio and the Exchange Ratio (as then in
effect) by (B) the NationsBank Ratio. If NationsBank makes such an election
within such five-day period, it shall give prompt written notice to the Company
of such election and the revised Exchange Ratio, whereupon no termination shall
have occurred pursuant to this Section 8.01(f) and this Agreement shall remain
in effect in accordance with its terms (except as the Exchange Ratio shall have
been so modified), and any references in this Agreement to "Exchange Ratio"
shall thereafter be deemed to refer to the Exchange Ratio as adjusted pursuant
to this Section 8.01(f).
For purposes of this Section 8.01(f), the following terms shall have the
meanings indicated:
"Average Closing Price" means the average of the daily last sale prices of
NationsBank Common Stock as reported on the NYSE (as reported in THE WALL STREET
JOURNAL or, if not reported therein, in another mutually agreed upon
authoritative source) for the ten consecutive full trading days in which such
shares are traded on the NYSE ending at the close of trading on the
Determination Date.
"Average Index Price" means the average of the Index Prices for the ten
consecutive full NYSE trading days ending at the close of trading on the
Determination Date.
"Determination Date" means the date on which the approval of the Federal
Reserve Board required for consummation of the Merger shall be received.
"Index Group" means the 15 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, an
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 as of the Starting Date. In the
event that the common stock of any such company ceases to be publicly traded or
any such announcement is made with respect to any such company, such company
will be removed from the Index Group, and the weights (which have been
determined based on the number of outstanding shares of common stock)
redistributed proportionately for purposes of determining the Index Price. The
15 bank holding companies and the weights attributed to them are as follows:
<TABLE>
<CAPTION>
NAME ------------------- PERCENTAGE WEIGHTING
--------------------
<C> <S> <C>
1. Citicorp 8.7%
2. Chase Manhattan Corp. 8.0%
3. BankAmerica Corp. 13.3%
4. Banc One Corp. 11.0%
5. First Union Corp. 10.7%
6. Wells Fargo & Co. 1.7%
7. First Chicago NBD Corp. 5.7%
8. Norwest Corp. 7.1%
9. Bank of New York Co. 7.2%
10. Fleet Financial Group 4.8%
11. PNC Bank Corp. 5.8%
12. SunTrust Banks Inc. 4.0%
13. KeyCorp 4.1%
14. Mellon Bank Corp. 4.8%
15. Wachovia Corp. 3.0%
</TABLE>
A-22
<PAGE>
"Index Price" on a given date means the weighted average (weighted in
accordance with the factors listed above) of the closing prices on such date of
the companies comprising the Index Group.
"Starting Date" means the last full day on which the NYSE was open for
trading prior to the execution of this Agreement.
"Starting Price" shall mean the last sale price per share of NationsBank
Common Stock on the Starting Date, as reported by the NYSE (as reported in THE
WALL STREET JOURNAL or, if not reported therein, in another mutually agreed upon
authoritative source).
If NationsBank or any company belonging to the Index Group 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
shall be appropriately adjusted for the purposes of applying this Section
8.01(f).
8.2. EFFECT OF TERMINATION AND ABANDONMENT. In the event of termination of
this Agreement and the abandonment of the Merger pursuant to this Article VIII,
no party to this Agreement shall have any liability or further obligation to any
other party hereunder except (i) as set forth in Section 9.1 and (ii) that
termination will not relieve a breaching party from liability for any willful
breach of this Agreement giving rise to such termination.
ARTICLE IX.
MISCELLANEOUS
9.1. SURVIVAL. All representations, warranties, agreements and covenants
contained in this Agreement shall not survive the Effective Time or termination
of this Agreement if this Agreement is terminated prior to the Effective Time;
provided, however, if the Effective Time occurs, the agreements of the parties
in Sections 3.4, 3.7, 6.12, 6.13, 6.14, 9.1, 9.4 and 9.8 shall survive the
Effective Time, and if this Agreement is terminated prior to the Effective Time,
the agreements of the parties in Sections 6.5(b), 8.2, 9.1, 9.2, 9.4, 9.5, 9.6,
9.7 and 9.8, shall survive such termination.
9.2. WAIVER; AMENDMENT. Subject to compliance with applicable law, prior to
the Effective Time, any provision of this Agreement may be (i) waived by the
party benefited by the provision, or (ii) amended or modified at any time, by an
agreement in writing between the parties hereto approved by their respective
Boards of Directors and executed in the same manner as this Agreement. Prior to
submission of this Agreement for approval by the stockholders of the Company,
NationsBank may make such amendments as are permitted by Section 2.1 and the
Company's Board of Directors shall approve the supplements and amendments
specified in this sentence.
9.3. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.4. GOVERNING LAW. This Agreement shall be governed by, and interpreted in
accordance with, the laws of the State of New York, without regard to the
conflict of law principles thereof (except to the extent that mandatory
provisions of Federal law govern).
9.5. EXPENSES. Each party hereto will bear all expenses incurred by it in
connection with this Agreement and the transactions contemplated hereby, except
that printing expenses and SEC filing and registration fees shall be shared
equally between the Company and NationsBank.
9.6. CONFIDENTIALITY. Each of the parties hereto and their respective
agents, attorneys and accountants will maintain the confidentiality of all
information provided in connection herewith in accordance, and subject to the
limitations of, the Confidentiality Agreement.
9.7. NOTICES. All notices, requests and other communications hereunder to a
party shall be in writing and shall be deemed given if personally delivered,
telecopied (with confirmation) or mailed by registered or certified mail (return
receipt requested) to such party at its address set forth below or such other
address as such party may specify by notice to the parties hereto.
If to NationsBank, to:
A-23
<PAGE>
NationsBank Corporation
NationsBank Corporate Center
100 North Tryon Street
Charlotte, North Carolina 28255
Attention: Frank L. Gentry
Telecopier: (704) 386-6453
With copies to:
Edward D. Herlihy, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
If to the Company, to:
Barnett Banks, Inc.
50 North Laura Street
Jacksonville, Florida 32202
Attention: Hinton F. Nobles, Jr.
Telecopier: (904) 791-7741
With copies to:
Fred B. White, III, Esq.
Skadden, Arps, Slate, Meagher
& Flom LLP
919 Third Avenue
New York, New York 10022
9.8. ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. Except for
the Confidentiality Agreement, which shall remain in effect, and the Stock
Option Agreements, this Agreement represents the entire understanding of
the parties hereto with reference to the transactions contemplated hereby
and thereby and supersedes any and all other oral or written agreements
heretofore made. Except for Sections 6.12 and 6.14, nothing in this
Agreement, expressed or implied, is intended to confer upon any person,
other than the parties hereto or their respective successors, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
9.9. HEADINGS. The headings contained in this Agreement are for
reference purposes only and are not part of this Agreement.
A-24
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed in counterparts by their duly authorized officers, all as of
the day and year first above written.
BARNETT BANKS, INC.
By: /s/_CHARLES E. RICE________________
Name: Charles E. Rice
Title: Chairman and Chief
Executive Officer
NATIONSBANK CORPORATION
By: /s/_HUGH L. MCCOLL JR._____________
Name: Hugh L. McColl Jr.
Title: President and Chief
Executive Officer
A-25
<PAGE>
APPENDIX B
<PAGE>
PERSONAL AND CONFIDENTIAL
November 18, 1997
Board of Directors
NationsBank Corporation
NationsBank Corporate Center
100 North Tryon Street
Charlotte, North Carolina 28255
Ladies and Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to the holders of NationsBank Corporation (the "Company") Common Stock (the
"Company Shares"), of the exchange ratio of 1.1875 Company Shares to be
exchanged (the "Exchange Ratio") for each share of Common Stock, par value $2.00
per share (the "Barnett Shares") of Barnett Banks, Inc. ("Barnett"), pursuant to
the merger (the "Merger") contemplated by the Agreement and Plan of Merger dated
as of August 29, 1997, among the Company, NB Holdings Corporation, a
wholly-owned subsidiary of the Company, and Barnett (the "Agreement").
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with the Company, having provided certain investment banking services
to the Company from time to time, including having both acted as lead manager in
a $50,000,000 debt offering and having executed a stock repurchase program in
1997, and having acted as financial advisor in connection with, and having
participated in certain of the negotiations leading to, the Agreement. We also
have provided certain investment banking services to Barnett from time to time.
In addition, Goldman Sachs is a full service securities firm and in the course
of its trading activities may from time to time effect transactions, for its own
account or the account of customers, and hold positions in securities or options
of the Company and Barnett.
In connection with this opinion, we have reviewed, among other things, the
Agreement; Annual Reports to Stockholders and Annual Reports on Form 10-K of the
Company and Barnett for the five years ended December 31, 1996; certain interim
reports to stockholders and Quarterly Reports on Form 10-Q of the Company and
Barnett; certain other communications from the Company and Barnett to their
stockholders; and certain internal financial analyses and financial forecasts
including forecasts of certain cost savings (the "Synergies") expected by the
Company to be achieved as a result of the Merger. We also have held discussions
with members of the senior management of the Company and Barnett regarding the
past and current business operations, regulatory relationships, financial
condition and future prospects of the Company and Barnett. We also have reviewed
with members of the senior management of the Company the results of the
Company's due diligence examination of Barnett and the strategic benefits
expected to be derived from the Merger. In addition, we have reviewed the
reported price and trading activity for the Company Shares and Barnett Shares,
compared certain financial and stock market information for the Company and
Barnett with similar information for certain other companies the securities of
which are publicly traded, reviewed the financial terms of certain recent
business combinations in the commercial banking industry and performed such
other studies and analyses as we considered appropriate.
We have relied upon the accuracy and completeness of all the financial and
other information reviewed by us and assumed such accuracy and completeness for
purposes of this opinion. In that regard, we have assumed, with your consent,
that the financial forecasts, including, without limitation, the Synergies and
projections regarding under-performing and non-performing assets and net
charge-offs have been reasonably prepared on a basis reflecting the best
currently available judgments and estimates of the Company and Barnett and that
such forecasts will be realized in the amounts and at the times contemplated
thereby. We are not experts in the evaluation of loan and lease portfolios for
purposes of assessing the adequacy of the allowances for losses with respect
thereto and have assumed, with your consent, that such allowances for each of
the Company and Barnett are in the aggregate adequate to cover all such losses.
In addition, we have not reviewed individual credit files nor have we made an
independent evaluation or appraisal of the assets and liabilities of the Company
or Barnett or any of their respective subsidiaries and we have not been
furnished with any such evaluation or appraisal. We also have assumed, with your
consent, that the Merger will be accounted for as a pooling of
B-1
<PAGE>
interests under generally accepted accounting principles and that obtaining any
necessary regulatory approvals and third party consents for the Merger or
otherwise will not have an adverse effect on the Company, Barnett or the
combined company pursuant to the Merger.
Our advisory services and the opinion expressed herein are provided for the
information and assistance of the Board of Directors of the Company in
connection with its consideration of the transaction contemplated by the
Agreement and such opinion does not constitute a recommendation as to how any
holder of the Company Shares should vote with respect to such transaction.
Based upon and subject to the foregoing and based upon such other matters
as we consider relevant, it is our opinion that as of the date hereof of the
Exchange Ratio pursuant to the Agreement is fair from a financial point of view
to the holders of Company Shares.
Very truly yours,
/s/________GOLDMAN, SACHS & CO.________
B-2
<PAGE>
APPENDIX C
<PAGE>
November 18, 1997
Board of Directors
NationsBank Corporation
100 North Tryon
Charlotte, NC 28255
Members of the Board:
We understand that NationsBank Corporation ("NationsBank") and Barnett Banks,
Inc. ("Barnett") have entered into an Agreement and Plan of Merger (the
"Agreement") dated August 29, 1997 pursuant to which Barnett is to be merged
with and into NB Holdings Corporation, a wholly owned subsidiary of NationsBank,
in a transaction (the "Merger") in which each outstanding share of Barnett's
common stock, par value $2.00 per share (the "Barnett Shares"), will be
converted into the right to receive 1.1875 shares (the "Exchange Ratio") of the
common stock of NationsBank (the "NationsBank Shares"), all as set forth more
fully in the Agreement. In connection with the Merger, the parties entered into
agreements, each dated August 29, 1997, (the "Option Agreements") pursuant to
which NationsBank and Barnett granted to the other an option to acquire, under
certain circumstances, a certain number of their respective outstanding common
shares, all as set forth more fully in the Option Agreements.
You have asked us whether, in our opinion, the Exchange Ratio is fair from a
financial point of view to the holders of NationsBank Shares (the "NationsBank
Shareholders").
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed certain publicly available business and financial information
relating to NationsBank and Barnett that we deemed to be relevant;
(2) Reviewed certain information, including financial forecasts, relating
to the respective businesses, earnings, assets, liabilities and
prospects of NationsBank and Barnett furnished to us by senior
management of NationsBank and Barnett as well as the amount and timing
of the cost savings and related expenses expected to result from the
Merger furnished to us by senior management of NationsBank and Barnett
(the "Expected Synergies");
(3) Conducted discussions with members of senior management of NationsBank
and Barnett concerning the matters described in clauses (1) and (2)
above, as well as their respective businesses and prospects before and
after giving effect to the Merger and the Expected Synergies;
(4) Reviewed the market prices and valuation multiples for the NationsBank
Shares and the Barnett Shares and compared them with those of certain
publicly traded companies which we deemed to be relevant;
(5) Reviewed the respective financial condition and results of operations
of NationsBank and Barnett and compared them with those of certain
publicly traded companies which we deemed to be relevant;
(6) Compared the proposed financial terms of the Merger with the financial
terms of certain other transactions which we deemed to be relevant;
(7) Participated in certain discussions and negotiations among
representatives of NationsBank and Barnett and their financial and
legal advisors;
(8) Reviewed the potential pro forma impact of the Merger;
(9) Reviewed the Agreement and Plan of Merger and the Option Agreements;
and
(10) Reviewed such other financial studies and analyses and took into
account such other matters as we deemed necessary under the
circumstances, including our assessment of general economic, market
and monetary conditions.
In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us,
discussed with or reviewed by or for us, or publicly available, and
C-1
<PAGE>
we have not assumed responsibility for independently verifying such information
or undertaken an independent evaluation or appraisal of the assets or
liabilities of NationsBank or Barnett or been furnished any such evaluation or
appraisal. We are not experts in the evaluation of allowances for loan losses,
and we have neither made an independent evaluation of the adequacy of the
allowance for loan losses of NationsBank or Barnett, nor reviewed any individual
credit files relating to NationsBank or Barnett, and, as a result, we have
assumed that the aggregate allowance for loan losses for each of NationsBank and
Barnett is adequate to cover such losses and will be adequate on a pro forma
basis for the combined entity. In addition, we have not assumed any obligation
to conduct, nor have we conducted, any physical inspection of the properties or
facilities of NationsBank or Barnett. With respect to the financial forecast
information and Expected Synergies furnished to or discussed with us by
NationsBank and Barnett, we have assumed that they have been reasonably prepared
and reflect the best currently available estimates and judgements of the senior
management of NationsBank and Barnett as to the expected future financial
performance of NationsBank, Barnett or the combined entity, as the case may be.
We have further assumed that the Merger will be accounted for as a pooling-
of-interests under generally accepted accounting principles and that it will
qualify as a tax-free reorganization for U.S. federal income tax purposes.
Our opinion is necessarily based upon market, economic and other conditions as
they exist and can be evaluated on, and on the information made available to us
as of the date hereof. We have assumed that in the course of obtaining the
necessary regulatory or other approvals (contractual or otherwise) for the
Merger, no restrictions, including any divestiture requirements or amendments or
modifications, will be imposed that will have a material adverse affect on the
contemplated benefits of the Merger, including the Expected Synergies.
We have been retained by the Board of Directors of NationsBank to act as
financial advisor to NationsBank in connection with the Merger and will receive
a fee for our services, a significant portion of which is contingent upon the
consummation of the Merger. In addition, NationsBank has agreed to indemnify us
for certain liabilities arising out of our engagement. We have in the past two
years provided financial advisory, investment banking and other services to
NationsBank and Barnett and received customary fees for the rendering of such
services. In the ordinary course of our securities business, we also may
actively trade debt and/or equity securities of NationsBank and Barnett and
their respective affiliates for our own account and the accounts of our
customers, and we therefore may from time to time hold a long or short position
in such securities.
This opinion is for the use and benefit of the Board of Directors of
NationsBank. Our opinion does not address the merits of the underlying decision
by NationsBank to engage in the Merger and does not constitute a recommendation
to any shareholder as to how such shareholder should vote on the proposed
Merger.
We are not expressing any opinion herein as to the prices at which NationsBank
Shares will trade following the announcement or consummation of the Merger.
On the basis of and subject to the foregoing, we are of the opinion that, as of
the date hereof, the Exchange Ratio is fair from a financial point of view to
the NationsBank Shareholders.
Very truly yours,
/s/ Merrill Lynch, Pierce, Fenner &
Smith Incorporated
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
C-2
<PAGE>
APPENDIX D
<PAGE>
MORGAN STANLEY
MORGAN STANLEY & CO.
INCORPORATED
1585 BROADWAY
NEW YORK, NEW YORK 10036
(212) 761-4000
November 18, 1997
Board of Directors
Barnett Banks, Inc.
50 North Laura Street
Jacksonville, FL 32202-3638
Members of the Board:
We understand that Barnett Banks, Inc. ("Barnett" or the "Company"),
NationsBank Corporation ("NationsBank") and NB Holdings Corporation, a
wholly-owned subsidiary of NationsBank ("Merger Sub") have entered into an
Agreement and Plan of Merger, dated as of August 29, 1997, as amended by a
certain amendment, dated as of November 18, 1997 (as amended, the "Merger
Agreement"), which provides, among other things, for the merger (the "Merger")
of Barnett with and into Merger Sub. Pursuant to the Merger, each outstanding
share of common stock, par value $2.00 per share, of Barnett (the "Barnett
Common Stock"), other than shares held in treasury or held by NationsBank or any
affiliate of NationsBank, will be converted into the right to receive 1.1875
shares (the "Exchange Ratio") of common stock of NationsBank (the "NationsBank
Common Stock") and cash in lieu of fractional shares. The terms and conditions
of the Merger are more fully set forth in the Merger Agreement.
You have asked for our opinion as to whether the Exchange Ratio pursuant to
the Merger Agreement is fair from a financial point of view to the holders of
shares of Barnett Common Stock (other than NationsBank and its affiliates).
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of Barnett and NationsBank, respectively;
(ii) reviewed certain internal financial statements and other financial
and operating data concerning Barnett prepared by the management of
Barnett;
(iii) analyzed certain financial projections prepared by the management
of Barnett;
(iv) discussed the past and current operations and financial condition and
the prospects of Barnett and NationsBank with senior executives of
Barnett and NationsBank, respectively;
(v) reviewed the reported prices and trading activity for the Barnett
Common Stock and NationsBank Common Stock;
(vi) compared the financial performance of Barnett and NationsBank and the
prices and trading activity of the Barnett Common Stock and the
NationsBank Common Stock with that of certain other comparable
publicly traded companies and their securities;
(vii) discussed the results of regulatory examinations of Barnett and
NationsBank with senior managements of the respective companies;
(viii) discussed with senior managements of Barnett and NationsBank the
strategic objectives of the Merger and their estimates of the
synergies and other benefits of the Merger for the combined
company;
D-1
<PAGE>
(ix) analyzed the pro forma impact of the Merger on the combined company's
earnings per share, consolidated capitalization and financial ratios;
(x) reviewed the financial terms, to the extent publicly available, of
certain comparable merger transactions;
(xi) participated in discussions and negotiations among representatives of
Barnett and NationsBank (and certain other parties) and their
financial and legal advisors;
(xii) reviewed the Merger Agreement between Barnett and NationsBank, and
certain related documents; and
(xiii) performed such other analyses and considered such other factors as
we have deemed appropriate.
We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for the purposes of
this opinion. With respect to the financial projections, including the synergies
and other benefits expected to result from the Merger, we have assumed that they
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the future financial performance of Barnett and
NationsBank. We have not made any independent valuation or appraisal of the
assets or liabilities of Barnett or NationsBank, nor have we been furnished with
any such appraisals and we have not examined any individual loan credit files of
Barnett and NationsBank. In addition, we have assumed the Merger will be
consummated substantially in accordance with the terms set forth in the Merger
Agreement. Our opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available to us as of, the
date hereof.
We have acted as financial advisor to the Board of Directors of Barnett in
connection with this transaction and will receive a fee for our services. In the
past, Morgan Stanley & Co. Incorporated and its affiliates have provided
financial advisory and financing services for Barnett and NationsBank, and have
received fees for the rendering of these services.
It is understood that this letter is for the information of the Board of
Directors of Barnett and that we express no opinion and make no recommendation
as to how the holders of Barnett Common Stock should vote at the stockholders'
meeting held in connection with the Merger.
Based on the foregoing, we are of the opinion on the date hereof that the
Exchange Ratio pursuant to the Merger Agreement is fair from a financial point
of view to the holders of shares of Barnett Common Stock (other than NationsBank
and its affiliates).
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ WILLIAM M. WEIANT______________
William M. Weiant
Managing Director
D-2
<PAGE>
APPENDIX E
<PAGE>
J.P. Morgan Securities Inc.
60 Wall Street
New York, NY
10260-0060
November 18, 1997
The Board of Directors
Barnett Banks, Inc.
P.O. Box 40789
Jacksonville, Florida 32203-0789
Ladies and Gentlemen:
You have requested our opinion as to the fairness, from a financial point
of view, to the holders of common stock of Barnett Banks, Inc. (the "Company")
of the Exchange Ratio (as defined below) in the proposed merger (the "Merger")
of the Company with NationsBank Corporation ("NationsBank"). Pursuant to the
Agreement and Plan of Merger, dated as of August 29, 1997, as amended (the
"Agreement"), by and between the Company and NationsBank, the Company will merge
with and into a subsidiary of NationsBank, and stockholders of the Company will
receive for each share of common stock, par value $2.00 per share, of the
Company (including each "Company Right", as defined in the Agreement) held by
them consideration equal to 1.1875 shares of common stock of NationsBank (the
"Exchange Ratio"), subject to adjustment as set forth in the Agreement.
In arriving at our opinion, we have reviewed (i) the Agreement; (ii) the
Joint Proxy Statement-Prospectus of the Company and NationsBank; (iii) certain
publicly available information concerning the business of the Company and of
certain other companies engaged in businesses comparable to those of the
Company, and the reported market prices for certain other companies' securities
deemed comparable; (iv) publicly available terms of certain transactions
involving companies comparable to the Company and the consideration received for
such companies; (v) current and historical market prices of the common stock of
the Company and NationsBank; and (vi) the audited financial statements of the
Company and NationsBank for the fiscal year ended December 31, 1996, and the
unaudited financial statements of the Company and NationsBank for the period
ended June 30, 1997.
In addition, we have held discussions with certain members of the
management of the Company and NationsBank with respect to certain aspects of the
Merger, and the past and current business operations of the Company and
NationsBank, the financial condition and future prospects and operations of the
Company and NationsBank, the effects of the Merger on the financial condition
and future prospects of the Company and NationsBank, and certain other matters
we believed necessary or appropriate to our inquiry. We have reviewed such other
financial studies and analyses and considered such other information as we
deemed appropriate for the purposes of this opinion.
In giving our opinion, we have relied upon and assumed, without independent
verification, the accuracy and completeness of all information that was publicly
available or otherwise reviewed by us, and we have not assumed any
responsibility or liability therefor. We have not conducted any valuation or
appraisal of any assets or liabilities, nor have any such valuations or
appraisals been provided to us. We have not been requested to review individual
credit files or make any independent assessment as to the future performance or
non-performance of the Company's or NationsBank's assets. We have assumed that
current allowances and reserves for loan losses for both the Company and
NationsBank are sufficient to cover all such losses. We have also assumed that,
in the course of obtaining regulatory and third party consents for the Merger
and the other transactions contemplated by the Agreement, no restriction will be
imposed that will have a material adverse effect on the future results of
operations or financial condition of the Company or NationsBank. We have also
assumed that the Merger will have the tax consequences described in discussions
with, and materials furnished to us by representatives of the Company, and that
the other transactions contemplated by the Agreement will be consummated as
described in the Agreement. We have relied as to all legal matters relevant to
rendering our opinion upon the advice of counsel.
E-1
<PAGE>
The Board of Directors
Barnett Banks, Inc.
November 18, 1997
Page 2
Our opinion is necessarily based on economic, market and other conditions
as in effect on, and the information made available to us as of, the date
hereof. It should be understood that subsequent developments may affect this
opinion and that we do not have any obligation to update, revise, or reaffirm
this opinion. We are expressing no opinion herein as to the price at which
NationsBank's stock will trade at any future time.
We have acted as financial advisor to the Company with respect to the
proposed Merger and will receive a fee from the Company for our services. We
will also receive an additional fee if the proposed Merger is consummated. We
maintain customary banking relationships with the Company and NationsBank. In
the ordinary course of their businesses, our affiliates may actively trade the
debt and equity securities of the Company or NationsBank for their own account
or for the accounts of customers and, accordingly, they may at any time hold
long or short positions in such securities.
On the basis of and subject to the foregoing, it is our opinion as of the
date hereof that the Exchange Ratio in the proposed Merger is fair, from a
financial point of view, to the holders of common stock of the Company.
This letter is provided to the Board of Directors of the Company in
connection with and for the purposes of its evaluation of the Merger. This
opinion does not constitute a recommendation to any stockholder of the Company
as to how such stockholder should vote with respect to the Merger.
Very truly yours,
J.P. MORGAN SECURITIES INC.
By: /s/ NICHOLAS B. PAUMGARTEN_________
NAME: NICHOLAS B. PAUMGARTEN
TITLE: MANAGING DIRECTOR
E-2
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
There are no provisions in the registrant's Articles of Incorporation, and
no contracts between the registrant and its directors and officers nor
resolutions adopted by the registrant, relating to indemnification. The
registrant's Articles of Incorporation prevent the recovery by the registrant of
monetary damages against its directors. However, in accordance with the
provisions of the North Carolina Business Corporation Act (the "Act"), the
registrant's Bylaws provide that, in addition to the indemnification of
directors and officers otherwise provided by the Act, the registrant shall,
under certain circumstances, indemnify its current or former directors and
officers against any and all liability and litigation expense, including
reasonable attorney's fees, arising out of their status or activities as
directors and officers, except for liability or litigation expense incurred on
account of activities that were at the time known or believed by such director
or officer to be clearly in conflict with the best interests of the registrant.
Pursuant to such Bylaw, the registrant may also maintain insurance on behalf of
its directors and officers against liability asserted against such persons in
such capacity whether or not such directors or officers have the right to
indemnification pursuant to the Bylaw or otherwise.
Sections 55-8-50 through 55-8-58 of the Act contain provisions prescribing
the extent to which directors and officers shall or may be indemnified. Section
55-8-51 of the Act permits a corporation, with certain exceptions, to indemnify
a present or former director against liability if (i) the director conducted
himself in good faith, (ii) the director reasonably believed (x) that the
director's conduct in the director's official capacity with the corporation was
in its best interests and (y) in all other cases the director's conduct was at
least not opposed to the corporation's best interests, and (iii) in the case of
any criminal proceeding, the director had no reasonable cause to believe the
director's conduct was unlawful. A corporation may not indemnify a director in
connection with a proceeding by or in the right of the corporation in which the
director was adjudged liable to the corporation or in connection with a
proceeding charging improper personal benefit to the director. The above
standard of conduct is determined by the board of directors, or a committee or
special legal counsel or the shareholders as prescribed in Section 55-8-55.
Sections 55-8-52 and 55-8-56 of the Act require a corporation to indemnify
a director or officer in the defense of any proceeding to which the director or
officer was a party against reasonable expenses when the director or officer is
wholly successful in the director's or officer's defense, unless the articles of
incorporation provide otherwise. Upon application, the court may order
indemnification of the director or officer if the director or officer is
adjudged fairly and reasonably so entitled under Section 55-8-54.
In addition, Section 55-8-57 permits a corporation to provide for
indemnification of directors, officers, employees or agents, in its articles of
incorporation or bylaws or by contract or resolution, against liability in
various proceedings and to purchase and maintain insurance policies on behalf of
these individuals.
The foregoing is only a general summary of certain aspects of North
Carolina law dealing with indemnification of directors and officers and does not
purport to be complete. It is qualified in its entirety by reference to the
relevant statutes, which contain detailed specific provisions regarding the
circumstances under which and the person for whose benefit indemnification shall
or may be made and accordingly are set forth in Exhibit 99.10 hereto and
incorporated herein by reference.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following exhibits are filed herewith or incorporated herein by
reference.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ --------------------------------------------------------------------------------------------------------------
<C> <C> <S>
2.1 -- Agreement and Plan of Merger, by and between Barnett Banks, Inc. and NationsBank Corporation, dated as of
August 29, 1997, included as Appendix A to the accompanying Joint Proxy Statement-Prospectus.
2.2 -- Amendment to Agreement and Plan of Merger by and among Barnett Banks, Inc., NationsBank Corporation and NB
Holdings Corporation, dated as of November 18, 1997.
4.1 -- Form of Certificate of Designations for NationsBank Corporation $2.50 Cumulative Convertible Preferred Stock,
Series BB.
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ --------------------------------------------------------------------------------------------------------------
<C> <C> <S>
5.1 -- Opinion of Paul J. Polking Esq., Executive Vice President and General Counsel of NationsBank Corporation.
8.1 -- Opinion of Wachtell, Lipton, Rosen & Katz.
8.2 -- Form of Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
10.1 -- Employment Agreement, dated as of October 10, 1997, by and between NationsBank Corporation and Charles E.
Rice.
10.2 -- Employment Agreement, dated as of October 10, 1997, by and between NationsBank Corporation and Allen L.
Lastinger, Jr.
10.3 -- Employment Agreement, dated as of October 10, 1997, by and between NationsBank Corporation and Hinton F.
Nobles, Jr.
10.4 -- Employment Agreement, dated as of October 10, 1997, by and between NationsBank Corporation and Charles W.
Newman.
10.5 -- Employment Agreement, dated as of October 10, 1997, by and between NationsBank Corporation and Richard A.
Anderson.
10.6 -- Employment Agreement, dated as of October 10, 1997, by and between NationsBank Corporation and Judith S.
Beaubouef.
12.1 -- Statement re Computation of Earnings to Combined Fixed Charges and Preferred Stock Dividends.
23.1 -- Consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated.
23.2 -- Consent of Goldman, Sachs & Co.
23.3 -- Consent of J.P. Morgan Securities Inc.
23.4 -- Consent of Morgan, Stanley & Co. Incorporated.
23.5 -- Consent of Paul J. Polking, Esq., Executive Vice President and General Counsel of NationsBank Corporation,
included in Exhibit 5.1 to this Registration Statement.
23.6 -- Consent of Wachtell, Lipton, Rosen & Katz, included in Exhibit 8.2 to this Registration Statement.
23.7 -- Consent of Arthur Andersen LLP.
23.8 -- Consent of Price Waterhouse LLP.
23.9 -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP.
24.1 -- Power of Attorney and Certified Resolutions.
99.1 -- Stock Option Agreement, dated as of August 29, 1997, by and between Barnett Banks, Inc. (as issuer) and
NationsBank Corporation (as grantee).
99.2 -- Stock Option Agreement, dated as of August 29, 1997, by and between NationsBank Corporation (as issuer) and
Barnett Banks, Inc. (as grantee).
99.3 -- Consent of Charles E. Rice to the use of his name as a person about to become a director of NationsBank
Corporation.
99.4 -- Notice of Special Meeting of Shareholders of NationsBank Corporation.
99.5 -- Chief Executive Officer's Letter to Shareholders of NationsBank Corporation.
99.6 -- Notice of Special Meeting of Shareholders of Barnett Banks, Inc.
99.7 -- Chairman's Letter to Shareholders of Barnett Banks, Inc.
99.8 -- Form of Proxy for Special Meeting of Shareholders of NationsBank Corporation.
99.9 -- Form of Proxy for Special Meeting of Shareholders of Barnett Banks, Inc.
99.10 -- Provisions of North Carolina law regarding indemnification of directors and officers (incorporated herein by
reference to Exhibit 99.1 of the NationsBank Corporation Registration Statement on Form S-3, Registration No.
33-63097).
</TABLE>
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
II-2
<PAGE>
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change in such information in the registration
statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at the time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) The undersigned registrant hereby undertakes that prior to any public
reoffering of the securities registered hereunder through use of a prospectus
which is a part of this registration statement, by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the information called
for by the applicable registration form with respect to reofferings by persons
who may be deemed underwriters, in addition to the information called for by the
other items of the applicable form.
(d) The undersigned registrant hereby undertakes that every prospectus (i)
that is filed pursuant to paragraph (c) immediately preceding, or (ii) that
purports to meet the requirements of Sections 10(a)(3) of the Securities Act and
is used in connection with an offering of securities subject to Rule 415, will
be filed as a part of an amendment to the registration statement and will not be
used until such amendment is effective, and that, for purposes of determining
any liability under the Securities Act, each such post-effective amendment shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(e) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(f) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(g) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Charlotte, State of North
Carolina, this 18th day of November, 1997.
NATIONSBANK CORPORATION
(Registrant)
By: _________________*_________________
HUGH L. MCCOLL, JR.
CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on this 18th day of November, 1997.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
- ------------------------------------------------------ ------------------------------------------------------------------
<S> <C>
* Chief Executive Officer and Director
HUGH L. MCCOLL, JR. (Principal Executive Officer)
* Vice Chairman and Chief Financial Officer
JAMES H. HANCE, JR. (Principal Financial Officer)
* Executive Vice President
MARC D. OKEN (Principal Accounting Officer)
* Chairman of the Board and Director
ANDREW B. CRAIG, III
* Director
RONALD W. ALLEN
* Director
RAY C. ANDERSON
* Director
WILLIAM M. BARNHARDT
* Director
B.A. BRIDGEWATER, JR.
* Director
THOMAS E. CAPPS
* Director
CHARLES W. COKER
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
- ------------------------------------------------------ ------------------------------------------------------------------
<S> <C>
* Director
THOMAS G. COUSINS
* Director
ALAN T. DICKSON
* Director
PAUL FULTON
* Director
TIMOTHY L. GUZZLE
* Director
C. RAY HOLMAN
* Director
W. W. JOHNSON
* Director
RUSSELL W. MEYER
* Director
JOHN J. MURPHY
* Director
RICHARD B. PRIORY
* Director
JOHN C. SLANE
* Director
O. TEMPLE SLOAN, JR.
* Director
JOHN W. SNOW
* Director
MEREDITH R. SPANGLER
* Director
ALBERT E. SUTER
* Director
RONALD TOWNSEND
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
- ------------------------------------------------------ ------------------------------------------------------------------
<S> <C>
* Director
JACKIE M. WARD
* Director
VIRGIL R. WILLIAMS
* By: /s/CHARLES M. BERGER
CHARLES M. BERGER, ATTORNEY-IN-FACT
</TABLE>
II-6
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ --------------------------------------------------------------------------------------------------------------
<C> <C> <S>
2.1 -- Agreement and Plan of Merger, by and between Barnett Banks, Inc. and NationsBank Corporation, dated as of
August 29, 1997, included as Appendix A to the accompanying Joint Proxy Statement-Prospectus.
2.2 -- Amendment to Agreement and Plan of Merger by and among Barnett Banks, Inc., NationsBank Corporation and NB
Holdings Corporation, dated as of November 18, 1997.
4.1 -- Form of Certificate of Designations for NationsBank Corporation $2.50 Cumulative Convertible Preferred Stock,
Series BB.
5.1 -- Opinion of Paul J. Polking Esq., Executive Vice President and General Counsel of NationsBank Corporation.
8.1 -- Opinion of Wachtell, Lipton, Rosen & Katz.
8.2 -- Form of Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
10.1 -- Employment Agreement, dated as of October 10, 1997, by and between NationsBank Corporation and Charles E.
Rice.
10.2 -- Employment Agreement, dated as of October 10, 1997, by and between NationsBank Corporation and Allen L.
Lastinger, Jr.
10.3 -- Employment Agreement, dated as of October 10, 1997, by and between NationsBank Corporation and Hinton F.
Nobles, Jr.
10.4 -- Employment Agreement, dated as of October 10, 1997, by and between NationsBank Corporation and Charles W.
Newman.
10.5 -- Employment Agreement, dated as of October 10, 1997, by and between NationsBank Corporation and Richard A.
Anderson.
10.6 -- Employment Agreement, dated as of October 10, 1997, by and between NationsBank Corporation and Judith S.
Beaubouef.
12.1 -- Statement re Computation of Earnings to Combined Fixed Charges and Preferred Stock Dividends.
23.1 -- Consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated.
23.2 -- Consent of Goldman, Sachs & Co.
23.3 -- Consent of J.P. Morgan Securities Inc.
23.4 -- Consent of Morgan, Stanley & Co. Incorporated.
23.5 -- Consent of Paul J. Polking, Esq., Executive Vice President and General Counsel of NationsBank Corporation,
included in Exhibit 5.1 to this Registration Statement.
23.6 -- Consent of Wachtell, Lipton, Rosen & Katz, included in Exhibit 8.2 to this Registration Statement.
23.7 -- Consent of Arthur Andersen LLP.
23.8 -- Consent of Price Waterhouse LLP.
23.9 -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP.
24.1 -- Power of Attorney and Certified Resolutions.
99.1 -- Stock Option Agreement, dated as of August 29, 1997, by and between Barnett Banks, Inc. (as issuer) and
NationsBank Corporation (as grantee).
99.2 -- Stock Option Agreement, dated as of August 29, 1997, by and between NationsBank Corporation (as issuer) and
Barnett Banks, Inc. (as grantee).
99.3 -- Consent of Charles E. Rice to the use of his name as a person about to become a director of NationsBank
Corporation.
99.4 -- Notice of Special Meeting of Shareholders of NationsBank Corporation.
99.5 -- Chief Executive Officer's Letter to Shareholders of NationsBank Corporation.
99.6 -- Notice of Special Meeting of Shareholders of Barnett Banks, Inc.
99.7 -- Chairman's Letter to Shareholders of Barnett Banks, Inc.
99.8 -- Form of Proxy for Special Meeting of Shareholders of NationsBank Corporation.
99.9 -- Form of Proxy for Special Meeting of Shareholders of Barnett Banks, Inc.
99.10 -- Provisions of North Carolina law regarding indemnification of directors and officers (incorporated herein by
reference to Exhibit 99.1 of the NationsBank Corporation Registration Statement on Form S-3, Registration No.
33-63097).
</TABLE>
<PAGE>
EXHIBIT 2.2
AMENDMENT
TO
AGREEMENT AND PLAN OF MERGER
AMENDMENT, dated as of November 18, 1997 (this "Amendment") among
NationsBank Corporation, a North Carolina corporation ("NationsBank"), NB
Holdings Corporation, a Delaware corporation and wholly-owned subsidiary of
NationsBank ("Merger Sub"), and Barnett Banks, Inc., a Florida corporation ("the
Company").
WHEREAS, NationsBank and the Company have previously entered into that
certain Agreement and Plan of Merger, dated as of August 29, 1997 (the
"Agreement"); and
WHEREAS, such persons wish to amend the Agreement, pursuant to Sections
2.01 and 9.02 of the Agreement, in the manner set forth below;
NOW, THEREFORE, the parties hereto agree as follows;
1. All capitalized terms used and not defined herein shall have the
meanings given them in the Agreement, and each reference in this Agreement to
"this Agreement", "hereof", "herein", "hereunder" or "hereby" and each other
similar reference shall be deemed to refer to the Agreement as amended hereby.
All references to the Agreement in any other agreement between NationsBank and
the Company relating to the transactions contemplated by the Agreement shall be
deemed to refer to the Agreement as amended hereby.
2. The first paragraph on page 1 of the Agreement is hereby amended and
restated in its entirety to read as follows:
AGREEMENT AND PLAN OF MERGER, dated as of August 29, 1997 (this
"Agreement"), by and among Barnett Banks, Inc., a Florida corporation (the
"Company"), NationsBank Corporation, a North Carolina corporation
("NationsBank") and NB Holdings Corporation, a Delaware corporation and a
wholly-owned subsidiary of NationsBank (subject to Section 1.01 hereof,
"Merger Sub").
3. The first recital to the Agreement is hereby amended by deleting the
words "with and into NationsBank so that NationsBank" and substituting therefor
the words "with and into Merger Sub so that Merger Sub".
4. Section 1.01 is hereby amended by inserting the following definitions in
appropriate alphabetical order therein:
"Merger Sub" shall have the meaning set forth in the introductory
paragraph to this Agreement, or, at the sole election of NationsBank and
subject to compliance with Section 2.01 hereof, shall mean a wholly-owned
subsidiary of NationsBank organized by NationsBank to effect the Merger.
"Merger Sub Common Stock" shall have the meanings set forth in Section
3.01(c) of this Agreement.
5. Section 1.01 is hereby further amended by inserting the following before
the period in the definition of "Subsidiary" and "Significant Subsidiary": ";
provided that for purposes of Article V, Merger Sub shall be deemed a
Significant Subsidiary of NationsBank"
6. Section 2.01(a) is hereby amended by deleting each reference to
"NationsBank" in the first sentence thereof and substituting in each case the
words "Merger Sub", and by deleting the words "North Carolina" and substituting
therefor the word "Delaware".
7. Section 2.01(a) is hereby further amended by deleting from the second
sentence thereof the words "a wholly-owned subsidiary of".
8. Section 2.01(b) is hereby amended by deleting the phrase "the Secretary
of State of North Carolina" and substituting therefor the phrase "the Secretary
of State of the State of Delaware"; by deleting the phrase "Section 11-05 of the
General and Business Corporation Act of North Carolina (the "NCBCA") and by
substituting therefor the phrase "Section 252 of the General Corporation Law of
the State of Delaware (the "DGCL")"; and by deleting from the last sentence
thereof the phrase "Section 11-06 of the NCBCA" and substituting therefor the
phrase "Sections 259 and 261 of the DGCL".
<PAGE>
9. Section 2.01(c) is hereby amended by deleting the word "NationsBank" and
substituting therefor the words "Merger Sub".
10. Section 3.01 is hereby amended by adding at the end thereof a new
subsection (c), to read in its entirety as follows:
(c) OUTSTANDING MERGER SUB COMMON STOCK. Each share of the common
stock of Merger Sub (the "Merger Sub Common Stock") issued and outstanding
immediately prior to the Effective Time shall be unchanged and shall remain
issued and outstanding as common stock of the Surviving Corporation.
11. Section 5.03(b) is hereby amended by adding at the end thereof a new
paragraph (iii), to read in its entirety as follows:
(iii) In case of the representations and warranties of NationsBank,
the outstanding shares of Merger Sub Common Stock are (or, if NationsBank
should designate Merger Sub to be an entity other than NB Holdings
Corporation pursuant hereto, at the Effective Time will be) validly issued
and outstanding, fully paid and nonassessable, and subject to no preemptive
rights.
12. Section 5.03(d) is hereby amended by inserting between the words "and
it has" and "the corporate power" and following the phrase: "(and, in the case
of the representations and warranties of NationsBank, Merger Sub has or, if
NationsBank should designate Merger Sub to be an entity other than NB Holdings
Corporation pursuant hereto, will have at the Effective Time)".
13. Section 5.03(e) is hereby amended by inserting between at the end
thereof the following:
This Agreement and the transactions contemplated hereby have been (or, if
NationsBank should designate Merger Sub to be an entity other than NB
Holdings Corporation pursuant hereto, at the Effective Time will have been)
authorized by all necessary corporate and stockholder action of Merger Sub,
and this Agreement is (or, if NationsBank should designate Merger Sub to be
an entity other than NB Holdings Corporation pursuant hereto, at the
Effective Time will be) a legal, valid and binding agreement of Merger Sub,
enforceable in accordance with its terms (except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar laws of general applicability
relating to or affecting creditors' rights or by general equity
principles).
14. Section 7.08 is hereby amended by (A) amending and restating clause (i)
thereof to state in its entirety as follows:
(i) No gain or loss will be recognized by NationsBank, the Company or
Merger Sub as a result of the Merger;
and (B) by substituting for the phrase "NationsBank, the Company and others" in
the last sentence thereof the phrase "NationsBank, the Company and Merger Sub
and others".
