As filed with the Securities and Exchange Commission
on January 16, 1997
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
Date of Report (Date of Earliest Event Reported): December 31, 1996
NATIONSBANK CORPORATION
(Exact Name of Registrant as Specified in its Charter)
North Carolina 1-6523 56-0906609
(State of Incorporation) (Commission (IRS Employer
File Number) Identification No.)
NationsBank Corporate Center, Charlotte, North Carolina 28255
(Address of Principal Executive Offices) (Zip Code)
(704) 386-5000
(Registrant's Telephone Number, including Area Code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Effective January 7, 1997, Boatmen's Bancshares, Inc. ("Boatmen's")
merged with and into NB Holdings Corporation ("Holdings"), a Delaware
corporation and wholly owned subsidiary of the Registrant, pursuant to an
Agreement and Plan of Merger, dated as of August 29, 1996, as amended,
among Boatmen's, Holdings and the Registrant (the "Merger Agreement").
Pursuant to the Merger Agreement, upon consummation of the Merger on
January 7, 1997 (the "Effective Date"), each share of Boatmen's common
stock, $1.00 par value per share ("Boatmen's Common Stock"), was converted
into the right to receive 0.6525 of a share of the Registrant's common stock
("NationsBank Common Stock"), with cash in lieu of fractional shares;
provided that, in lieu of all or a portion of the NationsBank Common Stock to
which they would be entitled under the Merger Agreement, holders of
Boatmen's Common Stock could elect to receive cash in an amount equal to the
average closing price of NationsBank Common Stock on the New York Stock
Exchange during the ten consecutive trading day period ending on the tenth
calendar day immediately prior to the Effective Date. A copy of the press
release announcing the closing of the Merger is filed as Exhibit 99.1 to this
Current Report on Form 8-K.
The Registrant's Registration Statement on Form S-4 (Registration No.
333-16189), which was declared effective by the Securities and Exchange
Commission on December 18, 1996 (the "Registration Statement"), sets forth
certain information regarding the Merger, the Registrant and Boatmen's,
including, but not limited to, the date and manner of the Merger, a description
of the assets involved, the nature and amount of consideration paid by the
Registrant therefor, the method used for determining the amount of such
consideration, the nature of any material relationships between Boatmen's and
the Registrant or any officer or director of the Registrant or any associate of
any such officer or director, the nature of Boatmen's business and the
Registrant's intended use of the assets acquired in the Merger. In addition,
the information set forth under section heading "A" of Item 5 of this Current
Report on Form 8-K is incorporated herein by reference.
ITEM 5. OTHER EVENTS
A. Matters Related to the Acquisition of Boatmen's Bancshares, Inc.
Merger Consideration. By election of the holders of the Boatmen's
Common Stock, approximately four percent of the shares of Boatmen's Common Stock
were exchanged in the Merger for cash and the remaining approximately 96 percent
of the shares of Boatmen's Common Stock were exchanged in the Merger for
approximately 98 million shares of NationsBank Common Stock. The Registrant
intends to continue its program of repurchasing shares of NationsBank Common
Stock so that the net shares of NationsBank Common Stock issued in connection
with the Merger represent 60 percent of the total consideration paid by the
Registrant in the Merger. To achieve this allocation of the Merger
consideration, the Registrant intends to repurchase from time to time in open
market or private transactions approximately 37 million shares of NationsBank
Common Stock. A copy of the press release announcing the election of the
Boatmen's shareholders to
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receive in the Merger shares of NationsBank Common Stock or cash and the
Registrant's intent to repurchase shares of NationsBank Common Stock is filed
as Exhibit 99.2 to this Current Report on Form 8-K.
Exchange of Preferred Stock. On the Effective Date, (i) each share of
Cumulative Convertible Preferred Stock, Series A, of Boatmen's (the "Boatmen's
Series A Preferred Stock") was converted into one share of the Registrant's
Cumulative Convertible Preferred Stock, Series A (the "NationsBank New Series A
Preferred Stock"); (ii) each share of 7% Cumulative Redeemable Preferred Stock,
Series B, of Boatmen's (the "Boatmen's Series B Preferred Stock") was converted
into one share of the Registrant's 7% Cumulative Redeemable Preferred Stock,
Series B (the "NationsBank New Series B Preferred Stock"); and (iii) each
depositary share relating to the Boatmen's Series A Preferred Stock (the
"Boatmen's Depositary Shares") was converted into one depositary share of the
Registrant (the "NationsBank Depositary Shares"). The NationsBank New Series A
Preferred Stock, NationsBank New Series B Preferred Stock and NationsBank
Depositary Shares have rights, preferences and terms substantially identical to
the rights, preferences and terms of the Boatmen's Series A Preferred Stock,
Boatmen's Series B Preferred Stock and Boatmen's Depositary Shares,
respectively.
Board of Directors. On the Effective Date, the following persons, who
were immediately prior thereto serving as members of the Board of Directors of
Boatmen's, became members of the Board of Directors of the Registrant: Andrew B.
Craig, III, previously Chairman and CEO of Boatmen's; B.A. Bridgewater, Jr.,
Chairman, President and CEO of Brown Group, Inc.; C. Ray Holman, Chairman and
CEO of Mallinckrodt, Inc.; Russell W. Meyer, Jr., Chairman and CEO of The
Cessna Aircraft Company; and Albert E. Suter, Senior Vice Chairman and COO of
Emerson Electric Co. On the Effective Date, Mr. Craig became Chairman of the
Board of Directors of the Registrant and a member of its Executive Committee.
In addition, on January 1, 1997, Richard B. Priory, President and COO
of Duke Power Company, became a member of the Registrant's Board of Directors. A
copy of the press release announcing the election of the new members of the
Board of Directors of the Registrant is filed as Exhibit 99.3 to this Current
Report on Form 8-K.
Grant of Options. As a result of the Merger, on the Effective Date
options to purchase approximately five million shares of NationsBank Common
Stock were granted to approximately 19,700 qualified employees of Boatmen's
under the terms of the NationsBank Corporation 1996 Associates Stock Option
Award Plan. The exercise price for such options is $98.875, equal to the
closing price of NationsBank Common Stock on the Effective Date. Fifty percent
of options granted to qualified Boatmen's employees may be exercised as
early as April 1, 1997 after NationsBank Common Stock closes at or above
$100 a share on the New York Stock Exchange for ten consecutive trading days.
The remaining 50 percent may be exercised after NationsBank Common Stock
closes at or above $120 per share on the New York Stock Exchange for ten
consecutive trading days. Regardless of the price of NationsBank Common
Stock, the options will vest fully on July 1, 2000 and expire on June 29,
2001.
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Results of Operations of Boatmen's. Filed as Exhibit 99.4 to this
Current Report on Form 8-K is a summary of selected financial information
reflecting the results of operations of Boatmen's for the fiscal year ended
December 31, 1996.
B. Restated Articles of Incorporation.
Effective January 2, 1997, the Registrant's Articles of Incorporation
were amended and restated to (i) increase the number of shares of NationsBank
Common Stock authorized for issuance from 800,000,000 to 1,250,000,000; and (ii)
designate the preferences, limitations and relative rights of the NationsBank
New Series A Preferred Stock and NationsBank New Series B Preferred Stock. A
copy of the Registrant's Restated Articles of Incorporation is filed as Exhibit
3.1 to this Current Report on Form 8-K.
C. Release of Fiscal Year Earnings.
On January 13, 1997, the Registrant announced financial results for the
fiscal year ended December 31, 1996, reporting net income of $2.38 billion and
earnings per common share of $8.00. A copy of the press release announcing the
results of the Registrant's fiscal year ended December 31, 1996 is filed as
Exhibit 99.5 to this Current Report on Form 8-K.
D. Description of NationsBank Common Stock
The following is an updated Description of Common Stock of NationsBank
Corporation, which has been previously filed with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and updated and amended from time to time. The following description
reflects an increase in the authorized capital stock of the Registrant and the
designation of the preferences, limitations and relative rights of the
NationsBank New Series A Preferred Stock and NationsBank New Series B Preferred
Stock. To the extent the following description is inconsistent with prior
filings, it modifies and supersedes such filings.
NationsBank Common Stock
General. The Registrant is authorized to issue 1,250,000,000 shares of
NationsBank Common Stock, of which 384,488,669 shares were outstanding
as of January 7, 1997. NationsBank Common Stock is traded on the New York
Stock Exchange and the Pacific Stock Exchange under the trading symbol "NB."
NationsBank Common Stock is also listed on the London Stock Exchange and certain
shares are listed and traded on the Tokyo Stock Exchange. As of January 7,
1997, (i) approximately 65.3 million shares of NationsBank Common Stock were
reserved for issuance under various employee benefit plans and the directors'
stock plan of the Registrant and upon conversion of the ESOP Convertible
Preferred Stock, Series C, of the Registrant (the "NationsBank ESOP Preferred
Stock"); (ii) approximately 2.8 million shares were reserved for issuance
under the NationsBank Dividend Reinvestment and Stock Purchase Plan;
(iii) approximately 1.8 million shares were reserved for issuance upon
conversion of the NationsBank New Series A Preferred Stock;
(iv) approximately 25,000 shares were reserved for issuance upon the
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conversion of the Registrant's 6.25% Convertible Subordinated Debentures due May
1, 2011; and (v) approximately 1.5 million shares were reserved for issuance in
connection with the acquisition of First Federal Savings Bank of Brunswick,
Georgia. 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 January 7, 1997 is approximately 794 million.
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 the
Registrant 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 Registrant's 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 the Registrant, or
the sale of all or substantially all of the property of the Registrant 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 the Registrant's 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 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 Board of Directors of the
Registrant (the "NationsBank Board") may declare out of funds legally available
for such payments. The payment of distributions by the Registrant 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
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holders of its common stock. In addition, the payment of distributions to
shareholders is subject to any prior rights of outstanding preferred stock of
the Registrant. Share dividends, if any are declared, may be paid from
authorized but unissued shares.
Capital Guidelines. The ability of the Registrant to pay dividends in
the future is influenced by the various minimum capital requirements and the
capital and non-capital standards established under the Federal Deposit
Insurance Corporation Improvement Act of 1991.
The Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), the Office of the Comptroller of the Currency and the Federal
Deposit Insurance Corporation 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's 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 percent 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 percent 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. Asset and off-balance sheet exposures are
assigned to one of four categories of risk weights, based primarily on relative
credit risk. The minimum Tier 1 capital ratio is four percent and the minimum
total capital ratio is eight percent.
The leverage ratio is determined by dividing Tier 1 capital by total
adjusted assets. Although the stated minimum ratio is three percent, most
banking organizations are required to maintain ratios of at least 100 to
200 basis points above three percent.
Covenants Restricting Dividends. Various indentures and other
instruments under which the Registrant has issued debt securities, or under
which the Registrant has assumed the obligations of such issuer, contain certain
provisions prohibiting the Registrant from paying dividends on its capital
stock, or purchasing, redeeming, or otherwise acquiring or making distributions
with respect to its capital stock if, after giving effect thereto, certain
financial conditions are not met. The Registrant believes that these provisions
will not materially affect the Registrant's ability to pay dividends on its
capital stock.
NationsBank Preferred Stock
The Registrant 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
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involuntary liquidation rights and other rights as it may determine. The
Registrant has designated 3,000,000 shares of NationsBank ESOP Preferred Stock,
of which 2,319,060 shares were issued and outstanding as of January
7, 1997. In connection with the Merger, the Registrant designated out of its
authorized preferred stock 250,000 shares of NationsBank New Series A Preferred
Stock and 35,045 shares of NationsBank New Series B Preferred Stock
(collectively, the "NationsBank New Preferred Stock"). As of January 7, 1997,
203,087 shares of NationsBank New Series A Preferred Stock and 9,341 shares of
NationsBank New Series B Preferred Stock were issued and outstanding.
NationsBank ESOP Preferred Stock
The NationsBank ESOP Preferred Stock was first issued in the
transaction by which the Registrant was formed from the merger of NCNB
Corporation and C&S/Sovran Corporation in 1991 upon the conversion of shares of
ESOP Convertible Preferred Stock, Series C of C&S/Sovran Corporation. All shares
are held by the trustee under the NationsBank Corporation Retirement Savings
Plan (the "ESOP"). The NationsBank ESOP Preferred Stock ranks senior to the
NationsBank Common Stock, but ranks junior to the NationsBank New Preferred
Stock, with respect to dividends and distributions upon liquidation.
Preferential Rights. Shares of NationsBank ESOP Preferred Stock have no
preemptive or preferential rights to purchase or subscribe for shares of the
Registrant's capital stock of any class and are not subject to any sinking fund
or other obligation of the Registrant 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. The Registrant 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 the Registrant's
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
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votes together with the holders of NationsBank Common Stock as one class. Except
as otherwise required by applicable law, the holder of the NationsBank ESOP
Preferred Stock has no special voting rights. To the extent that the holder of
such shares is entitled to vote, each share is entitled to the number of votes
equal to the number of shares of NationsBank Common Stock into which such share
of NationsBank ESOP Preferred Stock could be converted on the record date for
determining the shareholders entitled to vote, rounded to the nearest whole
vote.
Shares of the NationsBank ESOP Preferred Stock initially are
convertible into NationsBank Common Stock at a conversion rate equal to 0.84
shares of NationsBank Common Stock per share of NationsBank ESOP Preferred
Stock, and a conversion price of $42.50 per 0.84 shares of NationsBank Common
Stock, subject to certain customary anti-dilution adjustments.
Distributions. In the event of any voluntary or involuntary
dissolution, liquidation or winding-up of the Registrant, the holder of the
NationsBank ESOP Preferred Stock will be entitled to receive out of the assets
of the Registrant available for distribution to shareholders, subject to the
rights of the holders of any of the Registrant's 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 the Registrant, the
amounts payable with respect to the NationsBank ESOP Preferred Stock and any
other stock ranking on a parity therewith as to any such distribution are not
paid in full, the holder of the NationsBank ESOP Preferred Stock and such other
stock will share ratably in any distribution of assets in proportion to the full
respective preferential amounts to which they are entitled. After payment of the
full amount of the liquidating distribution to which it is entitled, the holder
of the NationsBank ESOP Preferred Stock will not be entitled to any further
distribution of assets by the Registrant. Neither a merger or consolidation of
the Registrant with or into any other corporation, nor a merger or consolidation
of any other corporation with or into the Registrant nor a sale, transfer or
lease of all or any portion of the Registrant's assets, will be deemed to be a
dissolution, liquidation or winding-up of the Registrant.
Redemption. The NationsBank ESOP Preferred Stock is redeemable, in
whole or in part, at the option of the Registrant, at any time. The redemption
price for the shares of the NationsBank ESOP Preferred Stock will depend upon
the time of redemption. Specifically, the redemption price for the 12-month
period that began on July 1, 1996, is $43.49 per share; on each succeeding July
1, the redemption price will be reduced by $.33 per share, except that on and
after July 1, 1999, the redemption price will be $42.50 per share, and the
redemption price may be paid in cash or shares of NationsBank Common Stock. In
each case, the redemption price also must include all accrued and unpaid
dividends to the date of redemption. To the extent that the NationsBank ESOP
Preferred Stock is treated as Tier 1
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capital for bank regulatory purposes, the approval of the Federal Reserve Board
may be required for redemption of the NationsBank ESOP Preferred Stock.
The Registrant 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 Depositary Shares
General. The shares of NationsBank New Series A Preferred Stock are
represented by the NationsBank Depositary Shares. Each NationsBank Depositary
Share represents a 1/16th interest in a share of NationsBank New Series A
Preferred Stock. The NationsBank Depositary Shares are freely transferable under
the Securities Act, subject to certain restrictions on resales by affiliates.
The shares of the NationsBank New Series A Preferred Stock underlying
the NationsBank Depositary Shares have been deposited under a separate Deposit
Agreement, dated as of February 24, 1992, and amended January 31, 1996 (the
"Deposit Agreement") between Boatmen's and BANK IV, N.A. (the "Depositary") and,
following the closing of the Merger, are evidenced by NationsBank Depositary
Receipts. Pursuant to the Merger Agreement, the Deposit Agreement was
automatically assumed by Holdings, was assigned by it to the Registrant and
thereafter relates to the shares of NationsBank New Series A Preferred Stock
issued in the Merger. Subject to the terms of the Deposit Agreement, each owner
of a NationsBank Depositary Share is entitled, in proportion to the applicable
fractional interest in a share of NationsBank New Series A Preferred Stock
underlying such NationsBank Depositary Share, to all the rights and preferences
of the NationsBank New Series A Preferred Stock underlying such NationsBank
Depositary Share (including dividend, voting, redemption, conversion, and
liquidation rights).
Dividends and Other Distributions. The Depositary will distribute all
cash dividends or other cash distributions received in respect of the
NationsBank New Series A Preferred Stock to the record holders of NationsBank
Depositary Shares relating to such NationsBank New Series A Preferred Stock in
proportion to the numbers of such NationsBank Depositary Shares owned by such
holders on the relevant record date. The Depositary shall distribute only such
amount, however, as can be distributed without attributing to any holder of
NationsBank Depositary Shares a fraction of one cent, and any balance not so
distributed shall be added to and treated as part of the next sum received by
the Depositary for distribution to record holders of NationsBank Depositary
Shares.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of NationsBank
Depositary Shares entitled
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thereto, unless the Depositary, after consultation with the Registrant,
determines that it is not feasible to make such distribution, in which case the
Depositary may, with the approval of the Registrant, sell such property and
distribute the net proceeds from such sale to such holders.
Conversion. A holder of NationsBank Depositary Shares will be able to
participate in the conversion of the NationsBank New Series A Preferred Stock as
discussed below under "NationsBank New Series A Preferred Stock." If the
NationsBank Depositary Shares represented by a NationsBank Depositary Receipt
are to be converted in part only, a new NationsBank Depositary Receipt will be
issued by the Depositary for the NationsBank Depositary Shares which are not to
be converted. No fractional shares of NationsBank Common Stock will be issued
upon conversion, and if such conversion would result in a fractional share being
issued, an amount will be paid in cash by the Registrant equal to the value of
the fractional interest, based upon the closing price of the NationsBank Common
Stock on the last business day prior to the date of conversion.
Redemption of NationsBank Depositary Shares. If the NationsBank New
Series A Preferred Stock is redeemed, the NationsBank Depositary Shares will be
redeemed from the proceeds received by the Depositary resulting from the
redemption, in whole or in part, of the NationsBank New Series A Preferred Stock
held by the Depositary. The Depositary will mail notice of redemption not less
than 30 and not more than 60 days prior to the date fixed for redemption to the
record holders of the NationsBank Depositary Shares to be so redeemed at their
respective addresses appearing in the books of the Depositary. The redemption
price per NationsBank Depositary Share will be equal to the applicable fraction
of the redemption price per share payable with respect to the NationsBank New
Series A Preferred Stock. Whenever the Registrant redeems shares of NationsBank
New Series A Preferred Stock held by the Depositary, the Depositary will redeem
as of the same redemption date the number of NationsBank Depositary Shares
relating to shares of NationsBank New Series A Preferred Stock so redeemed. If
less than all the NationsBank Depositary Shares are to be redeemed, the
NationsBank Depositary Shares to be redeemed will be selected by lot or pro rata
as may be determined by the Depositary.
After the date fixed for redemption, the NationsBank Depositary Shares
so called for redemption will no longer be deemed to be outstanding and all
rights of the holders of the NationsBank Depositary Shares will cease, except
the right to receive the moneys payable upon such redemption and any money or
other property to which the holders of such NationsBank Depositary Shares were
entitled upon such redemption upon surrender to the Depositary of the
NationsBank Depositary Receipts evidencing such NationsBank Depositary Shares.
