<PAGE>
GLOBAL PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JANUARY 14, 1997)
NB CAPITAL TRUST III
500,000 FLOATING RATE CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
GUARANTEED AS SET FORTH HEREIN BY
NATIONSBANK(Register mark)
The Floating Rate Capital Securities (the "Capital Securities") offered
hereby represent preferred undivided beneficial interests in the assets of NB
Capital Trust III, a statutory business trust formed under the laws of the State
of Delaware ("NB Capital Trust" or the "Trust"). NationsBank Corporation, a
North Carolina corporation ("NationsBank" or the "Corporation"), will own all of
the common securities representing undivided beneficial interests in the assets
of NB Capital Trust (such common securities, the "Common Securities" and,
together with the Capital Securities, the "Trust Securities"). Application has
been made to list the Capital Securities on the Luxembourg Stock Exchange.
(CONTINUED ON NEXT PAGE)
SEE "RISK FACTORS" BEGINNING ON PAGE S-8 OF THIS GLOBAL PROSPECTUS
SUPPLEMENT FOR CERTAIN INFORMATION RELEVANT TO AN INVESTMENT IN THE CAPITAL
SECURITIES.
THE OFFERED SECURITIES ARE NOT SAVINGS ACCOUNTS OR BANK DEPOSITS, ARE NOT
OBLIGATIONS OF OR GUARANTEED BY ANY BANKING AFFILIATE OF NATIONSBANK, ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY AND INVOLVE INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH
CAROLINA (THE "COMMISSIONER") OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION, THE COMMISSIONER OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS GLOBAL PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH
IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS ARE TO BE USED BY
NATIONSBANC CAPITAL MARKETS, INC., A BROKER-DEALER AND A DIRECT WHOLLY
OWNED SUBSIDIARY OF NATIONSBANK, IN CONNECTION WITH OFFERS AND SALES
RELATED TO SECONDARY MARKET TRANSACTIONS IN THE OFFERED SECURITIES.
NATIONSBANC CAPITAL MARKETS, INC. OR ITS AFFILIATES MAY ACT AS
PRINCIPAL OR AGENT IN SUCH TRANSACTIONS. ANY SUCH SALES WILL
BE MADE AT NEGOTIATED PRICES RELATING TO PREVAILING MARKET
PRICES AT THE TIME OF SALE OR OTHERWISE.
NATIONSBANC CAPITAL MARKETS, INC.
The date of this Global Prospectus Supplement is January 22, 1997.
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)
NB Capital Trust exists for the sole purpose of issuing the Trust
Securities and investing the gross proceeds thereof in $515,500,000 of Floating
Rate Junior Subordinated Deferrable Interest Notes due 2027 (the "Junior
Subordinated Notes") of NationsBank. The Junior Subordinated Notes, the Capital
Securities and the related Capital Securities Guarantee (as defined herein) in
respect of which this Global Prospectus Supplement is being delivered are
referred to herein as the "Offered Securities." The Junior Subordinated Notes
will mature on January 15, 2027 (the "Stated Maturity"). The Junior Subordinated
Notes when issued will be unsecured obligations of NationsBank and will be
subordinate and junior in right of payment to other indebtedness of the
Corporation, as described herein. Upon an Event of Default (as defined in the
accompanying Prospectus) under the Declaration (as defined herein), the holders
of Capital Securities will have a preference over the holders of the Common
Securities with respect to payments in respect of Distributions (as defined
herein) and payments upon redemption, liquidation and otherwise.
The preferred undivided beneficial interests in the assets of the Trust
referred to in this Global Prospectus Supplement as the "Capital Securities" and
the related guarantee referred to in this Global Prospectus Supplement as the
"Capital Securities Guarantee" are referred to in the accompanying Prospectus as
the "Preferred Securities" and the "Preferred Securities Guarantee",
respectively.
Because holders of Capital Securities may receive Junior Subordinated Notes
upon dissolution of the Trust, prospective purchasers of Capital Securities are
also making an investment decision with regard to the Junior Subordinated Notes
and should carefully review all the information regarding the Junior
Subordinated Notes contained herein and in the accompanying Prospectus. See
"Description of the Junior Subordinated Notes -- General", "Description of the
Capital Securities -- Distribution of the Junior Subordinated Notes to Trust
Securityholders" and " -- Liquidation Distribution Upon Dissolution."
Holders of the Capital Securities are entitled to receive cumulative cash
distributions ("Distributions") accumulating from the date of original issuance
and payable quarterly in arrears on January 15, April 15, July 15 and October 15
of each year, commencing April 15, 1997, (each a "Distribution Payment Date") in
respect of the liquidation amount of $1,000 per Capital Security at a rate per
annum equal to LIBOR (as defined herein) plus 0.55% (the "Distribution Rate").
The payment of Distributions out of moneys held by NB Capital Trust and payments
on liquidation of NB Capital Trust or the redemption of Capital Securities, as
set forth below, are guaranteed on a subordinated basis by NationsBank (the
"Capital Securities Guarantee") as described herein and under "Description of
the Preferred Securities Guarantees" in the accompanying Prospectus. The Capital
Securities Guarantee covers payments of Distributions and other payments on the
Capital Securities only if and to the extent that NB Capital Trust has funds
available therefor which will only occur if NationsBank has made a payment of
interest or principal or other payments on the Junior Subordinated Notes held by
NB Capital Trust as its sole asset. The Capital Securities Guarantee, when taken
together with the Corporation's obligations under the Junior Subordinated Notes
and the Indenture (as defined herein) and its obligations under the Declaration,
including its liabilities to pay costs, expenses, debts and obligations of NB
Capital Trust (other than with respect to the Trust Securities), provide a full
and unconditional guarantee on a subordinated basis of amounts due on the
Capital Securities. See "Risk Factors -- Rights Under the Capital Securities
Guarantee" herein. The obligations of NationsBank under the Capital Securities
Guarantee rank (i) subordinate and junior in right of payment to all other
liabilities, including contingent liabilities, of NationsBank (ii) pari passu
with the most senior preferred or preference stock now or hereafter issued by
the Corporation and with any guarantee now or hereafter entered into by
NationsBank in respect of any preferred or preference stock of any affiliate of
the Corporation (including guarantees relating to preferred securities
previously issued by NB Capital Trust I and NB Capital Trust II, other wholly
owned trust subsidiaries of the Corporation, having an aggregate liquidation
value of $965,000,000) and (iii) senior to the Corporation's common stock. The
obligations of NationsBank under the Junior Subordinated Notes are subordinate
and junior in right of payment to all present and future Senior Obligations (as
defined herein) of NationsBank, which were approximately $17.7 billion at
December 31, 1996. The Junior Subordinated Notes purchased by the Trust may be
subsequently distributed pro rata to holders of the Trust Securities in
connection with the dissolution of the Trust.
(CONTINUED ON NEXT PAGE)
S-2
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)
The Distribution Rate and the Distribution Payment Date and other payment
dates for the Capital Securities will correspond to the interest rate and
Interest Payment Dates (as defined herein) and other payment dates on the Junior
Subordinated Notes, which will be the sole assets of the Trust. As a result, if
NationsBank does not make principal or interest payments on the Junior
Subordinated Notes, the Trust will not have sufficient funds to make
Distributions on the Capital Securities. In such event, the Capital Securities
Guarantee will not apply to such Distributions until the Trust has sufficient
funds available therefor.
NationsBank has the right to defer payments of interest on the Junior
Subordinated Notes by extending the Interest Payment Period (as defined herein)
on the Junior Subordinated Notes for up to 20 consecutive quarterly periods
(each, an "Extension Period"), provided that no Extension Period may extend
beyond the Stated Maturity of the Junior Subordinated Notes. If interest
payments are so deferred, Distributions on the Capital Securities will also be
deferred. During such Extension Period, Distributions will continue to accrue
with interest thereon (to the extent permitted by applicable law) at a rate per
annum equal to LIBOR plus 0.55%, compounded quarterly from the relevant
Distribution Payment Date. During any Extension Period, holders of Capital
Securities will be required to include deferred interest income in their gross
income for United States federal income tax purposes in advance of receipt of
the cash Distributions with respect to such deferred interest payments. There
could be multiple Extension Periods of varying lengths throughout the term of
the Junior Subordinated Notes. See "Risk Factors -- Option to Extend Interest
Payment Period"; "Description of the Junior Subordinated Notes -- Option to
Extend Interest Payment Period"; and "United States Federal Income
Taxation -- Interest Income and Original Issue Discount."
The Junior Subordinated Notes are payable in whole at the Stated Maturity.
Subject to the Corporation having received prior approval of the Board of
Governors of the Federal Reserve Board System (the "Federal Reserve Board"), if
required, the Junior Subordinated Notes may be prepaid prior to the Stated
Maturity at the option of the Corporation (i) in whole, but not in part, prior
to January 15, 2007 (a "Special Event Prepayment"), upon the occurrence and
continuation of a Special Event (as defined herein), or (ii) in whole or in part
at any time on or after January 15, 2007 (an "Optional Prepayment"), in each
case at a price (the "Prepayment Price") equal to the principal amount of the
Junior Subordinated Notes so prepaid plus the accrued and unpaid interest on the
Junior Subordinated Notes so prepaid (including Additional Interest and
Compounded Interest, as defined herein), to the date of prepayment. See
"Description of the Junior Subordinated Notes -- Special Event Prepayment" and
" -- Optional Prepayment."
As a result of the payment and prepayment terms of the Junior Subordinated
Notes, the Capital Securities are subject to mandatory redemption as follows:
(i) in whole, but not in part, prior to January 15, 2007 contemporaneously with
a Special Event Prepayment, (ii) in whole or in part on or after January 15,
2007 contemporaneously with an Optional Prepayment, or (iii) at the Stated
Maturity upon payment of the Junior Subordinated Notes, in each case at a
redemption price (the "Redemption Price") equal to the principal amount of the
Capital Securities so redeemed plus the accrued and unpaid Distributions
(including interest thereon, if any) on the Capital Securities so redeemed to
the date fixed for redemption. See "Description of the Capital Securities --
Redemption of Capital Securities Upon Payment or Prepayment of Junior
Subordinated Notes."
NationsBank will have the right at any time to liquidate the Trust and
cause the Junior Subordinated Notes to be distributed to the holders of the
Trust Securities, provided that NationsBank has received prior approval from the
Federal Reserve Board, if required. See "Description of the Junior Subordinated
Notes" and "Description of the Capital Securities -- Redemption of Capital
Securities Upon Payment or Prepayment of Junior Subordinated Notes." If the
Junior Subordinated Notes are distributed to the holders of the Capital
Securities, NationsBank will use its best efforts to have the Junior
Subordinated Notes listed on any exchanges on which the Capital Securities are
then listed. Application has been made to list the Capital Securities on the
Luxembourg Stock Exchange. NationsBank and NB Capital Trust do not intend to
apply to list the Capital Securities on any other securities exchange.
(CONTINUED ON NEXT PAGE)
S-3
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)
In the event of the involuntary or voluntary dissolution, winding-up or
termination of the Trust, the holders of the Capital Securities will be entitled
to receive for each Capital Security a liquidation amount of $1,000 plus accrued
and unpaid Distributions thereon (including interest thereon, if any) to the
date of payment, unless, in connection with such dissolution, the Junior
Subordinated Notes are distributed to the holders of the Capital Securities. See
"Description of the Capital Securities -- Liquidation Distribution Upon
Dissolution." Any such distribution of the Junior Subordinated Notes may be
subject to the prior approval of the Federal Reserve Board.
The Capital Securities will be represented by one or more global securities
(each a "Global Security") registered in the name of The Depository Trust
Company ("DTC") or its nominee. Beneficial interests in the Capital Securities
will be shown on, and transfers thereof will be effected only through, records
maintained by DTC and its participants including depositaries for Cedel Bank,
societe anonyme ("Cedel Bank") and Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear System (the "Euroclear Operator"
or "Euroclear"). Except as described in "Description of the Capital
Securities -- Book-Entry Only Issuance", Capital Securities in certificated form
will not be issued in exchange for the Global Securities.
This Global Prospectus Supplement and the related Prospectus do not
constitute an offer to sell or the solicitation of an offer to buy the Capital
Securities in any jurisdiction in which such offer or solicitation is unlawful.
The Capital Securities offered hereby or sold in the United Kingdom other than
to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments, whether as principal or agent (except in
circumstances that do not constitute an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations 1995),
and this Global Prospectus Supplement may only be issued or passed on to any
person in the United Kingdom if that person is of a kind described in Article
11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 or a person to whom this Global Prospectus Supplement
may otherwise lawfully be passed on.
S-4
<PAGE>
NATIONSBANK CORPORATION
NationsBank is a multi-bank holding company established as a North Carolina
corporation in 1968 and is registered under the Bank Holding Company Act of
1956, as amended (the "BHCA"), with its principal assets being the stock of its
subsidiaries. Through its banking subsidiaries (the "Banks") and its various
non-banking subsidiaries, NationsBank provides banking and banking-related
services, primarily throughout the Southeast and Mid-Atlantic states and Texas
and, since January 7, 1997, in the states previously serviced by Boatmen's
Bancshares, Inc. See "Recent Developments". The principal executive offices of
NationsBank are located at NationsBank Corporate Center in Charlotte, North
Carolina 28255. Its telephone number is (704) 386-5000.
NB CAPITAL TRUST
NB Capital Trust is a statutory business trust formed under Delaware law
pursuant to (i) a declaration of trust, dated as of October 29, 1996, executed
by NationsBank, as sponsor (the "Sponsor"), and the trustees of NB Capital Trust
(the "NB Trustees") and (ii) a certificate of trust filed with the Secretary of
State of the State of Delaware on November 1, 1996. The initial declaration will
be amended and restated in its entirety (as so amended and restated, the
"Declaration") substantially in the form filed as an exhibit to the Registration
Statement of which this Global Prospectus Supplement and the accompanying
Prospectus form a part. The Declaration will be qualified as an indenture under
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
NationsBank will directly or indirectly acquire all the Common Securities which
will represent an aggregate liquidation amount equal to at least three percent
of the total capital of NB Capital Trust. NB Capital Trust exists for the
exclusive purposes of (i) issuing the Trust Securities representing undivided
beneficial interests in the assets of the Trust, (ii) investing the gross
proceeds of the Trust Securities in the Junior Subordinated Notes and (iii)
engaging in only those other activities necessary or incidental thereto.
Pursuant to the Declaration, the number of NB Trustees will initially be
five. Three of the NB Trustees (the "Regular Trustees") will be persons who are
employees or officers of, or who are affiliated with, NationsBank. The fourth
trustee will be a financial institution that is unaffiliated with NationsBank,
which trustee will serve as institutional trustee under the Declaration and as
indenture trustee for the purposes of compliance with the provisions of the
Trust Indenture Act (the "Property Trustee"). The Bank of New York, a New York
banking corporation, will be the Property Trustee until removed or replaced by
the holder of the Common Securities. For purposes of compliance with the
provisions of the Trust Indenture Act, The Bank of New York will act as trustee
(the "Capital Securities Guarantee Trustee") under the Capital Securities
Guarantee and as Debt Trustee (as defined herein) under the Indenture. The fifth
trustee will be an entity that maintains its principal place of business in the
State of Delaware (the "Delaware Trustee"). Initially, The Bank of New York
(Delaware), an affiliate of the Property Trustee, will act as Delaware Trustee.
See "Description of the Preferred Securities Guarantees" in the accompanying
Prospectus and "Description of the Capital Securities -- Voting Rights" herein.
The Property Trustee will hold title to the Junior Subordinated Notes for
the benefit of the holders of the Trust Securities and in such capacity will
have the power to exercise all rights, powers and privileges under the
Indenture. In addition, the Property Trustee will maintain exclusive control of
a segregated non-interest-bearing bank account (the "Property Account") to hold
all payments made in respect of the Junior Subordinated Notes for the benefit of
the holders of the Trust Securities. The Property Trustee will make payments of
distributions and payments on liquidation, redemption and otherwise to the
holders of the Trust Securities out of funds from the Property Account. The
Capital Securities Guarantee Trustee will hold the Capital Securities Guarantee
for the benefit of the holders of the Capital Securities. NationsBank, as the
direct or indirect holder of all the Common Securities, will have the right to
appoint, remove or replace any NB Trustee and to increase or decrease the number
of NB Trustees. NationsBank will pay all fees and expenses related to NB Capital
Trust and the offering of the Trust Securities. See "Description of the Junior
Subordinated Notes -- Miscellaneous."
The rights of the holders of the Capital Securities, including economic
rights, rights to information and voting rights, are set forth in the
Declaration, the Delaware Business Trust Act (the "Trust Act") and the Trust
Indenture Act. See "Description of the Capital Securities."
S-5
<PAGE>
NATIONSBANK CORPORATION
SELECTED FINANCIAL DATA
The following selected financial data for the five years ended December 31,
1995 are derived from financial statements of the Corporation audited by Price
Waterhouse LLP, independent accountants. The financial data for the nine months
ended September 30, 1996 and 1995 are derived from unaudited financial
statements. The unaudited financial statements include all adjustments,
consisting only of normal recurring accruals, that the Corporation considers
necessary for a fair presentation of its financial position and the results of
its operations as of such dates and for such periods. Results for the nine
months ended September 30, 1996 are not necessarily indicative of the results
that might be expected for any other interim period or for the year as a whole.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEAR ENDED
DECEMBER 31,
1996 1995 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
(AMOUNTS IN MILLIONS EXCEPT PER SHARE INFORMATION AND RATIOS)
Income statement:
Income from earning assets................................. $ 10,438 $ 9,859 $ 13,220 $ 10,529 $ 8,327 $ 7,780
Interest expense........................................... 5,699 5,825 7,773 5,318 3,690 3,682
Net interest income........................................ 4,739 4,034 5,447 5,211 4,637 4,098
Provision for credit losses................................ 455 240 382 310 430 715
Gains (losses) on sales of securities...................... 34 8 29 (13) 84 249
Noninterest income......................................... 2,688 2,232 3,078 2,597 2,101 1,913
Merger-related charge...................................... 118 -- -- -- 30 --
Noninterest expense (including OREO expense)............... 4,212 3,831 5,181 4,930 4,371 4,149
Income before income taxes and effect of change in method
of accounting for income taxes........................... 2,676 2,203 2,991 2,555 1,991 1,396
Income tax expense (benefit)............................... 933 763 1,041 865 690 251
Net income................................................. 1,743 1,440 1,950 1,690 1,501 1,145
Net income applicable to common shareholders............... 1,732 1,434 1,942 1,680 1,491 1,121
Per common share:
Net income (primary)....................................... $ 5.82 $ 5.26 $ 7.13 $ 6.12 $ 5.78 $ 4.60
Net income (fully diluted)................................. 5.73 5.19 7.04 6.06 5.72(1) 4.52
Cash dividends paid........................................ 1.74 1.50 2.08 1.88 1.64 1.51
Shareholders' equity (period-end).......................... 45.77 44.00 46.52 39.70 36.39 30.80
Balance sheet (period-end):
Total assets............................................... $187,671 $182,138 $187,298 $169,604 $157,686 $118,059
Total loans, leases and factored accounts receivable, net
of unearned income....................................... 122,078 114,601 117,033 103,371 92,007 72,714
Total deposits............................................. 108,132 97,870 100,691 100,470 91,113 82,727
Long-term debt............................................. 22,034 15,741 17,775 8,488 8,352 3,066
Common shareholders' equity................................ 13,186 11,904 12,759 10,976 9,859 7,793
Total shareholders' equity................................. 13,304 11,941 12,801 11,011 9,979 7,814
Common shares outstanding at period end (in thousands)....... 288,112 270,544 274,269 276,452 270,905 252,990
Performance ratios:
Return on average assets................................... 1.15%(2) 1.03%(2) 1.03% 1.02% .97% 1.00%
Return on average shareholders' equity (3)................. 17.58(2) 17.02(2) 17.01 16.10 15.00 15.83
Risk-based capital ratios:
Tier 1..................................................... 7.05 7.16 7.24 7.43 7.41 7.54
Total...................................................... 12.05 11.23 11.58 11.47 11.73 11.52
Leverage capital ratio....................................... 6.30 5.96 6.27 6.18 6.00 6.16
Total equity to total assets................................. 7.09 6.56 6.83 6.49 6.33 6.62
Asset quality ratios:
Allowance for credit losses as a percentage of total loans,
leases and factored accounts receivable, net of unearned
income (period-end)...................................... 1.90 1.89 1.85 2.11 2.36 2.00
Allowance for credit losses as a percentage of
nonperforming loans (period-end)......................... 235.64 255.57 306.49 273.07 193.38 103.11
Net charge-offs as a percentage of average loans, leases
and factored accounts receivable, net of unearned
income................................................... .48(2) .33(2) .38 .33 .51 1.25
Nonperforming assets as a percentage of net loans, leases,
factored accounts receivable and other real estate owned
(period-end)............................................. .93 .90 .73 1.10 1.92 2.72
<CAPTION>
1991
<S> <C>
Income statement:
Income from earning assets................................. $ 9,398
Interest expense........................................... 5,599
Net interest income........................................ 3,799
Provision for credit losses................................ 1,582
Gains (losses) on sales of securities...................... 454
Noninterest income......................................... 1,742
Merger-related charge...................................... 330
Noninterest expense (including OREO expense)............... 3,974
Income before income taxes and effect of change in method
of accounting for income taxes........................... 109
Income tax expense (benefit)............................... (93)
Net income................................................. 202
Net income applicable to common shareholders............... 171
Per common share:
Net income (primary)....................................... $ .76
Net income (fully diluted)................................. .75
Cash dividends paid........................................ 1.48
Shareholders' equity (period-end).......................... 27.03
Balance sheet (period-end):
Total assets............................................... $110,319
Total loans, leases and factored accounts receivable, net
of unearned income....................................... 69,108
Total deposits............................................. 88,075
Long-term debt............................................. 2,876
Common shareholders' equity................................ 6,252
Total shareholders' equity................................. 6,518
Common shares outstanding at period end (in thousands)....... 231,246
Performance ratios:
Return on average assets................................... .17%
Return on average shareholders' equity (3)................. 2.70
Risk-based capital ratios:
Tier 1..................................................... 6.38
Total...................................................... 10.30
Leverage capital ratio....................................... 5.07
Total equity to total assets................................. 5.91
Asset quality ratios:
Allowance for credit losses as a percentage of total loans,
leases and factored accounts receivable, net of unearned
income (period-end)...................................... 2.32
Allowance for credit losses as a percentage of
nonperforming loans (period-end)......................... 81.82
Net charge-offs as a percentage of average loans, leases
and factored accounts receivable, net of unearned
income................................................... 1.86
Nonperforming assets as a percentage of net loans, leases,
factored accounts receivable and other real estate owned
(period-end)............................................. 4.01
</TABLE>
(1) Includes cumulative effect benefit of $200 million for the adoption of SFAS
109. The effect on primary and fully diluted earnings per share was $0.78
and $0.77, respectively, for the year ended December 31, 1993.
(2) Annualized.
(3) Average common shareholders' equity does not include the effect of market
value adjustments to securities available for sale and marketable equity
securities.
S-6
<PAGE>
RECENT DEVELOPMENTS
ACQUISITION OF BOATMEN'S BANCSHARES, INC.