15. Upon execution and delivery of this Amendment by each of the parties
hereto, Merger Sub shall become a party to the Agreement with such rights and
obligations as are provided herein and therein.
16. This Amendment shall be governed by and construed in accordance with
the laws of the state of New York, without regard to the conflict of law
principles thereof.
17. This Amendment may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
18. Except as expressly amended hereby, the Agreement shall remain in full
force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
BARNETT BANKS, INC.
By: /s/ Charles W. Newman
-----------------------
Name: Charles W. Newman
Title: Chief Financial Officer
NATIONSBANK CORPORATION
By: /s/ John E. Mack
------------------
Name: John E. Mack
Title: Senior Vice President
and Treasurer
NB HOLDINGS CORPORATION
By: /s/ John E. Mack
-----------------
Name: John E. Mack
Title: Senior Vice President
and Treasurer
[Amendment to Agreement and Plan of Merger]
<PAGE>
EXHIBIT 4.1
FORM
OF
ARTICLES OF AMENDMENT
TO
RESTATED ARTICLES OF INCORPORATION
OF
NATIONSBANK CORPORATION
(Pursuant to Sections 55-6-02 and 55-10-02 of the North Carolina Business
Corporation Act)
The undersigned corporation hereby submits these Articles of Amendment for
the purpose of amending its Restated Articles of Incorporation:
I. The name of the corporation is NationsBank Corporation.
II. On , 1997, pursuant to Section 55-6-02 of the North
Carolina Business Corporation Act, the following amendment to the Restated
Articles of Incorporation was duly adopted by the Board of Directors of the
Corporation (the "Board of Directors" or the "Board") (shareholder approval
was not required because the action was taken before issuance of any shares
of the series affected):
The Restated Articles of Incorporation of the Corporation are hereby
amended by adding the following after Section (b) of Article 3 thereof as
Section (c) of such Article 3:
(c) $2.50 Cumulative Convertible Preferred Stock, Series BB.
A. DESIGNATION.
The designation of this is "$2.50 Cumulative Convertible Preferred Stock,
Series BB" (hereinafter referred to as "Series BB Preferred Stock"), and the
initial number of shares constituting such series shall be 20,000,000, which
number may be increased or decreased (but not below the number of shares then
outstanding) from time to time by the Board of Directors. The Series BB
Preferred Stock shall rank prior to each of the Common Stock, the Series BB
Preferred Stock and the ESOP Preferred Stock with respect to the payment of
dividends and the distribution of assets.
B. DIVIDEND RIGHTS.
(1) The holders of shares of Series BB Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors, out of funds legally
available therefor, cumulative preferential cash dividends, accruing from the
date of issuance, at the annual rate of $2.50 per share, and no more, payable
quarterly on the first day of January, April, July and October of each year
(each of the quarterly periods ending on the last day of March, June, September
and December being hereinafter referred to as a "dividend period"). Dividends on
the Series BB Preferred Stock shall first become payable on the first day of
January, April, July or October, as the case may be, next following the date of
issuance, provided, however, that if the first dividend period ends within 20
days of the date of issuance, such initial dividend shall be payable at the
completion of the first full dividend period.
(2) Dividends on shares of Series BB Preferred Stock shall be cumulative
from the date of issuance whether or not there shall be funds legally available
for the payment thereof. Accumulations of dividends on the Series BB Preferred
Stock shall not bear interest. The Corporation shall not (i) declare or pay or
set apart for payment any dividends or distributions on any stock ranking as to
dividends junior to the Series BB Preferred Stock (other than dividends paid in
shares of such junior stock) or (ii) make any purchase or redemption of, or any
sinking fund payment for the purchase or redemption of, any stock ranking as to
dividends junior to the Series BB Preferred Stock (other than a purchase or
redemption made by issue or delivery of such junior stock) unless all dividends
payable on all outstanding shares of, Series BB Preferred Stock for all past
dividend periods shall have been paid in full or declared and a sufficient sum
set apart for payment thereof; provided, however, that any moneys theretofore
deposited in any sinking fund with respect to any preferred stock of the
1
<PAGE>
Corporation in compliance with the provisions of such sinking fund may
thereafter be applied to the purchase or redemption of such preferred stock in
accordance with the terms of such sinking fund regardless of whether at the time
of such application all dividends payable on all outstanding shares of Series BB
Preferred Stock for all past dividend periods shall have been paid in full or
declared and a sufficient sum set apart for payment thereof.
(3) All dividends declared on shares of Series BB Preferred Stock and any
other class of preferred stock or series thereof ranking on a parity as to
dividends with the Series BB Preferred Stock shall be declared pro rata, so that
the amounts of dividends declared on the Series BB Preferred Stock and such
other preferred stock for the same dividend period, or for the dividend period
of the Series BB Preferred Stock ending within the dividend period of such other
stock, shall, in all cases, bear to each other the same ratio that accrued
dividends on the shares of Series BB Preferred Stock and such other stock bear
to each other.
C. LIQUIDATION PREFERENCE.
(1) In the event of any liquidation, dissolution or winding up of the
affairs of the Corporation, whether voluntary or involuntary, the holders of
Series BB Preferred Stock shall be entitled to receive out of the assets of the
Corporation available for distribution to shareholders an amount equal to $25
per share plus an amount equal to accrued and unpaid dividends thereon to and
including the date of such distribution, and no more, before any distribution
shall be made to the holders of any class of stock of the Corporation ranking
junior to the Series BB Preferred Stock as to the distribution of assets.
(2) In the event the assets of the Corporation available for distribution
to shareholders upon any liquidation, dissolution or winding up of the affairs
of the Corporation, whether voluntary or involuntary, shall be insufficient to
pay in full the amounts payable with respect to the Series BB Preferred Stock
and any other shares of preferred stock of the Corporation ranking on a parity
with the Series BB Preferred Stock as to the distribution of assets, the holders
of Series BB Preferred Stock and the holders of such other preferred stock shall
share ratably in any distribution of assets of the Corporation in proportion to
the full respective preferential amounts to which they are entitled.
(3) The merger or consolidation of the Corporation into or with any other
corporation, the merger or consolidation of any other corporation into or with
the Corporation or the sale of the assets of the Corporation substantially as an
entirety shall not be deemed a liquidation, dissolution or winding up of the
affairs of the Corporation within the meaning of this Paragraph C.
D. REDEMPTION.
(1) The Corporation, at its option, may redeem all or any shares of the
Series BB Preferred Stock at any time at a redemption price (the "Redemption
Price") consisting of the sum of (i) of $25 per share and (ii) an amount equal
to accrued and unpaid dividends thereon to and including the date of redemption.
(2) If less than all the outstanding shares of Series BB Preferred Stock
are to be redeemed, the shares to be redeemed shall be selected pro rate as
nearly as practicable or by lot, as the Board of Directors may determine.
(3) Notice of any redemption shall be given by first class mail, postage
prepaid, mailed not less than 60 nor more than 90 days prior to the date fixed
for redemption to the holders of record of the shares of Series BB Preferred
Stock to be redeemed, at their respective addresses appearing on the books of
the Corporation. Notice so mailed shall be conclusively presumed to have been
duly given whether or not actually received. Such notice shall state: (1) the
date fixed for redemption; (2) the Redemption Price; (3) the right of the
holders of Series BB Preferred Stock to convert such stock into Common Stock
until the close of business on the 15th day prior to the redemption date (or the
next succeeding business day, if the 15th day is not a business day); (4) if
less than all the shares held by such holder are to be redeemed, the number of
shares to be redeemed from such holder, and (5) the place(s) where certificates
for such shares are to be surrendered for payment of the Redemption Price. If
such notice is mailed as aforesaid, and if on or before the date fixed for
redemption funds sufficient to redeem the shares called for redemption are set
aside by the Corporation in trust for the account of the holders of the shares
to be redeemed, notwithstanding the fact that any certificate for shares called
for redemption shall not have been surrendered for cancellation, on and after
the redemption date the shares represented thereby so called for redemption
shall be deemed to be no longer outstanding, dividends thereon shall cease to
2
<PAGE>
accrue, and all rights of the holders of such shares as shareholders of the
Corporation shall cease, except the right to receive the Redemption Price,
without interest, upon surrender of the certificate(s) representing such shares.
Upon surrender in accordance with the aforesaid notice of the certificate(s) for
any shares so redeemed (duly endorsed or accompanied by appropriate instruments
of transfer, if so required by the Corporation in such notice), the holders of
record of such shares shall be entitled to receive the Redemption Price, without
interest.
(4) At the option of the Corporation, if notice of redemption is mailed as
aforesaid, and if prior to the date fixed for redemption funds sufficient to pay
in full the Redemption Price are deposited in trust, for the account of the
holders of the shares to be redeemed, with a bank or trust company named in such
notice doing business in the Borough of Manhattan, The City of New York, State
of New York or the City of Charlotte, State of North Carolina and having
capital, surplus and undivided profits of at least $3 million, which bank or
trust company also may be the Transfer Agent and/or Paying Agent for the Series
BB Preferred Stock, notwithstanding the fact that any certificate for shares
called for redemption shall not have been surrendered for cancellation, on and
after such date of deposit the shares represented thereby so called for
redemption shall be deemed to be no longer outstanding, and all rights of the
holders of such shares as shareholders of the Corporation shall cease, except
the right of the holders thereof to convert such shares in accordance with the
provisions of Paragraph F at any time prior to the close of business on the 15th
day prior to the redemption date (or the next succeeding business day, if the
15th day is not a business day), and the right of the holders thereof to receive
out of the funds so deposited in trust the Redemption Price, without interest,
upon surrender of the certificate(s) representing such shares. Any funds so
deposited with such bank or trust company in respect of shares of Series BB
Preferred Stock converted before the close of business on the 15th day prior to
the redemption date (or the next succeeding business day, if the 15th day is not
a business day) shall be returned to the Corporation upon such conversion. Any
funds so deposited with such a bank or trust company which shall remain
unclaimed by the holders of shares called for redemption at the end of six years
after the redemption date shall be repaid to the Corporation, on demand, and
thereafter the holder of any such shares shall look only to the Corporation for
the payment, without interest, of the Redemption Price.
(5) Any provisions of Paragraph D or E to the contrary notwithstanding, in
the event that any quarterly dividend payable on the Series BB Preferred Stock
shall be in arrears and until all such dividends in arrears shall have been paid
or declared and set apart for payment, the Corporation shall not redeem any
shares of Series BB Preferred Stock unless all outstanding shares of Series BB
Preferred Stock are simultaneously redeemed and shall not purchase or otherwise
acquire any shares of Series BB Preferred Stock except in accordance with a
purchase offer made by the Corporation on the same terms to all holders of
record of Series BB Preferred Stock for the purchase of all outstanding shares
thereof.
E. Purchase by the Corporation. Except as provided in Paragraph D(5), the
Corporation shall be obligated to purchase shares of Series BB Preferred Stock
tendered by the holder thereof for purchase hereunder, at a purchase price
consisting of the sum of (i) $25 per share and (ii) an amount equal to accrued
and unpaid dividends thereon to and including the date of purchase. In order to
exercise his right to require the Corporation to purchase his shares of Series
BB Preferred Stock, the holder thereof shall surrender the Certificate(s)
therefor duly endorsed if the Corporation shall so require or accompanied by
appropriate instruments of transfer satisfactory to the Corporation, at the
office of the Transfer Agent(s) for the Series BB Preferred Stock, or at such
other office as may be designated by the Corporation, together with written
notice that such holder irrevocably elects to sell such shares to the
Corporation. Shares of Series BB Preferred Stock shall be deemed to have been
purchased by the Corporation immediately prior to the close of business on the
date such shares are tendered for sale to the Corporation and notice of election
to sell the same is received by the Corporation in accordance with the foregoing
provisions. As of such date the shares so tendered for sale shall be deemed to
be no longer outstanding, dividends thereon shall cease to accrue and all rights
of the holder of such shares as a shareholder of the Corporation shall cease,
except the right to receive the purchase price.
F. CONVERSION RIGHTS.
The holders of shares of Series BB Preferred Stock shall have the right, at
their option, to convert such shares into shares of Common Stock on the
following terms and conditions:
3
<PAGE>
(1) Shares of Series BB Preferred stock shall be convertible at any time
into fully paid and nonassessable shares of Common Stock (calculated as to each
conversion to the nearest 1/1,000 of a share) at the initial rate of 6.17215
shares of Common Stock for each share of Series BB Preferred Stock surrendered
for conversion (the "Conversion Rate"). The Conversion Rate shall be subject to
adjustment from time to time as hereinafter provided. No payment or adjustment
shall be made on account of any accrued and unpaid dividends on shares of Series
BB Preferred Stock surrendered for conversion prior to the record date for the
determination of shareholders entitled to such dividends or on account of any
dividends on the Common Stock issued upon such conversion subsequent to the
record date for the determination of shareholders entitled to such dividends. If
any shares of Series BB Preferred Stock shall be called for redemption, the
right to convert the shares designated for redemption shall terminate at the
close of business on the 15th day prior to the redemption date (or the next
succeeding business day, if the 15th day is not a business day) unless default
be made in the payment, of the Redemption Price. In the event of default in the
payment of the Redemption Price, the right to convert the shares designated for
redemption shall terminate at the close of business on the business day
immediately preceding the date that such default is cured.
(2) In order to convert shares of Series BB Preferred Stock into Common
Stock, the holder thereof shall surrender the certificate(s) therefor, duly
endorsed if the Corporation shall so require, or accompanied by appropriate
instruments of transfer satisfactory to the Corporation, at the office of the
Transfer Agent(s) for the Series BB Preferred Stock, or at such other office as
may be designated by the Corporation, together with written notice that such
holder irrevocably elects to convert such shares. Such notice shall also state
the name(s) and address(es) in which such holder wishes the certificate(s) for
the shares of Common Stock issuable upon conversion to be issued. As soon as
practicable after receipt of the certificate(s) representing the shares of
Series BB Preferred Stock to be converted and the notice of election to convert
the same, the Corporation shall issue and deliver at said office a certificate
or certificates for the number of whole shares of Common Stock issuable upon
conversion of the shares of Series BB Preferred Stock surrendered for
conversion, together with a cash payment in lieu of any fraction of a share, as
hereinafter provided, to the person(s) entitled to receive the same. Shares of
Series BB Preferred Stock shall be deemed to have been converted immediately
prior to the close of business on the date such shares are surrendered for
conversion and notice of election to convert the same is received by the
Corporation in accordance with the foregoing provisions, and the person(s)
entitled to receive the Common Stock issuable upon such conversion shall be
deemed for all purposes as record holder(s) of such Common Stock as of such
date.
(3) No fractional shares of Common Stock shall be issued upon conversion of
any shares of Series BB Preferred Stock. If more than one share of Series BB
Preferred Stock is surrendered at one time by the same holder, the number of
full shares issuable upon conversion thereof shall be computed on the basis of
the aggregate number of shares so surrendered. If the conversion of any shares
of Series BB Preferred Stock results in a fractional share of Common Stock, the
Corporation shall pay cash in lieu thereof in an amount equal to such fraction
multiplied times the closing price of the Common Stock on the date on which the
shares of Series BB Preferred Stock were duly surrendered for conversion, or if
such date is not a trading date, on the next succeeding trading date. The
closing price of the Common Stock for any day shall mean the last reported sales
price regular way on such day or, in case no such sale takes place on such day,
the average of the reported closing bid and asked prices, regular way, on the
New York Stock Exchange, or, if the Common Stock is not then listed on such
Exchange, on the principal national securities exchange on which the Common
Stock is listed for trading, or, if not then listed for trading on any national
securities exchange, the average of the closing bid and asked prices of the
Common Stock as furnished by the National Quotation Bureau, Inc., or if the
National Quotation Bureau, Inc. ceases to furnish such information, by a
comparable independent securities quotation service.
(4) In the event the Corporation shall at any time (i) pay a dividend or
make a distribution to holders of Common Stock in shares of Common Stock, (ii)
subdivide its outstanding shares of Common Stock into a larger number of shares,
or (iii) combine its outstanding shares of Common Stock into a smaller number of
shares, the Conversion Rate in effect at the time of the record date for such
dividend or distribution or the effective date of such subdivision or
combination shall be adjusted so that the holder of any shares of Series BB
Preferred Stock surrendered for conversion after such record date or effective
date shall be entitled to receive the number of shares of Common Stock which he
would have owned or have been entitled to receive immediately
4
<PAGE>
following such record date or effective date had such shares of Series BB
Preferred Stock been converted immediately prior thereto.
(5) Whenever the Conversion Rate shall be adjusted as herein provided (i)
the Corporation shall forthwith keep available at the office of the Transfer
Agent(s) for the Series BB Preferred Stock a statement describing in reasonable
detail the adjustment, the facts requiring such adjustment and the method of
calculation used; and (ii) the Corporation shall cause to be mailed by first
class mail, postage prepaid, as soon as practicable to each holder of record of
shares of Series BB Preferred Stock a notice stating that the Conversion Rate
has been adjusted and setting forth the adjusted Conversion Rate.
(6) In the event of any consolidation of the Corporation with or merger of
the Corporation into any other corporation (other than a merger in which the
Corporation is the surviving corporation) or a sale of the assets of the
Corporation substantially as an entirety, the holder of each share of Series BB
Preferred Stock shall have the right, after such consolidation, merger or sale
to convert such share into the number and kind of shares of stock or other
securities and the amount and kind of property receivable upon such
consolidation, merger or sale by a holder of the number of shares of Common
Stock issuable upon conversion of such share of Series BB Preferred Stock
immediately prior to such consolidation, merger or sale. Provision shall be made
for adjustments in the Conversion Rate which shall be as nearly equivalent as
may be practicable to the adjustments provided for in Paragraph F(4). The
provisions of this Paragraph F(6) shall similarly apply to successive
consolidations, mergers and sales.
(7) The Corporation shall pay any taxes that may be payable in respect of
the issuance of shares of Common Stock upon conversion of shares of Series BB
Preferred Stock, but the Corporation shall not be required to pay any taxes
which may be payable in respect of any transfer involved in the issuance of
shares of Common Stock in a name other than that in which the shares of Series
BB Preferred Stock so converted are registered, and the Corporation shall not be
required to issue or deliver any such shares unless and until the person(s)
requesting such issuance shall have paid to the Corporation the amount of any
such taxes, or shall have established to the satisfaction of the Corporation
that such taxes have been paid.
(8) The Corporation shall at all times reserve and keep available out of
its authorized but unissued Common Stock the full number of shares of Common
Stock issuable upon the conversion of all shares of Series BB Preferred Stock
then outstanding.
(9) In the event that:
(i) The Corporation shall declare a dividend or any other distribution
on its Common Stock, payable otherwise than in cash out of retained
earnings; or
(ii) The Corporation shall authorize the granting to the holders of
its Common Stock of rights to subscribe for or purchase any shares of
capital stock of any class or of any other rights; or
(iii) The Corporation shall propose to effect any consolidation of the
Corporation with or merger of the Corporation with or into any other
corporation or a sale of the assets of the company substantially as an
entirety which would result in an adjustment under Paragraph F(6),
the Corporation shall cause to be mailed to the holders of record of Series BB
Preferred Stock at least 20 days prior to the applicable date hereinafter
specified a notice stating (x) the date on which a record is to be taken for the
purpose of such dividend, distribution or rights or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution or rights are to be determined or (y) the date on
which such consolidation, merger or sale is expected to become effective, and
the date as of which it is expected that holders of Common Stock of record shall
be entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such consolidation, merger or sale. Failure to give
such notice, or any defect therein, shall not affect the legality or validity of
such dividend, distribution, consolidation, merger or sale.
G. VOTING RIGHTS.
Holders of Series BB Preferred Stock shall have no voting rights except as
required by law and as follows: in the event that any quarterly dividend payable
on the Series BB Preferred Stock is in arrears, the holders of
5
<PAGE>
Series BB Preferred Stock shall be entitled to vote together with the holders of
Common Stock at the Corporation's next meeting of shareholders and at each
subsequent meeting of shareholders unless all dividends in arrears have been
paid or declared and set apart for payment prior to the date of such meeting.
For the purpose of this Paragraph G, each holder of Series BB Preferred Stock
shall be entitled to cast the number of votes equal to the number of whole
shares of Common Stock into which his Series BB Preferred Stock is then
convertible.
H. REACQUIRED SHARES.
Shares of Series BB Preferred Stock converted, redeemed, or otherwise
purchased or acquired by the Corporation shall be restored to the status of
authorized but unissued shares of preferred stock without designation as to
series.
I. NO SINKING FUND.
Shares of Series BB Preferred Stock are not subject to the operation of a
sinking fund.
* * *
This the ___ day of __________, 1997.
NATIONSBANK CORPORATION
By:
---------------------------------------
Name:
Title:
6
<PAGE>
EXHIBIT 5.1
November 18, 1997
NationsBank Corporation
NationsBank Corporate Center
100 North Tryon Street
Charlotte, North Carolina 28255
Re: Registration Statement on Form S-4 Related to the Acquisition of Barnett
Banks, Inc.
Ladies and Gentlemen:
I and other members of my staff have acted as counsel to NationsBank
Corporation, a North Carolina corporation ( the "Corporation"), in connection
with the preparation and filing of a Registration Statement on Form S-4 (the
"Registration Statement") relating to the issuance of up to: (i) 265,000,000
shares of the Corporation's Common Stock and (the "Common Stock"), and (ii)
8,489 shares of the Corporation's $2.50 Cumulative Preferred Stock, Series BB
(the "Series BB Preferred Stock" and, together with the Common Stock, the
"Securities") to be issued by the Corporation in connection with the merger of
Barnett Banks, Inc. with and into a wholly owed subsidiary of the Corporation.
In rendering this opinion, I have examined such corporate records and other
documents, and I have reviewed such matters of law, as I have deemed necessary
or appropriate. Based on the foregoing, I am of the opinion that the Securities
are legally authorized and, when the Registration Statement has been declared
effective by order of the Securities and Exchange Commission and the Securities
have been issued and paid for upon the terms and conditions set forth in the
Registration Statement, the Securities will be validly issued, fully paid and
nonassessable.
I hereby consent to be named in the Registration Statement and in the
related joint proxy statement-prospectus contained therein as the attorney who
passed upon the legality of the Securities, and to the filing of a copy of this
opinion as Exhibit 5.1 to the Registration Statement.
Very truly yours,
/s/ Paul J. Polking
PAUL J. POLKING
Executive Vice President
and General Counsel
<PAGE>
EXHIBIT 8.1
November 18, 1997
NationsBank Corporation
100 North Tryon Street
Charlotte, North Carolina 28255
Ladies/Gentlemen:
We have acted as special counsel to NationsBank Corporation, a North
Carolina corporation ("NationsBank"), in connection with the proposed merger
(the "Merger") of Barnett Banks, Inc. ("Barnett"), a Florida corporation
("Barnett"), with and into NB Holdings Corporation, a Delaware corporation and a
wholly-owned subsidiary of NationsBank ("NB Holdings"), upon the terms and
conditions set forth in the Agreement and Plan of Merger dated as of August 29,
1997, by and among NationsBank, NB Holdings and Barnett (the "Agreement"). At
your request, in connection with the filing of the Registration Statement on
Form S-4 filed with the Securities Exchange Commission in connection with the
Merger (the "Registration Statement"), we are rendering our opinion concerning
certain federal income tax consequences of the Merger.
For purposes of the opinion set forth below, we have relied, with the
consent of NationsBank and the consent of Barnett, upon the accuracy and
completeness of the statements and representations (which statements and
representations we have neither investigated nor verified) contained,
respectively, in the certificates of the officers of NationsBank and Barnett
(copies of which are attached hereto and which are incorporated herein by
reference), and have assumed that such certificates will be complete and
accurate as of the Effective Time. We have also relied upon the accuracy of the
Registration Statement and the Joint Proxy Statement-Prospectus included therein
(together, the "Proxy Statement"). Any capitalized term used and not defined
herein has the meaning given to it in the Proxy Statement or the appendices
thereto (including the Agreement).
We have also assumed that (i) the transactions contemplated by the
Agreement will be consummated in accordance therewith and as described in the
Proxy Statement, (ii) the Merger will qualify as a statutory merger under the
applicable laws of the States of Florida and Delaware and (iii) treating any
obligations between NationBank (or its subsidiaries) and Barnett (or its
subsidiaries) as satisfied and reissued in connection with the Merger would not
have a significant effect on any person's federal income tax liability.
Based upon and subject to the foregoing, it is our opinion that, under
currently applicable United States federal income tax law, the Merger will
constitute a "reorganization" within the meaning of Section 368(a) of the Code
and that, accordingly:
(i) No gain or loss will be recognized by NationsBank, NB Holdings or
Barnett as a result of the Merger;
<PAGE>
(ii) No gain or loss will be recognized by the holders of Barnett
Common Stock who exchange all of their Barnett Common Stock
solely for NationsBank Common Stock pursuant to the Merger
(except with respect to cash received in lieu of a fractional
share interest in NationsBank Common Stock); and
(iii) The aggregate tax basis of the NationsBank Common Stock received
by holders of Barnett Common Stock who exchange all of their
Barnett Common Stock solely for NationsBank Common Stock
pursuant to the Merger will be the same as the aggregate tax
basis of the Barnett Common Stock surrendered in exchange
therefor (reduced by any amount allocable to the fractional
share interest in NationsBank Common Stock for which cash is
received).
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement, and to the
references to us under the caption "SUMMARY -- Certain Federal Income Tax
Consequences", under the caption "THE MERGER -- Certain Federal Income Tax
Consequences" and elsewhere in the Proxy Statement. In giving such consent, we
do not thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended.
Very truly yours,
/s/ Wachtell, Lipton, Rosen & Katz
2
FORM OF
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
TAX OPINION
[DATE]
Barnett Banks, Inc.
50 North Laura Street
Jacksonville, Florida 32202
Ladies and Gentlemen:
We have acted as counsel to Barnett Banks, Inc., a Florida corporation
("Barnett"), in connection with the contemplated merger (the "Merger") under the
laws of the States of Florida and Delaware of Barnett with and into NB Holdings
Corporation ("NB Holdings"), a Delaware corporation and a wholly-owned
subsidiary of NationsBank Corporation, a North Carolina corporation
("NationsBank"), pursuant to the Agreement and Plan of Merger, dated as of
August 29, 1997, by and between Barnett and NationsBank, as amended (the "Merger
Agreement"). The delivery of this opinion, dated as of the Effective Time, is a
condition to the Merger pursuant to Section 7.08 of the Merger Agreement.(1)
In rendering our opinion, we have examined and relied upon the accuracy
and completeness of the facts, information, covenants and representations
contained in originals or copies, certified or otherwise identified to
our satisfaction, of the Merger Agreement, the Registration Statement, and
such other documents as we have deemed necessary or appropriate as a basis for
the opinion set forth below. In addition, we have relied upon certain
statements, representations and agreements made by Barnett, NationsBank and
others, including representations set forth in letters dated the date hereof
from officers of Barnett and NationsBank (the "Representation Letters"). Our
opinion is conditioned on, among other things, the initial and continuing
accuracy of the facts, information, covenants and representations set forth in
the documents referred to above and the statements, representations and
agreements made by Barnett and NationsBank, including those set forth in the
Representation Letters.
In our examination we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents
of all documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such documents. We also have assumed that the
transactions related to the Merger or contemplated by the Merger Agreement
will be consummated in accordance with the Merger Agreement and as described
in the Registration Statement, and that the Merger qualifies as a statutory
merger under the laws of the States of Florida and Delaware.
In rendering our opinion, we have considered applicable provisions
of the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
Regulations promulgated thereunder (the "Regulations"), pertinent judicial
authorities, rulings of the Internal Revenue Service and such other authorities
as we have considered relevant. It should be noted that such laws, Code,
Regulations, judicial decisions and administrative interpretations are subject
to change at any time and, in some circumstances, with retroactive effect.
A material change in any of the authorities upon which our opinion is based
could affect our conclusions herein.
Opinion
Based solely upon the foregoing, we are of the opinion that
the Merger will be treated, under current law, as a reorganization within the
meeting of section 368(a) of the Code and that, accordingly, for United States
federal income tax purposes:
(i) No gain or loss will be recognized by NationsBank, NB Holdings or
Barnett as a result of the Merger;
___________________
1 Unless otherwise indicated, all defined terms used herein shall have the
meanings assigned to them in NationsBank's Registration Statement on Form
S-4 (the "Registration Statement") filed in connection with the Merger
with the Securities and Exchange Commission under the Securities Act of
1933, as amended.
<PAGE>
Barnett Banks, Inc.
[DATE]
Page 2
(ii) No gain or loss will be recognized by the holders of Barnett
Common Stock who exchange all of their Barnett Common Stock solely for
NationsBank Common Stock pursuant to the Merger (except with respect to cash
received in lieu of a fractional share interest in NationsBank Common Stock);
and
(iii) The aggregate tax basis of the NationsBank Common Stock received by
holders of Barnett Common Stock who exchange all of their Barnett Common Stock
solely for NationsBank Common Stock pursuant to the Merger will be the same as
the aggregate tax basis of the Barnett Common Stock surrendered in exchange
therefor (reduced by any amount allocable to a fractional share interest
in NationsBank Common Stock for which cash is received).
The foregoing opinion may not be applicable to shareholders of
Barnett with respect to Barnett Common Stock which was acquired pursuant
to the exercise of employee stock options or rights or otherwise as
compensation.
Except as set forth above, we express no other opinion. We disclaim
any undertaking to advise you of any subsequent changes of the facts stated
or assumed herein or any subsequent changes in applicable law. We are
furnishing this opinion to you solely in connection with Section 7.08 of the
Merger Agreement. This opinion is solely for your benefit and is not to be
used, circulated, quoted or otherwise referred to for any purpose without our
express written permission.
Very truly yours,
2
<PAGE>
<PAGE>
EMPLOYMENT AGREEMENT
by and between
NATIONSBANK CORPORATION
and
CHARLES E. RICE
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of October 10, 1997, by and between Charles E. Rice
(the "Executive") and NationsBank Corporation, a North Carolina corporation (the
"Corporation").
The Executive is currently employed by Barnett Banks, Inc., a Florida
corporation ("Barnett"), as Chairman and Chief Executive Officer and is a party
to an employment agreement with Barnett (the "Prior Agreement") dated as of July
1, 1996. Pursuant to the Agreement and Plan of Merger, dated as of August 29,
1997 (the "Merger Agreement"), by and between the Corporation and Barnett,
Barnett will merge (the "Merger") with and into the Corporation (or a
wholly-owned subsidiary of the Corporation) as of the "Effective Time" (as
defined in the Merger Agreement).
The Board of Directors of the Corporation (the "Board") recognizes that
the Executive will contribute significantly to the growth and success of the
Corporation following the Effective Time. The Board desires to provide for the
continued employment of the Executive and to encourage the attention and
dedication to the Corporation of the Executive as a member of the Corporation's
management, in the best interests of the Corporation and its shareholders. The
Executive is willing to commit himself to serve the Corporation on the terms and
conditions herein provided.
In order to effect the foregoing, the Corporation and the Executive
wish to enter into an employment agreement on the terms and conditions set forth
below. This Agreement shall become effective only at the Effective Time. If the
Effective Time does not occur, this Agreement shall be of no force and effect.
Accordingly, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Employment; Term. The Corporation hereby agrees to employ the
Executive, and the Executive hereby accepts such employment, on the terms and
conditions hereinafter set forth. The period of employment of the Executive by
the Corporation hereunder (the "Employment Period") shall commence on the date
(the "Effective Date") on which the Effective Time occurs and shall end on the
Executive's Date of Termination (as defined in Section 8(b) hereof). The term of
this Agreement (the "Term") shall begin on the Effective Date and shall end on
the third anniversary thereof.
2. Prior Agreement. As of the Effective Date, the Prior Agreement is
hereby amended and superseded in its entirety by the terms and provisions of
this Agreement.
3. Position and Duties. As of the Effective Date, the Executive shall
serve as a member of the Board and of the Corporation's Executive Committee.
Immediately upon the retirement of the Corporation's current Chairman of the
Board, the Executive shall serve as Chairman of the Board, in which capacity the
Executive shall perform the usual and customary duties of the chairman of the
board of a major United States financial institution. As of the
<PAGE>
Effective Date, the Executive shall also represent the Corporation at
appropriate national trade association and industry group meetings, including
but not limited to the International Financial Conference (Golembe Group) and
the Annual CEO Conference. The Corporation agrees to support the Executive's
election and reelection to the Board during the Term. Following termination of
the Executive's employment hereunder for any reason other than for Cause, the
Executive shall continue to serve as a director of the Corporation until the end
of the Term.
4. Place of Performance. In connection with the Executive's employment
by the Corporation, the Executive's principal business address shall be at
Barnett's current principal executive offices in Jacksonville, Florida or in
such other place as the Executive and the Corporation may agree.
5. Compensation and Related Matters.
(a) Base Salary. During the Employment Period, the Corporation
shall pay the Executive an annual base salary ("Base Salary") of $1,000,000 or,
if greater, an amount equal to the annual base salary in effect from time to
time for the Chief Executive Officer of the Corporation. Base Salary shall be
paid in approximately equal installments in accordance with the Corporation's
customary payroll practices. The salary payments (including any increased salary
payments) hereunder shall not in any way limit or reduce any other obligation of
the Corporation hereunder, and no other compensation, benefit or payment
hereunder shall in any way limit or reduce the obligation of the Corporation to
pay the Executive's salary hereunder.
(b) Bonuses. During the Employment Period, the Executive shall
receive annual bonuses (each an "Annual Bonus"), each of which shall be at least
equal to 100% of the annual bonus awarded to the Chief Executive Officer of the
Corporation; provided, however, that each Annual Bonus shall be no less than
$2,500,000. The Annual Bonus shall be paid at a time and in a manner consistent
with the time and manner in which the Annual Bonus is paid to the Chief
Executive Officer of the Corporation.
(c) Equity-Based Compensation. The Corporation shall grant to
the Executive (i) as of the Effective Date, 250,000 restricted shares of common
stock of the Corporation and (ii) as of the Effective Date and as of each of the
first two anniversaries of the Effective Date during the Employment Period, an
option to purchase 200,000 shares (subject to equitable adjustment in the event
of a stock split or similar event as provided in the Corporation's Key Employee
Stock Plan) of common stock of the Corporation, all pursuant to the
Corporation's Key Employee Stock Plan. Subject to the provisions hereof, (x) the
restrictions with respect to one-third of the shares subject to the grant
described in clause (i) of the preceding sentence shall lapse on each
anniversary of the Effective Date, (y) the options described in clause (ii) of
the preceding sentence shall become exercisable in three equal annual
installments commencing with the date of grant, provided that any such options
not yet exercisable on the last day of the Term shall become exercisable on such
day, and (z) all previously awarded and outstanding options described in clause
(ii) of the preceding sentence shall remain exercisable for the three-year
period commencing with the date of the Executive's termination of employment or
until the original expiration date of such options, if earlier.
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(d) Expenses. The Corporation shall promptly reimburse the
Executive for all reasonable business expenses incurred during the Employment
Period by the Executive in performing services hereunder, including all expenses
of travel and living expenses while away from home on business or at the request
of and in the service of the Corporation (including expenses incurred in
connection with Executive's attendance at the trade association and industry
group meetings referred to in Section 3 hereof), provided that such expenses are
incurred and accounted for in accordance with the policies and procedures
established by the Corporation.
(e) Other Benefits.
(i) During the Employment Period, the
Executive shall be entitled to participate in all of the
employee benefit plans and arrangements made available by the
Corporation to its executive officers, subject to and on a
basis consistent with the terms, conditions and overall
administration of such plans and arrangements, and shall be
entitled to all perquisites and special benefits provided to
senior executives of the Corporation.
(ii) Notwithstanding clause (i) above: (1)
the Corporation shall provide to the Executive and his spouse,
at the Corporation's expense, lifetime retiree medical
benefits equal to the medical benefits provided to retired
employees of the Corporation at the Effective Date or as the
same may be increased thereafter; and (2) during the
Employment Period and thereafter the Corporation shall provide
to the Executive, at the Corporation's expense, a home
security system and related security measures for the
Executive and his family, payment of club dues, unlimited use
of the Corporation's private planes (with all taxes associated
therewith paid by the Corporation on a grossed-up basis), use
of the Corporation's apartments, use of a Corporation
automobile (which shall be transferred to the Executive at his
request during the Term), an annual executive physical and
financial planning and tax preparation services, in each case
on a basis no less favorable than as provided by Barnett as of
the date hereof.
(iii) During the Employment Period and for a
reasonable period thereafter, the Executive shall be entitled
to remove from his office any and all items of personal
importance to him, including but not limited to furnishings
and any items of an ornamental or decorative nature. The
Corporation shall, at the Executive's request, transfer
ownership of any such items to the Executive.
(iv) Notwithstanding clause (i) above, as of
the Effective Date the Executive shall be designated a
participant in the NationsBank Corporation and Designated
Subsidiaries Supplemental Executive Retirement Plan ("SERP I")
which shall provide the Executive with a target annual
retirement benefit equal to sixty percent (60%) of the
Executive's final five-year average earnings, offset by the
Executive's annual retirement benefits from the Corporation's
tax-qualified defined benefit plan, the Corporation's ERISA
restoration plan, Barnett's tax-qualified defined benefit
plan, the Supplemental Executive Retirement Plan of Barnett
Banks, Inc. and its Affiliates (the "Barnett SERP"), any plan
maintained
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by any previous employer of the Executive (which previous
employer plan offset will be calculated in accordance with
Section 3.1(b)(1)(B) of the Barnett SERP as in effect on the
date hereof) and social security. The Executive shall be
credited with the Executive's service with, and compensation
from, Barnett prior to the Effective Date for purposes of
determining the Executive's SERP I target benefit. In no event
shall the annual retirement benefit payable to the Executive
from SERP I after the offsets listed above (the "Net SERP I
Benefit") be less than $1,825,000, and the Executive shall be
eligible to commence the Executive's Net SERP I Benefit upon
the Executive's attainment of age sixty-five (65). Upon the
Executive's death, his beneficiary shall be entitled to
receive until such beneficiary's death an annual benefit equal
to seventy-five percent (75%) of the Executive's Net SERP I
Benefit. Notwithstanding the foregoing provisions of this
clause, the Executive shall be entitled to receive the lump
sum value of the Executive's Net SERP I Benefit within thirty
(30) days following the Executive's Date of Termination (as
defined in Section 8(b) below) calculated using a discount
rate of five percent (5%) and the 1983 Group Annuity Mortality
Table and assuming a three year age difference between the
Executive and the Executive's spouse. Any such election to
receive a lump sum benefit may be made by the Executive's
delivery of a written election to the Corporation on, or at
any time after, the Effective Date. Such election may be made
by the Executive without the consent of the Corporation or any
administrative committee under SERP I, and no financial
penalty or other reduction in the lump sum value calculated
above shall be imposed as the result of such lump sum
election. In the event the Executive elects a lump sum payment
of the Executive's Net SERP I Benefit and dies prior to
receiving such payment, the lump sum value of the Executive's
Net SERP I Benefit (calculated as if the Executive had
terminated employment on the date prior to his death) shall be
paid to the Executive's estate or other designated
beneficiary. See Section 14(d) for special provisions related
to an income tax gross-up related to the Executive's Net SERP
I Benefit.
(f) Vacation. The Executive shall be entitled to (i) the
number of vacation days in each calendar year, (ii) compensation in respect of
earned but unused vacation days, and (iii) all paid holidays, in each case as
the same may be provided by the Corporation to its similarly situated executive
officers.
(g) Services Furnished. During the Employment Period, the
Corporation shall furnish the Executive with office space, stenographic
assistance and such other facilities and services as are provided to the
Executive by Barnett as of the date hereof. Following termination of the
Executive's employment hereunder for any reason, the Executive shall continue to
be provided with office space, stenographic assistance and such other facilities
and services that are commensurate with his former position.
6. Offices. Subject to Sections 3 and 4, the Executive agrees to serve
without additional compensation, if elected or appointed thereto, as a director
of any of the Corporation's subsidiaries and as a member of any committees of
the board of directors of any such corporations, and in one or more executive
positions of any of the Corporation's subsidiaries,
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provided that the Executive is indemnified for serving in any and all such
capacities on a basis no less favorable than is currently or may be provided to
any other director of the Corporation, any of its subsidiaries, or in connection
with any such executive position, as the case may be.
7. Termination. The Employment Period shall end in the event of a
termination of the Executive's employment in accordance with any of the
provisions of this Section 7, and the Term shall end in the event of a
termination of Executive's employment in accordance with the provisions of
subsection (c) of this Section 7, in each case, on the Executive's Date of
Termination (as defined in Section 8(b) below).
(a) Death. The Executive's employment hereunder shall
terminate upon his death.
(b) Disability. If, as a result of the Executive's incapacity
due to physical or mental illness, the Executive shall have been absent from the
full-time performance of his duties hereunder for the entire period of six
consecutive months, and within thirty (30) days after written Notice of
Termination (as defined in Section 8) is given shall not have returned to the
performance of his duties hereunder on a full-time basis, the Corporation may
terminate the Executive's employment hereunder for "Disability."
(c) Cause. The Corporation may terminate the Executive's
employment hereunder for Cause. For purposes of this Agreement, the Corporation
shall have "Cause" to terminate the Executive's employment hereunder upon the
occurrence of any of the following events:
(i) the conviction of the Executive
for the commission of a felony involving dishonesty with
respect to the Corporation; or
(ii) gross and willful misconduct by
the Executive that is demonstrably and materially injurious to
the Corporation or its subsidiaries, whether monetarily or
otherwise.
Cause shall not exist unless and until the Corporation has delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than two-thirds (2/3) of the entire membership of the Board at a meeting of
the Board called and held for such purpose (after reasonable notice to the
Executive and an opportunity for the Executive, together with his counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
the Executive was guilty of the conduct set forth in this Section 7(c) and
specifying the particulars thereof in detail. For purposes of this Section 7(c),
no act or failure to act on the Executive's part shall be considered "willful"
unless done or failed to be done by the Executive in bad faith and without
reasonable belief that the Executive's action or omission was in the best
interest of the Corporation.
(d) Good Reason. The Executive may terminate his employment
hereunder for "Good Reason." The Executive shall be deemed to have terminated
his employment for
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Good Reason if his employment terminates for any reason other than by the
Corporation for Cause.
8. Termination Procedure.
(a) Notice of Termination. Any termination of the Executive's
employment by the Corporation or by the Executive (other than termination
pursuant to Section 7(a) hereof) shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 13. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice that
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated.
(b) Date of Termination. "Date of Termination" shall mean (i)
if the Executive's employment is terminated pursuant to Section 7(a) above, the
date of the Executive's death, (ii) if the Executive's employment is terminated
pursuant to section 7(b) above, thirty (30) days after Notice of Termination is
given (provided that the Executive shall not have returned to the performance of
his duties on a full-time basis during such thirty (30) day-period), (iii) if
the Executive's employment is terminated pursuant to Section 7(c) above, the
date specified in the Notice of Termination, and (iv) if the Executive's
employment is terminated pursuant to Section 7(d) above, the date on which a
Notice of Termination is given or any later date (within 30 days) set forth in
such Notice of Termination; provided, however, that, if within thirty (30) days
after any Notice of Termination is given the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
binding and final arbitration award or by a final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom having expired
and no appeal having been perfected).
(c) Compensation During Dispute. If a purported termination
occurs during the Term and such termination is disputed in accordance with
subsection (b) of this Section 8, the Corporation shall continue to pay the
Executive the full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, salary) and continue the
Executive as a participant in all compensation, benefit and insurance plans in
which the Executive was participating when the notice giving rise to the dispute
was given, until the Date of Termination, determined in accordance with
subsection (b) of this Section 8. Amounts paid under this Section 8(c) are in
addition to all other amounts due under this Agreement and shall not be offset
against or reduce any other amounts due under this Agreement.