Voting the NationsBank New Series A Preferred Stock. Upon receipt of
notice of any meeting at which the holders of the NationsBank New Series A
Preferred Stock are entitled to vote as discussed below under "NationsBank New
Series A Preferred Stock", the Depositary will mail the information contained in
such notice of meeting to the record holders of the NationsBank Depositary
Shares relating to such NationsBank New Series A Preferred Stock. Each record
holder of such NationsBank Depositary Shares on the record
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date (which will be the same date as the record date for the NationsBank New
Series A Preferred Stock) will be entitled to instruct the Depositary as to the
exercise of the voting rights pertaining to the number of shares of NationsBank
New Series A Preferred Stock underlying such holder's NationsBank Depositary
Shares. The Depositary will endeavor, insofar as practicable, to vote the number
of shares of NationsBank New Series A Preferred Stock underlying such
NationsBank Depositary Shares in accordance with such instructions, and the
Registrant will agree to take all action which may be deemed necessary by the
Depositary in order to enable the Depositary to do so. The Depositary will
abstain from voting shares of NationsBank New Series A Preferred Stock to the
extent it does not receive specific instructions from the holders of NationsBank
Depositary Shares relating to such NationsBank New Series A Preferred Stock.
Amendment and Termination of Deposit Agreement. The form of NationsBank
Depositary Receipt evidencing the NationsBank Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Registrant, as assignee of Holdings (successor by merger with
Boatmen's), and the Depositary. Any amendment, however, which materially and
adversely alters the rights of the holders of NationsBank Depositary Shares will
not be effective unless such amendment has been approved by the record holders
of at least a majority of the NationsBank Depositary Shares then outstanding.
The Deposit Agreement may be terminated by the Registrant or the Depositary if,
among other reasons, (i) all outstanding NationsBank Depositary Shares have been
redeemed or converted into NationsBank Common Stock, or (ii) there has been a
final distribution in respect of the NationsBank New Series A Preferred Stock in
connection with any liquidation, dissolution or winding up of the Registrant and
such distribution has been distributed to the holders of the related NationsBank
Depositary Shares.
Charges of Depositary. The Registrant will pay all transfer and other
taxes and governmental charges arising solely from the existence of the Deposit
Agreement. The Registrant will pay charges of the Depositary in connection with
the initial deposit of the NationsBank New Series A Preferred Stock and any
redemption of the NationsBank New Series A Preferred Stock. Holders of
NationsBank Depositary Shares will pay other transfer and other taxes and
governmental charges and such other charges as are expressly provided in the
Deposit Agreement to be for their accounts.
Miscellaneous. The Depositary will forward to the holders of
NationsBank Depositary Shares all reports and communications from the Registrant
which are delivered to the Depositary and which the Registrant is required to
furnish to the holders of the NationsBank New Series A Preferred Stock.
Neither the Depositary nor the Registrant will be liable if it is
prevented or delayed by law or any circumstance beyond its control in performing
its obligations under the Deposit Agreement. The obligations of the Registrant
and the Depositary under the Deposit Agreement will be limited to performance in
good faith of their duties thereunder and they will not be obligated to
prosecute or defend any legal proceeding in respect of any NationsBank
Depositary Shares or NationsBank New Series A Preferred Stock unless
satisfactory indemnity is furnished. They may rely upon written advice of
counsel or
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<PAGE>
accountants, holders of NationsBank Depositary Shares or other persons believed
to be competent and on documents believed to be genuine.
Resignation and Removal of Depositary. The Depositary may resign at any
time by delivering to the Registrant notice of its election to do so, and the
Registrant may at any time remove the Depositary, any such resignation or
removal to take effect upon the appointment of a successor Depositary and its
acceptance of such appointment. Such successor Depositary must be appointed
within 60 days after delivery of the notice of resignation or removal and must
be a bank or trust company having its principal office in the United States and
having a combined capital and surplus of at least $50,000,000.
NationsBank New Series A Preferred Stock
The shares of NationsBank New Series A Preferred Stock rank prior to
the shares of NationsBank New Series B Preferred Stock and NationsBank ESOP
Preferred Stock as to dividends and upon liquidation.
Dividends. Holders of the NationsBank New Series A Preferred Stock will
be entitled to receive, when and as declared by the NationsBank Board, out of
assets of the Registrant legally available for payment, cash dividends at the
rate of 7.00% of the liquidation preference per annum (equivalent to $1.75 per
annum per NationsBank Depositary Share). Dividends will be calculated on the
basis of a 360-day year consisting of twelve 30-day months and will be payable
quarterly on March 1, June 1, September 1, and December 1 of each year.
Dividends on the NationsBank New Series A Preferred Stock will be cumulative
from the date of original issue. Each dividend will be payable to holders of
record as they appear on the stock register of the Registrant on the record
dates fixed by the NationsBank Board.
If at any time there are outstanding shares of any other series of
preferred stock ranking junior to or on a parity with the NationsBank New Series
A Preferred Stock as to dividends, no dividends will be declared or paid or set
apart for payment on any such other series for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for such payment on the
NationsBank New Series A Preferred Stock for all dividend payment periods
terminating on or prior to the date of payment of such dividends. If dividends
on the NationsBank New Series A Preferred Stock and on any other series of
preferred stock ranking on a parity as to dividends with the NationsBank New
Series A Preferred Stock are in arrears, in making any dividend payment on
account of such arrears, the Registrant will make payments ratably upon all
outstanding shares of the NationsBank New Series A Preferred Stock and shares of
such other series of preferred stock in proportion to the respective amounts of
dividends in arrears on the NationsBank New Series A Preferred Stock and on such
other series of preferred stock to the date of such dividend payment. Holders of
shares of the NationsBank New Series A Preferred Stock will not be entitled to
any dividend, whether payable in cash, property or stock, in excess of full
cumulative dividends.
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<PAGE>
Unless full cumulative dividends on all outstanding shares of the
NationsBank New Series A Preferred Stock will have been paid or declared and set
aside for payment for all past dividend payment periods, no dividends (other
than a dividend in NationsBank Common Stock or in any other stock ranking junior
to the NationsBank New Series A Preferred Stock as to dividends and upon
liquidation) will be declared upon the NationsBank Common Stock or upon any
other stock ranking junior to the NationsBank New Series A Preferred Stock as to
dividends and upon liquidation, nor will any NationsBank Common Stock or any
other stock of the Registrant ranking junior to or on a parity with the
NationsBank New Series A Preferred Stock as to dividends or upon liquidation, be
redeemed, purchased or otherwise acquired for any consideration (or any moneys
be paid to or made available for a sinking fund for the redemption of any shares
of any such stock) by the Registrant (except by conversion into or exchange for
stock of the Registrant ranking junior to the NationsBank New Series A Preferred
Stock as to dividends and upon liquidation). No interest, or sum of money in
lieu of interest, will be payable in respect of any dividend payment or payments
on the NationsBank New Series A Preferred Stock which may be in arrears.
Conversion Rights. Shares of the NationsBank New Series A Preferred
Stock are convertible at any time at the option of the holder into shares of
NationsBank Common Stock at a conversion price of $44.44 per share of
NationsBank Common Stock (equivalent to a conversion rate of approximately 0.562
share of NationsBank Common Stock for each NationsBank Depositary Share),
subject to adjustment as described below (except that a share of NationsBank New
Series A Preferred Stock that has been called for redemption will be convertible
up to and including but not after the close of business on the tenth day
preceding the date fixed for redemption).
The conversion price is subject to adjustment upon certain events,
including the issuance of NationsBank Common Stock as a dividend or distribution
on shares of NationsBank Common Stock; subdivisions, splits, combinations or
reclassifications of outstanding shares of NationsBank Common Stock; the
issuance to holders of NationsBank Common Stock generally of rights or warrants
to subscribe for NationsBank Common Stock at less than the then current market
price; or the distribution to holders of the NationsBank Common Stock of
evidences of indebtedness, assets (excluding cash dividends or distributions
payable out of consolidated earnings or earned surplus), or rights or warrants
to subscribe for securities of the Registrant other than those mentioned above.
In the case of (i) any consolidation or merger to which the Registrant
is a party (other than one in which the Registrant is the continuing corporation
and the outstanding shares of the NationsBank Common Stock are not changed into
or exchanged for stock or other securities of any other person or cash or other
property as a result of or in connection with the consolidation or merger), (ii)
a sale or conveyance of the properties and assets of the Registrant as, or
substantially as, an entirety, or (iii) any statutory exchange of securities
with another corporation, there will be no adjustment of the conversion price,
but the holder of each share of NationsBank New Series A Preferred Stock then
outstanding will have the right thereafter to convert such share into the kind
and amount of securities, cash, or other property that the holder would have
owned or been entitled to receive
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<PAGE>
immediately after such consolidation, merger, statutory exchange, sale or
conveyance if such share had been converted immediately before the effective
date of such consolidation, merger, statutory exchange, sale or conveyance.
Upon conversion, no adjustments will be made for accrued dividends and,
therefore, NationsBank Depositary Shares surrendered for conversion after the
record date next preceding a dividend payment date for the NationsBank New
Series A Preferred Stock and before the dividend payment date must be
accompanied by payment of an amount equal to the dividend thereon which is to be
paid on such dividend payment date (unless the NationsBank Depositary Shares
surrendered for conversion have been called for redemption prior to such
dividend payment date).
No adjustment of the conversion price will be required to be made in
any case unless the adjustment amounts to 1% or more of the conversion price,
but any adjustment not made by reason of this limitation will be required to be
carried forward cumulatively and taken into account in any subsequent
adjustments.
If at any time the Registrant makes a distribution of property to its
shareholders which would be taxable to such shareholders as a dividend for
federal income tax purposes (e.g., distributions of evidences of indebtedness or
assets of the Registrant, but generally not stock dividends or rights to
subscribe to capital stock) and, pursuant to the antidilution provisions
described above, the conversion price of the NationsBank New Series A Preferred
Stock is reduced, such reduction may be deemed to be the receipt of taxable
income by holders of the NationsBank Depositary Shares.
A holder may effect the conversion of any whole number of NationsBank
Depositary Shares (whether or not evenly divisible by sixteen) by delivering the
NationsBank Depositary Receipts evidencing such shares to the Depositary. the
Registrant will issue to the Depositary a certificate for any fractional share
of NationsBank New Series A Preferred Stock remaining unconverted.
Fractional shares of NationsBank Common Stock will not be delivered
upon conversion. Instead, a cash adjustment will be paid in respect of such
fractional interest, based on the then current market price of NationsBank
Common Stock.
Redemption. Shares of NationsBank New Series A Preferred Stock will not
be redeemable prior to March 1, 1997. Subject to obtaining the prior approval of
the Federal Reserve Board, if required, the shares of NationsBank New Series A
Preferred Stock will be redeemable at the option of the Registrant, in whole or
in part, at any time or from time to time, on and after March 1, 1997, on not
less than 30 nor more than 60 days' notice by mail, at a redemption price of
$400 per share (equivalent to $25 per NationsBank Depositary Share) plus accrued
and unpaid dividends to the redemption date.
The NationsBank New Series A Preferred Stock will not be subject to any
sinking fund or other obligation of the Registrant to redeem or retire the
NationsBank New Series A Preferred Stock.
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<PAGE>
At its election, the Registrant, before the redemption date, may
deposit the funds for such redemption, in trust, with a designated depositary
and authorize such depositary to complete the redemption notice, and, after such
deposit, all rights of the holders of NationsBank New Series A Preferred Stock
and related NationsBank Depositary Shares so called for redemption will cease,
except the right to receive the redemption price. As and to the extent, however,
that the Registrant or the Depositary is required or permitted under the
abandoned property laws of any jurisdiction to escheat any redemption funds held
for the benefit of any holder, the Registrant and the Depositary will be
absolved of any further liability or obligation to such holder to the full
extent provided by law. Notwithstanding the foregoing, if any dividends on the
NationsBank New Series A Preferred Stock are in arrears, no shares of
NationsBank New Series A Preferred Stock or NationsBank Depositary Shares may be
redeemed unless all outstanding shares of NationsBank New Series A Preferred
Stock are simultaneously redeemed, and the Registrant will not purchase or
otherwise acquire any shares of NationsBank New Series A Preferred Stock or
NationsBank Depositary Shares; provided, however, that the foregoing will not
prevent the purchase or acquisition of shares of NationsBank New Series A
Preferred Stock or NationsBank Depositary Shares by the Registrant pursuant to a
purchase or exchange offer made on the same terms to holders of all outstanding
shares of NationsBank New Series A Preferred Stock or NationsBank Depositary
Shares.
If a notice of redemption has been given, from and after the redemption
date for the shares of NationsBank New Series A Preferred Stock called for
redemption (unless default will be made by the Registrant in providing money for
the payment of the redemption price of the shares so called for redemption),
dividends on the NationsBank New Series A Preferred Stock so called for
redemption will cease to accrue and such shares will no longer be deemed to be
outstanding, and all rights of the holders thereof as shareholders of the
Registrant (except the right to receive the redemption price) will cease. Upon
surrender in accordance with such notice of the certificates representing any
shares so redeemed (properly endorsed or assigned for transfer, if the
NationsBank Board will so require and the notice will so state), the redemption
price set forth above will be paid out of funds provided by the Registrant. If
fewer than all of the shares represented by any such certificates are redeemed,
a new certificate will be issued representing the unredeemed shares without cost
to the holder thereof.
Liquidation Rights. In the event of any voluntary or involuntary
dissolution, liquidation, or winding up of the Registrant, the holders of the
NationsBank New Series A Preferred Stock will be entitled to receive and to be
paid out of assets of the Registrant available for distribution to its
shareholders, before any payment or distribution is made to holders of
NationsBank Common Stock or any other class of stock ranking junior to the
NationsBank New Series A Preferred Stock upon liquidation, a liquidating
distribution of $400 per share of NationsBank New Series A Preferred Stock
(equivalent to $25 per NationsBank Depositary Share) plus accrued and unpaid
dividends. After payment of the full amount of the liquidating distributions to
which they are entitled, the holders of the NationsBank New Series A Preferred
Stock will have no right or claim to any of the remaining assets of the
Registrant. If, upon any voluntary or involuntary dissolution,
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<PAGE>
liquidation, or winding up of the Registrant, the amounts payable with respect
to the NationsBank New Series A Preferred Stock and any other shares of stock of
the Registrant ranking as to any such distribution on a parity with the
NationsBank New Series A Preferred Stock are not paid in full, the holders of
the NationsBank New Series A Preferred Stock and of such other shares will share
ratably in any such distribution of assets of the Registrant in proportion to
the full respective distributable amounts to which they are entitled. Neither
the sale of all or substantially all the property or business of the Registrant,
nor the merger or consolidation of the Registrant into or with any other
corporation will be deemed to be a dissolution, liquidation, or winding up,
voluntary or involuntary, of the Registrant.
Voting. Except as otherwise expressly required by applicable law or as
described below, holders of the NationsBank Depositary Shares or the NationsBank
New Series A Preferred Stock will not be entitled to vote on any matter,
including but not limited to any merger, consolidation or transfer of assets,
and will not be entitled to notice of any meeting of shareholders of the
Registrant. Whenever the approval or other action of holders of the NationsBank
New Series A Preferred Stock is required by applicable law or by the NationsBank
Articles of Incorporation, each share of the NationsBank New Series A Preferred
Stock will be entitled to one vote and, except as described below, the
affirmative vote of a majority of such shares at a meeting at which a majority
of such shares are present or represented will be sufficient to constitute such
approval or other action. Holders of NationsBank Depositary Shares will be
entitled to vote the shares of NationsBank New Series A Preferred Stock which
their NationsBank Depositary Shares represent.
The affirmative vote of the holders of at least 66 2/3% of the
outstanding shares of NationsBank New Series A Preferred Stock is required to
(i) authorize, effect or validate the amendment, alteration or repeal of any
provision of the NationsBank Articles of Incorporation which would adversely
affect the preferences, rights, powers or privileges, qualifications,
limitations and restrictions of the NationsBank New Series A Preferred Stock and
(ii) create, authorize or issue, or reclassify any authorized stock of the
Registrant into, or create, authorize or issue any obligation or security
convertible into or evidencing a right to purchase any shares of any class of
stock ranking on a parity with or prior to the NationsBank New Series A
Preferred Stock in respect of dividends or distribution of assets on
liquidation.
If at any time the Registrant falls in arrears in the payment of
dividends on the NationsBank New Series A Preferred Stock in an aggregate amount
at least equal to the full accrued dividends for six quarterly dividend periods,
the number of directors of the Registrant will be increased by two and the
holders of the NationsBank New Series A Preferred Stock (and all classes of
preferred stock ranking on parity thereto), voting separately as a single class,
will have the exclusive right to elect two directors to fill the positions so
created, and such right will continue annually until all dividends in arrears
for any past dividend period have been paid in full or declared or set aside for
payment. Immediately upon the cessation of such special voting rights the terms
of the directors so elected will terminate.
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<PAGE>
Other Aspects. Holders of the NationsBank New Series A Preferred Stock
will have no preemptive rights. Shares of NationsBank New Series A Preferred
Stock are validly issued, fully paid and nonassessable.
NationsBank New Series B Preferred
Dividend Rights. Holders of shares of NationsBank New 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 New Series B Preferred
Stock will be cumulative and no cash dividends can be declared or paid on any
shares of NationsBank Common Stock unless full cumulative dividends on
NationsBank New Series B Preferred Stock have been paid, or declared and funds
sufficient for the payment thereof set apart.
Liquidation Rights. In the event of the dissolution, liquidation or
winding up of the Registrant, the holders of NationsBank New Series B Preferred
Stock will be entitled to receive, after payment of the full liquidation
preference on shares of any class of preferred stock ranking superior to
NationsBank New Series B Preferred Stock (if any such shares are then
outstanding) but before any distribution on shares of NationsBank Common Stock,
liquidating dividends of $100 per share plus accumulated dividends.
Redemption. Shares of NationsBank New Series B Preferred Stock 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 New Series B Preferred Stock; and (ii) the Registrant 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 of any class or series
of preferred stock ranking superior to NationsBank New Series B Preferred Stock.
Voting Rights. Each share of NationsBank New Series B Preferred Stock
has equal voting rights, share for share, with each share of NationsBank Common
Stock.
Superior Stock. The Registrant may, without the consent of holders of
NationsBank New Series B Preferred Stock, issue preferred stock with superior or
equal rights or preferences. The shares of NationsBank New Series A Preferred
Stock issued in the Merger rank prior to, and the NationsBank ESOP Preferred
Stock and NationsBank Common Stock rank junior to, the NationsBank New Series B
Preferred Stock as to dividends and upon liquidation.
6.25% Convertible Subordinated Debentures due May 1, 2011
General. Pursuant to the Merger Agreement, on the Effective Date, the
Registrant assumed all of Boatmen's rights and obligations under the 6.25%
Convertible Subordinated Debentures due May 1, 2011 (the "Convertible
Debentures"), which had been
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<PAGE>
assumed by Boatmen's at the time it acquired Centerre Bancorporation. The terms
of the Convertible Debentures are set forth in the Indenture, dated as of May 1,
1986, between Centerre Bancorporation and The Boatmen's National Bank of St.
Louis, as trustee, a copy of which appears as Exhibit E-18 to the Merger
Agreement. As a result of the Merger, the Convertible Debentures are convertible
into shares of NationsBank Common Stock in accordance with the terms and
conditions set forth in the Indenture.