On January 7, 1997, NationsBank completed the acquisition of Boatmen's
Bancshares, Inc. ("Boatmen's"), a corporation organized and existing under the
laws of the State of Missouri and registered as a bank holding company under the
BHCA. Pursuant to an Agreement and Plan of Merger dated August 29, 1996,
Boatmen's was merged into a wholly owned subsidiary of NationsBank (the
"Boatmen's Acquisition"). As permitted by the terms of the Boatmen's
Acquisition, common shareholders of Boatmen's elected to receive an aggregate of
approximately 98 million shares of NationsBank common stock (96% of total
consideration paid by NationsBank) and an aggregate of approximately $372
million in cash (4% of total consideration) in exchange for the shares of
Boatmen's common stock. NationsBank 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 Boatmen's Acquisition
represent 60% of the total consideration paid by NationsBank in the Boatmen's
Acquisition.
The Boatmen's Acquisition constituted a tax-free reorganization under the
Code (as defined herein) and was accounted for as a purchase. At December 31,
1996, Boatmen's had total assets of $41 billion and had over 600 banking offices
in Missouri, Kansas, Arkansas, Oklahoma, New Mexico, Texas, Iowa, Illinois and
Tennessee. At December 31, 1996, Boatmen's had approximately $550 million in
indebtedness which would have been classified as Senior Obligations had the
Boatmen's Acquisition been consummated by such date.
For additional information regarding the Boatmen's Acquisition, see the
Corporation's Current Reports on Form 8-K filed September 6, 1996 (as amended by
Form 8-K/A-1 filed September 11, 1996 and Form 8-K/A-2 filed November 13, 1996),
December 17, 1996 and January 16, 1997, incorporated herein by reference.
RECENT NATIONSBANK FINANCIAL INFORMATION.
NationsBank had net income for 1996 of $2.38 billion, a 22% increase over
1995 net income of $1.95 billion. Earnings per share of common stock for 1996
were $8.00, compared to $7.13 per share in 1995. For the fourth quarter of 1996,
net income was $632 million, or $2.19 per share, as compared to $510 million, or
$1.87 per share, in the fourth quarter of 1995.
Taxable-equivalent net interest income increased 16% in 1996 to $6.42
billion. The net interest yield in 1996 was 3.62%, compared to 3.33% in 1995.
Noninterest income increased 18% to $3.65 billion in 1996, compared to $3.08
billion in 1995, due primarily to higher income from investment banking, deposit
accounts and mortgage-related activities. Noninterest expense was $5.67 billion
in 1996, compared to $5.16 billion in 1995, an increase of 10%.
The provision for credit losses increased to $605 million in 1996, compared
to $382 million in 1995. Net charge-offs were $598 million in 1996, or 0.48% of
average net loans, leases and factored accounts receivable, compared to $421
million, or 0.38% of average levels in 1995. The allowance for credit losses was
$2.32 billion at December 31, 1996, or 1.89% of net loans, leases and factored
accounts receivable, compared to $2.16 billion at December 31, 1995, or 1.85% of
net loans, leases and factored accounts receivable. The allowance represented
260% of nonperforming loans at December 31, 1996, compared to 306% at December
31, 1995. Total nonperforming assets were $1.04 billion on December 31, 1996, or
0.85% of net loans, leases and factored accounts receivables and other real
estate owned, compared to $853 million on December 31, 1995, or 0.73% of net
levels.
Average loans and leases were $122.3 billion in 1996, a 12% increase over
1995, driven primarily by a 19% increase in average consumer loans. Average
deposits in 1996 were $107.59 billion, compared to $99.28 billion in 1995. On
December 31, 1996, total earning assets were $165.28 billion, of which net loans
and leases were $121.58 billion and securities were $14.39 billion.
Total shareholders' equity was $13.71 billion at December 31, 1996, or
7.38% of total assets. Return on average common shareholders' equity was 17.95%
in 1996, compared to 17.01% in 1995. Revenue growth outpaced expense growth,
improving the efficiency ratio in 1996 to 56.3%, compared to 59.8% in 1995.
At December 31, 1996, the NationsBank Tier 1 and total risk-based capital
ratios were 7.76% and 12.66%, respectively. The Corporation's leverage ratio was
7.09% at December 31, 1996.
S-7
<PAGE>
RISK FACTORS
PROSPECTIVE PURCHASERS OF CAPITAL SECURITIES SHOULD CAREFULLY REVIEW THE
INFORMATION CONTAINED ELSEWHERE IN THIS GLOBAL PROSPECTUS SUPPLEMENT AND IN THE
ACCOMPANYING PROSPECTUS AND SHOULD PARTICULARLY CONSIDER THE FOLLOWING MATTERS.
ABSENCE OF PRIOR PUBLIC MARKET
Prior to this offering, there has been no public market for the Capital
Securities. Application has been made to list the Capital Securities on the
Luxembourg Stock Exchange. However, there can be no assurance that the Capital
Securities will be accepted for listing. NationsBank and NB Capital Trust do not
intend to apply to list the Capital Securities on any other securities exchange.
There can be no assurance that an active public market will develop for the
Capital Securities or that, if such market develops, the market price will equal
or exceed the public offering price set forth on the cover page of this Global
Prospectus Supplement. The public offering price for the Capital Securities has
been determined through negotiations between the Corporation and the
Representatives (as defined herein). Prices for the Capital Securities will be
determined in the marketplace and may be influenced by many factors, including
the liquidity of the market for the Capital Securities, investor perceptions of
the Corporation and general industry and economic conditions. If the
Underwriters do not make a market for the Capital Securities, the liquidity and
market price of the Capital Securities could be adversely affected.
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE CAPITAL SECURITIES GUARANTEE AND
JUNIOR SUBORDINATED NOTES
The Corporation's obligations under the Capital Securities Guarantee rank
(i) subordinate and junior in right of payment to all other liabilities,
including contingent liabilities, of NationsBank (ii) pari passu with the most
senior preferred or preference stock now or hereafter issued by the Corporation
and with any guarantee now or hereafter entered into by NationsBank in respect
of any preferred or preference stock of any affiliate of the Corporation
(including guarantees relating to preferred securities previously issued by NB
Capital Trust I and NB Capital Trust II having an aggregate liquidation value of
$965,000,000), and (iii) senior to the Corporation's common stock. The
obligations of NationsBank under the Junior Subordinated Notes are subordinate
and junior in right of payment to all present and future Senior Obligations of
NationsBank and rank pari passu with obligations to or rights of the
Corporation's other general unsecured creditors. No payment of principal
(including prepayments, if any), premium, if any, or interest on the Junior
Subordinated Notes may be made if (i) any Senior Obligations of NationsBank are
not paid when due and any applicable grace period with respect to such default
has ended with such default not having been cured or waived or ceasing to exist
or (ii) the maturity of any Senior Obligations has been accelerated because of a
default. As of December 31, 1996, Senior Obligations of NationsBank were
approximately $17.7 billion. In addition, because NationsBank is a holding
company, the Junior Subordinated Notes are effectively subordinated to all
existing and future liabilities of the Corporation's subsidiaries, including
obligations to depositors. The terms of the Capital Securities, the Junior
Subordinated Notes or the Capital Securities Guarantee do not limit the
Corporation's ability to incur additional indebtedness, including indebtedness
that ranks senior to the Junior Subordinated Notes and the Capital Securities
Guarantee. See "Description of the Preferred Securities Guarantees -- Status of
the Preferred Securities Guarantees" and "Description of the Junior Subordinated
Notes" in the accompanying Prospectus and "Description of the Junior
Subordinated Notes -- Subordination" herein.
RIGHTS UNDER THE CAPITAL SECURITIES GUARANTEE
The Capital Securities Guarantee will be qualified as an indenture under
the Trust Indenture Act. The Capital Securities Guarantee Trustee will hold the
Capital Securities Guarantee for the benefit of the holders of the Capital
Securities.
The Capital Securities Guarantee guarantees to the holders of the Capital
Securities the payment of (i) any accrued and unpaid Distributions that are
required to be paid on the Capital Securities, to the extent the Trust has funds
available therefor, (ii) the Redemption Price, with respect to Capital
Securities called for redemption by the Trust, to the extent the Trust has funds
available therefor, and (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of the Trust (other than in connection with the
distribution of Junior Subordinated Notes to the holders of Capital Securities
or a redemption of all the Capital Securities), the lesser
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of (a) the aggregate of the liquidation amount and all accrued and unpaid
Distributions on the Capital Securities to the date of the payment to the extent
the Trust has funds available therefor or (b) the amount of assets of the Trust
remaining available for distribution to holders of the Capital Securities in
liquidation of the Trust. The holders of a majority in aggregate liquidation
amount of the Capital Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Capital
Securities Guarantee Trustee or to direct the exercise of any trust or power
conferred upon the Capital Securities Guarantee Trustee under the Capital
Securities Guarantee. Notwithstanding the foregoing, any holder of Capital
Securities may institute a legal proceeding directly against NationsBank to
enforce such holder's rights under the Capital Securities Guarantee without
first instituting a legal proceeding against the Trust, the Capital Securities
Guarantee Trustee or any other person or entity. If NationsBank were to default
on its obligation to pay amounts payable on the Junior Subordinated Notes or
otherwise, the Trust would lack funds for the payment of Distributions or
amounts payable on redemption of the Capital Securities or otherwise, and, in
such event, holders of the Capital Securities would not be able to rely upon the
Capital Securities Guarantee for payment of such amounts. Instead, holders of
the Capital Securities would rely on the enforcement (i) by the Property Trustee
of its rights as registered holder of the Junior Subordinated Notes against
NationsBank pursuant to the terms of the Indenture and the Junior Subordinated
Notes or (ii) by such holder of the Property Trustee's or such holder's own
rights against NationsBank to enforce payments on the Junior Subordinated Notes.
See "Description of the Preferred Securities Guarantees" and "Description of the
Junior Subordinated Notes" in the accompanying Prospectus, and " -- Enforcement
of Certain Rights by Holders of Capital Securities." The Declaration provides
that each holder of Capital Securities, by acceptance thereof, agrees to the
provisions of the Capital Securities Guarantee, including the subordination
provisions thereof, and the Indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES
If a Declaration Event of Default (as defined herein) occurs and is
continuing, then the holders of Capital Securities would rely on the enforcement
by the Property Trustee of its rights as a holder of the Junior Subordinated
Notes against NationsBank. In addition, the holders of a majority in liquidation
amount of the Capital Securities will have the right to direct the time, method,
and place of conducting any proceeding for any remedy available to the Property
Trustee or to direct the exercise of any trust or power conferred upon the
Property Trustee under the Declaration, including the right to direct the
Property Trustee to exercise the remedies available to it as a holder of the
Junior Subordinated Notes. If the Property Trustee fails to enforce its rights
under the Junior Subordinated Notes, a holder of Capital Securities may
institute a legal proceeding directly against NationsBank to enforce the
Property Trustee's rights under the Junior Subordinated Notes without first
instituting any legal proceeding against the Property Trustee or any other
person or entity. Notwithstanding the foregoing, if NationsBank fails to pay
interest or principal on the Junior Subordinated Notes on the date such interest
or principal is otherwise payable (or in the case of prepayment, on the
prepayment date) (a "Note Payment Failure"), and such Note Payment Failure is
continuing, a holder of Capital Securities may directly institute a proceeding
for enforcement of payment to such holder of the principal of or interest on the
Junior Subordinated Notes having a principal amount equal to the aggregate
liquidation amount of the Capital Securities of such holder (a "Direct Action")
after the respective due date specified in the Junior Subordinated Notes. In
connection with such Direct Action, NationsBank will be subrogated to the rights
of such holder of Capital Securities under the Declaration to the extent of any
payment made by NationsBank to such holder of Capital Securities in such Direct
Action. The holders of Capital Securities will not be able to exercise directly
any other remedy available to the holders of the Junior Subordinated Notes. See
"Description of the Capital Securities -- Declaration Events of Default and Note
Payment Failures."
LIMITED RIGHTS OF ACCELERATION
The Property Trustee, as holder of the Junior Subordinated Notes, may
accelerate payment of the principal and accrued and unpaid interest on the
Junior Subordinated Notes only upon the occurrence and continuation of a
"Declaration Event of Default" which, generally is limited to certain events of
bankruptcy, insolvency and reorganization of the Corporation and certain events
of dissolution, winding-up or termination of the Trust. See "Description of the
Junior Subordinated Notes -- Events of Default, Waiver and Notice" in the
accompanying Prospectus for a description of the Events of Default. Accordingly,
there is no right to acceleration upon default by the Corporation of its payment
obligations under the Junior Subordinated Notes or defaults of the Corporation
under the Capital Securities Guarantee.
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OPTION TO EXTEND INTEREST PAYMENT PERIOD
NationsBank has the right under the Indenture to defer payments of interest
on the Junior Subordinated Notes by extending the Interest Payment Period at any
time, and from time to time, on the Junior Subordinated Notes. As a consequence
of such an extension, quarterly distributions on the Capital Securities would be
deferred (but would continue to accrue, despite such deferral, with interest
thereon at a rate per annum equal to LIBOR plus 0.55%, compounded quarterly from
the relevant Distribution Payment Date for such Distributions) by the Trust
during any such Extension Period. Such right to extend the Interest Payment
Period for the Junior Subordinated Notes is limited to a period not exceeding 20
consecutive quarterly periods, but no such Extension Period may extend beyond
the Stated Maturity of the Junior Subordinated Notes. During any such Extension
Period (a) NationsBank shall not declare or pay dividends on, or make a
distribution with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of shares of NationsBank common stock in connection
with the satisfaction by NationsBank of its obligations under any employee
benefit plans, (ii) as a result of a reclassification of NationsBank capital
stock or the exchange or conversion of one class or series of the Corporation's
capital stock for another class or series of NationsBank capital stock or (iii)
the purchase of fractional interests in shares of the Corporation's capital
stock pursuant to an acquisition or the conversion or exchange provisions of
such NationsBank capital stock or the security being converted or exchanged),
(b) NationsBank shall not make any payment of interest, principal or premium, if
any, on or repay, repurchase or redeem any debt securities issued by NationsBank
that rank pari passu with or junior to the Junior Subordinated Notes and (c)
NationsBank shall not make any guarantee payments with respect to the foregoing
(other than pursuant to the Capital Securities Guarantee). Subject to the above
requirements, prior to the termination of any such Extension Period, NationsBank
may further extend the Interest Payment Period and upon the termination of any
Extension Period and the payment of all amounts then due, NationsBank may
commence a new Extension Period. See "Description of the Junior Subordinated
Notes -- Option to Extend Interest Payment Period" and "Description of the
Capital Securities -- Distributions".
Should NationsBank exercise its right to defer payments of interest by
extending the Interest Payment Period, each holder of Capital Securities will be
required to accrue income (as original issue discount ("OID")) in respect of the
deferred stated interest allocable to its Capital Securities for United States
federal income tax purposes, which will be allocated but not distributed, to
holders of record of Capital Securities. As a result, each such holder of
Capital Securities will recognize income for United States federal income tax
purposes in advance of the receipt of cash and will not receive the cash from NB
Capital Trust related to such income if such holder disposes of its Capital
Securities prior to the record date for the date on which Distributions of such
amounts are to be made. NationsBank has no current intention of exercising its
right to defer payments of interest by extending the Interest Payment Period on
the Junior Subordinated Notes. However, should NationsBank determine to exercise
such right in the future, the market price of the Capital Securities is likely
to be affected. A holder that disposes of its Capital Securities during an
Extension Period, therefore, might not receive the same return on its investment
as a holder that continues to hold its Capital Securities. In addition, as a
result of the Corporation's right to defer interest payments, the market price
of the Capital Securities may be more volatile than other securities on which
OID accrues that do not have such rights.
PROPOSED TAX LEGISLATION
On March 19, 1996, President Clinton proposed certain tax law changes that
would, among other things, generally deny corporate issuers a deduction for
interest in respect of certain debt obligations issued on or after December 7,
1995 (the "Proposed Legislation") if such debt obligations have a maximum term
in excess of 20 years and are not shown as indebtedness on the issuer's
applicable consolidated balance sheet or, where the debt obligation is issued to
a related party (other than a corporation), where the holder or some other
related party issues a related instrument that is not shown as indebtedness on
the issuer's consolidated balance sheet. On March 29, 1996, Senate Finance
Committee Chairman William V. Roth, Jr. and House Ways and Means Committee
Chairman Bill Archer issued a joint statement (the "Joint Statement") indicating
their intent that certain legislative proposals initiated by the Clinton
administration, including the Proposed Legislation, that may be adopted by
either of the tax-writing committees of Congress would have an effective date
that is no earlier than the date of "appropriate Congressional action." In
addition, subsequent to the publication of the
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Joint Statement, Senator Daniel Patrick Moynihan and Representatives Sam M.
Gibbons and Charles B. Rangel wrote letters to Treasury Department officials
concurring with the views expressed in the Joint Statement (the "Democrat
Letters"). Based upon the Joint Statement and the Democrat Letters, it is
expected that if the Proposed Legislation were to be enacted, such legislation
would not apply to the Junior Subordinated Notes. There can be no assurances,
however, that the effective date guidance contained in the Joint Statement and
the Democrat Letters will be incorporated into the Proposed Legislation, if
enacted, or that other legislation enacted after the date hereof will not
otherwise adversely affect the ability of the Corporation to deduct the interest
payable on the Junior Subordinated Notes. Accordingly, there can be no assurance
that a Tax Event (as defined herein) will not occur. See " -- Redemption of
Capital Securities Upon Payment or Prepayment of Junior Subordinated Notes."
DISTRIBUTION OF THE JUNIOR SUBORDINATED NOTES TO TRUST SECURITYHOLDERS
NationsBank will have the right at any time to dissolve the Trust and,
after the satisfaction of creditors as required by law, to cause the Junior
Subordinated Notes to be distributed to the holders of the Trust Securities in
connection with the liquidation of the Trust. In certain circumstances,
NationsBank shall have the right to prepay the Junior Subordinated Notes, in
whole or in part, in lieu of a distribution of the Junior Subordinated Notes by
the Trust, in which event the Trust will redeem the Trust Securities on a pro
rata basis to the same extent as the Junior Subordinated Notes are prepaid by
NationsBank. Any such distribution or redemption prior to the Stated Maturity
may require prior approval of the Federal Reserve Board. See "Description of the
Capital Securities -- Redemption of Capital Securities Upon Payment or
Prepayment of Junior Subordinated Notes."
Under current United States federal income tax law, a distribution of
Junior Subordinated Notes upon the dissolution of NB Capital Trust would not be
a taxable event to holders of the Capital Securities. If, however, the Trust is
characterized as an association taxable as a corporation at the time of the
dissolution of the Trust, the distribution of the Junior Subordinated Notes may
constitute a taxable event to holders of Capital Securities. Moreover, any
Special Event Prepayment or Optional Prepayment in which holders of the Capital
Securities receive cash may be a taxable event to such holders. See "United
States Federal Income Taxation -- Receipt of Junior Subordinated Notes or Cash
Upon Liquidation of NB Capital Trust."
There can be no assurance as to the market prices for the Capital
Securities or the Junior Subordinated Notes that may be distributed in exchange
for Capital Securities upon a dissolution or liquidation of the Trust.
Accordingly, the Capital Securities or the Junior Subordinated Notes, may trade
at a discount to the price that the investor paid to purchase the Capital
Securities offered hereby.
Because holders of Capital Securities may receive Junior Subordinated Notes
upon dissolution of the Trust, prospective purchasers of Capital Securities are
also making an investment decision with regard to the Junior Subordinated Notes
and should carefully review all the information regarding the Junior
Subordinated Notes contained herein and in the accompanying Prospectus. See
"Description of the Junior Subordinated Notes -- General," "Description of the
Capital Securities -- Distribution of the Junior Subordinated Notes to Trust
Securityholders" and " -- Liquidation Distribution Upon Dissolution."
REDEMPTION OF CAPITAL SECURITIES UPON PAYMENT OR PREPAYMENT OF JUNIOR
SUBORDINATED NOTES
The Capital Securities must be redeemed upon the payment of the Junior
Subordinated Notes at Stated Maturity or upon any prepayment of the Junior
Subordinated Notes. The Corporation has the right to make a Special Event
Prepayment in whole, but not in part, prior to January 15, 2007, upon the
occurrence and continuation of a Special Event, within 90 days following the
occurrence of such Special Event, and to make an Optional Prepayment in whole or
in part, at the option of the Corporation, at any time on or after January 15,
2007. See "Description of the Junior Subordinated Notes -- Optional Prepayment"
and " -- Special Event Prepayment" and "Description of the Capital
Securities -- Redemption of Capital Securities Upon Payment or Prepayment of
Junior Subordinated Notes." The exercise of any prepayment right will be subject
to the prior approval of the Federal Reserve Board, if required.
Since the Capital Securities must be redeemed upon prepayment of the Junior
Subordinated Notes, such prepayment may result in a holder's investment in the
Capital Securities being terminated in whole or, in the case of an Optional
Prepayment, in whole or in part, earlier than initially anticipated by such
holder.
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"Special Event" means a Tax Event, a Capital Treatment Event or an
Investment Company Event.
"Tax Event" means that (i) NationsBank shall have received an opinion of
nationally recognized independent tax counsel experienced in such matters to the
effect that, as a result of (a) any amendment to, or change (including any
announced prospective change) in, the laws or any regulations thereunder of the
United States or any political subdivision or taxing authority thereof or
therein or (b) any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or such pronouncement or decision is announced on or after the date of
original issuance of the Capital Securities, there is more than an insubstantial
risk that interest payable on the Junior Subordinated Notes is not, or within 90
days of the date thereof, will not be deductible, in whole or in part, by
NationsBank for United States federal income tax purposes or (ii) the Regular
Trustees have been informed by a nationally recognized independent tax counsel
that a No Recognition Opinion cannot be delivered. "No Recognition Opinion"
means an opinion of nationally recognized independent tax counsel experienced in
such matters, which opinion may rely on published revenue rulings of the
Internal Revenue Service, to the effect that the holders of the Trust Securities
will not recognize any gain or loss for United States federal income tax
purposes as a result of the dissolution of the Trust and the distribution of the
Junior Subordinated Notes.
See "United States Federal Income Taxation -- Proposed Tax Legislation" for
a discussion of certain legislative proposals that, if adopted, could give rise
to a Tax Event, which may permit the Corporation to cause a redemption of the
Capital Securities prior to January 15, 2007.
"Capital Treatment Event" means the reasonable determination by the
Corporation that, as a result of the occurrence of any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision thereof or
therein, or as a result of any official or administrative pronouncement or
action or judicial decision interpreting or applying such laws or regulations,
which amendment or change is effective or such pronouncement, action or decision
is announced on or after the date of issuance of the Capital Securities, there
is more than an insubstantial risk that the Corporation will not be entitled to
treat an amount equal to the aggregate liquidation amount of the Capital
Securities as Tier 1 capital (or the then equivalent thereof) for purposes of
the capital adequacy guidelines of the Federal Reserve Board, as then in effect
and applicable to the Corporation. See "NationsBank Corporation -- Supervision
and Regulation" in the accompanying Prospectus.
"Investment Company Event" means the receipt by the Trust of an opinion of
counsel experienced in such matters to the effect that, as a result of the
occurrence of a change in law or regulation or change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law"), the Trust is or
will be considered an investment company that is required to be registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), which Change in
1940 Act Law becomes effective on or after the date of original issuance of the
Capital Securities.