9. Compensation upon Termination or During Disability.
(a) Disability; Death. During any period that the Executive
fails to perform his duties hereunder as a result of incapacity due to physical
or mental illness ("Disability Period"), the Executive shall continue to receive
the Base Salary at the rate in effect at the beginning of such period as well as
all other payments and benefits set forth in Section 5 hereof, reduced by any
payments made to the Executive during the disability period under the disability
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benefit plans of the Corporation then in effect or under the Social Security
disability insurance program ("Disability Payments"). Subsequent to the
termination of the Executive's employment pursuant to Section 7(b), or in the
event the Executive's employment is terminated by reason of his death, the
Corporation shall pay to the Executive, his legal representative or his
successors (as described in Section 12(b)) the payments and benefits set forth
in subsection (b) of this Section 9.
(b) By the Corporation without Cause or by the Executive for
Good Reason. If during the Term the Executive's employment is terminated by the
Corporation other than for Cause or by the Executive for Good Reason, then:
(i) the Corporation shall pay the Executive
his Base Salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given; any bonus
payable hereunder in respect of a period which ended prior to
the Date of Termination and which had not yet been paid; and
an amount equal to the minimum bonus referred to in Section
5(b) hereof, multiplied by a fraction, the numerator of which
shall be the number of days from the beginning of the
applicable period to and including the Date of Termination and
the denominator of which shall be 365;
(ii) in lieu of any further salary or bonus
payments to the Executive for periods subsequent to the Date
of Termination, the Corporation shall pay as liquidated
damages to the Executive an aggregate amount equal to the
product of (A) the number of years (including fractions
thereof) remaining in the Term as of the Date of Termination
and (B) the sum of (1) the Executive's Base Salary rate in
effect as of the Date of Termination, and (2) the minimum
annual bonus referred to in Section 5(b) hereof, such amount
to be paid in a cash lump sum within five (5) days following
the Date of Termination;
(iii) all equity based awards described in
Section 5(c) hereof shall become fully vested and exercisable,
as applicable, and all options described in Section 5(c) that
are then outstanding shall remain exercisable for the
three-year period commencing with the Date of Termination;
(iv) the Corporation shall continue to
provide to the Executive the benefits described in Section
5(e)(i) hereof for the remainder of the Term. Welfare and
other insurance benefits otherwise receivable by the Executive
pursuant to this Section 9(b)(iv) shall be reduced to the
extent comparable benefits are actually received by the
Executive from a subsequent employer during the period during
which the Corporation is required to provide such benefits,
and the Executive shall report any such benefits actually
received to the Corporation; and
(v) if the Executive's employment is
terminated by the Corporation other than for Cause (and not by
the Executive for Good Reason), the Corporation shall grant to
the Executive an immediately exercisable option to
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purchase that number of shares of common stock of the
Corporation that he would have been granted pursuant to
Section 5(c) hereof during the remainder of the Term had his
employment not been terminated.
(c) By Corporation for Cause. If the Executive's employment
shall be terminated by the Corporation for Cause, then the Corporation shall pay
the Executive his Base Salary (at the rate in effect at the time Notice of
Termination is given) through the Date of Termination.
(d) Compensation Plans. Following any termination of the
Executive's employment, the Corporation shall pay the Executive all unpaid
amounts, if any, to which the Executive is entitled as of the Date of
Termination under any compensation plan or program of the Corporation, including
but not limited to any deferred compensation plan or program, at the time such
payments are due in accordance with and subject to the provisions of such plans
or programs.
(e) Mitigation. Except as is specifically provided in
subsection (b) (iv) of this Section 9, the Executive shall not be required to
mitigate the amount of any payment provided herein by seeking other employment
or otherwise, nor shall the amount of any payment or benefit provided hereunder
be reduced by any compensation earned by the Executive as the result of
employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Corporation, or otherwise.
10. Confidential Information; Non-Competition.
(a) Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Corporation all trade secrets,
confidential information, and knowledge or data relating to the Corporation and
its businesses, which shall have been obtained by the Executive during the
Executive's employment by the Corporation and which shall not have been or
hereafter become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). The Executive
shall not, without the prior written consent of the Corporation or as may
otherwise be required by law or legal process, communicate or divulge any such
trade secrets, information, knowledge or data to anyone other than the
Corporation and those designated by the Corporation. Any termination of the
Executive's employment or of this Agreement shall have no effect on the
continuing operation of this Section 10(a). The Executive agrees to return all
confidential information, including all photocopies, extracts and summaries
thereof, and any such information stored electronically on tapes, computer disks
or in any other manner to the Corporation at any time upon request by the
Corporation and upon the termination of his employment hereunder for any reason.
(b) Non-Competition. During the Employment Period and for a
period of two (2) years thereafter, the Executive shall not engage in
Competition, as defined below, with the Corporation in any locality or region of
the United States in which the Corporation had operations at the time of, or
within six (6) months prior to, the termination of the Executive's employment
hereunder; provided, that it shall not be a violation of this Section 10(b) for
the Executive to become the registered or beneficial owner of up to five percent
(5%) of any class of
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the capital stock of a competing corporation registered under the Securities
Exchange Act of 1934, as amended, provided that the Executive does not actively
participate in the business of such corporation until such time as this covenant
expires.
For purposes of this Agreement, Competition by the Executive
shall mean the Executive's engaging in, or otherwise directly or indirectly
being employed by or acting as a consultant (for the purposes of this Section
10, the Executive shall be a "consultant" if the Executive works forty (40) or
more hours for any one such entity in any ninety-day period) or lender to, or
being a director, officer, employee, principal, agent, stockholder (other than
as specifically provided for herein), member, owner or partner of, or permitting
his name to be used in connection with the activities of any other business or
organization anywhere in the United States which competes, directly or
indirectly, with the business of the Corporation as the same shall be
constituted at any time during the Employment Period.
11. Indemnification; Legal Fees. The Corporation shall indemnify the
Executive to the fullest extent permitted by the laws of the Corporation's state
of incorporation in effect at that time, or certificate of incorporation and
by-laws of the Corporation, whichever affords the greater protection to the
Executive. The Executive will be entitled to any insurance policies the
Corporation may elect to maintain generally for the benefit of its officers and
directors against all costs, charges and expenses incurred in connection with
any action, suit or proceeding to which he may be made a party by reason of
being a director or officer of the Corporation. The Corporation shall reimburse
the Executive for any legal fees and expenses incurred by the Executive
(including but not limited to the legal fees and expenses incurred pursuant to
Section 16 hereof) in contesting or disputing any termination of the Executive's
employment or in seeking to obtain or enforce any right or benefit provided by
this Agreement (or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), to any payment or benefit provided hereunder)
other than for any such expenses, costs, liabilities or legal fees incurred as a
result of the Executive's bad faith. Such payments shall be made within five (5)
days after the Executive's request for payment accompanied with such evidence of
fees and expenses incurred as the Corporation reasonably may require. Any
termination of the Executive's employment or of this Agreement shall have no
effect on the continuing operation of this Section 11.
12. Successors; Binding Agreement.
(a) Corporation's Successors. The Corporation will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Corporation to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Corporation would be required to perform
it if no such succession had taken place. Failure of the Corporation to obtain
such assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Executive to
compensation from the Corporation in the same amount and on the same terms as he
would be entitled to hereunder if he terminated his employment for Good Reason,
except that for purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Date of Termination. As
used in this Agreement, "Corporation" shall mean the Corporation as hereinbefore
defined
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and any successor to its business and/or assets as aforesaid which executes and
delivers the agreement provided for in this Section 12 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law.
(b) The Executive's Successors. This Agreement and all rights
of the Executive hereunder shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts would still be payable to him hereunder if he had
continued to live, all such amounts unless otherwise provided herein shall be
paid in accordance with the terms of this Agreement to the Executive's devisee,
legatee, or other designee or, if there be no such designee, to the Executive's
estate.
13. Notice. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive: Charles E. Rice
50 North Laura Street
Jacksonville, FL 32202
If to the Corporation: NationsBank Corporation
NationsBank Corporate Center
100 North Tryon Street
Charlotte, NC 28255
Attention: General Counsel
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
14. Additional Payment.
(a) If any of the payments provided for in this Agreement (the
"Contract Payments") or any portion of the Total Payments (as defined below)
will be subject to the tax (the "Excise Tax") imposed by section 4999 of the
Code, the Corporation shall pay to the Executive, no later than the fifth day
following the earlier of the date on which such payment is made and the Date of
Termination, an additional amount (the "Gross-Up Payment") such that the net
amount retained by the Executive, after deduction of any Excise Tax on the
Contract Payments and such other Total Payments and any federal and state and
local income, employment and other taxes and Excise Tax upon the payment
provided for by this subsection, shall be equal to the Contract Payments and
such other Total Payments.
(b) For purposes of determining whether any payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or
benefits received or to be
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received by the Executive in connection with an event described in section
280(G)(b)(2)(A)(i) of the Code (hereinafter, a "change in control"), or the
Executive's termination of employment pursuant to the terms of any plan,
arrangement or agreement with Barnett, the Corporation, its successors, any
person whose actions result in a change in control or any person affiliated with
the Corporation or such person (together with the Contract Payments, the "Total
Payments"), shall be treated as "parachute payments" within the meaning of
section 280G(b)(2) of the Code except to the extent that, in the opinion of tax
counsel selected by the Corporation's independent auditors and acceptable to the
Executive, the Total Payments do not constitute parachute payments, (ii) all
"excess parachute payments" within the meaning of section 280G(b)(1) shall be
treated as subject to the Excise Tax except to the extent that, in the opinion
of such tax counsel, such excess parachute payments represent reasonable
compensation for services actually rendered within the meaning of section
280G(b)(4)(B) of the Code in excess of the base amount within the meaning of
section 280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax,
and (iii) the value of any noncash benefits or any deferred payment or benefit
shall be determined by the Corporation's independent auditors in accordance with
the principles of sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be deemed to
pay federal income taxes at the highest marginal rate of federal income taxation
in the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in the state and
locality of the Executive's residence on the Date of Termination, net of the
maximum reduction in federal income taxes which could be obtained from
deductions of such state and local taxes.
(c) In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at the time
of termination of the Executive's employment, the Executive shall repay to the
Corporation at the time that the amount of such reduction in Excise Tax is
finally determined, the portion of the Gross-Up Payment attributable to such
reduction (plus the portion of the Gross-Up Payment attributable to the Excise
Tax and federal and state and local income tax imposed on the Gross-up Payment
being repaid by the Executive if such repayment results in a reduction in Excise
Tax and/or a federal and state and local income tax deduction) plus interest on
the amount of such repayment at the rate provided in section 1274(b)(2)(B) of
the Code. In the event that the Excise Tax is determined to exceed the amount
taken into account hereunder at the time of the termination of the Executive's
employment (including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Corporation shall
make an additional gross-up payment in respect of such excess (plus any interest
payable with respect to such excess) at the time that the amount of such excess
is finally determined.
(d) Notwithstanding any provision of this Agreement to the
contrary, in addition to the payment of the Executive's Net SERP I Benefit as
provided in Section 5(e)(iv), the Corporation shall pay the Executive from time
to time additional amounts such that after all applicable federal and state and
local income, employment and other taxes on the Executive's Net SERP I Benefit
and on any additional amount payable under this Section 14(d), the Executive has
received the Executive's entire Net SERP I Benefit on an after-tax basis. Any
additional amount due under this Section 14(d) shall be due and payable to the
Executive at the time the income, employment or other tax is assessed against
the Executive's Net SERP I Benefit whether or not the Executive's Net SERP I
Benefit is then payable. The federal and state and
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local income tax rates for purposes of calculating the additional amount
hereunder shall be determined in accordance with the last sentence of Section
14(b).
15. Amendment or Modification; Waiver. No provisions of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Executive and such officer of
the Corporation as may be specifically designated by the Board or its
compensation committee. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision to this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.
16. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three arbitrators in Jacksonville, Florida, in
accordance with the rules of the American Arbitration Association then in effect
or of such similar organization as the parties hereto may mutually agree.
Judgment may be entered on the arbitrator's award in any court having
jurisdiction. The expense of such arbitration shall be borne by the Corporation.
17. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Florida without regard to its conflicts of law principles.
18. Miscellaneous. All references to sections of any statute shall be
deemed also to refer to any successor provisions to such sections. The
obligations of the parties under Sections 9, 10 and 11 hereof and Section 5(e)
hereof (except for clause (i) thereof) shall survive the expiration of the Term.
The compensation and benefits payable to the Executive under Section 9 of this
Agreement shall be in lieu of any other severance benefits to which the
Executive may otherwise be entitled upon his termination of employment under any
severance plan, program, policy or arrangement of the Corporation.
19. Severability. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect throughout the Term.
20. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
21. Entire Agreement. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and, as of
the Effective Date, supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto.
12
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
NATIONSBANK CORPORATION
By: /s/ James H. Hance, Jr.
--------------------------
James H. Hance, Jr., Vice
Chairman and Chief Financial
Officer
/s/ Charles E. Rice
--------------------------------
Charles E. Rice
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<PAGE>
EMPLOYMENT AGREEMENT
by and between
a
NATIONSBANK CORPORATION
and
ALLEN L. LASTINGER, JR.
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of October 10, 1997, by and between Allen L.
Lastinger, Jr. (the "Employee") and NationsBank Corporation, a North Carolina
corporation (the "Corporation").
The Employee is currently employed by Barnett Banks, Inc., a Florida
corporation ("Barnett"), as President and Chief Operating Officer and is a party
to an employment agreement with Barnett (the "Prior Agreement") dated as of July
1, 1996. Pursuant to the Agreement and Plan of Merger, dated as of August 29,
1997 (the "Merger Agreement"), by and between the Corporation and Barnett,
Barnett will merge (the "Merger") with and into the Corporation (or a
wholly-owned subsidiary of the Corporation) as of the "Effective Time" (as
defined in the Merger Agreement).
The Board of Directors of the Corporation (the "Board") recognizes that
the Employee will contribute significantly to the growth and success of the
Corporation following the Effective Time. The Board desires to provide for the
continued employment of the Employee and to encourage the attention and
dedication to the Corporation of the Employee as a member of the Corporation's
management, in the best interests of the Corporation and its shareholders. The
Employee is willing to commit himself to serve the Corporation on the terms and
conditions herein provided.
In order to effect the foregoing, the Corporation and the Employee wish
to enter into an employment agreement on the terms and conditions set forth
below. This Agreement shall become effective only at the Effective Time. If the
Effective Time does not occur, this Agreement shall be of no force and effect.
Accordingly, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Employment; Term. The Corporation hereby agrees to employ the
Employee, and the Employee hereby accepts such employment, on the terms and
conditions hereinafter set forth. The period of employment of the Employee by
the Corporation hereunder (the "Employment Period") shall commence on the date
(the "Effective Date") on which the Effective Time occurs and shall end on the
Employee's Date of Termination (as defined in Section 8(b) hereof). The term of
this Agreement (the "Term") shall begin on the Effective Date and shall end on
the third anniversary thereof.
2. Prior Agreement. As of the Effective Date, the Prior Agreement is
hereby amended and superseded in its entirety by the terms and provisions of
this Agreement.
3. Position and Duties. As of the Effective Date, the Employee shall
serve as Executive Vice President of the Corporation and Chairman of
NationsBank-Florida in which capacity the Employee shall perform the usual and
customary duties of the office in which the Employee shall serve.
<PAGE>
4. Place of Performance. In connection with the Employee's employment
by the Corporation, the Employee's principal business address shall be at
Barnett's current principal executive offices in Jacksonville, Florida or in
such other place as the Employee and the Corporation may agree.
5. Compensation and Related Matters.
(a) Base Salary. During the Employment Period, the Corporation
shall pay the Employee an annual base salary ("Base Salary") of $600,000,
payable in approximately equal installments in accordance with the Corporation's
customary payroll practices. The Base Salary may be increased during the
Employment Period, and if so increased, it shall not be decreased. The salary
payments (including any increased salary payments) hereunder shall not in any
way limit or reduce any other obligation of the Corporation hereunder, and no
other compensation, benefit or payment hereunder shall in any way limit or
reduce the obligation of the Corporation to pay the Employee's salary hereunder.
(b) Bonuses. During the Employment Period, the Employee shall
receive annual bonuses (each, an "Annual Bonus"), each of which shall equal no
less than $1,000,000. The Annual Bonus shall be paid at a time and in a manner
consistent with the Corporation's customary practice.
(c) Equity-Based Compensation. The Corporation shall grant to
the Employee (i) as of the Effective Date, 125,000 restricted shares of common
stock of the Corporation and (ii) as of the Effective Date and as of each of the
first two anniversaries of the Effective Date during the Employment Period, an
option to purchase 100,000 shares (subject to equitable adjustment in the event
of a stock split or similar event as provided in the Corporation's Key Employee
Stock Plan) of the common stock of the Corporation, all pursuant to the
Corporation's Key Employee Stock Plan. Subject to the provisions hereof, (x) the
restrictions with respect to one-third of the shares subject to the grant
described in clause (i) of the preceding sentence shall lapse on each
anniversary of the Effective Date, (y) the options described in clause (ii) of
the preceding sentence shall become exercisable in three equal annual
installments commencing with the date of grant, provided that any such options
not yet exercisable on the last day of the Term shall become exercisable on such
day, and (z) all previously awarded and outstanding options described in clause
(ii) of the preceding sentence shall remain exercisable for the three-year
period commencing with the date of the Employee's termination of employment or
until the original expiration date of such options, if earlier.
(d) Expenses. The Corporation shall promptly reimburse the
Employee for all reasonable business expenses incurred during the Employment
Period by the Employee in performing services hereunder, including all expenses
of travel and living expenses while away from home on business or at the request
of and in the service of the Corporation, provided that such expenses are
incurred and accounted for in accordance with the policies and procedures
established by the Corporation.
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<PAGE>
(e) Other Benefits.
(i) Subject to the provisions of clause (ii) below,
during the Employment Period, the Employee shall be entitled
to participate in all of the employee benefit plans and
arrangements made available by the Corporation to similarly
situated employees, subject to and on a basis consistent with
the terms, conditions and overall administration of such plans
and arrangements, and shall be entitled to all perquisites and
special benefits provided to similarly situated employees of
the Corporation. Credit shall be given to the Employee for the
Employee's service with Barnett, as if such service had been
performed for the Corporation, for all relevant purposes under
all such Corporation plans and arrangements.
(ii) As of the Effective Date the Employee shall be
designated a participant in the NationsBank Corporation and
Designated Subsidiaries Supplemental Executive Retirement Plan
("SERP I") which shall provide the Employee with a target
annual retirement benefit equal to sixty percent (60%) of the
Employee's final five-year average earnings, offset by the
Employee's annual retirement benefits from the Corporation's
tax-qualified defined benefit plan, the Corporation's ERISA
restoration plan, Barnett's tax-qualified defined benefit
plan, the Supplemental Executive Retirement Plan of Barnett
Banks, Inc. and its Affiliates (the "Barnett SERP"), any plan
maintained by any previous employer of the Employee (which
previous employer plan offset will be calculated in accordance
with Section 3.1(b)(1)(B) of the Barnett SERP as in effect on
the date hereof) and social security. The Employee shall be
credited with the Employee's service with, and compensation
from, Barnett prior to the Effective Date for purposes of
determining the Employee's SERP I target benefit. In no event
shall the annual retirement benefit payable to the Employee
from SERP I after the offsets listed above (the "Net SERP I
Benefit") be less than $840,000, and the Employee shall be
eligible to commence the Employee's Net SERP I Benefit on the
fifth (5th) anniversary of the Effective Date. Upon the
Employee's death, the Employee's beneficiary shall be entitled
to receive until such beneficiary's death an annual benefit
equal to seventy-five percent (75%) of the Employee's Net SERP
I Benefit. Notwithstanding the foregoing provisions of this
clause, the Employee shall be entitled to receive the lump sum
value of the Employee's Net SERP I Benefit within thirty (30)
days following the Employee's Date of Termination (as defined
in Section 8(b) below) calculated using a discount rate of
five percent (5%) and the 1983 Group Annuity Mortality Table
and assuming a three year age difference between the Employee
and the Employee's spouse. Any such election to receive a lump
sum benefit may be made by the Employee's delivery of a
written election to the Corporation on, or at any time after,
the Effective Date. Such election may be made by the Employee
without the consent of the Corporation or any administrative
committee under SERP I, and no financial penalty or other
reduction in the lump sum value calculated above shall be
imposed as the result of such lump sum election. In the event
the Employee elects a lump sum payment of the Employee's Net
SERP I Benefit and dies prior to receiving such payment, the
lump sum value of the Employee's Net SERP I Benefit
(calculated as if the Employee had terminated
3
<PAGE>
employment on the date prior to his death) shall be paid to
the Employee's estate or other designated beneficiary. See
Section 14(d) for special provisions related to an income tax
gross-up related to the Employee's Net SERP I Benefit.
(f) Vacation. The Employee shall be entitled to (i) the number
of vacation days in each calendar year, (ii) compensation in respect of earned
but unused vacation days, and (iii) all paid holidays, in each case as the same
may be provided by the Corporation to its similarly situated employees.
(g) Services Furnished. During the Employment Period, the
Corporation shall furnish the Employee with office space, stenographic
assistance and such other facilities and services as are provided to the
Employee by Barnett as of the date hereof.
6. Offices. Subject to Sections 3 and 4, the Employee agrees to serve
without additional compensation, if elected or appointed thereto, as a director
of any of the Corporation's subsidiaries and as a member of any committees of
the board of directors of any such corporations, and in one or more executive
positions of any of the Corporation's subsidiaries, provided that the Employee
is indemnified for serving in any and all such capacities on a basis no less
favorable than is currently or may be provided to any other director of the
Corporation, any of its subsidiaries, or in connection with any such executive
position, as the case may be.
7. Termination. The Employment Period shall end in the event of a
termination of the Employee's employment in accordance with any of the
provisions of this Section 7, and the Term shall end in the event of a
termination of Employee's employment in accordance with the provisions of
subsection (c) of this Section 7, in each case, on the Employee's Date of
Termination (as defined in Section 8(b) below).
(a) Death. The Employee's employment hereunder shall terminate
upon the Employee's death.
(b) Disability. If, as a result of the Employee's incapacity
due to physical or mental illness, the Employee shall have been absent from the
full-time performance of the Employee's duties hereunder for the entire period
of six consecutive months, and within thirty (30) days after written Notice of
Termination (as defined in Section 8) is given shall not have returned to the
performance of the Employee's duties hereunder on a full-time basis, the
Corporation may terminate the Employee's employment hereunder for "Disability."
(c) Cause. The Corporation may terminate the Employee's
employment hereunder for Cause. For purposes of this Agreement, the Corporation
shall have "Cause" to terminate the Employee's employment hereunder upon the
occurrence of any of the following events:
(i) the conviction of the Employee for the commission
of a felony involving dishonesty with respect to the
Corporation; or
4
<PAGE>
(ii) gross and willful misconduct by the Employee
that is demonstrably and materially injurious to the
Corporation or its subsidiaries, whether monetarily or
otherwise.
Cause shall not exist unless and until the Corporation has delivered to the
Employee a copy of a resolution duly adopted by the affirmative vote of not less
than two-thirds (2/3) of the entire membership of the Board at a meeting of the
Board called and held for such purpose (after reasonable notice to the Employee
and an opportunity for the Employee, together with the Employee's counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
the Employee was guilty of the conduct set forth in this Section 7(c) and
specifying the particulars thereof in detail. For purposes of this Section 7(c),
no act or failure to act on the Employee's part shall be considered "willful"
unless done or failed to be done by the Employee in bad faith and without
reasonable belief that the Employee's action or omission was in the best
interest of the Corporation.
(d) Good Reason. The Employee may terminate the Employee's
employment hereunder for "Good Reason." The Employee shall be deemed to have
terminated the Employee's employment for Good Reason if the Employee's
employment is terminated for any reason other than for death, Disability or
Cause.
8. Termination Procedure.
(a) Notice of Termination. Any termination of the Employee's
employment by the Corporation or by the Employee (other than termination
pursuant to Section 7(a) hereof) shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 13. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice that
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Employee's employment under the provision
so indicated.
(b) Date of Termination. "Date of Termination" shall mean (i)
if the Employee's employment is terminated pursuant to Section 7(a) above, the
date of the Employee's death, (ii) if the Employee's employment is terminated
pursuant to Section 7(b) above, thirty (30) days after Notice of Termination is
given (provided that the Employee shall not have returned to the performance of
the Employee's duties on a full-time basis during such thirty (30) day period),
(iii) if the Employee's employment is terminated pursuant to Section 7(c) above,
the date specified in the Notice of Termination, and (iv) if the Employee's
employment is terminated pursuant to Section 7(d) above, the date on which a
Notice of Termination is given or any later date (within 30 days) set forth in
such Notice of Termination; provided, however, that, if within thirty (30) days
after any Notice of Termination is given the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
binding and final arbitration award or by a final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom having expired
and no appeal having been perfected).
5
<PAGE>
(c) Compensation During Dispute. If a purported termination
occurs during the Term, and such termination is disputed in accordance with
subsection (b) of this Section 8, the Corporation shall continue to pay the
Employee the full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, salary) and continue the
Employee as a participant in all compensation, benefit and insurance plans in
which the Employee was participating when the notice giving rise to the dispute
was given, until the Date of Termination, determined in accordance with
subsection (b) of this Section 8. Amounts paid under this Section 8(c) are in
addition to all other amounts due under this Agreement and shall not be offset
against or reduce any other amounts due under this Agreement.
9. Compensation upon Termination or During Disability.
(a) Disability; Death. During any period that the Employee
fails to perform the Employee's duties hereunder as a result of incapacity due
to physical or mental illness ("Disability Period"), the Employee shall continue
to receive the Employee's Base Salary at the rate in effect at the beginning of
such period as well as all other payments and benefits set forth in Section 5
hereof, reduced by any payments made to the Employee during the disability
period under the disability benefit plans of the Corporation then in effect or
under the Social Security disability insurance program ("Disability Payments").
Subsequent to the termination of the Employee's employment pursuant to Section
7(b), or in the event the Employee's employment is terminated by reason of the
Employee's death, the Corporation shall pay to the Employee, the Employee's
legal representative or the Employee's successors (as described in Section
12(b)) the payments and benefits set forth in subsection (b) of this Section 9
for a period of one (1) year or, if less, for the period ending on the last day
of the Term.
(b) By the Corporation without Cause or by the Employee for
Good Reason. If during the Term the Employee's employment is terminated by the
Corporation other than for Cause or Disability or if the Employee terminates the
Employee's employment for Good Reason, then:
(i) the Corporation shall pay the Employee the
Employee's Base Salary through the Date of Termination at the
rate in effect at the time Notice of Termination is given; any
bonus payable hereunder in respect of a year which ended prior
to the Date of Termination and which had not yet been paid;
and an amount equal to the minimum bonus referred to in
Section 5(b) hereof, multiplied by a fraction the numerator of
which shall be the number of days from the beginning of the
applicable year to and including the Date of Termination and
the denominator of which shall be 365;
(ii) in lieu of any further salary or bonus payments
to the Employee for periods subsequent to the Date of
Termination, the Corporation shall pay as liquidated damages
to the Employee an aggregate amount equal to the product of
(A) the number of years (including fractions thereof)
remaining in the Term as of the Date of Termination (but no
more than one (1) year in the case of the Employee's death or
Disability as provided in Section 9(a) above) and (B) the sum
of (1) the Employee's Base Salary rate in effect as of the
Date of Termination, and (2) the
6
<PAGE>
minimum annual bonus referred to in Section 5(b) hereof, such
amount to be paid in a cash lump sum within five (5) days
following the Date of Termination;
(iii) all equity based awards described in Section
5(c) hereof shall become fully vested and exercisable, as
applicable, and all options described in Section 5(c) that are
then outstanding shall remain exercisable for the three-year
period commencing with the Date of Termination; and
(iv) the Corporation shall continue to provide to the
Employee the benefits described in Section 5(e)(i) hereof for
the remainder of the Term. Welfare and other insurance
benefits otherwise receivable by the Employee pursuant to this
Section 9(b)(iv) shall be reduced to the extent comparable
benefits are actually received by the Employee from a
subsequent employer during the period during which the
Corporation is required to provide such benefits, and the
Employee shall report any such benefits actually received to
the Corporation.
(c) By Corporation for Cause. If the Employee's employment
shall be terminated by the Corporation for Cause, then the Corporation shall pay
the Employee the Employee's Base Salary (at the rate in effect at the time
Notice of Termination is given) through the Date of Termination.
(d) Compensation Plans. Following any termination of the
Employee's employment, the Corporation shall pay the Employee all unpaid
amounts, if any, to which the Employee is entitled as of the Date of Termination
under any compensation plan or program of the Corporation, including but not
limited to any deferred compensation plan or program, at the time such payments
are due in accordance with and subject to the provisions of such plans or
programs.
(e) Mitigation. Except as is specifically provided in
subsection (b)(iv) of this Section 9, the Employee shall not be required to
mitigate the amount of any payment provided herein by seeking other employment
or otherwise, nor shall the amount of any payment or benefit provided hereunder
be reduced by any compensation earned by the Employee as the result of
employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Employee to the Corporation, or otherwise.
10. Confidential Information; Non-Competition.
(a) Confidential Information. The Employee shall hold in a
fiduciary capacity for the benefit of the Corporation all trade secrets,
confidential information, and knowledge or data relating to the Corporation and
its businesses, which shall have been obtained by the Employee's employment by
the Corporation and which shall not have been or hereafter become public
knowledge (other than by acts by the Employee or representatives of the Employee
in violation of this Agreement). The Employee shall not, without the prior
written consent of the Corporation or as may otherwise be required by law or
legal process, communicate or divulge any such trade secrets, information,
knowledge or data to anyone other than the Corporation and those designated by
the Corporation. Any termination of the Employee's employment or of this
Agreement shall have no effect on the continuing operation of this Section
10(a). The Employee agrees to return all
7
<PAGE>
confidential information, including all photocopies, extracts and summaries
thereof, and any such information stored electronically on tapes, computer disks
or in any other manner to the Corporation at any time upon request by the
Corporation and upon the termination of the Employee's employment hereunder for
any reason.
(b) Non-Competition. During the Employment Period and for a
period of two (2) years thereafter, the Employee shall not engage in
Competition, as defined below, with the Corporation in any locality or region of
the United States in which the Corporation had operations at the time of, or
within six (6) months prior to, the termination of the Employee's employment
hereunder; provided, that it shall not be a violation of this Section 10(b) for
the Employee to become the registered or beneficial owner of up to five percent
(5%) of any class of the capital stock of a competing corporation registered
under the Securities Exchange Act of 1934, as amended, provided that the
Employee does not actively participate in the business of such corporation until
such time as this covenant expires.
For purposes of this Agreement, Competition by the Employee
shall mean the Employee's engaging in, or otherwise directly or indirectly being
employed by or acting as a consultant (for the purposes of this Section 10, the
Employee shall be a "consultant" if the Employee works forty (40) or more hours
for any one such entity in any ninety-day period) or lender to, or being a
director, officer, employee, principal, agent, stockholder (other than as
specifically provided for herein), member, owner or partner of any company or
business operation specified below:
(i) any company which is, or is a direct or indirect
subsidiary of, one of the twenty-five largest bank holding
companies headquartered in the United States (as measured by
asset size) or any of the ten largest investment banking
companies headquartered in the United States (as measured by
capital);
(ii) any business operation of any company in the
financial services industry if such business operation is then
in substantial and direct competition with a principal
business operation of the Corporation in which the Corporation
was engaged as of the Date of Termination and if the financial
services company has total revenues of $100 million or more
annually and a majority of such revenues are derived from
customers and/or operations in the State of Florida; provided,
however, that no business operation of the Corporation shall
constitute a principal business operation of the Corporation
for purposes of this clause (ii) unless the revenues, profits
or assets of the Corporation attributable to such business
operation amount to at least 10% of the total revenues,
profits or assets of the Corporation; or
(iii) any business operation which directly engages
in the business of automobile leasing, automobile lending,
mortgage banking or home equity lending or the origination,
purchase, sale or servicing of residential mortgage loans or
home equity loan products ("Consumer Finance Activities");
provided, however, that the foregoing shall in no way limit
the Employee's activities with respect to any entity or
business which engages in Consumer Finance Activities if the
Employee's activities are unrelated to the Consumer Finance
Activities of such entity or business.
8
<PAGE>
11. Indemnification; Legal Fees. The Corporation shall indemnify the
Employee to the fullest extent permitted by the laws of the Corporation's state
of incorporation in effect at that time, or certificate of incorporation and
by-laws of the Corporation, whichever affords the greater protection to the
Employee. The Employee will be entitled to any insurance policies the
Corporation may elect to maintain generally for the benefit of its officers and
directors against all costs, charges and expenses incurred in connection with
any action, suit or proceeding to which the Employee may be made a party by
reason of being a director or officer of the Corporation. The Corporation shall
reimburse the Employee for any legal fees and expenses incurred by the Employee
(including but not limited to the legal fees and expenses incurred pursuant to
Section 16 hereof) in contesting or disputing any termination of the Employee's
employment or in seeking to obtain or enforce any right or benefit provided by
this Agreement (or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Internal Revenue Code of
1996, as amended (the "Code"), to any payment or benefit provided hereunder)
other than for any such expenses, costs, liabilities or legal fees incurred as a
result of the Employee's bad faith. Such payments shall be made within five (5)
days after the Employee's request for payment accompanied with such evidence of
fees and expenses incurred as the Corporation reasonably may require. Any
termination of the Employee's employment or of this Agreement shall have no
effect on the continuing operation of this Section 11.
12. Successors; Binding Agreement.
(a) Corporation's Successors. The Corporation will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Corporation to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Corporation would be required to perform
it if no such succession had taken place. Failure of the Corporation to obtain
such assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Employee to
compensation from the Corporation in the same amount and on the same terms as
the Employee would be entitled to hereunder if the Employee terminated the
Employee's employment for Good Reason, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Corporation" shall
mean the Corporation as hereinbefore defined and any successor to its business
and/or assets as aforesaid which executes and delivers the agreement provided
for in this Section 12 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
(b) The Employee's Successors. This Agreement and all rights
of the Employee hereunder shall inure to the benefit of and be enforceable by
the Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and Legatees. If the Employee should
die while any amounts would still be payable to the Employee hereunder if the
Employee had continued to live, all such amounts unless otherwise provided
herein shall be paid in accordance with the terms of this Agreement to the
Employee's devisee, legatee, or other designee or, if there be no such designee,
to the Employee's estate.
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<PAGE>
13. Notice. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Employee: Allen L. Lastinger, Jr.
1145 Campbell Avenue
Jacksonville, FL 32207
If to the Corporation: NationsBank Corporation
NationsBank Corporate Center
100 N. Tryon Street
Charlotte, NC 28255
Attention: General Counsel
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
14. Additional Payment.
(a) If any of the payments provided for in this Agreement (the
"Contract Payments") or any portion of the Total Payments (as defined below)
will be subject to the tax (the "Excise Tax") imposed by section 4999 of the
Code, the Corporation shall pay to the Employee, no later than the fifth day
following the earlier of the date on which such payment is made and the Date of
Termination, an additional amount (the "Gross-Up Payment") such that the net
amount retained by the Employee, after deduction of any Excise Tax on the
Contract Payments and such other Total Payments and any federal and state and
local income, employment and other taxes and Excise Tax upon the payment
provided for by this subsection, shall be equal to the Contract Payments and
such other Total Payments.
(b) For purposes of determining whether any payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or
benefits received or to be received by the Employee in connection with an event
described in section 280(G)(b)(2)(A)(i) of the Code (hereinafter, a "change in
control"), or the Employee's termination of employment pursuant to the terms of
any plan, arrangement or agreement with Barnett, the Corporation, its
successors, any person whose actions result in a change in control or any person
affiliated with the Corporation or such person (together with the Contract
Payments, the "Total Payments"), shall be treated as "parachute payments" within
the meaning of section 28OG(b)(2) of the Code except to the extent that, in the
opinion of tax counsel selected by the Corporation's independent auditors and
acceptable to the Employee, the Total Payments do not constitute parachute
payments, (ii) all "excess parachute payments" within the meaning of section
28OG(b)(1) shall be treated as subject to the Excise Tax except to the extent
that, in the opinion of such tax counsel, such excess parachute payments
represent reasonable compensation for services actually rendered within the
meaning of section 280G(b)(4)(B) of the Code in excess of the base amount within
the meaning of section 28OG(b)(3) of the Code, or are otherwise not subject to
the Excise Tax, and (iii) the value of any noncash benefits or any deferred
payment or benefit shall be determined by the Corporation's
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<PAGE>
independent auditors in accordance with the principles of sections 280G(d)(3)
and (4) of the Code. For purposes of determining the amount of the Gross-Up
Payment, the Employee shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the highest
marginal rate of taxation in the state and locality of the Employee's residence
on the Date of Termination, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes.
(c) In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at the time
of termination of the Employee's employment, the Employee shall repay to the
Corporation at the time that the amount of such reduction in Excise Tax is
finally determined, the portion of the Gross-Up Payment attributable to such
reduction (plus the portion of the Gross-Up Payment attributable to the Excise
Tax and federal and state and local income tax imposed on the Gross-Up Payment
being repaid by the Employee if such repayment results in a reduction in Excise
Tax and/or a federal and state and local income tax deduction) plus interest on
the amount of such repayment at the rate provided in section 1274(b)(2)(B) of
the Code. In the event that the Excise Tax is determined to exceed the amount
taken into account hereunder at the time of the termination of the Employee's
employment (including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Corporation shall
make an additional gross-up payment in respect of such excess (plus any interest
payable with respect to such excess) at the time that the amount of such excess
is finally determined.
(d) Notwithstanding any provision of this Agreement to the
contrary, in addition to the payment of the Employee's Net SERP I Benefit as
provided in Section 5(e)(ii), the Corporation shall pay the Employee from time
to time additional amounts such that after all applicable federal and state and
local income, employment and other taxes on the Employee's Net SERP I Benefit
and on the additional amount payable under this Section 14(d), the Employee has
received the Employee's entire Net SERP I Benefit on an after-tax basis. Any
additional amount due under this Section 14(d) shall be due and payable to the
Employee at the time the income, employment or other tax is assessed against the
Employee's Net SERP I Benefit whether or not the Employee's Net SERP I Benefit
is then payable. The federal and state and local income tax rates for purposes
of calculating the additional amount hereunder shall be determined in accordance
with the last sentence of Section 14(b).
15. Amendment or Modification; Waiver. No provisions of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Employee and such officer of the
Corporation as may be specifically designated by the Board or its compensation
committee. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.
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<PAGE>
16. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three arbitrators in Jacksonville, Florida, in
accordance with the rules of the American Arbitration Association then in effect
or of such similar organization as the parties hereto may mutually agree.
Judgment may be entered on the arbitrator's award in any court having
jurisdiction. The expense of such arbitration shall be borne by the Corporation.
17. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Florida without regard to its conflicts of law principles.
18. Miscellaneous. All references to sections of any statute shall be
deemed also to refer to any successor provisions to such sections. The
obligations of the parties under Sections 9, 10 and 11 hereof shall survive the
expiration of the Term. The compensation and benefits payable to the Employee
under Section 9 of this Agreement shall be in lieu of any other severance
benefits to which the Employee may otherwise be entitled upon the Employee's
termination of employment under any severance plan, program, policy or
arrangement of the Corporation.
19. Severability. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect throughout the Term.
20. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
21. Entire Agreement. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and, as of
the Effective Date, supersedes
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<PAGE>
all prior agreements, promises, covenants, arrangements communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of any party hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
NATIONSBANK CORPORATION
By:/s/ James H. Hance, Jr.
--------------------------
James H. Hance, Jr., Vice Chairman
and Chief Financial Officer
/s/ Allen L. Lastinger, Jr.
-----------------------------
Allen L. Lastinger, Jr.
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<PAGE>
EMPLOYMENT AGREEMENT
by and between
NATIONSBANK CORPORATION
and
HINTON F. NOBLES, JR.
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of October 10, 1997, by and between Hinton F.
Nobles, Jr. (the "Employee") and NationsBank Corporation, a North Carolina
corporation (the "Corporation").
The Employee is currently employed by Barnett Banks, Inc., a Florida
corporation ("Barnett"), as an Executive Vice President and is a party to an
employment agreement with Barnett (the "Prior Agreement") dated as of July 1,
1996. Pursuant to the Agreement and Plan of Merger, dated as of August 29, 1997
(the "Merger Agreement"), by and between the Corporation and Barnett, Barnett
will merge (the "Merger") with and into the Corporation (or a wholly-owned
subsidiary of the Corporation) as of the "Effective Time" (as defined in the
Merger Agreement).
The Board of Directors of the Corporation (the "Board") recognizes that
the Employee will contribute significantly to the growth and success of the
Corporation following the Effective Time. The Board desires to provide for the
continued employment of the Employee and to encourage the attention and
dedication to the Corporation of the Employee as a member of the Corporation's
management, in the best interests of the Corporation and its shareholders. The
Employee is willing to commit himself to serve the Corporation on the terms and
conditions herein provided.
In order to effect the foregoing, the Corporation and the Employee wish
to enter into an employment agreement on the terms and conditions set forth
below. This Agreement shall become effective only at the Effective Time. If the
Effective Time does not occur, this Agreement shall be of no force and effect.
Accordingly, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Employment; Term. The Corporation hereby agrees to employ the
Employee, and the Employee hereby accepts such employment, on the terms and
conditions hereinafter set forth. The period of employment of the Employee by
the Corporation hereunder (the "Employment Period") shall commence on the date
(the "Effective Date") on which the Effective Time occurs and shall end on the
Employee's Date of Termination (as defined in Section 8(b) hereof). The term of
this Agreement (the "Term") shall begin on the Effective Date and shall end on
the third anniversary thereof.
2. Prior Agreement. As of the Effective Date, the Prior Agreement is
hereby amended and superseded in its entirety by the terms and provisions of
this Agreement.
3. Position and Duties. As of the Effective Date, the Employee shall
serve as Executive Vice President of the Corporation in which capacity the
Employee shall perform the usual and customary duties of the office in which the
Employee shall serve.
<PAGE>
4. Place of Performance. In connection with the Employee's employment
by the Corporation, the Employee's principal business address shall be at
Barnett's current principal executive offices in Jacksonville, Florida or in
such other place as the Employee and the Corporation may agree.
5. Compensation and Related Matters.
(a) Base Salary. During the Employment Period, the Corporation
shall pay the Employee an annual base salary ("Base Salary") of $400,000,
payable in approximately equal installments in accordance with the Corporation's
customary payroll practices. The Base Salary may be increased during the
Employment Period, and if so increased, it shall not be decreased. The salary
payments (including any increased salary payments) hereunder shall not in any
way limit or reduce any other obligation of the Corporation hereunder, and no
other compensation, benefit or payment hereunder shall in any way limit or
reduce the obligation of the Corporation to pay the Employee's salary hereunder.
(b) Bonuses. During the Employment Period, the Employee shall
receive annual bonuses (each, an "Annual Bonus"), each of which shall equal no
less than $400,000. The Annual Bonus shall be paid at a time and in a manner
consistent with the Corporation's customary practice.
(c) Equity-Based Compensation. The Corporation shall grant to
the Employee (i) as of the Effective Date, 50,000 restricted shares of common
stock of the Corporation and (ii) as of the Effective Date and as of the first
anniversary of the Effective Date (provided the Employment Period is continuing
on such anniversary date), an option to purchase 30,000 shares (subject to
equitable adjustment in the event of a stock split or similar event as provided
in the Corporation's Key Employee Stock Plan) of common stock of the
Corporation, all pursuant to the Corporation's Key Employee Stock Plan. Subject
to the provisions hereof, (x) the restrictions with respect to one-third of the
shares subject to the grant described in (i) of the preceding sentence shall
lapse on each anniversary of the Effective Date, (y) the options described in
clause (ii) of the preceding sentence shall become exercisable in three equal
annual installments commencing with the date of grant, provided that any such
options not yet exercisable on the last day of the Term shall become exercisable
on such day, and (z) all previously awarded and outstanding options described in
clause (ii) of the preceding sentence shall remain exercisable for the
three-year period commencing with the date of the Employee's termination of
employment or until the original expiration date of such options, if earlier.