Conversion. The number of shares of NationsBank Common Stock issuable
upon conversion of a Convertible Debenture is determined by (i) dividing the
principal amount to be converted by the conversion price set forth in the
Convertible Debenture in effect on the date of conversion; and then (ii)
multiplying the resulting number by the 0.6525. Pursuant to the Indenture, if
NationsBank: (i) pays a dividend or makes a distribution on NationsBank Common
Stock in the form of shares of NationsBank Common Stock; (ii) subdivides the
outstanding shares of NationsBank Common Stock into a greater number of shares;
(iii) combines the outstanding shares of NationsBank Common Stock into a smaller
number of shares; (iv) makes a distribution on NationsBank Common Stock in
shares of its capital stock other than NationsBank Common stock; or (v) issues
by reclassification of NationsBank Common Stock any shares of its capital stock,
then, the conversion privilege and conversion price in effect immediately prior
to such action will be adjusted so that the holder of a Convertible Debenture
thereafter converted may receive the number of shares of capital stock of the
Registrant that such holder would have received immediately following such
action if the holder had converted the Convertible Debenture immediately prior
to such action. The conversion price is subject to further adjustment in the
event the Registrant (i) distributes any rights or warrants to all holders of
NationsBank Common Stock entitling them, for a period expiring within 60 days of
the record date for the determination of such holders, to purchase shares of
NationsBank Common Stock at a price per share less than the current market price
per share on such record date; or (ii) distributes to all holders of NationsBank
Common Stock any of its assets or debt securities or any rights or warrants to
purchase securities of the Registrant.
In all cases, no adjustment in the conversion price of the Convertible
Debentures is required to be made unless the adjustment would require an
increase or decrease of at least 1% in the conversion price. Any adjustments
that are not made because they fail to satisfy such requirement are carried
forward and taken into account in any subsequent adjustments. In addition, no
adjustment to the conversion price is required if holders of the Convertible
Debentures are to participate in the transaction otherwise triggering an
adjustment on a basis and with notice that the NationsBank Board determines to
be fair and appropriate in light of the basis and notice on which holders of
NationsBank Common Stock participate in the transaction. No adjustment to the
conversion price is required in connection with a grant of rights to purchase
NationsBank Common Stock pursuant to a plan of the Registrant for reinvestment
of dividends or interest.
The terms of the Indenture require the Registrant to reserve and have
available, free from any preemptive rights, out of its authorized but unissued
NationsBank Common Stock or NationsBank Common Stock held in treasury enough
shares of NationsBank Common Stock to permit the conversion of the Convertible
Debentures. All shares of
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<PAGE>
NationsBank Common Stock issued upon conversion of the Convertible Debentures
will be fully paid and nonassessable.
Effective Law
The rights of holders of NationsBank Common Stock are dependent,
directly or indirectly, on applicable state and federal statutes and regulations
which are subject to change from time to time. The Registrant has not undertaken
to update the foregoing description in each case where such a change may affect
the rights of shareholders.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The Registrant has filed all required financial statements, pro forma
financial information and exhibits required by Item 2 hereof with the Securities
and Exchange Commission as part of the Registration Statement.
The following exhibits are filed herewith:
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
<S> <C>
3.1 Copy of the Registrant's Restated Articles of Incorporation.
99.1 Press release dated January 7, 1997 with respect to the
closing of the Merger.
99.2 Press release dated January 8, 1997 with respect to
the election of the holders of Boatmen's Common Stock
to receive in the Merger shares of NationsBank Common
Stock or cash and the Registrant's intent to
repurchase shares of NationsBank Common Stock.
99.3 Press release dated December 20, 1996 with respect to the
election of new directors to serve on the Registrant's Board
of Directors.
99.4 Summary of selected financial information reflecting the
results of the operations of Boatmen's for the fiscal year
ended December 31, 1996.
99.5 Press release dated January 13, 1997 with respect to
the Registrant's financial results for the fiscal
year ended December 31, 1996.
</TABLE>
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
NATIONSBANK CORPORATION
By: /s/ Marc D. Oken
Marc D. Oken
Chief Accounting Officer
Dated: January 16, 1997
20
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of Exhibit
3.1 Copy of the Registrant's Restated Articles of
Incorporation.
99.1 Press release dated January 7, 1997 with respect to
the closing of the Merger.
99.2 Press release dated January 8, 1997 with respect to
the election of the holders of Boatmen's Common
Stock to receive in the Merger shares of
NationsBank Common Stock or cash and the
Registrant's intent to repurchase shares of
NationsBank Common Stock.
99.3 Press release dated December 20, 1996 with respect
to the election of new directors to serve on the
Registrant's Board of Directors.
99.4 Summary of selected financial information
reflecting the results of the operations of
Boatmen's for the fiscal year ended December 31,
1996.
99.5 Press release dated January 13, 1997 with respect
to the Registrant's financial results for the
fiscal year ended December 31, 1996.
<PAGE>
RESTATED
ARTICLES OF INCORPORATION
OF
NATIONSBANK CORPORATION
NationsBank Corporation, a business corporation incorporated under the
North Carolina Business Corporation Act, pursuant to action by its Board of
Directors, hereby sets forth its Restated Articles of Incorporation:
1. The name of the Corporation is NationsBank Corporation.
2. The purposes for which the Corporation is organized are to engage in
any lawful act or activity for which corporations may be organized under Chapter
55 of the North Carolina General Statutes, as amended.
3. The number of shares the Corporation is authorized to issue is One
Billion Two Hundred Ninety-Five Million (1,295,000,000), divided into the
following classes:
Class Number of Shares
.......................Common 1,250,000,000
....................Preferred 45,000,000
The class of common has unlimited voting rights and, after satisfaction
of claims, if any, of the holders of preferred shares, is entitled to receive
the net assets of the Corporation upon distribution.
The Board of Directors of the Corporation shall have full power and
authority to establish one or more series within the class of preferred shares
(the "Preferred Shares"), to define the designations, preferences, limitations
and relative rights (including conversion rights) of shares within such class
and to determine all variations between series.
The Board of Directors of the Corporation has designated, established
and authorized the following series of Preferred Shares:
(a) Cumulative Convertible Preferred Stock, Series A.
A. Designation.
The designation of the series of Preferred Stock created by
this resolution shall be Cumulative Convertible Preferred Stock, Series
A, $100 stated value, of the Corporation (hereinafter referred to as
"Series A
<PAGE>
Preferred Stock"), and the number of shares constituting such series
shall be 250,000, which number may be increased (but not above the
total number of shares of Preferred Stock of the Corporation then
authorized by the Restated Articles of Incorporation, as amended from
time to time) or decreased (but not below the number of shares then
outstanding) from time to time by the Board of Directors. The Series A
Preferred Stock shall rank prior to the Common Stock, the 7% Cumulative
Redeemable Preferred Stock, Series B, $100 stated value per share, and
the ESOP Convertible Preferred Stock, Series C, with respect to the
payment of dividends and the distribution of assets.
B. Dividend Rights.
(1) The holders of shares of Series A Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors,
out of funds legally available therefor, cash dividends, accruing from
the date of initial issuance, at the annual rate of 7.00% of the
liquidation preference per annum, and no more, payable, when and as
declared by the Board of Directors, quarterly on March 1, June 1,
September 1, and December 1 of each year (each quarterly period ending
on any such date being hereinafter referred to as a "dividend period"),
commencing on the first March 1, June 1, September 1, or December 1 to
occur after the Issue Date (as hereafter defined), at such annual rate.
Each dividend will be payable to holders of record as they appear on
the stock books of the Corporation on such record dates as shall be
fixed by the Board of Directors of the Corporation. The date of initial
issuance of shares of Series A Preferred Stock is hereinafter referred
to as the "Issue Date". Dividends payable on the Series A Preferred
Stock (i) for any period other than a full dividend period shall be
computed on the basis of a 360-day year consisting of twelve 30-day
months and (ii) for each full dividend period shall be computed by
dividing the annual dividend rate by four.
(2) Dividends on shares of Series A Preferred Stock shall be
cumulative from the Issue Date whether or not there shall be funds
legally available for the payment thereof. If there shall be
outstanding shares of any other series of Preferred Stock ranking
junior to or on a parity with the Series A Preferred Stock as to
dividends, no dividends shall be declared or paid or set apart for
payment on any such other series for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof is set apart for
such payment on the Series A Preferred Stock for all dividend periods
terminating on or prior to the date of payment of such dividends. If
dividends on the Series A Preferred Stock and on any other series of
Preferred Stock ranking on a parity as to dividends with the Series A
-2-
<PAGE>
Preferred Stock are in arrears, in making any dividend payment on
account of such arrears, the Corporation shall make payments ratably
upon all outstanding shares of the Series A Preferred Stock and shares
of such other series of Preferred Stock in proportion to the respective
amounts of dividends in arrears on the Series A Preferred Stock and on
such other series of Preferred Stock to the date of such dividend
payment. Holders of shares of the Series A Preferred Stock shall not be
entitled to any dividend, whether payable in cash, property or stock,
in excess of full cumulative dividends on such shares. No interest or
sum of money in lieu of interest shall be payable in respect of any
dividend payment or payments which may be in arrears.
(3) Unless full cumulative dividends on all outstanding shares
of the Series A Preferred Stock shall have been paid or declared and
set aside for payment for all past dividend periods, no dividend (other
than a dividend in Common Stock or in any other stock ranking junior to
the Series A Preferred Stock as to dividends and the distribution of
assets upon liquidation, dissolution or winding up) shall be declared
upon the Common Stock or upon any other stock ranking junior to the
Series A Preferred Stock as to dividends and the distribution of assets
upon liquidation, dissolution, or winding up, nor shall any Common
Stock or any other stock of the Corporation ranking junior to or on a
parity with the Series A Preferred Stock as to dividends or upon the
distribution of assets upon liquidation, dissolution or winding up be
redeemed, purchased or otherwise acquired for any consideration (or any
moneys be paid to or made available for a sinking fund for the
redemption of any shares of any such stock) by the Corporation (except
by conversion into or exchange for stock of the Corporation ranking
junior to the Series A Preferred Stock as to dividends and the
distribution of assets upon liquidation, dissolution or winding up).
C. Liquidation Preferences.
(1) In the event of any liquidation, dissolution or winding up
of the affairs of the Corporation, whether voluntary or involuntary,
the holders of Series A Preferred Stock shall be entitled to receive
out of the assets of the Corporation available for distribution to
stockholders an amount equal to $400.00 per share plus an amount equal
to any accrued and unpaid dividends thereon to and including the date
of such distribution, and no more, before any distribution shall be
made to the holders of Common Stock or any other class of stock of the
Corporation ranking junior to the Series A Preferred Stock as to the
distribution of assets. After payment of such liquidating
distributions, the holders of shares of Series A Preferred Stock will
not be entitled to any further participation in any distribution of
assets by the Corporation.
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(2) In the event the assets of the Corporation available for
distribution to stockholders upon any liquidation, dissolution or
winding up of the affairs of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full the amounts payable
with respect to the Series A Preferred Stock and any other shares of
Preferred Stock ranking on a parity with the Series A Preferred Stock
as to the distribution of assets, the holders of Series A Preferred
Stock and the holders of such other Preferred Stock shall share ratably
in any distribution of assets of the Corporation in proportion to the
full respective preferential amounts to which they are entitled.
(3) The merger or consolidation of the Corporation into or
with any other corporation, the merger or consolidation of any other
corporation into or with the Corporation or the sale of the assets of
the Corporation substantially as an entirety shall not be deemed a
liquidation, dissolution or winding up of the affairs of the
Corporation within the meaning of this Section 3.
D. Redemption.
(1) Subject to obtaining the prior approval of the Board of
Governors of the Federal Reserve System, the Corporation, at its
option, may redeem any or all shares of Series A Preferred Stock, at
any time or from time to time, on or after March 1, 1997 at a
redemption price of $400.00 per share, plus an amount equal to accrued
and unpaid dividends thereon to and including the date of redemption
(the "Redemption Price").
(2) If less than all the outstanding shares of Series A
Preferred Stock are to be redeemed, the shares to be redeemed shall be
selected pro rata as nearly as practicable or by lot, or by such other
method as the Board of Directors may determine to be fair and
appropriate.
(3) Notice of any redemption shall be given by first class
mail, postage prepaid, mailed not less than 30 nor more than 60 days
prior to the date fixed for redemption to the holders of record of the
shares of Series A Preferred Stock to be redeemed, at their respective
addresses appearing on the books of the Corporation. Notice so mailed
shall be conclusively presumed to have been duly given whether or not
actually received. Such notice shall state: (i) the date fixed for
redemption; (ii) the Redemption Price; (iii) that the holder has the
right to convert such shares into Common Stock until the close of
business on the tenth day preceding the redemption date; (iv) the
then-effective conversion price and the place where certificates for
such shares may be surrendered for conversion; (v) the number of shares
of Series A Preferred Stock to be redeemed and if less than all the
shares held by such holder are to be redeemed, the number of such
shares to be so
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redeemed from such holder; (vi) the place where certificates for such
shares are to be surrendered for payment of the Redemption Price; and
(vii) that after such date fixed for redemption the shares to be
redeemed shall not accrue dividends. If such notice is mailed as
aforesaid, and if on or before the date fixed for redemption funds
sufficient to redeem the shares called for reemption are set aside by
the Corporation in trust for the account of the holders of the shares
to be redeemed, notwithstanding the fact that any certificate for
shares called for redemption shall not have been surrendered for
cancellation, on and after the redemption date the shares represented
thereby so called for redemption shall be deemed to be no longer
outstanding, dividends thereon shall cease to accrue and all rights of
the holders of such shares as stockholders of the Corporation shall
cease (except the right to receive the Redemption Price, without
interest, upon surrender of the certificate representing such shares).
Upon surrender in accordance with the aforesaid notice of the
certificate for any shares so redeemed (duly endorsed or accompanied by
appropriate instruments of transfer, if so required by the Corporation
in such notice), the holders of record of such shares shall be entitled
to receive the Redemption Price, without interest. Notwithstanding the
foregoing, however, as and to the extent that the Corporation is
required or permitted under the abandoned property laws of any
jurisdiction to escheat any redemption funds held in trust for the
benefit of any holder, the Corporation shall be absolved of any further
obligation or liability to such holder to the full extent provided by
any such law. In case fewer than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares without cost to the holder thereof.
(4) At the option of the Corporation, if notice of redemption
is mailed as aforesaid, and if prior to the date fixed for redemption
funds sufficient to pay in full the Redemption Price are deposited in
trust, for the account of the holders of the shares to be redeemed,
with a bank or trust company named in such notice doing business in the
State of North Carolina or the Borough of Manhattan, The City of New
York, State of New York, and having capital and surplus of at least $50
million (which bank or trust company also may be the transfer agent
and/or paying agent for the Series A Preferred Stock) notwithstanding
the fact that any certificate(s) for shares called for redemption shall
not have been surrendered for cancellation, on and after such date of
deposit the shares represented thereby so called for redemption shall
be deemed to be no longer outstanding, and all rights of the holders of
such shares as shareholders of the Corporation shall cease, except the
right of the holders thereof to convert such shares in accordance with
the provisions of Section 5 at any time prior to the close of business
on the tenth day preceding the redemption date and the right of the
holders thereof to receive out of the funds so deposited in trust the
Redemption Price, without interest, upon surrender of the
certificate(s) representing such shares. Any
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funds so deposited with such bank or trust company in respect of shares
of Series A Preferred Stock converted before the close of business on
the tenth day preceding the redemption date shall be returned to the
Corporation upon such conversion. Unless otherwise required by law, any
funds so deposited with such bank or trust company which shall remain
unclaimed by the holders of shares called for redemption at the end of
two years after the redemption date shall be repaid to the Corporation,
on demand, and thereafter the holder of any such shares shall look only
to the Corporation for the payment, without interest, of the Redemption
Price. Notwithstanding the foregoing, however, as and to the extent
that the Corporation is required or permitted under the abandoned
property laws of any jurisdiction to escheat any redemption funds held
in trust for the benefit of any holder, the Corporation shall be
absolved of any further obligation or liability to such holder to the
full extent provided by any such laws.
(5) Any provision of this Section 4 to the contrary
notwithstanding, in the event that any quarterly dividend payable on
the Series A Preferred Stock shall be in arrears and until all such
dividends in arrears shall have been paid or declared and set apart for
payment, the Corporation shall not redeem any shares of Series A
Preferred Stock unless all outstanding shares of Series A Preferred
Stock are simultaneously redeemed and shall not purchase or otherwise
acquire any shares of Series A Preferred Stock except in accordance
with a purchase or exchange offer made on the same terms to all holders
of record of Series A Preferred Stock for the purchase of all
outstanding shares thereof.
E. Conversion Rights.
The holders of shares of Series A Preferred Stock shall have
the right, at their option, to convert such shares into shares of
Common Stock on the following terms and conditions:
(1) Shares of Series A Preferred Stock shall be convertible at
any time into fully paid and nonassessable shares of Common Stock at a
conversion price of $44.44 per share of Common Stock (the "Conversion
Price"). For purposes of this Section 5, references to shares of Series
A Preferred Stock shall apply equally to fractional shares thereof, but
only to the extent that such fractional shares are integral multiples
of 1/16 of one share. The Conversion Price shall be subject to
adjustment from time to time as hereinafter provided. For purposes of
such conversion, each share of Series A Preferred Stock will be valued
at $400. No payment or adjustment shall be made on account of any
accrued and unpaid dividends on shares of Series A Preferred Stock
surrendered for conversion prior to the record date for the
determination of stockholders entitled to such dividends or on account
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of any dividends on the shares of Common Stock issued upon such
conversion subsequent to the record date for the determination of
stockholders entitled to such dividends. If any shares of Series A
Preferred Stock shall be called for redemption, the right to convert
the shares designated for redemption shall terminate at the close of
business on the tenth day preceding the date fixed for redemption
unless default is made in the payment of the Redemption Price. In the
event of default in the payment of the Redemption Price, the right to
convert the shares designated for redemption shall terminate at the
close of business on the business day immediately preceding the date
that such default is cured.
(2) In order to convert shares of Series A Preferred Stock
into Common Stock, the holder thereof shall surrender the certificates
therefor, duly endorsed if the Corporation shall so require, or
accompanied by appropriate instruments of transfer satisfactory to the
Corporation, at the office of the transfer agent for the Series A
Preferred Stock, or at such other office as may be designated by the
Corporation, together with written notice that such holder irrevocably
elects to convert such shares or any fraction of a share of Series A
Preferred Stock having a denominator of 16, each such fractional
interest, measured in 1/16 of a share, being valued for purposes of
conversion at $25; references in this Section 5 to the conversion of
any share of Series A Preferred Stock shall also apply, mutatis
mutandis, to such fractional interests. Such notice shall also state
the name and address in which such holder wishes the certificate for
the shares of Common Stock issuable upon conversion to be issued. As
soon as practicable after receipt of the certificates representing the
shares of Series A Preferred Stock to be converted and the notice of
election to convert the same, the Corporation shall issue and deliver
at said office a certificate for the number of whole shares of Common
Stock issuable upon conversion of the shares of Series A Preferred
Stock surrendered for conversion, together with a cash payment in lieu
of any fraction of a share, as hereinafter provided, to the person
entitled to receive the same. If more than one stock certificate for
Series A Preferred Stock shall be surrendered for conversion at one
time by the same holder, the number of full shares of Common Stock
issuable upon conversion thereof shall be computed on the basis of the
aggregate number of shares represented by all the certificates so
surrendered. Shares of Series A Preferred Stock shall be deemed to have
been converted immediately prior to the close of business on the date
such shares are surrendered for conversion and notice of election to
convert the same is received by the Corporation in accordance with the
foregoing provision, and the person entitled to receive the Common
Stock issuable upon such conversion shall be deemed for all purposes as
the record holder of such Common Stock as of such date.