LIMITED VOTING RIGHTS
Holders of Capital Securities will have limited voting rights and will not
be entitled to vote to appoint, remove or replace, or to increase or decrease
the number of, NB Trustees, which voting rights are vested exclusively in the
holder of the Common Securities. See "Description of the Capital
Securities -- Voting Rights."
TRADING PRICE
The Capital Securities may trade at a price that does not fully reflect the
value of accrued but unpaid interest with respect to the underlying Junior
Subordinated Notes. A holder who uses the accrual method of accounting for tax
purposes (and a cash method holder, if the Junior Subordinated Notes are deemed
to be issued with OID) and who disposes of his Capital Securities between record
dates for payments of Distributions thereon will be required to include accrued
but unpaid interest on the Junior Subordinated Notes through the date of
disposition in income as ordinary income (i.e., interest or, possibly, OID), and
to add such amount to his adjusted tax basis in his pro rata share of the
underlying Junior Subordinated Notes deemed disposed of. To the extent the
selling price is less than the holder's adjusted tax basis (which will include
all accrued but unpaid interest), a holder will recognize a capital loss.
Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for United States federal income tax purposes. See
"United States Federal Income Taxation -- Interest Income and Original Issue
Discount" and " -- Sales of Capital Securities."
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CAPITALIZATION
The following table sets forth the unaudited capitalization of the
Corporation and its subsidiaries as of December 31, 1996 and as adjusted to give
effect to (i) the issuance of the Capital Securities offered hereby, (ii) the
issuance and the maturity of certain of the Corporation's and its subsidiaries'
notes during the period beginning January 1, 1997 through the date of this
Global Prospectus Supplement and (iii) the issuance and the maturity of certain
of the Corporation's medium-term notes during the period beginning January 1,
1997 through the date of this Global Prospectus Supplement. This table does not
reflect (i) the issuance by NationsBank of its common stock and preferred stock
in connection with the Boatmen's Acquisition, (ii) the assumption of Boatmen's
debt by NationsBank in connection with the Boatmen's Acquisition, (iii) the
increase in authorized repurchases of NationsBank common stock by the
Corporation approved by the Corporation's Board of Directors prior to the
Boatmen's Acquisition or (iv) the pro forma capitalization of NationsBank giving
effect to the Boatmen's Acquisition. For a discussion of the Boatmen's
Acquisition, see "Recent Developments -- Acquisition of Boatmen's Bancshares,
Inc." herein and "NationsBank Corporation -- Recent Acquisition" in the
accompanying Prospectus.
<TABLE>
<CAPTION>
NATIONSBANK AS
ACTUAL ADJUSTED
<S> <C> <C>
(AMOUNTS IN MILLIONS)
<CAPTION>
<S> <C> <C>
LONG-TERM DEBT
SENIOR DEBT:
NationsBank Corporation (parent):
Floating rate medium-term notes, due 1996-2006.................................................. $ 4,311 $ 4,311
4.55 to 8.20% medium-term notes, due 1996-2006.................................................. 1,073 1,073
5.51% ESOP secured notes, due 1996-1999......................................................... 48 48
7 1/2% notes, due 1997.......................................................................... 250 250
5 1/8% notes, due 1998.......................................................................... 300 300
6 5/8% notes, due 1998.......................................................................... 400 400
Floating rate notes, due 1998................................................................... 300 300
5 3/8% notes, due 2000.......................................................................... 398 398
Floating rate notes, due 2000................................................................... 500 500
7% notes, due 2001.............................................................................. 499 499
Floating rate notes, due 2001................................................................... 200 200
Floating rate notes, due 2002................................................................... 499 499
7% notes, due 2003.............................................................................. 498 498
9 1/4% unsecured notes, due 2006................................................................ 124 124
Other senior notes.............................................................................. 29 29
9,429 9,429
Subsidiaries (1):
Bank notes with maturities greater than one year, due 1996-2003................................. 3,507 3,738
Floating rate mortgage-backed bonds, due 1998-2000.............................................. 3,000 3,000
Other senior notes.............................................................................. 624 624
7,131 7,362
Total senior debt............................................................................. 16,560 16,791
</TABLE>
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<TABLE>
<CAPTION>
NATIONSBANK AS
ACTUAL ADJUSTED
(AMOUNTS IN MILLIONS)
<S> <C> <C>
SUBORDINATED DEBT:
NationsBank Corporation (parent):
9 3/8% notes, due 1997.......................................................................... 75 75
9 3/4% notes, due 1999.......................................................................... 100 100
9 1/8% notes, due 2001.......................................................................... 299 299
8 1/8% notes, due 2002.......................................................................... 349 349
6.20% to 7.875% medium-term notes, due 2003 through 2011........................................ 625 625
6 1/2% notes, due 2003.......................................................................... 600 600
7 3/4% notes, due 2004.......................................................................... 299 299
6 7/8% notes, due 2005.......................................................................... 399 399
7 5/8% notes, due 2005.......................................................................... 297 297
6 1/2% notes, due 2006.......................................................................... 300 300
7 1/2% notes, due 2006.......................................................................... 500 500
9 3/8% notes, due 2009.......................................................................... 397 397
10.20% notes, due 2015.......................................................................... 200 200
7 3/4% notes, due 2015.......................................................................... 350 350
7.80% notes, due 2016........................................................................... 447 447
8.57% medium-term notes, due 2024, putable 2004................................................. 100 100
7 1/4% notes, due 2025.......................................................................... 444 444
Other subordinated notes........................................................................ 40 40
5,821 5,821
Subsidiaries (1):
9 1/2% notes, due 2004.......................................................................... 300 300
Floating rate notes, due 2019, putable 1999..................................................... 8 8
308 308
Total subordinated debt....................................................................... 6,129 6,129
Total long-term debt.......................................................................... 22,689 22,920
Guaranteed Preferred Beneficial Interests in Corporation's Junior Subordinated Notes.......... 965 1,458 (2)
SHAREHOLDERS' EQUITY
Preferred stock, authorized -- 45,000,000 shares; issued -- 5,220,459............................. 171 171
Common stock, authorized -- 1,250,000,000 shares; issued -- 286,746,154 (3)(4).................... 3,855 3,855
Retained earnings................................................................................. 9,673 9,673
Other, including loan to ESOP trust............................................................... 10 10
Total shareholders' equity.................................................................... 13,709 13,709
$37,363 $38,087
</TABLE>
(1) These obligations are direct obligations of certain of the subsidiaries of
NationsBank and, as such, constitute claims against such subsidiaries prior
to the Corporation's equity interest therein.
(2) The line item "Guaranteed Preferred Beneficial Interests in Corporation's
Junior Subordinated Notes" reflects (i) the issuance of $600 million
aggregate liquidation amount of preferred undivided beneficial interests in
NB Capital Trust I, (ii) the issuance of $365 million aggregate liquidation
amount of preferred undivided beneficial interests in NB Capital Trust II
and (iii) the issuance of $500 million aggregate liquidation amount of
preferred undivided beneficial interests in NB Capital Trust III represented
by the Capital Securities being offered hereby. Such preferred undivided
beneficial interests, together with common interests in such Trusts owned by
the Corporation, represent all of the undivided beneficial interests in the
assets of the respective Trusts. As described herein, the sole asset of the
Trust will be $515,500,000 aggregate principal amount of Floating Rate
Junior Subordinated Deferrable Interest Notes due 2027 issued and sold by
the Corporation to the Trust. The sole asset of NB Capital Trust I is
$618,560,000 aggregate principal amount of 7.84% Junior Subordinated
Deferrable Interest Notes due 2026 issued and sold by the Corporation to NB
Capital Trust I on December 4, 1996. The sole asset of NB Capital Trust II
is $376,300,000 aggregate principal amount of 7.83% Junior Subordinated
Deferrable Interest Notes due 2026 issued and sold by the Corporation to NB
Capital Trust II on December 17, 1996.
(3) On July 16, 1996, the Corporation's Board of Directors authorized the
purchase of up to 20 million shares of NationsBank common stock, from time
to time during the next 36 months, in open market or private transactions.
Also on July 16, 1996, the Board of Directors authorized the repurchase of
NationsBank common stock in the open market, from time to time over the next
13 months, representing the number of shares of NationsBank common stock the
Corporation intends to issue for its Dividend Reinvestment and Stock
Purchase Plan and other employee and director benefit plans.
(4) As of December 31, 1996, (a) 60.3 million shares of NationsBank common stock
were reserved for issuance under various employee and director benefit plans
of the Corporation and upon the conversion of the ESOP Convertible Preferred
Stock, Series C, (b) 2.8 million shares of NationsBank common stock were
reserved for issuance under the Corporation's Dividend Reinvestment and
Stock Purchase Plan (c) 110 million shares of common stock were reserved for
issuance in connection with the Boatmen's Acquisition and (d) 1.5 million
shares of common stock were reserved for issuance in connection with other
pending acquisitions.
As of December 31, 1996, the Corporation had $2.3 billion of commercial
paper and other short-term notes payable outstanding. During the year ended
December 31, 1996, the amount of commercial paper and other short-term notes
payable outstanding averaged $2.6 billion and ranged from a high of $3.1 billion
to a low of $2.1 billion. At December 31, 1996, the Corporation had unused lines
of credit aggregating $1.5 billion, principally to support commercial paper
borrowings.
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RATIOS OF EARNINGS TO FIXED CHARGES
The following are the Corporation's consolidated ratios of earnings to
fixed charges and ratios of earnings to combined fixed charges and preferred
stock dividend requirements for the nine months ended September 30, 1996 and for
each of the years in the five-year period ended December 31, 1995:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits...................................... 1.8 1.7 1.9 2.3 2.4 1.1
Including interest on deposits...................................... 1.5 1.4 1.5 1.5 1.4 1.0
Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends:
Excluding interest on deposits...................................... 1.8 1.6 1.8 2.3 2.3 1.1
Including interest on deposits...................................... 1.5 1.4 1.5 1.5 1.4 1.0
</TABLE>
For purposes of computing the consolidated ratios, earnings represent net
income of the Corporation plus applicable income taxes and fixed charges, less
capitalized interest and the equity in undistributed earnings of unconsolidated
subsidiaries and associated companies. Fixed charges represent interest expense
(exclusive of interest on deposits in one case and inclusive of such interest in
the other), capitalized interest, amortization of debt discount and appropriate
issuance costs and one-third (the amount deemed to represent an appropriate
interest factor) of net rent expense under all lease commitments. Preferred
stock dividend requirements represent dividend requirements on the outstanding
preferred stock adjusted to reflect the pre-tax earnings that would be required
to cover such dividend requirements.
ACCOUNTING TREATMENT
The financial statements of the Trust will be consolidated into the
Corporation's consolidated financial statements, with the Capital Securities
included in the "Trust Preferred Securities" line item presented in the "Total
Liabilities" section on the Corporation's balance sheet. The sole asset of the
Trust will be $515,500,000 aggregate principal amount of Floating Rate Junior
Subordinated Deferrable Interest Notes due 2027, issued by NationsBank to the
Trust. Future reports of NationsBank filed under Section 13 of the Exchange Act
will include in an audited footnote to the financial statements of NationsBank
disclosure that (i) each of the NB Capital Trusts is wholly owned by
NationsBank; (ii) the sole assets of each of such Trusts are the Junior
Subordinated Notes held by such Trust (stating the principal amount, interest
rate and maturity date of the Junior Subordinated Notes held by each such
Trust); and (iii) the Capital Securities Guarantee relating to the Capital
Securities of each such Trust, when taken together with the Corporation's
obligations under the Junior Subordinated Notes held by such Trust, the
Indenture and the Declaration of such Trust, will provide a full and
unconditional guarantee by NationsBank, on a subordinated basis, of payments due
on such Capital Securities.
USE OF PROCEEDS
The Trust will use the gross proceeds received from the sale of the Capital
Securities to purchase Junior Subordinated Notes from NationsBank. NationsBank
intends to add the net proceeds from the sale of the Junior Subordinated Notes
to its general funds, to be used for general corporate purposes, including the
Corporation's working capital needs, the funding of investments in, or
extensions of credit to, its banking and nonbanking subsidiaries, possible
acquisitions of other financial institutions or their assets or liabilities,
possible acquisitions of or investments in other businesses of a type eligible
for bank holding companies and possible reduction of outstanding indebtedness or
repurchase of outstanding equity securities of the Corporation. Pending such
use, the Corporation may temporarily invest the net proceeds in investment grade
securities. The Corporation may, from time to time, engage in additional capital
financings of a character and in amounts to be determined by the Corporation in
light of its needs at such time or times and in light of prevailing market
conditions.
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<PAGE>
DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES
Set forth below is a description of the specific terms of the Junior
Subordinated Notes in which the Trust will invest the proceeds from the issuance
and sale of the Trust Securities. This description supplements the description
of the general terms and provisions of the Junior Subordinated Notes set forth
in the accompanying Prospectus under the caption "Description of the Junior
Subordinated Notes." The following description does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, the
description in the accompanying Prospectus and the Indenture, dated as of
November 27, 1996 (the "Base Indenture"), between NationsBank and The Bank of
New York, as Trustee (the "Debt Trustee"), as supplemented by a Third
Supplemental Indenture (the "Supplemental Indenture") to be dated as of February
3, 1997 (the Base Indenture, as so supplemented, is hereinafter referred to as
the "Indenture"), the forms of which are filed as exhibits to, or incorporated
by reference into, the Registration Statement of which this Global Prospectus
Supplement and the accompanying Prospectus form a part. Certain capitalized
terms used herein are defined in the Indenture.
NationsBank will have the right at any time to dissolve the Trust and cause
the Junior Subordinated Notes to be distributed to the holders of the Trust
Securities. Any such distribution may require the prior approval of the Federal
Reserve Board.
GENERAL
The Junior Subordinated Notes will be issued as unsecured debt under the
Indenture. The Junior Subordinated Notes will be limited in aggregate principal
amount to approximately $515,500,000, such amount being the sum of the aggregate
stated liquidation amount of the Trust Securities.
The Junior Subordinated Notes are not subject to a sinking fund provision.
The entire principal amount of the Junior Subordinated Notes will mature and
become due and payable, together with any accrued and unpaid interest thereon
including Compounded Interest (as defined herein) and Additional Interest (as
defined herein), if any (collectively, the "Maturity Payment Amount"), on
January 15, 2027.
If Junior Subordinated Notes are distributed to holders of Capital
Securities in liquidation of such holders' interests in the Trust, such Junior
Subordinated Notes will initially be issued as a Global Security. As described
herein, Junior Subordinated Notes also may be issued in certificated form in
exchange for a Global Security. See " -- Book-Entry and Settlement; the
Depositary" below. In the event that Junior Subordinated Notes are issued in
certificated form, such Junior Subordinated Notes will be in minimum
denominations of $1,000 and may be transferred or exchanged at the offices
described below. Payments on Junior Subordinated Notes issued as a Global
Security will be made to a Depositary (as defined herein) or, in the event that
no Depositary is used, to a Paying Agent for the Junior Subordinated Notes. In
the event Junior Subordinated Notes are issued in certificated form, principal
and interest will be payable, the transfer of the Junior Subordinated Notes will
be registrable and Junior Subordinated Notes will be exchangeable for Junior
Subordinated Notes of other denominations of a like aggregate principal amount
at the corporate trust office of the Property Trustee in New York, New York;
provided, that payment of interest may be made at the option of NationsBank by
check mailed to the address of the holder entitled thereto or by wire transfer
to an account appropriately designated by the holder entitled thereto.
Notwithstanding the foregoing, so long as the holder of any Junior Subordinated
Notes is the Property Trustee, the payment of principal and interest on the
Junior Subordinated Notes held by the Property Trustee will be made at such
place and to such account as may be designated by the Property Trustee.
The Indenture does not contain provisions that afford holders of the Junior
Subordinated Notes protection in the event of a highly leveraged transaction or
other similar transaction involving NationsBank that may adversely affect such
holders.
SUBORDINATION
The Indenture provides that the Junior Subordinated Notes are subordinated
and junior in right of payment to all present and future Senior Obligations (as
defined herein) of NationsBank and rank pari passu and are equivalent to
creditor obligations of those holding general unsecured claims not entitled to
statutory priority under the United States Bankruptcy Code or otherwise. In
addition, no payment of principal (including
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<PAGE>
prepayments), premium, if any, or interest on the Junior Subordinated Notes may
be made at any time when (i) there is a default in the payment of the principal
of, premium, if any, interest on or otherwise with respect to any Senior
Obligations, whether at maturity or any date fixed for prepayment or by
declaration or otherwise, (ii) any event of default with respect to Senior
Obligations has occurred and is continuing, or would occur as a result of such
payment on the Junior Subordinated Notes or any prepayment, retirement, purchase
or other acquisition of any of the Junior Subordinated Notes, permitting the
holders of such Senior Obligations (or a trustee on behalf of the holder
thereof) to accelerate the maturity thereof. Upon any distribution of assets of
the Corporation to creditors upon any dissolution, winding-up, liquidation or
reorganization, whether voluntary or involuntary, or in a bankruptcy,
insolvency, receivership or other proceedings, the payment of the principal of,
and interest on, the Junior Subordinated Notes will, to the extent set forth in
the Indenture, be subordinated in right of payment to the prior payment in full
of all Senior Obligations of NationsBank. Upon any payment or distribution of
assets to creditors upon dissolution, winding-up, liquidation, reorganization,
assignment for benefit of creditors, marshalling of assets or any bankruptcy,
insolvency or similar proceedings of NationsBank, the holders of all Senior
Obligations will first be entitled to receive payment in full of all amounts due
or to become due thereon before the holders of the Junior Subordinated Notes
will be entitled to receive and retain any payments in respect of the principal
of, or interest on, the Junior Subordinated Notes.
The term "Senior Obligations" means, with respect to NationsBank, (i) the
principal, premium, if any, and interest in respect of (A) indebtedness of
NationsBank for money borrowed (whether or not denominated as senior or
subordinated) and (B) indebtedness evidenced by securities, debentures, bonds or
other similar instruments (whether or not denominated as senior or subordinated)
issued by NationsBank, (ii) all capital lease obligations of NationsBank, (iii)
all obligations of NationsBank issued or assumed as the deferred purchase price
of property, all conditional sale obligations of NationsBank and all obligations
of NationsBank under any title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business), (iv) all obligations of
NationsBank for the reimbursement on any letter of credit, banker's acceptance,
or similar credit transaction, (v) all obligations of the Corporation arising
from off-balance sheet guarantees by the Corporation and direct credit
substitutes and obligations of the Corporation associated with derivative
products such as interest and foreign exchange contracts, commodity contracts,
swap agreements (including interest rate and foreign exchange swap agreements),
cap agreements, floor agreements, collar agreements, interest rate agreements,
foreign exchange rate agreements, options, commodity futures contracts and
commodity option contracts; (vi) all obligations and financial instruments of
the type referred to in clauses (i) through (v) above of other persons for the
payment of which NationsBank is responsible or liable as obligor, guarantor or
otherwise and (vii) all obligations of the type referred to in clauses (i)
through (vi) above of other persons secured by any lien on any property or asset
of NationsBank (whether or not such obligation is assumed by NationsBank),
except for (1) any such indebtedness that is by its terms subordinated to or
ranks pari passu with the Junior Subordinated Notes and (2) any indebtedness
between or among NationsBank or its affiliates, including all other debt
securities and guarantees in respect of those debt securities, issued to (a) any
other NB Trust or a trustee of such trust and (b) any other trust, or a trustee
of such trust, partnership or other entity affiliated with NationsBank that is a
financing vehicle of NationsBank (a "financing entity") in connection with the
issuance by such financial entity of Capital Securities or other securities that
rank pari passu with, or junior to, the Capital Securities.
The rights of the holders of the Junior Subordinated Notes will be
subrogated to the rights of holders of or obligees under the Senior Obligations
of NationsBank until all amounts owing to the holders of or obligees under the
Senior Obligations are paid in full. Such Senior Obligations shall continue to
be Senior Obligations and be entitled to the benefits of the subordination
provisions irrespective of any amendment, modification or waiver of any term of
such Senior Obligations.
The Indenture does not limit the aggregate amount of Senior Obligations
that may be issued by NationsBank. As of December 31, 1996, there were
approximately $17.7 billion of Senior Obligations of NationsBank outstanding. In
addition, because NationsBank is a holding company, the Junior Subordinated
Notes are effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries, including obligations to depositors.
S-17
<PAGE>
INTEREST
Interest on the Junior Subordinated Notes will be payable quarterly in
arrears on January 15, April 15, July 15 and October 15 of each year (each, an
"Interest Payment Date") commencing on April 15, 1997 to those persons in whose
names the Junior Subordinated Notes are registered, subject to certain
exceptions, at the close of business one Business Day (as defined below) prior
to the relevant Interest Payment Date. In the event the Junior Subordinated
Notes shall not continue to remain in book-entry only form, the record dates
shall be the January 1, April 1, July 1 or October 1 prior to the relevant
Interest Payment Date. Interest payable at the Stated Maturity will be payable
to holders of the Junior Subordinated Notes at such date. The "Interest Payment
Period" with respect to a Junior Subordinated Note is each successive period
from and including an Interest Payment Date with respect to such Junior
Subordinated Note (or February 3, 1997 in the case of the initial Interest
Payment Period) to, but excluding, the next Interest Payment Date or the Stated
Maturity, as the case may be.
The interest rate on the Junior Subordinated Notes will be reset quarterly.
The interest rate on the Junior Subordinated Notes for each Interest Payment
Period will be determined on the Interest Determination Date for such Interest
Payment Period. The "Interest Determination Date" for an Interest Payment Period
is two London Banking Days (as defined below) preceding the first day of such
Interest Payment Period. The interest rate on the Junior Subordinated Notes for
each Interest Payment Period will be effective as of the Interest Reset Date for
such Interest Payment Period.
The Junior Subordinated Notes will bear interest for each Interest Payment
Period at a rate per annum equal to (i) LIBOR (as defined below) plus (ii)
0.55%. The initial interest rate on the Junior Subordinated Notes will be LIBOR
in effect on January 30, 1997 plus 0.55%. LIBOR and the resulting interest rate
for each Interest Payment Period will be determined by the Calculation Agent
(described below) in accordance with the following provisions.
"LIBOR" with respect to an Interest Determination Date, means a rate of
interest calculated in the following order of priority:
(1) the rate (expressed as a percentage per annum) for Eurodollar
deposits having a three-month maturity that appears on Telerate Page 3750
as of 11:00 a.m. (London time) on the related Interest Determination Date;
(2) if such rate does not appear on Telerate Page 3750 as of 11:00
a.m. (London time) on the related Interest Determination Date, LIBOR will
be the arithmetic mean (if necessary rounded upwards to the nearest whole
multiple of 0.00001%) of the rates (expressed as percentages per annum) for
Eurodollar deposits having a three-month maturity that appear on Reuters
Monitor Money Rates Page LIBO ("Reuters Page LIBO") as of 11:00 a.m.
(London time) on such Interest Determination Date;
(3) if such rate does not appear on Reuters Page LIBO as of 11:00 a.m.