(d) Expenses. The Corporation shall promptly reimburse the
Employee for all reasonable business expenses incurred during the Employment
Period by the Employee in performing services hereunder, including all expenses
of travel and living expenses while away from home on business or at the request
of and in the service of the Corporation, provided that such expenses are
incurred and accounted for in accordance with the policies and procedures
established by the Corporation.
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<PAGE>
(e) Other Benefits.
(i) Subject to the provisions of clause (ii) below,
during the Employment Period, the Employee shall be entitled
to participate in all of the employee benefit plans and
arrangements made available by the Corporation to similarly
situated employees, subject to and on a basis consistent with
the terms, conditions and overall administration of such plans
and arrangements, and shall be entitled to all perquisites and
special benefits provided to similarly situated employees of
the Corporation. Credit shall be given to the Employee for the
Employee's service with Barnett, as if such service had been
performed for the Corporation, for all relevant purposes under
all such Corporation plans and arrangements.
(ii) As of the Effective Date the Employee shall be
designated a participant in the NationsBank Corporation and
Designated Subsidiaries Supplemental Executive Retirement Plan
("SERP I") which shall provide the Employee with a target
annual retirement benefit equal to sixty percent (60%) of the
Employee's final five-year average earnings, offset by the
Employee's annual retirement benefits from the Corporation's
tax-qualified defined benefit plan, the Corporation's ERISA
restoration plan, Barnett's tax-qualified defined benefit
plan, the Supplemental Executive Retirement Plan of Barnett
Banks, Inc. and its Affiliates (the "Barnett SERP"), any plan
maintained by any previous employer of the Employee (which
previous employer plan offset will be calculated in accordance
with Section 3.1(b)(1)(B) of the Barnett SERP as in effect on
the date hereof) and social security. The Employee shall be
credited with the Employee's service with, and compensation
from, Barnett prior to the Effective Date for purposes of
determining the Employee's SERP I target benefit. In no event
shall the annual retirement benefit payable to the Employee
from SERP I after the offsets listed above (the "Net SERP I
Benefit") be less than $250,000, and the Employee shall be
eligible to commence the Employee's Net SERP I Benefit on the
fifth (5th) anniversary of the Effective Date. Upon the
Employee's death, the Employee's beneficiary shall be entitled
to receive until such beneficiary's death an annual benefit
equal to seventy-five percent (75%) of the Employee's Net SERP
I Benefit. Notwithstanding the foregoing provisions of this
clause, the Employee shall be entitled to receive the lump sum
value of the Employee's Net SERP I Benefit within thirty (30)
days following the Employee's Date of Termination (as defined
in Section 8(b) below) calculated using a discount rate of
five percent (5%) and the 1983 Group Annuity Mortality Table
and assuming a three year age difference between the Employee
and the Employee's spouse. Any such election to receive a lump
sum benefit may be made by the Employee's delivery of a
written election to the Corporation on, or at any time after,
the Effective Date. Such election may be made by the Employee
without the consent of the Corporation or any administrative
committee under SERP I, and no financial penalty or other
reduction in the lump sum value calculated above shall be
imposed as the result of such lump sum election. In the event
the Employee elects a lump sum payment of the Employee's Net
SERP I Benefit and dies prior
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<PAGE>
to receiving such payment, the lump sum value of the
Employee's Net SERP I Benefit (calculated as if the Employee
had terminated employment on the date prior to his death)
shall be paid to the Employee's estate or other designated
beneficiary. See Section 14(d) for special provisions related
to an income tax gross-up related to the Employee's Net SERP I
Benefit.
(f) Vacation. The Employee shall be entitled to (i) the number
of vacation days in each calendar year, (ii) compensation in respect of earned
but unused vacation days, and (iii) all paid holidays, in each case as the same
may be provided by the Corporation to its similarly situated employees.
(g) Services Furnished. During the Employment Period, the
Corporation shall furnish the Employee with office space, stenographic
assistance and such other facilities and services as are provided to the
Employee by Barnett as of the date hereof.
6. Offices. Subject to Sections 3 and 4, the Employee agrees to serve
without additional compensation, if elected or appointed thereto, as a director
of any of the Corporation's subsidiaries and as a member of any committees of
the board of directors of any such corporations, and in one or more executive
positions of any of the Corporation's subsidiaries, provided that the Employee
is indemnified for serving in any and all such capacities on a basis no less
favorable than is currently or may be provided to any other director of the
Corporation, any of its subsidiaries, or in connection with any such executive
position, as the case may be.
7. Termination. The Employment Period shall end in the event of a
termination of the Employee's employment in accordance with any of the
provisions of this Section 7, and the Term shall end in the event of a
termination of Employee's employment in accordance with the provisions of
subsection (c) of this Section 7, in each case, on the Employee's Date of
Termination (as defined in Section 8(b) below).
(a) Death. The Employee's employment hereunder shall terminate
upon the Employee's death.
(b) Disability. If, as a result of the Employee's incapacity
due to physical or mental illness, the Employee shall have been absent from the
full-time performance of the Employee's duties hereunder for the entire period
of six consecutive months, and within thirty (30) days after written Notice of
Termination (as defined in Section 8) is given shall not have returned to the
performance of the Employee's duties hereunder on a full-time basis, the
Corporation may terminate the Employee's employment hereunder for "Disability."
(c) Cause. The Corporation may terminate the Employee's
employment hereunder for Cause. For purposes of this Agreement, the Corporation
shall have "Cause" to terminate the Employee's employment hereunder upon the
occurrence of any of the following events:
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<PAGE>
(i) the conviction of the Employee for the commission
of a felony involving dishonesty with respect to the
Corporation; or
(ii) gross and willful misconduct by the Employee
that is demonstrably and materially injurious to the
Corporation or its subsidiaries, whether monetarily or
otherwise.
Cause shall not exist unless and until the Corporation has delivered to the
Employee a copy of a resolution duly adopted by the affirmative vote of not less
than two-thirds (2/3) of the entire membership of the Board at a meeting of the
Board called and held for such purpose (after reasonable notice to the Employee
and an opportunity for the Employee, together with the Employee's counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
the Employee was guilty of the conduct set forth in this Section 7(c) and
specifying the particulars thereof in detail. For purposes of this Section 7(c),
no act or failure to act on the Employee's part shall be considered "willful"
unless done or failed to be done by the Employee in bad faith and without
reasonable belief that the Employee's action or omission was in the best
interest of the Corporation.
(d) Good Reason. The Employee may terminate the Employee's
employment hereunder for "Good Reason." The Employee shall be deemed to have
terminated the Employee's employment for Good Reason if the Employee's
employment is terminated for any reason other than for death, Disability or
Cause.
8. Termination Procedure.
(a) Notice of Termination. Any termination of the Employee's
employment by the Corporation or by the Employee (other than termination
pursuant to Section 7(a) hereof) shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 13. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice that
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Employee's employment under the provision
so indicated.
(b) Date of Termination. "Date of Termination" shall mean (i)
if the Employee's employment is terminated pursuant to Section 7(a) above, the
date of the Employee's death, (ii) if the Employee's employment is terminated
pursuant to Section 7(b) above, thirty (30) days after Notice of Termination is
given (provided that the Employee shall not have returned to the performance of
the Employee's duties on a full-time basis during such thirty (30) day period),
(iii) if the Employee's employment is terminated pursuant to Section 7(c) above,
the date specified in the Notice of Termination, and (iv) if the Employee's
employment is terminated pursuant to Section 7(d) above, the date on which a
Notice of Termination is given or any later date (within 30 days) set forth in
such Notice of Termination; provided, however, that, if within thirty (30) days
after any Notice of Termination is given the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
binding and final arbitration award or by a final judgment,
5
<PAGE>
order or decree of a court of competent jurisdiction (the time for appeal
therefrom having expired and no appeal having been perfected).
(c) Compensation During Dispute. If a purported termination
occurs during the Term, and such termination is disputed in accordance with
subsection (b) of this Section 8, the Corporation shall continue to pay the
Employee the full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, salary) and continue the
Employee as a participant in all compensation, benefit and insurance plans in
which the Employee was participating when the notice giving rise to the dispute
was given, until the Date of Termination, determined in accordance with
subsection (b) of this Section 8. Amounts paid under this Section 8(c) are in
addition to all other amounts due under this Agreement and shall not be offset
against or reduce any other amounts due under this Agreement.
9. Compensation upon Termination or During Disability.
(a) Disability; Death. During any period that the Employee
fails to perform the Employee's duties hereunder as a result of incapacity due
to physical or mental illness ("Disability Period"), the Employee shall continue
to receive the Employee's Base Salary at the rate in effect at the beginning of
such period as well as all other payments and benefits set forth in Section 5
hereof, reduced by any payments made to the Employee during the disability
period under the disability benefit plans of the Corporation then in effect or
under the Social Security disability insurance program ("Disability Payments").
Subsequent to the termination of the Employee's employment pursuant to Section
7(b), or in the event the Employee's employment is terminated by reason of the
Employee's death, the Corporation shall pay to the Employee, the Employee's
legal representative or the Employee's successors (as described in Section
12(b)) the payments and benefits set forth in subsection (b) of this Section 9
for a period of one (1) year or, if less, for the period ending on the last day
of the Term.
(b) By the Corporation without Cause or by the Employee for
Good Reason. If during the Term the Employee's employment is terminated by the
Corporation other than for Cause or Disability or if the Employee terminates the
Employee's employment for Good Reason, then:
(i) the Corporation shall pay the Employee the
Employee's Base Salary through the Date of Termination at the
rate in effect at the time Notice of Termination is given; any
bonus payable hereunder in respect of a year which ended prior
to the Date of Termination and which had not yet been paid;
and an amount equal to the minimum bonus referred to in
Section 5(b) hereof, multiplied by a fraction the numerator of
which shall be the number of days from the beginning of the
applicable year to and including the Date of Termination and
the denominator of which shall be 365;
(ii) in lieu of any further salary or bonus payments
to the Employee for periods subsequent to the Date of
Termination, the Corporation shall pay as liquidated damages
to the Employee an aggregate amount equal to the product of
(A) the number of years (including fractions thereof)
remaining in the Term as of
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<PAGE>
the Date of Termination (but no more than one (1) year in the
case of the Employee's death or Disability as provided in
Section 9(a) above) and (B) the sum of (1) the Employee's Base
Salary rate in effect as of the Date of Termination, and (2)
the minimum annual bonus referred to in Section 5(b) hereof,
such amount to be paid in a cash lump sum within five (5) days
following the Date of Termination;
(iii) all equity based awards described in Section
5(c) hereof shall become fully vested and exercisable, as
applicable, and all options described in Section 5(c) that are
then outstanding shall remain exercisable for the three-year
period commencing with the Date of Termination; and
(iv) the Corporation shall continue to provide to the
Employee the benefits described in Section 5(e)(i) hereof for
the remainder of the Term. Welfare and other insurance
benefits otherwise receivable by the Employee pursuant to this
Section 9(b)(iv) shall be reduced to the extent comparable
benefits are actually received by the Employee from a
subsequent employer during the period during which the
Corporation is required to provide such benefits, and the
Employee shall report any such benefits actually received to
the Corporation.
(c) By Corporation for Cause. If the Employee's employment
shall be terminated by the Corporation for Cause, then the Corporation shall pay
the Employee the Employee's Base Salary (at the rate in effect at the time
Notice of Termination is given) through the Date of Termination.
(d) Compensation Plans. Following any termination of the
Employee's employment, the Corporation shall pay the Employee all unpaid
amounts, if any, to which the Employee is entitled as of the Date of Termination
under any compensation plan or program of the Corporation, including but not
limited to any deferred compensation plan or program, at the time such payments
are due in accordance with and subject to the provisions of such plans or
programs.
(e) Mitigation. Except as is specifically provided in
subsection (b)(iv) of this Section 9, the Employee shall not be required to
mitigate the amount of any payment provided herein by seeking other employment
or otherwise, nor shall the amount of any payment or benefit provided hereunder
be reduced by any compensation earned by the Employee as the result of
employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Employee to the Corporation, or otherwise.
10. Confidential Information; Non-Competition.
(a) Confidential Information. The Employee shall hold in a
fiduciary capacity for the benefit of the Corporation all trade secrets,
confidential information, and knowledge or data relating to the Corporation and
its businesses, which shall have been obtained by the Employee's employment by
the Corporation and which shall not have been or hereafter become
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<PAGE>
public knowledge (other than by acts by the Employee or representatives of the
Employee in violation of this Agreement). The Employee shall not, without the
prior written consent of the Corporation or as may otherwise be required by law
or legal process, communicate or divulge any such trade secrets, information,
knowledge or data to anyone other than the Corporation and those designated by
the Corporation. Any termination of the Employee's employment or of this
Agreement shall have no effect on the continuing operation of this Section
10(a). The Employee agrees to return all confidential information, including all
photocopies, extracts and summaries thereof, and any such information stored
electronically on tapes, computer disks or in any other manner to the
Corporation at any time upon request by the Corporation and upon the termination
of the Employee's employment hereunder for any reason.
(b) Non-Competition. During the Employment Period and for a
period of two (2) years thereafter, the Employee shall not engage in
Competition, as defined below, with the Corporation in any locality or region of
the United States in which the Corporation had operations at the time of, or
within six (6) months prior to, the termination of the Employee's employment
hereunder; provided, that it shall not be a violation of this Section 10(b) for
the Employee to become the registered or beneficial owner of up to five percent
(5%) of any class of the capital stock of a competing corporation registered
under the Securities Exchange Act of 1934, as amended, provided that the
Employee does not actively participate in the business of such corporation until
such time as this covenant expires.
For purposes of this Agreement, Competition by the Employee
shall mean the Employee's engaging in, or otherwise directly or indirectly being
employed by or acting as a consultant (for the purposes of this Section 10, the
Employee shall be a "consultant" if the Employee works forty (40) or more hours
for any one such entity in any ninety-day period) or lender to, or being a
director, officer, employee, principal, agent, stockholder (other than as
specifically provided for herein), member, owner or partner of any company or
business operation specified below:
(i) any company which is, or is a direct or indirect
subsidiary of, one of the twenty-five largest bank holding
companies headquartered in the United States (as measured by
asset size) or any of the ten largest investment banking
companies headquartered in the United States (as measured by
capital);
(ii) any business operation of any company in the
financial services industry if such business operation is then
in substantial and direct competition with a principal
business operation of the Corporation in which the Corporation
was engaged as of the Date of Termination and if the financial
services company has total revenues of $100 million or more
annually and a majority of such revenues are derived from
customers and/or operations in the State of Florida; provided,
however, that no business operation of the Corporation shall
constitute a principal business operation of the Corporation
for purposes of this clause (ii) unless the revenues, profits
or assets of the Corporation attributable to such business
operation amount to at least 10% of the total revenues,
profits or assets of the Corporation; or
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<PAGE>
(iii) any business operation which directly engages
in the business of automobile leasing, automobile lending,
mortgage banking or home equity lending or the origination,
purchase, sale or servicing of residential mortgage loans or
home equity loan products ("Consumer Finance Activities");
provided, however, that the foregoing shall in no way limit
the Employee's activities with respect to any entity or
business which engages in Consumer Finance Activities if the
Employee's activities are unrelated to the Consumer Finance
Activities of such entity or business.
11. Indemnification; Legal Fees. The Corporation shall indemnify the
Employee to the fullest extent permitted by the laws of the Corporation's state
of incorporation in effect at that time, or certificate of incorporation and
by-laws of the Corporation, whichever affords the greater protection to the
Employee. The Employee will be entitled to any insurance policies the
Corporation may elect to maintain generally for the benefit of its officers and
directors against all costs, charges and expenses incurred in connection with
any action, suit or proceeding to which the Employee may be made a party by
reason of being a director or officer of the Corporation. The Corporation shall
reimburse the Employee for any legal fees and expenses incurred by the Employee
(including but not limited to the legal fees and expenses incurred pursuant to
Section 16 hereof) in contesting or disputing any termination of the Employee's
employment or in seeking to obtain or enforce any right or benefit provided by
this Agreement (or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Internal Revenue Code of
1996, as amended (the "Code"), to any payment or benefit provided hereunder)
other than for any such expenses, costs, liabilities or legal fees incurred as a
result of the Employee's bad faith. Such payments shall be made within five (5)
days after the Employee's request for payment accompanied with such evidence of
fees and expenses incurred as the Corporation reasonably may require. Any
termination of the Employee's employment or of this Agreement shall have no
effect on the continuing operation of this Section 11.
12. Successors; Binding Agreement.
(a) Corporation's Successors. The Corporation will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Corporation to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Corporation would be required to perform
it if no such succession had taken place. Failure of the Corporation to obtain
such assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Employee to
compensation from the Corporation in the same amount and on the same terms as
the Employee would be entitled to hereunder if the Employee terminated the
Employee's employment for Good Reason, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Corporation" shall
mean the Corporation as hereinbefore defined and any successor to its business
and/or assets as aforesaid which executes and delivers the agreement provided
for in this Section 12 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
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<PAGE>
(b) The Employee's Successors. This Agreement and all rights
of the Employee hereunder shall inure to the benefit of and be enforceable by
the Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and Legatees. If the Employee should
die while any amounts would still be payable to the Employee hereunder if the
Employee had continued to live, all such amounts unless otherwise provided
herein shall be paid in accordance with the terms of this Agreement to the
Employee's devisee, legatee, or other designee or, if there be no such designee,
to the Employee's estate.
13. Notice. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Employee: Hinton F. Nobles, Jr.
P.O. Box 40789
Jacksonville, FL 32203
With a Copy to: Halcyon E. Skinner, Esq.
50 North Laura Street, Suite 3300
Jacksonville, FL 32203
If to the Corporation: NationsBank Corporation
NationsBank Corporate Center
100 North Tryon Street
Charlotte, NC 28255
Attention: General Counsel
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
14. Additional Payment.
(a) If any of the payments provided for in this Agreement (the
"Contract Payments") or any portion of the Total Payments (as defined below)
will be subject to the tax (the "Excise Tax") imposed by section 4999 of the
Code, the Corporation shall pay to the Employee, no later than the fifth day
following the earlier of the date on which such payment is made and the Date of
Termination, an additional amount (the "Gross-Up Payment") such that the net
amount retained by the Employee, after deduction of any Excise Tax on the
Contract Payments and such other Total Payments and any federal and state and
local income, employment and other taxes and Excise Tax upon the payment
provided for by this subsection, shall be equal to the Contract Payments and
such other Total Payments.
(b) For purposes of determining whether any payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or
benefits received or to be received by the Employee in connection with an event
described in section 280(G)(b)(2)(A)(i) of
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<PAGE>
the Code (hereinafter, a "change in control"), or the Employee's termination of
employment pursuant to the terms of any plan, arrangement or agreement with
Barnett, the Corporation, its successors, any person whose actions result in a
change in control or any person affiliated with the Corporation or such person
(together with the Contract Payments, the "Total Payments"), shall be treated as
"parachute payments" within the meaning of section 28OG(b)(2) of the Code except
to the extent that, in the opinion of tax counsel selected by the Corporation's
independent auditors and acceptable to the Employee, the Total Payments do not
constitute parachute payments, (ii) all "excess parachute payments" within the
meaning of section 28OG(b)(1) shall be treated as subject to the Excise Tax
except to the extent that, in the opinion of such tax counsel, such excess
parachute payments represent reasonable compensation for services actually
rendered within the meaning of section 280G(b)(4)(B) of the Code in excess of
the base amount within the meaning of section 28OG(b)(3) of the Code, or are
otherwise not subject to the Excise Tax, and (iii) the value of any noncash
benefits or any deferred payment or benefit shall be determined by the
Corporation's independent auditors in accordance with the principles of sections
280G(d)(3) and (4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, the Employee shall be deemed to pay federal income taxes at
the highest marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the Employee's
residence on the Date of Termination, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and local
taxes.
(c) In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at the time
of termination of the Employee's employment, the Employee shall repay to the
Corporation at the time that the amount of such reduction in Excise Tax is
finally determined, the portion of the Gross-Up Payment attributable to such
reduction (plus the portion of the Gross-Up Payment attributable to the Excise
Tax and federal and state and local income tax imposed on the Gross-Up Payment
being repaid by the Employee if such repayment results in a reduction in Excise
Tax and/or a federal and state and local income tax deduction) plus interest on
the amount of such repayment at the rate provided in section 1274(b)(2)(B) of
the Code. In the event that the Excise Tax is determined to exceed the amount
taken into account hereunder at the time of the termination of the Employee's
employment (including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Corporation shall
make an additional gross-up payment in respect of such excess (plus any interest
payable with respect to such excess) at the time that the amount of such excess
is finally determined.
(d) Notwithstanding any provision of this Agreement to the
contrary, in addition to the payment of the Employee's Net SERP I Benefit as
provided in Section 5(e)(ii), the Corporation shall pay the Employee from time
to time additional amounts such that after all applicable federal and state and
local income, employment and other taxes on the Employee's Net SERP I Benefit
and on the additional amount payable under this Section 14(d), the Employee has
received the Employee's entire Net SERP I Benefit on an after-tax basis. Any
additional amount due under this Section 14(d) shall be due and payable to the
Employee at the time the income, employment or other tax is assessed against the
Employee's Net SERP I Benefit whether or not the Employee's Net SERP I Benefit
is then payable. The federal and state
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<PAGE>
and local income tax rates for purposes of calculating the additional amount
hereunder shall be determined in accordance with the last sentence of Section
14(b).
15. Amendment or Modification; Waiver. No provisions of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Employee and such officer of the
Corporation as may be specifically designated by the Board or its compensation
committee. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.
16. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three arbitrators in Jacksonville, Florida, in
accordance with the rules of the American Arbitration Association then in effect
or of such similar organization as the parties hereto may mutually agree.
Judgment may be entered on the arbitrator's award in any court having
jurisdiction. The expense of such arbitration shall be borne by the Corporation.
17. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Florida without regard to its conflicts of law principles.
18. Miscellaneous. All references to sections of any statute shall be
deemed also to refer to any successor provisions to such sections. The
obligations of the parties under Sections 9, 10 and 11 hereof shall survive the
expiration of the Term. The compensation and benefits payable to the Employee
under Section 9 of this Agreement shall be in lieu of any other severance
benefits to which the Employee may otherwise be entitled upon the Employee's
termination of employment under any severance plan, program, policy or
arrangement of the Corporation.
19. Severability. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect throughout the Term.
20. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
21. Entire Agreement. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and, as of
the Effective Date, supersedes all prior agreements, promises, covenants,
arrangements communications, representations or
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<PAGE>
warranties, whether oral or written, by any officer, employee or representative
of any party hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
NATIONSBANK CORPORATION
By: /s/ James H.Hance, Jr.
---------------------------
James H. Hance, Jr., Vice Chairman
and Chief Financial Officer
/s/ Hinton F. Nobles, Jr.
---------------------------
Hinton F. Nobles, Jr.
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<PAGE>
EMPLOYMENT AGREEMENT
by and between
NATIONSBANK CORPORATION
and
CHARLES W. NEWMAN
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of October 10, 1997, by and between Charles W.
Newman (the "Employee") and NationsBank Corporation, a North Carolina
corporation (the "Corporation").
The Employee is currently employed by Barnett Banks, Inc., a Florida
corporation ("Barnett"), as Chief Financial Officer and is a party to an
employment agreement with Barnett (the "Prior Agreement") dated as of July 1,
1996. Pursuant to the Agreement and Plan of Merger, dated as of August 29, 1997
(the "Merger Agreement"), by and between the Corporation and Barnett, Barnett
will merge (the "Merger") with and into the Corporation (or a wholly-owned
subsidiary of the Corporation) as of the "Effective Time" (as defined in the
Merger Agreement).
The Board of Directors of the Corporation (the "Board") recognizes that
the Employee will contribute significantly to the growth and success of the
Corporation following the Effective Time. The Board desires to provide for the
continued employment of the Employee and to encourage the attention and
dedication to the Corporation of the Employee as a member of the Corporation's
management, in the best interests of the Corporation and its shareholders. The
Employee is willing to commit himself to serve the Corporation on the terms and
conditions herein provided.
In order to effect the foregoing, the Corporation and the Employee wish
to enter into an employment agreement on the terms and conditions set forth
below. This Agreement shall become effective only at the Effective Time. If the
Effective Time does not occur, this Agreement shall be of no force and effect.
Accordingly, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Employment; Term. The Corporation hereby agrees to employ the
Employee, and the Employee hereby accepts such employment, on the terms and
conditions hereinafter set forth. The period of employment of the Employee by
the Corporation hereunder (the "Employment Period") shall commence on the date
(the "Effective Date") on which the Effective Time occurs and shall end on the
Employee's Date of Termination (as defined in Section 8(b) hereof). The term of
this Agreement (the "Term") shall begin on the Effective Date and shall end on
the third anniversary thereof.
2. Prior Agreement. As of the Effective Date, the Prior Agreement is
hereby amended and superseded in its entirety by the terms and provisions of
this Agreement.
3. Position and Duties. As of the Effective Date, the Employee shall
serve as Executive Vice President of the Corporation in which capacity the
Employee shall perform the usual and customary duties of the office in which the
Employee shall serve.
<PAGE>
4. Place of Performance. In connection with the Employee's employment
by the Corporation, the Employee's principal business address shall be at
Barnett's current principal executive offices in Jacksonville, Florida or in
such other place as the Employee and the Corporation may agree.
5. Compensation and Related Matters.
(a) Base Salary. During the Employment Period, the Corporation
shall pay the Employee an annual base salary ("Base Salary") of $400,000,
payable in approximately equal installments in accordance with the Corporation's
customary payroll practices. The Base Salary may be increased during the
Employment Period, and if so increased, it shall not be decreased. The salary
payments (including any increased salary payments) hereunder shall not in any
way limit or reduce any other obligation of the Corporation hereunder, and no
other compensation, benefit or payment hereunder shall in any way limit or
reduce the obligation of the Corporation to pay the Employee's salary hereunder.
(b) Bonuses. During the Employment Period, the Employee shall
receive annual bonuses (each, an "Annual Bonus"), each of which shall equal no
less than $400,000. The Annual Bonus shall be paid at a time and in a manner
consistent with the Corporation's customary practice.
(c) Equity-Based Compensation. The Corporation shall grant to
the Employee (i) as of the Effective Date, 50,000 restricted shares of common
stock of the Corporation and (ii) as of the Effective Date and as of the first
anniversary of the Effective Date (provided the Employment Period is continuing
on such anniversary date), an option to purchase 30,000 shares (subject to
equitable adjustment in the event of a stock split or similar event as provided
in the Corporation's Key Employee Stock Plan) of common stock of the
Corporation, all pursuant to the Corporation's Key Employee Stock Plan. Subject
to the provisions hereof, (x) the restrictions with respect to one-third of the
shares subject to the grant described in (i) of the preceding sentence shall
lapse on each anniversary of the Effective Date, (y) the options described in
clause (ii) of the preceding sentence shall become exercisable in three equal
annual installments commencing with the date of grant, provided that any such
options not yet exercisable on the last day of the Term shall become exercisable
on such day, and (z) all previously awarded and outstanding options described in
clause (ii) of the preceding sentence shall remain exercisable for the
three-year period commencing with the date of the Employee's termination of
employment or until the original expiration date of such options, if earlier.
(d) Expenses. The Corporation shall promptly reimburse the
Employee for all reasonable business expenses incurred during the Employment
Period by the Employee in performing services hereunder, including all expenses
of travel and living expenses while away from home on business or at the request
of and in the service of the Corporation, provided that such expenses are
incurred and accounted for in accordance with the policies and procedures
established by the Corporation.
2
<PAGE>
(e) Other Benefits.
(i) Subject to the provisions of clause (ii) below,
during the Employment Period, the Employee shall be entitled
to participate in all of the employee benefit plans and
arrangements made available by the Corporation to similarly
situated employees, subject to and on a basis consistent with
the terms, conditions and overall administration of such plans
and arrangements, and shall be entitled to all perquisites and
special benefits provided to similarly situated employees of
the Corporation. Credit shall be given to the Employee for the
Employee's service with Barnett, as if such service had been
performed for the Corporation, for all relevant purposes under
all such Corporation plans and arrangements.
(ii) As of the Effective Date the Employee shall be
designated a participant in the NationsBank Corporation and
Designated Subsidiaries Supplemental Executive Retirement Plan
("SERP I") which shall provide the Employee with a target
annual retirement benefit equal to sixty percent (60%) of the
Employee's final five-year average earnings, offset by the
Employee's annual retirement benefits from the Corporation's
tax-qualified defined benefit plan, the Corporation's ERISA
restoration plan, Barnett's tax-qualified defined benefit
plan, the Supplemental Executive Retirement Plan of Barnett
Banks, Inc. and its Affiliates (the "Barnett SERP"), any plan
maintained by any previous employer of the Employee (which
previous employer plan offset will be calculated in accordance
with Section 3.1(b)(1)(B) of the Barnett SERP as in effect on
the date hereof) and social security. The Employee shall be
credited with the Employee's service with, and compensation
from, Barnett prior to the Effective Date for purposes of
determining the Employee's SERP I target benefit. In no event
shall the annual retirement benefit payable to the Employee
from SERP I after the offsets listed above (the "Net SERP I
Benefit") be less than $250,000, and the Employee shall be
eligible to commence the Employee's Net SERP I Benefit on the
fifth (5th) anniversary of the Effective Date. Upon the
Employee's death, the Employee's beneficiary shall be entitled
to receive until such beneficiary's death an annual benefit
equal to seventy-five percent (75%) of the Employee's Net SERP
I Benefit. Notwithstanding the foregoing provisions of this
clause, the Employee shall be entitled to receive the lump sum
value of the Employee's Net SERP I Benefit within thirty (30)
days following the Employee's Date of Termination (as defined
in Section 8(b) below) calculated using a discount rate of
five percent (5%) and the 1983 Group Annuity Mortality Table
and assuming a three year age difference between the Employee
and the Employee's spouse. Any such election to receive a lump
sum benefit may be made by the Employee's delivery of a
written election to the Corporation on, or at any time after,
the Effective Date. Such election may be made by the Employee
without the consent of the Corporation or any administrative
committee under SERP I, and no financial penalty or other
reduction in the lump sum value calculated above shall be
imposed as the result of such lump sum election. In the event
the Employee elects a lump sum payment of the Employee's Net
SERP I Benefit and dies prior
3
<PAGE>
to receiving such payment, the lump sum value of the
Employee's Net SERP I Benefit (calculated as if the Employee
had terminated employment on the date prior to his death)
shall be paid to the Employee's estate or other designated
beneficiary. See Section 14(d) for special provisions related
to an income tax gross-up related to the Employee's Net SERP I
Benefit.
(f) Vacation. The Employee shall be entitled to (i) the number
of vacation days in each calendar year, (ii) compensation in respect of earned
but unused vacation days, and (iii) all paid holidays, in each case as the same
may be provided by the Corporation to its similarly situated employees.
(g) Services Furnished. During the Employment Period, the
Corporation shall furnish the Employee with office space, stenographic
assistance and such other facilities and services as are provided to the
Employee by Barnett as of the date hereof.
6. Offices. Subject to Sections 3 and 4, the Employee agrees to serve
without additional compensation, if elected or appointed thereto, as a director
of any of the Corporation's subsidiaries and as a member of any committees of
the board of directors of any such corporations, and in one or more executive
positions of any of the Corporation's subsidiaries, provided that the Employee
is indemnified for serving in any and all such capacities on a basis no less
favorable than is currently or may be provided to any other director of the
Corporation, any of its subsidiaries, or in connection with any such executive
position, as the case may be.
7. Termination. The Employment Period shall end in the event of a
termination of the Employee's employment in accordance with any of the
provisions of this Section 7, and the Term shall end in the event of a
termination of Employee's employment in accordance with the provisions of
subsection (c) of this Section 7, in each case, on the Employee's Date of
Termination (as defined in Section 8(b) below).
(a) Death. The Employee's employment hereunder shall terminate
upon the Employee's death.
(b) Disability. If, as a result of the Employee's incapacity
due to physical or mental illness, the Employee shall have been absent from the
full-time performance of the Employee's duties hereunder for the entire period
of six consecutive months, and within thirty (30) days after written Notice of
Termination (as defined in Section 8) is given shall not have returned to the
performance of the Employee's duties hereunder on a full-time basis, the
Corporation may terminate the Employee's employment hereunder for "Disability."
(c) Cause. The Corporation may terminate the Employee's
employment hereunder for Cause. For purposes of this Agreement, the Corporation
shall have "Cause" to terminate the Employee's employment hereunder upon the
occurrence of any of the following events:
(i) the conviction of the Employee for the commission
of a felony involving dishonesty with respect to the
Corporation; or
4
<PAGE>
(ii) gross and willful misconduct by the Employee
that is demonstrably and materially injurious to the
Corporation or its subsidiaries, whether monetarily or
otherwise.
Cause shall not exist unless and until the Corporation has delivered to the
Employee a copy of a resolution duly adopted by the affirmative vote of not less
than two-thirds (2/3) of the entire membership of the Board at a meeting of the
Board called and held for such purpose (after reasonable notice to the Employee
and an opportunity for the Employee, together with the Employee's counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
the Employee was guilty of the conduct set forth in this Section 7(c) and
specifying the particulars thereof in detail. For purposes of this Section 7(c),
no act or failure to act on the Employee's part shall be considered "willful"
unless done or failed to be done by the Employee in bad faith and without
reasonable belief that the Employee's action or omission was in the best
interest of the Corporation.
(d) Good Reason. The Employee may terminate the Employee's
employment hereunder for "Good Reason." The Employee shall be deemed to have
terminated the Employee's employment for Good Reason if the Employee's
employment is terminated for any reason other than for death, Disability or
Cause.
8. Termination Procedure.
(a) Notice of Termination. Any termination of the Employee's
employment by the Corporation or by the Employee (other than termination
pursuant to Section 7(a) hereof) shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 13. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice that
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Employee's employment under the provision
so indicated.
(b) Date of Termination. "Date of Termination" shall mean (i)
if the Employee's employment is terminated pursuant to Section 7(a) above, the
date of the Employee's death, (ii) if the Employee's employment is terminated
pursuant to Section 7(b) above, thirty (30) days after Notice of Termination is
given (provided that the Employee shall not have returned to the performance of
the Employee's duties on a full-time basis during such thirty (30) day period),
(iii) if the Employee's employment is terminated pursuant to Section 7(c) above,
the date specified in the Notice of Termination, and (iv) if the Employee's
employment is terminated pursuant to Section 7(d) above, the date on which a
Notice of Termination is given or any later date (within 30 days) set forth in
such Notice of Termination; provided, however, that, if within thirty (30) days
after any Notice of Termination is given the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
binding and final arbitration award or by a final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom having expired
and no appeal having been perfected).
5
<PAGE>
(c) Compensation During Dispute. If a purported termination
occurs during the Term, and such termination is disputed in accordance with
subsection (b) of this Section 8, the Corporation shall continue to pay the
Employee the full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, salary) and continue the
Employee as a participant in all compensation, benefit and insurance plans in
which the Employee was participating when the notice giving rise to the dispute
was given, until the Date of Termination, determined in accordance with
subsection (b) of this Section 8. Amounts paid under this Section 8(c) are in
addition to all other amounts due under this Agreement and shall not be offset
against or reduce any other amounts due under this Agreement.
9. Compensation upon Termination or During Disability.
(a) Disability; Death. During any period that the Employee
fails to perform the Employee's duties hereunder as a result of incapacity due
to physical or mental illness ("Disability Period"), the Employee shall continue
to receive the Employee's Base Salary at the rate in effect at the beginning of
such period as well as all other payments and benefits set forth in Section 5
hereof, reduced by any payments made to the Employee during the disability
period under the disability benefit plans of the Corporation then in effect or
under the Social Security disability insurance program ("Disability Payments").
Subsequent to the termination of the Employee's employment pursuant to Section
7(b), or in the event the Employee's employment is terminated by reason of the
Employee's death, the Corporation shall pay to the Employee, the Employee's
legal representative or the Employee's successors (as described in Section
12(b)) the payments and benefits set forth in subsection (b) of this Section 9
for a period of one (1) year or, if less, for the period ending on the last day
of the Term.
(b) By the Corporation without Cause or by the Employee for
Good Reason. If during the Term the Employee's employment is terminated by the
Corporation other than for Cause or Disability or if the Employee terminates the
Employee's employment for Good Reason, then:
(i) the Corporation shall pay the Employee the
Employee's Base Salary through the Date of Termination at the
rate in effect at the time Notice of Termination is given; any
bonus payable hereunder in respect of a year which ended prior
to the Date of Termination and which had not yet been paid;
and an amount equal to the minimum bonus referred to in
Section 5(b) hereof, multiplied by a fraction the numerator of
which shall be the number of days from the beginning of the
applicable year to and including the Date of Termination and
the denominator of which shall be 365;
(ii) in lieu of any further salary or bonus payments
to the Employee for periods subsequent to the Date of
Termination, the Corporation shall pay as liquidated damages
to the Employee an aggregate amount equal to the product of
(A) the number of years (including fractions thereof)
remaining in the Term as of the Date of Termination (but no
more than one (1) year in the case of the Employee's death or
Disability as provided in Section 9(a) above) and (B) the
6
<PAGE>
sum of (1) the Employee's Base Salary rate in effect as of the
Date of Termination, and (2) the minimum annual bonus referred
to in Section 5(b) hereof, such amount to be paid in a cash
lump sum within five (5) days following the Date of
Termination;
(iii) all equity based awards described in Section
5(c) hereof shall become fully vested and exercisable, as
applicable, and all options described in Section 5(c) that are
then outstanding shall remain exercisable for the three-year
period commencing with the Date of Termination; and
(iv) the Corporation shall continue to provide to the
Employee the benefits described in Section 5(e)(i) hereof for
the remainder of the Term. Welfare and other insurance
benefits otherwise receivable by the Employee pursuant to this
Section 9(b)(iv) shall be reduced to the extent comparable
benefits are actually received by the Employee from a
subsequent employer during the period during which the
Corporation is required to provide such benefits, and the
Employee shall report any such benefits actually received to
the Corporation.
(c) By Corporation for Cause. If the Employee's employment
shall be terminated by the Corporation for Cause, then the Corporation shall pay
the Employee the Employee's Base Salary (at the rate in effect at the time
Notice of Termination is given) through the Date of Termination.
(d) Compensation Plans. Following any termination of the
Employee's employment, the Corporation shall pay the Employee all unpaid
amounts, if any, to which the Employee is entitled as of the Date of Termination
under any compensation plan or program of the Corporation, including but not
limited to any deferred compensation plan or program, at the time such payments
are due in accordance with and subject to the provisions of such plans or
programs.
(e) Mitigation. Except as is specifically provided in
subsection (b)(iv) of this Section 9, the Employee shall not be required to
mitigate the amount of any payment provided herein by seeking other employment
or otherwise, nor shall the amount of any payment or benefit provided hereunder
be reduced by any compensation earned by the Employee as the result of
employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Employee to the Corporation, or otherwise.
10. Confidential Information; Non-Competition.
(a) Confidential Information. The Employee shall hold in a
fiduciary capacity for the benefit of the Corporation all trade secrets,
confidential information, and knowledge or data relating to the Corporation and
its businesses, which shall have been obtained by the Employee's employment by
the Corporation and which shall not have been or hereafter become public
knowledge (other than by acts by the Employee or representatives of the Employee
in violation of this Agreement). The Employee shall not, without the prior
written consent of the
7
<PAGE>
Corporation or as may otherwise be required by law or legal process, communicate
or divulge any such trade secrets, information, knowledge or data to anyone
other than the Corporation and those designated by the Corporation. Any
termination of the Employee's employment or of this Agreement shall have no
effect on the continuing operation of this Section 10(a). The Employee agrees to
return all confidential information, including all photocopies, extracts and
summaries thereof, and any such information stored electronically on tapes,
computer disks or in any other manner to the Corporation at any time upon
request by the Corporation and upon the termination of the Employee's employment
hereunder for any reason.
(b) Non-Competition. During the Employment Period and for a
period of two (2) years thereafter, the Employee shall not engage in
Competition, as defined below, with the Corporation in any locality or region of
the United States in which the Corporation had operations at the time of, or
within six (6) months prior to, the termination of the Employee's employment
hereunder; provided, that it shall not be a violation of this Section 10(b) for
the Employee to become the registered or beneficial owner of up to five percent
(5%) of any class of the capital stock of a competing corporation registered
under the Securities Exchange Act of 1934, as amended, provided that the
Employee does not actively participate in the business of such corporation until
such time as this covenant expires.
For purposes of this Agreement, Competition by the Employee
shall mean the Employee's engaging in, or otherwise directly or indirectly being
employed by or acting as a consultant (for the purposes of this Section 10, the
Employee shall be a "consultant" if the Employee works forty (40) or more hours
for any one such entity in any ninety-day period) or lender to, or being a
director, officer, employee, principal, agent, stockholder (other than as
specifically provided for herein), member, owner or partner of any company or
business operation specified below:
(i) any company which is, or is a direct or indirect
subsidiary of, one of the twenty-five largest bank holding
companies headquartered in the United States (as measured by
asset size) or any of the ten largest investment banking
companies headquartered in the United States (as measured by
capital);
(ii) any business operation of any company in the
financial services industry if such business operation is then
in substantial and direct competition with a principal
business operation of the Corporation in which the Corporation
was engaged as of the Date of Termination and if the financial
services company has total revenues of $100 million or more
annually and a majority of such revenues are derived from
customers and/or operations in the State of Florida; provided,
however, that no business operation of the Corporation shall
constitute a principal business operation of the Corporation
for purposes of this clause (ii) unless the revenues, profits
or assets of the Corporation attributable to such business
operation amount to at least 10% of the total revenues,
profits or assets of the Corporation; or
(iii) any business operation which directly engages
in the business of automobile leasing, automobile lending,
mortgage banking or home equity
8
<PAGE>
lending or the origination, purchase, sale or servicing of
residential mortgage loans or home equity loan products
("Consumer Finance Activities"); provided, however, that the
foregoing shall in no way limit the Employee's activities with
respect to any entity or business which engages in Consumer
Finance Activities if the Employee's activities are unrelated
to the Consumer Finance Activities of such entity or business.
11. Indemnification; Legal Fees. The Corporation shall indemnify the
Employee to the fullest extent permitted by the laws of the Corporation's state
of incorporation in effect at that time, or certificate of incorporation and
by-laws of the Corporation, whichever affords the greater protection to the
Employee. The Employee will be entitled to any insurance policies the
Corporation may elect to maintain generally for the benefit of its officers and
directors against all costs, charges and expenses incurred in connection with
any action, suit or proceeding to which the Employee may be made a party by
reason of being a director or officer of the Corporation. The Corporation shall
reimburse the Employee for any legal fees and expenses incurred by the Employee
(including but not limited to the legal fees and expenses incurred pursuant to
Section 16 hereof) in contesting or disputing any termination of the Employee's
employment or in seeking to obtain or enforce any right or benefit provided by
this Agreement (or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Internal Revenue Code of
1996, as amended (the "Code"), to any payment or benefit provided hereunder)
other than for any such expenses, costs, liabilities or legal fees incurred as a
result of the Employee's bad faith. Such payments shall be made within five (5)
days after the Employee's request for payment accompanied with such evidence of
fees and expenses incurred as the Corporation reasonably may require. Any
termination of the Employee's employment or of this Agreement shall have no
effect on the continuing operation of this Section 11.
12. Successors; Binding Agreement.
(a) Corporation's Successors. The Corporation will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Corporation to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Corporation would be required to perform
it if no such succession had taken place. Failure of the Corporation to obtain
such assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Employee to
compensation from the Corporation in the same amount and on the same terms as
the Employee would be entitled to hereunder if the Employee terminated the
Employee's employment for Good Reason, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Corporation" shall
mean the Corporation as hereinbefore defined and any successor to its business
and/or assets as aforesaid which executes and delivers the agreement provided
for in this Section 12 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
(b) The Employee's Successors. This Agreement and all rights
of the Employee hereunder shall inure to the benefit of and be enforceable by
the Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees
9
<PAGE>
and Legatees. If the Employee should die while any amounts would still be
payable to the Employee hereunder if the Employee had continued to live, all
such amounts unless otherwise provided herein shall be paid in accordance with
the terms of this Agreement to the Employee's devisee, legatee, or other
designee or, if there be no such designee, to the Employee's estate.