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(3) In the case of any share of Series A Preferred Stock which
is converted after any record date with respect to the payment of a
dividend on the Series A Preferred Stock and on or prior to the date on
which such dividend is payable by the Corporation (the "Dividend Due
Date"), the dividend due on such Dividend Due Date shall be payable on
such Dividend Due Date to the holder of record of such shares as of
such preceding record date notwithstanding such conversion. Shares of
Series A Preferred Stock surrendered for conversion during the period
from the close of business on any record date with respect to the
payment of a dividend on the Series A Preferred Stock next preceding
any Dividend Due Date to the opening of business on such Dividend Due
Date shall (except in the case of shares of Series A Preferred Stock
which have been called for redemption on a redemption date within such
period) be accompanied by payment in New York Clearing House funds or
other funds acceptable to the Corporation of an amount equal to the
dividend payable on such Dividend Due Date on the shares of Series A
Preferred Stock being surrendered for conversion. The dividend with
respect to a share of Series A Preferred Stock called for redemption on
a redemption date during the period from the close of business on any
record date with respect to the payment of a dividend on the Series A
Preferred Stock next preceding any Dividend Due Date to the opening of
business on such Dividend Due Date shall be payable on such Dividend
Due Date to the holder of record of such share on such dividend record
date, notwithstanding the conversion of such share of Series A
Preferred Stock after such record date and prior to such Dividend Due
Date, and the holder converting such share of Series A Preferred Stock
called for redemption need not include a payment of such dividend
amount upon surrender of such share of Series A Preferred Stock for
conversion. Except as provided in this subsection, no payment or
adjustment shall be made upon any conversion on account of any
dividends accrued on shares of Series A Preferred Stock surrendered for
conversion or on account of any dividends on the shares of Common Stock
issued upon conversion.
(4) No fractional shares of Common Stock shall be issued upon
conversion of any shares of Series A Preferred Stock. If more than one
share of Series A Preferred Stock is surrendered at one time by the
same holder, the number of full shares issuable upon conversion thereof
shall be computed on the basis of the aggregate number of shares so
surrendered. If the conversion of any shares of Series A Preferred
Stock results in a fractional share of Common Stock, the Corporation
shall pay cash in lieu thereof in an amount equal to such fraction
multiplied by the closing price, determined as provided in subsection
(vi) of Section 5(e) below, on the date on which the shares of Series A
Preferred Stock were duly surrendered for conversion, or if such date
is not a trading date, on the next succeeding trading date.
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(5) The Conversion Price shall be adjusted from time to time
as follows:
(i) In case the Corporation shall pay or make a
dividend or other distribution on shares of Common Stock in Common
Stock, the Conversion Price in effect at the opening of business on the
date following the date fixed for the determination of stockholders
entitled to receive such dividend or other distribution shall be
reduced by multiplying such Conversion Price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at
the close of business on the date fixed for such determination and the
denominator shall be the sum of such number of shares and the total
number of shares constituting such dividend or other distribution, such
reduction to become effective immediately after the opening of business
on the day following the date fixed for such determination. For
purposes of this subsection, the number of shares of Common Stock at
any time outstanding shall not include shares held in the treasury of
the Corporation but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The
Corporation will not pay any dividend or make any distribution on
shares of Common Stock held in the treasury of the Corporation.
(ii) In case the Corporation shall issue additional
rights or warrants to all holders of its Common Stock entitling them to
subscribe for or purchase shares of Common Stock at a price per share
less than the then current market price per share (determined as
provided in subsection (vi) below) of the Common Stock on the date
fixed for the determination of stockholders entitled to receive such
rights or warrants (other than pursuant to a dividend reinvestment
plan), the Conversion Price in effect at the opening of business on the
day following the date fixed for such determination shall be reduced by
multiplying such Conversion Price by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination plus the number of
shares of Common Stock which the aggregate of the offering price of the
total number of shares of Common Stock so offered for subscription or
purchase would purchase at such current market price (determined as
provided in subsection (vi) below) and the denominator shall be the
number of shares of Common Stock outstanding at the close of business
on the date fixed for such determination plus the number of shares of
Common Stock so offered for subscription or purchase, such reduction to
become effective immediately after the opening of business on the day
following the date fixed for such determination. For the purposes of
this subsection (ii), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the
Corporation but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The
Corporation will not issue any
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rights or warrants in respect of shares of Common Stock held in the
treasury of the Corporation during the period so held.
(iii) In case outstanding shares of Common Stock
shall be subdivided into a greater number of shares of Common Stock,
the Conversion Price in effect at the opening of business on the day
following the day upon which such subdivision becomes effective shall
be proportionately reduced, and, conversely, in case outstanding shares
of Common Stock shall be combined into a smaller number of shares of
Common Stock, the Conversion Price in effect at the opening of business
on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or
increase, as the case may be, to become effective immediately after the
opening of business on the day following the day upon which such
subdivision or combination becomes effective.
(iv) In case the Corporation shall, by dividend or
otherwise, distribute to all holders of its Common Stock evidences of
its indebtedness or assets (including securities, but excluding (1) any
rights or warrants referred to in subsection (ii) above, (2) any
dividend or distribution paid in cash out of the retained earnings of
the Corporation and (3) any dividend or distribution referred to in
subsection (i) above), the Conversion Price shall be adjusted so that
the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the close of business on the date
fixed for the determination of stockholders entitled to receive such
distribution by a fraction of which the numerator shall be the current
market price per share (determined as provided in subsection (vi)
below) of the Common Stock on the date fixed for such determination
less the then fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and shall be
described in a statement filed with the transfer agent for the Series A
Preferred Stock) of the portion of the evidences of indebtedness or
assets so distributed applicable to one share of Common Stock and the
denominator shall be such current market price per share of the Common
Stock, such adjustment to become effective immediately prior to the
opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such distribution.
(v) For the purposes of this Section 5, the
reclassification of Common Stock into securities including securities
other than Common Stock (other than any reclassification upon a
consolidation or merger to which Section 5(g) below applies) shall be
deemed to involve (A) a distribution of such securities other than
Common Stock to all holders of Common Stock (and the effective date of
such reclassification shall be deemed to be "the date fixed for the
determination of stockholders entitled to receive such distribution"
and the "date fixed for such determination" within the meaning of
subsection (iv) above), and (B) a subdivision or combination, as the
case
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may be, of the number of shares of Common Stock outstanding immediately
prior to such reclassification into the number of shares of Common
Stock outstanding immediately thereafter (and the effective date of
such reclassification shall be deemed to be "the day upon which such
sudivision became effective" or "the day upon which such combination
becomes effective" as the case may be, and "the day upon which such
subdivision or combination becomes effective" within the meaning of
subsection (iii) above).
(vi) For the purpose of any computation under
subsections (ii) and (iv) above, the current market price per share of
Common Stock on any day shall be deemed to be the average of the daily
closing prices for the 30 consecutive trading days commencing 45
trading days before the day in question. The closing price for each day
shall be as reported on the New York Stock Exchange Composite Tape or,
if the Common Stock is no longer listed on such exchange, as reported
on the principal national securities exchange or national automated
stock quotation system on which the Common Stock is listed, traded or
quoted, or, if the Common Stock is not listed, traded or quoted on any
national securities exchange or national automated stock quotation
system, the closing price shall be deemed to be the average of the
closing bid and asked prices in the over-the-counter market as
furnished by any New York Stock Exchange member firm selected from time
to time by the Board of Directors for that pupose.
(vii) Notwithstanding the foregoing, no adjustment in
the Conversion Price for the Series A Preferred Shares shall be
required unless such adjustment would require an increase or decrease
of at least 1% in such price; provided, however, that any adjustments
which by reason of this subsection (vii) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section shall be made to the
nearest cent or to the nearest one-hundredth of a share, as the case
may be.
(6) Whenever the Conversion Price shall be adjusted as herein
provided (i) the Corporation shall forthwith make available at the
office of the transfer agent for the Series A Preferred Stock a
statement describing in reasonable detail the adjustment, the facts
requiring such adjustment and the method of calculation used; and (ii)
the Corporation shall cause to be mailed by first class mail, postage
prepaid, as soon as practicable to each holder of record of shares of
Series A Preferred Stock a notice stating that the Conversion Price has
been adjusted and setting forth the adjusted Conversion Price.
(7) In the event of any consolidation of the Corporation with
or merger of the Corporation into any other corporation (other than a
merger in
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which the Corporation is the surviving corporation) or a sale, lease or
conveyance of the assets of the Corporation as an entirety or
substantially as an entirety, or any statutory exchange of securities
with another corporation, the holder of each share of Series A
Preferred Stock shall have the right, after such consolidation, merger,
sale or exchange, to convert such share into the number and kind of
shares of stock or other securities and the amount and kind of property
which such holder would have been entitled to receive upon such
consolidation, merger, sale or exchange of the number of shares of
Common Stock that would have been issued to such holder had such shares
of Series A Preferred Stock been converted immediately prior to such
consolidation, merger or sale. The provisions of this Section 5(g)
shall similarly apply to successive consolidations, mergers, sales or
exchanges.
(8) The Corporation shall pay any taxes that may be payable in
respect of the issuance of shares of Common Stock upon conversion of
shares of Series A Preferred Stock, but the Corporation shall not be
required to pay any taxes which may be payable in respect of any
transfer involved in the issuance of shares of Common Stock in the name
other than that in which the shares of Series A Preferred Stock so
converted are registered, and the Corporation shall not be required to
issue or deliver any such shares unless and until the person requesting
such issuance shall have paid to the Corporation the amount of any such
taxes, or shall have established to the satisfaction of the Corporation
that such taxes have been paid.
(9) The Corporation may (but shall not be required to) make
such reductions in the Conversion Price, in addition to those required
by subsections (i) through (iv) of Section 5(e) above, as it considers
to be advisable in order that any event treated for federal income tax
purposes as a dividend of stock or stock rights shall not be taxable to
the recipients.
(10) The Corporation shall at all times reserve and keep
available out of its authorized but unissued Common Stock the full
number of shares of Common Stock issuable upon the conversion of all
shares of Series A Preferred Stock then outstanding.
(11) In the event that:
(i) the Corporation shall declare a dividend
or any other distribution on its Common Stock, payable otherwise than
in cash out of retained earnings; or
(ii) the Corporation shall authorize the
granting to the holders of its Common Stock of rights to subscribe for
or purchase any shares of capital stock of any class or of any other
rights; or
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(iii) any capital reorganization of the
Corporation, reclassification of the capital stock of the Corporation,
consolidation or merger of the Corporation with or into another
corporation (other than a merger in which the Corporation is the
surviving corporation), or sale, lease or conveyance of the assets of
the Corporation as an entirety or substantially as an entirety to
another corporation occurs; or
(iv) the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation occurs, the Corporation
shall cause to be mailed to the holders of record of Series A Preferred
Stock at least 15 days prior to the applicable date hereinafter
specified a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution of rights or, if a
record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distribution or rights
are to be determined or (y) the date on which such reorganization,
reclassification, consolidation, merger, sale, lease, conveyance,
dissolution, liquidation or winding up is expected to take place, and
the date, if any is to be fixed, as of which holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, lease, conveyance,
dissolution, liquidation or winding up. Failure to give such notice, or
any defect therein, shall not affect the legality or validity of such
dividend, distribution, reorganization, reclassification,
consolidation, merger, sale, lease, conveyance, dissolution,
liquidation or winding up.
F. Voting Rights.
Other than as required by applicable law, the Series A
Preferred Stock shall not have any voting powers either general or
special, except that:
(1) Unless the vote or consent of the holders of a greater
number of shares shall then be required by law, the affirmative vote or
consent of the holders of at least 66-2/3% of all of the shares of the
Series A Preferred Stock, and any one or more other series of preferred
stock of the Corporation similarly affected, at the time outstanding,
given in person or by proxy, either in writing or by a vote at a
meeting called for the purpose at which the holders of shares of the
Series A Preferred Stock and any such other series of preferred stock
shall vote together as a separate class, shall be necessary for
authorizing, effecting or validating the amendment, alteration or
repeal of any of the provisions of the Restated Articles of
Incorporation, as amended, or of any amendment or supplement thereto
(including any certificate of designation or any similar document
relating to any series of preferred stock) of the Corporation, which
would adversely affect the preferences, rights,
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powers or privileges, qualifications, limitations and restrictions of
the Series A Preferred Stock.
(2) Unless the vote or consent of the holders of a greater
number of shares shall then be required by law, the affirmative vote or
consent of the holders of at least 66-2/3% of all of the shares of the
Series A Preferred Stock and any other series of preferred stock of the
Corporation ranking on a parity with shares of the Series A Preferred
Stock, either as to dividends or the distribution of assets upon
liquidation, dissolution or winding up, at the time outstanding, given
in person or by proxy, either in writing or by a vote at a meeting
called for the purpose at which the holders of shares of the Series A
Preferred Stock and any such other series of preferred stock of the
Corporation shall vote together as a single class without regard to
series, shall be necessary to create, authorize or issue, or reclassify
any authorized stock of the Corporation into, or create, authorize or
issue any obligation or security convertible into or evidencing a right
to purchase, any shares of any class of stock of the Corporation
ranking prior to the Series A Preferred Stock or ranking prior to any
other series of preferred stock of the Corporation which ranks on a
parity with the Series A Preferred Stock as to dividends or upon the
distribution of assets upon liquidation, dissolution or winding up.
Subject to the foregoing, the Corporation's Restated Articles of
Incorporation, as amended, may be amended to increase the number of
authorized shares of preferred stock without the vote of the holders of
preferred stock, including the Series A Preferred Stock.
(3) Whenever, at any time or times, dividends payable on the
shares of Series A Preferred Stock shall be in arrears in an amount
equal to at least six full quarterly dividends on shares of the Series
A Preferred Stock at the time outstanding, the holders of the
outstanding shares of Series A Preferred Stock shall have the exclusive
right, voting separately as a class together with holders of shares of
any one or more other series of preferred stock ranking on a parity
with the Series A Preferred Stock either as to dividends or the
distribution of assets upon liquidation, dissolution or winding up and
upon which like voting rights have been conferred and are exercisable,
to elect two directors of the Corporation for one-year terms at the
Corporation's next annual meeting of stockholders and at each
subsequent annual meeting of stockholders. At elections for such
directors, each holder of Series A Preferred Stock shall be entitled to
one vote for each share held (the holders of shares of any other series
of preferred stock ranking on such a parity being entitled to such
number of votes, if any, for each share of stock held as may be granted
to them). Upon the vesting of such right of the holders of Series A
Preferred Stock, the maximum authorized number of members of the Board
of Directors shall automatically be increased by two and the two
vacancies so created shall be filled by vote of the holders of the
outstanding shares of Series A Preferred Stock (either alone or
together with
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the holders of shares of any one or more other series of preferred
stock ranking on such a parity) as hereinafter set forth. The right of
the holders of Series A Preferred Stock, voting separately as a class
to elect (either alone or together with the holders of shares of any
one or more other series of preferred stock ranking on such a parity)
members of the Board of Directors of the Corporation as aforesaid shall
continue until such time as all dividends accumulated on the Series A
Preferred Stock shall have been paid in full or declared and set apart
for payment, at which time such right shall immediately terminate,
except as herein or by law expressly provided, subject to revesting in
the event of each and every subsequent default of the character above
mentioned.
(4) Upon termination of such special voting rights
attributable to all holders of the Series A Preferred Stock and any
other series or preferred stock ranking on a parity with the Series A
Preferred Stock as to dividends or the distribution of assets upon
liquidation, dissolution or winding up and upon which like voting
rights have been conferred and are exercisable, the term of office of
each director elected by the holders of shares of Series A Preferred
Stock and such parity preferred stock (a "Preferred Stock Director")
pursuant to such special voting rights shall immediately terminate and
the number of directors constituting the entire Board of Directors
shall be reduced by the number of Preferred Stock Directors. Any
Preferred Stock Director may be removed by, and shall not be removed
otherwise than by, the vote of the holders of record of a majority of
the outstanding shares of Series A Preferred Stock and all other series
of preferred stock ranking on a parity with the Series A Preferred
Stock with respect to dividends who were entitled to participate in
such Preferred Stock Director's election, voting as a separate class,
at a meeting called for such purposes. If the office of any Preferred
Stock Director becomes vacant by reason of death, resignation,
retirement, disqualification, removal from office, or otherwise, the
remaining Preferred Stock Director may choose a successor who shall
hold office for the unexpired term in respect of which such vacancy
occurred.
G. Reacquired Shares.
Shares of Series A Preferred Stock converted, redeemed, or
otherwise purchased or acquired by the Corporation shall be restored to
the status of authorized but unissued shares of Series A Preferred
Stock without designation as to series.
H. Ranking.
Any class or classes of stock of the Corporation shall be
deemed to rank:
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(1) prior to the Series A Preferred Stock, as to dividends or
as to distribution of assets upon liquidation, dissolution or winding
up, if the holders of such class shall be entitled to the receipt of
dividends or of amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in preference or priority to the
holders of the Series A Preferred Stock;
(2) on a parity with the Series A Preferred Stock, as to
dividends or as to distribution of assets upon liquidation, dissolution
or winding up, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof be
different from those of the Series A Preferred Stock, if the holders of
such class of stock and the Series A Preferred Stock shall be entitled
to the receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in
proportion to their respective amounts of accrued and unpaid dividends
per share or liquidation prices, without preference or priority one
over the other; and
(3) junior to the Series A Preferred Stock, as to dividends or
as to the distribution of assets upon liquidation, dissolution or
winding up, if such stock shall be Common Stock or if the holders of
Series A Preferred Stock shall be entitled to receipt of dividends or
of amounts distributable upon liquidation, dissolution or winding up,
as the case may be, in preference or priority to the holders of shares
of such stock.
I. No Sinking Fund.
Shares of Series A Preferred Stock are not subject to the
operation of a sinking fund or other obligation of the Corporation to
redeem or retire the Series A Preferred Stock.
(b) 7% Cumulative Redeemable Preferred Stock, Series B.
A. Designation.
The designation of this series is "7% Cumulative Redeemable
Preferred Stock, Series B" (hereinafter referred to as the "Series B
Preferred Stock") and the number of shares constituting such series is
Thirty-Five Thousand and Forty-Five (35,045). Shares of Series B
Preferred Stock shall have a stated value of $100.00 per share.
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B. Dividends.
The holders of record of the shares of the Series B Preferred
Stock shall be entitled to receive, when and as declared by the Board
of Directors of the corporation, out of any funds legally available for
such purpose, cumulative cash dividends at an annual dividend rate per
share of 7% of the stated value thereof, which amount is $7.00 per
annum, per share, and no more. Such dividends shall be payable each
calendar quarter at the rate of $1.75 per share on such dates as shall
be fixed by resolution of the Board of Directors of the Corporation.
The date from which dividends on such shares shall be cumulative shall
be the first day after said shares are issued. Accumulations of
dividends shall not bear interest. No cash dividend shall be declared,
paid or set apart for any shares of Common Stock unless all dividends
on all shares of the Series B Preferred Stock at the time outstanding
for all past dividend periods and for the then current dividend shall
have been paid, or shall have been declared and a sum sufficient for
the payment thereof, shall have been set apart. Subject to the
foregoing provisions of this paragraph (2), cash dividends or other
cash distributions as may be determined by the Board of Directors of
the Corporation, may be declared and paid upon the shares of the Common
Stock of the corporation from time to time out of funds legally
available therefor, and the shares of the Series B Preferred Stock
shall not be entitled to participate in any such cash dividend or other
such cash distribution so declared and paid or made on such shares of
Common Stock.
C. Redemption.
From and after October 31, 1988, any holder may, by written
request, call upon the Corporation to redeem all or any part of said
holder's shares of said Series B Preferred Stock at a redemption price
of $100.00 per share plus accumulated unpaid dividends to the date said
request for redemption is received by the Corporation and no more (the
"Redemption Price"). Any such request for redemption shall be
accompanied by the certificates for which redemption is requested, duly
endorsed or with appropriate stock power attached, in either case with
signature guaranteed. Upon receipt by the Corporation of any such
request for redemption from any holder of the Series B Preferred Stock,
the Corporation shall forthwith redeem said stock at the Redemption
Price, provided that: (i) full cumulative dividends have been paid or
declared and set apart for payment upon all shares of any series of
preferred stock ranking superior to the Series B Preferred Stock as to
dividends or other distributions (collectively the "Superior Stock");
and (ii) the Corporation is not then in default or in arrears with
respect to any sinking or analogous fund or call for tenders obligation
or agreement for the purchase, redemption or retirement of any shares
of Superior Stock. In the
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event that, upon receipt of a request for redemption, either or both of
the conditions set forth in clauses (i) and (ii) above are not met, the
Corporation shall forthwith return said request to the submitting
shareholder along with a statement that the Corporation is unable to
honor such request and explanation of the reasons therefor. From and
after the receipt by the Corporation of a request for redemption from
any holder of said Series B Preferred Stock, which request may be
honored consistent with the foregoing provisions, all rights of such
holder in the Series B Preferred Stock for which redemption is
requested shall cease and terminate, except only the right to receive
the Redemption Price thereof, but without interest.