(London time) on the related Interest Determination Date, the Calculation
Agent will request the principal London offices of four leading banks in
the London interbank market to provide such banks' offered quotations
(expressed as percentages per annum) to prime banks in the London interbank
market for Eurodollar deposits having a three-month maturity as of 11:00
a.m. (London time) on such Interest Determination Date. If at least two
quotations are provided, LIBOR will be the arithmetic mean (if necessary
rounded upwards to the nearest whole multiple of 0.00001%) of such
quotations;
(4) if fewer than two such quotations are provided as requested in
clause (3) above, the Calculation Agent will request four major New York
City banks to provide such banks' offered quotations (expressed as
percentages per annum) to leading European banks for loans in Eurodollars
having a three-month maturity as of 11:00 a.m. (London time) on such
Interest Determination Date. If at least two such quotations are provided,
LIBOR will be the arithmetic mean (if necessary rounded upwards to the
nearest whole multiple of 0.00001%) of such quotations; and
(5) if fewer than two such quotations are provided as requested in
clause (4) above, LIBOR will be LIBOR as determined on the previous
Interest Determination Date.
If any Interest Payment Date for a Junior Subordinated Note falls on a day
that is not a Business Day, the Interest Payment Date will be the following day
that is a Business Day unless such Interest Payment Date is in
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<PAGE>
the next succeeding calendar year, in which case the Interest Payment Date will
be the immediately preceding day that is a Business Day. If the Stated Maturity
falls on a day that is not a Business Day, the payment of principal and interest
will be made on the next Business Day as if it were made on the date such
payment was due and no additional interest will accrue on the amount so payable
for the period from and after the Stated Maturity.
Accrued interest on any Junior Subordinated Note will be calculated by
multiplying the principal amount of such Junior Subordinated Note by an accrued
interest factor. Such accrued interest factor will be computed by adding the
interest factor calculated for each day from and including February 3, 1997, or
from but excluding the last date to which interest has been paid, as the case
may be, to and including the date for which accrued interest is being
calculated. The interest factor (expressed as a decimal) for each such day is
computed by dividing the interest rate in effect on such day by 360. All
percentages resulting from any calculation of interest on the Junior
Subordinated Notes will be rounded to the nearest one hundred-thousandth of a
percentage point, with five one-millionths of a percentage point rounded upward
(E.G., 5.687665% (or .05687665) would be rounded to 5.68767% (or .0568767)), and
all dollar amounts used or resulting from such calculation will be rounded to
the nearest cent (with one-half cent being rounded upward).
As used herein:
"Business Day" with respect to any Junior Subordinated Note means any day
other than a Saturday or Sunday that (i) is not a day on which banking
institutions in New York, New York, or Charlotte, North Carolina are authorized
or required by law or regulation to be closed and (ii) is a London Banking Day.
"London Banking Day" means a day on which dealings in deposits in U.S.
dollars are transacted in the London interbank market.
"Telerate Page 3750" means the display designated as Page 3750 on the Dow
Jones Telerate Service (or such other page as may replace Page 3750 on that
service or such other service or services as may be nominated by the British
Bankers Association as the information vendor for the purpose of displaying
London interbank offered rates for US dollar deposits).
The Corporation has appointed The Bank of New York as agent to calculate
interest on the Junior Subordinated Notes (in such capacity, the "Calculation
Agent"). Upon the request of any holder of the Junior Subordinated Notes, the
Calculation Agent will provide the interest rate then in effect and, if
determined, the interest rate that will become effective for the next Interest
Payment Period. In the absence of manifest error, such determination is binding
on all parties.
The interest rate on the Junior Subordinated Notes will in no event be
higher than the maximum rate permitted by New York law, as the same may be
modified by United States law of general application.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
NationsBank shall have the right at any time, and from time to time, during
the term of the Junior Subordinated Notes to defer payments of interest by
extending the interest payment period for a period not exceeding 20 consecutive
quarterly periods, but no such Extension Period may extend beyond the Stated
Maturity. At the end of any such Extension Period, NationsBank shall pay all
interest then accrued and unpaid (including any Additional Interest, as defined
herein) together with interest thereon at a rate per annum equal to LIBOR plus
0.55%, compounded quarterly from the relevant Interest Payment Date ("Compounded
Interest"); provided, that during any such Extension Period, (a) NationsBank
shall not declare or pay dividends on, make any distribution with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to any of
its capital stock (other than (i) purchases or acquisitions of shares of
NationsBank common stock in connection with the satisfaction by NationsBank of
its obligations under any employee benefit plans, (ii) as a result of a
reclassification of NationsBank capital stock or the exchange or conversion of
one class or series of the Corporation's capital stock for another class or
series of NationsBank capital stock or (iii) the purchase of fractional
interests in shares of the Corporation's capital stock pursuant to an
acquisition or the conversion or exchange provisions of such NationsBank capital
stock or the security being converted or exchanged), (b) NationsBank shall not
make any payment of principal, premium, if any, or interest on or repay,
repurchase or redeem any debt securities issued by NationsBank that rank pari
passu with or junior to the Junior Subordinated Notes
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<PAGE>
and (c) NationsBank shall not make any guarantee payments with respect to the
foregoing (other than pursuant to the Capital Securities Guarantee). Prior to
the termination of any such Extension Period, NationsBank may further defer
payments of interest by extending the Interest Payment Period; provided,
however, that, such Extension Period, including all such previous and further
extensions, may not exceed 20 consecutive quarterly periods or beyond the Stated
Maturity. Upon the termination of any Extension Period and the payment of all
amounts then due, NationsBank may commence a new Extension Period, subject to
the terms set forth in this section. No interest shall be due and payable during
an Extension Period, except at the end thereof, but NationsBank may prepay at
any time all or any portion of the interest accrued during an Extension Period.
NationsBank has no present intention of exercising its right to defer payments
of interest by extending the Interest Payment Period on the Junior Subordinated
Notes. If the Property Trustee shall be the sole holder of the Junior
Subordinated Notes, NationsBank shall give the Regular Trustees and the Property
Trustee notice of its selection of such Extension Period at least one Business
Day prior to the earlier of (i) the date Distributions on the Capital Securities
are payable or (ii) the date the Regular Trustees are required to give notice of
the record date or the date such Distribution is payable to any applicable
self-regulatory organization or to holders of the Capital Securities, but in any
event at least one Business Day before such record date. The Regular Trustees
shall give notice of the Corporation's selection of such Extension Period to the
holders of the Capital Securities. If the Property Trustee shall not be the sole
holder of the Junior Subordinated Notes, NationsBank shall give the holders of
the Junior Subordinated Notes notice of its selection of such Extension Period
at least 10 Business Days prior to the earlier of (i) the Interest Payment Date
or (ii) the date upon which NationsBank is required to give notice of the record
or payment date of such interest payment to any applicable self-regulatory
organization or to holders of the Junior Subordinated Notes.
SPECIAL EVENT PREPAYMENT
If a Special Event shall occur and be continuing prior to January 15, 2007,
the Corporation may, at its option and subject to receipt of prior approval of
the Federal Reserve Board if required, prepay the Junior Subordinated Notes in
whole, but not in part, at any time within 90 days of the occurrence of such
Special Event. Such a Special Event Prepayment shall be at the Prepayment Price.
OPTIONAL PREPAYMENT
The Junior Subordinated Notes will be prepayable, in whole or in part, at
the option of the Corporation at any time on or after January 15, 2007, subject
to the Corporation having received prior approval of the Federal Reserve Board
if required. Such an Optional Prepayment shall be at the Prepayment Price.
PREPAYMENT PROCEDURES
Notice of any prepayment will be mailed at least 30 days but not more than
60 days before the prepayment date to each holder of Junior Subordinated Notes
to be prepaid at its registered address. Unless the Corporation defaults in
payment of the Prepayment Price, on and after the prepayment date interest
ceases to accrue on such Junior Subordinated Notes called for prepayment.
ADDITIONAL INTEREST
If at any time the Trust shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other domestic taxing authority,
then, in any such case, NationsBank will pay as additional interest ("Additional
Interest") on the Junior Subordinated Notes held by the Property Trustee, such
additional amounts as shall be required so that the net amounts received and
retained by the Trust and the Property Trustee after paying such taxes, duties,
assessments or other governmental charges will be equal to the amounts the Trust
and the Property Trustee would have received and retained had no such taxes,
duties, assessments or other governmental charges been imposed.
INDENTURE EVENTS OF DEFAULT AND NOTE PAYMENT FAILURES
"Indenture Events of Default" are limited to certain events of bankruptcy,
insolvency and reorganization of the Corporation and certain events of
dissolution, winding-up or termination of the Trust and do not include defaults
of the Corporation in payment obligations with respect to the Junior
Subordinated Notes or defaults of
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the Corporation under the Capital Securities Guarantee. If any Indenture Event
of Default shall occur and be continuing, the Property Trustee, as the holder of
the Junior Subordinated Notes, will have the right to declare the principal of
and the interest on the Junior Subordinated Notes (including any Compounded
Interest and Additional Interest, if any) and any other amounts payable under
the Indenture to be forthwith due and payable and to enforce its other rights as
a creditor with respect to the Junior Subordinated Notes. See "Description of
Junior Subordinated Notes -- Events of Default, Waiver and Notice" in the
accompanying Prospectus for a description of the Indenture Events of Default. An
Indenture Event of Default also constitutes a Declaration Event of Default. The
holders of Capital Securities in certain circumstances have the right to direct
the Property Trustee to exercise its rights as the holder of the Junior
Subordinated Notes. See "Description of the Capital Securities -- Declaration
Events of Default and Note Payment Failures" and " -- Voting Rights."
Notwithstanding the foregoing, if a Note Payment Failure has occurred and is
continuing, a holder of Capital Securities may institute a Direct Action for
payment after the respective due date specified in the Junior Subordinated
Notes. Notwithstanding any payments made to such holder of Capital Securities by
NationsBank in connection with a Direct Action, NationsBank shall remain
obligated to pay the principal of or interest on the Junior Subordinated Notes
held by the Trust or the Property Trustee of the Trust, and NationsBank shall be
subrogated to the rights of the holder of such Capital Securities with respect
to payments on the Capital Securities to the extent of any payments made by
NationsBank to such holder in any Direct Action. The holders of Capital
Securities will not be able to exercise directly any other remedy available to
the holders of the Junior Subordinated Notes.
BOOK-ENTRY AND SETTLEMENT; THE DEPOSITARY
If Junior Subordinated Notes are distributed to holders of Capital
Securities in liquidation of such holders' interests in the Trust, it is
anticipated that the Junior Subordinated Notes previously registered in the name
of the Property Trustee on behalf of the Trust will be re-registered in the name
of Cede & Co., as nominee for DTC, in which case, DTC will act as securities
depositary for the Junior Subordinated Notes in the same manner as it acts as
securities depositary for the Capital Securities and the terms of the depositary
arrangements, DTC's book-entry system, and the practices of DTC, Cedel Bank and
Euroclear as they then relate to purchases, transfers, notices and payments with
respect to the Capital Securities will apply in all material respects to the
Junior Subordinated Notes then represented by one or more Global Securities held
by DTC. See "Description of the Capital Securities -- Book-Entry Only Issuance."
NationsBank may appoint another Depositary in the event DTC or any successor or
alternate depositary is unable or unwilling to act or continue to act as a
depositary for the Global Securities.
Except under the limited circumstances described below, Junior Subordinated
Notes represented by a Global Security will not be exchangeable for, and will
not otherwise be issuable as, Junior Subordinated Notes in definitive form. The
Global Securities described above may not be transferred except by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or to a successor Depositary
or its nominee.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in such a Global
Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Junior
Subordinated Notes in definitive form and will not be considered the holders (as
defined in the Indenture) thereof for any purpose under the Indenture, and no
Global Security representing Junior Subordinated Notes shall be exchangeable,
except for another Global Security of like denomination and tenor to be
registered in the name of the Depositary or its nominee or to a successor
Depositary or its nominee. Accordingly, each Beneficial Owner (as defined
herein) must rely on the procedures of the Depositary or if such person is not a
Participant (as defined herein), on the procedures of the Participant through
which such person owns its interest to exercise any rights of a holder under the
Indenture.
None of NationsBank, the Trust, the Property Trustee, any paying agent and
any other agent of NationsBank, or the Debt Trustee will have any responsibility
or liability for any aspect of the records relating
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to or payments made on account of beneficial ownership interests in a Global
Security for such Junior Subordinated Notes or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
A Global Security shall be exchangeable for Junior Subordinated Notes
registered in the names of persons other than the Depositary or its nominee only
if (i) the Depositary notifies NationsBank that it is unwilling or unable to
continue as a depositary for such Global Security and no successor depositary
shall have been appointed, (ii) the Depositary, at any time, ceases to be a
clearing agency registered under the Exchange Act or other application statute
or regulation at which time the Depositary is required to be so registered to
act as such depositary and no successor depositary shall have been appointed or
(iii) NationsBank in its sole discretion, determines that such Global Security
shall be so exchangeable. Any Global Security that is exchangeable pursuant to
the preceding sentence shall be exchangeable for Junior Subordinated Notes
registered in such names as the Depositary shall direct. It is expected that
such instructions will be based upon directions received by the Depositary from
its Participants with respect to ownership of beneficial interests in such
Global Security.
GOVERNING LAW
The Indenture and the Junior Subordinated Notes will be governed by, and
construed in accordance with, the internal laws of the State of New York.
MISCELLANEOUS
The Indenture provides that NationsBank will pay all fees and expenses
related to (i) the offering of the Trust Securities and the Junior Subordinated
Notes, (ii) the organization, maintenance and dissolution of the Trust, (iii)
the retention of the NB Trustees and (iv) the enforcement by the Property
Trustee of the rights of the holders of the Capital Securities. The payment of
such fees and expenses will be fully and unconditionally guaranteed by
NationsBank.
NationsBank will have the right at all times to assign any of its
respective rights or obligations under the Indenture to a direct or indirect
wholly owned subsidiary of NationsBank; provided that, in the event of any such
assignment, NationsBank will remain liable for all of their respective
obligations. Subject to the foregoing, the Indenture will be binding upon and
inure to the benefit of the parties thereto and their respective successors and
assigns. The Indenture provides that it may not otherwise be assigned by the
parties thereto.
DESCRIPTION OF THE CAPITAL SECURITIES
The Capital Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Property Trustee will act as indenture trustee for the
Capital Securities under the Declaration for purposes of compliance with the
provisions of the Trust Indenture Act. The terms of the Capital Securities will
include those stated in the Declaration and those made part of the Declaration
by the Trust Indenture Act. The following summary of the material terms and
provisions of the Capital Securities which supplements, and to the extent
inconsistent, replaces the description set forth under the caption "Description
of the Preferred Securities" in the accompanying Prospectus does not purport to
be complete and is subject to, and qualified in its entirety by reference to,
the Declaration, a form of which is filed as an exhibit to the Registration
Statement of which this Global Prospectus Supplement is a part, the Trust Act
and the Trust Indenture Act.
GENERAL
The Declaration authorizes the Regular Trustees to issue the Trust
Securities on behalf of the Trust, which represent undivided beneficial
interests in the assets of the Trust. All of the Common Securities will be
owned, directly or indirectly, by NationsBank. The Common Securities rank pari
passu, and payments will be made thereon on a pro rata basis, with the Capital
Securities, except that upon the occurrence and during the continuance of a
Declaration Event of Default, the rights of the holders of the Common Securities
to receive payment of periodic distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the Capital Securities. The Declaration does not permit the issuance by the
Trust of any securities other than the Trust Securities or the incurrence of any
indebtedness by the Trust.
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Pursuant to the Declaration, the Property Trustee will own the Junior
Subordinated Notes purchased by the Trust for the benefit of the holders of the
Trust Securities. The payment of Distributions out of money held by the Trust,
and payments upon redemption of the Capital Securities or liquidation of the
Trust, are guaranteed by NationsBank to the extent described under "Description
of the Preferred Securities Guarantees" in the accompanying Prospectus. The
Capital Securities Guarantee will be held by The Bank of New York, as the
Capital Securities Guarantee Trustee, for the benefit of the holders of the
Capital Securities. The Capital Securities Guarantee does not cover payment of
Distributions when the Trust does not have sufficient available funds to pay
such Distributions. In such event, the remedy of a holder of Capital Securities
is to vote to direct the Property Trustee to enforce the Property Trustee's
rights under the Junior Subordinated Notes. Notwithstanding the foregoing, in
the circumstances of a Note Payment Failure, a holder of Capital Securities may
institute a Direct Action without first instituting any legal proceeding against
the Property Trustee or any person or entity. See " -- Declaration Events of
Default and Note Payment Failures" and " -- Voting Rights."
DISTRIBUTIONS
Distributions on the Capital Securities will be payable quarterly in
arrears on January 15, April 15, July 15 and October 15 of each year (each, a
"Distribution Payment Date") commencing on April 15, 1997 to those persons in
whose names the Capital Securities are registered, subject to certain
exceptions, at the close of business one Business Day prior to relevant
Distribution Payment Date. In the event the Capital Securities shall not
continue to remain in book-entry only form, the record dates shall be the
January 1, April 1, July 1 or October 1 prior to the relevant Distribution
Payment Date. The "Distribution Payment Period" with respect to a Capital
Security is each successive period from and including a Distribution Payment
Date with respect to such Capital Security (or February 3, 1997 in the case of
the initial Distribution Payment Period) to, but excluding, the next
Distribution Payment Date.
The Distribution Rate on the Capital Securities will be reset quarterly.
The Distribution Rate on the Distribution Payment Period will be determined on
the Distribution Determination Date for such Distribution Payment Period. The
"Distribution Determination Date" for a Distribution Payment Period is two
London Banking Days preceding the first day of such Distribution Payment Period
(a "Distribution Reset Date"). The Distribution Rate on the Capital Securities
for each Distribution Payment Period will be effective as of the Distribution
Reset Date for such Distribution Payment Period.
The Capital Securities will accrue Distributions for each Distribution
Payment Period at a rate per annum equal to the Distribution Rate of LIBOR plus
0.55%. The initial Distribution Rate on the Capital Securities will be LIBOR in
effect on January 30, 1997 plus 0.55%.
LIBOR and the amount of Distributions payable in respect of each
Distribution Payment Period will be calculated by the Calculation Agent, in the
same manner as LIBOR and the interest payable in respect of each Interest
Payment Period for the Junior Subordinated Notes, as described under
"Description of the Junior Subordinated Notes -- Interest".
NationsBank has the right under the Indenture to defer payments of interest
on the Junior Subordinated Notes by extending the Interest Payment Period from
time to time on the Junior Subordinated Notes, which, if exercised, would defer
quarterly Distributions on the Capital Securities (though such Distributions
would continue to accrue with interest since interest would continue to accrue
on the Junior Subordinated Notes) during any such Extension Period. Such right
to extend the Interest Payment Period for the Junior Subordinated Notes is
limited to a period not exceeding 20 consecutive quarterly periods and such
period may not extend beyond the Stated Maturity of the Junior Subordinated
Notes. In the event that NationsBank exercises this right, then (a) NationsBank
shall not declare or pay dividends on, make distributions with respect to, or
redeem, purchase or acquire, or make a liquidation payment with respect to, any
of its capital stock (other than (i) purchases or acquisitions of shares of
NationsBank common stock in connection with the satisfaction by NationsBank of
its obligations under any employee benefit plans, (ii) as a result of a
reclassification of the Corporation's capital stock or the exchange or
conversion of one class or series of NationsBank capital stock for another class
or series of NationsBank capital stock or (iii) the purchase of fractional
interests in shares of NationsBank capital stock pursuant to an acquisition or
the conversion or exchange provisions of such NationsBank capital stock or the
security being converted or exchanged), (b) NationsBank shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities issued
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by NationsBank that rank pari passu with or junior to such Junior Subordinated
Notes and (c) NationsBank shall not make any guarantee payments with respect to
the foregoing (other than pursuant to the Capital Securities Guarantee). Subject
to the above requirements, prior to the termination of any such Extension
Period, NationsBank may further extend the interest payment period; and, upon
the termination of any Extension Period and the payment of all amounts then due,
NationsBank may select a new Extension Period. See "Description of the Junior
Subordinated Notes -- Interest" and " -- Option to Extend Interest Payment
Period." If Distributions are deferred, the deferred Distributions and accrued
interest thereon shall be paid to holders on the record date next following the
termination of such Extension Period.
Distributions on the Capital Securities must be paid on the dates payable
to the extent that the Trust has funds available for the payment of such
Distributions in the Property Account. The Trust's funds available for
Distributions to the holders of the Capital Securities will be limited to
payments received from NationsBank on the Junior Subordinated Notes. See
"Description of the Junior Subordinated Notes." The payment of Distributions out
of moneys held by the Trust is guaranteed by NationsBank to the extent set forth
under "Description of the Capital Securities Guarantees" in the accompanying
Global Prospectus.
Distributions on the Capital Securities will be payable to the holders
thereof on the relevant record dates, which, as long as the Capital Securities
remain in book-entry only form, will be one Business Day prior to the relevant
Distribution Payment Date. Such Distributions will be paid through the Property
Trustee who will hold amounts received in respect of the Junior Subordinated
Notes in the Property Account for the benefit of the holders of the Trust
Securities. Subject to any applicable laws and regulations and the provisions of
the Declaration, each such payment will be made as described under
" -- Book-Entry Only Issuance" below. In the event that any date on which
Distributions are to be made on the Capital Securities is not a Business Day,
then payment of the Distributions payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such record date.
REDEMPTION OF CAPITAL SECURITIES UPON PAYMENT OR PREPAYMENT OF JUNIOR
SUBORDINATED NOTES
The Junior Subordinated Notes will mature on January 15, 2027. Moreover,
the Junior Subordinated Notes are subject to prepayment (i) in whole, but not in
part, prior to January 15, 2007 upon the occurrence of a Special Event, and (ii)
in whole or in part, at any time on or after January 15, 2007, in either case at
the Prepayment Price. Such prepayments shall be subject to receipt of Federal
Reserve Board approval, if required. See "Description of the Junior Subordinated
Notes." Upon the payment of the Junior Subordinated Notes, at maturity or upon
prepayment, the proceeds from such payment or prepayment shall simultaneously be
applied to redeem Trust Securities having an aggregate liquidation amount equal
to the aggregate principal amount of Junior Subordinated Notes so paid or
prepaid. In the event that fewer than all of the outstanding Capital Securities
are to be redeemed, the Capital Securities will be redeemed pro rata as
described under " -- Book-Entry Only Issuance" below.
Upon the payment in full at the Stated Maturity or prepayment in whole, but
not in part, of the Junior Subordinated Notes, the proceeds from such payment or
prepayment shall be applied by the Property Trustee to redeem the Trust
Securities, upon not less than 15 nor more than 60 days' notice of a date of
redemption (the "Redemption Date"), at the applicable Redemption Price, which
shall be equal to (i) in the case of the payment of the Junior Subordinated
Notes at the Stated Maturity, the Maturity Redemption Price (equal to the
Maturity Payment Amount in respect of the Junior Subordinated Notes), or (ii) in
the case of a Special Event Prepayment, or an Optional Prepayment, the Early
Redemption Price (equal to the Prepayment Price in respect of the Junior
Subordinated Notes). See "Description of the Junior Subordinated
Notes -- Optional Prepayment" and " -- Special Event Prepayment."
DISTRIBUTION OF THE JUNIOR SUBORDINATED NOTES TO TRUST SECURITYHOLDERS
NationsBank will have the right at any time to dissolve the Trust and cause
the Junior Subordinated Notes to be distributed to the holders of the Trust
Securities. Any such dissolution and distribution may require prior approval of
the Federal Reserve Board.