13. Notice. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Employee: Charles W. Newman
193 Lamplighter Lane
Ponte Vedra Beach, FL 32082
If to the Corporation: NationsBank Corporation
NationsBank Corporate Center
100 North Tryon Street
Charlotte, NC 28255
Attention: General Counsel
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
14. Additional Payment.
(a) If any of the payments provided for in this Agreement (the
"Contract Payments") or any portion of the Total Payments (as defined below)
will be subject to the tax (the "Excise Tax") imposed by section 4999 of the
Code, the Corporation shall pay to the Employee, no later than the fifth day
following the earlier of the date on which such payment is made and the Date of
Termination, an additional amount (the "Gross-Up Payment") such that the net
amount retained by the Employee, after deduction of any Excise Tax on the
Contract Payments and such other Total Payments and any federal and state and
local income, employment and other taxes and Excise Tax upon the payment
provided for by this subsection, shall be equal to the Contract Payments and
such other Total Payments.
(b) For purposes of determining whether any payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or
benefits received or to be received by the Employee in connection with an event
described in section 280(G)(b)(2)(A)(i) of the Code (hereinafter, a "change in
control"), or the Employee's termination of employment pursuant to the terms of
any plan, arrangement or agreement with Barnett, the Corporation, its
successors, any person whose actions result in a change in control or any person
affiliated with the Corporation or such person (together with the Contract
Payments, the "Total Payments"), shall be treated as "parachute payments" within
the meaning of section 28OG(b)(2) of the Code except to the extent that, in the
opinion of tax counsel selected by the Corporation's independent auditors and
acceptable to the Employee, the Total Payments do not constitute parachute
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<PAGE>
payments, (ii) all "excess parachute payments" within the meaning of section
28OG(b)(1) shall be treated as subject to the Excise Tax except to the extent
that, in the opinion of such tax counsel, such excess parachute payments
represent reasonable compensation for services actually rendered within the
meaning of section 280G(b)(4)(B) of the Code in excess of the base amount within
the meaning of section 28OG(b)(3) of the Code, or are otherwise not subject to
the Excise Tax, and (iii) the value of any noncash benefits or any deferred
payment or benefit shall be determined by the Corporation's independent auditors
in accordance with the principles of sections 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up Payment, the Employee
shall be deemed to pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which the Gross-Up Payment is to
be made and state and local income taxes at the highest marginal rate of
taxation in the state and locality of the Employee's residence on the Date of
Termination, net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes.
(c) In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at the time
of termination of the Employee's employment, the Employee shall repay to the
Corporation at the time that the amount of such reduction in Excise Tax is
finally determined, the portion of the Gross-Up Payment attributable to such
reduction (plus the portion of the Gross-Up Payment attributable to the Excise
Tax and federal and state and local income tax imposed on the Gross-Up Payment
being repaid by the Employee if such repayment results in a reduction in Excise
Tax and/or a federal and state and local income tax deduction) plus interest on
the amount of such repayment at the rate provided in section 1274(b)(2)(B) of
the Code. In the event that the Excise Tax is determined to exceed the amount
taken into account hereunder at the time of the termination of the Employee's
employment (including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Corporation shall
make an additional gross-up payment in respect of such excess (plus any interest
payable with respect to such excess) at the time that the amount of such excess
is finally determined.
(d) Notwithstanding any provision of this Agreement to the
contrary, in addition to the payment of the Employee's Net SERP I Benefit as
provided in Section 5(e)(ii), the Corporation shall pay the Employee from time
to time additional amounts such that after all applicable federal and state and
local income, employment and other taxes on the Employee's Net SERP I Benefit
and on the additional amount payable under this Section 14(d), the Employee has
received the Employee's entire Net SERP I Benefit on an after-tax basis. Any
additional amount due under this Section 14(d) shall be due and payable to the
Employee at the time the income, employment or other tax is assessed against the
Employee's Net SERP I Benefit whether or not the Employee's Net SERP I Benefit
is then payable. The federal and state and local income tax rates for purposes
of calculating the additional amount hereunder shall be determined in accordance
with the last sentence of Section 14(b).
15. Amendment or Modification; Waiver. No provisions of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Employee and such officer of the
Corporation as may be specifically designated by the Board or its compensation
committee. No waiver by either party hereto at any
11
<PAGE>
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement.
16. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three arbitrators in Jacksonville, Florida, in
accordance with the rules of the American Arbitration Association then in effect
or of such similar organization as the parties hereto may mutually agree.
Judgment may be entered on the arbitrator's award in any court having
jurisdiction. The expense of such arbitration shall be borne by the Corporation.
17. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Florida without regard to its conflicts of law principles.
18. Miscellaneous. All references to sections of any statute shall be
deemed also to refer to any successor provisions to such sections. The
obligations of the parties under Sections 9, 10 and 11 hereof shall survive the
expiration of the Term. The compensation and benefits payable to the Employee
under Section 9 of this Agreement shall be in lieu of any other severance
benefits to which the Employee may otherwise be entitled upon the Employee's
termination of employment under any severance plan, program, policy or
arrangement of the Corporation.
19. Severability. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect throughout the Term.
20. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
21. Entire Agreement. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and, as of
the Effective Date, supersedes all prior agreements, promises, covenants,
arrangements communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto.
12
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
NATIONSBANK CORPORATION
By:/s/ James H. Hance, Jr.
----------------------------
James H. Hance, Jr., Vice Chairman
and Chief Financial Officer
/s/ Charles W. Newman
------------------------------
Charles W. Newman
13
<PAGE>
EMPLOYMENT AGREEMENT
by and between
NATIONSBANK CORPORATION
and
RICHARD A. ANDERSON
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of October 10, 1997, by and between Richard A.
Anderson (the "Employee") and NationsBank Corporation, a North Carolina
corporation (the "Corporation").
The Employee is currently employed by Barnett Banks, Inc., a Florida
corporation ("Barnett"), as Chief Credit Policy Executive and is a party to an
employment agreement with Barnett (the "Prior Agreement") dated as of April 15,
1997. Pursuant to the Agreement and Plan of Merger, dated as of August 29, 1997
(the "Merger Agreement"), by and between the Corporation and Barnett, Barnett
will merge (the "Merger") with and into the Corporation (or a wholly-owned
subsidiary of the Corporation) as of the "Effective Time" (as defined in the
Merger Agreement).
The Board of Directors of the Corporation (the "Board") recognizes that
the Employee will contribute significantly to the growth and success of the
Corporation following the Effective Time. The Board desires to provide for the
continued employment of the Employee and to encourage the attention and
dedication to the Corporation of the Employee as a member of the Corporation's
management, in the best interests of the Corporation and its shareholders. The
Employee is willing to commit himself to serve the Corporation on the terms and
conditions herein provided.
In order to effect the foregoing, the Corporation and the Employee wish
to enter into an employment agreement on the terms and conditions set forth
below. This Agreement shall become effective only at the Effective Time. If the
Effective Time does not occur, this Agreement shall be of no force and effect.
Accordingly, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Employment; Term. The Corporation hereby agrees to employ the
Employee, and the Employee hereby accepts such employment, on the terms and
conditions hereinafter set forth. The period of employment of the Employee by
the Corporation hereunder (the "Employment Period") shall commence on the date
(the "Effective Date") on which the Effective Time occurs and shall end on the
Employee's Date of Termination (as defined in Section 8(b) hereof). The term of
this Agreement (the "Term") shall begin on the Effective Date and shall end on
the third anniversary thereof.
2. Prior Agreement. As of the Effective Date, the Prior Agreement is
hereby amended and superseded in its entirety by the terms and provisions of
this Agreement.
3. Position and Duties. As of the Effective Date, the Employee shall
serve as Executive Vice President of the Corporation in which capacity the
Employee shall perform the usual and customary duties of the office in which the
Employee shall serve.
4. Place of Performance. In connection with the Employee's employment
by the Corporation, the Employee's principal business address shall be at
Barnett's current principal
<PAGE>
executive offices in Jacksonville, Florida or in such other place as the
Employee and the Corporation may agree.
5. Compensation and Related Matters.
(a) Base Salary. During the Employment Period, the Corporation
shall pay the Employee an annual base salary ("Base Salary") of $400,000,
payable in approximately equal installments in accordance with the Corporation's
customary payroll practices. The Base Salary may be increased during the
Employment Period, and if so increased, it shall not be decreased. The salary
payments (including any increased salary payments) hereunder shall not in any
way limit or reduce any other obligation of the Corporation hereunder, and no
other compensation, benefit or payment hereunder shall in any way limit or
reduce the obligation of the Corporation to pay the Employee's salary hereunder.
(b) Bonuses. During the Employment Period, the Employee shall
receive annual bonuses (each, an "Annual Bonus"), each of which shall equal no
less than $400,000. The Annual Bonus shall be paid at a time and in a manner
consistent with the Corporation's customary practice.
(c) Equity-Based Compensation. The Corporation shall grant to
the Employee (i) as of the Effective Date, 50,000 restricted shares of common
stock of the Corporation and (ii) as of the Effective Date and as of the first
anniversary of the Effective Date (provided the Employment Period is continuing
on such anniversary date), an option to purchase 30,000 shares (subject to
equitable adjustment in the event of a stock split or similar event as provided
in the Corporation's Key Employee Stock Plan) of common stock of the
Corporation, all pursuant to the Corporation's Key Employee Stock Plan. Subject
to the provisions hereof, (x) the restrictions with respect to one-third of the
shares subject to the grant described in (i) of the preceding sentence shall
lapse on each anniversary of the Effective Date, (y) the options described in
clause (ii) of the preceding sentence shall become exercisable in three equal
annual installments commencing with the date of grant, provided that any such
options not yet exercisable on the last day of the Term shall become exercisable
on such day, and (z) all previously awarded and outstanding options described in
clause (ii) of the preceding sentence shall remain exercisable for the
three-year period commencing with the date of the Employee's termination of
employment or until the original expiration date of such options, if earlier.
(d) Expenses. The Corporation shall promptly reimburse the
Employee for all reasonable business expenses incurred during the Employment
Period by the Employee in performing services hereunder, including all expenses
of travel and living expenses while away from home on business or at the request
of and in the service of the Corporation, provided that such expenses are
incurred and accounted for in accordance with the policies and procedures
established by the Corporation.
2
<PAGE>
(e) Other Benefits.
(i) Subject to the provisions of clause (ii) below,
during the Employment Period, the Employee shall be entitled
to participate in all of the employee benefit plans and
arrangements made available by the Corporation to similarly
situated employees, subject to and on a basis consistent with
the terms, conditions and overall administration of such plans
and arrangements, and shall be entitled to all perquisites and
special benefits provided to similarly situated employees of
the Corporation. Credit shall be given to the Employee for the
Employee's service with Barnett, as if such service had been
performed for the Corporation, for all relevant purposes under
all such Corporation plans and arrangements.
(ii) As of the Effective Date the Employee shall be
designated a participant in the NationsBank Corporation and
Designated Subsidiaries Supplemental Executive Retirement Plan
("SERP I") which shall provide the Employee with a target
annual retirement benefit equal to sixty percent (60%) of the
Employee's final five-year average earnings, offset by the
Employee's annual retirement benefits from the Corporation's
tax-qualified defined benefit plan, the Corporation's ERISA
restoration plan, Barnett's tax-qualified defined benefit
plan, the Supplemental Executive Retirement Plan of Barnett
Banks, Inc. and its Affiliates (the "Barnett SERP"), any plan
maintained by any previous employer of the Employee (which
previous employer plan offset will be calculated in accordance
with Section 3.1(b)(1)(B) of the Barnett SERP as in effect on
the date hereof) and social security. The Employee shall be
credited with the Employee's service with, and compensation
from, Barnett prior to the Effective Date for purposes of
determining the Employee's SERP I target benefit. In no event
shall the annual retirement benefit payable to the Employee
from SERP I after the offsets listed above (the "Net SERP I
Benefit") be less than $250,000, and the Employee shall be
eligible to commence the Employee's Net SERP I Benefit on the
fifth (5th) anniversary of the Effective Date. Upon the
Employee's death, the Employee's beneficiary shall be entitled
to receive until such beneficiary's death an annual benefit
equal to seventy-five percent (75%) of the Employee's Net SERP
I Benefit. Notwithstanding the foregoing provisions of this
clause, the Employee shall be entitled to receive the lump sum
value of the Employee's Net SERP I Benefit within thirty (30)
days following the Employee's Date of Termination (as defined
in Section 8(b) below) calculated using a discount rate of
five percent (5%) and the 1983 Group Annuity Mortality Table
and assuming a three year age difference between the Employee
and the Employee's spouse. Any such election to receive a lump
sum benefit may be made by the Employee's delivery of a
written election to the Corporation on, or at any time after,
the Effective Date. Such election may be made by the Employee
without the consent of the Corporation or any administrative
committee under SERP I, and no financial penalty or other
reduction in the lump sum value calculated above shall be
imposed as the result of such lump sum election. In the event
the Employee elects a lump sum payment of the Employee's Net
SERP I Benefit and dies prior to receiving such payment, the
lump sum value of the Employee's Net SERP I Benefit
(calculated as if the Employee had terminated
3
<PAGE>
employment on the date prior to his death) shall be paid to
the Employee's estate or other designated beneficiary. See
Section 14(d) for special provisions related to an income tax
gross-up related to the Employee's Net SERP I Benefit.
(f) Vacation. The Employee shall be entitled to (i) the number
of vacation days in each calendar year, (ii) compensation in respect of earned
but unused vacation days, and (iii) all paid holidays, in each case as the same
may be provided by the Corporation to its similarly situated employees.
(g) Services Furnished. During the Employment Period, the
Corporation shall furnish the Employee with office space, stenographic
assistance and such other facilities and services as are provided to the
Employee by Barnett as of the date hereof.
6. Offices. Subject to Sections 3 and 4, the Employee agrees to serve
without additional compensation, if elected or appointed thereto, as a director
of any of the Corporation's subsidiaries and as a member of any committees of
the board of directors of any such corporations, and in one or more executive
positions of any of the Corporation's subsidiaries, provided that the Employee
is indemnified for serving in any and all such capacities on a basis no less
favorable than is currently or may be provided to any other director of the
Corporation, any of its subsidiaries, or in connection with any such executive
position, as the case may be.
7. Termination. The Employment Period shall end in the event of a
termination of the Employee's employment in accordance with any of the
provisions of this Section 7, and the Term shall end in the event of a
termination of Employee's employment in accordance with the provisions of
subsection (c) of this Section 7, in each case, on the Employee's Date of
Termination (as defined in Section 8(b) below).
(a) Death. The Employee's employment hereunder shall terminate
upon the Employee's death.
(b) Disability. If, as a result of the Employee's incapacity
due to physical or mental illness, the Employee shall have been absent from the
full-time performance of the Employee's duties hereunder for the entire period
of six consecutive months, and within thirty (30) days after written Notice of
Termination (as defined in Section 8) is given shall not have returned to the
performance of the Employee's duties hereunder on a full-time basis, the
Corporation may terminate the Employee's employment hereunder for "Disability."
(c) Cause. The Corporation may terminate the Employee's
employment hereunder for Cause. For purposes of this Agreement, the Corporation
shall have "Cause" to terminate the Employee's employment hereunder upon the
occurrence of any of the following events:
(i) the conviction of the Employee for the
commission of a felony involving dishonesty with respect to
the Corporation; or
4
<PAGE>
(ii) gross and willful misconduct by the Employee
that is demonstrably and materially injurious to the
Corporation or its subsidiaries, whether monetarily or
otherwise.
Cause shall not exist unless and until the Corporation has delivered to the
Employee a copy of a resolution duly adopted by the affirmative vote of not less
than two-thirds (2/3) of the entire membership of the Board at a meeting of the
Board called and held for such purpose (after reasonable notice to the Employee
and an opportunity for the Employee, together with the Employee's counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
the Employee was guilty of the conduct set forth in this Section 7(c) and
specifying the particulars thereof in detail. For purposes of this Section 7(c),
no act or failure to act on the Employee's part shall be considered "willful"
unless done or failed to be done by the Employee in bad faith and without
reasonable belief that the Employee's action or omission was in the best
interest of the Corporation.
(d) Good Reason. The Employee may terminate the Employee's
employment hereunder for "Good Reason." The Employee shall be deemed to have
terminated the Employee's employment for Good Reason if the Employee's
employment is terminated for any reason other than for death, Disability or
Cause.
8. Termination Procedure.
(a) Notice of Termination. Any termination of the Employee's
employment by the Corporation or by the Employee (other than termination
pursuant to Section 7(a) hereof) shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 13. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice that
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Employee's employment under the provision
so indicated.
(b) Date of Termination. "Date of Termination" shall mean (i)
if the Employee's employment is terminated pursuant to Section 7(a) above, the
date of the Employee's death, (ii) if the Employee's employment is terminated
pursuant to Section 7(b) above, thirty (30) days after Notice of Termination is
given (provided that the Employee shall not have returned to the performance of
the Employee's duties on a full-time basis during such thirty (30) day period),
(iii) if the Employee's employment is terminated pursuant to Section 7(c) above,
the date specified in the Notice of Termination, and (iv) if the Employee's
employment is terminated pursuant to Section 7(d) above, the date on which a
Notice of Termination is given or any later date (within 30 days) set forth in
such Notice of Termination; provided, however, that, if within thirty (30) days
after any Notice of Termination is given the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
binding and final arbitration award or by a final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom having expired
and no appeal having been perfected).
5
<PAGE>
(c) Compensation During Dispute. If a purported termination
occurs during the Term, and such termination is disputed in accordance with
subsection (b) of this Section 8, the Corporation shall continue to pay the
Employee the full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, salary) and continue the
Employee as a participant in all compensation, benefit and insurance plans in
which the Employee was participating when the notice giving rise to the dispute
was given, until the Date of Termination, determined in accordance with
subsection (b) of this Section 8. Amounts paid under this Section 8(c) are in
addition to all other amounts due under this Agreement and shall not be offset
against or reduce any other amounts due under this Agreement.
9. Compensation upon Termination or During Disability.
(a) Disability; Death. During any period that the Employee
fails to perform the Employee's duties hereunder as a result of incapacity due
to physical or mental illness ("Disability Period"), the Employee shall continue
to receive the Employee's Base Salary at the rate in effect at the beginning of
such period as well as all other payments and benefits set forth in Section 5
hereof, reduced by any payments made to the Employee during the disability
period under the disability benefit plans of the Corporation then in effect or
under the Social Security disability insurance program ("Disability Payments").
Subsequent to the termination of the Employee's employment pursuant to Section
7(b), or in the event the Employee's employment is terminated by reason of the
Employee's death, the Corporation shall pay to the Employee, the Employee's
legal representative or the Employee's successors (as described in Section
12(b)) the payments and benefits set forth in subsection (b) of this Section 9
for a period of one (1) year or, if less, for the period ending on the last day
of the Term.
(b) By the Corporation without Cause or by the Employee for
Good Reason. If during the Term the Employee's employment is terminated by the
Corporation other than for Cause or Disability or if the Employee terminates the
Employee's employment for Good Reason, then:
(i) the Corporation shall pay the Employee the
Employee's Base Salary through the Date of Termination at the
rate in effect at the time Notice of Termination is given; any
bonus payable hereunder in respect of a year which ended prior
to the Date of Termination and which had not yet been paid;
and an amount equal to the minimum bonus referred to in
Section 5(b) hereof, multiplied by a fraction the numerator of
which shall be the number of days from the beginning of the
applicable year to and including the Date of Termination and
the denominator of which shall be 365;
(ii) in lieu of any further salary or bonus payments
to the Employee for periods subsequent to the Date of
Termination, the Corporation shall pay as liquidated damages
to the Employee an aggregate amount equal to the product of
(A) the number of years (including fractions thereof)
remaining in the Term as of the Date of Termination (but no
more than one (1) year in the case of the Employee's death or
Disability as provided in Section 9(a) above) and (B) the sum
of (1) the Employee's Base Salary rate in effect as of the
Date of Termination, and (2) the
6
<PAGE>
minimum annual bonus referred to in Section 5(b) hereof, such
amount to be paid in a cash lump sum within five (5) days
following the Date of Termination;
(iii) all equity based awards described in Section
5(c) hereof shall become fully vested and exercisable, as
applicable, and all options described in Section 5(c) that are
then outstanding shall remain exercisable for the three-year
period commencing with the Date of Termination; and
(iv) the Corporation shall continue to provide to the
Employee the benefits described in Section 5(e)(i) hereof for
the remainder of the Term. Welfare and other insurance
benefits otherwise receivable by the Employee pursuant to this
Section 9(b)(iv) shall be reduced to the extent comparable
benefits are actually received by the Employee from a
subsequent employer during the period during which the
Corporation is required to provide such benefits, and the
Employee shall report any such benefits actually received to
the Corporation.
(c) By Corporation for Cause. If the Employee's employment
shall be terminated by the Corporation for Cause, then the Corporation shall pay
the Employee the Employee's Base Salary (at the rate in effect at the time
Notice of Termination is given) through the Date of Termination.
(d) Compensation Plans. Following any termination of the
Employee's employment, the Corporation shall pay the Employee all unpaid
amounts, if any, to which the Employee is entitled as of the Date of Termination
under any compensation plan or program of the Corporation, including but not
limited to any deferred compensation plan or program, at the time such payments
are due in accordance with and subject to the provisions of such plans or
programs.
(e) Mitigation. Except as is specifically provided in
subsection (b)(iv) of this Section 9, the Employee shall not be required to
mitigate the amount of any payment provided herein by seeking other employment
or otherwise, nor shall the amount of any payment or benefit provided hereunder
be reduced by any compensation earned by the Employee as the result of
employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Employee to the Corporation, or otherwise.
10. Confidential Information; Non-Competition.
(a) Confidential Information. The Employee shall hold in a
fiduciary capacity for the benefit of the Corporation all trade secrets,
confidential information, and knowledge or data relating to the Corporation and
its businesses, which shall have been obtained by the Employee's employment by
the Corporation and which shall not have been or hereafter become public
knowledge (other than by acts by the Employee or representatives of the Employee
in violation of this Agreement). The Employee shall not, without the prior
written consent of the Corporation or as may otherwise be required by law or
legal process, communicate or divulge any such trade secrets, information,
knowledge or data to anyone other than the Corporation and those designated by
the Corporation. Any termination of the Employee's employment or of this
Agreement shall have no effect on the continuing operation of this Section
10(a). The Employee agrees to return all
7
<PAGE>
confidential information, including all photocopies, extracts and summaries
thereof, and any such information stored electronically on tapes, computer disks
or in any other manner to the Corporation at any time upon request by the
Corporation and upon the termination of the Employee's employment hereunder for
any reason.
(b) Non-Competition. During the Employment Period and for a
period of two (2) years thereafter, the Employee shall not engage in
Competition, as defined below, with the Corporation in any locality or region of
the United States in which the Corporation had operations at the time of, or
within six (6) months prior to, the termination of the Employee's employment
hereunder; provided, that it shall not be a violation of this Section 10(b) for
the Employee to become the registered or beneficial owner of up to five percent
(5%) of any class of the capital stock of a competing corporation registered
under the Securities Exchange Act of 1934, as amended, provided that the
Employee does not actively participate in the business of such corporation until
such time as this covenant expires.
For purposes of this Agreement, Competition by the Employee
shall mean the Employee's engaging in, or otherwise directly or indirectly being
employed by or acting as a consultant (for the purposes of this Section 10, the
Employee shall be a "consultant" if the Employee works forty (40) or more hours
for any one such entity in any ninety-day period) or lender to, or being a
director, officer, employee, principal, agent, stockholder (other than as
specifically provided for herein), member, owner or partner of any company or
business operation specified below:
(i) any company which is, or is a direct or indirect
subsidiary of, one of the twenty-five largest bank holding
companies headquartered in the United States (as measured by
asset size) or any of the ten largest investment banking
companies headquartered in the United States (as measured by
capital);
(ii) any business operation of any company in the
financial services industry if such business operation is then
in substantial and direct competition with a principal
business operation of the Corporation in which the Corporation
was engaged as of the Date of Termination and if the financial
services company has total revenues of $100 million or more
annually and a majority of such revenues are derived from
customers and/or operations in the State of Florida; provided,
however, that no business operation of the Corporation shall
constitute a principal business operation of the Corporation
for purposes of this clause (ii) unless the revenues, profits
or assets of the Corporation attributable to such business
operation amount to at least 10% of the total revenues,
profits or assets of the Corporation; or
(iii) any business operation which directly engages
in the business of automobile leasing, automobile lending,
mortgage banking or home equity lending or the origination,
purchase, sale or servicing of residential mortgage loans or
home equity loan products ("Consumer Finance Activities");
provided, however, that the foregoing shall in no way limit
the Employee's activities with respect to any entity or
business which engages in Consumer Finance Activities if the
Employee's activities are unrelated to the Consumer Finance
Activities of such entity or business.
8
<PAGE>
11. Indemnification; Legal Fees. The Corporation shall indemnify the
Employee to the fullest extent permitted by the laws of the Corporation's state
of incorporation in effect at that time, or certificate of incorporation and
by-laws of the Corporation, whichever affords the greater protection to the
Employee. The Employee will be entitled to any insurance policies the
Corporation may elect to maintain generally for the benefit of its officers and
directors against all costs, charges and expenses incurred in connection with
any action, suit or proceeding to which the Employee may be made a party by
reason of being a director or officer of the Corporation. The Corporation shall
reimburse the Employee for any legal fees and expenses incurred by the Employee
(including but not limited to the legal fees and expenses incurred pursuant to
Section 16 hereof) in contesting or disputing any termination of the Employee's
employment or in seeking to obtain or enforce any right or benefit provided by
this Agreement (or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Internal Revenue Code of
1996, as amended (the "Code"), to any payment or benefit provided hereunder)
other than for any such expenses, costs, liabilities or legal fees incurred as a
result of the Employee's bad faith. Such payments shall be made within five (5)
days after the Employee's request for payment accompanied with such evidence of
fees and expenses incurred as the Corporation reasonably may require. Any
termination of the Employee's employment or of this Agreement shall have no
effect on the continuing operation of this Section 11.
12. Successors; Binding Agreement.
(a) Corporation's Successors. The Corporation will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Corporation to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Corporation would be required to perform
it if no such succession had taken place. Failure of the Corporation to obtain
such assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Employee to
compensation from the Corporation in the same amount and on the same terms as
the Employee would be entitled to hereunder if the Employee terminated the
Employee's employment for Good Reason, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Corporation" shall
mean the Corporation as hereinbefore defined and any successor to its business
and/or assets as aforesaid which executes and delivers the agreement provided
for in this Section 12 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
(b) The Employee's Successors. This Agreement and all rights
of the Employee hereunder shall inure to the benefit of and be enforceable by
the Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and Legatees. If the Employee should
die while any amounts would still be payable to the Employee hereunder if the
Employee had continued to live, all such amounts unless otherwise provided
herein shall be paid in accordance with the terms of this Agreement to the
Employee's devisee, legatee, or other designee or, if there be no such designee,
to the Employee's estate.
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<PAGE>
13. Notice. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Employee: Richard A. Anderson
13733 Bermuda Cay Court
Jacksonville, FL 32225
If to the Corporation: NationsBank Corporation
NationsBank Corporate Center
100 North Tryon Street
Charlotte, NC 28255
Attention: General Counsel
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
14. Additional Payment.
(a) If any of the payments provided for in this Agreement (the
"Contract Payments") or any portion of the Total Payments (as defined below)
will be subject to the tax (the "Excise Tax") imposed by section 4999 of the
Code, the Corporation shall pay to the Employee, no later than the fifth day
following the earlier of the date on which such payment is made and the Date of
Termination, an additional amount (the "Gross-Up Payment") such that the net
amount retained by the Employee, after deduction of any Excise Tax on the
Contract Payments and such other Total Payments and any federal and state and
local income, employment and other taxes and Excise Tax upon the payment
provided for by this subsection, shall be equal to the Contract Payments and
such other Total Payments.
(b) For purposes of determining whether any payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or
benefits received or to be received by the Employee in connection with an event
described in section 280(G)(b)(2)(A)(i) of the Code (hereinafter, a "change in
control"), or the Employee's termination of employment pursuant to the terms of
any plan, arrangement or agreement with Barnett, the Corporation, its
successors, any person whose actions result in a change in control or any person
affiliated with the Corporation or such person (together with the Contract
Payments, the "Total Payments"), shall be treated as "parachute payments" within
the meaning of section 28OG(b)(2) of the Code except to the extent that, in the
opinion of tax counsel selected by the Corporation's independent auditors and
acceptable to the Employee, the Total Payments do not constitute parachute
payments, (ii) all "excess parachute payments" within the meaning of section
28OG(b)(1) shall be treated as subject to the Excise Tax except to the extent
that, in the opinion of such tax counsel, such excess parachute payments
represent reasonable compensation for services actually rendered within the
meaning of section 280G(b)(4)(B) of the Code in excess of the base amount within
the meaning of section 28OG(b)(3) of the Code, or are otherwise not subject to
the Excise Tax, and (iii) the value of any
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<PAGE>
noncash benefits or any deferred payment or benefit shall be determined by the
Corporation's independent auditors in accordance with the principles of sections
280G(d)(3) and (4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, the Employee shall be deemed to pay federal income taxes at
the highest marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the Employee's
residence on the Date of Termination, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and local
taxes.
(c) In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at the time
of termination of the Employee's employment, the Employee shall repay to the
Corporation at the time that the amount of such reduction in Excise Tax is
finally determined, the portion of the Gross-Up Payment attributable to such
reduction (plus the portion of the Gross-Up Payment attributable to the Excise
Tax and federal and state and local income tax imposed on the Gross-Up Payment
being repaid by the Employee if such repayment results in a reduction in Excise
Tax and/or a federal and state and local income tax deduction) plus interest on
the amount of such repayment at the rate provided in section 1274(b)(2)(B) of
the Code. In the event that the Excise Tax is determined to exceed the amount
taken into account hereunder at the time of the termination of the Employee's
employment (including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Corporation shall
make an additional gross-up payment in respect of such excess (plus any interest
payable with respect to such excess) at the time that the amount of such excess
is finally determined.
(d) Notwithstanding any provision of this Agreement to the
contrary, in addition to the payment of the Employee's Net SERP I Benefit as
provided in Section 5(e)(ii), the Corporation shall pay the Employee from time
to time additional amounts such that after all applicable federal and state and
local income, employment and other taxes on the Employee's Net SERP I Benefit
and on the additional amount payable under this Section 14(d), the Employee has
received the Employee's entire Net SERP I Benefit on an after-tax basis. Any
additional amount due under this Section 14(d) shall be due and payable to the
Employee at the time the income, employment or other tax is assessed against the
Employee's Net SERP I Benefit whether or not the Employee's Net SERP I Benefit
is then payable. The federal and state and local income tax rates for purposes
of calculating the additional amount hereunder shall be determined in accordance
with the last sentence of Section 14(b).
15. Amendment or Modification; Waiver. No provisions of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Employee and such officer of the
Corporation as may be specifically designated by the Board or its compensation
committee. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.
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<PAGE>
16. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three arbitrators in Jacksonville, Florida, in
accordance with the rules of the American Arbitration Association then in effect
or of such similar organization as the parties hereto may mutually agree.
Judgment may be entered on the arbitrator's award in any court having
jurisdiction. The expense of such arbitration shall be borne by the Corporation.
17. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Florida without regard to its conflicts of law principles.
18. Miscellaneous. All references to sections of any statute shall be
deemed also to refer to any successor provisions to such sections. The
obligations of the parties under Sections 9, 10 and 11 hereof shall survive the
expiration of the Term. The compensation and benefits payable to the Employee
under Section 9 of this Agreement shall be in lieu of any other severance
benefits to which the Employee may otherwise be entitled upon the Employee's
termination of employment under any severance plan, program, policy or
arrangement of the Corporation.
19. Severability. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect throughout the Term.
20. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
21. Entire Agreement. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and, as of
the Effective Date, supersedes all prior agreements, promises, covenants,
arrangements communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
NATIONSBANK CORPORATION
By: /s/ James H. Hance, Jr.
---------------------------
James H. Hance, Jr., Vice Chairman
and Chief Financial Officer
/s/ Richard A. Anderson
------------------------------
Richard A. Anderson
<PAGE>
EMPLOYMENT AGREEMENT
by and between
NATIONSBANK CORPORATION
and
JUDITH S. BEAUBOUEF
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of October 10, 1997, by and between Judith S.
Beaubouef (the "Employee") and NationsBank Corporation, a North Carolina
corporation (the "Corporation").
The Employee is currently employed by Barnett Banks, Inc., a Florida
corporation ("Barnett"), as Chief Legal Executive and is a party to an
employment agreement with Barnett (the "Prior Agreement") dated as of July 1,
1996. Pursuant to the Agreement and Plan of Merger, dated as of August 29, 1997
(the "Merger Agreement"), by and between the Corporation and Barnett, Barnett
will merge (the "Merger") with and into the Corporation (or a wholly-owned
subsidiary of the Corporation) as of the "Effective Time" (as defined in the
Merger Agreement).
The Board of Directors of the Corporation (the "Board") recognizes that
the Employee will contribute significantly to the growth and success of the
Corporation following the Effective Time. The Board desires to provide for the
continued employment of the Employee and to encourage the attention and
dedication to the Corporation of the Employee as a member of the Corporation's
management, in the best interests of the Corporation and its shareholders. The
Employee is willing to commit herself to serve the Corporation on the terms and
conditions herein provided.
In order to effect the foregoing, the Corporation and the Employee wish
to enter into an employment agreement on the terms and conditions set forth
below. This Agreement shall become effective only at the Effective Time. If the
Effective Time does not occur, this Agreement shall be of no force and effect.
Accordingly, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Employment; Term. The Corporation hereby agrees to employ the
Employee, and the Employee hereby accepts such employment, on the terms and
conditions hereinafter set forth. The period of employment of the Employee by
the Corporation hereunder (the "Employment Period") shall commence on the date
(the "Effective Date") on which the Effective Time occurs and shall end on the
Employee's Date of Termination (as defined in Section 8(b) hereof). The term of
this Agreement (the "Term") shall begin on the Effective Date and shall end on
the third anniversary thereof.
2. Prior Agreement. As of the Effective Date, the Prior Agreement is
hereby amended and superseded in its entirety by the terms and provisions of
this Agreement.
3. Position and Duties. As of the Effective Date, the Employee shall
serve as Executive Vice President of the Corporation in which capacity the
Employee shall perform the usual and customary duties of the office in which the
Employee shall serve.
<PAGE>
4. Place of Performance. In connection with the Employee's employment
by the Corporation, the Employee's principal business address shall be at
Barnett's current principal executive offices in Jacksonville, Florida or in
such other place as the Employee and the Corporation may agree.
5. Compensation and Related Matters.
(a) Base Salary. During the Employment Period, the Corporation
shall pay the Employee an annual base salary ("Base Salary") of $400,000,
payable in approximately equal installments in accordance with the Corporation's
customary payroll practices. The Base Salary may be increased during the
Employment Period, and if so increased, it shall not be decreased. The salary
payments (including any increased salary payments) hereunder shall not in any
way limit or reduce any other obligation of the Corporation hereunder, and no
other compensation, benefit or payment hereunder shall in any way limit or
reduce the obligation of the Corporation to pay the Employee's salary hereunder.
(b) Bonuses. During the Employment Period, the Employee shall
receive annual bonuses (each, an "Annual Bonus"), each of which shall equal no
less than $400,000. The Annual Bonus shall be paid at a time and in a manner
consistent with the Corporation's customary practice.
(c) Equity-Based Compensation. The Corporation shall grant to
the Employee (i) as of the Effective Date, 50,000 restricted shares of common
stock of the Corporation and (ii) as of the Effective Date and as of the first
anniversary of the Effective Date (provided the Employment Period is continuing
on such anniversary date), an option to purchase 30,000 shares (subject to
equitable adjustment in the event of a stock split or similar event as provided
in the Corporation's Key Employee Stock Plan) of common stock of the
Corporation, all pursuant to the Corporation's Key Employee Stock Plan. Subject
to the provisions hereof, (x) the restrictions with respect to one-third of the
shares subject to the grant described in (i) of the preceding sentence shall
lapse on each anniversary of the Effective Date, (y) the options described in
clause (ii) of the preceding sentence shall become exercisable in three equal
annual installments commencing with the date of grant, provided that any such
options not yet exercisable on the last day of the Term shall become exercisable
on such day, and (z) all previously awarded and outstanding options described in
clause (ii) of the preceding sentence shall remain exercisable for the
three-year period commencing with the date of the Employee's termination of
employment or until the original expiration date of such options, if earlier.
(d) Expenses. The Corporation shall promptly reimburse the
Employee for all reasonable business expenses incurred during the Employment
Period by the Employee in performing services hereunder, including all expenses
of travel and living expenses while away from home on business or at the request
of and in the service of the Corporation, provided that such expenses are
incurred and accounted for in accordance with the policies and procedures
established by the Corporation.
2
<PAGE>
(e) Other Benefits.
(i) Subject to the provisions of clause (ii) below,
during the Employment Period, the Employee shall be entitled
to participate in all of the employee benefit plans and
arrangements made available by the Corporation to similarly
situated employees, subject to and on a basis consistent with
the terms, conditions and overall administration of such plans
and arrangements, and shall be entitled to all perquisites and
special benefits provided to similarly situated employees of
the Corporation. Credit shall be given to the Employee for the
Employee's service with Barnett, as if such service had been
performed for the Corporation, for all relevant purposes under
all such Corporation plans and arrangements.
(ii) As of the Effective Date the Employee shall be
designated a participant in the NationsBank Corporation and
Designated Subsidiaries Supplemental Executive Retirement Plan
("SERP I") which shall provide the Employee with a target
annual retirement benefit equal to sixty percent (60%) of the
Employee's final five-year average earnings, offset by the
Employee's annual retirement benefits from the Corporation's
tax-qualified defined benefit plan, the Corporation's ERISA
restoration plan, Barnett's tax-qualified defined benefit
plan, the Supplemental Executive Retirement Plan of Barnett
Banks, Inc. and its Affiliates (the "Barnett SERP"), any plan
maintained by any previous employer of the Employee (which
previous employer plan offset will be calculated in accordance
with Section 3.1(b)(1)(B) of the Barnett SERP as in effect on
the date hereof) and social security. The Employee shall be
credited with the Employee's service with, and compensation
from, Barnett prior to the Effective Date for purposes of
determining the Employee's SERP I target benefit. In no event
shall the annual retirement benefit payable to the Employee
from SERP I after the offsets listed above (the "Net SERP I
Benefit") be less than $250,000, and the Employee shall be
eligible to commence the Employee's Net SERP I Benefit on the
fifth (5th) anniversary of the Effective Date. Upon the
Employee's death, the Employee's beneficiary shall be entitled
to receive until such beneficiary's death an annual benefit
equal to seventy-five percent (75%) of the Employee's Net SERP
I Benefit. Notwithstanding the foregoing provisions of this
clause, the Employee shall be entitled to receive the lump sum
value of the Employee's Net SERP I Benefit within thirty (30)
days following the Employee's Date of Termination (as defined
in Section 8(b) below) calculated using a discount rate of
five percent (5%) and the 1983 Group Annuity Mortality Table
and assuming a three year age difference between the Employee
and the Employee's spouse. Any such election to receive a lump
sum benefit may be made by the Employee's delivery of a
written election to the Corporation on, or at any time after,
the Effective Date. Such election may be made by the Employee
without the consent of the Corporation or any administrative
committee under SERP I, and no financial penalty or other
reduction in the lump sum value calculated above shall be
imposed as the result of such lump sum election. In the event
the Employee elects a lump sum payment of the Employee's Net
SERP I Benefit and dies prior
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<PAGE>
to receiving such payment, the lump sum value of the
Employee's Net SERP I Benefit (calculated as if the Employee
had terminated employment on the date prior to her death)
shall be paid to the Employee's estate or other designated
beneficiary. See Section 14(d) for special provisions related
to an income tax gross-up related to the Employee's Net SERP I
Benefit.
(f) Vacation. The Employee shall be entitled to (i) the number
of vacation days in each calendar year, (ii) compensation in respect of earned
but unused vacation days, and (iii) all paid holidays, in each case as the same
may be provided by the Corporation to its similarly situated employees.
(g) Services Furnished. During the Employment Period, the
Corporation shall furnish the Employee with office space, stenographic
assistance and such other facilities and services as are provided to the
Employee by Barnett as of the date hereof.
6. Offices. Subject to Sections 3 and 4, the Employee agrees to serve
without additional compensation, if elected or appointed thereto, as a director
of any of the Corporation's subsidiaries and as a member of any committees of
the board of directors of any such corporations, and in one or more executive
positions of any of the Corporation's subsidiaries, provided that the Employee
is indemnified for serving in any and all such capacities on a basis no less
favorable than is currently or may be provided to any other director of the
Corporation, any of its subsidiaries, or in connection with any such executive
position, as the case may be.
7. Termination. The Employment Period shall end in the event of a
termination of the Employee's employment in accordance with any of the
provisions of this Section 7, and the Term shall end in the event of a
termination of Employee's employment in accordance with the provisions of
subsection (c) of this Section 7, in each case, on the Employee's Date of
Termination (as defined in Section 8(b) below).
(a) Death. The Employee's employment hereunder shall terminate
upon the Employee's death.
(b) Disability. If, as a result of the Employee's incapacity
due to physical or mental illness, the Employee shall have been absent from the
full-time performance of the Employee's duties hereunder for the entire period
of six consecutive months, and within thirty (30) days after written Notice of
Termination (as defined in Section 8) is given shall not have returned to the
performance of the Employee's duties hereunder on a full-time basis, the
Corporation may terminate the Employee's employment hereunder for "Disability."
(c) Cause. The Corporation may terminate the Employee's
employment hereunder for Cause. For purposes of this Agreement, the Corporation
shall have "Cause" to terminate the Employee's employment hereunder upon the
occurrence of any of the following events:
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<PAGE>
(i) the conviction of the Employee for the commission
of a felony involving dishonesty with respect to the
Corporation; or
(ii) gross and willful misconduct by the Employee
that is demonstrably and materially injurious to the
Corporation or its subsidiaries, whether monetarily or
otherwise.
Cause shall not exist unless and until the Corporation has delivered to the
Employee a copy of a resolution duly adopted by the affirmative vote of not less
than two-thirds (2/3) of the entire membership of the Board at a meeting of the
Board called and held for such purpose (after reasonable notice to the Employee
and an opportunity for the Employee, together with the Employee's counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
the Employee was guilty of the conduct set forth in this Section 7(c) and
specifying the particulars thereof in detail. For purposes of this Section 7(c),
no act or failure to act on the Employee's part shall be considered "willful"
unless done or failed to be done by the Employee in bad faith and without
reasonable belief that the Employee's action or omission was in the best
interest of the Corporation.
(d) Good Reason. The Employee may terminate the Employee's
employment hereunder for "Good Reason." The Employee shall be deemed to have
terminated the Employee's employment for Good Reason if the Employee's
employment is terminated for any reason other than for death, Disability or
Cause.
8. Termination Procedure.
(a) Notice of Termination. Any termination of the Employee's
employment by the Corporation or by the Employee (other than termination
pursuant to Section 7(a) hereof) shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 13. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice that
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Employee's employment under the provision
so indicated.
(b) Date of Termination. "Date of Termination" shall mean (i)
if the Employee's employment is terminated pursuant to Section 7(a) above, the
date of the Employee's death, (ii) if the Employee's employment is terminated
pursuant to Section 7(b) above, thirty (30) days after Notice of Termination is
given (provided that the Employee shall not have returned to the performance of
the Employee's duties on a full-time basis during such thirty (30) day period),
(iii) if the Employee's employment is terminated pursuant to Section 7(c) above,
the date specified in the Notice of Termination, and (iv) if the Employee's
employment is terminated pursuant to Section 7(d) above, the date on which a
Notice of Termination is given or any later date (within 30 days) set forth in
such Notice of Termination; provided, however, that, if within thirty (30) days
after any Notice of Termination is given the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
binding and final arbitration award or by a final judgment,
5
<PAGE>
order or decree of a court of competent jurisdiction (the time for appeal
therefrom having expired and no appeal having been perfected).