D. Liquidation Preference.
In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the corporation, the holders of the Series
B Preferred Stock shall be entitled to receive, subject to the
provisions of paragraph 7 and before any payment shall be made to the
holders of the shares of Common Stock, the amount of $100.00 each
share, plus accumulated dividends. After payment to the holders of the
Series B Preferred Stock of the full amount as aforesaid, the holders
of the Series B Preferred Stock as such shall have no right or claim to
any of the remaining assets which shall be distributed ratably to the
holders of the Common Stock. If, upon any such liquidation, dissolution
or winding up, the assets available therefore are not sufficient to
permit payments to the holders of Series B Preferred Stock of the full
amount as aforesaid, then subject to the provisions of paragraph 7, the
holders of the Series B Preferred Stock then outstanding shall share
ratably in the distribution of assets in accordance with the sums which
would be payable if such holders were to receive the full amounts as
aforesaid.
E. Sinking Fund.
There shall be no sinking fund applicable to the shares of Series B
Preferred Stock.
F. Conversion.
The shares of Series B Preferred Stock shall not be
convertible into any shares of Common Stock or any other class of
shares, nor exchanged for any shares of Common Stock or any other class
of shares.
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G. Superior Stock.
The corporation may issue stock with preferences superior or
equal to the shares of the Series B Preferred Stock without the consent
of the holders thereof.
H. Voting rights.
Each share of the Series B Preferred Stock shall be entitled
to equal voting rights, share for share, with each share of the Common
Stock.
(c) ESOP Convertible Preferred Stock, Series C.
The shares of the ESOP Convertible Preferred Stock, Series C,
of the Corporation shall be designated "ESOP Convertible Preferred
Stock, Series C," and the number of shares constituting such series
shall be 3,000,000. The ESOP Convertible Preferred Stock, Series C,
shall hereinafter be referred to as the "ESOP Preferred Stock."
A. Special Purpose Restricted Transfer Issue.
Shares of ESOP Preferred Stock shall be issued only to a
trustee acting on behalf of an employee stock ownership plan or other
employee benefit plan of the Corporation or any subsidiary of the
Corporation. In the event of any transfer of shares of ESOP Preferred
Stock to any person other than any such plan trustee or the
Corporation, the shares of ESOP Preferred Stock so transferred, upon
such transfer and without any further action by the Corporation or the
holder, shall be automatically converted into shares of Common Stock on
the terms otherwise provided for the conversion of shares of ESOP
Preferred Stock into shares of Common Stock pursuant to paragraph E
hereof and no such transferee shall have any of the voting powers,
preferences and relative, participating, optional or special rights
ascribed to shares of ESOP Preferred Stock hereunder but, rather, only
the powers and rights pertaining to the Common Stock into which such
shares of ESOP Preferred Stock shall be so converted. Certificates
representing shares of ESOP Preferred Stock shall be legended to
reflect such restrictions on transfer. Notwithstanding the foregoing
provisions of this paragraph A, shares of ESOP Preferred Stock (i) may
be converted into shares of Common Stock as provided by paragraph E
hereof and the shares of Common Stock issued upon such conversion may
be transferred by the holder thereof as permitted by law and (ii) shall
be redeemable by the Corporation upon the terms and conditions provided
by paragraphs F, G and H hereof.
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B. Dividends and Distributions.
(1) Subject to the provisions for adjustment hereinafter set
forth, the holders of shares of ESOP Preferred Stock shall be entitled
to receive, when, as and if declared by the Board of Directors out of
funds legally available therefor, cash dividends ("Preferred
Dividends") in an amount equal to $3.30 per share per annum, and no
more, payable semi-annually, one-half on the first day of January and
one-half on the first day of July of each year (each a "Dividend
Payment Date") commencing the first such day following the effective
time of the Merger (as defined below), to holders of record at the
start of business on such Dividend Payment Date. Preferred Dividends
shall begin to accrue on shares of ESOP Preferred Stock on the last
dividend payment date on the outstanding shares of ESOP Convertible
Preferred Stock, Series C, of C&S/Sovran Corporation ("C&S/Sovran")
(which shares are to be converted on a one-for-one basis into shares of
ESOP Preferred Stock at the effective time of the merger (the "Merger")
of C&S/Sovran Merger Corporation ("Merger Corporation"), a Delaware
corporation and a wholly owned subsidiary of the Corporation, with and
into C&S/Sovran, as provided in the Agreement and Plan of
Consolidation, dated July 21, 1991, between the Corporation and
C&S/Sovran). Preferred Dividends shall accrue on a daily basis whether
or not the Corporation shall have earnings or surplus at the time, but
Preferred Dividends on the shares of ESOP Preferred Stock for any
period less than a full semi-annual period between Dividend Payment
Dates shall be computed on the basis of a 360-day year of 30-day
months. Accumulated but unpaid Preferred Dividends shall accumulate as
of the Dividend Payment Date on which they first become payable, but no
interest shall accrue on accumulated but unpaid Preferred Dividends.
(2) So long as any ESOP Preferred Stock shall be outstanding,
no dividend shall be declared or paid or set apart for payment on any
other series of stock ranking on a parity with the ESOP Preferred Stock
as to dividends, unless there shall also be or have been declared and
paid or set apart for payment on the ESOP Preferred Stock, like
dividends for all dividend payment periods of the ESOP Preferred Stock
ending on or before the dividend payment date of such parity stock,
ratably in proportion to the respective amounts of dividends
accumulated and unpaid through such dividend payment period on the ESOP
Preferred Stock and accumulated and unpaid or payable on such parity
stock through the dividend payment period on such parity stock next
preceding such Dividend Payment Date. In the event that full cumulative
dividends on the ESOP Preferred Stock have not been declared and paid
or set apart for payment when due, the Corporation shall not declare or
pay or set apart for payment any dividends or make any other
distributions on, or make any payment on account of the purchase,
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redemption or other retirement of any other class of stock or series
thereof of the Corporation ranking, as to dividends or as to
distributions in the event of a liquidation, dissolution or winding-up
of the Corporation, junior to the ESOP Preferred Stock until full
cumulative dividends on the ESOP Preferred Stock shall have been paid
or declared and provided for; provided, however, that the foregoing
shall not apply to (i) any dividend payable solely in any shares of any
stock ranking, as to dividends or as to distributions in the event of
the liquidation, dissolution or winding-up of the Corporation, junior
to the ESOP Preferred Stock, or (ii) the acquisition of shares of any
stock ranking, as to dividends or as to distributions in the event of a
liquidation, dissolution or winding-up of the Corporation, junior to
the ESOP Preferred Stock either (A) pursuant to any employee or
director incentive or benefit plan or arrangement (including any
employment, severance or consulting agreement) of the Corporation or
any subsidiary of the Corporation heretofore or hereafter adopted or
(B) in exchange solely for shares of any other stock ranking junior to
the ESOP Preferred Stock.
C. Voting Rights.
The holders of shares of ESOP Preferred Stock shall have the
following voting rights:
(1) The holders of ESOP Preferred Stock shall be entitled to
vote on all matters submitted to a vote of the holders of Common Stock
of the Corporation, voting together with the holders of Common Stock as
one class. Each share of the ESOP Preferred Stock shall be entitled to
the number of votes equal to the number of shares of Common Stock into
which such share of ESOP Preferred Stock could be converted on the
record date for determining the shareholders entitled to vote, rounded
to the nearest whole vote; it being understood that whenever the
"Conversion Price" (as defined in paragraph E hereof) is adjusted as
provided in paragraph I hereof, the voting rights of the ESOP Preferred
Stock shall also be similarly adjusted.
(2) Except as otherwise required by the North Carolina
Business Corporation Act or set forth in paragraph C(1), holders of
ESOP Preferred Stock shall have no special voting rights and their
consent shall not be required for the taking of any corporate action.
D. Liquidation, Dissolution or Winding-Up.
(1) Upon any voluntary or involuntary liquidation, dissolution
or winding-up of the Corporation, the holders of ESOP Preferred Stock
shall be entitled to receive out of the assets of the Corporation which
remain after satisfaction in full of all valid claims of creditors of
the Corporation and
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which are available for payment to shareholders and subject to the
rights of the holders of any stock of the Corporation ranking senior to
or on a parity with the ESOP Preferred Stock in respect of
distributions upon liquidation, dissolution or winding-up of the
Corporation, before any amount shall be paid or distributed among the
holders of Common Stock or any other shares ranking junior to the ESOP
Preferred Stock in respect of the distributions upon liquidation,
dissolution or winding-up of the Corporation, liquidating distributions
in the amount of $42.50 per share, plus an amount equal to all accrued
and unpaid dividends thereon to the date fixed for distribution, and no
more. If upon any liquidation, dissolution or winding-up of the
Corporation, the amounts payable with respect to the ESOP Preferred
Stock and any other stock ranking as to any such distribution on a
parity with the ESOP Preferred Stock are not paid in full, the holders
of the ESOP Preferred Stock and such other stock shall share ratably in
any distribution of assets in proportion to the full respective
preferential amounts to which they are entitled. After payment of the
full amount to which they are entitled as provided by the foregoing
provisions of this paragraph D(1), the holders of shares of ESOP
Preferred Stock shall not be entitled to any further right or claim to
any of the remaining assets of the Corporation.
(2) Neither the merger or consolidation of the Corporation
with or into any other corporation, nor the merger or consolidation of
any other corporation with or into the Corporation, nor the sale,
transfer or lease of all or any portion of the assets of the
Corporation, shall be deemed to be a dissolution, liquidation or
winding-up of the affairs of the Corporation for purposes of this
paragraph D, but the holders of ESOP Preferred Stock shall nevertheless
be entitled in the event of any such merger or consolidation to the
rights provided by paragraph H hereof.
(3) Written notice of any voluntary or involuntary
liquidation, dissolution or winding-up of the Corporation, stating the
payment date or dates when, and the place or places where, the amounts
distributable to holders of ESOP Preferred Stock in such circumstances
shall be payable, shall be given by first-class mail, postage prepaid,
mailed not less than twenty (20) days prior to any payment date stated
therein, to the holders of ESOP Preferred Stock, at the address shown
on the books of the Corporation or any transfer agent for the ESOP
Preferred Stock.
E. Conversion into Common Stock.
(1) A holder of shares of ESOP Preferred Stock shall be
entitled, at any time prior to the close of business on the date fixed
for redemption of such shares pursuant to paragraph F, G or H hereof,
to cause any or all of such shares to be converted into shares of
Common Stock, initially at a
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conversion rate equal to the ratio of 1.0 shares of ESOP Preferred
Stock to 0.84 shares of Common Stock and a conversion price the amount
of which initially shall be $42.50 (as adjusted as hereinafter
provided, the "Conversion Price") for, initially, each 0.84 shares of
Common Stock. Each of the Conversion Price and the resulting conversion
ratio is subject to adjustment as hereinafter provided.
(2) Any holder of shares of ESOP Preferred Stock desiring to
convert such shares into shares of Common Stock shall surrender the
certificate or certificates representing the shares of ESOP Preferred
Stock being converted, duly assigned or endorsed for transfer to the
Corporation (or accompanied by duly executed stock powers relating
thereto), at the principal executive office of the Corporation or the
offices of the transfer agent for the ESOP Preferred Stock or such
office or offices in the continental United States of an agent for
conversion as may from time to time be designated by notice to the
holders of the ESOP Preferred Stock by the Corporation or the transfer
agent for the ESOP Preferred Stock, accompanied by written notice of
conversion. Such notice of conversion shall specify (i) the number of
shares of ESOP Preferred Stock to be converted and the name or names in
which such holder wishes the certificate or certificates for Common
Stock and for any shares of ESOP Preferred Stock not to be so converted
to be issued, and (ii) the address to which such holder wishes delivery
to be made of such new certificates to be issued upon such conversion.
(3) Upon surrender of a certificate representing a share or
shares of ESOP Preferred Stock for conversion, the Corporation shall
issue and send by hand delivery (with receipt to be acknowledged) or by
first-class mail, postage prepaid, to the holder thereof or to such
holder's designee, at the address designated by such holder, a
certificate or certificates for the number of shares of Common Stock to
which such holder shall be entitled upon conversion. In the event that
there shall have been surendered a certificate or certificates
representing shares of ESOP Preferred Stock, only part of which are to
be converted, the Corporation shall issue and deliver to such holder or
such holder's designee a new certificate or certificates representing
the number of shares of ESOP Preferred Stock which shall not have been
converted.
(4) The issuance by the Corporation of shares of Common Stock
upon a conversion of shares of ESOP Preferred Stock into shares of
Common Stock made at the option of the holder thereof shall be
effective as of the earlier of (i) the delivery to such holder or such
holder's designee of the certificate or certificates representing the
shares of Common Stock issued upon conversion thereof or (ii) the
commencement of business on the second business day after the surrender
of the certificate or certificates for the shares of ESOP Preferred
Stock to be converted, duly assigned or endorsed
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for transfer to the Corporation (or accompanied by duly executed stock
powers relating thereto) as provided hereby. On and after the effective
date of conversion, the person or persons entitled to receive the
Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common
Stock, but no allowance or adjustment shall be made in respect of
dividends payable to holders of Common Stock in respect of any period
prior to such effective date. The Corporation shall not be obligated to
pay any dividends which shall have been declared and shall be payable
to holders of shares of ESOP Preferred Stock on a Dividend Payment Date
if such Dividend Payment Date for such dividend shall coincide with or
be on or subsequent to the effective date of conversion of such shares.
(5) The Corporation shall not be obligated to deliver to
holders of ESOP Preferred Stock any fractional share or shares of
Common Stock issuable upon any conversion of such shares of ESOP
Preferred Stock, but in lieu thereof may make a cash payment in respect
thereof in any manner permitted by law.
(6) The Corporation shall at all times reserve and keep
available out of its authorized and unissued Common Stock, solely for
issuance upon the conversion of shares of ESOP Preferred Stock as
herein provided, free from any preemptive rights, such number of shares
of Common Stock as shall from time to time be issuable upon the
conversion of all shares of ESOP Preferred Stock then outstanding. The
Corporation shall prepare and shall use its best efforts to obtain and
keep in force such governmental or regulatory permits or other
authorizations as may be required by law, and shall comply with all
requirements as to registration or qualification of the Common Stock,
in order to enable the Corporation lawfully to issue and deliver to
each holder of record of ESOP Preferred Stock such number of shares of
its Common Stock as shall from time to time be sufficient to effect the
conversion of all shares of ESOP Preferred Stock then outstanding and
convertible into shares of Common Stock.
F. Redemption At the Option of the Corporation.
(1) The ESOP Preferred Stock shall be redeemable, in whole or
in part, at the option of the Corporation at any time after July 1,
1992, or on or before July 1, 1992 if permitted by paragraph F(3) or
F(4), at the following redemption prices per share (except as to
redemption pursuant to paragraph F(3)):
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During the Twelve-Month Price Per
Period Beginning July 1, Share
............................1991 $45.14
............................1992 44.81
............................1993 44.48
............................1994 44.15
............................1995 43.82
............................1996 43.49
............................1997 43.16
............................1998 42.83
and thereafter at $42.50 per share, plus, in each case, an amount equal
to all accrued and unpaid dividends thereon to the date fixed for
redemption. Payment of the redemption price shall be made by the
Corporation in cash or shares of Common Stock, or a combination
thereof, as permitted by paragraph F(5). From and after the date fixed
for redemption, dividends on shares of ESOP Preferred Stock called for
redemption will cease to accrue, such shares will no longer be deemed
to be outstanding and all rights in respect of such shares of the
Corporation shall cease, except the right to receive the redemption
price. If less than all of the outstanding shares of ESOP Preferred
Stock are to be redeemed, the Corporation shall either redeem a portion
of the shares of each holder determined pro rata based on the number of
shares held by each holder or shall select the shares to be redeemed by
lot, as may be determined by the Board of Directors of the Corporation.
(2) Unless otherwise required by law, notice of redemption
will be sent to the holders of ESOP Preferred Stock at the address
shown on the books of the Corporation or any transfer agent for the
ESOP Preferred Stock by first-class mail, postage prepaid, mailed not
less than twenty (20) days nor more than sixty (60) days prior to the
redemption date. Each such notice shall state: (i) the redemption date;
(ii) the total number of shares of the ESOP Preferred Stock to be
redeemed and, if fewer than all the shares held by such holder are to
be redeemed, the number of such shares to be redeemed from such holder;
(iii) the redemption price; (iv) the place or places where certificates
for such shares are to be surrendered for payment of the redemption
price; (v) that dividends on the shares to be redeemed will cease to
accrue on such redemption date; and (vi) the conversion rights of the
shares to be redeemed, the period within which conversion rights may be
exercised, and the Conversion Price and number of shares of Common
Stock issuable upon conversion of a share of ESOP Preferred Stock at
the time. These notice provisions may be supplemented if necessary in
order to comply with optional redemption provisions for preferred stock
which may be required under the Internal Revenue Code of 1986, as
amended, or the
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Employee Retirement Income Security Act of 1974, as amended ("ERISA").
Upon surrender of the certificates for any shares so called for
redemption and not previously converted (properly endorsed or assigned
for transfer, if the Board of Directors of the Corporation shall so
require and the notice shall so state), such shares shall be redeemed
by the Corporation at the date fixed for redemption and at the
applicable redemption price set forth in this paragraph F.
(3) In the event of a change in the federal tax law of the
United States of America which has the effect of precluding the
Corporation from claiming any of the tax deductions for dividends paid
on the ESOP Preferred Stock when such dividends are used as provided
under Section 404(k)(2) of the Internal Revenue Code of 1986, as
amended and in effect on the date shares of ESOP Preferred Stock are
initially issued, the Corporation may, within 180 days following the
effective date of such tax legislation and implementing regulations of
the Internal Revenue Service, if any, in its sole discretion and
notwithstanding anything to the contrary in paragraph F(1), elect to
redeem any or all such shares for the amount payable in respect of the
shares upon liquidation of the Corporation pursuant to paragraph D.
(4) In the event the C&S/Sovran Retirement Savings, ESOP and
Profit Sharing Plan (as amended, together with any successor plan, the
"Plan") is terminated, the Corporation shall, notwithstanding anything
to the contrary in paragraph F(1), redeem all shares of ESOP Preferred
Stock for the amount payable in respect of the shares upon redemption
of the ESOP Preferred Stock pursuant to paragraph F(1) hereof.
(5) The Corporation, at its option, may make payment of the
redemption price required upon redemption of shares of ESOP Preferred
Stock in cash or in shares of Common Stock, or in a combination of such
shares and cash, any such shares to be valued for such purpose at their
Fair Market Value (as defined in paragraph I(7) hereof).