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After the date for any distribution of Junior Subordinated Notes upon
dissolution of the Trust, (i) the Capital Securities will no longer be deemed to
be outstanding, (ii) the Depositary or its nominee, as the record holder of the
Capital Securities, will receive a registered global certificate or certificates
representing the Junior Subordinated Notes to be delivered upon such
distribution, and (iii) any certificates representing Capital Securities not
held by the Depositary or its nominee will be deemed to represent Junior
Subordinated Notes having an aggregate principal amount equal to the aggregate
stated liquidation amount of, with an interest rate identical to the
Distribution Rate of, and accrued and unpaid interest equal to accrued and
unpaid Distributions on such Capital Securities until such certificates are
presented to NationsBank or its agent for transfer or reissuance.
There can be no assurance as to the market prices for either the Capital
Securities or the Junior Subordinated Notes that may be distributed in exchange
for the Capital Securities upon a dissolution and liquidation of the Trust.
Accordingly, the Capital Securities or the Junior Subordinated Notes may trade
at a discount to the price that the investor paid to purchase the Capital
Securities offered hereby.
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding Capital
Securities unless all accrued and unpaid Distributions have been paid on all
Capital Securities for all quarterly Distribution Periods terminating on or
prior to the date of redemption.
If the Trust gives a notice of redemption in respect of Capital Securities
(which notice will be irrevocable), then, by 12:00 noon, New York City time, on
the Redemption Date, provided that NationsBank has paid to the Property Trustee
a sufficient amount of cash in connection with the related redemption or
maturity of the Junior Subordinated Notes, the Trust will irrevocably deposit
with the Depositary funds sufficient to pay the applicable Redemption Price and
will give the Depositary irrevocable instructions and authority to pay the
Redemption Price to the holders of the Capital Securities. See " -- Book-Entry
Only Issuance." If notice of redemption shall have been given and funds
deposited as required, then, immediately prior to the close of business on the
date of such deposit, distributions will cease to accrue and all rights of
holders of such Capital Securities so called for redemption will cease, except
the right of the holders of such Capital Securities to receive the Redemption
Price but without interest on such Redemption Price. In the event that any date
fixed for redemption of Capital Securities is not a Business Day, then payment
of the Redemption Price payable on such date will be made on the next succeeding
day that is a Business Day (without any interest or other payment in respect of
any such delay), except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day. In
the event that payment of the Redemption Price in respect of Capital Securities
is improperly withheld or refused and not paid either by the Trust, or by
NationsBank pursuant to the Capital Securities Guarantee, distributions on such
Capital Securities will continue to accrue at the then applicable rate from the
original Redemption Date to the date of payment, in which case the actual
payment date will be considered the date fixed for redemption for purposes of
calculating the Redemption Price.
In the event that fewer than all of the outstanding Capital Securities are
to be redeemed, the Capital Securities will be redeemed pro rata as described
below under " -- Book-Entry Only Issuance."
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws and the regulations of the Federal Reserve
Board), NationsBank or its subsidiaries may at any time, and from time to time,
purchase outstanding Capital Securities by tender, in the open market or by
private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust (each a "Liquidation"), the then holders
of the Capital Securities will be entitled to receive out of the assets of the
Trust, after satisfaction of liabilities to creditors, Distributions in an
amount equal to the aggregate of the stated liquidation amount of $1,000 per
Capital Security plus accrued and unpaid Distributions thereon to the date of
payment (the "Liquidation Distribution"), unless, in connection with such
Liquidation, Junior Subordinated Notes in an aggregate stated principal amount
equal to the aggregate stated liquidation amount of, with an interest rate
identical to the Distribution Rate of, and accrued and unpaid interest equal to
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accrued and unpaid Distributions on, the Capital Securities have been
distributed on a pro rata basis to the holders of the Capital Securities. Any
Liquidation Distribution may require prior approval of the Federal Reserve
Board.
If, upon any such Liquidation, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Capital Securities shall be paid on a pro rata basis. The holders
of the Common Securities will be entitled to receive distributions upon any such
dissolution pro rata with the holders of the Capital Securities, except that if
a Declaration Event of Default has occurred and is continuing, the Capital
Securities shall have a preference over the Common Securities with regard to
such distributions.
Pursuant to the Declaration, the Trust shall terminate (i) on January 1,
2052, the expiration of the term of the Trust, (ii) upon the bankruptcy of the
Corporation, (iii) upon the filing of a certificate of dissolution or its
equivalent with respect to the Corporation, the filing of a certificate of
cancellation with respect to the Trust after obtaining the consent of the
holders of at least a majority in aggregate liquidation amount of the Trust
Securities affected thereby voting together as a single class to file such
certificate of cancellation or the revocation of the charter of NationsBank and
the expiration of 90 days after the date of revocation without a reinstatement
thereof, (iv) upon the distribution of Junior Subordinated Notes to holders of
the Capital Securities, (v) upon the entry of a decree of a judicial dissolution
of NationsBank or the Trust, or (vi) upon the redemption of all the Trust
Securities.
DECLARATION EVENTS OF DEFAULT AND NOTE PAYMENT FAILURES
An Indenture Event of Default constitutes an event of default under the
Declaration with respect to the Trust Securities (a "Declaration Event of
Default"); provided, that pursuant to the Declaration, the holder of the Common
Securities will be deemed to have waived any Declaration Event of Default with
respect to the Common Securities until all Declaration Events of Default with
respect to the Capital Securities have been cured, waived or otherwise
eliminated. Until such Declaration Events of Default with respect to the Capital
Securities have been so cured, waived, or otherwise eliminated, the Property
Trustee will be deemed to be acting solely on behalf of the holders of the
Capital Securities and only the holders of the Capital Securities will have the
right to direct the Property Trustee with respect to certain matters under the
Declaration, and therefore the Indenture. If the Property Trustee fails to
enforce its rights under the Junior Subordinated Notes after a holder of Capital
Securities has made a written request, such holder of record of Capital
Securities may institute a legal proceeding against NationsBank to enforce the
Property Trustee's rights under the Junior Subordinated Notes without first
instituting any legal proceeding against the Property Trustee or any other
person or entity.
Notwithstanding the foregoing, if a Note Payment Failure (which involves a
failure to make a timely interest, principal or redemption payment but does not
constitute a Declaration Event of Default) has occurred and is continuing, a
holder of Capital Securities may institute directly a proceeding for enforcement
of payment to such holder directly of the principal of or interest on the Junior
Subordinated Notes having a principal amount equal to the aggregate liquidation
amount of the Capital Securities of such holder after the respective due date
specified in the Junior Subordinated Notes. In connection with such Direct
Action, NationsBank will be subrogated to the rights of such holder of Capital
Securities under the Declaration to the extent of any payment made by
NationsBank to such holder of Capital Securities in such Direct Action. The
holders of Capital Securities will not be able to exercise directly any other
remedy available to the holders of the Junior Subordinated Notes.
Upon the occurrence of a Declaration Event of Default, the Property Trustee
as the sole holder of the Junior Subordinated Notes will have the right under
the Indenture to declare the principal of and interest on the Junior
Subordinated Notes to be immediately due and payable. NationsBank and the Trust
are each required to file annually with the Property Trustee an officer's
certificate as to its compliance with all conditions and covenants under the
Declaration.
VOTING RIGHTS
Except as described herein, under the Trust Act, the Trust Indenture Act
and under "Description of the Preferred Securities Guarantees -- Modification of
the Preferred Securities Guarantees; Assignment" in the
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accompanying Prospectus, and as otherwise required by law and the Declaration,
the holders of the Capital Securities will have no voting rights.
Subject to the requirement of the Property Trustee obtaining a tax opinion
in certain circumstances set forth in the last sentence of this paragraph, the
holders of a majority in aggregate liquidation amount of the Capital Securities,
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Property Trustee, or direct the exercise of any
trust or power conferred upon the Property Trustee under the Declaration
including the right to direct the Property Trustee, as holder of the Junior
Subordinated Notes, to (i) exercise the remedies available to it under the
Indenture as a holder of the Junior Subordinated Notes, (ii) waive any past
Indenture Event of Default that is waivable under the Indenture, (iii) exercise
any right to rescind or annul a declaration that the principal of all the Junior
Subordinated Notes shall be due and payable or (iv) consent to any amendment,
modification or termination of the Indenture or the Junior Subordinated Notes
where such consent shall be required; provided, however, that, where a consent
or action under the Indenture would require the consent or act of holders of
more than a majority in principal amount of the Junior Subordinated Notes (a
"Super Majority") affected thereby, only the holders of at least such Super
Majority in aggregate liquidation amount of the Capital Securities may direct
the Property Trustee to give such consent or take such action. If the Property
Trustee fails to enforce its rights under the Junior Subordinated Notes after a
holder of record of Capital Securities has made a written request, such holder
of record of Capital Securities may institute a legal proceeding directly
against NationsBank to enforce the Property Trustee's rights under the Junior
Subordinated Notes without first instituting any legal proceeding against the
Property Trustee or any other person or entity. Notwithstanding the foregoing,
if a Note Payment Failure has occurred and is continuing, a holder of Capital
Securities may institute directly a proceeding for enforcement of payment to
such holder of the principal of, premium, if any, or interest on the Junior
Subordinated Notes having a principal amount equal to the aggregate liquidation
amount of the Capital Securities of such holder after the respective due date
specified in the Junior Subordinated Notes. The Property Trustee shall notify
all holders of the Capital Securities of any notice of an Event of Default or
Note Payment Failure received from the Debt Trustee with respect to the Junior
Subordinated Notes. Such notice, in the case of an Event of Default, shall state
that such Indenture Event of Default also constitutes a Declaration Event of
Default. Except with respect to directing the time, method and place of
conducting a proceeding for a remedy, the Property Trustee shall not take any of
the actions described in clauses (i), (ii) or (iii) above unless the Property
Trustee has obtained an opinion of a nationally recognized tax counsel
experienced in such matters to the effect that, as a result of such action, the
Trust will not fail to be classified as a grantor trust for United States
federal income tax purposes.
In the event the consent of the Property Trustee, as the holder of the
Junior Subordinated Notes, is required under the Indenture with respect to any
amendment, modification or termination of the Indenture, the Property Trustee
shall request the direction of the holders of the Trust Securities with respect
to such amendment, modification or termination and shall vote with respect to
such amendment, modification or termination as directed by a majority in
aggregate liquidation amount of the Trust Securities voting together as a single
class; provided, however, that where a consent under the Indenture would require
the consent of a Super Majority, the Property Trustee may only give such consent
at the direction of the holders of at least the proportion in liquidation amount
of the Trust Securities which the relevant Super Majority represents of the
aggregate principal amount of the Junior Subordinated Notes outstanding and;
provided further, in the case of a consent under the Indenture which requires
the consent of holders of all the Junior Subordinated Notes outstanding, the
Property Trustee may only give such consent at the direction of the holders of
all of the Trust Securities. The Property Trustee shall not take any such action
in accordance with the directions of the holders of the Trust Securities unless
the Property Trustee has obtained an opinion of a nationally recognized tax
counsel experienced in such matters to the effect that for the purposes of
United States federal income tax the Trust will not be classified as other than
a grantor trust.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of Capital Securities may be
given at a separate meeting of holders of Capital Securities convened for such
purpose, at a meeting of all of the holders of Trust Securities or pursuant to
written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Capital Securities are entitled to vote, or of any matter upon
which action by written consent of such holders is
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to be taken, to be mailed to each holder of record of Capital Securities. Each
such notice will include a statement setting forth the following information:
(i) the date of such meeting or the date by which such action is to be taken;
(ii) a description of any resolution proposed for adoption at such meeting on
which such holders are entitled to vote or of such matter upon which written
consent is sought; and (iii) instructions for the delivery of proxies or
consents. No vote or consent of the holders of Capital Securities will be
required for the Trust to redeem and cancel Capital Securities or distribute
Junior Subordinated Notes in accordance with the Declaration.
Notwithstanding that holders of Capital Securities are entitled to vote or
consent under any of the circumstances described above, any of the Capital
Securities that are owned at such time by NationsBank or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, NationsBank, shall not be entitled to vote or consent and shall,
for purposes of such vote or consent, be treated as if such Capital Securities
were not outstanding.
The procedures by which holders of Capital Securities may exercise their
voting rights are described below. See " -- Book-Entry Only Issuance."
Holders of the Capital Securities will have no rights to appoint or remove
the NB Trustees, who may be appointed, removed or replaced solely by NationsBank
as the indirect or direct holder of all of the Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by the Regular
Trustees (or, if there are more than two Regular Trustees, a majority of the
Regular Trustees) and, in certain circumstances, the Property Trustee or the
Delaware Trustee, provided that, if any proposed amendment provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Trust
Securities, whether by way of amendment to the Declaration or otherwise or (ii)
the dissolution, winding-up or termination of the Trust other than pursuant to
the terms of the Declaration, then the holders of the Trust Securities voting
together as a single class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of at least a majority in liquidation amount of the Trust Securities
affected thereby; provided, that, if any amendment or proposal referred to in
clause (i) above would adversely affect only the Capital Securities or the
Common Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a majority in liquidation amount of such class of
Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified for purposes of United States federal income taxation as other
than a grantor trust, (ii) reduce or otherwise adversely affect the powers of
the Property Trustee or (iii) cause the Trust to be deemed an "investment
company" which is required to be registered under the 1940 Act.
MERGERS OR CONSOLIDATIONS
The Trust may not consolidate or merge with or into, or be replaced by, or
convey, transfer or lease its properties and assets substantially as an
entirety, to any corporation or other body, except as described below. The Trust
may, with the consent of a majority of the Regular Trustees and without the
consent of the holders of the Trust Securities, the Property Trustee or the
Delaware Trustee consolidate or merge with or into, or be replaced by a trust
organized as such under the laws of any State of the United States; provided,
that (i) if the Trust is not the survivor such successor entity (the "Successor
Entity") either (x) expressly assumes all of the obligations of the Trust under
the Trust Securities or (y) substitutes for the Trust Securities other
securities having substantially the same terms as the Trust Securities (the
"Successor Securities"), so long as the Successor Securities rank the same as
the Trust Securities rank with respect to distributions and payments upon
liquidation, redemption and otherwise, (ii) NationsBank expressly acknowledges a
trustee of such successor entity possessing the same powers and duties as the
Property Trustee as the holder of the Junior Subordinated
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Notes, (iii) the Capital Securities or any Successor Securities are listed, or
any Successor Securities of the Capital Securities will be listed upon
notification of issuance, on any securities exchange or with another
organization on which the Capital Securities are then listed or quoted, if any,
(iv) such merger, consolidation or replacement does not cause the Capital
Securities (including any Successor Securities thereof) to be downgraded by any
nationally recognized statistical rating organization, (v) such merger,
consolidation or replacement does not adversely affect the rights, preferences
and privileges of the holders of the Trust Securities (including any Successor
Securities) in any material respect (other than with respect to any dilution of
the holders' interest in the new entity), (vi) such successor entity has a
purpose identical to that of the Trust, (vii) prior to such merger,
consolidation or replacement, NationsBank has received an opinion of a
nationally recognized independent counsel to the Trust experienced in such
matters to the effect that, (A) such merger, consolidation or replacement does
not adversely affect the rights, preferences and privileges of the holders of
the Trust Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of the holders' interest in the
new entity), (B) following such merger, consolidation or replacement, neither
the Trust nor such Successor Entity will be required to register as an
investment company under the 1940 Act and (C) following such merger,
consolidation or replacement, the Trust or the Successor Entity will continue to
be classified as a grantor trust for United States federal income tax purposes
and (viii) NationsBank guarantees the obligations of such successor entity under
the Successor Securities at least to the extent provided by the Capital
Securities Guarantee and the Common Securities Guarantee (as described in the
accompanying Prospectus). Notwithstanding the foregoing, the Trust shall not,
except with the consent of holders of 100 percent in liquidation amount of the
Trust Securities, consolidate, merge with or into, or be replaced by any other
entity or permit any other entity to consolidate, merge with or into, or replace
it, if such consolidation, merger or replacement would cause the Trust or the
Successor Entity to be classified as other than a grantor trust for United
States federal income tax purposes.
BOOK-ENTRY ONLY ISSUANCE
The Capital Securities initially will be issued in book-entry form only and
will be represented by one or more Global Securities held through DTC (in the
United States), or through Cedel Bank or Euroclear (abroad). Capital Securities
held through DTC will be registered in the name of Cede & Co., as nominee of
DTC. Cedel Bank and Euroclear will hold omnibus positions on behalf of Cedel
Bank Participants (as defined below) and Euroclear Participants (as defined
below), respectively, through customers' securities accounts in Cedel Bank's and
Euroclear's names, respectively, on the books of their respective depositaries,
which in turn, will hold such positions on the books of DTC.
Under the book-entry system of DTC, purchases of Capital Securities must be
made by or through persons that have accounts with DTC ("Participants") or
persons that may hold interests through Participants ("Indirect Participants").
Upon the issuance and deposit of a Global Security, DTC will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the individual Capital Securities represented by such Global Security to the
accounts of Participants as designated by the Underwriters. The ownership of
beneficial interests in such Global Security will be shown on, and the transfer
of that ownership will be effected only through, records maintained by DTC (with
respect to interests of Participants) and the records of Participants (with
respect to interests of Indirect Participants) and Indirect Participants. So
long as DTC, or its nominee, is the registered holder of a Global Security, DTC
or its nominee will be considered the sole owner or holder of the Capital
Securities represented by such Global Security for all purposes under the
Indenture. Except as provided below, owners of beneficial interests in a Global
Security will not be entitled to have Capital Securities registered in their
names, will not receive or be entitled to receive physical delivery of such
Capital Securities in certificated form and will not be considered the owners or
holders thereof under the Indenture. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
certificated form. Such transfer restrictions and such laws may impair the
ability to own, transfer or pledge beneficial interests in a Global Security.
DTC has advised the Corporation as follows: DTC is a limited-purpose trust
company organized under New York law, a "banking organization" within the
meaning of New York law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code as in effect in
the State of New York and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act, as amended. DTC was created to
hold securities deposited by its Participants and to facilitate the clearance
and
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settlement of securities transactions among Participants in such securities
through electronic computerized book-entry changes in accounts of the
Participants, thereby eliminating the need for physical movement of securities
certificates. DTC's direct Participants include securities brokers and dealers
(including the Underwriters), banks (including certain subsidiaries of the
Corporation), trust companies, clearing corporations and certain other
organizations, some of whom (and/or their representatives) have ownership
interests in DTC. DTC is owned by a number of its Participants and by the New
York Stock Exchange, Inc., the American Stock Exchange, Inc. and the NASD.
Indirect access to DTC's book-entry system is also available to Indirect
Participants, such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly. The rules applicable to DTC and its Participants are on file with
the Securities and Exchange Commission.
To facilitate subsequent transfers, all securities deposited with DTC are
registered in the name of DTC's partnership nominee, Cede & Co. The deposit of
securities with DTC and their registration in the name of Cede & Co. effect no
change in beneficial ownership. DTC has no knowledge of the actual beneficial
owners of securities deposited with it such as the Capital Securities; DTC's
records reflect only the identity of the Participants to whose accounts such
securities are credited, which may or may not be the beneficial owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers. Conveyance of notices and other communications by DTC
to Participants, by Participants to Indirect Participants, and by Participants
and Indirect Participants to beneficial owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time. Neither DTC nor Cede & Co. will consent or vote with
respect to securities held by DTC. Under its usual procedures, DTC mails an
omnibus proxy to an issuer as soon as possible after the record date. The
omnibus proxy assigns Cede & Co.'s consenting or voting rights to those
Participants to whose accounts the securities are credited on the record date
(identified in a listing attached to the omnibus proxy).
DTC can act only on behalf of Participants, who in turn act on behalf of
Indirect Participants. Owners of beneficial interests in a Global Security that
are not Participants or Indirect Participants but desire to purchase, sell or
otherwise transfer ownership of such interests may do so only through
Participants and Indirect Participants. In addition, the ability of owners of
beneficial interests in a Global Security to pledge such interests to persons or
entities that do not participate in the DTC system may be limited due to the
lack of certificates for the Capital Securities.
Transfers between Cedel Bank Participants and Euroclear Participants will
occur in the ordinary way in accordance with their applicable rules and
operating procedures.
Cross-market transfers between persons holding securities directly or
indirectly through DTC in the United States, on the one hand, and directly or
indirectly through Cedel Bank Participants or Euroclear Participants, on the
other, will be effected by DTC in accordance with DTC rules on behalf of the
relevant European international clearing system by its Depositary; however, such
cross-market transactions will require delivery of instructions to the relevant
European international clearing system by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(European time). The relevant European international clearing system will, if
the transaction meets its settlement requirements, deliver instructions to its
Depositary to take action to effect final settlement on its behalf by delivering
or receiving securities in DTC, and making or receiving payment in accordance
with normal procedures for same-day funds settlement applicable to DTC. Cedel
Bank Participants and Euroclear Participants may not deliver instructions
directly to the Depositaries.
Because of time-zone differences, credits for securities in Cedel Bank or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant Cedel
Bank Participant or Euroclear Participant on such business day. Cash received in
Cedel Bank or Euroclear as a result of sales of securities by or through a Cedel
Bank Participant or a Euroclear Participant to a DTC Participant will be
received with value on the DTC settlement date but will be available in the
relevant Cedel Bank or Euroclear cash account only as of the business day
following settlement in DTC.
Cedel Bank is incorporated under the laws of Luxembourg as a professional
depository. Cedel Bank holds securities for its participating organizations
("Cedel Participants") and facilitates the clearance and settlement
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of securities transactions between Cedel Bank Participants through electronic
book-entry changes in accounts of Cedel Bank Participants, thereby eliminating
the need for physical movement of certificates. Transactions may be settled by
Cedel Bank in any of 28 currencies, including United States dollars. Cedel Bank
provides to its Cedel Bank Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedel Bank interfaces with
domestic markets in several countries. As a professional depository, Cedel Bank
is subject to regulation by the Luxembourg Monetary Institute. Cedel Bank
Participants are recognized financial institutions around the world, including
underwriters, securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations and may include one or more of the
Underwriters of the Capital Securities. Indirect access to Cedel Bank is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Cedel Bank
Participant, either directly or indirectly.
The Euroclear System (the "Euroclear System") was created in 1968 to hold
securities for participants of the Euroclear System ("Euroclear Participants")
and to clear and settle transactions between Euroclear Participants through
simultaneous electronic book-entry delivery against payment, thereby eliminating
the need for physical movement of certificates and any risk from lack of
simultaneous transfers of securities and cash. Transactions may now be settled
in any of 32 currencies, including United States dollars. The Euroclear System
includes various other services, including securities lending and borrowing and
interfaces with domestic markets in several countries generally similar to the
arrangements for cross-market transfers with DTC described above. The Euroclear
System is operated by the Euroclear Operator, under contract with Euroclear
Clearance System, S.C., a Belgian cooperative corporation (the "Cooperative").
All operations are conducted by the Euroclear Operator, and all Euroclear
securities clearance accounts and Euroclear cash accounts are accounts with the
Euroclear Operator, not the Cooperative. The Cooperative establishes policy for
the Euroclear System on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries and may include one or more of the
Underwriters of the Capital Securities. Indirect access to the Euroclear System
is also available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Brussels branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear Participants and has no record
of or relationship with persons holding through Euroclear Participants.