(c) Compensation During Dispute. If a purported termination
occurs during the Term, and such termination is disputed in accordance with
subsection (b) of this Section 8, the Corporation shall continue to pay the
Employee the full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, salary) and continue the
Employee as a participant in all compensation, benefit and insurance plans in
which the Employee was participating when the notice giving rise to the dispute
was given, until the Date of Termination, determined in accordance with
subsection (b) of this Section 8. Amounts paid under this Section 8(c) are in
addition to all other amounts due under this Agreement and shall not be offset
against or reduce any other amounts due under this Agreement.
9. Compensation upon Termination or During Disability.
(a) Disability; Death. During any period that the Employee
fails to perform the Employee's duties hereunder as a result of incapacity due
to physical or mental illness ("Disability Period"), the Employee shall continue
to receive the Employee's Base Salary at the rate in effect at the beginning of
such period as well as all other payments and benefits set forth in Section 5
hereof, reduced by any payments made to the Employee during the disability
period under the disability benefit plans of the Corporation then in effect or
under the Social Security disability insurance program ("Disability Payments").
Subsequent to the termination of the Employee's employment pursuant to Section
7(b), or in the event the Employee's employment is terminated by reason of the
Employee's death, the Corporation shall pay to the Employee, the Employee's
legal representative or the Employee's successors (as described in Section
12(b)) the payments and benefits set forth in subsection (b) of this Section 9
for a period of one (1) year or, if less, for the period ending on the last day
of the Term.
(b) By the Corporation without Cause or by the Employee for
Good Reason. If during the Term the Employee's employment is terminated by the
Corporation other than for Cause or Disability or if the Employee terminates the
Employee's employment for Good Reason, then:
(i) the Corporation shall pay the Employee the
Employee's Base Salary through the Date of Termination at the
rate in effect at the time Notice of Termination is given; any
bonus payable hereunder in respect of a year which ended prior
to the Date of Termination and which had not yet been paid;
and an amount equal to the minimum bonus referred to in
Section 5(b) hereof, multiplied by a fraction the numerator of
which shall be the number of days from the beginning of the
applicable year to and including the Date of Termination and
the denominator of which shall be 365;
(ii) in lieu of any further salary or bonus payments
to the Employee for periods subsequent to the Date of
Termination, the Corporation shall pay as liquidated damages
to the Employee an aggregate amount equal to the product of
(A) the number of years (including fractions thereof)
remaining in the Term as of
6
<PAGE>
the Date of Termination (but no more than one (1) year in the
case of the Employee's death or Disability as provided in
Section 9(a) above) and (B) the sum of (1) the Employee's Base
Salary rate in effect as of the Date of Termination, and (2)
the minimum annual bonus referred to in Section 5(b) hereof,
such amount to be paid in a cash lump sum within five (5) days
following the Date of Termination;
(iii) all equity based awards described in Section
5(c) hereof shall become fully vested and exercisable, as
applicable, and all options described in Section 5(c) that are
then outstanding shall remain exercisable for the three-year
period commencing with the Date of Termination; and
(iv) the Corporation shall continue to provide to the
Employee the benefits described in Section 5(e)(i) hereof for
the remainder of the Term. Welfare and other insurance
benefits otherwise receivable by the Employee pursuant to this
Section 9(b)(iv) shall be reduced to the extent comparable
benefits are actually received by the Employee from a
subsequent employer during the period during which the
Corporation is required to provide such benefits, and the
Employee shall report any such benefits actually received to
the Corporation.
(c) By Corporation for Cause. If the Employee's employment
shall be terminated by the Corporation for Cause, then the Corporation shall pay
the Employee the Employee's Base Salary (at the rate in effect at the time
Notice of Termination is given) through the Date of Termination.
(d) Compensation Plans. Following any termination of the
Employee's employment, the Corporation shall pay the Employee all unpaid
amounts, if any, to which the Employee is entitled as of the Date of Termination
under any compensation plan or program of the Corporation, including but not
limited to any deferred compensation plan or program, at the time such payments
are due in accordance with and subject to the provisions of such plans or
programs.
(e) Mitigation. Except as is specifically provided in
subsection (b)(iv) of this Section 9, the Employee shall not be required to
mitigate the amount of any payment provided herein by seeking other employment
or otherwise, nor shall the amount of any payment or benefit provided hereunder
be reduced by any compensation earned by the Employee as the result of
employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Employee to the Corporation, or otherwise.
10. Confidential Information; Non-Competition.
(a) Confidential Information. The Employee shall hold in a
fiduciary capacity for the benefit of the Corporation all trade secrets,
confidential information, and knowledge or data relating to the Corporation and
its businesses, which shall have been obtained by the Employee's employment by
the Corporation and which shall not have been or hereafter become
7
<PAGE>
public knowledge (other than by acts by the Employee or representatives of the
Employee in violation of this Agreement). The Employee shall not, without the
prior written consent of the Corporation or as may otherwise be required by law
or legal process, communicate or divulge any such trade secrets, information,
knowledge or data to anyone other than the Corporation and those designated by
the Corporation. Any termination of the Employee's employment or of this
Agreement shall have no effect on the continuing operation of this Section
10(a). The Employee agrees to return all confidential information, including all
photocopies, extracts and summaries thereof, and any such information stored
electronically on tapes, computer disks or in any other manner to the
Corporation at any time upon request by the Corporation and upon the termination
of the Employee's employment hereunder for any reason.
(b) Non-Competition. During the Employment Period and for a
period of two (2) years thereafter, the Employee shall not engage in
Competition, as defined below, with the Corporation in any locality or region of
the United States in which the Corporation had operations at the time of, or
within six (6) months prior to, the termination of the Employee's employment
hereunder; provided, that it shall not be a violation of this Section 10(b) for
the Employee to become the registered or beneficial owner of up to five percent
(5%) of any class of the capital stock of a competing corporation registered
under the Securities Exchange Act of 1934, as amended, provided that the
Employee does not actively participate in the business of such corporation until
such time as this covenant expires.
For purposes of this Agreement, Competition by the Employee
shall mean the Employee's engaging in, or otherwise directly or indirectly being
employed by or acting as a consultant (for the purposes of this Section 10, the
Employee shall be a "consultant" if the Employee works forty (40) or more hours
for any one such entity in any ninety-day period) or lender to, or being a
director, officer, employee, principal, agent, stockholder (other than as
specifically provided for herein), member, owner or partner of any company or
business operation specified below:
(i) any company which is, or is a direct or indirect
subsidiary of, one of the twenty-five largest bank holding
companies headquartered in the United States (as measured by
asset size) or any of the ten largest investment banking
companies headquartered in the United States (as measured by
capital);
(ii) any business operation of any company in the
financial services industry if such business operation is then
in substantial and direct competition with a principal
business operation of the Corporation in which the Corporation
was engaged as of the Date of Termination and if the financial
services company has total revenues of $100 million or more
annually and a majority of such revenues are derived from
customers and/or operations in the State of Florida; provided,
however, that no business operation of the Corporation shall
constitute a principal business operation of the Corporation
for purposes of this clause (ii) unless the revenues, profits
or assets of the Corporation attributable to such business
operation amount to at least 10% of the total revenues,
profits or assets of the Corporation; or
8
<PAGE>
(iii) any business operation which directly engages
in the business of automobile leasing, automobile lending,
mortgage banking or home equity lending or the origination,
purchase, sale or servicing of residential mortgage loans or
home equity loan products ("Consumer Finance Activities");
provided, however, that the foregoing shall in no way limit
the Employee's activities with respect to any entity or
business which engages in Consumer Finance Activities if the
Employee's activities are unrelated to the Consumer Finance
Activities of such entity or business.
11. Indemnification; Legal Fees. The Corporation shall indemnify the
Employee to the fullest extent permitted by the laws of the Corporation's state
of incorporation in effect at that time, or certificate of incorporation and
by-laws of the Corporation, whichever affords the greater protection to the
Employee. The Employee will be entitled to any insurance policies the
Corporation may elect to maintain generally for the benefit of its officers and
directors against all costs, charges and expenses incurred in connection with
any action, suit or proceeding to which the Employee may be made a party by
reason of being a director or officer of the Corporation. The Corporation shall
reimburse the Employee for any legal fees and expenses incurred by the Employee
(including but not limited to the legal fees and expenses incurred pursuant to
Section 16 hereof) in contesting or disputing any termination of the Employee's
employment or in seeking to obtain or enforce any right or benefit provided by
this Agreement (or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Internal Revenue Code of
1996, as amended (the "Code"), to any payment or benefit provided hereunder)
other than for any such expenses, costs, liabilities or legal fees incurred as a
result of the Employee's bad faith. Such payments shall be made within five (5)
days after the Employee's request for payment accompanied with such evidence of
fees and expenses incurred as the Corporation reasonably may require. Any
termination of the Employee's employment or of this Agreement shall have no
effect on the continuing operation of this Section 11.
12. Successors; Binding Agreement.
(a) Corporation's Successors. The Corporation will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Corporation to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Corporation would be required to perform
it if no such succession had taken place. Failure of the Corporation to obtain
such assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Employee to
compensation from the Corporation in the same amount and on the same terms as
the Employee would be entitled to hereunder if the Employee terminated the
Employee's employment for Good Reason, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Corporation" shall
mean the Corporation as hereinbefore defined and any successor to its business
and/or assets as aforesaid which executes and delivers the agreement provided
for in this Section 12 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
9
<PAGE>
(b) The Employee's Successors. This Agreement and all rights
of the Employee hereunder shall inure to the benefit of and be enforceable by
the Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and Legatees. If the Employee should
die while any amounts would still be payable to the Employee hereunder if the
Employee had continued to live, all such amounts unless otherwise provided
herein shall be paid in accordance with the terms of this Agreement to the
Employee's devisee, legatee, or other designee or, if there be no such designee,
to the Employee's estate.
13. Notice. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Employee: Judith S. Beaubouef
1865 Hickory Lane
Atlantic Beach, FL 32233
If to the Corporation: NationsBank Corporation
NationsBank Corporate Center
100 North Tryon Street
Charlotte, NC 28255
Attention: General Counsel
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
14. Additional Payment.
(a) If any of the payments provided for in this Agreement (the
"Contract Payments") or any portion of the Total Payments (as defined below)
will be subject to the tax (the "Excise Tax") imposed by section 4999 of the
Code, the Corporation shall pay to the Employee, no later than the fifth day
following the earlier of the date on which such payment is made and the Date of
Termination, an additional amount (the "Gross-Up Payment") such that the net
amount retained by the Employee, after deduction of any Excise Tax on the
Contract Payments and such other Total Payments and any federal and state and
local income, employment and other taxes and Excise Tax upon the payment
provided for by this subsection, shall be equal to the Contract Payments and
such other Total Payments.
(b) For purposes of determining whether any payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or
benefits received or to be received by the Employee in connection with an event
described in section 280(G)(b)(2)(A)(i) of the Code (hereinafter, a "change in
control"), or the Employee's termination of employment pursuant to the terms of
any plan, arrangement or agreement with Barnett, the Corporation, its
successors, any person whose actions result in a change in control or any person
affiliated with the Corporation or such person (together with the Contract
Payments, the "Total Payments"),
10
<PAGE>
shall be treated as "parachute payments" within the meaning of section
28OG(b)(2) of the Code except to the extent that, in the opinion of tax counsel
selected by the Corporation's independent auditors and acceptable to the
Employee, the Total Payments do not constitute parachute payments, (ii) all
"excess parachute payments" within the meaning of section 28OG(b)(1) shall be
treated as subject to the Excise Tax except to the extent that, in the opinion
of such tax counsel, such excess parachute payments represent reasonable
compensation for services actually rendered within the meaning of section
280G(b)(4)(B) of the Code in excess of the base amount within the meaning of
section 28OG(b)(3) of the Code, or are otherwise not subject to the Excise Tax,
and (iii) the value of any noncash benefits or any deferred payment or benefit
shall be determined by the Corporation's independent auditors in accordance with
the principles of sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, the Employee shall be deemed to
pay federal income taxes at the highest marginal rate of federal income taxation
in the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in the state and
locality of the Employee's residence on the Date of Termination, net of the
maximum reduction in federal income taxes which could be obtained from deduction
of such state and local taxes.
(c) In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at the time
of termination of the Employee's employment, the Employee shall repay to the
Corporation at the time that the amount of such reduction in Excise Tax is
finally determined, the portion of the Gross-Up Payment attributable to such
reduction (plus the portion of the Gross-Up Payment attributable to the Excise
Tax and federal and state and local income tax imposed on the Gross-Up Payment
being repaid by the Employee if such repayment results in a reduction in Excise
Tax and/or a federal and state and local income tax deduction) plus interest on
the amount of such repayment at the rate provided in section 1274(b)(2)(B) of
the Code. In the event that the Excise Tax is determined to exceed the amount
taken into account hereunder at the time of the termination of the Employee's
employment (including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Corporation shall
make an additional gross-up payment in respect of such excess (plus any interest
payable with respect to such excess) at the time that the amount of such excess
is finally determined.
(d) Notwithstanding any provision of this Agreement to the
contrary, in addition to the payment of the Employee's Net SERP I Benefit as
provided in Section 5(e)(ii), the Corporation shall pay the Employee from time
to time additional amounts such that after all applicable federal and state and
local income, employment and other taxes on the Employee's Net SERP I Benefit
and on the additional amount payable under this Section 14(d), the Employee has
received the Employee's entire Net SERP I Benefit on an after-tax basis. Any
additional amount due under this Section 14(d) shall be due and payable to the
Employee at the time the income, employment or other tax is assessed against the
Employee's Net SERP I Benefit whether or not the Employee's Net SERP I Benefit
is then payable. The federal and state and local income tax rates for purposes
of calculating the additional amount hereunder shall be determined in accordance
with the last sentence of Section 14(b).
11
<PAGE>
15. Amendment or Modification; Waiver. No provisions of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Employee and such officer of the
Corporation as may be specifically designated by the Board or its compensation
committee. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.
16. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three arbitrators in Jacksonville, Florida, in
accordance with the rules of the American Arbitration Association then in effect
or of such similar organization as the parties hereto may mutually agree.
Judgment may be entered on the arbitrator's award in any court having
jurisdiction. The expense of such arbitration shall be borne by the Corporation.
17. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Florida without regard to its conflicts of law principles.
18. Miscellaneous. All references to sections of any statute shall be
deemed also to refer to any successor provisions to such sections. The
obligations of the parties under Sections 9, 10 and 11 hereof shall survive the
expiration of the Term. The compensation and benefits payable to the Employee
under Section 9 of this Agreement shall be in lieu of any other severance
benefits to which the Employee may otherwise be entitled upon the Employee's
termination of employment under any severance plan, program, policy or
arrangement of the Corporation.
19. Severability. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect throughout the Term.
20. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
21. Entire Agreement. This Agreement sets forth the entire agreement of
the parties hereto in, respect of the subject matter contained herein and, as of
the Effective Date, supersedes all prior agreements, promises, covenants,
arrangements communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto.
12
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
NATIONSBANK CORPORATION
By: /s/ James H. Hance, Jr.
--------------------------------
James H. Hance, Jr., Vice Chairman
and Chief Financial Officer
/s/ Judith S. Beaubouef
------------------------------------
Judith S. Beaubouef
13
<PAGE>
EXHIBIT 12.1
NATIONSBANK CORPORATION AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED DECEMBER 31,
ENDED ------------------------------------------------
SEPTEMBER 30, 1997 1996 1995 1994 1993 1992
------------------ ------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
EXCLUDING INTEREST ON DEPOSITS
Income before taxes............................. $ 3,530 $ 3,634 $ 2,991 $2,555 $1,991 $1,396
Equity in undistributed losses (earnings) of
unconsolidated subsidiaries................... 1 2 (7) (3) (5) (1)
Fixed charges:
Interest expense (including capitalized
interest).................................. 3,394 4,125 4,480 2,896 1,421 916
Amortization of debt discount and appropriate
issuance costs............................. 14 20 12 8 6 3
1/3 of net rent expense....................... 111 126 125 114 96 91
------------------ ------- ------- ------ ------ ------
Total fixed charges........................ 3,519 4,271 4,617 3,018 1,523 1,010
Preferred dividend requirements................. 14 22 13 15 16 29
Earnings (excluding capitalized interest)....... $ 7,050 $ 7,907 $ 7,601 $5,570 $3,509 $2,398
------------------ ------- ------- ------ ------ ------
------------------ ------- ------- ------ ------ ------
Fixed charges................................... $ 3,533 $ 4,293 $ 4,630 $3,033 $1,539 $1,039
------------------ ------- ------- ------ ------ ------
------------------ ------- ------- ------ ------ ------
Ratio of Earnings to Fixed Charges.............. 2.00 1.84 1.64 1.84 2.28 2.31
INCLUDING INTEREST ON DEPOSITS
Income before taxes............................. $ 3,530 $ 3,634 $ 2,991 $2,555 $1,991 $1,396
Equity in undistributed losses (earnings) of
unconsolidated subsidiaries................... 1 2 (7) (3) (5) (1)
Fixed charges:
Interest expense (including capitalized
interest)..................................... 6,367 7,447 7,761 5,310 3,570 3,688
Amortization of debt discount and appropriate
issuance costs................................ 14 20 12 8 6 3
1/3 of net rent expense......................... 111 126 125 114 96 91
------------------ ------- ------- ------ ------ ------
Total fixed charges........................ 6,492 7,593 7,898 5,432 3,672 3,782
Preferred dividend requirements................. 14 22 13 15 16 29
Earnings (excluding capitalized interest)....... $ 10,023 $11,229 $10,882 $7,984 $5,658 $5,170
------------------ ------- ------- ------ ------ ------
------------------ ------- ------- ------ ------ ------
Fixed charges................................... $ 6,506 $ 7,615 $ 7,911 $5,447 $3,688 $3,811
------------------ ------- ------- ------ ------ ------
------------------ ------- ------- ------ ------ ------
Ratio of Earnings to Fixed Charges.............. 1.54 1.47 1.38 1.47 1.53 1.36
</TABLE>
<PAGE>
EXHIBIT 12.1 (CONTINUED)
BARNETT BANKS, INC. -- CONSOLIDATED
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED DECEMBER 31,
ENDED ------------------------------------------------------------
SEPTEMBER 30, 1997 1996 1995 1994 1993 1992
------------------ ---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
EXCLUDING INTEREST ON DEPOSITS
Net Income....................... $ 425,290 $ 564,491 $ 533,301 $487,971 $420,994 $207,656
Provision (benefit) for income
taxes.......................... 226,811 339,659 286,293 249,834 207,482 95,310
------------------ ---------- ---------- -------- -------- --------
Earnings before
provision (benefit)
for income taxes............... 652,101 904,150 819,594 737,805 628,476 302,966
------------------ ---------- ---------- -------- -------- --------
Fixed charges:
Interest expense (excluding
interest on deposits).......... 216,475 212,439 226,207 159,897 91,005 100,953
Minority interest expense........ 41,247 3,804 -- -- -- --
Capitalized interest............. 486 1,054 1,386 665 1,364 1,498
Interest portion of rentals
(33%).......................... 21,491 30,358 29,993 27,450 32,756 31,115
------------------ ---------- ---------- -------- -------- --------
Total fixed charges............ 279,699 247,655 257,586 188,012 125,125 133,566
------------------ ---------- ---------- -------- -------- --------
Earnings before provision
(benefit) for income taxes and
fixed charges.................. $ 931,800 $1,151,805 $1,077,180 $925,817 $753,601 $436,532
------------------ ---------- ---------- -------- -------- --------
------------------ ---------- ---------- -------- -------- --------
Preferred dividend
requirements................... -- $ 2,168 15,861 18,234 18,238 18,254
Ratio of pre-tax income to net
income......................... 1.53 1.60 1.54 1.51 1.49 1.46
------------------ ---------- ---------- -------- -------- --------
Preferred dividend factor........ -- 3,473 24,376 27,570 27,226 26,632
Total Fixed Charges.............. 279,699 247,655 257,586 188,012 125,125 133,566
------------------ ---------- ---------- -------- -------- --------
Combined fixed charges and
preferred dividend
requirements................... $ 279,699 $ 251,128 $ 281,962 $215,582 $152,351 $160,198
------------------ ---------- ---------- -------- -------- --------
------------------ ---------- ---------- -------- -------- --------
Ratio of earnings to combined
fixed charges and preferred
dividend requirements.......... 3.33 4.59 3.82 4.29 4.95 2.72
------------------ ---------- ---------- -------- -------- --------
------------------ ---------- ---------- -------- -------- --------
</TABLE>
<PAGE>
EXHIBIT 12.1 (CONTINUED)
BARNETT BANKS, INC. -- CONSOLIDATED
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED DECEMBER 31,
ENDED ------------------------------------------------------------------
SEPTEMBER 30, 1997 1996 1995 1994 1993 1992
------------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
INCLUDING INTEREST ON
DEPOSITS
Net Income................. $ 425,290 $ 564,491 $ 533,301 $ 487,971 $ 420,994 $ 207,656
Provision (benefit) for
income taxes............. 226,811 339,659 286,293 249,834 207,482 95,310
------------------ ---------- ---------- ---------- ---------- ----------
Earnings before provision
(benefit) for income
taxes.................... 652,101 904,150 819,594 737,805 628,476 302,966
------------------ ---------- ---------- ---------- ---------- ----------
Fixed charges:
Interest expense
(including interest on
deposits)............. 906,372 1,136,770 1,219,253 921,408 880,105 1,143,680
Minority interest
expense............... 41,247 3,804 -- -- -- --
Capitalized interest..... 486 1,054 1,386 665 1,364 1,498
Interest portion of
rentals (33%)......... 21,491 30,358 29,993 27,450 32,256 31,115
------------------ ---------- ---------- ---------- ---------- ----------
Total fixed charges...... 969,596 1,171,986 1,250,632 949,523 913,725 1,176,293
------------------ ---------- ---------- ---------- ---------- ----------
Earnings before provision
for income taxes and
fixed charges............ $1,621,697 $2,076,136 $2,070,226 $1,687,328 $1,542,201 $1,479,259
------------------ ---------- ---------- ---------- ---------- ----------
------------------ ---------- ---------- ---------- ---------- ----------
Preferred dividend
requirements............. -- 2,168 15,861 18,234 18,238 18,254
Ratio of pre-tax income to
net income............... 1.53 1.60 1.54 1.51 1.49 1.46
------------------ ---------- ---------- ---------- ---------- ----------
Preferred dividend
factor................... -- 3,473 24,376 27,570 27,226 26,632
Total Fixed Charges........ 969,596 1,171,986 1,250,632 949,523 913,725 1,176,293
------------------ ---------- ---------- ---------- ---------- ----------
Combined fixed charges and
preferred dividend
requirements............. $ 969,596 $1,175,459 $1,275,008 $ 977,093 $ 940,951 $1,202,925
------------------ ---------- ---------- ---------- ---------- ----------
------------------ ---------- ---------- ---------- ---------- ----------
Ratio of earnings to
combined fixed charges
and preferred dividend
requirements............. 1.67 1.77 1.62 1.73 1.64 1.23
------------------ ---------- ---------- ---------- ---------- ----------
------------------ ---------- ---------- ---------- ---------- ----------
</TABLE>
<PAGE>
EXHIBIT 23.1
November 18, 1997
NationsBank Corporation
100 North Tryon
Charlotte, NC 28255
Members of the Board:
We hereby consent to the use of our opinion letter to the Board of
Directors of NationsBank Corporation, included as Appendix C to the
Prospectus/Joint Proxy Statement which forms a part of the Registration
Statement on Form S-4 relating to the proposed merger of NationsBank Corporation
with Barnett Banks, Inc., and to the references to such opinion in such
Prospectus/Joint Proxy Statement under the captions "Summary," "The
Merger -- Background of the Merger", " -- Reasons of NationsBank for the Merger"
and " -- Opinions of NationsBank's Financial Advisors." In giving such consent,
we do not admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the rules
and regulations of the Securities and Exchange Commission thereunder, no do we
thereby admit that we are experts with respect to any part of such Registration
Statement within the meaning of the term "experts" as used in the Securities Act
of 1933, as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder.
Very truly yours,
Merrill Lynch, Pierce,
Fenner & Smith Incorporated
By: /s/ MICHAEL BARRY
------------------------
NAME: MICHAEL BARRY
TITLE: DIRECTOR
<PAGE>
EXHIBIT 23.2
PERSONAL AND CONFIDENTIAL
November 18, 1997
Board of Directors
NationsBank Corporation
NationsBank Corporate Center
100 North Tryon Street
Charlotte, NC 28255
Re: Proxy Statement on Schedule 14A of NationsBank Corporation
Ladies and Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to the holders of NationsBank Corporation (the "Company") common stock (the
"Company Shares"), of the exchange ratio of 1.1875 Company Shares to be
exchanged for each share of Common Stock, par value $2.00 per share of Barnett
Banks, Inc. ("Barnett"), pursuant to the merger contemplated by the Agreement
and Plan of Merger dated as of August 29, 1997, among the Company, NB Holdings
Corporation, a wholly-owned subsidiary of the Company, and Barnett.
The foregoing opinion letter is for the information and assistance of the
Board of Directors of the Company in connection with their consideration of the
transaction contemplated therein and is not to be used, circulated, quoted or
otherwise referred to for any other purpose, nor is it to be filed with,
included in or referred to in whole or in part in any registration statement,
proxy statement or any other document, except in accordance with our written
prior consent. We understand that the Company has determined to include our
opinion in the above referenced Proxy Statement.
In that regard, we hereby consent to the reference to the opinion of our
Firm in the Letter, dated November 18, 1997, to the Board of Directors of the
Company under the captions "SUMMARY -- Opinions of NationsBank's Financial
Advisors", "THE MERGER -- Background of, and Reasons of NationsBank for, the
Merger" and "THE MERGER -- Opinions of NationsBank's Financial Advisors" and to
the inclusion of the foregoing opinion as Appendix B to the above mentioned
Proxy Statement. In providing such consent, except as may be required by the
federal securities laws, we do not intend that any person other than the Board
of Directors rely on such opinion. In giving such consent, we do not thereby
admit that we come within the category of persons whose consent is required
under section 7 of the Securities Act of 1933 or the rules and regulations of
the Securities and Exchange Commission thereunder.
Very truly yours,
/s/GOLDMAN, SACHS & CO.
GOLDMAN, SACHS & CO.
<PAGE>
<PAGE>
EXHIBIT 23.3
CONSENT OF J.P. MORGAN SECURITIES INC.
We hereby consent to (i) the use of our opinion letter dated November 20,
1997 to the Board of Directors of Barnett Banks, Inc. ("Barnett"), included as
Appendix E to the Joint Proxy Statement-Prospectus which forms a part of the
Registration Statement on Form S-4 relating to the proposed merger of Barnett
and NationsBank Corporation, and (ii) the references to such opinion in such
Joint Proxy Statement-Prospectus. In giving such consent, we do not admit that
we come within the category of persons whose consent is required under Section 7
of the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder, nor do we hereby admit that we
are experts with respect to any part of such Registration Statement within the
meaning of the term "experts" as used in the Securities Act of 1933, as amended,
or the rules and regulations of the Securities and Exchange Commission
thereunder.
J.P. MORGAN SECURITIES INC.
By: /s/ STEVE M. CHAIKEN
-------------------------------------
NAME: Steve M. Chaiken
TITLE: Vice President and Assistant
General Counsel
November 18, 1997
<PAGE>
EXHIBIT 23.4
CONSENT OF MORGAN STANLEY & CO. INCORPORATED
November 18, 1997
Barnett Banks, Inc.
50 North Laura Street
Jacksonville, FL 32202-3638
Dear Sirs:
We hereby consent to the inclusion of the Registration Statement on Form
S-4 relating to the proposed merger of Barnett Banks, Inc. with and into NB
Holdings Corporation, a wholly-owned subsidiary of NationsBank Corporation, of
our opinion letter to the Board of Directors of Barnett Banks, Inc. included as
Appendix D to the Joint Proxy Statement/Prospectus which is a part of the
Registration Statement, and to the references to such letter and our firm name
in such Joint Proxy Statement/Prospectus. In giving such consent, we do not
thereby admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the rules
and regulations adopted by the Securities and Exchange Commission thereunder nor
do we admit that we are experts with respect to any part of such Registration
Statement within the meaning of the term "experts" as used in the Securities Act
of 1933, as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ William M. Weiant
___________________________________
<PAGE>
<PAGE>
EXHIBIT 23.7
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference in this Form S-4 registration statement of our report
dated January 13, 1997, incorporated by reference in Barnett Banks, Inc.'s Form
10-K for the year ended December 31, 1996, and to all references to our Firm
included in this registration statement.
ARTHUR ANDERSEN LLP
Jacksonville, Florida
November 18, 1997
<PAGE>
EXHIBIT 23.8
CONSENT OF PRICE WATERHOUSE LLP
We hereby consent to the incorporation by reference in the Joint Proxy
Statement-Prospectus constituting part of this Registration Statement on Form
S-4 of NationsBank Corporation of our report dated January 10, 1997, which
appears on page 48 of the NationsBank Corporation 1996 Annual Report to
Shareholders, which is incorporated by reference in its Annual Report on Form
10-K for the year ended December 31, 1996. We also consent to the references to
us under the headings "Experts" and "Selected Financial Data" in such Joint
Proxy Statement -- Prospectus. However, it should be noted that Price Waterhouse
LLP has not prepared or certified such "Selected Financial Data."
PRICE WATERHOUSE LLP
CHARLOTTE, NORTH CAROLINA
NOVEMBER 18, 1997
Exhibit 23.9
LETTERHEAD OF
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
November 18, 1997
NationsBank Corporation
100 North Tryon Street
Charlotte, North Carolina 28255
Ladies and Gentlemen:
We have acted as counsel to Barnett Banks, Inc., a Florida corporation
("Barnett"), in connection with the contemplated merger (the "Merger")
under the laws of the States of Florida and Delaware of Barnett with
and into NB Holdings Corporation ("NB Holdings"), a Delaware corporation
and a wholly-owned subsidiary of NationsBank Corporation, a North Carolina
corporation ("NationsBank"), pursuant to the Agreement and Plan of Merger,
dated as of August 29, 1997, by and between Barnett and NationsBank, as amended
(the "Merger Agreement"). At your request, in connection with NationsBank's
Registration Statement on Form S-4 (the "Registration Statement") filed in
connection with the Merger with the Securities and Exchange Commission under
the Securities Act of 1933, as amended (the "Securities Act") and in
accordance with the requirements of Item 601(b) (8) of Regulation S-K under
the Securities Act, we are providing to you a form of the tax opinion
(the "Form of Tax Opinion") that we expect to render at the Effective Time
pursuant to Section 7.08 of the Merger Agreement.1
We hereby consent in accordance with the requirements of Item 601(b) (23)
of Regulation S-K under the Securities Act to the filing of the Form of
Tax Opinion as Exhibit 8.2 to the Registration Statement and to the discussion
of such opinion in the Joint Proxy Statement-Prospectus which forms part
of the Registration State-
- ---------------------------
1 Unless otherwise indicated, all defined terms used herein shall have
the meanings assigned to them in the Registration Statement.
<PAGE>
NationsBank Corporation
November 18, 1997
Page 2
ment. In giving such consent, we do not thereby admit that we are in the
category of persons whose consent is required under Section 7 of the
Securities Act or the rules and regulations of the Securities and Exchange
Commission thereunder.
Very truly yours,
/s/ Skadden, Arps, Slate, Meagher & Flom LLP
---------------------------------------------
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each of NationsBank Corporation,
and the several undersigned Officers and Directors thereof whose signatures
appear below, hereby makes, constitutes and appoints Paul J. Polking and Charles
M. Berger, and each of them acting individually, its, his and her true and
lawful attorneys with power to act without any other and with full power of
substitution, to execute, deliver and file in its, his and her name and on its,
his and her behalf, and in each of the undersigned Officer's and Director's
capacity or capacities as shown below, (a) a Registration Statement of
NationsBank Corporation on Form S-4 (or other appropriate form) with respect to
the registration under the Securities Act of 1933, as amended, of a number of
shares of common stock of NationsBank Corporation to be issued in exchange for
the outstanding shares of common stock, on a fully-diluted basis, of Barnett
Banks, Inc. upon consummation of the proposed merger of Barnett Banks, Inc. with
and into NationsBank Corporation, or a wholly owned subsidiary thereof, and any
and all documents in support thereof or supplemental thereto and any and all
amendments, including any and all post-effective amendments, to the foregoing
(hereinafter called the "Registration Statement"), and (b) such registration
statements, petitions, applications, consents to service of process or other
instruments, any and all documents in support thereof or supplemental thereto,
and any and all amendments or supplements to the foregoing, as may be necessary
or advisable to qualify or register the securities covered by said Registration
Statement under such securities laws, regulations or requirements as may be
applicable; and each of Nations Bank Corporation and said Officers and Directors
hereby grants to said attorneys, and to each of them, full power and authority
to do and perform each and every act and thing whatsoever as said attorneys or
attorney may deem necessary or advisable to carry out fully the intent of this
power of attorney to the same extent and with the same effect as NationsBank
Corporation might or could do, and as each of said Officers and Directors might
or could do personally in his or her capacity or capacities as aforesaid, and
each of NationsBank Corporation and said Officers and Directors hereby ratifies
and confirms all acts and things which said attorneys or attorney might do or
cause to be done by virtue of this power of attorney and its, his or her
signature as the same may be signed by said attorneys or attorney, or any of
them, to any or all of the following (and/or any and all amendments and
supplements to any or all thereof): such Registration Statement under the
Securities Act of 1933, as amended, and all such registration statements,
petitions, applications, consents to service of process and other instruments,
and any and all documents in support thereof or supplemental thereto, under such
securities laws, regulations and requirements as may be applicable.
IN WITNESS WHEREOF, NationsBank Corporation has caused this power of
attorney to be signed on its behalf, and each of the undersigned Officers and
Directors in the capacity or capacities noted has hereunto set his or her hand
as of the date indicated below.
NATIONSBANK CORPORATION
By: /s/______HUGH L. MCCOLL, JR._______
HUGH L. MCCOLL, JR.
CHIEF EXECUTIVE OFFICER
Dated: September 24, 1997
<TABLE>
<C> <S> <C>
/s/ HUGH L. MCCOLL, JR. Chief Executive Officer September 24, 1997
- ------------------------------------------------------ and Director
HUGH L. MCCOLL, JR. (Principal Executive Officer)
/s/ JAMES H. HANCE, JR. Vice Chairman and Chief Financial Officer September 24, 1997
- ------------------------------------------------------ (Principal Financial Officer)
JAMES H. HANCE, JR.
</TABLE>
1
<PAGE>
<TABLE>
<C> <S> <C>
/s/ MARC D. OKEN Executive Vice President and Chief September 24, 1997
- ------------------------------------------------------ Accounting Officer
MARC D. OKEN (Principal Accounting Officer)
/s/ ANDREW B. CRAIG, III Chairman of the Board September 24, 1997
- ------------------------------------------------------
ANDREW B. CRAIG, III
/s/ RONALD W. ALLEN Director September 24, 1997
- ------------------------------------------------------
RONALD W. ALLEN
/s/ RAY C. ANDERSON Director September 24, 1997
- ------------------------------------------------------
RAY C. ANDERSON
/s/ WILLIAM M. BARNHARDT Director September 24, 1997
- ------------------------------------------------------
WILLIAM M. BARNHARDT
/s/ B. A. BRIDGEWATER, JR. Director September 24, 1997
- ------------------------------------------------------
B. A. BRIDGEWATER, JR.
/s/ THOMAS E. CAPPS Director September 24, 1997
- ------------------------------------------------------
THOMAS E. CAPPS
/s/ CHARLES W. COKER Director September 24, 1997
- ------------------------------------------------------
CHARLES W. COKER
/s/ THOMAS G. COUSINS Director September 24, 1997
- ------------------------------------------------------
THOMAS G. COUSINS
/s/ ALAN T. DICKSON Director September 24, 1997
- ------------------------------------------------------
ALAN T. DICKSON
/s/ PAUL FULTON Director September 24, 1997
- ------------------------------------------------------
PAUL FULTON
/s/ TIMOTHY L. GUZZLE Director September 24, 1997
- ------------------------------------------------------
TIMOTHY L. GUZZLE
/s/ C. RAY HOLMAN Director September 24, 1997
- ------------------------------------------------------
C. RAY HOLMAN
/s/ W. W. JOHNSON Director September 24, 1997
- ------------------------------------------------------
W. W. JOHNSON
/s/ RUSSELL W. MEYER, JR. Director September 24, 1997
- ------------------------------------------------------
RUSSELL W. MEYER, JR.
/s/ JOHN J. MURPHY Director September 24, 1997
- ------------------------------------------------------
JOHN J. MURPHY
</TABLE>
2
<PAGE>
<TABLE>
<C> <S> <C>
/s/ RICHARD B. PRIORY Director September 24, 1997
- ------------------------------------------------------
RICHARD B. PRIORY
/s/ JOHN C. SLANE Director September 24, 1997
- ------------------------------------------------------
JOHN C. SLANE
/s/ O. TEMPLE SLOAN, JR. Director September 24, 1997
- ------------------------------------------------------
O. TEMPLE SLOAN, JR.
/s/ JOHN W. SNOW Director September 24, 1997
- ------------------------------------------------------
JOHN W. SNOW
/s/ MEREDITH R. SPANGLER Director September 24, 1997
- ------------------------------------------------------
MEREDITH R. SPANGLER
/s/ ALBERT E. SUTER Director September 24, 1997
- ------------------------------------------------------
ALBERT E. SUTER
/s/ RONALD TOWNSEND Director September 24, 1997
- ------------------------------------------------------
RONALD TOWNSEND
/s/ JACKIE M. WARD Director September 24, 1997
- ------------------------------------------------------
JACKIE M. WARD
/s/ VIRGIL R. WILLIAMS Director September 24, 1997
- ------------------------------------------------------
VIRGIL R. WILLIAMS
</TABLE>
3
<PAGE>
CERTIFICATE OF SECRETARY
I, ALLISON L. GILLIAM, Assistant Secretary of NationsBank Corporation, a
corporation duly organized and existing under the laws of the State of North
Carolina, do hereby certify that the foregoing is a true and correct copy of
resolutions duly adopted by a majority of the entire Board of Directors of the
corporation at a meeting of the Board of Directors held August 29, 1997, at
which meeting a quorum was present and acted throughout and that the resolutions
are in full force and effect and have not been amended or rescinded as of the
date hereof.
IN WITNESS WHEREOF, I have hereupon set my hand and affixed the seal of the
corporation this 7th day of November, 1997.
(CORPORATE SEAL)
/s/_________ALLISON L. GILLIAM_________
ALLISON L. GILLIAM
ASSISTANT SECRETARY
4
<PAGE>
NATIONSBANK CORPORATION
BOARD OF DIRECTORS
RESOLUTIONS
ACQUISITION OF BARNETT BANKS, INC.
AUGUST 29, 1997
ACQUISITION OF BARNETT BANKS, INC.
WHEREAS, it is proposed that NationsBank Corporation (the "Corporation")
purchase all of the outstanding capital stock (the "Acquisition") of Barnett
Banks, Inc. ("Barnett"); and
WHEREAS, the purchase price for the Acquisition will be paid in shares of
the Corporation's common stock (the "NationsBank Common Stock") in accordance
with the terms of the transaction as described to the Board of Directors and set
forth in the draft Acquisition Agreement (as defined below) as attached hereto
as Exhibit A, with such changes and modifications thereto as the appropriate
officers of the Corporation determine to be necessary or desirable; and
WHEREAS, it is deemed to be fair, advisable and in the best interests of
the Corporation and its shareholders to effect the Acquisition;
NOW, THEREFORE, BE IT:
RESOLVED, that the Board of Directors of the Corporation hereby approves
the Acquisition and the other transactions contemplated in connection therewith,
to be negotiated and evidenced by an Agreement and Plan of Merger by and between
the Corporation and Barnett (the "Acquisition Agreement"), including the
issuance of NationsBank Common Stock in exchange for the outstanding shares of
Barnett common stock ("Barnett Common Stock") upon consummation of the
Acquisition at an exchange ratio of 1.1875 shares of NationsBank Common Stock
for each outstanding share of Barnett Common Stock (the "Exchange Ratio"); and
RESOLVED, that the Board of Directors of the Corporation hereby determines
that the Barnett Common Stock as the consideration to be received by the
Corporation in exchange for shares of NationsBank Common Stock is adequate; and
RESOLVED, that the Board of Directors of the Corporation hereby authorizes
the appropriate officers of the Corporation to negotiate, execute and deliver
the Acquisition Agreement, with such changes and modifications thereto as such
officers determine to be necessary or desirable; and
RESOLVED, that the appropriate officers of the Corporation be, and each of
them hereby is, authorized, empowered and directed, subject to the terms and
conditions of the Acquisition Agreement, to do any and all things necessary to
effectuate and consummate the transactions contemplated by the Acquisition
Agreement as may be prescribed by law or as they may deem necessary or
advisable, including the negotiation, execution and delivery of a stock option
agreement and certain employment agreements; to prepare all documentation and to
effect all filings and obtain appropriate permits, consents, approvals and
authorizations of all third parties, including the Board of Governors of the
Federal Reserve System, the Office of the Comptroller of the Currency, the
Federal Deposit Insurance Corporation and any other applicable federal or state
regulatory authority; and to execute personally or by attorney-in-fact such
required filings or amendments or supplements to such required filings, and
otherwise to cause such filings and any amendments thereto to become effective
or otherwise approved; and
RESOLVED, that the proper officers of the Corporation shall be, and each of
them hereby is, authorized to execute an amendment to the Corporation's Articles
of Incorporation, establishing and fixing the preferences, limitations and
relative rights of the Corporation's Series BB $2.50 Cumulative Convertible
Preferred Stock, par value $.10 per share (the "Preferred Stock"); and
RESOLVED, that, if the Barnett Series B $2.50 Cumulative Convertible
Preferred Stock, par value $.10 per share, has not earlier been called for
redemption by Barnett at the request of the Corporation as provided in the
Acquisition Agreement, then the issuance by the Corporation of shares of
Preferred Stock to the holders
1
<PAGE>
of the Barnett Series B $2.50 Cumulative Convertible Preferred Stock, par value
$.10 per share, upon consummation of the Acquisition, pursuant to the terms of
the Acquisition Agreement be, and it hereby is, approved, and all such shares,
upon issuance, will be fully paid and nonassessable and not subject to
preemptive rights; and
RESOLVED, that a special meeting of shareholders of the Corporation (the
"Special Meeting") be held at such place, date and time as shall be determined
by the Chairman of the Board, the Chief Executive Officer, the President or the
Secretary in accordance with the terms of the Acquisition Agreement, to consider
and act on the issuance of NationsBank Common Stock in the Acquisition (the
"Issuance"); and
RESOLVED, that the record date for the determination of shareholders
entitled to vote at the Special Meeting and any adjournments thereof shall be
the close of business on such date as shall be determined by the Chairman of the
Board, the Chief Executive Officer, the President or the Secretary (the "Record
Date"); and
RESOLVED, that the proper officers of the Corporation be, and each of them
hereby is, authorized and directed, for and on behalf of the Corporation, to
mail to the shareholders of record as of the close of business on the Record
Date, a Notice of Special Meeting, accompanied by a Joint Proxy
Statement-Prospectus of the Corporation and Barnett; and
RESOLVED, that the Issuance shall be submitted to the Corporation's
shareholders entitled to vote thereon for their approval at the Special Meeting,
and that the Board of Directors unanimously recommend that the shareholders of
the Corporation entitled to vote thereon approve the Issuance; and
RESOLVED, that Charles E. Rice and four other persons as may be acceptable
to the Board of Directors of the Corporation be appointed as directors of the
Corporation in such manner and at such time as set forth in the Acquisition
Agreement; and
RESOLVED, that the Board of Directors of the Corporation will nominate Mr.