G. Other Redemption Rights.
Shares of ESOP Preferred Stock shall be redeemed by the
Corporation at a price which is the greater of the Conversion Value (as
defined in paragraph I) of the ESOP Preferred Stock on the date fixed
for redemption or a redemption price of $42.50 per share plus accrued
and unpaid dividends thereon to the date fixed for redemption, for
shares of Common Stock (any such shares of Common Stock to be valued
for such purpose as provided by paragraph F(5) hereof), at the option
of the holder, at any time and from time to time upon notice to the
Corporation given not less than five (5) business days prior to the
date fixed by the Corporation in such notice for such
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redemption, when and to the extent necessary (i) to provide for
distributions required to be made under, or to satisfy an investment
election provided to participants in accordance with, the Plan to
participants in the Plan or (ii) to make payment of principal, interest
or premium due and payable (whether as scheduled or upon acceleration)
on any indebtedness incurred by the holder or Trustee under the Plan
for the benefit of the Plan.
H. Consolidation, Merger, etc.
(1) In the event that the Corporation shall consummate any
consolidation or merger or similar transaction, however named, pursuant
to which the outstanding shares of Common Stock are by operation of law
exchanged solely for or changed, reclassified or converted solely into
stock of any successor or resulting company (including the Corporation
and any company that directly or indirectly owns all of the outstanding
capital stock of such successor or resulting company) that constitutes
"qualifying employer securities" with respect to a holder of ESOP
Preferred Stock within the meaning of Section 409(l) of the Internal
Revenue Code of 1986, as amended, and Section 407(d)(5) of ERISA, or
any successor provisions of law, and, if applicable, for a cash payment
in lieu of fractional shares, if any, the shares of ESOP Preferred
Stock of such holder shall be assumed by and shall become preferred
stock of such successor or resulting company, having in respect of such
company insofar as possible the same powers, preferences and relative,
participating, optional or other special rights (including the
redemption rights provided by paragraphs F, G and H hereof), and the
qualifications, limitations or restrictions thereon, that the ESOP
Preferred Stock had immediately prior to such transaction, except that
after such transaction each share of the ESOP Preferred Stock shall be
convertible, otherwise on the terms and conditions provided by
paragraph E hereof, into the qualifying employer securities so
receivable by a holder of the number of shares of Common Stock into
which such shares of ESOP Preferred Stock could have been converted
immediately prior to such transaction if such holder of Common Stock
failed to exercise any rights of election to receive any kind or amount
of stock, securities, cash or other property (other than such
qualifying employer securities and a cash payment, if applicable, in
lieu of fractional shares) receivable upon such transaction (provided
that, if the kind or amount of qualifying employer securities
receivable upon such transaction is not the same for each non-electing
share, then the kind and amount of qualifying employer securities
receivable upon such transaction for each non-electing share shall be
the kind and amount so receivable per share by a plurality of the
non-electing shares). The rights of the ESOP Preferred Stock as
preferred stock of such successor or resulting company shall
successively be subject to adjustments pursuant to paragraph I hereof
after any such transaction as nearly equivalent to the adjustments
provided
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for by such paragraph prior to such transaction. The Corporation shall
not consummate any such merger, consolidation or similar transaction
unless all then outstanding shares of the ESOP Preferred Stock shall be
assumed and authorized by the successor or resulting company as
aforesaid.
(2) In the event that the Corporation shall consummate any
consolidation or merger or similar transaction, however named, pursuant
to which the outstanding shares of Common Stock are by operation of law
exchanged for or changed, reclassified or converted into other stock or
securities or cash or any other property, or any combination thereof,
other than any such consideration which is constituted solely of
qualifying employer securities (as referred to in paragraph H(1)) and
cash payments, if applicable, in lieu of fractional shares, outstanding
shares of ESOP Preferred Stock shall, without any action on the part of
the Corporation or any holder thereof (but subject to paragraph H(3)),
be deemed converted by virtue of such merger, consolidation or similar
transaction immediately prior to such consummation into the number of
shares of Common Stock into which such shares of ESOP Preferred Stock
could have been converted at such time, and each share of ESOP
Preferred Stock shall, by virtue of such transaction and on the same
terms as apply to the holders of Common Stock, be converted into or
exchanged for the aggregate amount of stock, securities, cash or other
property (payable in like kind) receivable by a holder of the number of
shares of Common Stock into which such shares of ESOP Preferred Stock
could have been converted immediately prior to such transaction if such
holder of Common Stock failed to exercise any rights of election as to
the kind or amount of stock, securities, cash or other property
receivable upon such transaction (provided that, if the kind or amount
of stock, securities, cash or other property receivable upon such
transaction is not the same for each non- electing share, then the kind
and amount of stock, securities, cash or other property receivable upon
such transaction for each non-electing share shall be the kind and
amount so receivable per share by a plurality of the non-electing
shares).
(3) In the event the Corporation shall enter into any
agreement providing for any consolidation or merger or similar
transaction described in paragraph H(2), then the Corporation shall as
soon as practicable thereafter (and in any event at least ten (10)
business days before consummation of such transaction) give notice of
such agreement and the material terms thereof to each holder of ESOP
Preferred Stock and each such holder shall have the right to elect, by
written notice to the Corporation, to receive, upon consummation of
such transaction (if and when such transaction is consummated), from
the Corporation or the successor of the Corporation, in redemption and
retirement of such ESOP Preferred Stock, a cash payment equal to the
amount payable in respect of shares of ESOP Preferred Stock upon
redemption pursuant to paragraph F(1) hereof. No such notice of
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redemption shall be effective unless given to the Corporation prior to
the close of business on the second business day prior to consummation
of such transaction, unless the Corporation or the successor of the
Corporation shall waive such prior notice, but any notice of redemption
so given prior to such time may be withdrawn by notice of withdrawal
given to the Corporation prior to the close of business on the second
business day prior to consummation of such transaction.
I. Anti-dilution Adjustments.
(1) In the event the Corporation shall, at any time or from
time to time while any of the shares of the ESOP Preferred Stock are
outstanding, (i) pay a dividend or make a distribution in respect of
the Common Stock in shares of Common Stock, (ii) subdivide the
outstanding shares of Common Stock, or (iii) combine the outstanding
shares of Common Stock into a smaller number of shares, in each case
whether by reclassification of shares, recapitalization of the
Corporation (including a recapitalization effected by a merger or
consolidation to which paragraph H hereof does not apply) or otherwise,
the Conversion Price in effect immediately prior to such action shall
be adjusted by multiplying such Conversion Price by the fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately before such event and the denominator of which is the
number of shares of Common Stock outstanding immediately after such
event. An adjustment made pursuant to this paragraph I(l) shall be
given effect, upon payment of such a dividend or distribution, as of
the record date for the determination of shareholders entitled to
receive such dividend or distribution (on a retroactive basis) and in
the case of a subdivision or combination shall become effective
immediately as of the effective date thereof.
(2) In the event that the Corporation shall, at any time or
from time to time while any of the shares of ESOP Preferred Stock are
outstanding, issue to holders of shares of Common Stock as a dividend
or distribution, including by way of a reclassification of shares or a
recapitalization of the Corporation, any right or warrant to purchase
shares of Common Stock (but not including as such a right or warrant
any security convertible into or exchangeable for shares of Common
Stock) at a purchase price per share less than the Fair Market Value
(as hereinafter defined) of a share of Common Stock on the date of
issuance of such right or warrant, then, subject to the provisions of
paragraphs I(5) and I(6), the Conversion Price shall be adjusted by
multiplying such Conversion Price by the fraction the numerator of
which shall be the number of shares of Common Stock outstanding
immediately before such issuance of rights or warrants plus the number
of shares of Common Stock which could be purchased at the Fair Market
Value of a share
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of Common Stock at the time of such issuance for the maximum aggregate
consideration payable upon exercise in full of all such rights or
warrants and the denominator of which shall be the number of shares of
Common Stock outstanding immediately before such issuance of rights or
warrants plus the maximum number of shares of Common Stock that could
be acquired upon exercise in full of all such rights and warrants.
(3) In the event the Corporation shall, at any time and from
time to time while any of the shares of ESOP Preferred Stock are
outstanding, issue, sell or exchange shares of Common Stock (other than
pursuant to any right or warrant to purchase or acquire shares of
Common Stock (including as such a right or warrant any security
convertible into or exchangeable for shares of Common Stock) and other
than pursuant to any dividend reinvestment plan or employee or director
incentive or benefit plan or arrangement, including any employment,
severance or consulting agreement, of the Corporation or any subsidiary
of the Corporation heretofore or hereafter adopted) for a consideration
having a Fair Market Value on the date of such issuance, sale or
exchange less than the Fair Market Value of such shares on the date of
such issuance, sale or exchange, then, subject to the provisions of
paragraphs I(5) and (6), the Conversion Price shall be adjusted by
multiplying such Conversion Price by the fraction the numerator of
which shall be the sum of (i) the Fair Market Value of all the shares
of Common Stock outstanding on the day immediately preceding the first
public announcement of such issuance, sale or exchange plus (ii) the
Fair Market Value of the consideration received by the Corporation in
respect of such issuance, sale or exchange of shares of Common Stock,
and the denominator of which shall be the product of (i) the Fair
Market Value of a share of Common Stock on the day immediately
preceding the first public announcement of such issuance, sale or
exchange multiplied by (ii) the sum of the number of shares of Common
Stock outstanding on such day plus the number of shares of Common Stock
so issued, sold or exchanged by the Corporation. In the event the
Corporation shall, at any time or from time to time while any shares of
ESOP Preferred Stock are outstanding, issue, sell or exchange any right
or warrant to purchase or acquire shares of Common Stock (including as
such a right or warrant any security convertible into or exchangeable
for shares of Common Stock), other than any such issuance to holders of
shares of Common Stock as a dividend or distribution (including by way
of a reclassification of shares or a recapitalization of the
Corporation) and other than pursuant to any dividend reinvestment plan
or employee or director incentive or benefit plan or arrangement
(including any employment, severance or consulting agreement) of the
Corporation or any subsidiary of the Corporation heretofore or
hereafter adopted, for a consideration having a Fair Market Value on
the date of such issuance, sale or exchange less than the Non-Dilutive
Amount (as hereinafter defined), then, subject to the provisions of
paragraphs I(5) and (6), the Conversion Price shall be adjusted
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by multiplying such Conversion Price by a fraction the numerator of
which shall be the sum of (a) the Fair Market Value of all the shares
of Common Stock outstanding on the day immediately preceding the first
public announcement of such issuance, sale or exchange plus (b) the
Fair Market Value of the consideration received by the Corporation in
respect of such issuance, sale or exchange of such right or warrant
plus (c) the Fair Market Value at the time of such issuance of the
consideration which the Corporation would receive upon exercise in full
of all such rights or warrants, and the denominator of which shall be
the product of (a) the Fair Market Value of a share of Common Stock on
the day immediately preceding the first public announcement of such
issuance, sale or exchange multiplied by (b) the sum of the number of
shares of Common Stock outstanding on such day plus the maximum number
of shares of Common Stock which could be acquired pursuant to such
right or warrant at the time of the issuance, sale or exchange of such
right or warrant (assuming shares of Common Stock could be acquired
pursuant to such right or warrant at such time).
(4) In the event the Corporation shall, at any time or from
time to time while any of the shares of ESOP Preferred Stock are
outstanding, make any Extraordinary Distribution (as hereinafter
defined) in respect of the Common Stock, whether by dividend,
distribution, reclassification of shares or recapitalization of the
Corporation (including a recapitalization or reclassification effected
by a merger or consolidation to which paragraph H hereof does not
apply) or effect a Pro Rata Repurchase (as hereinafter defined) of
Common Stock, the Conversion Price in effect immediately prior to such
Extraordinary Distribution or Pro Rata Repurchase shall, subject to
paragraphs I(5) and (6), be adjusted by multiplying such Conversion
Price by the fraction the numerator of which is (a) the product of (i)
the number of shares of Common Stock outstanding immediately before
such Extraordinary Distribution or Pro Rata Repurchase multiplied by
(ii) the Fair Market Value (as herein defined) of a share of Common
Stock on the Valuation Date (as hereinafter defined) with respect to an
Extraordinary Distribution, or on the applicable expiration date
(including all extensions thereof) of any tender offer which is a Pro
Rata Repurchase, or on the date of purchase with respect to any Pro
Rata Repurchase which is not a tender offer, as the case may be, minus
(b) the Fair Market Value of the Extraordinary Distribution or the
aggregate purchase price of the Pro Rata Repurchase, as the case may
be, and the denominator of which shall be the product of (i) the number
of shares of Common Stock outstanding immediately before such
Extraordinary Distribution or Pro Rata Repurchase minus, in the case of
a Pro Rata Repurchase, the number of shares of Common Stock repurchased
by the Corporation multiplied by (ii) the Fair Market Value of a share
of Common Stock on the record date with respect to an Extraordinary
Distribution or on the applicable expiration date (including all
extensions thereof) of any tender offer which is a Pro Rata Repurchase
or on the date of purchase with respect
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to any Pro Rata Repurchase which is not a tender offer, as the case may
be. The Corporation shall send each holder of ESOP Preferred Stock (x)
notice of its intent to make any Extraordinary Distribution and (y)
notice of any offer by the Corporation to make a Pro Rata Repurchase,
in each case at the same time as, or as soon as practicable after, such
offer is first communicated (including by announcement of a record date
in accordance with the rules of any stock exchange on which the Common
Stock is listed or admitted to trading) to holders of Common Stock.
Such notice shall indicate the intended record date and the amount and
nature of such dividend or distribution, or the number of shares
subject to such offer for a Pro Rata Repurchase and the purchase price
payable by the Corporation pursuant to such offer, as well as the
Conversion Price and the number of shares of Common Stock into which a
share of ESOP Preferred Stock may be converted at such time.
(5) Notwithstanding any other provisions of this paragraph I,
the Corporation shall not be required to make any adjustment of the
Conversion Price unless such adjustment would require an increase or
decrease of at least one percent (1%) in the Conversion Price. Any
lesser adjustment shall be carried forward and shall be made no later
than the time of, and together with, the next subsequent adjustment
which, together with any adjustment or adjustments so carried forward,
shall amount to an increase or decrease of at least one percent (1%) in
the Conversion Price.
(6) If the Corporation shall make any dividend or distribution
on the Common Stock or issue any Common Stock, other capital stock or
other security of the Corporation or any rights or warrants to purchase
or acquire any such security, which transaction does not result in an
adjustment to the Conversion Price pursuant to the foregoing provisions
of this paragraph I, the Board of Directors of the Corporation shall
consider whether such action is of such a nature that an adjustment to
the Conversion Price should equitably be made in respect of such
transaction. If in such case the Board of Directors of the Corporation
determines that the adjustment to the Conversion Price should be made,
an adjustment shall be made effective as of such date, as determined by
the Board of Directors of the Corporation. The determination of the
Board of Directors of the Corporation as to whether an adjustment to
the Conversion Price should be made pursuant to the foregoing
provisions of this paragraph I(6), and, if so, as to what adjustment
should be made and when, shall be final and binding on the Corporation
and all shareholders of the Corporation. The Corporation shall be
entitled to make such additional adjustments in the Conversion Price,
in addition to those required by the foregoing provisions of this
paragraph I, as shall be necessary in order that any dividend or
distribution in shares of capital stock of the Corporation,
subdivision, reclassification or combination of shares of stock of the
Corporation or any recapitalization of the Corporation shall not be
taxable to holders of the Common Stock.
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(7) For purposes of this paragraph I, the following
definitions shall apply:
"Conversion Value" shall mean the Fair Market Value of the
aggregate number of shares of Common Stock into which a share of ESOP
Preferred Stock is convertible.
"Extraordinary Distribution" shall mean any dividend or other
distribution (effected while any of the shares of ESOP Preferred Stock
are outstanding) (a) of cash, where the aggregate amount of such cash
dividend and distribution together with the amount of all cash
dividends and distributions made during the preceding period of 12
months, when combined with the aggregate amount of all Pro Rata
Repurchases (for this purpose, including only that portion of the
aggregate purchase price of such Pro Rata Repurchase which is in excess
of the Fair Market Value of the Common Stock repurchased as determined
on the applicable expiration date (including all extensions thereof) of
any tender offer or exchange offer which is a Pro Rata Repurchase, or
the date of purchase with respect to any other Pro Rata Repurchase
which is not a tender offer or exchange offer made during such period),
exceeds Twelve and One-Half percent (12.5%) of the aggregate Fair
Market Value of all shares of Common Stock outstanding on the record
date for determining the shareholders entitled to receive such
Extraordinary Distribution and (b) any shares of capital stock of the
Corporation (other than shares of Common Stock), other securities of
the Corporation (other than securities of the type referred to in
paragraph I(2)), evidence of indebtedness of the Corporation or any
other person or any other property (including shares of any subsidiary
of the Corporation), or any combination thereof. The Fair Market Value
of an Extraordinary Distribution for purposes of paragraph I(4) shall
be the sum of the Fair Market Value of such Extraordinary Distribution
plus the amount of any cash dividends which are not Extraordinary
Distributions made during such twelve-month period and not previously
included in the calculation of an adjustment pursuant to paragraph
I(4).
"Fair Market Value" shall mean, as to shares of Common Stock
or any other class of capital stock or securities of the Corporation or
any other issuer which are publicly traded, the average of the Current
Market Prices (as hereinafter defined) of such shares or securities for
each day of the Adjustment Period (as hereinafter defined). "Current
Market Price" of publicly traded shares of Common Stock or any other
class of capital stock or other security of the Corporation or any
other issuer for a day shall mean the last reported sales price,
regular way, or, in case no sale takes place on such day, the average
of the reported closing bid and asked prices, regular way, in either
case as reported on the New York Stock Exchange Composite Tape or,
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if such security is not listed or admitted to trading on the New York
Stock Exchange, on the principal national securities exchange on which
such security is listed or admitted to trading or, if not listed or
admitted to trading on any national securities exchange, on the NASDAQ
National Market System or, if such security is not quoted on such
National Market System, the average of the closing bid and asked prices
on each such day in the over-the-counter market as reported by NASDAQ
or, if bid and asked prices for such security on each such day shall
not have been reported through NASDAQ, the average of the bid and asked
prices for such day as furnished by any New York Stock Exchange member
firm selected for such purpose by the Board of Directors of the
Corporation or a committee thereof on each trading day during the
Adjustment Period. "Adjustment Period" shall mean the period of five
(5) consecutive trading days preceding the date as of which the Fair
Market Value of a security is to be determined. The "Fair Market Value"
of any security which is not publicly traded or of any other property
shall mean the fair value thereof as determined by an independent
investment banking or appraisal firm experienced in the valuation of
such securities or property selected in good faith by the Board of
Directors of the Corporation or a committee thereof, or, if no such
investment banking or appraisal firm is in the good faith judgment of
the Board of Directors or such committee available to make such
determination, as determined in good faith by the Board of Directors of
the Corporation or such committee.
"Non-Dilutive Amount" in respect of an issuance, sale or
exchange by the Corporation of any right or warrant to purchase or
acquire shares of Common Stock (including any security convertible into
or exchangeable for shares of Common Stock) shall mean the remainder of
(a) the product of the Fair Market Value of a share of Common Stock on
the day preceding the first public announcement of such issuance, sale
or exchange multiplied by the maximum number of shares of Common Stock
which could be acquired on such date upon the exercise in full of such
rights and warrants (including upon the conversion or exchange of all
such convertible or exchangeable securities), whether or not
exercisable (or convertible or exchangeable) at such date, minus (b)
the aggregate amount payable pursuant to such right or warrant to
purchase or acquire such maximum number of shares of Common Stock;
provided, however, that in no event shall the Non-Dilutive Amount be
less than zero. For purposes of the foregoing sentence, in the case of
a security convertible into or exchangeable for shares of Common Stock,
the amount payable pursuant to a right or warrant to purchase or
acquire shares of Common Stock shall be the Fair Market Value of such
security on the date of the issuance, sale or exchange of such security
by the Corporation.