Distributions with respect to the Capital Securities held through Cedel
Bank or Euroclear will be credited to the cash accounts of Cedel Bank
Participants or Euroclear Participants in accordance with the relevant system's
rules and procedures, to the extent received by its Depositary. Such
Distributions will be subject to tax reporting in accordance with relevant
United States tax laws and regulations. See "Certain United States Federal
Income Tax Consequences to Foreign Investors" herein. Cedel Bank or the
Euroclear Operator, as the case may be, will take any other action permitted to
be taken by a holder of the Capital Securities under the Indenture on behalf of
a Cedel Bank Participant or a Euroclear Participant only in accordance with its
relevant rules and procedures and subject to its Depositary's ability to effect
such actions on its behalf through DTC.
Although DTC, Cedel Bank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of the Capital Securities among
participants of DTC, Cedel Bank and Euroclear, they are under no obligation to
perform or continue to perform such procedures and such procedures may be
discontinued at any time.
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Except as otherwise provided herein, the holder of a Global Security shall
be the only person entitled to receive payments with respect to Capital
Securities represented by such Global Security. Accordingly, payments of
principal of and any interest on individual Capital Securities represented by a
Global Security will be made only to DTC or its nominee, as the case may be, as
the registered holder of the Global Certificate representing such Capital
Securities. DTC has advised the Corporation that it is DTC's practice to credit
Participants' accounts on the payable date in accordance with their respective
holdings with respect to a Global Security as shown on DTC's records, unless DTC
has reason to believe that it will not receive payment on such date. Payments by
Participants to beneficial owners are governed by standing instructions and
customary practices, as is the case with securities held in "street name." Such
instructions will be the responsibility of such Participant and not of DTC, the
Underwriters, the Corporation or the Trust; subject to any statutory or
regulatory requirements as may be in effect from time to time. The Corporation
will in every case be discharged by payment to, or to the order of, DTC or its
nominee, as the holder of such Global Security, of the amount so paid. Each of
the persons shown in the records of DTC or its nominee as an owner of a
beneficial interest therein must look solely to DTC or its nominee, as the case
may be, for its share of any such payment so made by the Corporation. None of
the Corporation, the Trust, the Property Trustee, any Paying Agent, security
registrar or transfer agent for the Capital Securities and any other agent of
NationsBank will have any responsibility or liability for any aspect of the
records relating to or payments made on account of owners of beneficial
interests in a Global Security or for maintaining, supervising or reviewing any
records relating to such beneficial interests.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of beneficial interests in Global Securities among its Participants,
it is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time.
If DTC is at any time unwilling, unable or ineligible to continue as a
depositary and a successor depositary is not appointed by the Corporation within
90 days, the Corporation will issue registered Capital Securities in
certificated form in exchange for beneficial interests in each Global Security.
In addition, the Regular Trustees, after consultation with the Corporation, may
at any time determine not to have Capital Securities represented by Global
Securities and, in such event, the Trust will issue registered Capital
Securities in certificated form in exchange for beneficial interests in Global
Securities. In any such instance, an owner of a beneficial interest in a Global
Security will be entitled to physical delivery in certificated form of a Capital
Security or Capital Securities equal in liquidation amount to such beneficial
interest and to have such Capital Security or Capital Securities registered in
its name. Any Capital Securities so issued in certificated form will be issued
in denominations of $1,000 or any integral multiple in excess thereof and will
be issued in registered form only, without coupons.
In the event that the Capital Securities are issued in certificated form,
the Trust will appoint a paying and transfer agent in Luxembourg at whose office
such Capital Securities in certificated form may be presented for payment and/or
transfer for so long as they are outstanding. The paying and transfer agent that
is expected to be appointed in such circumstances is: Banque Generale du
Luxembourg, 14 rue Aldringen, L2951 Luxembourg. In addition, upon redemption of
the Capital Securities, such Capital Securities in certificated form may be
presented for payment at the offices of such paying and transfer agent in
Luxembourg up to two years after the date of redemption of the Capital
Securities. If Capital Securities in certificated form are issued, notices to
holders of the Capital Securities will also be given by mail to the addresses of
such holders as they appear on the security register. In addition, in the event
that Capital Securities in certificated form are issued, the Trust will cause
the Distribution Rate of the Capital Securities applicable to each Distribution
Payment Period, the related Distribution Payment Date and the amount of the
Distribution payable on the Capital Securities on such Distribution Payment Date
to be published in a daily newspaper in Luxembourg, as described below.
Any notices required to be given to holders of the Capital Securities will
be given to DTC or its nominee, as the registered holder of the Capital
Securities, and by publication in a daily newspaper in Luxembourg, which is
expected to be the LUXEMBURGER WORT. Until such time as any Capital Securities
are issued in certificated form, there may be substituted for publication in
such newspaper the delivery of the relevant notice to Euroclear and Cedel Bank
for communication to their Participants except that, so long as the Capital
Securities are listed on the Luxembourg Stock Exchange and the rules of the
Luxembourg Stock Exchange so require, notices will also be published in the
LUXEMBURGER WORT. Any such notice to Euroclear and Cedel Bank shall be deemed to
have been given to their Participants on the seventh day after the day on which
the said notice was given to Euroclear and Cedel Bank. Promptly after the
determination of the Distribution Rate on the Capital
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Securities applicable to each Distribution Payment Period (and in no event later
than the first day of each Distribution Period), the Regular Trustee will give
notice of such Distribution Rate, the related Distribution Payment Date and the
amount of Distribution payable on such Distribution Payment Date, to the Listing
Agent (as defined herein) and the Luxembourg Stock Exchange.
PAYMENT AND PAYING AGENCY
Payments in respect of the Capital Securities represented by the Global
Securities shall be made to DTC, which shall credit the relevant accounts at DTC
on the applicable Distribution Payment Date or, in the case of certificated
securities, such payments shall be made by check mailed to the address of the
holder entitled thereto. The Paying Agent shall initially be The Bank of New
York. The Paying Agent shall be permitted to resign as Paying Agent upon 30
days' written notice to the Regular Trustees. In the event that The Bank of New
York shall no longer be the Paying Agent, the Regular Trustees shall appoint a
successor to act as Paying Agent (which shall be a bank or trust company).
REGISTRAR, TRANSFER AGENT AND PAYING AGENT
The Property Trustee will act as registrar, transfer agent and paying agent
for the Capital Securities. In the event The Bank of New York shall no longer be
the Paying Agent, the Regular Trustees shall appoint a successor to act as
Paying Agent (which shall be a bank or trust company).
Registration of transfers of Capital Securities will be effected without
charge by or on behalf of the Trust, but upon payment (with the giving of such
indemnity as the Trust or the Corporation may require) in respect of any tax or
other government charges which may be imposed in relation to it.
The Trust will not be required to register or cause to be registered the
transfer of Capital Securities after such Capital Securities have been called
for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, prior to the occurrence of a default with respect to
the Trust Securities and after the curing of any defaults that may have
occurred, undertakes to perform only such duties as are specifically set forth
in the Declaration and, after default, shall exercise the same degree of care as
a prudent individual would exercise in the conduct of his or her own affairs.
Subject to such provisions, the Property Trustee is under no obligation to
exercise any of the powers vested in it by the Declaration at the request of any
holder of Capital Securities, unless offered reasonable indemnity by such holder
against the costs, expenses and liabilities which might be incurred thereby. The
holders of Capital Securities will not be required to offer such indemnity in
the event such holders, by exercising their voting rights, direct the Property
Trustee to take any action it is empowered to take under the Declaration
following a Declaration Event of Default. The Property Trustee also serves as
trustee under the Capital Securities Guarantee and the Indenture.
The Corporation and certain of its affiliates have from time to time
maintained deposit accounts and conducted other banking transactions with the
Property Trustee and its affiliated entities in the ordinary course of business.
The Property Trustee also serves as trustee for certain series of the
Corporation's outstanding indebtedness under other indentures.
GOVERNING LAW
The Declaration and the Capital Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate the Trust in
such a way so that the Trust will not be required to register as an "investment
company" under the 1940 Act or characterized as other than a grantor trust for
United States federal income tax purposes. NationsBank is authorized and
directed to conduct its affairs so that the Junior Subordinated Notes will be
treated as indebtedness of NationsBank for United States federal income tax
purposes. In this connection, NationsBank and the Regular Trustees are
authorized to take any action, not inconsistent with applicable law, the
Declaration, the certificate of trust of
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the Trust or the certificate of incorporation of NationsBank, that each of
NationsBank and the Regular Trustees determine in their discretion to be
necessary or desirable to achieve such end, as long as such action does not
adversely affect the interests of the holders of the Capital Securities or vary
the terms thereof.
Holders of the Capital Securities have no preemptive rights.
DESCRIPTION OF THE CAPITAL SECURITIES GUARANTEE
Pursuant to the Capital Securities Guarantee, NationsBank will agree, to
the extent the Trust shall have funds available therefor, to pay in full to the
holders of the Capital Securities issued by the Trust, the Guarantee Payments
(as defined in the accompanying Prospectus) (except to the extent paid by the
Trust), as and when due, regardless of any defense, right of set-off or
counterclaim which the Trust may have or assert. The Corporation's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Corporation to the holders of Capital Securities or by causing
the Trust to pay such amounts to such holders. The Capital Securities Guarantee
will be qualified as an indenture under the Trust Indenture Act. The Bank of New
York will act as the initial Capital Securities Guarantee Trustee. The terms of
the Capital Securities Guarantee will be those set forth in such Capital
Securities Guarantee and those made part of such Capital Securities Guarantee by
the Trust Indenture Act. The Capital Securities Guarantee will be held by the
Capital Securities Guarantee Trustee for the benefit of the holders of the
Capital Securities. The Capital Securities Guarantee, when taken together with
the Corporation's obligations under the Junior Subordinated Notes, the Indenture
and the Declaration, including the Corporation's obligations to pay costs,
expenses, debts and liabilities of the NB Capital Trusts under the Indenture
(other than with respect to the Trust Securities), will provide a full and
unconditional guarantee, on a subordinated basis, to the extent the applicable
Trust shall have funds available therefor, by the Corporation of payments due on
the Capital Securities. A summary description of the Capital Securities
Guarantee appears in the accompanying Prospectus under the caption "Description
of the Preferred Securities Guarantees."
EFFECT OF OBLIGATIONS UNDER THE JUNIOR SUBORDINATED
NOTES AND THE CAPITAL SECURITIES GUARANTEE
As set forth in the Declaration, the sole purpose of the Trust is to issue
the Trust Securities evidencing undivided beneficial interests in the assets of
the Trust, and to invest the proceeds from such issuance and sale in the Junior
Subordinated Notes.
As long as payments of interest and other payments are made when due on the
Junior Subordinated Notes, such payments will be sufficient to cover
Distributions and payments due on the Trust Securities because of the following
factors: (i) the aggregate principal amount of Junior Subordinated Notes will be
equal to the sum of the aggregate stated liquidation amount of the Trust
Securities; (ii) the interest rate and the interest and other payment dates on
the Junior Subordinated Notes will match the Distribution Rate and Distribution
and other payment dates for the Capital Securities; (iii) NationsBank shall pay
all, and the Trust shall not be obligated to pay, directly or indirectly, all
costs, expenses, debt, and obligations of the Trust (other than with respect to
the Trust Securities); and (iv) the Declaration further provides that the
Regular Trustees shall not take or cause or permit the Trust to, among other
things, engage in any activity that is not consistent with the purposes of the
Trust.
Payments of Distributions (to the extent funds therefor are available) and
other payments due on the Capital Securities (to the extent funds therefor are
available) are guaranteed on a subordinated basis by NationsBank as and to the
extent set forth under "Description of the Preferred Securities Guarantees" in
the accompanying Prospectus. If NationsBank does not make interest payments on
the Junior Subordinated Notes purchased by the Trust, it is expected that the
Trust will not have sufficient funds to pay Distributions on the Capital
Securities. The Capital Securities Guarantee does not apply to any payment of
Distributions unless and until the Trust has sufficient funds for the payment of
such Distributions. The Capital Securities Guarantee covers the payment of
Distributions and other payments on the Capital Securities only if and to the
extent that NationsBank has made a payment of interest or principal on the
Junior Subordinated Notes held by the Trust as its sole asset. The Capital
Securities Guarantee, when taken together with the Corporation's obligations
under the Junior Subordinated Notes and the Indenture and its obligations under
the Declaration, including
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its obligations to pay costs, expenses, debts and liabilities of the Trust
(other than with respect to the Trust Securities), will provide a full and
unconditional guarantee on a subordinated basis of amounts due on the Capital
Securities.
If NationsBank fails to make interest or other payments on the Junior
Subordinated Notes when due (taking account of any Extension Period), the
Declaration provides a mechanism whereby the holders of the Capital Securities,
using the procedures described in "Description of the Capital
Securities -- Book-Entry Only Issuance" and " -- Voting Rights," may direct the
Property Trustee to enforce its rights under the Junior Subordinated Notes. If
the Property Trustee fails to enforce its rights under the Junior Subordinated
Notes, a holder of Capital Securities may institute a legal proceeding against
NationsBank to enforce the Property Trustee's rights under the Junior
Subordinated Notes without first instituting any legal proceeding against the
Property Trustee or any other person or entity. Notwithstanding the foregoing,
if a Note Payment Failure has occurred and is continuing, a holder of Capital
Securities may then institute a Direct Action for payment after the respective
due date specified in the Junior Subordinated Notes. In connection with such
Direct Action, NationsBank will be subrogated to the rights of such holder of
Capital Securities under the Declaration to the extent of any payment made by
NationsBank to such holder of Capital Securities in such Direct Action.
NationsBank, under the Capital Securities Guarantee, acknowledges that the
Capital Securities Guarantee Trustee shall enforce the Capital Securities
Guarantee on behalf of the holders of the Capital Securities. If NationsBank
fails to make payments under the Capital Securities Guarantee, the Capital
Securities Guarantee provides a mechanism whereby the holders of the Capital
Securities may direct the Capital Securities Guarantee Trustee to enforce its
rights thereunder. Any holder of Capital Securities may institute a legal
proceeding directly against NationsBank to enforce the Capital Securities
Guarantee Trustee's rights under the Capital Securities Guarantee without first
instituting a legal proceeding against the Trust, the Capital Securities
Guarantee Trustee, or any other person or entity.
NationsBank and the Trust believe that the above mechanisms and
obligations, taken together, provide a full and unconditional guarantee by
NationsBank on a subordinated basis of payments due on the Capital Securities.
See "Description of the Preferred Securities Guarantees -- General" in the
accompanying Prospectus.
UNITED STATES FEDERAL INCOME TAXATION
GENERAL
The following is a summary of certain of the material United States federal
income tax consequences of the purchase, ownership and disposition of Capital
Securities. The statements of law and legal conclusions set forth in this
summary regarding the tax consequences to the Beneficial Owners of the Capital
Securities represent the opinion of Stroock & Stroock & Lavan, special tax
counsel to NationsBank and the Trust ("Tax Counsel"). Unless otherwise stated,
this summary deals only with Capital Securities held as capital assets by
holders who purchase the Capital Securities upon original issuance ("Initial
Holders"). It does not deal with special classes of holders such as banks,
thrifts, real estate investment trusts, regulated investment companies,
insurance companies, dealers in securities or currencies, tax-exempt investors,
or persons that will hold the Capital Securities as a position in a "straddle,"
as part of a "synthetic security" or "hedge," as part of a "conversion
transaction" or other integrated investment, or as other than a capital asset.
This summary also does not address the tax consequences to persons that have a
functional currency other than the U.S. Dollar or the tax consequences to
shareholders, partners or beneficiaries of a holder of Capital Securities.
Further, it does not include any description of any alternative minimum tax
consequences or the tax laws of any state or local government or of any foreign
government that may be applicable to the Capital Securities. This summary is
based on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
regulations thereunder and administrative and judicial interpretations thereof,
as of the date hereof, all of which are subject to change, possibly on a
retroactive basis.
CLASSIFICATION OF THE JUNIOR SUBORDINATED NOTES
In connection with the issuance of the Junior Subordinated Notes, Tax
Counsel will render its opinion generally to the effect that under then current
law and assuming full compliance with the terms of the Indenture (and certain
other documents), and based on certain facts and assumptions contained in such
opinion, the
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Junior Subordinated Notes will be classified for United States federal income
tax purposes as indebtedness of NationsBank.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Capital Securities, Tax Counsel will
render its opinion generally to the effect that, under then current law and
assuming full compliance with the terms of the Declaration and the Indenture
(and certain other documents), and based on certain facts and assumptions
contained in such opinion, the Trust will be classified for United States
federal income tax purposes as a grantor trust and not as an association taxable
as a corporation. Accordingly, for United States federal income tax purposes,
each holder of Capital Securities generally will be considered the owner of an
undivided interest in the Junior Subordinated Notes, and each holder will be
required to include in its gross income any interest (or accrued OID) with
respect to its allocable share of those Junior Subordinated Notes.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under recently issued Treasury regulations (the "Regulations") applicable
to debt instruments issued on or after August 13, 1996, a "remote" contingency
that stated interest will not be timely paid will be ignored in determining
whether a debt instrument is issued with OID. NationsBank believes that the
likelihood of its exercising its option to defer payments of interest is
"remote" since exercising that option would prevent NationsBank from declaring
dividends on any class of its equity. Accordingly, NationsBank intends to take
the position, based on the advice of Tax Counsel, that the Junior Subordinated
Notes will not be considered to be issued with OID and, accordingly, stated
interest on the Junior Subordinated Notes generally will be taxable to a holder
as ordinary income at the time it is paid or accrued in accordance with such
holder's method of accounting.
Under the Regulations, if NationsBank were to exercise its option to defer
payments of interest, the Junior Subordinated Notes would at that time be
treated as issued with OID, and all stated interest on the Junior Subordinated
Notes would thereafter be treated as OID as long as the Junior Subordinated
Notes remain outstanding. In such event, all of a holder's taxable interest
income with respect to the Junior Subordinated Notes would thereafter be
accounted for on an economic accrual basis regardless of such holder's method of
tax accounting, and actual distributions of stated interest would not be
reported as taxable income. Consequently, a holder of Capital Securities would
be required to include OID in its gross income even though NationsBank would not
make actual cash payments during an Extension Period.
The Regulations have not yet been addressed in any rulings or other
interpretations by the Internal Revenue Service ("IRS"), and the IRS could take
a position that the likelihood of deferral is not remote.
Because income on the Capital Securities will constitute interest or OID,
corporate holders of Capital Securities will not be entitled to a
dividends-received deduction with respect to any income recognized with respect
to the Capital Securities.
MARKET DISCOUNT AND BOND PREMIUM
Holders of Capital Securities other than Initial Holders may be considered
to have acquired their undivided interests in the Junior Subordinated Notes with
market discount or acquisition premium as such phrases are defined for United
States federal income tax purposes. Such holders are advised to consult their
tax advisors as to the income tax consequences of the acquisition, ownership and
disposition of the Capital Securities.
RECEIPT OF JUNIOR SUBORDINATED NOTES OR CASH UPON LIQUIDATION OF NB CAPITAL
TRUST
NationsBank will have the right at any time to dissolve the Trust and cause
the Junior Subordinated Notes to be distributed to the holders of the Trust
Securities, provided that NationsBank has received prior approval from the
Federal Reserve Board, if required. Under current law, such a distribution, for
United States federal income tax purposes, would be treated as a nontaxable
event to each holder, and each holder would receive an aggregate tax basis in
the Junior Subordinated Notes equal to such holder's aggregate tax basis in its
Capital Securities. A holder's holding period in the Junior Subordinated Notes
so received in liquidation of the Trust would include the period during which
the Capital Securities were held by such holder. If, however, at the time of the
dissolution of the Trust there has been a Tax Event or similar circumstance
which results in
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the Trust being treated as an association taxable as a corporation, the
distribution of the Junior Subordinated Notes would likely constitute a taxable
event to holders of Capital Securities.
Under certain circumstances described herein (see "Description of the
Junior Subordinated Notes -- Optional Prepayment" and " -- Special Event
Prepayment"), the Junior Subordinated Notes may be prepaid for cash and the
proceeds of such prepayment distributed to holders in redemption of their
Capital Securities. Under current law, such a redemption would, for United
States federal income tax purposes, constitute a taxable disposition of the
redeemed Capital Securities, and a holder would recognize gain or loss as if it
sold such redeemed Capital Securities for cash. See " -- Sales of Capital
Securities."
SALES OF CAPITAL SECURITIES
A holder that sells Capital Securities will recognize gain or loss equal to
the difference between its adjusted tax basis in the Capital Securities and the
amount realized on the sale of such Capital Securities (other than with respect
to accrued and unpaid interest which has not yet been included in income, which
will be treated as ordinary income). A holder's adjusted tax basis in the
Capital Securities generally will be its initial purchase price increased by OID
(if any) previously includable in such holder's gross income to the date of
disposition and decreased by payments received on the Capital Securities that
are principal payments on the Junior Subordinated Notes. Such gain or loss
generally will be a capital gain or loss and generally will be a long-term
capital gain or loss if the Capital Securities have been held for more than one
year.
The Capital Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
Junior Subordinated Notes. A holder who uses the accrual method of accounting
for tax purposes (and a cash method holder, if the Junior Subordinated Notes are
deemed to be issued with OID) and who disposes of his Capital Securities between
record dates for payments of Distributions thereon will be required to include
accrued but unpaid interest on the Junior Subordinated Notes through the date of
disposition in income as ordinary income (i.e., interest or, possibly, OID), and
to add such amount to his adjusted tax basis in his pro rata share of the
underlying Junior Subordinated Notes deemed disposed of. To the extent the
selling price is less than the holder's adjusted tax basis (which will include
all accrued but unpaid interest) a holder will recognize a capital loss. Subject
to certain limited exceptions, capital losses cannot be applied to offset
ordinary income for United States federal income tax purposes.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is, under United
States tax law, a foreign corporation, a non-resident alien individual, a
foreign partnership, or an estate or trust treated as a foreign estate or trust
under Section 7701(a)(31) of the Code.
Under present United States federal income tax law: (i) payments by the
Trust or any of its paying agents to any holder of a Capital Security who or
which is a United States Alien Holder will not be subject to United States
federal withholding tax; provided, that, (a) the beneficial owner of the Capital
Security does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of NationsBank entitled to vote,
(b) the beneficial owner of the Capital Security is not a controlled foreign
corporation that is related to NationsBank through stock ownership and (c)
either (A) the beneficial owner of the Capital Security certifies to the Trust
or its agent, under penalties of perjury, that it is not a United States holder
and provides its name and address or (B) a securities clearing organization,
bank or other financial institution that holds customers' securities in the
ordinary course of its trade or business (a "Financial Institution"), and holds
the Capital Security in such capacity, certifies to the Trust or its agent,
under penalties of perjury, that such statement has been received from the
beneficial owner by it or by a Financial Institution between it and the
beneficial owner and furnishes the Trust or its agent with a copy thereof; and
(ii) a United States Alien Holder of a Capital Security will not be subject to
United States federal withholding tax on any gain realized upon the sale or
other disposition of a Capital Security.