Rice to serve as Chairman of the Board for the period set forth in the
Acquisition Agreement; and
RESOLVED, that the appropriate officers of the Corporation be, and each of
them hereby is, authorized, empowered and directed to vote any shares of any
subsidiary of the Corporation (other than those shares held by any subsidiary in
a fiduciary capacity, in which event the fiduciary shall make all decisions
related to such shares, including whether or not and how to vote any shares held
by it in such capacity) as may be necessary to effect the consummation of the
Acquisition; and
RESOLVED, that the Corporation hereby reserves, sets aside and authorizes
for issuance up to 245,000,000 shares of the authorized but unissued shares of
NationsBank Common Stock (the "Shares"), and that the appropriate officers of
the Corporation be, and each of them hereby is, authorized and empowered to
issue the Shares, or such portion thereof, as may be necessary in connection
with the conversion and exchange of the issued and outstanding shares of
Barnett, as well as any outstanding stock options of Barnett, in accordance with
the provisions of such conversion and exchange as set forth in the Acquisition
Agreement; and
RESOLVED, that the appropriate officers of the Corporation be, and each of
them hereby is, authorized, empowered and directed to convert any rights with
respect to Barnett Common Stock pursuant to stock options or stock appreciation
rights which are outstanding as of the closing of the Acquisition into rights
with respect to NationsBank Common Stock, such conversion and the terms of any
converted stock options or stock appreciation rights to be in accordance with
the terms of the Acquisition Agreement; and
RESOLVED, that the Shares, when issued and distributed in accordance with
and pursuant to the Acquisition Agreement, shall be fully paid and
non-assessable and the holders of such Shares shall be subject to no further
call or liability with respect thereto; and
RESOLVED, that the Board of Directors of the Corporation hereby approves
the retention of Goldman, Sachs & Co. ("Goldman Sachs") and Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch") as financial advisors in
connection with the Acquisition on the terms discussed at this meeting, and the
Corporation is hereby authorized to enter into an engagement letter with each of
Goldman Sachs and Merrill Lynch in connection therewith, all in such form as is
approved by the Chairman of the Board and the appropriate officers of the
Corporation, pursuant to which each of Goldman Sachs and Merrill Lynch shall
deliver to the Board of
2
<PAGE>
Directors of the Corporation their respective opinions that the Exchange Ratio
pursuant to the Acquisition Agreement is fair to the Corporation from a
financial point of view; and
RESOLVED, that the Board of Directors of the Corporation hereby adopts, as
if expressly set forth herein, the form of any resolution required by any
authority to be filed in connection with any applications, consents to service,
issuer's covenants or other documents, applications, reports or filings relating
to the foregoing resolutions if (i) in the opinion of the officers of the
Corporation executing same, the adoption of such resolutions is necessary or
desirable and (ii) the Secretary or an Assistant Secretary of the Corporation
evidences such adoption by inserting in the minutes of this meeting copies of
such resolutions, which will thereupon be deemed to be adopted by the Board of
Directors of the Corporation with the same force and effect as if presented at
this meeting.
FURTHER AUTHORITY AND RATIFICATION
NOW, THEREFORE, BE IT:
RESOLVED, that the appropriate officers of the Corporation hereby are
authorized, empowered and directed to do any and all things necessary,
appropriate or convenient to carry into effect the foregoing resolutions,
including the execution and delivery of all such instruments, agreements,
certificates, reports, applications, notices, letters and other documents; and
RESOLVED, that any and all actions heretofore taken by any of the
directors, officers, representatives or agents of the Corporation or any of its
affiliates in connection with the transactions contemplated by the Acquisition
Agreement or otherwise referred to in the foregoing resolutions hereby are
ratified, confirmed and approved in all respects as the acts and deeds of the
Corporation.
3
<PAGE>
CERTIFICATE OF SECRETARY
I, ALLISON L. GILLIAM, Assistant Secretary of NationsBank Corporation, a
corporation duly organized and existing under the laws of the State of North
Carolina, do hereby certify that the foregoing is a true and correct copy of
resolutions duly adopted by a majority of the entire Board of Directors of the
corporation at a meeting of the Board of Directors held September 24, 1997, at
which meeting a quorum was present and acted throughout and that the resolutions
are in full force and effect and have not been amended or rescinded as of the
date hereof.
IN WITNESS WHEREOF, I have hereupon set my hand and affixed the seal of the
corporation this 7th day of November, 1997.
(CORPORATE SEAL)
/s/_________ALLISON L. GILLIAM_________
ALLISON L. GILLIAM
ASSISTANT SECRETARY
<PAGE>
NATIONSBANK CORPORATION
BOARD OF DIRECTORS
RESOLUTIONS
REGISTRATION AND LISTING OF SHARES
TO BE ISSUED IN CONNECTION WITH
ACQUISITION OF BARNETT BANKS, INC.
ISSUANCE, REGISTRATION AND LISTING OF SHARES
TO BE ISSUED IN CONNECTION WITH
THE KEY EMPLOYEE STOCK PLAN
SEPTEMBER 24, 1997
WHEREAS, on August 29, 1997, the Board of Directors of NationsBank
Corporation (the "Corporation") approved the Corporation's purchase of all of
the outstanding capital stock (the "Acquisition") of Barnett Banks, Inc.
("Barnett") and certain other transactions contemplated in connection therewith,
pursuant to the terms of the Agreement and Plan of Merger (the "Acquisition
Agreement") by and between the Corporation and Barnett; and
WHEREAS, the Acquisition Agreement provides for the issuance of the
Corporation's common stock (the "NationsBank Common Stock") in exchange for the
outstanding shares of Barnett common stock ("Barnett Common Stock") upon
consummation of the Acquisition at an exchange ratio of 1.1875 shares of
NationsBank Common Stock for each outstanding share of Barnett Common Stock (the
"Exchange Ratio"); and
WHEREAS, in approving the Acquisition Agreement and the transactions
contemplated thereby, the Board of Directors of the Corporation reserved, set
aside and authorized for issuance up to 245,000,000 shares of the authorized but
unissued shares of NationsBank Common Stock, and provided that a special meeting
of shareholders of the Corporation (the "Special Meeting") be held to consider
and act on the issuance of NationsBank Common Stock in the Acquisition (the
"Issuance"); and
WHEREAS, the Corporation sponsors the NationsBank Corporation Key Employee
Stock Plan (the "Plan"); and
WHEREAS, upon consummation of the Barnett transaction, the number of key
employees of the Corporation potentially eligible for awards under the Plan will
be significantly increased; and
WHEREAS, in the opinion of the members of this Board of Directors, it is
desirable and in the best interests of the Corporation that the Plan be amended
in connection with the Barnett transaction to increase the number of shares of
the Corporation's common stock reserved for issuance under the Plan by 10
million shares (which represent the approximate number of shares currently
available for grants under the various Barnett stock incentive plans after
adjustment for the merger exchange ratio) (the "Plan Shares") from 58 million to
68 million and be amended to otherwise meet current needs, subject to the
approval of such amendments by the Corporation's shareholders at their meeting
called for purposes of approving the Barnett transaction; and
WHEREAS, in Section 15.1 of the Plan, the Board is authorized to amend the
Plan in whole or in part from time to time;
NOW, THEREFORE, BE IT:
RESOLVED, that the resolutions of this Board of Directors dated August 29,
1997 are hereby reaffirmed in their entirely; and
RESOLVED, that the Corporation hereby reserves, sets aside and authorizes
for issuance up to an additional 20 million shares of the authorized but
unissued shares of NationsBank Common Stock (together with the 245 million
shares of NationsBank Common Stock previously reserved, set aside and authorized
for issuance for the Barnett transaction, the "Shares") for the Barnett
transaction, and that the appropriate officers of the Corporation be, and each
of them hereby is, authorized and empowered to issue the Shares, or such portion
the thereof, as may be necessary in connection with the conversion and exchange
of the issued and outstanding
1
<PAGE>
shares of Barnett, as well as any outstanding stock options of Barnett, in
accordance with the provisions of such conversion and exchange as set forth in
the Acquisition Agreement; and
RESOLVED, that, in connection with the issuance and registration of the
Shares pursuant to the Acquisition Agreement, the appropriate officers of the
Corporation be, and each of them hereby is, authorized, empowered and directed
to execute and file with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-4 (or such other form as such
officers, upon advice of counsel, may determine to be necessary or appropriate)
under the Securities Act of 1933, as amended (the "Securities Act"), to execute
and file all such other instruments and documents, and to do all such other acts
and things in connection with such Registration Statement, including the
execution and filing of such amendment or amendments (including any
post-effective amendments) thereto, as they may deem necessary or advisable to
effect such filings and to procure the effectiveness of such Registration
Statement (and any such post-effective amendments thereto) and to make such
supplements to the Joint Proxy Statement-Prospectus forming a part of said
Registration Statement as may be required or otherwise as they may deem
advisable, with the taking of such action conclusively establishing the validity
thereof; and
RESOLVED, that the number of shares of NationsBank Common Stock reserved
for issuance under the Plan be, and subject to the consummation of the Barnett
transaction, they hereby are, increased from 58 million to 68 million, and that
said 10 million shares be, and they hereby are, set aside, reserved and
authorized for issuance pursuant to the terms and provisions of the Plan, as
amended; and
RESOLVED, that the amendment and restatement of the NationsBank Corporation
Key Employee Stock Plan as presented at this meeting be, and the same hereby is,
authorized, approved and adopted effective upon, and subject to, approval by the
Corporation's shareholders at their meeting called for the purpose of approving
the Barnett transaction; and
RESOLVED, that this Board of Directors does hereby recommend and propose
the ratification, adoption and approval by the shareholders of the Corporation
of the amendment and restatement of the Plan presented at this meeting and does
hereby direct that a proposal for the ratification, adoption and approval of the
amendment and restatement of the Plan be prepared by the proper officers of the
Corporation and presented to the shareholders of the Corporation at the meeting
of shareholders called for purposes of approving the Barnett transaction; and
RESOLVED, that, in connection with the issuance and registration of the
Plan Shares pursuant to the Plan, as amended, the appropriate officers of the
Corporation be, and each of them hereby is, authorized, empowered and directed
to execute and file with the Securities and Exchange Commission (the
"Commission") a Registration Statement of Form S-8, and any subsequent
registration statements on Form S-8 relating to the Plan, (or such other forms
as such officers, upon the advice of counsel, may determine to be necessary or
appropriate) under the Securities Act, to execute and file all such other
instruments and documents, and to do all such other acts and things in
connection with such Registration Statements, including the execution and filing
of such amendment or amendments (including any post-effective amendments)
thereto, as they may deem necessary or advisable to effect such filings and to
procure the effectiveness of said Registration Statements (and any
post-effective amendments thereto) and to make such supplements thereof as they
may be required or otherwise as they may deem advisable, with the taking of such
action conclusively establishing the validity thereof; and
RESOLVED, that Paul J. Polking and Charles M. Berger be, and each of them
with full power to act without the other hereby is, authorized and empowered to
sign the aforesaid Registration Statements and any amendment or amendments
thereto (including any post-effective amendments) on behalf of and as attorneys
for the Corporation and on behalf of and as attorneys for any of the following:
the Principal Executive Officer, the Principal Financial Officer, the Principal
Accounting Officer and any other officer of the Corporation; and
RESOLVED, that Paul J. Polking be, and he hereby is, designated as Agent
for Service of the Corporation with all such powers and functions as are
provided by the General Rules and Regulations of the Commission under the
Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); and
RESOLVED, that the Shares and the Plan Shares, when issued and distributed
in accordance with and pursuant to the Acquisition Agreement and under the Plan,
respectively, shall be fully paid and non-assessable
2
<PAGE>
and the holders of such Shares and Plan Shares shall be subject to no further
call or liability with respect thereto; and
RESOLVED, that the appropriate officers of the Corporation be, and each of
them hereby is, authorized, empowered and directed, in the name of and on behalf
of the Corporation, to take all such actions and to execute all such documents
as such officers may deem necessary or appropriate for compliance with the
Securities Act or the Exchange Act in connection with the transactions
contemplated by the Acquisition Agreement; and
RESOLVED, that the listing of the Shares to be issued pursuant to the
Acquisition Agreement and the Plan shares to be issued under the Plan on the New
York Stock Exchange, the Pacific Stock Exchange and the London Stock Exchange
hereby is approved, and that the appropriate officers of the Corporation be, and
each of them hereby is, authorized, empowered and directed, with the assistance
of counsel, to prepare, execute and file listing applications and any requests
for determinations as to the application of certain rules to the Acquisition
with such exchanges and to take all actions necessary or appropriate to effect
such listings and requests, including, without limitation, the preparation,
execution and filing of all necessary applications, documents, forms and
agreements with such exchanges, the payment by the Corporation of all required
filing or applications fees to such exchanges and the appearance of any such
officer (if requested) before officials of such exchanges; and
RESOLVED, that it is desirable and in the best interests of the Corporation
that the Shares to be issued in accordance with and pursuant to the Acquisition
Agreement and the Plan Shares to be issued under the Plan be qualified or
registered for distribution in various states and certain foreign jurisdictions
(if applicable) where appropriate, that the Chairman of the Board, the Chief
Executive Officer, the Chief Financial Officer, any Executive Vice President,
any Senior Vice President or any Associate General Counsel and the Secretary or
any Assistant Secretary hereby are authorized, empowered and directed to
determine the states and foreign jurisdictions, if any, in which appropriate
action shall be taken to qualify or register for distribution the Shares and the
Plan Shares as such officers may deem advisable; that said officers be, and each
of them hereby is, authorized, empowered and directed to perform on behalf of
the Corporation any and all such acts as they may deem necessary or advisable in
order to comply with the applicable laws of any such states and foreign
jurisdictions, if any, and in connection therewith to execute and file all
requisite papers, and documents, including, without limitation, resolutions,
applications, reports, surety bonds, irrevocable consents and appointments of
attorneys for service of process; and the execution by such officers of any such
paper or document or the doing by them of any act in connection with the
foregoing matters shall establish conclusively their authority therefor from the
Corporation and the approval and ratification by the Corporation of the papers
and documents so executed and the actions so taken; and
RESOLVED, that the foregoing officers be, and each of them hereby is,
authorized, empowered and directed to do any and all things which in their
judgment may be necessary or appropriate in order to obtain a permit, exemption,
registration or qualification for, and a dealer's license with respect to, the
distribution of the Shares and the Plan Shares in accordance with and under the
securities or insurance laws of any one or more of the states as such officers
may deem advisable, and in connection therewith to execute, acknowledge, verify,
deliver, file and publish all applications, reports, resolutions, consents,
consents to service of process, powers of attorneys, commitments and other
papers and instruments as may be required under such laws and to take any and
all further action which they may deem necessary or appropriate in order to
secure and to maintain such permits, exemptions, registrations and
qualifications in effect for so long as they shall deem in the best interests of
the Corporation; and
RESOLVED, that ChaseMellon Shareholder Services ("ChaseMellon") be, and it
hereby is, appointed Transfer Agent and Registrar for the Shares and the Plan
Shares; that ChaseMellon be, and it hereby is, vested with all the power and
authority as Transfer Agent and Registrar with respect to the Shares and the
Plan Shares as it has heretofore been vested with for the shares of NationsBank
Common Stock currently issued and outstanding; and that, if determined to be
necessary or advisable by the appropriate officers of the Corporation,
ChaseMellon may be appointed Exchange Agent for the Acquisition; and
RESOLVED, that the Board of Directors of the Corporation hereby adopts, as
if expressly set forth herein, the form of any resolution required by any
authority to be filed in connection with any applications, consents to
3
<PAGE>
service, issuer's covenants or other documents, applications, reports or filings
relating to the foregoing resolutions if (i) in the opinion of the officers of
the Corporation executing same, the adoption of such resolutions is necessary or
desirable, and (ii) the Secretary or an Assistant Secretary of the Corporation
evidences such adoption by inserting in the minutes of this meeting copies of
such resolutions, which will thereupon be deemed to be adopted by the Board of
Directors of the Corporation with the same force and effect as if presented at
this meeting; and
FURTHER AUTHORITY AND RATIFICATION
NOW, THEREFORE, BE IT:
RESOLVED, that the appropriate officers of the Corporation hereby are
authorized, empowered and directed to do any and all things necessary,
appropriate or convenient to carry into effect the foregoing resolutions,
including the execution and delivery of all such instruments, agreements,
certificates, reports, applications, notices, letters and other documents and
the payment of the necessary fees and expenses; and
RESOLVED, that any and all actions heretofore taken by any of the
directors, officers, representatives or agents of the Corporation or any of its
affiliates in connection with the transactions contemplated by the Acquisition
Agreement or otherwise referred to in the foregoing resolutions hereby are
ratified, confirmed and approved in all respects as the acts and deeds of the
Corporation.
4
<PAGE>
<PAGE>
EXHIBIT 99.1
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated August 29, 1997, between Barnett
Banks, Inc., a Florida corporation ("Issuer"), and NationsBank Corporation, a
North Carolina corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan
of Merger of even date herewith (the "Merger Agreement"), which agreement has
been executed by the parties hereto immediately prior to this Stock Option
Agreement (the "Agreement"); and
WHEREAS, as a condition to Grantee's entering into the Merger
Agreement and in consideration therefor, Issuer has agreed to grant Grantee the
Option (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to 39,379,343
fully paid and nonassessable shares of Issuer's Common Stock, par value $2.00
per share ("Common Stock"), at a price of $54.8125 per share (the "Option
Price"); provided, however, that in no event shall the number of shares of
Common Stock for which this Option is exercisable exceed 19.9% of the Issuer's
issued and outstanding shares of Common Stock without giving effect to any
shares subject to or issued pursuant to the Option. The number of shares of
Common Stock that may be received upon the exercise of the Option and the Option
Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are
either (i) issued or otherwise become outstanding after the date of this
Agreement (other than pursuant to this Agreement) or (ii) redeemed, repurchased,
retired or otherwise cease to be outstanding after the date of the Agreement,
the number of shares of Common Stock subject to the Option shall be increased or
decreased, as appropriate, so that, after such issuance, such number equals
19.9% of the number of shares of Common Stock then issued and outstanding
without giving effect
<PAGE>
to any shares subject or issued pursuant to the Option. Nothing contained in
this Section 1(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer or Grantee to breach any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option,
in whole or part, and from time to time, if, but only if, both an Initial
Triggering Event (as hereinafter defined) and a Subsequent Triggering Event (as
hereinafter defined) shall have occurred prior to the occurrence of an Exercise
Termination Event (as hereinafter defined), provided that the Holder shall have
sent the written notice of such exercise (as provided in subsection (e) of this
Section 2) within 90 days following such Subsequent Triggering Event. Each of
the following shall be an "Exercise Termination Event": (i) the Effective Time
(as defined in the Merger Agreement) of the Merger; (ii) termination of the
Merger Agreement in accordance with the provisions thereof if such termination
occurs prior to the occurrence of an Initial Triggering Event except a
termination by Grantee pursuant to Section 8.01(b) of the Merger Agreement
(unless the breach by Issuer giving rise to such right of termination is
non-volitional); or (iii) the passage of 12 months after termination of the
Merger Agreement if such termination follows the occurrence of an Initial
Triggering Event or is a termination by Grantee pursuant to Section 8.01(b) of
the Merger Agreement (unless the breach by Issuer giving rise to such right of
termination is non-volitional) (provided that if an Initial Triggering Event
continues or occurs beyond such termination and prior to the passage of such
12-month period, the Exercise Termination Event shall be 12 months from the
expiration of the Last Triggering Event but in no event more than 18 months
after such termination). The "Last Triggering Event" shall mean the last Initial
Triggering Event to expire. The term "Holder" shall mean the holder or holders
of the Option.
(b) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Issuer or any of its Subsidiaries (each an "Issuer
Subsidiary"), without having received Grantee's prior written consent,
shall have entered into an agreement to engage in an Acquisition
Transaction (as hereinafter defined) with any person (the term "person"
for purposes of this Agreement having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and the rules and regulations thereunder) other
than Grantee or any of its Subsidiaries (each a "Grantee
<PAGE>
Subsidiary") or the Board of Directors of Issuer shall have recommended
that the stockholders of Issuer approve or accept any Acquisition
Transaction. For purposes of this Agreement, "Acquisition Transaction"
shall mean (w) a merger or consolidation, or any similar transaction,
involving Issuer or any Significant Subsidiary (as defined in Rule 1-02 of
Regulation S-X promulgated by the Securities and Exchange Commission (the
"SEC")) of Issuer, (x) a purchase, lease or other acquisition or
assumption of all or a substantial portion of the assets or deposits of
Issuer or any Significant Subsidiary of Issuer, (y) a purchase or other
acquisition (including by way of merger, consolidation, share exchange or
otherwise) of securities representing 10% or more of the voting power of
Issuer, or (z) any substantially similar transaction; provided, however,
that in no event shall any merger, consolidation, purchase or similar
transaction involving only the Issuer and one or more of its Subsidiaries
or involving only any two or more of such Subsidiaries, be deemed to be an
Acquisition Transaction, provided that any such transaction is not entered
into in violation of the terms of the Merger Agreement;
(ii) Issuer or any Issuer Subsidiary, without having received
Grantee's prior written consent, shall have authorized, recommended,
proposed or publicly announced its intention to authorize, recommend or
propose, to engage in an Acquisition Transaction with any person other
than Grantee or a Grantee Subsidiary, or the Board of Directors of Issuer
shall have publicly withdrawn or modified, or publicly announced its
intention to withdraw or modify, in any manner adverse to Grantee, its
recommendation that the stockholders of Issuer approve the transactions
contemplated by the Merger Agreement in anticipation of engaging in an
Acquisition Transaction;
(iii) Any person other than Grantee, any Grantee Subsidiary or
any Issuer Subsidiary acting in a fiduciary capacity in the ordinary
course of its business shall have acquired beneficial ownership or the
right to acquire beneficial ownership of 10% or more of the outstanding
shares of Common Stock (the term "beneficial ownership" for purposes of
this Agreement having the meaning assigned thereto in Section 13(d) of the
1934 Act, and the rules and regulations thereunder);
(iv) Any person other than Grantee or any Grantee Subsidiary
shall have made a bona fide proposal to Issuer or its stockholders by
public announcement or
<PAGE>
written communication that is or becomes the subject of public disclosure
to engage in an Acquisition Transaction;
(v) After an overture is made by a third party to Issuer or
its stockholders to engage in an Acquisition Transaction, Issuer shall
have breached any covenant or obligation contained in the Merger Agreement
and such breach (x) would entitle Grantee to terminate the Merger
Agreement and (y) shall not have been cured prior to the Notice Date (as
defined below); or
(vi) Any person other than Grantee or any Grantee Subsidiary,
other than in connection with a transaction to which Grantee has given its
prior written consent, shall have filed an application or notice with the
Federal Reserve Board, or other federal or state bank regulatory
authority, which application or notice has been accepted for processing,
for approval to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person of beneficial
ownership of 20% or more of the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described
in paragraph (i) of subsection (b) of this Section 2, except that the
percentage referred to in clause (y) shall be 20%.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event of
which it has notice (together, a "Triggering Event"), it being understood that
the giving of such notice by Issuer shall not be a condition to the right of the
Holder to exercise the Option.
(e) In the event the Holder is entitled to and wishes to exercise
the Option, it shall send to Issuer a written notice (the date of which being
herein referred to as the "Notice Date") specifying (i) the total number of
shares it will purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 60 business days from the Notice
Date for the closing of such purchase (the "Closing Date"); provided that if
prior notification to or approval of the Federal Reserve Board or any
<PAGE>
other regulatory agency is required in connection with such purchase, the Holder
shall promptly file the required notice or application for approval and shall
expeditiously process the same and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which any required
notification periods have expired or been terminated or such approvals have been
obtained and any requisite waiting period or periods shall have passed. Any
exercise of the Option shall be deemed to occur on the Notice Date relating
thereto.
(f) At the closing referred to in subsection (e) of this Section 2,
the Holder shall pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer,
provided that failure or refusal of Issuer to designate such a bank account
shall not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder, and the Holder
shall deliver to Issuer a copy of this Agreement and a letter agreeing that the
Holder will not offer to sell or otherwise dispose of such shares in violation
of applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder
may be endorsed with a restrictive legend that shall read substantially as
follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the registered
holder hereof and Issuer and to resale restrictions arising under
the Securities Act of 1933, as amended. A copy of such agreement is
on file at the principal office of Issuer and will be provided to
the holder hereof without charge upon receipt by Issuer of a written
request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act"), in the above legend
shall be removed by
<PAGE>
delivery of substitute certificate(s) without such reference if the Holder shall
have delivered to Issuer a copy of a letter from the staff of the SEC, or an
opinion of counsel, in form and substance reasonably satisfactory to Issuer, to
the effect that such legend is not required for purposes of the 1933 Act; (ii)
the reference to the provisions to this Agreement in the above legend shall be
removed by delivery of substitute certificate(s) without such reference if the
shares have been sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required by
law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. ss. 18a and regulations promulgated
thereunder and (y) in the event, under the Bank Holding Company Act of 1956, as
amended (the "BHCA"), or the Change in Bank Control Act of 1978, as amended, or
any state
<PAGE>
banking law, prior approval of or notice to the Federal Reserve Board or to any
state regulatory authority is necessary before the Option may be exercised,
cooperating fully with the Holder in preparing such applications or notices and
providing such information to the Federal Reserve Board or such state regulatory
authority as they may require) in order to permit the Holder to exercise the
Option and Issuer duly and effectively to issue shares of Common Stock pursuant
hereto; and (iv) promptly to take all action provided herein to protect the
rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section 1 of
this Agreement, the number of shares of Common Stock purchasable upon the
exercise of the Option and the Option Price shall be subject to adjustment from
time to time as provided in this Section 5. In the event of any change in, or
distributions in respect of, the Common Stock by reason of stock dividends,
split-ups, mergers, recapitalizations, combinations, subdivisions, conversions,
exchanges of shares, distributions on or in respect of the Common Stock that
would be prohibited under the terms of the Merger Agreement, or the like, the
type and number of shares of Common Stock purchasable upon exercise hereof and
the Option Price shall be appropriately adjusted in such manner as shall fully
preserve the economic benefits provided hereunder and proper provision shall be
made in any agreement
<PAGE>
governing any such transaction to provide for such proper adjustment and the
full satisfaction of the Issuer's obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within 90 days of such Subsequent Triggering Event (whether on its own
behalf or on behalf of any subsequent holder of this Option (or part thereof) or
any of the shares of Common Stock issued pursuant hereto), promptly prepare,
file and keep current a shelf registration statement under the 1933 Act covering
this Option and any shares issued and issuable pursuant to this Option and shall
use its reasonable best efforts to cause such registration statement to become
effective and remain current in order to permit the sale or other disposition of
this Option and any shares of Common Stock issued upon total or partial exercise
of this Option ("Option Shares") in accordance with any plan of disposition
requested by Grantee. Issuer will use its reasonable best efforts to cause such
registration statement first to become effective and then to remain effective
for such period not in excess of 180 days from the day such registration
statement first becomes effective or such shorter time as may be reasonably
necessary to effect such sales or other dispositions. Grantee shall have the
right to demand two such registrations. The foregoing notwithstanding, if, at
the time of any request by Grantee for registration of the Option or Option
Shares as provided above, Issuer is in registration with respect to an
underwritten public offering of shares of Common Stock, and if in the good faith
judgment of the managing underwriter or managing underwriters, or, if none, the
sole underwriter or underwriters, of such offering the inclusion of the Holder's
Option or Option Shares would interfere with the successful marketing of the
shares of Common Stock offered by Issuer, the number of Option Shares otherwise
to be covered in the registration statement contemplated hereby may be reduced;
and provided, however, that after any such required reduction the number of
Option Shares to be included in such offering for the account of the Holder
shall constitute at least 25% of the total number of shares to be sold by the
Holder and Issuer in the aggregate; and provided further, however, that if such
reduction occurs, then the Issuer shall file a registration statement for the
balance as promptly as practical and no reduction shall thereafter occur. Each
such Holder shall provide all information reasonably requested by Issuer for
inclusion in any registration statement to be filed hereunder. If requested by
any such Holder in connection with such registration, Issuer shall become a
party to any underwriting agreement relating to the sale of such shares, but
<PAGE>
only to the extent of obligating itself in respect of representations,
warranties, indemnities and other agreements customarily included in secondary
offering underwriting agreements for the Issuer. Upon receiving any request
under this Section 6 from any Holder, Issuer agrees to send a copy thereof to
any other person known to Issuer to be entitled to registration rights under
this Section 6, in each case by promptly mailing the same, postage prepaid, to
the address of record of the persons entitled to receive such copies.
Notwithstanding anything to the contrary contained herein, in no event shall
Issuer be obligated to effect more than two registrations pursuant to this
Section 6 by reason of the fact that there shall be more than one Grantee as a
result of any assignment or division of this Agreement.
7. (a) Immediately prior to the occurrence of a Repurchase Event (as
defined below), (i) following a request of the Holder, delivered prior to an
Exercise Termination Event, Issuer (or any successor thereto) shall repurchase
the Option from the Holder at a price (the "Option Repurchase Price") equal to
the amount by which (A) the Market/Offer Price (as defined below) exceeds (B)
the Option Price, multiplied by the number of shares for which this Option may
then be exercised and (ii) at the request of the owner of Option Shares from
time to time (the "Owner"), delivered within 90 days of such occurrence (or such
later period as provided in Section 10), Issuer shall repurchase such number of
the Option Shares from the Owner as the Owner shall designate at a price (the
"Option Share Repurchase Price") equal to the Market/Offer Price multiplied by
the number of Option Shares so designated. The term "Market/Offer Price" shall
mean the highest of (i) the price per share of Common Stock at which a tender
offer or exchange offer therefor has been made, (ii) the price per share of
Common Stock to be paid by any third party pursuant to an agreement with Issuer,
(iii) the highest closing price for shares of Common Stock within the six-month
period immediately preceding the date the Holder gives notice of the required
repurchase of this Option or the Owner gives notice of the required repurchase
of Option Shares, as the case may be, or (iv) in the event of a sale of all or a
substantial portion of Issuer's assets, the sum of the price paid in such sale
for such assets and the current market value of the remaining assets of Issuer
as determined by a nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, and reasonably acceptable to the
Issuer, divided by the number of shares of Common Stock of Issuer outstanding at
the time of such sale. In determining the Market/Offer Price, the value of
consideration other than cash shall be determined by a nationally recognized
investment banking firm selected by the Holder or
<PAGE>
Owner, as the case may be, and reasonably acceptable to the Issuer.
(b) The Holder and the Owner, as the case may be, may exercise its
right to require Issuer to repurchase the Option and any Option Shares pursuant
to this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. Within the latter to occur of (x) five business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto and (y) the time that is
immediately prior to the occurrence of a Repurchase Event, Issuer shall deliver
or cause to be delivered to the Holder the Option Repurchase Price and/or to the
Owner the Option Share Repurchase Price therefor or the portion thereof, if any,
that Issuer is not then prohibited under applicable law and regulation from so
delivering or with respect to which Issuer does not require the approval (or has
obtained such approval) of its stockholders pursuant to Article VIII of Issuer's
Amended and Restated Articles of Incorporation.
(c) To the extent that Issuer is prohibited under applicable law or
regulation from repurchasing, or requires any approval of its stockholders to
repurchase, the Option and/or the Option Shares in full, Issuer shall
immediately so notify the Holder and/or the Owner and thereafter deliver or
cause to be delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the Option Share
Repurchase Price, respectively, that it is no longer prohibited from delivering,
within five business days after the date on which Issuer is no longer so
prohibited; provided, however, that if Issuer at any time after delivery of a
notice of repurchase pursuant to paragraph (b) of this Section 7 is prohibited
under applicable law or regulation from delivering, or requires any approval of
its stockholders to deliver, to the Holder and/or the Owner, as appropriate, the
Option Repurchase Price and the Option Share Repurchase Price, respectively, in
full (and Issuer hereby undertakes to use its best efforts to obtain such
approval of its stockholders and all required regulatory and legal approvals and
to file any required notices, in each case as promptly as practicable in order
to accomplish such repurchase), the Holder or Owner may revoke its notice of
repurchase of the Option or the Option Shares either in whole or to the extent
of the prohibition, whereupon, in the latter
<PAGE>
case, Issuer shall promptly (i) deliver to the Holder and/or the Owner, as
appropriate, that portion of the Option Repurchase Price or the Option Share
Repurchase Price that Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Holder, a new Stock Option Agreement
evidencing the right of the Holder to purchase that number of shares of Common
Stock obtained by multiplying the number of shares of Common Stock for which the
surrendered Stock Option Agreement was exercisable at the time of delivery of
the notice of repurchase by a fraction, the numerator of which is the Option
Repurchase Price less the portion thereof theretofore delivered to the Holder
and the denominator of which is the Option Repurchase Price, or (B) to the
Owner, a certificate for the Option Shares it is then so prohibited from
repurchasing.
(d) For purposes of this Section 7, a Repurchase Event shall be
deemed to have occurred (i) upon the consummation of any merger, consolidation
or similar transaction involving Issuer or any purchase, lease or other
acquisition of all or a substantial portion of the assets of Issuer, other than
any such transaction which would not constitute an Acquisition Transaction
pursuant to the provisos to Section 2(b)(i) hereof or (ii) upon the acquisition
by any person of beneficial ownership of 50% or more of the then outstanding
shares of Common Stock, provided that no such event shall constitute a
Repurchase Event unless a Subsequent Triggering Event shall have occurred prior
to an Exercise Termination Event. The parties hereto agree that Issuer's
obligations to repurchase the Option or Option Shares under this Section 7 shall
not terminate upon the occurrence of an Exercise Termination Event unless no
Subsequent Triggering Event shall have occurred prior to the occurrence of an
Exercise Termination Event.
8. (a) In the event that prior to an Exercise Termination Event,
Issuer shall enter into an agreement (i) to consolidate with or merge into any
person, other than Grantee or one of its Subsidiaries, and shall not be the
continuing or surviving corporation of such consolidation or merger, (ii) to
permit any person, other than Grantee or one of its Subsidiaries, to merge into
Issuer and Issuer shall be the continuing or surviving corporation, but, in
connection with such merger, the then outstanding shares of Common Stock shall
be changed into or exchanged for stock or other securities of any other person
or cash or any other property or the then outstanding shares of Common Stock
shall after such merger represent less than 50% of the outstanding voting shares
and voting share equivalents of the merged company, or (iii) to sell or
otherwise transfer all or substantially all
<PAGE>
of its assets to any person, other than Grantee or one of its Subsidiaries,
then, and in each such case, the agreement governing such transaction shall make
proper provision so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option"), at the election of
the Holder, of either (x) the Acquiring Corporation (as hereinafter defined) or
(y) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(A) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other
than Issuer), (ii) Issuer in a merger in which Issuer is the continuing or
surviving person, and (iii) the transferee of all or substantially all of
Issuer's assets.
(B) "Substitute Common Stock" shall mean the common stock
issued by the issuer of the Substitute Option upon exercise of the
Substitute Option.
(3) "Assigned Value" shall mean the Market/Offer Price, as
defined in Section 7.
(4) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one year immediately
preceding the consolidation, merger or sale in question, but in no event
higher than the closing price of the shares of Substitute Common Stock on
the day preceding such consolidation, merger or sale; provided that if
Issuer is the issuer of the Substitute Option, the Average Price shall be
computed with respect to a share of common stock issued by the person
merging into Issuer or by any company which controls or is controlled by
such person, as the Holder may elect.
(c) The Substitute Option shall have the same terms as the Option,
provided, that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to the Holder. The issuer of the Substitute Option shall
also enter into an agreement with the then Holder or Holders of the Substitute
Option in substantially the same form as this Agreement, which shall be
applicable to the Substitute Option.
<PAGE>
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock as is equal to the Assigned Value multiplied
by the number of shares of Common Stock for which the Option is then
exercisable, divided by the Average Price. The exercise price of the Substitute
Option per share of Substitute Common Stock shall then be equal to the Option
Price multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock for which the Option is then exercisable and the
denominator of which shall be the number of shares of Substitute Common Stock
for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall
the Substitute Option be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than 19.9%
of the shares of Substitute Common Stock outstanding prior to exercise but for
this clause (e), the issuer of the Substitute Option (the "Substitute Option
Issuer") shall make a cash payment to Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in this
clause (e) over (ii) the value of the Substitute Option after giving effect to
the limitation in this clause (e). This difference in value shall be determined
by a nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, and reasonably acceptable to the Acquiring
Corporation.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase the
Substitute Option from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to (x) the amount by which (i) the Highest
Closing Price (as hereinafter defined) exceeds (ii) the exercise price of the
Substitute Option, multiplied by the number of shares of Substitute Common Stock
for which the Substitute Option may then be exercised plus (y) Grantee's
reasonable out-of-pocket expenses (to the extent not previously reimbursed), and
at the request of the owner (the "Substitute Share Owner") of shares of
Substitute Common Stock (the "Substitute Shares"), the Substitute Option
<PAGE>
Issuer shall repurchase the Substitute Shares at a price (the "Substitute Share
Repurchase Price") equal to (x) the Highest Closing Price multiplied by the
number of Substitute Shares so designated plus (y) Grantee's reasonable
Out-of-Pocket Expenses (to the extent not previously reimbursed). The term
"Highest Closing Price" shall mean the highest closing price for shares of
Substitute Common Stock within the six-month period immediately preceding the
date the Substitute Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the required
repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as
the case may be, may exercise its respective right to require the Substitute
Option Issuer to repurchase the Substitute Option and the Substitute Shares
pursuant to this Section 9 by surrendering for such purpose to the Substitute
Option Issuer, at its principal office, the agreement for such Substitute Option
(or, in the absence of such an agreement, a copy of this Agreement) and
certificates for Substitute Shares accompanied by a written notice or notices
stating that the Substitute Option Holder or the Substitute Share Owner, as the
case may be, elects to require the Substitute Option Issuer to repurchase the
Substitute Option and/or the Substitute Shares in accordance with the provisions
of this Section 9. As promptly as practicable, and in any event within five
business days after the surrender of the Substitute Option and/or certificates
representing Substitute Shares and the receipt of such notice or notices
relating thereto, the Substitute Option Issuer shall deliver or cause to be
delivered to the Substitute Option Holder the Substitute Option Repurchase Price
and/or to the Substitute Share Owner the Substitute Share Repurchase Price
therefor or, in either case, the portion thereof which the Substitute Option
Issuer is not then prohibited under applicable law and regulation, or under any
express provision of its certificate of incorporation or similar charter
document requiring prior stockholder approval, from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited
under applicable law or regulation from repurchasing, or requires any approval
of its stockholders pursuant to its certificate of incorporation or similar
charter document to repurchase, the Substitute Option and/or the Substitute
Shares in part or in full, the Substitute Option Issuer following a request for
repurchase pursuant to this Section 9 shall immediately so notify the Substitute
Option Holder and/or the Substitute Share Owner and thereafter deliver or cause
to be delivered, from time to time, to the Substitute Option Holder and/or the
Substitute Share Owner,
<PAGE>
as appropriate, the portion of the Substitute Share Repurchase Price,
respectively, which it is no longer prohibited from delivering, within five
business days after the date on which the Substitute Option Issuer is no longer
so prohibited; provided, however, that if the Substitute Option Issuer is at any
time after delivery of a notice of repurchase pursuant to subsection (b) of this
Section 9 prohibited under applicable law or regulation from delivering, or
requires the any approval of its stockholders under its certificate of
incorporation or similar charter document to deliver, to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the Substitute Option
Repurchase Price and the Substitute Share Repurchase Price, respectively, in
full (and the Substitute Option Issuer shall use its best efforts to obtain any
such required stockholder approval and all required regulatory and legal
approvals, in each case as promptly as practicable, in order to accomplish such
repurchase), the Substitute Option Holder or Substitute Share Owner may revoke
its notice of repurchase of the Substitute Option or the Substitute Shares
either in whole or to the extent of the prohibition, whereupon, in the latter
case, the Substitute Option Issuer shall promptly (i) deliver to the Substitute
Option Holder or Substitute Share Owner, as appropriate, that portion of the
Substitute Option Repurchase Price or the Substitute Share Repurchase Price that
the Substitute Option Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of the Substitute Common Stock obtained by
multiplying the number of shares of the Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the Substitute
Option Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the Substitute Option
Repurchase Price, or (B) to the Substitute Share Owner, a certificate for the
Substitute Common Shares it is then so prohibited from repurchasing.
10. The 90-day period for exercise of certain rights under Sections
2, 6, 7 and 14 shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise of such rights, for the expiration of all
statutory waiting periods, and to the extent required to obtain any required
stockholder approval or until such stockholder approval is no longer required
pursuant to the relevant certificate of incorporation or similar charter
document; and (ii) to the extent necessary to avoid liability
<PAGE>
under Section 16(b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Issuer and no other corporate proceedings on the part of
Issuer (other than the shareholder approval referred to in Sections 7(b) and
9(a) hereof) are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant hereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
(c) Issuer has taken all action (including if required redeeming all
of the Rights or amending or terminating the Rights Agreement) so that the
entering into of this Option Agreement, the acquisition of shares of Common
Stock hereunder and the other transactions contemplated hereby do not and will
not result in the grant of any rights to any person under the Rights Agreement
or enable or require the Rights to be exercised, distributed or triggered.
12. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter
into this Agreement and, subject to any approvals or consents referred to
herein, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
<PAGE>
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Grantee. This Agreement has been duly executed and delivered by
Grantee.
(b) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be, acquired
with a view to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the Securities Act.
13. (a) Notwithstanding anything to the contrary contained
herein, in no event shall Grantee's Total Profit (as defined below in
Section 13(c) hereof) exceed $400 million.
(b) Notwithstanding anything to the contrary contained herein, the
Option may not be exercised for a number of shares as would, as of the date of
exercise, result in a Notional Total Profit (as defined below in Section 13(d)
hereof) of more than $400 million; provided, that nothing in this sentence shall
restrict any exercise of the Option permitted hereby on any subsequent date.
(c) As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the following: (i) the amount received by Grantee
pursuant to Issuer's repurchase of the Option (or any portion thereof) pursuant
to Section 7 hereof, (ii) (x) the amount received by Grantee pursuant to
Issuer's repurchase of Option Shares pursuant to Section 7 hereof, less (y)
Grantee's purchase price for such Option Shares, (iii) (x) the net cash amounts
received by Grantee pursuant to the sale of Option Shares (or any other
securities into which such Option Shares shall be converted or exchanged) to any
unaffiliated party, less (y) Grantee's purchase price of such Option Shares,
(iv) any amounts received by Grantee on the transfer of the Option (or any
portion thereof) to any unaffiliated party, and (v) any equivalent amount with
respect to the Substitute Option.
(d) As used herein, the term "Notional Total Profit" with respect to
any number of shares as to which Grantee may propose to exercise the Option
shall be the Total Profit determined as of the date of such proposed exercise
assuming that the Option were exercised on such date for such number of shares
and assuming that such shares, together with all other Option Shares held by
Grantee and its affiliates as of such date, were sold for cash at the closing
market price for the Issuer Common as of the close of business
<PAGE>
on the preceding trading day (less customary brokerage commissions).
14. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to any
other person, without the express written consent of the other party, except
that in the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder within 90
days following such Subsequent Triggering Event (or such later period as
provided in Section 10); provided, however, that until the date 15 days
following the date on which the Federal Reserve Board approves an application by
Grantee under the BHCA to acquire the shares of Common Stock subject to the
Option, Grantee may not assign its rights under the Option except in (i) a
widely dispersed public distribution, (ii) a private placement in which no one
party acquires the right to purchase in excess of 2% of the voting shares of
Issuer, (iii) an assignment to a single party (e.g., a broker or investment
banker) for the purpose of conducting a widely dispersed public distribution on
Grantee's behalf, or (iv) any other manner approved by the Federal Reserve
Board.