"Pro Rata Repurchase" shall mean any purchase of shares of
Common Stock by the Corporation or any subsidiary thereof, whether for
cash, shares
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of capital stock of the Corporation, other securities of the
Corporation, evidences of indebtedness of the Corporation or any other
person or any other property (including shares of a subsidiary of the
Corporation), or any combination thereof, effected while any of the
shares of ESOP Preferred Stock are outstanding, pursuant to any tender
offer or exchange offer subject to Section 13(e) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or any successor
provision of law, or pursuant to any other offer available to
substantially all holders of Common Stock; provided, however, that no
purchase of shares by the Corporation or any subsidiary thereof made in
open market transactions shall be deemed a Pro Rata Repurchase. For
purposes of this paragraph I(7), shares shall be deemed to have been
purchased by the Corporation or any subsidiary thereof "in open market
transactions" if they have been purchased substantially in accordance
with the requirements of Rule 10b-18 as in effect under the Exchange
Act, on the date shares of ESOP Preferred Stock are initially issued by
the Corporation or on such other terms and conditions as the Board of
Directors of the Corporation or a committee thereof shall have
determined are reasonably designed to prevent such purchases from
having a material effect on the trading market for the Common Stock.
"Valuation Date" with respect to an Extraordinary Distribution
shall mean the date that is five (5) business days prior to the record
date for such Extraordinary Distribution.
(8) Whenever an adjustment to the Conversion Price is required
pursuant hereto, the Corporation shall forthwith place on file with the
transfer agent for the Common Stock and the ESOP Preferred Stock if
there be one, and with the Secretary of the Corporation, a statement
signed by two officers of the Corporation, stating the adjusted
Conversion Price determined as provided herein and the resulting
conversion ratio, and the voting rights (as appropriately adjusted), of
the ESOP Preferred Stock. Such statement shall set forth in reasonable
detail such facts as shall be necessary to show the reason and the
manner of computing such adjustment, including any determination of
Fair Market Value involved in such computation. Promptly after each
adjustment to the Conversion Price and the related voting rights of the
ESOP Preferred Stock, the Corporation shall mail a notice thereof and
of the then prevailing conversion ratio to each holder of shares of the
ESOP Preferred Stock.
J. Ranking; Retirement of Shares.
(1) The ESOP Preferred Stock shall rank (a) senior to the
Common Stock as to the payment of dividends and the distribution of
assets on liquidation, dissolution and winding-up of the Corporation,
(b) junior to the
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shares of Series B Cumulative Perpetual Convertible Preferred Stock, no
par value per share, of the Corporation as to the payment of dividends
and the distribution of assets on liquidation, dissolution or
winding-up of the Corporation, and (c) unless otherwise provided in the
Articles of Incorporation of the Corporation or an amendment to such
Articles of Incorporation relating to a subsequent series of Preferred
Stock, without par value, of the Corporation (the "Preferred Stock"),
junior to all other series of the Preferred Stock as to the payment of
dividends and the distribution of assets on liquidation, dissolution or
winding-up.
(2) Any shares of ESOP Preferred Stock acquired by the
Corporation by reason of the conversion or redemption of such shares as
provided hereby, or otherwise so acquired, shall be retired as shares
of ESOP Preferred Stock and restored to the status of authorized but
unissued shares of Preferred Stock, undesignated as to series, and may
thereafter be reissued as part of a new series of such Preferred Stock
as permitted by law.
K. Miscellaneous.
(1) All notices referred to herein shall be in writing, and
all notices hereunder shall be deemed to have been given upon the
earlier of receipt thereof or three (3) business days after the mailing
thereof if sent by registered mail (unless first-class mail shall be
specifically permitted for such notice under the terms hereof) with
postage prepaid, addressed: (a) if to the Corporation, to its office at
NationsBank Corporate Center, Charlotte, North Carolina 28255
(Attention: Treasurer) or to the transfer agent for the ESOP Preferred
Stock, or other agent of the Corporation designated as permitted hereby
or (b) if to any holder of the ESOP Preferred Stock or Common Stock, as
the case may be, to such holder at the address of such holder as listed
in the stock record books of the Corporation (which may include the
records of any transfer agent for the ESOP Preferred Stock or Common
Stock, as the case may be) or (c) to such other address as the
Corporation or any such holder, as the case may be, shall have
designated by notice similarly given.
(2) The term "Common Stock" as used herein means the
Corporation's Common Stock, as the same existed at the date of filing
of the Amendment to the Corporation's Articles of Incorporation
relating to the ESOP Preferred Stock or any other class of stock
resulting from successive changes or reclassification of such Common
Stock consisting solely of changes in par value, or from par value to
no par value. In the event that, at any time as a result of an
adjustment made pursuant to paragraph I hereof, the holder of any share
of the ESOP Preferred Stock upon thereafter surrendering such shares
for conversion shall become entitled to receive any shares or other
securities of the Corporation other than shares of Common
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Stock, the Conversion Price in respect of such other shares or
securities so receivable upon conversion of shares of ESOP Preferred
Stock shall thereafter be adjusted, and shall be subject to further
adjustment from time to time, in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Common
Stock contained in paragraph I hereof, and the provisions of paragraphs
A through H, J, and K hereof with respect to the Common Stock shall
apply on like or similar terms to any such other shares or securities.
(3) The Corporation shall pay any and all stock transfer and
documentary stamp taxes that may be payable in respect of any issuance
or delivery of shares of ESOP Preferred Stock or shares of Common Stock
or other securities issued on account of ESOP Preferred Stock pursuant
hereto or certificates representing such shares or securities. The
Corporation shall not, however, be required to pay any such tax which
may be payable in respect of any transfer involved in the issuance or
delivery of shares of ESOP Preferred Stock or Common Stock or other
securities in a name other than that in which the shares of ESOP
Preferred Stock with respect to which such shares or other securities
are issued or delivered were registered, or in respect of any payment
to any person with respect to any such shares or securities other than
a payment to the registered holder thereof, and shall not be required
to make any such issuance, delivery or payment unless and until the
person otherwise entitled to such issuance, delivery or payment has
paid to the Corporation the amount of any such tax or has established,
to the satisfaction of the Corporation, that such tax has been paid or
is not pay able.
(4) In the event that a holder of shares of ESOP Preferred
Stock shall not by written notice designate the name in which shares of
Common Stock to be issued upon conversion of such shares should be
registered or to whom payment upon redemption of shares of ESOP
Preferred Stock should be made or the address to which the certificate
or certificates representing such shares, or such payment, should be
sent, the Corporation shall be entitled to register such shares, and
make such payment, in the name of the holder of such ESOP Preferred
Stock as shown on the records of the Corporation and to send the
certificate or certificates representing such shares, or such payment,
to the address of such holder shown on the records of the Corporation.
(5) The Corporation may appoint, and from time to time
discharge and change, a transfer agent for the ESOP Preferred Stock.
Upon any such appointment or discharge of a transfer agent, the
Corporation shall send notice thereof by first-class mail, postage
prepaid, to each holder of record of ESOP Preferred Stock.
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4. The address of the registered office of the Corporation is
NationsBank Corporate Center, NC1-007-56, Charlotte, Mecklenburg County, North
Carolina 28255, and the name of its registered agent at such address is James W.
Kiser.
5. No holder of any stock of the Corporation of any class now or
hereafter authorized shall have any preemptive right to purchase, subscribe for,
or otherwise acquire any shares of stock of the Corporation of any class now or
hereafter authorized, or any securities exchangeable for or convertible into any
such shares, or any warrants or other instruments evidencing rights or options
to subscribe for, purchase or otherwise acquire any such shares whether such
shares, securities, warrants or other instruments be unissued, or issued and
thereafter acquired by the Corporation.
6. To the fullest extent permitted by the North Carolina Business
Corporation Act, as the same exists or may hereafter be amended, a director of
the Corporation shall not be personally liable to the Corporation, its
shareholders or otherwise for monetary damage for breach of his duty as a
director. Any repeal or modification of this Article shall be prospective only
and shall not adversely affect any limitation on the personal liability of a
director of the Corporation existing at the time of such repeal or modification.
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FOR IMMEDIATE RELEASE
Jan. 7, 1997 -- NationsBank today entered a new era with the closing of its
merger with Boatmen's Bancshares Inc.
"The combination of NationsBank and Boatmen's creates one of the most powerful
financial institutions in the country," said Hugh L. McColl Jr., chief executive
officer of NationsBank.
"The `new NationsBank' now provides more than 13 million customer households
unmatched financial services and our shareholders increased value for their
investment. Perhaps most important, we will be more able than ever to make a
positive difference in the communities where we do business."
The NationsBank retail franchise now spans a 16-state region -- 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.
On Sept. 30, 1996, the combined company would have been the fourth-largest U.S.
banking company and would have had reported assets of approximately $225
billion.
# # #
Contact: Todd Rubenson 704 386-4401
<PAGE>
FOR IMMEDIATE RELEASE
JAN. 8, 1997 -- NationsBank Corporation today announced results of the election
procedure called for in its merger agreement with Boatmen's Bancshares Inc. The
merger agreement permitted Boatmen's shareholders to elect cash consideration,
stock consideration or a combination of both.
Approximately 4 percent of Boatmen's common shares will be exchanged for cash.
The remaining approximately 96 percent of Boatmen's shares will be exchanged for
shares of NationsBank common stock, resulting in 98 million shares of
NationsBank common stock being issued.
NationsBank will continue its share repurchase program, including the repurchase
of common shares so that net common shares issued for the Boatmen's transaction
represent 60 percent of the total consideration. This would result in net shares
issued of approximately 61 million, indicating the repurchase of approximately
37 million common shares. These repurchases would occur from time to time in
open market or private transactions.
On Sept. 30, 1996, NationsBank, including Boatmen's, would have been the
fourth-largest U.S. banking company and would have had reported assets of
approximately $225 billion.
# # #
Media Contact: Martha Larsh 704 388-4379
<PAGE>
FOR IMMEDIATE RELEASE
Dec. 20, 1996 -- NationsBank Corporation shareholders today approved the
issuance of NationsBank stock to Boatmen's Bancshares Inc. shareholders in the
proposed merger of the two companies. NationsBank shareholders also approved an
amendment to the company's articles of incorporation to increase the authorized
number of shares of common stock to 1.25 billion and an amendment and
restatement of the company's key employee stock plan, which provides for an
additional 5 million shares for issuance under the plan.
The vote was taken at a special meeting of NationsBank shareholders in
Charlotte, N.C. At a special meeting of Boatmen's shareholders today in St.
Louis, Mo., Boatmen's shareholders approved the merger.
"This merger will create one of the strongest banks in the country," said Hugh
L. McColl Jr., chairman and CEO of NationsBank. "The shareholders of this
company have once again demonstrated not only their confidence in management and
the board, but also their vision for the future of banking."
- -- MORE --
<PAGE>
Page 2
The NationsBank board of directors has elected five current directors of
Boatmen's to become NationsBank directors effective as of the closing of the
merger. The new NationsBank directors will be Andrew B. Craig III, currently
chairman and CEO of Boatmen's; B.A. Bridgewater Jr., chairman, President and CEO
of Brown Group, Inc.; C. Ray Holman, chairman and CEO of Mallinckrodt Group
Inc.; Russell W. Meyer Jr., chairman and CEO of The Cessna Aircraft Company; and
Albert E. Suter, senior vice chairman and COO of Emerson Electric Co. As of the
closing of the merger, Mr. Craig will be chairman of NationsBank and a member of
the NationsBank Executive Committee.
The NationsBank board of directors also has elected Richard B. Priory, President
and COO of Duke Power Company, to become a NationsBank director effective Jan.
1, 1997.
NationsBank received Federal Reserve Board approval for the merger on Dec. 16,
1996. The merger is expected to close in early January 1997.
NationsBank is the fifth-largest banking company in the United States with $188
billion in assets as of Sept. 30, 1996.
# # #
Contact: Todd Rubenson 704 386-4401
<PAGE>
SUMMARY OF SELECTED FINANCIAL INFORMATION
BOATMEN'S BANCSHARES, INC.
<TABLE>
<CAPTION>
Quarter ended December 31 Year ended December 31
--------------------------------- ----------------------------------------
(in millions except per share data) 1996 1995 % change 1996 1995 % change
- ----------------------------------- ------- -------- --------- ----------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS
Net interest income $ 400.3 $ 383.9 4.3 $ 1,584.6 $ 1,492.0 6.2
Provision for loan losses 19.7 26.5 (25.6) 84.5 59.8 41.4
Noninterest income 203.5 208.8 (2.5) 840.7 759.6(1) 10.7
Noninterest expense 367.9(2) 368.8 (0.2) 1,522.4(3) 1,450.8(3) 4.9
Net income 140.2 128.3 9.3 522.8 480.0 8.9
Net income before nonoperating items 146.1 128.3 13.9 585.2 513.4 14.0
COMMON SHARE DATA
Net income $ 0.89 $ 0.81 9.9 $ 3.29 $ 3.02 8.9
Net income before nonoperating items 0.93 0.81 14.8 3.69 3.23 14.2
Dividends declared 0.42 0.37 13.5 1.58 1.42 11.3
Book value (period end) 23.11 22.21 4.0
Tangible book value (period end) 20.41 19.45 4.9
Shares outstanding (period end) 155.3 157.6 (1.4)
Average shares outstanding 156.7 156.7 0.0
SELECTED FINANCIAL RATIOS
Before nonoperating items:
Return on assets 1.45 1.27 1.45 1.27
Return on total equity 16.11 14.49 16.13 15.08
Return on common equity 16.34 14.69 16.38 15.32
Efficiency ratio 58.48 61.18 58.01 61.54
After nonoperating items:
Return on assets 1.39 1.27 1.29 1.19
Return on total equity 15.46 14.49 14.41 14.10
Return on common equity 15.68 14.69 14.61 14.31
Net interest margin 4.47 4.31 4.45 4.23
Capital ratios:
Equity to assets 8.91 8.75
Risk-based capital:
Tier 1 capital 11.33 11.29
Total capital 13.85 13.97
Tier 1 leverage ratio 8.23 7.95
FINANCIAL POSITION AT PERIOD END
Total assets $ 41,200.4 $ 41,123.5 0.2
Loans 24,604.7 24,050.9 2.3
Reserve for loan losses 458.1 452.6 1.2
Deposits 31,954.0 31,978.1 (0.1)
Long-term debt 609.1 615.1 (1.0)
Equity 3,671.6 3,599.8 2.0
(1) Includes securities restructuring charge of $22.0 million.
(2) Includes merger expenses of $9.2 million.
(3) Includes merger expenses of $69.6 million in 1996 and $26.0 million in 1995, and SAIF assessment of $23.6 million in 1996.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENT OF INCOME
BOATMEN'S BANCSHARES, INC.
<TABLE>
<CAPTION>
Quarter ended December 31 Year ended December 31
----------------------------------- ------------------------------
(in thousands) 1996 1995 1996 1995
- -------------- ---------------- ----------------- ---------------- ------------
<S> <C> <C> <C> <C>
Interest income
Interest and fees on loans $ 527,321 $ 538,382 $ 2,109,806 $ 2,107,749
Interest on short-term investments 1,261 1,540 5,692 4,787
Interest on Federal funds sold and securities
purchased under resale agreements 3,181 11,645 24,316 40,028
Interest on held to maturity securities:
Taxable 72,064 357,753
Tax-exempt 15,013 14,325 63,471 56,108
------------ ------------ ------------ ------------
Total interest on held to maturity securities 15,013 86,389 63,471 413,861
Interest on available for sale securities 173,774 87,712 673,800 304,816
Interest on trading securities 880 706 3,628 2,049
------------ ------------ ------------ ------------
Total interest income 721,430 726,374 2,880,713 2,873,290
------------ ------------ ------------ ------------
Interest expense
Interest on deposits 243,021 265,050 994,142 1,025,459
Interest on Federal funds purchased and
other short-term borrowings 65,057 63,921 249,173 304,509
Interest on capital lease obligations 923 971 3,754 3,896
Interest on long-term debt 12,108 12,498 49,015 47,454
------------ ------------ ------------ ------------
Total interest expense 321,109 342,440 1,296,084 1,381,318
------------ ------------ ------------ ------------
Net interest income 400,321 383,934 1,584,629 1,491,972
Provision for loan losses 19,675 26,451 84,517 59,756
------------ ------------ ------------ ------------
Net interest income after provision for loan losses 380,646 357,483 1,500,112 1,432,216
------------ ------------ ------------ ------------
Noninterest income
Trust fees 55,361 52,226 214,929 200,242
Service charges 62,695 59,760 249,931 231,648
Mortgage banking revenues 19,592 20,421 86,758 80,702
Credit card 12,343 16,184 50,044 61,483
Investment banking revenues 12,615 10,832 48,982 42,158
Securities gains (losses), net 70 11,034 1,994 (7,040)
Other 40,821 38,331 188,071 150,437
------------ ------------ ------------ ------------
Total noninterest income 203,497 208,788 840,709 759,630
------------ ------------ ------------ ------------
Noninterest expense
Staff 193,940 186,596 767,073 726,472
Net occupancy 24,982 24,368 101,943 98,777
Equipment 30,776 31,123 121,914 116,704
FDIC insurance (1) 809 4,945 32,613 39,288
Intangible amortization 9,870 11,268 40,147 43,755
Advertising 11,959 11,705 45,124 42,866
Merger expense 9,154 69,617 25,978
Other 86,383 98,776 344,007 356,985
------------ ------------ ------------ ------------
Total noninterest expense 367,873 368,781 1,522,438 1,450,825
------------ ------------ ------------ ------------
Income before income tax expense 216,270 197,490 818,383 741,021
Income tax expense 76,023 69,229 295,615 261,010
------------ ------------ ------------ ------------
Net income $ 140,247 $ 128,261 $ 522,768 $ 480,011
============ ============ ============ ============
Net income available to common
shareholders $ 138,673 $ 126,407 $ 515,961 $ 472,868
============ ============ ============ ============
Net income per common share $ 0.89 $ 0.81 $ 3.29 $ 3.02
============ ============ ============ ============
Dividends declared per share $ 0.42 $ 0.37 $ 1.58 $ 1.42
============ ============ ============ ============
Average shares (YTD) 156,673,502 156,663,791
============ ============
Returns:
Return on assets 1.39 1.27 1.29 1.19
Return on total equity 15.46 14.49 14.41 14.10
Return on common equity 15.68 14.69 14.61 14.31
Preferred dividends declared $ 1,574 $ 1,854 $ 6,807 $ 7,143
Fully taxable equivalent (FTE) adjustment $ 9,613 $ 10,031 $ 38,468 $ 41,794
(1) 1996 includes a nonrecurring SAIF assessment totaling $23.6 million recorded in the third quarter.
</TABLE>
<PAGE>
CONSOLIDATED BALANCE SHEET
BOATMEN'S BANCSHARES, INC.