PROPOSED TAX LEGISLATION
On March 19, 1996, President Clinton proposed the Proposed Legislation that
would, among other things, generally deny corporate issuers a deduction for
interest in respect of certain debt obligations issued on or after
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December 7, 1995 if such debt obligations have a maximum term in excess of 20
years and are not shown as indebtedness on the issuer's applicable consolidated
balance sheet or, where the debt obligation is issued to a related party (other
than a corporation), where the holder or some other related party issues a
related instrument that is not shown as indebtedness on the issuer's
consolidated balance sheet. On March 29, 1996, Senate Finance Committee Chairman
William V. Roth, Jr. and House Ways and Means Committee Chairman Bill Archer
issued the Joint Statement indicating their intent that certain legislative
proposals initiated by the Clinton administration, including the Proposed
Legislation, that may be adopted by either of the tax-writing committees of
Congress would have an effective date that is no earlier than the date of
"appropriate Congressional action." In addition, subsequent to the publication
of the Joint Statement, Senator Daniel Patrick Moynihan and Representatives Sam
M. Gibbons and Charles B. Rangel wrote the Democrat Letters to Treasury
Department officials concurring with the views expressed in the Joint Statement.
Based upon the Joint Statement and the Democrat Letters, it is expected that if
the Proposed Legislation were to be enacted, such legislation would not apply to
the Junior Subordinated Notes. There can be no assurances, however, that the
effective date guidance contained in the Joint Statement and the Democrat
Letters will be incorporated into the Proposed Legislation, if enacted, or that
other legislation enacted after the date hereof will not otherwise adversely
affect the ability of the Corporation to deduct the interest payable on the
Junior Subordinated Notes. Accordingly, there can be no assurance that a Tax
Event will not occur. See "Description of the Capital Securities -- Redemption
of Capital Securities Upon Payment or Prepayment of Junior Subordinated Notes."
INFORMATION REPORTING TO HOLDERS
Generally, income on the Capital Securities will be reported to holders on
Forms 1099, which forms should be mailed to holders of Capital Securities by
January 31 following each calendar year.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Capital Securities may
be subject to a "backup" withholding tax of 31% unless the holder complies with
certain identification requirements. Any withheld amounts will be allowed as a
credit against the holder's United States federal income tax, provided the
required information is provided to the IRS.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL
OR OTHER TAX LAWS.
CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES TO FOREIGN INVESTORS
Holders of the Capital Securities who are not U.S. Persons (as defined
below) must comply with applicable certification requirements in order to
receive payments of interest free of applicable withholding taxes. In no event
will any payments by the Trust or the Property Trustee be increased as a result
of any such withholding or other taxes. A holder of a Capital Security that is
not a U.S. Person will be subject to the 30% U.S. withholding tax that generally
applies to payments of interest on registered debt issued by U.S. Persons,
unless (i) each clearing system, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business in the
chain of intermediaries between such holder of a Capital Security and the U.S.
entity required to withhold tax complies with applicable certification
requirements, and (ii) such holder of a Capital Security taxes one of the
following steps to obtain an exemption or reduced tax rate:
EXEMPTION FOR NON-U.S. PERSONS (FORM W-8). Holders of the Capital
Securities for which the interest income is not effectively connected with a
United States trade or business, that do not own more than 10% of the stock of
the Corporation and that are non-U.S. Persons can obtain a complete exemption
from the withholding tax by filing a signed Form W-8 (Certificate of Foreign
Status). If the information shown on Form W-8 changes, a new form W-8 must be
filed within 30 days of such change.
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EXEMPTION FOR NON-U.S. PERSONS WITH EFFECTIVELY CONNECTED INCOME (FORM
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income if effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
EXEMPTION OR REDUCED RATE FOR NON-U.S. PERSONS RESIDENT IN TREATY COUNTRIES
(FORM 1001.) Non-U.S. Persons that are holders of the Capital Securities and
reside in a country that has a tax treaty with the United States can obtain an
exemption or reduced tax rate (depending on the treaty terms) by filing Form
1001 (Ownership, Exemption or Reduced Rate Certificate). If the treaty provides
only for a reduced rate, withholding tax will be imposed at that rate unless the
filer alternatively files Form W-8. Form 1001 may be filed by the holder of a
Capital Security or its agent.
EXEMPTION FOR U.S. PERSON (FORM W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (payer's Request for
Taxpayer Identification Number and Certification).
U.S. FEDERAL INCOME TAX REPORTING PROCEDURE. A holder of a Capital Security
or, in the case of a Form 1001 or a Form 4224 filer, its agent, files by
submitting the appropriate form to the person through whom it holds (the
clearing agency, in the case of persons holding directly on the books of the
clearing agency) prior to the first interest payment occurring after its
acquisition of a Capital Security. Form W-8 and Form 1001 are effective for
three calendar years and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any political subdivision thereof or (iii) an estate or trust
the income of which is includible in gross income for United States tax
purposes, regardless of its source. This summary does not deal with all aspects
of U.S. Federal income tax withholding that may be relevant to foreign holders
of the Capital Securities. Investors are advised to consult their own tax
advisors for specific tax advice concerning their holding and disposing of the
Capital Securities.
ERISA CONSIDERATIONS
GENERAL
A fiduciary of an employee benefit plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") should consider
fiduciary standards under ERISA in the context of the particular circumstances
of such plan before authorizing an investment in the Capital Securities. Such
fiduciary should consider whether the investment satisfies ERISA's
diversification and prudence requirements, whether the investment constitutes
unauthorized delegation of fiduciary authority and whether the investment is in
accordance with the documents and instruments governing the plan. In addition,
ERISA and the Code prohibit a wide range of transactions ("Prohibited
Transactions") involving the assets of a plan subject to ERISA or the assets of
an individual retirement account or plan subject to Section 4975 of the Code or
any entity in which such plan invests whose assets are deemed "plan assets"
(hereinafter an "ERISA Plan") and persons who have certain specified
relationships to the ERISA Plan ("parties in interest," within the meaning of
ERISA, and "disqualified persons," within the meaning of the Code). Such
transactions may require "correction" and may cause the ERISA Plan fiduciary to
incur certain liabilities and the parties in interest or disqualified persons to
be subject to excise taxes.
Governmental plans and certain church plans (each as defined under ERISA)
are not subject to the Prohibited Transaction rules. Such plans may, however, be
subject to federal, state or local laws or regulations which may affect their
investment in the Capital Securities. Any fiduciary of such a governmental or
church plan considering an investment in the Capital Securities should determine
the need for, and the availability, if necessary, of any exemptive relief under
such laws or regulations.
TRUST ASSETS AS "PLAN ASSETS"
The Department of Labor has issued final regulations (the "Labor
Regulations") as to what constitutes assets of an employee benefit plan ("plan
asset") under ERISA. The Labor Regulations provide that, as a general rule, when
an ERISA Plan acquires an equity interest in an entity and such interest does
not represent a
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"publicly offered security" nor a security issued by an investment company
registered under the 1940 Act, the ERISA Plan's assets include both the equity
interest and an undivided interest in each of the underlying assets of the
entity, unless it is established either that the entity is an operating company
or that equity participation in the entity by "benefit plan investors" is not
"significant." For purposes of the Labor Regulations, the Trust will not be an
investment company nor an operating company.
Under the Labor Regulations, equity participation by benefit plan investors
will not be considered "significant" on any date only if, immediately after the
most recent acquisition of Capital Securities, the aggregate interest in the
Capital Securities held by benefit plan investors will be less than 25% of the
value of the Capital Securities. Although it is possible that the equity
participation by benefit plan investors on any date will not be "significant"
for purposes of the Labor Regulations, such result cannot be assured.
Consequently, if ERISA Plans or investors using plan assets of ERISA Plans
purchase the Capital Securities, the Trust's assets could be deemed to be "plan
assets" of such ERISA Plans for purposes of the fiduciary responsibility
provisions of ERISA and the Code. Under ERISA, any person who exercises any
authority or control respecting the management or disposition of the assets of
an ERISA Plan is considered to be a fiduciary of such ERISA Plan. For example,
the Property Trustee could therefore become a fiduciary of the ERISA Plans that
invest in the Capital Securities and be subject to the general fiduciary
requirements of ERISA in exercising its authority with respect to the management
of the assets of the Trust. However, the Property Trustee will have only limited
discretionary authority with respect to the Trust's assets and the remaining
functions and responsibilities performed by the Property Trustee will be for the
most part custodial and ministerial in nature.
PROHIBITED TRANSACTIONS
The Corporation may be a party in interest or a disqualified person with
respect to an ERISA Plan investing in the Capital Securities or acquiring Junior
Subordinated Notes, and therefore, such investment by an ERISA Plan may give
rise to a Prohibited Transaction in the form of a direct or indirect extension
of credit by the investing ERISA Plan to the Corporation. Consequently, before
investing in the Capital Securities or acquiring Junior Subordinated Notes, any
person who is, or who is acquiring such securities for, or on behalf of, an
ERISA Plan should determine that either a statutory or an administrative
exemption from the Prohibited Transaction rules discussed below or otherwise
available is applicable to such investment in the Capital Securities or
acquisition of Junior Subordinated Notes, or that such investment in, or
acquisition of, such securities will not result in a Prohibited Transaction.
The statutory or administrative exemptions from the Prohibited Transaction
rules under ERISA and the Code which may be available to an ERISA Plan which is
investing in the Capital Securities include: Prohibited Transaction Class
Exemption ("PTCE") 90-1, regarding investments by insurance company pooled
separate accounts; PTCE 91-38, regarding investments by bank collective
investment funds; PTCE 84-14, regarding transactions effected by qualified
professional asset managers; PTCE 96-23, regarding transactions effected by
in-house asset managers; and PTCE 95-60, regarding investments by insurance
company general accounts (collectively referred to as the "ERISA Investor
Exemptions").
Notwithstanding the foregoing, Capital Securities may not be acquired by
any Person who is, or who in acquiring such Capital Securities is using the
assets of, an ERISA Plan unless one of the ERISA Investor Exemptions or another
applicable exemption is available to the ERISA Plan. The acquisition of the
Capital Securities by any Person who is, or who in acquiring such Capital
Securities is using the assets of, an ERISA Plan shall be deemed to constitute a
representation by such Person to the Trust that such person is eligible for
exemptive relief available pursuant to either the ERISA Investor Exemptions or
another applicable exemption with respect to the acquisition and holding of such
Capital Securities.
THE DISCUSSION HEREIN OF ERISA IS GENERAL IN NATURE AND IS NOT INTENDED TO
BE ALL INCLUSIVE. ANY FIDUCIARY OF AN ERISA PLAN, GOVERNMENTAL PLAN OR CHURCH
PLAN CONSIDERING AN INVESTMENT IN THE CAPITAL SECURITIES SHOULD CONSULT WITH ITS
LEGAL ADVISORS REGARDING THE CONSEQUENCES OF SUCH INVESTMENT.
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PLAN OF DISTRIBUTION
This Prospectus Supplement and accompanying Prospectus are to be used by
NationsBanc Capital Markets, Inc. ("NCMI"), a broker-dealer and a direct wholly
owned subsidiary of NationsBank, in connection with offers and sales of Offered
Securities in secondary market transactions at negotiated prices relating to
prevailing prices at the time of sale or otherwise. NCMI may act as principal or
agent in such transactions.
NationsBank is considered to be an affiliate of NCMI, and the offer and
sale of any Offered Securities by NCMI will comply with the requirements of the
NASD regarding the underwriting of securities of affiliates and with any
restrictions that may be imposed on NCMI by the Federal Reserve Board. In
addition, under the applicable NASD rules, no NASD member participating in
offers and sales of the Offered Securities may execute a transaction in the
Offered Securities in a discretionary account without the specific prior written
approval of the member's customer.
NCMI has no obligation to make a market in the Offered Securities, and if
commenced, may discontinue its market-making activities at any time without
notice, at its sole discretion. Furthermore, NCMI may be required to discontinue
its market-marking activities during periods when the Corporation is involved in
a distribution of certain of its securities or when NCMI, by virtue of its
affiliation with the Corporation, is aware of material non-public information
relating to the Corporation. In such instance, NCMI would not be able to
recommence its market-making activities until such distribution has been
completed or such information has become publicly available. It is not possible
to determine the impact, if any, that any such dicontinuance may have on the
market for the Offered Securities. While other broker-dealers may make a market
in the Offered Securities from time to time, there can be no assurance that any
other broker-dealer will do so at any time when NCMI discontinues its
market-making activities.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Capital
Securities will be passed upon on behalf of the NB Capital Trust by Richards,
Layton & Finger, special Delaware counsel to the NB Capital Trust. The validity
of the Junior Subordinated Notes and the Capital Securities Guarantees and
certain matters relating thereto will be passed upon for NationsBank by Smith
Helms Mulliss & Moore, L.L.P. and for the Underwriters by Stroock & Stroock &
Lavan. Certain United States federal income taxation matters will be passed upon
for NationsBank and the NB Capital Trust by Stroock & Stroock & Lavan, special
tax counsel to NationsBank and the NB Capital Trust. Smith Helms Mulliss &
Moore, L.L.P. and Stroock & Stroock & Lavan will rely on the opinion of
Richards, Layton & Finger as to matters of Delaware law. As of the date of this
Global Prospectus Supplement, certain members of Smith Helms Mulliss & Moore,
L.L.P. beneficially own approximately 80,000 shares of the Corporation's common
stock.
LISTING OF CAPITAL SECURITIES
AND RELATED MATTERS
Application has been made to list the Capital Securities on the Luxembourg
Stock Exchange. However, there can be no assurance that the Capital Securities
will be accepted for listing. NationsBank and the Trust do not intend to list
the Capital Securities on any other securities exchange. Prior to listing, a
legal notice relating to the issuance of the Capital Securities, the Certificate
of Trust, the Declaration, the Indenture and the Underwriting Agreement will be
deposited with the Chief Registrar of the District Court of Luxembourg, where
such documents may be inspected and copies thereof obtained upon request.
As long as any of the Capital Securities are outstanding, copies of the
Certificate of Trust, the Declaration, the Indenture and the Underwriting
Agreement and copies of the documents referred to under "Available Information"
in the accompanying Prospectus, including the Current Report on Form 8-K to be
filed by the Corporation and the Trust with the Commission shortly after
completion of the offering, will be available at the offices of Banque Generale
du Luxembourg (the "Listing Agent") in the City of Luxembourg. In addition, the
1994 and 1995 annual financial statements and the quarterly and annual financial
statements commencing with the September 30, 1996 statements of NationsBank will
be available at the offices of the Listing Agent in the City of Luxembourg.
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There has been no material adverse change in the consolidated financial
condition of the Corporation since September 30, 1996.
The Corporation is not a party to any legal proceeding which, if determined
adversely, would materially and adversely affect its condition or operations or
would materially and adversely affect its ability to perform its obligations
under the Indenture. The Trust is not a party to any legal proceeding which, if
determined adversely, would materially and adversely affect its condition or
operations or would materially and adversely affect its ability to perform its
obligations under the Declaration.
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PROSPECTUS
NATIONSBANK(Register mark)
JUNIOR SUBORDINATED NOTES
NB CAPITAL TRUST III
NB CAPITAL TRUST IV
NB CAPITAL TRUST V
PREFERRED SECURITIES
GUARANTEED AS SET FORTH HEREIN BY
NATIONSBANK(Register mark)
NationsBank Corporation ("NationsBank" or the "Corporation") may offer from
time up to $1,031,000,000 in aggregate principal amount of its subordinated
debentures, notes or other evidence of indebtedness (the "Junior Subordinated
Notes") in one or more series and in amounts, at prices and on terms to be
determined at the time of an offering. The Junior Subordinated Notes when issued
will be unsecured obligations of the Corporation. The Corporation's obligations
under the Junior Subordinated Notes will be subordinate and junior in right of
payment to other indebtedness of the Corporation, as may be described in an
accompanying Prospectus Supplement (the "Prospectus Supplement") and in an
aggregate amount to be set forth as of the most recent practicable date in such
Prospectus Supplement.
NB Capital Trust III, NB Capital Trust IV and NB Capital Trust V (each, an
"NB Capital Trust"), each a statutory business trust formed under the laws of
the State of Delaware, severally may offer, from time to time, capital
securities representing undivided preferred beneficial interests in the assets
of the respective NB Capital Trust ("Preferred Securities") having an aggregate
liquidation value of not in excess of $1,000,000,000. The payment of periodic
cash distributions ("distributions") with respect to Preferred Securities of an
NB Capital Trust and payment on liquidation, redemption or otherwise with
respect to such Preferred Securities, in each case out of moneys held by such
Trust, will be guaranteed by NationsBank as described herein (each, a "Preferred
Securities Guarantee"). See "DESCRIPTION OF THE PREFERRED SECURITIES
GUARANTEES." The Corporation's obligations under each Preferred Securities
Guarantee will be subordinate and junior in right of payment to all other
liabilities, including contingent liabilities, of the Corporation and will rank
pari passu
(CONTINUED ON NEXT PAGE)
THE OFFERED SECURITIES ARE NOT SAVINGS ACCOUNTS OR BANK DEPOSITS, ARE NOT
OBLIGATIONS OF OR GUARANTEED BY ANY BANKING AFFILIATE OF NATIONSBANK,
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENT AGENCY AND INVOLVE INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH
CAROLINA (THE "COMMISSIONER") OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION, THE COMMISSIONER OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS AND ANY RELATED PROSPECTUS SUPPLEMENTS ARE TO BE USED BY
NATIONSBANC CAPITAL MARKETS, INC., A BROKER-DEALER AND A DIRECT WHOLLY
OWNED SUBSIDIARY OF NATIONSBANK, IN CONNECTION WITH OFFERS AND SALES
RELATED TO SECONDARY MARKET TRANSACTIONS IN THE OFFERED
SECURITIES. NATIONSBANC CAPITAL MARKETS, INC. OR ITS AFFILIATES
MAY ACT AS PRINCIPAL OR AGENT IN SUCH TRANSACTIONS. ANY
SUCH SALES WILL BE MADE AT NEGOTIATED PRICES RELATING
TO PREVAILING MARKET PRICES AT THE TIME OF SALE OR
OTHERWISE.
NATIONSBANC CAPITAL MARKETS, INC.
The date of this Prospectus is January 14, 1997.
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)
with the most senior preferred or preference stock now or hereafter issued by
the Corporation and with any guarantee now or hereafter entered into by
NationsBank in respect of any preferred or preference stock of any affiliate of
the Corporation. A Preferred Securities Guarantee relating to the Preferred
Securities of an NB Capital Trust, when taken together with the Corporation's
obligations under the Junior Subordinated Notes held by such Trust, the
Indenture (as defined herein) and the Declaration of such Trust (as described
herein), including the Corporation's obligation to pay all costs, expenses,
debts and liabilities of such Trust imposed by the Indenture (other than with
respect to the Trust Securities (as defined herein) of such Trust), will provide
a full and unconditional guarantee, on a subordinated basis by the Corporation
of payments due on such Preferred Securities. See "EFFECT OF OBLIGATIONS UNDER
THE JUNIOR SUBORDINATED NOTES AND THE GUARANTEE."
Junior Subordinated Notes may be issued and sold from time to time in one
or more series to an NB Capital Trust, or a trustee of such Trust, in connection
with the investment of the proceeds from the offering of Preferred Securities
and Common Securities (as defined herein) of such Trust. The Junior Subordinated
Notes purchased by an NB Capital Trust may be subsequently distributed pro rata
to holders of the Trust Securities in connection with the dissolution of such
Trust upon the occurrence of certain events as may be described in an
accompanying Prospectus Supplement relating to such securities. The Junior
Subordinated Notes, the Preferred Securities and the related Preferred
Securities Guarantees are sometimes collectively referred to hereafter as the
"Offered Securities."
The Offered Securities may be offered in amounts, at prices and on terms to
be determined at the time of offering. Specific terms of the Junior Subordinated
Notes of any series and of the Preferred Securities of the NB Capital Trust
which will purchase and hold such Notes (the terms of which Preferred Securities
will mirror the terms of such Junior Subordinated Notes), in respect of which
this prospectus (the "Prospectus") is delivered will be set forth in the
Prospectus Supplement relating to such securities. Such Prospectus Supplement
will describe, without limitation and where applicable, the following: (i) in
the case of Junior Subordinated Notes, the specific designation, aggregate
principal amount, denomination, maturity, premium, if any, any exchange,
conversion, prepayment, redemption or sinking fund provisions, if any, interest
rate (which may be fixed or variable), if any, the time and method of
calculating interest payments, if any, dates on which premium, if any, and
interest, if any, will be payable, the right of NationsBank, if any, to defer
payment of interest on the Junior Subordinated Notes and the maximum length of
such deferral period, the initial public offering price, subordination terms,
any listing on a securities exchange and any other specific terms of the
offering; and (ii) in the case of Preferred Securities, the designation, number
of securities, liquidation preference per security, initial public offering
price, any listing on a securities exchange, distribution rate (or method of
calculation thereof), dates on which distributions shall be payable and dates
from which distributions shall accrue, any voting rights, terms for any
conversion or exchange into other securities, any redemption, exchange or
sinking fund provisions, and any other rights, preferences, privileges,
limitations or restrictions relating to the Preferred Securities, as well as the
terms upon which the proceeds of the sale of the Preferred Securities shall be
used to purchase a specific series of Junior Subordinated Notes of NationsBank.
The Prospectus Supplement relating to any Offered Securities also will contain
specific information regarding any special prepayment or redemption provisions
of the particular securities offered thereby.
This Prospectus may not be used to consummate sales of securities unless
accompanied by a Prospectus Supplement.
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR ANY ACCOMPANYING PROSPECTUS
SUPPLEMENT IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS OR ANY
ACCOMPANYING PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY NATIONSBANK
CORPORATION, ANY OF THE NB CAPITAL TRUSTS OR NATIONSBANC CAPITAL MARKETS, INC.
NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY ACCOMPANYING PROSPECTUS
SUPPLEMENT NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF NATIONSBANK CORPORATION OR ANY OF THE NB CAPITAL TRUSTS SINCE THE DATE
HEREOF. NEITHER THIS PROSPECTUS NOR ANY ACCOMPANYING PROSPECTUS SUPPLEMENT
CONSTITUTES AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER
OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
2
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, previously filed by the Corporation with the
Securities and Exchange Commission (the "Commission") pursuant to Section 13 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are
incorporated herein by reference:
(a) The Corporation's Annual Report on Form 10-K for the year ended
December 31, 1995 as filed March 29, 1996;
(b) The Corporation's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1996 as filed May 10, 1996, June 30, 1996 as filed August
14, 1996, and September 30, 1996 as filed November 13, 1996;
(c) The Corporation's Current Reports on Form 8-K filed January 12,
1996, February 1, 1996, March 8, 1996, April 17, 1996, May 16, 1996, July
5, 1996, July 31, 1996, September 6, 1996 (as amended by Form 8-K/A-1 filed
September 11, 1996 and Form 8-K/A-2 filed November 13, 1996), September 20,
1996 (as amended by Form 8-K/A filed September 23, 1996), October 25, 1996,
November 14, 1996, December 4, 1996 and December 17, 1996 (two Forms 8-K);
and
(d) The description of the Corporation's Common Stock contained in its
registration statement filed pursuant to Section 12 of the Exchange Act, as
modified by the Corporation's Current Report on Form 8-K filed on September
21, 1994.