15. Each of Grantee and Issuer will use its best efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including without limitation making application to list the
shares of Common Stock issuable hereunder on the New York Stock Exchange upon
official notice of issuance and applying to the Federal Reserve Board under the
BHCA for approval to acquire the shares issuable hereunder, but Grantee shall
not be obligated to apply to state banking authorities for approval to acquire
the shares of Common Stock issuable hereunder until such time, if ever, as it
deems appropriate to do so.
16. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party hereto and that
the obligations of the parties hereto shall be enforceable by either party
hereto through injunctive or other equitable relief.
17. If any term, provision, covenant or restriction contained in
this Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in
<PAGE>
this Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that the Holder is not permitted to acquire, or Issuer is not
permitted to repurchase pursuant to Section 7, the full number of shares of
Common Stock provided in Section 1(a) hereof (as adjusted pursuant to Section
1(b) or 5 hereof), it is the express intention of Issuer to allow the Holder to
acquire or to require Issuer to repurchase such lesser number of shares as may
be permissible, without any amendment or modification hereof.
18. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
cable, telegram, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
19. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
20. This Agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
one and the same agreement.
21. Except as otherwise expressly provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
22. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, 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 and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.
<PAGE>
23. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the date first above written.
BARNETT BANKS, INC.
By: /s/ Charles E. Rice
-------------------------------
Name: Charles E. Rice
Title: Chairman and Chief
Executive Officer
NATIONSBANK CORPORATION
By: /s/ Hugh L. McColl Jr.
-------------------------------
Name: Hugh L. McColl Jr.
Title: President and Chief
Executive Officer
[Barnett Option]
<PAGE>
EXHIBIT 99.2
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated August 29, 1997, between NationsBank
Corporation, a North Carolina corporation ("Issuer"), and Barnett
Banks, Inc., a Florida corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan
of Merger of even date herewith (the "Merger Agreement"), which agreement has
been executed by the parties hereto immediately prior to this Stock Option
Agreement (the "Agreement"); and
WHEREAS, as a condition to Grantee's entering into the Merger
Agreement and in consideration therefor, Issuer has agreed to grant Grantee the
Option (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to 70,654,895
fully paid and nonassessable shares of Issuer's Common Stock, par value $2.50
per share ("Common Stock"), at a price of $63.3125 per share (the "Option
Price"); provided, however, that in no event shall the number of shares of
Common Stock for which this Option is exercisable exceed 10.0% of the Issuer's
issued and outstanding shares of Common Stock without giving effect to any
shares subject to or issued pursuant to the Option. The number of shares of
Common Stock that may be received upon the exercise of the Option and the Option
Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are
either (i) issued or otherwise become outstanding after the date of this
Agreement (other than pursuant to this Agreement) or (ii) redeemed, repurchased,
retired or otherwise cease to be outstanding after the date of the Agreement,
the number of shares of Common Stock subject to the Option shall be increased or
decreased, as appropriate, so that, after such issuance, such number equals
10.0% of the number of shares of Common Stock then issued and outstanding
without giving effect
<PAGE>
to any shares subject or issued pursuant to the Option. Nothing contained in
this Section 1(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer or Grantee to breach any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option,
in whole or part, and from time to time, if, but only if, both an Initial
Triggering Event (as hereinafter defined) and a Subsequent Triggering Event (as
hereinafter defined) shall have occurred prior to the occurrence of an Exercise
Termination Event (as hereinafter defined), provided that the Holder shall have
sent the written notice of such exercise (as provided in subsection (e) of this
Section 2) within 90 days following such Subsequent Triggering Event. Each of
the following shall be an "Exercise Termination Event": (i) the Effective Time
(as defined in the Merger Agreement) of the Merger; (ii) termination of the
Merger Agreement in accordance with the provisions thereof if such termination
occurs prior to the occurrence of an Initial Triggering Event except a
termination by Grantee pursuant to Section 8.01(b) of the Merger Agreement
(unless the breach by Issuer giving rise to such right of termination is
non-volitional); or (iii) the passage of 12 months after termination of the
Merger Agreement if such termination follows the occurrence of an Initial
Triggering Event or is a termination by Grantee pursuant to Section 8.01(b) of
the Merger Agreement (unless the breach by Issuer giving rise to such right of
termination is non-volitional) (provided that if an Initial Triggering Event
continues or occurs beyond such termination and prior to the passage of such
12-month period, the Exercise Termination Event shall be 12 months from the
expiration of the Last Triggering Event but in no event more than 18 months
after such termination). The "Last Triggering Event" shall mean the last Initial
Triggering Event to expire. The term "Holder" shall mean the holder or holders
of the Option.
(b) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Issuer or any of its Subsidiaries (each an "Issuer
Subsidiary"), without having received Grantee's prior written consent,
shall have entered into an agreement to engage in an Acquisition
Transaction (as hereinafter defined) with any person (the term "person"
for purposes of this Agreement having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and the rules and regulations thereunder) other
than Grantee or any of its Subsidiaries (each a "Grantee
<PAGE>
Subsidiary") or the Board of Directors of Issuer shall have recommended
that the stockholders of Issuer approve or accept any Acquisition
Transaction. For purposes of this Agreement, "Acquisition Transaction"
shall mean (w) a merger or consolidation, or any similar transaction,
involving Issuer or any Significant Subsidiary (as defined in Rule 1-02 of
Regulation S-X promulgated by the Securities and Exchange Commission (the
"SEC")) of Issuer, (x) a purchase, lease or other acquisition or
assumption of all or a substantial portion of the assets or deposits of
Issuer or any Significant Subsidiary of Issuer, (y) a purchase or other
acquisition (including by way of merger, consolidation, share exchange or
otherwise) of securities representing 10% or more of the voting power of
Issuer, or (z) any substantially similar transaction; provided, however,
that in no event shall any merger, consolidation, purchase or similar
transaction involving only the Issuer and one or more of its Subsidiaries
or involving only any two or more of such Subsidiaries, be deemed to be an
Acquisition Transaction, provided that any such transaction is not entered
into in violation of the terms of the Merger Agreement;
(ii) Issuer or any Issuer Subsidiary, without having received
Grantee's prior written consent, shall have authorized, recommended,
proposed or publicly announced its intention to authorize, recommend or
propose, to engage in an Acquisition Transaction with any person other
than Grantee or a Grantee Subsidiary, or the Board of Directors of Issuer
shall have publicly withdrawn or modified, or publicly announced its
intention to withdraw or modify, in any manner adverse to Grantee, its
recommendation that the stockholders of Issuer approve the transactions
contemplated by the Merger Agreement in anticipation of engaging in an
Acquisition Transaction;
(iii) Any person other than Grantee, any Grantee Subsidiary or
any Issuer Subsidiary acting in a fiduciary capacity in the ordinary
course of its business shall have acquired beneficial ownership or the
right to acquire beneficial ownership of 10% or more of the outstanding
shares of Common Stock (the term "beneficial ownership" for purposes of
this Agreement having the meaning assigned thereto in Section 13(d) of the
1934 Act, and the rules and regulations thereunder);
(iv) Any person other than Grantee or any Grantee Subsidiary
shall have made a bona fide proposal to Issuer or its stockholders by
public announcement or
<PAGE>
written communication that is or becomes the subject of public disclosure
to engage in an Acquisition Transaction;
(v) After an overture is made by a third party to Issuer or
its stockholders to engage in an Acquisition Transaction, Issuer shall
have breached any covenant or obligation contained in the Merger Agreement
and such breach (x) would entitle Grantee to terminate the Merger
Agreement and (y) shall not have been cured prior to the Notice Date (as
defined below); or
(vi) Any person other than Grantee or any Grantee Subsidiary,
other than in connection with a transaction to which Grantee has given its
prior written consent, shall have filed an application or notice with the
Federal Reserve Board, or other federal or state bank regulatory
authority, which application or notice has been accepted for processing,
for approval to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person of beneficial
ownership of 20% or more of the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described
in paragraph (i) of subsection (b) of this Section 2, except that the
percentage referred to in clause (y) shall be 20%.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event of
which it has notice (together, a "Triggering Event"), it being understood that
the giving of such notice by Issuer shall not be a condition to the right of the
Holder to exercise the Option.
(e) In the event the Holder is entitled to and wishes to exercise
the Option, it shall send to Issuer a written notice (the date of which being
herein referred to as the "Notice Date") specifying (i) the total number of
shares it will purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 60 business days from the Notice
Date for the closing of such purchase (the "Closing Date"); provided that if
prior notification to or approval of the Federal Reserve Board or any
<PAGE>
other regulatory agency is required in connection with such purchase, the Holder
shall promptly file the required notice or application for approval and shall
expeditiously process the same and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which any required
notification periods have expired or been terminated or such approvals have been
obtained and any requisite waiting period or periods shall have passed. Any
exercise of the Option shall be deemed to occur on the Notice Date relating
thereto.
(f) At the closing referred to in subsection (e) of this Section 2,
the Holder shall pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer,
provided that failure or refusal of Issuer to designate such a bank account
shall not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder, and the Holder
shall deliver to Issuer a copy of this Agreement and a letter agreeing that the
Holder will not offer to sell or otherwise dispose of such shares in violation
of applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder
may be endorsed with a restrictive legend that shall read substantially as
follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the registered
holder hereof and Issuer and to resale restrictions arising under
the Securities Act of 1933, as amended. A copy of such agreement is
on file at the principal office of Issuer and will be provided to
the holder hereof without charge upon receipt by Issuer of a written
request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act"), in the above legend
shall be removed by
<PAGE>
delivery of substitute certificate(s) without such reference if the Holder shall
have delivered to Issuer a copy of a letter from the staff of the SEC, or an
opinion of counsel, in form and substance reasonably satisfactory to Issuer, to
the effect that such legend is not required for purposes of the 1933 Act; (ii)
the reference to the provisions to this Agreement in the above legend shall be
removed by delivery of substitute certificate(s) without such reference if the
shares have been sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required by
law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. ss. 18a and regulations promulgated
thereunder and (y) in the event, under the Bank Holding Company Act of 1956, as
amended (the "BHCA"), or the Change in Bank Control Act of 1978, as amended, or
any state
<PAGE>
banking law, prior approval of or notice to the Federal Reserve Board or to any
state regulatory authority is necessary before the Option may be exercised,
cooperating fully with the Holder in preparing such applications or notices and
providing such information to the Federal Reserve Board or such state regulatory
authority as they may require) in order to permit the Holder to exercise the
Option and Issuer duly and effectively to issue shares of Common Stock pursuant
hereto; and (iv) promptly to take all action provided herein to protect the
rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section 1 of
this Agreement, the number of shares of Common Stock purchasable upon the
exercise of the Option and the Option Price shall be subject to adjustment from
time to time as provided in this Section 5. In the event of any change in, or
distributions in respect of, the Common Stock by reason of stock dividends,
split-ups, mergers, recapitalizations, combinations, subdivisions, conversions,
exchanges of shares, distributions on or in respect of the Common Stock that
would be prohibited under the terms of the Merger Agreement, or the like, the
type and number of shares of Common Stock purchasable upon exercise hereof and
the Option Price shall be appropriately adjusted in such manner as shall fully
preserve the economic benefits provided hereunder and proper provision shall be
made in any agreement
<PAGE>
governing any such transaction to provide for such proper adjustment and the
full satisfaction of the Issuer's obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within 90 days of such Subsequent Triggering Event (whether on its own
behalf or on behalf of any subsequent holder of this Option (or part thereof) or
any of the shares of Common Stock issued pursuant hereto), promptly prepare,
file and keep current a shelf registration statement under the 1933 Act covering
this Option and any shares issued and issuable pursuant to this Option and shall
use its reasonable best efforts to cause such registration statement to become
effective and remain current in order to permit the sale or other disposition of
this Option and any shares of Common Stock issued upon total or partial exercise
of this Option ("Option Shares") in accordance with any plan of disposition
requested by Grantee. Issuer will use its reasonable best efforts to cause such
registration statement first to become effective and then to remain effective
for such period not in excess of 180 days from the day such registration
statement first becomes effective or such shorter time as may be reasonably
necessary to effect such sales or other dispositions. Grantee shall have the
right to demand two such registrations. The foregoing notwithstanding, if, at
the time of any request by Grantee for registration of the Option or Option
Shares as provided above, Issuer is in registration with respect to an
underwritten public offering of shares of Common Stock, and if in the good faith
judgment of the managing underwriter or managing underwriters, or, if none, the
sole underwriter or underwriters, of such offering the inclusion of the Holder's
Option or Option Shares would interfere with the successful marketing of the
shares of Common Stock offered by Issuer, the number of Option Shares otherwise
to be covered in the registration statement contemplated hereby may be reduced;
and provided, however, that after any such required reduction the number of
Option Shares to be included in such offering for the account of the Holder
shall constitute at least 25% of the total number of shares to be sold by the
Holder and Issuer in the aggregate; and provided further, however, that if such
reduction occurs, then the Issuer shall file a registration statement for the
balance as promptly as practical and no reduction shall thereafter occur. Each
such Holder shall provide all information reasonably requested by Issuer for
inclusion in any registration statement to be filed hereunder. If requested by
any such Holder in connection with such registration, Issuer shall become a
party to any underwriting agreement relating to the sale of such shares, but
<PAGE>
only to the extent of obligating itself in respect of representations,
warranties, indemnities and other agreements customarily included in secondary
offering underwriting agreements for the Issuer. Upon receiving any request
under this Section 6 from any Holder, Issuer agrees to send a copy thereof to
any other person known to Issuer to be entitled to registration rights under
this Section 6, in each case by promptly mailing the same, postage prepaid, to
the address of record of the persons entitled to receive such copies.
Notwithstanding anything to the contrary contained herein, in no event shall
Issuer be obligated to effect more than two registrations pursuant to this
Section 6 by reason of the fact that there shall be more than one Grantee as a
result of any assignment or division of this Agreement.
7. (a) Immediately prior to the occurrence of a Repurchase Event (as
defined below), (i) following a request of the Holder, delivered prior to an
Exercise Termination Event, Issuer (or any successor thereto) shall repurchase
the Option from the Holder at a price (the "Option Repurchase Price") equal to
the amount by which (A) the Market/Offer Price (as defined below) exceeds (B)
the Option Price, multiplied by the number of shares for which this Option may
then be exercised and (ii) at the request of the owner of Option Shares from
time to time (the "Owner"), delivered within 90 days of such occurrence (or such
later period as provided in Section 10), Issuer shall repurchase such number of
the Option Shares from the Owner as the Owner shall designate at a price (the
"Option Share Repurchase Price") equal to the Market/Offer Price multiplied by
the number of Option Shares so designated. The term "Market/Offer Price" shall
mean the highest of (i) the price per share of Common Stock at which a tender
offer or exchange offer therefor has been made, (ii) the price per share of
Common Stock to be paid by any third party pursuant to an agreement with Issuer,
(iii) the highest closing price for shares of Common Stock within the six-month
period immediately preceding the date the Holder gives notice of the required
repurchase of this Option or the Owner gives notice of the required repurchase
of Option Shares, as the case may be, or (iv) in the event of a sale of all or a
substantial portion of Issuer's assets, the sum of the price paid in such sale
for such assets and the current market value of the remaining assets of Issuer
as determined by a nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, and reasonably acceptable to the
Issuer, divided by the number of shares of Common Stock of Issuer outstanding at
the time of such sale. In determining the Market/Offer Price, the value of
consideration other than cash shall be determined by a nationally recognized
investment banking firm selected by the Holder or
<PAGE>
Owner, as the case may be, and reasonably acceptable to the Issuer.
(b) The Holder and the Owner, as the case may be, may exercise its
right to require Issuer to repurchase the Option and any Option Shares pursuant
to this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. Within the latter to occur of (x) five business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto and (y) the time that is
immediately prior to the occurrence of a Repurchase Event, Issuer shall deliver
or cause to be delivered to the Holder the Option Repurchase Price and/or to the
Owner the Option Share Repurchase Price therefor or the portion thereof, if any,
that Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation from repurchasing the Option and/or the Option Shares in full, Issuer
shall immediately so notify the Holder and/or the Owner and thereafter deliver
or cause to be delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the Option Share
Repurchase Price, respectively, that it is no longer prohibited from delivering,
within five business days after the date on which Issuer is no longer so
prohibited; provided, however, that if Issuer at any time after delivery of a
notice of repurchase pursuant to paragraph (b) of this Section 7 is prohibited
under applicable law or regulation from delivering to the Holder and/or the
Owner, as appropriate, the Option Repurchase Price and the Option Share
Repurchase Price, respectively, in full (and Issuer hereby undertakes to use its
best efforts to obtain all required regulatory and legal approvals and to file
any required notices, in each case as promptly as practicable in order to
accomplish such repurchase), the Holder or Owner may revoke its notice of
repurchase of the Option or the Option Shares either in whole or to the extent
of the prohibition, whereupon, in the latter case, Issuer shall promptly (i)
deliver to the Holder and/or the Owner, as appropriate, that portion of the
Option Repurchase Price or the Option Share Repurchase Price that Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Holder, a new Stock Option Agreement evidencing the right of
<PAGE>
the Holder to purchase that number of shares of Common Stock obtained by
multiplying the number of shares of Common Stock for which the surrendered Stock
Option Agreement was exercisable at the time of delivery of the notice of
repurchase by a fraction, the numerator of which is the Option Repurchase Price
less the portion thereof theretofore delivered to the Holder and the denominator
of which is the Option Repurchase Price, or (B) to the Owner, a certificate for
the Option Shares it is then so prohibited from repurchasing.
(d) For purposes of this Section 7, a Repurchase Event shall be
deemed to have occurred (i) upon the consummation of any merger, consolidation
or similar transaction involving Issuer or any purchase, lease or other
acquisition of all or a substantial portion of the assets of Issuer, other than
any such transaction which would not constitute an Acquisition Transaction
pursuant to the provisos to Section 2(b)(i) hereof or (ii) upon the acquisition
by any person of beneficial ownership of 50% or more of the then outstanding
shares of Common Stock, provided that no such event shall constitute a
Repurchase Event unless a Subsequent Triggering Event shall have occurred prior
to an Exercise Termination Event. The parties hereto agree that Issuer's
obligations to repurchase the Option or Option Shares under this Section 7 shall
not terminate upon the occurrence of an Exercise Termination Event unless no
Subsequent Triggering Event shall have occurred prior to the occurrence of an
Exercise Termination Event.
8. (a) In the event that prior to an Exercise Termination Event,
Issuer shall enter into an agreement (i) to consolidate with or merge into any
person, other than Grantee or one of its Subsidiaries, and shall not be the
continuing or surviving corporation of such consolidation or merger, (ii) to
permit any person, other than Grantee or one of its Subsidiaries, to merge into
Issuer and Issuer shall be the continuing or surviving corporation, but, in
connection with such merger, the then outstanding shares of Common Stock shall
be changed into or exchanged for stock or other securities of any other person
or cash or any other property or the then outstanding shares of Common Stock
shall after such merger represent less than 50% of the outstanding voting shares
and voting share equivalents of the merged company, or (iii) to sell or
otherwise transfer all or substantially all of its assets to any person, other
than Grantee or one of its Subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provision so that the
Option shall, upon the consummation of any such transaction and upon the terms
and conditions set forth herein, be converted into, or exchanged for, an option
(the "Substitute
<PAGE>
Option"), at the election of the Holder, of either (x) the Acquiring Corporation
(as hereinafter defined) or (y) any person that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
(A) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other
than Issuer), (ii) Issuer in a merger in which Issuer is the continuing or
surviving person, and (iii) the transferee of all or substantially all of
Issuer's assets.
(B) "Substitute Common Stock" shall mean the common stock
issued by the issuer of the Substitute Option upon exercise of the
Substitute Option.
(3) "Assigned Value" shall mean the Market/Offer Price, as
defined in Section 7.
(4) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one year immediately
preceding the consolidation, merger or sale in question, but in no event
higher than the closing price of the shares of Substitute Common Stock on
the day preceding such consolidation, merger or sale; provided that if
Issuer is the issuer of the Substitute Option, the Average Price shall be
computed with respect to a share of common stock issued by the person
merging into Issuer or by any company which controls or is controlled by
such person, as the Holder may elect.
(c) The Substitute Option shall have the same terms as the Option,
provided, that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to the Holder. The issuer of the Substitute Option shall
also enter into an agreement with the then Holder or Holders of the Substitute
Option in substantially the same form as this Agreement, which shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock as is equal to the Assigned Value multiplied
by the number of shares of Common Stock for which the Option is then
exercisable, divided by the Average Price. The exercise price of the Substitute
Option per share of Substitute Common Stock shall
<PAGE>
then be equal to the Option Price multiplied by a fraction, the numerator of
which shall be the number of shares of Common Stock for which the Option is then
exercisable and the denominator of which shall be the number of shares of
Substitute Common Stock for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall
the Substitute Option be exercisable for more than 10.0% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than 10.0%
of the shares of Substitute Common Stock outstanding prior to exercise but for
this clause (e), the issuer of the Substitute Option (the "Substitute Option
Issuer") shall make a cash payment to Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in this
clause (e) over (ii) the value of the Substitute Option after giving effect to
the limitation in this clause (e). This difference in value shall be determined
by a nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, and reasonably acceptable to the Acquiring
Corporation.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase the
Substitute Option from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to (x) the amount by which (i) the Highest
Closing Price (as hereinafter defined) exceeds (ii) the exercise price of the
Substitute Option, multiplied by the number of shares of Substitute Common Stock
for which the Substitute Option may then be exercised plus (y) Grantee's
reasonable out-of-pocket expenses (to the extent not previously reimbursed), and
at the request of the owner (the "Substitute Share Owner") of shares of
Substitute Common Stock (the "Substitute Shares"), the Substitute Option Issuer
shall repurchase the Substitute Shares at a price (the "Substitute Share
Repurchase Price") equal to (x) the Highest Closing Price multiplied by the
number of Substitute Shares so designated plus (y) Grantee's reasonable
Out-of-Pocket Expenses (to the extent not previously reimbursed). The term
"Highest Closing Price" shall mean the highest closing price
<PAGE>
for shares of Substitute Common Stock within the six-month period immediately
preceding the date the Substitute Option Holder gives notice of the required
repurchase of the Substitute Option or the Substitute Share Owner gives notice
of the required repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as
the case may be, may exercise its respective right to require the Substitute
Option Issuer to repurchase the Substitute Option and the Substitute Shares
pursuant to this Section 9 by surrendering for such purpose to the Substitute
Option Issuer, at its principal office, the agreement for such Substitute Option
(or, in the absence of such an agreement, a copy of this Agreement) and
certificates for Substitute Shares accompanied by a written notice or notices
stating that the Substitute Option Holder or the Substitute Share Owner, as the
case may be, elects to require the Substitute Option Issuer to repurchase the
Substitute Option and/or the Substitute Shares in accordance with the provisions
of this Section 9. As promptly as practicable, and in any event within five
business days after the surrender of the Substitute Option and/or certificates
representing Substitute Shares and the receipt of such notice or notices
relating thereto, the Substitute Option Issuer shall deliver or cause to be
delivered to the Substitute Option Holder the Substitute Option Repurchase Price
and/or to the Substitute Share Owner the Substitute Share Repurchase Price
therefor or, in either case, the portion thereof which the Substitute Option
Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Substitute Option Issuer is prohibited
under applicable law or regulation from repurchasing the Substitute Option
and/or the Substitute Shares in part or in full, the Substitute Option Issuer
following a request for repurchase pursuant to this Section 9 shall immediately
so notify the Substitute Option Holder and/or the Substitute Share Owner and
thereafter deliver or cause to be delivered, from time to time, to the
Substitute Option Holder and/or the Substitute Share Owner, as appropriate, the
portion of the Substitute Share Repurchase Price, respectively, which it is no
longer prohibited from delivering, within five business days after the date on
which the Substitute Option Issuer is no longer so prohibited; provided,
however, that if the Substitute Option Issuer is at any time after delivery of a
notice of repurchase pursuant to subsection (b) of this Section 9 prohibited
under applicable law or regulation from delivering to the Substitute Option
Holder
<PAGE>
and/or the Substitute Share Owner, as appropriate, the Substitute Option
Repurchase Price and the Substitute Share Repurchase Price, respectively, in
full (and the Substitute Option Issuer shall use its best efforts to obtain all
required regulatory and legal approvals, in each case as promptly as
practicable, in order to accomplish such repurchase), the Substitute Option
Holder or Substitute Share Owner may revoke its notice of repurchase of the
Substitute Option or the Substitute Shares either in whole or to the extent of
the prohibition, whereupon, in the latter case, the Substitute Option Issuer
shall promptly (i) deliver to the Substitute Option Holder or Substitute Share
Owner, as appropriate, that portion of the Substitute Option Repurchase Price or
the Substitute Share Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, or (B) to the Substitute Share
Owner, a certificate for the Substitute Common Shares it is then so prohibited
from repurchasing.
10. The 90-day period for exercise of certain rights under Sections
2, 6, 7 and 14 shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise of such rights and for the expiration of
all statutory waiting periods; and (ii) to the extent necessary to avoid
liability under Section 16(b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as
follows:
(a) Issuer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Issuer and no other corporate proceedings on the part of
Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
<PAGE>
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant hereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
(c) Issuer has taken all action (including if required redeeming all
of the Rights or amending or terminating the Rights Agreement) so that the
entering into of this Option Agreement, the acquisition of shares of Common
Stock hereunder and the other transactions contemplated hereby do not and will
not result in the grant of any rights to any person under the Rights Agreement
or enable or require the Rights to be exercised, distributed or triggered.
12. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter
into this Agreement and, subject to any approvals or consents referred to
herein, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Grantee. This Agreement has been duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be, acquired
with a view to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the Securities Act.
13. (a) Notwithstanding anything to the contrary contained
herein, in no event shall Grantee's Total Profit (as defined below in
Section 13(c) hereof) exceed $400 million.
(b) Notwithstanding anything to the contrary contained herein, the
Option may not be exercised for a number of shares as would, as of the date of
exercise, result in a Notional Total Profit (as defined below in Section 13(d)
<PAGE>
hereof) of more than $400 million; provided, that nothing in this sentence shall
restrict any exercise of the Option permitted hereby on any subsequent date.
(c) As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the following: (i) the amount received by Grantee
pursuant to Issuer's repurchase of the Option (or any portion thereof) pursuant
to Section 7 hereof, (ii) (x) the amount received by Grantee pursuant to
Issuer's repurchase of Option Shares pursuant to Section 7 hereof, less (y)
Grantee's purchase price for such Option Shares, (iii) (x) the net cash amounts
received by Grantee pursuant to the sale of Option Shares (or any other
securities into which such Option Shares shall be converted or exchanged) to any
unaffiliated party, less (y) Grantee's purchase price of such Option Shares,
(iv) any amounts received by Grantee on the transfer of the Option (or any
portion thereof) to any unaffiliated party, and (v) any equivalent amount with
respect to the Substitute Option.
(d) As used herein, the term "Notional Total Profit" with respect to
any number of shares as to which Grantee may propose to exercise the Option
shall be the Total Profit determined as of the date of such proposed exercise
assuming that the Option were exercised on such date for such number of shares
and assuming that such shares, together with all other Option Shares held by
Grantee and its affiliates as of such date, were sold for cash at the closing
market price for the Issuer Common as of the close of business on the preceding
trading day (less customary brokerage commissions).
14. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to any
other person, without the express written consent of the other party, except
that in the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder within 90
days following such Subsequent Triggering Event (or such later period as
provided in Section 10); provided, however, that until the date 15 days
following the date on which the Federal Reserve Board approves an application by
Grantee under the BHCA to acquire the shares of Common Stock subject to the
Option, Grantee may not assign its rights under the Option except in (i) a
widely dispersed public distribution, (ii) a private placement in which no one
party acquires the right to purchase in excess of 2% of the voting shares of
Issuer, (iii) an assignment to a single party (e.g., a broker or investment
<PAGE>
banker) for the purpose of conducting a widely dispersed public distribution on
Grantee's behalf, or (iv) any other manner approved by the Federal Reserve
Board.
15. Each of Grantee and Issuer will use its best efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including without limitation making application to list the
shares of Common Stock issuable hereunder on the New York Stock Exchange upon
official notice of issuance and applying to the Federal Reserve Board under the
BHCA for approval to acquire the shares issuable hereunder, but Grantee shall
not be obligated to apply to state banking authorities for approval to acquire
the shares of Common Stock issuable hereunder until such time, if ever, as it
deems appropriate to do so.
16. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party hereto and that
the obligations of the parties hereto shall be enforceable by either party
hereto through injunctive or other equitable relief.
17. If any term, provision, covenant or restriction contained in
this Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7, the full number of shares of Common Stock
provided in Section 1(a) hereof (as adjusted pursuant to Section 1(b) or 5
hereof), it is the express intention of Issuer to allow the Holder to acquire or
to require Issuer to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof.
18. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
cable, telegram, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
19. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York,
<PAGE>
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
20. This Agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
one and the same agreement.
21. Except as otherwise expressly provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
22. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, 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 and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.
23. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, all as of
the date first above written.
NATIONSBANK CORPORATION
By: /s/ Hugh L. McColl
----------------------------------
Name: Hugh L. McColl Jr.
Title: President and Chief
Executive Officer
BARNETT BANKS, INC.
By: /s/ Charles E. Rice
----------------------------------
Name: Charles E. Rice
Title: Chairman and Chief
Executive Officer
[NationsBank Option]
<PAGE>
EXHIBIT 99.3
CONSENT OF CHARLES E. RICE
The undersigned hereby consents, pursuant to Rule 438 of the Securities Act
of 1933, as amended, to the references to him in the Joint Proxy
Statement-Prospectus of NationsBank Corporation and Barnett Banks, Inc., which
is part of this Registration Statement on Form S-4 of NationsBank Corporation,
with respect to his being elected or appointed as a director of NationsBank
Corporation under the circumstances described therein.
/s/ Charles E. Rice
___________________
CHARLES E. RICE
DIRECTOR, BARNETT BANKS, INC.
November 18, 1997
<PAGE>
NATIONSBANK CORPORATION
- --------------------------------------------------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
- --------------------------------------------------------------------------------
A Special Meeting of Shareholders of NationsBank Corporation
("NationsBank") will be held at the International Trade Center, 200
North College Street, in the city of Charlotte, North Carolina, at 9:30
a.m. local time on December 19, 1997, to consider and act upon:
1. The issuance of shares of Common Stock of NationsBank ("Common
Stock") and a new series of NationsBank Cumulative Convertible
Preferred Stock pursuant to the merger (the "Merger") of Barnett
Banks, Inc. ("Barnett") with and into NB Holdings Corporation, a
wholly owned subsidiary of NationsBank ("NB Holdings"), upon the
terms and subject to the conditions set forth in the Agreement
and Plan of Merger, dated as of August 29, 1997, as amended
between NationsBank, Barnett and NB Holdings.
2. The amendment and restatement of the NationsBank Corporation Key
Employee Stock Plan.
3. The transaction of such other business as may properly come
before the meeting or any adjournments or postponements thereof.
Only holders of record of Common Stock, ESOP Convertible Preferred
Stock, Series C, and 7% Cumulative Redeemable Preferred Stock, Series B,
at the close of business on October 31, 1997, are entitled to notice of
and to vote at the Special Meeting or any adjournments or postponements
thereof. Approval of the matters to be voted on at the Special Meeting
requires the affirmative vote of a majority of the votes cast by holders
of Common Stock, ESOP Convertible Preferred Stock, Series C, and 7%
Cumulative Redeemable Preferred Stock, Series B, voting together as a
single class.
/s/ HUGH L. MCCOLL, JR.
HUGH L. MCCOLL, JR.
CHIEF EXECUTIVE OFFICER
November 18, 1997
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY,
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING.
THE BOARD OF DIRECTORS OF NATIONSBANK UNANIMOUSLY RECOMMENDS
THAT SHAREHOLDERS VOTE FOR APPROVAL OF THE MATTERS TO BE VOTED
UPON AT THE SPECIAL MEETING.
<PAGE>
November 18, 1997
Dear Fellow Shareholder:
We are pleased to enclose information relating to a Special
Meeting of Shareholders of NationsBank Corporation to be held at
the International Trade Center, 200 North College Street, in the
city of Charlotte, North Carolina, at 9:30 a.m. local time on
December 19, 1997.
On August 29, 1997, NationsBank and Barnett Banks, Inc.
entered into a definitive agreement to combine NationsBank with
Barnett by merging Barnett into a wholly owned subsidiary of
NationsBank. The merger has been approved by the Boards of
Directors of both NationsBank and Barnett.
The purpose of our Special Meeting is to consider and vote
on (i) the issuance of NationsBank capital stock to Barnett
shareholders in the proposed merger and (ii) an amendment and
restatement of the NationsBank Corporation Key Employee Stock
Plan.
The merger with Barnett is extremely important for our
company. The merger will create the preeminent banking
institution in Florida, which we believe is one of the most
attractive markets in the United States. As a result of the
merger, NationsBank will have pro forma combined assets of
approximately $284 billion, pro forma combined deposits of
approximately $161 billion and pro forma combined shareholders'
equity of approximately $23 billion.
The matters to be voted on by the NationsBank shareholders
require for approval the affirmative vote of a majority of the
votes cast by holders of NationsBank Common Stock, NationsBank
ESOP Convertible Preferred Stock, Series C and NationsBank 7%
Cumulative Redeemable Preferred Stock, Series B, voting together
as a single class.
Shareholders are entitled to vote all shares of Common
Stock, ESOP Convertible Preferred Stock, Series C, and 7%
Cumulative Redeemable Preferred Stock, Series B, held by them on
October 31, 1997, which is the record date for the Special
Meeting.
WE URGE YOU TO CONSIDER CAREFULLY THESE IMPORTANT MATTERS,
WHICH ARE DESCRIBED IN THE ATTACHED JOINT PROXY
STATEMENT-PROSPECTUS. In order to ensure that your vote is
represented at the meeting, please indicate your choice on the
proxy form, date and sign it, and promptly return it in the
enclosed envelope. You are, of course, welcome to attend the
meeting and to vote your shares in person.
/s/ HUGH L. MCCOLL, JR.
HUGH L. MCCOLL, JR.
CHIEF EXECUTIVE OFFICER
<PAGE>
BARNETT BANKS, INC.
----------------------------------------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 19, 1997
----------------------------------------------------------------------
A Special Meeting of Shareholders of Barnett Banks, Inc.
("Barnett") will be held at the Barnett Office Park, 9000 Southside
Blvd., Jacksonville, Florida, at 9:30 a.m. local time on December 19,
1997, for the following purposes:
1. To consider and vote upon a proposal to approve the Agreement
and Plan of Merger, dated as of August 29, 1997, as amended
(the "Merger Agreement"), by and among Barnett, NationsBank
Corporation ("NationsBank"), and NB Holdings Corporation ("NB
Holdings"), a wholly owned subsidiary of NationsBank,
providing for the merger (the "Merger") of Barnett with and
into NB Holdings. A copy of the Merger Agreement is attached
as Appendix A to the accompanying Joint Proxy
Statement-Prospectus.
2. To transact such other business as may properly come before
the Special Meeting or any adjournments or postponements
thereof.
Only holders of record of Barnett common stock at the close of
business on October 31, 1997, are entitled to notice of and to vote at
such meeting or any adjournments or postponements thereof. The
affirmative vote of holders of a majority of the outstanding shares of
Barnett common stock is required for approval of the Merger Agreement
and the transactions contemplated thereby.
/s/ CHARLES E. RICE
CHARLES E. RICE
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
November 18, 1997
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY,
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING.
THE BOARD OF DIRECTORS OF BARNETT BANKS, INC. UNANIMOUSLY RECOMMENDS
THAT SHAREHOLDERS VOTE FOR APPROVAL OF THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY.
<PAGE>
Dear Fellow Shareholder:
We are pleased to enclose information relating to a Special
Meeting of Shareholders of Barnett Banks, Inc. to be held at the
Barnett Office Park, 9000 Southside Blvd., Jacksonville,
Florida, at 9:30 a.m. local time on December 19, 1997.
At the Special Meeting, you will be asked to consider and
vote upon a proposal to approve an Agreement and Plan of Merger
dated August 29, 1997, as amended, by and among Barnett,
NationsBank Corporation and NB Holdings Corporation, a wholly
owned subsidiary of NationsBank. Under the terms of this
Agreement, Barnett will be merged with and into NB Holdings (the
"Merger"), and each outstanding share of common stock of Barnett
will be converted into the right to receive 1.1875 shares of
NationsBank common stock (and cash, without interest, in lieu of
fractional shares).
The Merger will provide you with the opportunity to
participate as a shareholder in a combined company that will be
one of the largest and most diversified financial services
organizations in the United States. We believe the resulting
company in the Merger will be well positioned to compete more
effectively in the increasingly competitive financial services
industry and to achieve Barnett's goals for continued revenue
growth, improved profitability and superior shareholder returns.
YOUR BOARD OF DIRECTORS HAS APPROVED THE MERGER AGREEMENT
AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE
MERGER AGREEMENT AND THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE MERGER. The enclosed Joint
Proxy Statement-Prospectus explains in detail the terms of the
proposed Merger and related matters. Please carefully review and
consider all of this information.
Consummation of the Merger is subject to certain
conditions, including but not limited to approval of the Merger
by the requisite vote of the shareholders of both Barnett and
NationsBank, and approval of the Merger by various regulatory
authorities.
It is very important that your shares are represented at
the Special Meeting, whether or not you plan to attend in
person. The affirmative vote of the holders of a majority of the
outstanding shares of Barnett common stock is required for
approval of the Merger. Your failure to vote for approval of the
Merger will have the same effect as a vote against the Merger.
In order to ensure that your vote is represented at the Special
Meeting, please sign, date and mail the proxy card in the
enclosed envelope.
Thank you for your cooperation and continued support.
/s/ CHARLES E. RICE
CHARLES E. RICE
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
<PAGE>
NATIONSBANK CORPORATION
F O R M
O F
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P R O X Y
SPECIAL MEETING OF SHAREHOLDERS, DECEMBER 19, 1997
The undersigned shareholder of NationsBank Corporation hereby appoints John
Lord, David S. Andrews and Madeline Domino or any of them acting by majority or
acting singly in the absence of the others, attorneys and proxies, with full
power of substitution, to represent the undersigned and vote all of the shares
of Common Stock of NationsBank Corporation which the undersigned is entitled to
vote at the Special Meeting of Shareholders to be held at the International
Trade Center, 200 North College Street, Charlotte, North Carolina, on December
19, 1997, at 9:30 a.m. (local time or any adjournment(s) thereof:
The shares represented by this proxy will be voted as directed by the
shareholder. If no direction is given when the duly executed proxy is returned,
such shares will be voted "FOR" Proposals 1 and 2.
1. Approval of the issuance of Common Stock and $2.50 Cumulative Convertible
Preferred Stock, Series BB, of NationsBank Corporation in the merger of
Barnett Banks, Inc. and NationsBank Corporation.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. Adoption of the Amended and Restated NationsBank Corporation Key Employee
Stock Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PLEASE SIGN ON REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
(This Proxy is continued on the reverse side)
<PAGE>
(This Proxy is continued from other side)
The undersigned hereby authorizes the proxies to vote in their discretion on
any other business which may properly be brought before the meeting or any
adjournment thereof.
Signature
Signature
Date
Please mark, date and sign as your
name appears above and return in
the enclosed envelope. If acting
as executor, administrator,
trustee, guardian, etc., you
should so indicate when signing.
If the signer is a corporation,
please sign in full corporate name
by duly authorized officer.
I PLAN TO ATTEND THE SPECIAL MEETING: YES [ ] NO [ ]
Your vote is important to us. Whether or not you expect to attend the
Special Meeting, please complete, sign and return the attached proxy card
promptly in the accompanying envelope. The envelope requires no postage if
mailed in the United States.
<PAGE>
BARNETT BANKS, INC.
SPECIAL MEETING, DECEMBER 19, 1997
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF BARNETT BANKS, INC.
("BARNETT").
P
The undersigned shareholder of Barnett, a Florida corporation,
having received the Notice and Proxy Statement for the Special Meeting of
Shareholders, appoints Charles E. Rice and Allen L. Lastinger, Jr., or
either of them, as proxies, with full power of substitution to represent
the shareholder and to vote all shares of stock of Barnett which
R
the shareholder is entitled to vote at the Special Meeting of
shareholders of Barnett to be held at 9000 Southside Boulevard,
Jacksonville, Florida on Friday, December 19, 1997, at 9:30 a.m., local
time, and any and all adjournments thereof in the manner specified.
O
Should any other matter requiring a vote of the shareholders arise,
the proxies named above are authorized to
X
vote in accordance with their best judgement in the interest of Barnett.
The Board of Directors is not aware of any matter which is to be
presented for action at the Special Meeting other than as set forth on
this card.
Y
PLEASE SIGN AND DATE ON THE REVERSE SIDE AND MAIL PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE OR OTHERWISE TO P.O. BOX 8075, EDISON, NEW
JERSEY, 08818-9045. IF YOU DO NOT SIGN AND RETURN A PROXY OR ATTEND THE
MEETING AND VOTE BY BALLOT, YOUR SHARES CANNOT BE VOTED.
(YOU ARE REQUESTED TO COMPLETE, SIGN AND RETURN THIS PROXY PROMPTLY.)
(pyramid) PLEASE DETACH PROXY HERE, SIGN AND MAIL (pyramid)
BARNETT BANKS, INC.
Dear Shareholder:
A Special Meeting of shareholders of Barnett Banks, Inc. ("Barnett") will
be held at 9000 Southside Boulevard, Jacksonville, Florida, on Friday, December
19, 1997, at 9:30 a.m. (the "Special Meeting"). At the Special Meeting,
shareholders will act upon a proposal to approve the Agreement and Plan to
Merger, dated as of August 29, 1997, as amended (the "Agreement"), between
Barnett and NationsBank Corporation ("NationsBank"), and the consummation of the
transactions contemplated thereby, pursuant to which Barnett would be merged
with a wholly-owned subsidiary of NationsBank, upon the terms and subject to the
conditions set forth in the Agreement.
It is important that your shares are represented at the Special Meeting.
Whether or not you plan to attend the Special Meeting, please review the
enclosed Joint Proxy Statement-Prospectus, complete the attached proxy form, and
return it promptly in the envelope provided.
<PAGE>
<TABLE>
<S> <C>
PLEASE MARK YOUR
VOTES AS IN THIS
X EXAMPLE.
</TABLE>
<TABLE>
<C> <S> <C> <C>
The Board of Directors recommends a vote FOR proposal 1.
1. Proposal to approve the Agreement and Plan of Merger, dated as of August 29, 1997, as FOR AGAINST ABSTAIN
amended (the "Agreement"), between Barnett Banks, Inc. ("Barnett") and NationsBank [ ] [ ] [ ]
Corporation ("NationsBank"), and the consummation of the transactions contemplated
thereby, pursuant to which Barnett would be merged with a wholly-owned subsidiary of
NationsBank, upon the terms and subject to the conditions set forth in the Agreement.
</TABLE>
WILL ATTEND SPECIAL MEETING [ ]
Please sign exactly as name or names appear on this proxy card. Executors,
administrators, trustees, or other representatives should so indicate when
signing. If a corporation, please sign in corporate name by president or
other authorized officer. If a partnership, please sign in partnership name
by authorized person.
--------------------------------------
--------------------------------------
Signatures(s) of Shareholder(s) Date
(pyramid) FOLD AND DETACH HERE (pyramid)
BARNETT BANKS, INC.
SPECIAL MEETING OF SHAREHOLDERS
ADMISSION TICKET
DECEMBER 19, 1997, 9:30 A.M.
BARNETT OFFICE PARK
9000 SOUTHSIDE BLVD.
JACKSONVILLE, FL 32256
THIS IS YOUR PROXY. YOUR VOTE IS IMPORTANT. IT IS IMPORTANT THAT YOUR
SHARES ARE REPRESENTED AT THIS MEETING, WHETHER OR NOT YOU ATTEND THE
MEETING IN PERSON. TO MAKE SURE YOUR SHARES ARE REPRESENTED, WE URGE YOU
TO COMPLETE AND MAIL THE PROXY CARD ABOVE.