<TABLE>
<CAPTION>
(in thousands) December 31 September 30
- -------------- ------------------------------------- ---------------
ASSETS 1996 1995 1996
- ------- ---------------- ---------------- ---------------
<S> <C> <C> <C>
Cash and due from banks $ 2,733,213 $ 2,611,765 $ 2,232,618
Short-term investments 72,091 83,166 59,483
Securities:
Held to maturity 1,003,415 923,130 1,028,881
Available for sale 10,518,740 10,347,172 10,944,317
Trading 28,364 58,361 54,946
Federal funds sold and securities purchased
under resale agreements 446,276 1,225,671 182,944
Loans, net of unearned income 24,604,681 24,050,903 24,314,765
Less reserve for loan losses 458,090 452,560 472,161
------------- ------------- -------------
Loans, net 24,146,591 23,598,343 23,842,604
------------- ------------- -------------
Property and equipment 775,587 800,502 776,366
Other assets 1,476,160 1,475,379 1,571,794
------------- ------------- -------------
Total assets $ 41,200,437 $ 41,123,489 $ 40,693,953
============= ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Demand deposits $ 7,354,523 $ 6,894,649 $ 6,914,124
Retail savings deposits and interest-bearing
transaction accounts 13,450,215 13,510,720 13,006,473
Time deposits 11,149,258 11,572,768 10,641,042
------------- ------------- -------------
Total deposits 31,953,996 31,978,137 30,561,639
------------- ------------- -------------
Federal funds purchased and securities sold
under repurchase agreements 3,021,109 2,902,973 3,277,966
Short-term borrowings 1,289,404 1,474,991 1,944,904
Capital lease obligations 36,607 39,076 38,039
Long-term debt 609,070 615,129 606,148
Other liabilities 617,682 512,436 683,526
------------- ------------- -------------
Total liabilities 37,527,868 37,522,742 37,112,222
------------- ------------- -------------
Redeemable preferred stock 934 961 949
------------- ------------- -------------
Stockholders' Equity:
Preferred stock 82,147 99,324 94,671
Common stock,($1 par value; 250,000,000
shares authorized) 158,400 158,068 158,400
Surplus 1,199,692 1,212,838 1,209,335
Retained earnings 2,405,658 2,137,176 2,332,005
Treasury stock, at cost (168,131) (18,096) (151,597)
Unrealized net depreciation,
available for sale securities (6,131) 10,476 (62,032)
------------- ------------- -------------
Total stockholders' equity 3,671,635 3,599,786 3,580,782
------------- ------------- -------------
Total liabilities and stockholders' equity $ 41,200,437 $ 41,123,489 $ 40,693,953
============= ============= =============
Book value per share $ 23.11 $ 22.21 $ 22.45
============= ============= =============
Tangible book value per share $ 20.41 $ 19.45 $ 19.75
============= ============= =============
Month end shares outstanding 155,324,746 157,591,239 155,256,583
============= ============= =============
Month end treasury shares 3,075,610 476,519 3,143,773
============= ============= =============
</TABLE>
<PAGE>
CREDIT QUALITY STATISTICS
BOATMEN'S BANCSHARES, INC.
<TABLE>
<CAPTION>
Quarter ended December 31 Year ended December 31
----------------------------------- -----------------------------------
RESERVE FOR LOAN LOSSES 1996 1995 1996 1995
- ----------------------- ----------------- ---------------- ----------------- ----------------
(in thousands)
<S> <C> <C> <C> <C>
Balance, beginning of period $ 472,161 $ 461,352 $ 452,560 $ 449,485
Charge-offs (48,551) (51,436) (138,121) (118,639)
Recoveries 14,805 13,690 57,640 54,152
--------- --------- --------- ---------
Net charge-offs (33,746) (37,746) (80,481) (64,487)
--------- --------- --------- ---------
Provision for loan losses 19,675 26,451 84,517 59,756
Loan reserve from acquisitions 2,503 1,494 7,806
--------- --------- --------- ---------
Balance, end of period $ 458,090 $ 452,560 $ 458,090 $ 452,560
========= ========= ========= =========
Reserve at December 31:
Loan reserve as % of net loans 1.86 1.88 1.86 1.88
Loan reserve as multiple of net charge-offs 3.39 x 3.00 x 5.69 x 7.02 x
Net charge-offs during the period:
Net charge-offs as % of net loans 0.55 0.63 0.33 0.27
Net charge-offs as % of net loans (average) 0.56 0.62 0.33 0.27
Net charge-offs as % of loan reserve 29.47 33.36 17.57 14.25
</TABLE>
Note: Ratios are annualized when appropriate.
<TABLE>
<CAPTION>
December 31 September 30
----------------------------------- -----------------
NONPERFORMING ASSETS 1996 1995 1996
- -------------------- ----------------- ---------------- ------------------
(in thousands)
<S> <C> <C> <C>
Nonaccrual $156,226 $165,440 $164,029
Restructured 2,355 7,996 2,370
Past due 90 days or more 37,224 37,349 40,858
-------- -------- --------
Total nonperforming loans 195,805 210,785 207,257
-------- -------- --------
Foreclosed property 28,936 35,149 33,178
-------- -------- --------
Total nonperforming assets $224,741 $245,934 $240,435
======== ======== ========
</TABLE>
<TABLE>
<S> <C> <C> <C>
Nonperforming loans as % of total loans 0.79 0.87 0.85
Nonperforming assets as % of total loans
and foreclosed property 0.91 1.02 0.98
Nonperforming assets as % of total assets 0.55 0.60 0.59
Loan reserve as % of nonperforming loans 233.95 214.70 227.81
</TABLE>
<TABLE>
<CAPTION>
Quarter ended December 31 Year ended December 31
----------------------------------- ------------------------------------
1996 1995 1996 1995
----------------- ---------------- ----------------- -----------------
<S> <C> <C> <C> <C>
USED IN CALCULATIONS:
Net loans, period end 24,604,681 24,050,903 24,604,681 24,050,903
Unearned Income 78,069 87,000 78,069 87,000
Total Loans, period end 24,682,750 24,137,903 24,682,750 24,137,903
Net loans, average 24,289,969 24,184,430 24,217,889 23,842,269
Total assets 41,200,437 41,123,489 41,200,437 41,123,489
</TABLE>
<PAGE>
RISK-BASED CAPITAL
BOATMEN'S BANCSHARES, INC.
<TABLE>
<CAPTION>
December 31 September 30
----------------------------------- -----------------
(in millions) 1996 1995 1996
- ------------- ---------------- ----------------- -----------------
<S> <C> <C> <C>
Tier I Capital:
Stockholders' equity $ 3,671.6 $ 3,599.8 $ 3,580.8
Unrealized net (appreciation) depreciation,
available for sale securities 6.2 (10.5) 62.0
------------ ---------- ----------
Stockholders' equity, net 3,677.8 3,589.3 3,642.8
Minority interest 0.7 0.7 0.7
Intangible assets:
Goodwill (261.4) (278.0) (267.1)
Core deposit premium (52.7) (69.5) (56.5)
------------ ---------- ----------
Total Tier I 3,364.4 3,242.5 3,319.9
------------ ---------- ----------
Tier II Capital:
Allowable reserve for loan losses 372.2 360.1 370.2
Qualifying long-term debt 375.0 410.0 375.0
------------ ---------- ----------
Total Tier II 747.2 770.1 745.2
------------ ---------- ----------
Total Capital $ 4,111.6 $ 4,012.6 $ 4,065.1
============ ========== ==========
Risk-Adjusted Assets $ 29,692.5 $ 28,721.2 $ 29,512.1
============ ========== ==========
Risk-Based Capital Ratios
Tier I 11.33 11.29 1.25
Total 13.85 13.97 13.77
Tier I leverage ratio 8.23 7.95 8.21
</TABLE>
<PAGE>
CONSOLIDATED AVERAGE BALANCE SHEET
AND NET INTEREST MARGIN
BOATMEN'S BANCSHARES, INC.
<TABLE>
<CAPTION>
Quarter ended December 31 Year ended December 31
-------------------------------------------------- --------------------------------------
1996 1995 1996 1995
--------------------------- --------------------- ------------------ ------------------
Average balances (in millions) Balance Rate Balance Rate Balance Rate Balance Rate
- ------------------------------ --------------------------- --------------------- ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Loans, net of unearned income $ 24,290.0 8.66 $ 24,184.4 8.86 $ 24,217.9 8.74 $ 23,842.3 8.87
Short-term investments 78.4 6.39 92.4 6.61 87.8 6.48 79.0 6.06
Federal funds sold and
securities purchased under
resale agreements 235.3 5.38 796.9 5.80 449.3 5.41 675.4 5.93
Held to maturity securities:
Taxable -- -- 4,584.8 6.24 -- -- 5,825.5 6.14
Tax-exempt 1,024.2 8.79 891.4 9.52 988.3 9.45 864.2 9.73
Total held to maturity securities 1,024.2 8.79 5,476.2 6.77 988.3 9.45 6,689.7 6.60
Available for sale securities 10,770.3 6.43 5,696.6 6.19 10,688.0 6.32 4,946.3 6.30
Trading securities 53.7 7.02 49.2 6.01 58.7 6.68 33.4 6.48
Total earning assets 36,451.9 7.98 36,295.7 8.05 36,490.0 8.00 36,266.1 8.04
Less reserve for loan losses (473.9) (463.9) (467.9) (459.9)
Cash and due from banks 2,076.1 2,142.2 2,077.5 2,220.4
All other assets 2,296.8 2,324.3 2,285.0 2,262.8
Total assets $ 40,350.9 $ 40,298.3 $ 40,384.6 $ 40,289.4
Liabilities and Stockholders' Equity:
Retail savings deposits and interest-
bearing transaction accounts $ 13,211.9 3.09 $ 12,995.1 3.16 $ 13,220.2 3.06 $ 12,600.6 3.13
Time deposits 10,552.8 5.30 11,574.1 5.54 11,004.4 5.36 11,734.2 5.37
Total interest-bearing deposits 23,764.7 4.07 24,569.2 4.28 24,224.6 4.10 24,334.8 4.21
Federal funds purchased and
other short-term borrowings 4,945.7 5.23 4,449.4 5.70 4,708.6 5.29 5,226.9 5.83
Capital lease obligations 37.1 9.89 39.2 9.82 38.2 9.82 39.6 9.82
Long-term debt 608.8 7.91 599.4 8.27 614.5 7.98 555.8 8.54
Total interest-bearing liabilities 29,356.3 4.35 29,657.2 4.58 29,585.9 4.38 30,157.1 4.58
Demand deposits 6,683.7 6,544.7 6,542.8 6,247.6
All other liabilities 681.3 555.0 625.9 479.6
Total liabilities 36,721.3 36,756.9 36,754.6 36,884.3
Redeemable preferred stock 0.9 1.0 0.9 1.1
Total stockholders' equity 3,628.7 3,540.4 3,629.1 3,404.0
Total liabilities and
stockholders' equity $ 40,350.9 $ 40,298.3 $ 40,384.6 $ 40,289.4
Interest rate spread 3.63 3.47 3.62 3.46
Effect of noninterest-bearing funds 0.84 0.84 0.83 0.77
Net interest margin 4.47 4.31 4.45 4.23
</TABLE>
<PAGE>
7
FOR IMMEDIATE RELEASE
NATIONSBANK EARNED $2.5 BILLION IN OPERATING PROFITS
IN 1996, UP 26%
CHARLOTTE, NC, Jan. 13, 1997 -- With solid revenue growth outpacing expense
growth in 1996, NationsBank generated a 26-percent increase in 1996 operating
profits to $2.45 billion.
"During 1996, we continued to improve our performance for both customers and
shareholders," said Hugh L. McColl Jr., chief executive officer. "We implemented
programs, products and systems over the past year that enable us to more
effectively meet customers' needs.
"At the same time, we focused on using our capital wisely on behalf of our
shareholders. This focus has been visible in our acquisitions, the shifting of
capital away from less profitable businesses, the reduction of low-yielding
assets and the aggressive repurchases of common stock. These actions, combined
with excellent financial performance, were rewarded with a 40-percent increase
in our stock price in 1996."
Earnings Highlights (1996 compared to 1995)
o Revenues (net interest income plus noninterest income) grew 17 percent
to more than $10 billion
o Operating earnings per share rose 16 percent to $8.26
o Operating return on average common shareholders' equity increased more
than 150 basis points to 18.53 percent Efficiency ratio improved 351
basis points to 56.3 percent Capital ratios strengthened, with the total
equity to assets ratio rising to 7.38 percent from 6.83 percent
NationsBank earned $2.45 billion in 1996, before a merger charge primarily
related to Bank South. This represented a 26-percent increase over the $1.95
billion earned in 1995. Operating earnings per common share for 1996 rose 16
percent to $8.26, from $7.13 per common share in 1995. Operating return on
common shareholders' equity rose to 18.53 percent in 1996, up from 17.01 percent
last year.
1
<PAGE>
Cash basis earnings (operating net income excluding amortization of intangibles)
increased 25 percent to $2.58 billion in 1996, equaling $8.69 per common share.
As a result of the merger-related, after-tax charge of $77 million, reported net
income and earnings per share were $2.38 billion and $8.00, respectively, in
1996.
For the fourth quarter of 1996, net income rose 24 percent to $632 million,
compared to $510 million in the fourth quarter of 1995. Earnings per common
share in the fourth quarter of 1996 increased 17 percent to $2.19, from $1.87
per common share in 1995.
1996 results include the impact of several acquisitions and loan securitizations
completed primarily in 1996 and at the end of 1995.
Net Interest Income
In 1996, average loans and leases grew 12 percent over year-earlier levels to
$122 billion. This increase was driven primarily by a 19-percent increase in
average consumer loans. This loan growth, combined with a taxable-equivalent
29-basis-point increase in the net interest yield, led to a 16-percent increase
in net interest income to $6.42 billion in 1996. The continuing improvement in
the net interest yield to 3.62 percent from 3.33 percent in 1995 was primarily
driven by ongoing initiatives focused on balance sheet efficiency and
discipline.
Noninterest Income
Noninterest income rose 18 percent to $3.65 billion in 1996. The year-over-year
increase was driven by higher income from investment banking, deposit accounts
and mortgage-related activities.
Efficiency
Revenue growth outpaced expense growth in 1996, improving the efficiency ratio
351 basis points to 56.3 percent, compared to 59.8 percent in 1995. This
improvement reflected continued productivity increases and the rationalization
of business units.
<PAGE>
Credit Quality
Total nonperforming assets were $1.04 billion on Dec. 31, 1996, or .85 percent
of net loans, leases and factored receivables and other real estate owned. This
compared to $853 million, or .73 percent of net levels on Dec. 31, 1995. The
allowance for credit losses totaled $2.32 billion at year-end, equaling 260
percent of nonperforming loans, compared to $2.16 billion, or 306 percent one
year earlier. In 1996, net charge-offs were $598 million. This equaled .48
percent of average net loans, leases and factored receivables, compared to .38
percent of average levels in 1995.
Capital Strength
Total shareholders' equity climbed to $13.7 billion on Dec. 31, 1996, up 7
percent from levels one year ago. This represented 7.38 percent of period-end
assets, compared to 6.83 percent at Dec. 31, 1995. Book value per common share
rose to $47.38 at the end of the 1996. NationsBank repurchased approximately 17
million of its common shares in 1996.
NationsBank Corporation, headquartered in Charlotte, N.C., is a bank holding
company that provides financial products and services nationally and
internationally to individuals, businesses, corporations, institutional
investors and government agencies. Following its Jan. 7, 1997 merger with
Boatmen's Bancshares Inc. of St. Louis, Mo., NationsBank has primary retail and
commercial banking operations in 16 states and the District of Columbia. On a
pro forma combined basis, NationsBank had total assets of approximately $227
billion at year-end.
<PAGE>
NATIONSBANK CORPORATION FINANCIAL HIGHLIGHTS
THREE MONTHS TWELVE MONTHS
ENDED DECEMBER 31 ENDED DECEMBER 31
1996 1995 1996 1995
FINANCIAL OPERATING SUMMARY
(In millions except per-share data)
Net income $632 $510 $2,452 $1,950
Earnings per common share 2.19 1.87 8.26 7.13
Fully diluted earnings
per common share 2.14 1.85 8.10 7.04
Cash basis earnings (1) 669 539 2,580 2,069
Cash basis earnings per share 2.31 1.98 8.69 7.56
Average common shares issued 287.173 271.558 295.108 272.480
Average fully diluted common
shares issued 294.591 276.009 301.765 277.134
Price per share of common
stock at period end $97.750 $69.625 $97.750 $69.625
Common dividends paid 189 158 707 567
Common dividends paid per share .66 .58 2.40 2.08
Preferred dividends paid 4 2 15 8
OPERATING EARNINGS SUMMARY (Taxable-equivalent in millions)
Net interest income $1,612 $1,438 $6,423 $5,560
Provision for credit losses (150) (142) (605) (382)
Gains on sales of securities 33 21 67 29
Noninterest income 958 846 3,646 3,078
Other real estate owned expense (7) (8) (20) (18)
Other noninterest expense (1,466) (1,342) (5,665) (5,163)
Income before income taxes 980 813 3,846 3,104
Income taxes - including
FTE adjustment* 348 303 1,394 1,154
Net income $632 $510 $2,452 $1,950
*FTE adjustment $22 $25 $94 $113
<PAGE>
AVERAGE BALANCE SHEET SUMMARY (In billions)
Loans and leases, net $120.892 $114.604 $122.268 $109.487
Securities held for investment 2.585 12.945 3.442 15.521
Securities available for sale 11.540 10.689 17.295 10.272
Total securities 14.125 23.634 20.737 25.793
Earning assets 171.249 169.334 177.400 167.004
Total assets 194.321 191.693 200.885 188.547
Noninterest-bearing deposits 23.971 21.908 23.990 21.128
Interest-bearing deposits 81.794 76.694 83.595 78.150
Total deposits 105.765 98.602 107.585 99.278
Shareholders' equity 13.224 11.903 13.263 11.451
Common shareholders' equity 13.108 11.866 13.149 11.415
OTHER OPERATING FINANCIAL DATA
Net interest yield 3.75% 3.38% 3.62% 3.33%
Return on average assets 1.29 1.06 1.22 1.03
Return on average
tangible assets 1.38 1.12 1.30 1.11
Return on average common
shareholders' equity 19.06 16.98 18.53 17.01
Return on average tangible
common shareholders' equity 23.81 20.46 22.80 20.74
Total equity to assets ratio
(period end) 7.38 6.83 7.38 6.83
Gross charge-offs (in millions) $208 $211 $836 $636
Net charge-offs (in millions) 151 156 598 421
% of average loans, leases and
factored accounts receivable, net .49% .53% .48% .38%
Efficiency ratio 57.11 58.73 56.26 59.77
REPORTED RESULTS(Operating results including merger-related charge)
Net income $632 $510 $2,375 $1,950
Earnings per common share 2.19 1.87 8.00 7.13
Fully diluted earnings per
common share 2.14 1.85 7.85 7.04
Return on average common
shareholders' equity 19.06 16.98 17.95 17.01
(1) Cash basis earnings equal net income excluding amortization of
intangibles.
<PAGE>
DECEMBER 31
1996 1995
BALANCE SHEET SUMMARY (In billions)
Loans and leases, net $121.583 $116.042
Securities held for investment 2.110 4.432
Securities available for sale 12.277 19.415
Total securities 14.387 23.847
Earning assets 165.276 167.945
Factored accounts receivable 1.047 .991
Mortgage servicing rights .946 .707
Goodwill, core deposit and
other intangibles 2.030 1.514
Total assets 185.794 187.298
Noninterest-bearing deposits 25.738 23.414
Interest-bearing deposits 80.760 77.277
Total deposits 106.498 100.691
Shareholders' equity 13.709 12.801
Common shareholders' equity 13.586 12.759
Per common share (not in billions) 47.38 46.52
RISK-BASED CAPITAL
Tier 1 capital $12.384 $10.799
Tier 1 capital ratio 7.76% 7.24%
Total capital $20.208 $17.264
Total capital ratio 12.66% 11.58%
Leverage ratio 7.09% 6.27%
Common shares issued (in millions) 286.746 274.269
Allowance for credit losses $2.315 $2.163
Allowance for credit losses
as % of net loans, leases
and factored accounts receivable 1.89% 1.85%
Allowance for credit losses
as % of nonperforming loans 260.02 306.49
Nonperforming loans $.890 $.706
Nonperforming assets 1.043 .853
Nonperforming assets as % of:
Total assets .56% .46%
Net loans, leases, factored accounts
receivable and other real estate owned .85% .73%
OTHER DATA
Full-time equivalent headcount 62,971 58,322
Banking centers 1,979 1,833
ATMs 3,948 2,292
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BUSINESS UNIT RESULTS - Three months ended December 31, 1996
(in millions)
Return on Average Loans
Total Revenue Net Income Equity and Leases,net
General Bank $1,786 70% $373 59% 21% $76,728 63%
Global Finance 597 23 186 29 19 36,511 30
Financial Services 173 7 45 7 15 8,282 7