All reports and any definitive proxy or information statements filed by the
Corporation with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Offered Securities offered hereby shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
THE CORPORATION WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A
COPY OF ANY OR ALL OF THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE (OTHER THAN
EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE
IN SUCH DOCUMENTS). WRITTEN REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO JOHN
E. MACK, SENIOR VICE PRESIDENT AND TREASURER, NATIONSBANK CORPORATION,
NATIONSBANK CORPORATE CENTER, CORPORATE TREASURY DIVISION, CHARLOTTE, NORTH
CAROLINA 28255. TELEPHONE REQUESTS MAY BE DIRECTED TO (704) 386-5972.
AVAILABLE INFORMATION
This Prospectus constitutes a part of a combined Registration Statement on
Form S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") filed by NationsBank and the NB Capital Trusts with the Commission
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Offered Securities. This Prospectus does not contain all of the
information set forth in such Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission, although
it does include a summary of the material terms of the Indenture and the
Declarations. Reference is made to such Registration Statement and to the
exhibits relating thereto for further information with respect to NationsBank,
the NB Capital Trusts and the Offered Securities. Any statements contained
herein concerning the provisions of any document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission or incorporated by
reference herein are not necessarily complete, and, in each instance, reference
is made to the copy of such document so filed for a more complete description of
the matter involved. Each such statement is qualified in its entirety by such
reference.
NationsBank is subject to the informational requirements of the Exchange
Act and, in accordance therewith, files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information can be inspected and copied at the following public reference
facilities maintained by the Commission: 450 Fifth Street, N.W., Washington,
D.C. 20549; 7 World Trade Center, Suite 1300, New
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York, New York 10048; and the Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. Copies of such material may also be obtained
by mail from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, upon payment of prescribed rates. The
Commission maintains an Internet web site that contains reports, proxy and
information statements and other information regarding issuers who file
electronically with the Commission. The address of that site is
http://www.sec.gov. In addition, reports, proxy statements and other information
concerning NationsBank may be inspected at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005 and at the offices of
The Pacific Stock Exchange Incorporated, 301 Pine Street, San Francisco,
California 94104.
No separate financial statements of any of the NB Capital Trusts have been
included herein. NationsBank does not consider that such financial statements
would be material to holders of the Preferred Securities because (i) all of the
voting securities of each of the NB Capital Trusts will be owned, directly or
indirectly, by NationsBank, a reporting company under the Exchange Act, (ii)
none of the NB Capital Trusts has any independent operations but each exists for
the sole purpose of issuing securities representing undivided beneficial
interests in the assets of such Trust and investing the proceeds thereof in
Junior Subordinated Notes issued by NationsBank, and (iii) the Corporation's
obligations described herein and in any accompanying Prospectus Supplement to
provide certain indemnities in respect of and be responsible for certain costs,
expenses, debts and liabilities of each NB Capital Trust under the Indenture and
any supplemental indenture thereto and pursuant to the Declaration of each NB
Capital Trust, the guarantee issued with respect to Preferred Securities issued
by each NB Capital Trust, the Junior Subordinated Notes purchased by each NB
Capital Trust and the provisions of the Indenture, taken together, constitute a
full and unconditional guarantee of payments due on the Preferred Securities.
See "DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES" and "DESCRIPTION OF THE
PREFERRED SECURITIES GUARANTEES."
NB Capital Trust III currently is subject to the informational reporting
requirements under Section 13 of the Exchange Act but has not yet been required
to file any such reports. NB Capital Trusts IV and V currently are not subject
to the reporting requirements under Section 13, but will become subject to such
requirements upon the effectiveness of the Registration Statement. The NB
Capital Trusts, including NB Capital Trust III, intend to seek and expect to
receive exemptions from the Section 13 reporting requirements prior to the
filing deadlines for any such reports.
NATIONSBANK CORPORATION
GENERAL
NationsBank is a multi-bank holding company established as a North Carolina
corporation in 1968 and is registered under the Bank Holding Company Act of
1956, as amended (the "BHCA"), with its principal assets being the stock of its
subsidiaries. Through its banking subsidiaries (the "Banks") and its various
non-banking subsidiaries, NationsBank provides banking and banking-related
services, primarily throughout the Southeast and Mid-Atlantic states and Texas.
The principal executive offices of NationsBank are located at NationsBank
Corporate Center in Charlotte, North Carolina 28255. Its telephone number is
(704) 386-5000.
OPERATIONS
NationsBank provides a diversified range of banking and certain nonbanking
financial services and products through its various subsidiaries. NationsBank
manages its business activities through three major business units: the General
Bank, Global Finance and Financial Services.
The General Bank provides comprehensive services in the commercial and
retail banking fields, including the origination and servicing of home mortgage
loans, the issuance and servicing of credit cards (through a Delaware
subsidiary), indirect lending, dealer finance and certain insurance services.
The General Bank also provides retirement services for defined benefit and
defined contribution plans, full service and discount brokerage services,
investment advisory services, including advising the Nations Fund family of
mutual funds, as well as private banking, fiduciary and investment management
services through subsidiaries of NationsBank. As of September 30, 1996, the
General Bank operated 1,980 banking offices through the following Banks:
NationsBank, N.A. (serving the states of North Carolina, South Carolina,
Maryland and Virginia and the District of Columbia); NationsBank, N.A. (South)
(serving the states of Florida and Georgia); NationsBank of
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<PAGE>
Kentucky, N.A.; NationsBank of Tennessee, N.A.; NationsBank of Texas, N.A.; and
Sun World, N.A. (serving the state of Texas). The General Bank also provides
fully automated, 24-hour cash dispensing and depositing services throughout the
states in which it is located, through 3,609 automated teller machines.
Global Finance provides comprehensive corporate and investment banking as
well as trading and distribution services to domestic and international
customers. The group serves as a principal lender and investor, as well as an
advisor, arranger and underwriter, and manages treasury and trade transactions
for clients and customers. Loan origination and syndication, asset-backed
lending, leasing, factoring, project finance and mergers and acquisitions are
representative of the services provided by the group. Global Finance also
underwrites, trades and distributes a wide range of securities (including
bank-eligible securities and, to a limited extent, bank-ineligible securities as
authorized by the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board")), and trades and distributes a wide range of derivative products
in certain interest rate, foreign exchange, commodity and equity markets. Global
Finance provides its services through various offices located in major United
States cities as well as in London, Frankfurt, Singapore, Bogota, Mexico City,
Grand Cayman, Nassau, Seoul, Tokyo, Osaka, Taipei and Hong Kong.
Financial Services includes NationsCredit Consumer Corporation, primarily a
consumer finance subsidiary, and NationsCredit Commercial Corporation, primarily
a commercial finance subsidiary. NationsCredit Consumer Corporation, which has
approximately 331 offices located in 36 states, provides personal, mortgage and
automobile loans to consumers and retail finance programs to dealers.
NationsCredit Commercial Corporation consists of seven divisions that specialize
in one or more of the following areas: equipment loans and leasing; loans for
debt restructuring, mergers and acquisitions and working capital; real estate,
golf/recreational and health care financing; and inventory financing to
manufacturers, distributors and dealers.
RECENT ACQUISITION
On January 7, 1997, NationsBank completed the acquisition of Boatmen's
Bancshares, Inc., a corporation organized and existing under the laws of the
State of Missouri and registered as a bank holding company under the BHCA
("Boatmen's"). Pursuant to an Agreement and Plan of Merger dated August 29,
1996, Boatmen's was merged into a wholly owned subsidiary of NationsBank (the
"Boatmen's Acquisition"). The Boatmen's Acquisition constituted a tax-free
reorganization under the Internal Revenue Code of 1986, as amended, and was
accounted for as a purchase. At September 30, 1996, Boatmen's had total assets
of $41 billion and had over 600 banking offices in Missouri, Kansas, Arkansas,
Oklahoma, New Mexico, Texas, Iowa, Illinois and Tennessee. For additional
information regarding the Boatmen's Acquisition, see the Current Report of
NationsBank on Form 8-K filed September 6, 1996, as amended by Form 8-K/A-1
filed September 11, 1996 and Form 8-K/A-2 filed November 13, 1996, incorporated
herein by reference.
As part of its operations, NationsBank regularly evaluates the potential
acquisition of, and holds discussions with, various financial institutions and
other businesses of a type eligible for bank holding company investment. In
addition, NationsBank regularly analyzes the values of, and submits bids for,
the acquisition of customer-based funds and other liabilities and assets of such
financial institutions and other businesses. As a general rule, NationsBank
publicly announces such material acquisitions when a definitive agreement has
been reached.
SUPERVISION AND REGULATION
GENERAL. As a registered bank holding company, NationsBank is subject to
the supervision of, and to regular inspection by, the Federal Reserve Board. The
Banks are organized as national banking associations, which are subject to
regulation, supervision and examination by the Office of the Comptroller of the
Currency (the "Comptroller"). The Banks are also subject to regulation by the
Federal Deposit Insurance Corporation (the "FDIC") and other federal regulatory
agencies. In addition to banking laws, regulations and regulatory agencies,
NationsBank and its subsidiaries and affiliates are subject to various other
laws and regulations and supervision and examination by other regulatory
agencies, all of which directly or indirectly affect the Corporation's
operations, management and ability to make distributions. The following
discussion summarizes certain aspects of those laws and regulations that affect
NationsBank.
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The activities of NationsBank, and those of companies which it controls or
in which it holds more than 5% of the voting stock, are limited to banking or
managing or controlling banks or furnishing services to or performing services
for its subsidiaries, or any other activity which the Federal Reserve Board
determines to be so closely related to banking or managing or controlling banks
as to be a proper incident thereto. In making such determinations, the Federal
Reserve Board is required to consider whether the performance of such activities
by a bank holding company or its subsidiaries can reasonably be expected to
produce benefits to the public such as greater convenience, increased
competition or gains in efficiency that outweigh possible adverse effects, such
as undue concentration of resources, decreased or unfair competition, conflicts
of interest or unsound banking practices. Generally, bank holding companies,
such as NationsBank, are required to obtain prior approval of the Federal
Reserve Board to engage in any new activity not previously approved by the
Federal Reserve Board or to acquire more than 5% of any class of voting stock of
any company.
Bank holding companies are also required to obtain the prior approval of
the Federal Reserve Board before acquiring more than 5% of any class of voting
stock of any bank which is not already majority-owned by the bank holding
company. Pursuant to the Riegle-Neal Interstate Banking and Branching Efficiency
Act of 1994 (the "Interstate Banking and Branching Act"), a bank holding company
became able to acquire banks in states other than its home state beginning
September 29, 1995, without regard to the permissibility of such acquisition
under state law, but subject to any state requirement that the bank has been
organized and operating for a minimum period of time, not to exceed five years,
and the requirement that the bank holding company, prior to or following the
proposed acquisition, controls no more than 10% of the total amount of deposits
of insured depository institutions in the United States and no more than 30% of
such deposits in that state (or such lesser or greater amount set by state law).
The Interstate Banking and Branching Act also authorizes banks to merge
across state lines, therefore creating interstate branches, beginning June 1,
1997. Under such legislation, each state has the opportunity either to "opt out"
of this provision, thereby prohibiting interstate branching in such states, or
to "opt in" at an earlier time, thereby allowing interstate branching within
that state prior to June 1, 1997. Furthermore, pursuant to such act, a bank is
now able to open new branches in a state in which it does not already have
banking operations if the laws of such state permit such DE NOVO branching. Of
those states in which the Banks are located, Delaware, Maryland, North Carolina
and Virginia have enacted legislation to "opt in," thereby permitting interstate
branching prior to June 1, 1997, and Texas has adopted legislation to "opt out"
of the interstate branching provisions (which Texas law currently expires on
September 2, 1999).
As previously described, NationsBank regularly evaluates merger and
acquisition opportunities, and it anticipates that it will continue to evaluate
such opportunities in light of the new legislation.
Proposals to change the laws and regulations governing the banking industry
are frequently introduced in Congress, in the state legislatures and before the
various bank regulatory agencies.
CAPITAL AND OPERATIONAL REQUIREMENTS. The Federal Reserve Board, the
Comptroller and the FDIC have issued substantially similar risk-based and
leverage capital guidelines applicable to United States banking organizations.
In addition, those regulatory agencies may from time to time require that a
banking organization maintain capital above the minimum levels, whether because
of its financial condition or actual or anticipated growth.
The Federal Reserve Board risk-based guidelines define a two-tier capital
framework. Tier 1 capital consists of common and qualifying preferred
shareholders' equity, less certain intangibles and other adjustments. Tier 2
capital consists of subordinated and other qualifying debt, and the allowance
for credit losses up to 1.25% of risk-weighted assets. The sum of Tier 1 and
Tier 2 capital less investments in unconsolidated subsidiaries represents
qualifying total capital, at least 50% of which must consist of Tier 1 capital.
Risk-based capital ratios are calculated by dividing Tier 1 and total capital by
risk-weighted assets. Assets and off-balance sheet exposures are assigned to one
of four categories of risk-weights, based primarily on relative credit risk. The
minimum Tier 1 capital ratio is 4% and the minimum total capital ratio is 8%.
The Corporation's Tier 1 and total risk-based capital ratios under these
guidelines at September 30, 1996 were 7.05% and 12.05%, respectively.
The leverage ratio is determined by dividing Tier 1 capital by adjusted
average total assets. Although the stated minimum ratio is 3%, most banking
organizations are required to maintain ratios of at least 100 to 200
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basis points above 3%. The Corporation's leverage ratio at September 30, 1996
was 6.30%. Management believes that NationsBank meets its leverage ratio
requirement.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), among other things, identifies five capital categories for insured
depository institutions (well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized) and requires the respective Federal regulatory agencies to
implement systems for "prompt corrective action" for insured depository
institutions that do not meet minimum capital requirements within such
categories. FDICIA imposes progressively more restrictive constraints on
operations, management and capital distributions, depending on the category in
which an institution is classified. Failure to meet the capital guidelines could
also subject a banking institution to capital raising requirements. An
"undercapitalized" bank must develop a capital restoration plan and its parent
holding company must guarantee that bank's compliance with the plan. The
liability of the parent holding company under any such guarantee is limited to
the lesser of 5% of the bank's assets at the time it became "undercapitalized"
or the amount needed to comply with the plan. Furthermore, in the event of the
bankruptcy of the parent holding company, such guarantee would take priority
over the parent's general unsecured creditors. In addition, FDICIA requires the
various regulatory agencies to prescribe certain non-capital standards for
safety and soundness relating generally to operations and management, asset
quality and executive compensation and permits regulatory action against a
financial institution that does not meet such standards.
The various regulatory agencies have adopted substantially similar
regulations that define the five capital categories identified by FDICIA, using
the total risk-based capital, Tier 1 risk-based capital and leverage capital
ratios as the relevant capital measures. Such regulations establish various
degrees of corrective action to be taken when an institution is considered
undercapitalized. Under the regulations, a "well capitalized" institution must
have a Tier 1 capital ratio of at least 6%, a total capital ratio of at least
10% and a leverage ratio of at least 5% and not be subject to a capital
directive order. An "adequately capitalized" institution must have a Tier 1
capital ratio of at least 4%, a total capital ratio of at least 8% and a
leverage ratio of at least 4%, or 3% in some cases. Under these guidelines, as
of September 30, 1996, each of the Banks was considered well capitalized.
On October 21, 1996, the Federal Reserve Board issued a press release (the
"Federal Reserve Press Release") announcing that it had approved the use of
certain cumulative preferred stock instruments, such as the Preferred
Securities, in Tier 1 capital for bank holding companies. Because NationsBank
intends to treat the Preferred Securities in Tier 1 capital and, under current
United States federal tax law, will receive a tax deduction for interest in
respect of the Junior Subordinated Notes, the issuance of the Offered Securities
is a cost-effective method of raising capital on an after-tax basis.
Banking agencies have recently adopted final regulations which mandate that
regulators take into consideration concentrations of credit risk and risks from
non-traditional activities, as well as an institution's ability to manage those
risks, when determining the adequacy of an institution's capital. This
evaluation will be made as a part of the institution's regular safety and
soundness examination. Banking agencies also have recently adopted final
regulations requiring regulators to consider interest rate risk (when the
interest rate sensitivity of an institution's assets does not match the
sensitivity of its liabilities or its off-balance-sheet position) in the
evaluation of a bank's capital adequacy. Concurrently, banking agencies have
proposed a methodology for evaluating interest rate risk. After gaining
experience with the proposed measurement process, these banking agencies intend
to propose further regulations to establish an explicit risk-based capital
charge for interest rate risk.
DISTRIBUTIONS. The Corporation's funds for cash distributions to its
shareholders are derived from a variety of sources, including cash and temporary
investments. The primary source of such funds, however, is dividends received
from the Banks. The amount of dividends that each Bank may declare in a calendar
year without approval of the Comptroller is the Bank's net profits for that
year, as defined by statute, combined with its net retained profits, as defined,
for the preceding two years. In addition, from time to time NationsBank applies
for, and may receive, permission from the Comptroller for one or more of the
Banks to declare special dividends. As of January 1, 1996, the Banks can
initiate dividend payments without prior regulatory approval of up to $905
million plus an additional amount equal to their net profits for 1996 up to the
date of any such dividend declaration.
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In addition to the foregoing, the ability of NationsBank and the Banks to
pay dividends may be affected by the various minimum capital requirements and
the capital and non-capital standards established under FDICIA as described
above. Furthermore, the Comptroller may prohibit the payment of a dividend by a
national bank if it determines that such payment would constitute an unsafe or
unsound practice. The right of NationsBank, its shareholders and its creditors
to participate in any distribution of the assets or earnings of its subsidiaries
is further subject to the prior claims of creditors of the respective
subsidiaries.
SOURCE OF STRENGTH. According to Federal Reserve Board policy, bank holding
companies are expected to act as a source of financial strength to each
subsidiary bank and to commit resources to support each such subsidiary. This
support may be required at times when a bank holding company may not be able to
provide such support. In the event of a loss suffered or anticipated by the
FDIC -- either as a result of default of a banking or thrift subsidiary of
NationsBank or related to FDIC assistance provided to a subsidiary in danger of
default -- the other Banks may be assessed for the FDIC's loss, subject to
certain exceptions.
THE TRUSTS
Each of the NB Capital Trusts is a statutory business trust formed under
Delaware law pursuant to (i) a separate declaration of trust executed by the
Corporation, as sponsor for such trust (the "Sponsor"), and the NB Trustees (as
defined herein) for such trust and (ii) the filing of a separate certificate of
trust with the Delaware Secretary of State. The declarations of trust with
respect to all of the NB Capital Trusts have identical terms (except with
respect to the name of the NB Capital Trust to which it relates) and each is
referred to as a "Declaration." The term "Declaration," when used with respect
to the Preferred Securities of a particular NB Capital Trust, shall be deemed to
include any Amended and Restated Declaration of Trust with respect to such
Preferred Securities.
Each NB Capital Trust exists for the exclusive purposes of (i) issuing the
Preferred Securities and common securities representing undivided beneficial
interests in the assets of such Trust (the "Common Securities" and, together
with the Preferred Securities, the "Trust Securities"), (ii) investing the gross
proceeds from the sale of the Trust Securities in the purchase of a series of
Junior Subordinated Notes, and (iii) engaging in only those other activities
necessary or incidental thereto. The Common Securities of an NB Capital Trust
will rank pari passu, and payments will be made thereon pro rata, with the
Preferred Securities of such Trust, except that upon an event of default under
the Declaration of such Trust, the rights of the holders of the Common
Securities to payment in respect of distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the Preferred Securities. The Corporation will, directly or indirectly, purchase
and own all of the Common Securities of each NB Capital Trust, which will
represent an aggregate liquidation amount equal to at least 3 percent of the
total capital of such NB Capital Trust. Each NB Capital Trust has a term of
approximately 55 years, but may earlier terminate as provided in its
Declaration. Each NB Capital Trust's business and affairs will be conducted by
its trustees (the "NB Trustees"). The Corporation, as the direct or indirect
holder of the Common Securities of each NB Capital Trust, will be entitled to
appoint, remove or replace any of, or increase or reduce the number of, the NB
Trustees of each such NB Capital Trust. The duties and obligations of the NB
Trustees shall be governed by the respective Declarations of such NB Capital
Trusts. One or more of the NB Trustees of each NB Capital Trust will be persons
who are employees or officers of or who are otherwise affiliated with the
Corporation (the "Regular Trustees"), and one NB Trustee of each NB Capital
Trust will be a financial institution that is unaffiliated with the Corporation,
which shall act as property trustee under the related Declaration and as
indenture trustee (the "Property Trustee") for purposes of compliance with the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), pursuant to
the terms set forth in a Prospectus Supplement relating to the offering of the
Trust Securities of each such Trust. The Property Trustee will hold title to the
Junior Subordinated Notes purchased by an NB Capital Trust for the benefit of
the holders of the Trust Securities of such Trust and will have the power to
exercise all rights, power and privileges under the Indenture as the holder of
such Junior Subordinated Notes. In addition, the Property Trustee will maintain
exclusive control of a segregated non-interest bearing bank account (the
"Property Account") to hold all payments made in respect of such Junior
Subordinated Notes for the benefit of the holders of such Trust Securities. The
Property Trustee will make payments of distributions and payments on
liquidation, redemption or otherwise to the holders of such Trust Securities out
of funds from the Property Account. In addition, unless the Property Trustee
maintains a principal place of business in the
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State of Delaware and otherwise meets the requirements of applicable law, one NB
Trustee of each NB Capital Trust will have its principal place of business or
reside in the State of Delaware (the "Delaware Trustee").
The Declaration of an NB Capital Trust may be modified or amended if
approved by its Regular Trustees (if there are more than two Regular Trustees,
then approved by a majority of its Regular Trustees) and, in certain
circumstances, by its Property Trustee or its Delaware Trustee, provided that,
if any proposed amendment provides for, or such Regular Trustees otherwise
propose to effect, (i) any action that would adversely affect the powers,
preferences or special rights of the Trust Securities of such Trust, whether by
way of amendment to its Declaration or otherwise or (ii) the dissolution,
winding-up or termination of such Trust other than pursuant to the terms of its
Declaration, then the holders of such Trust Securities voting together as a
single class will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval of at
least a majority in liquidation amount of such Trust Securities affected
thereby; provided further, that, if any amendment or proposal referred to in
clause (i) above would adversely affect only the Preferred Securities or the
Common Securities of such Trust, then only the affected class will be entitled
to vote on such amendment or proposal and such amendment or proposal shall not
be effective except with the approval of a majority in liquidation amount of
such class of Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration of an NB Capital Trust if such amendment or modification would
(i) cause such Trust to be classified for purposes of United States federal
income taxation as other than a grantor trust, (ii) reduce or otherwise
adversely affect the powers of the Property Trustee of such Trust or (iii) cause
such Trust to be deemed an "investment company" required to be registered under
the Investment Company Act of 1940, as amended (the "1940 Act").
The Corporation will pay all fees and expenses related to the NB Capital
Trusts and the offering of Trust Securities. The office of the Delaware Trustee
for each NB Capital Trust in the State of Delaware is The Bank of New York
(Delaware), White Clay Center, Route 273, Newark, Delaware 19711. The principal
place of business of each NB Capital Trust shall be c/o NationsBank Corporation,
Corporate Treasury Division, NationsBank Corporate Center, Charlotte, North
Carolina 28255, telephone (704) 386-5972.
USE OF PROCEEDS
Each NB Capital Trust will use the gross proceeds received from the sale of
its Preferred Securities to purchase Junior Subordinated Notes from NationsBank.
NationsBank intends to add the net proceeds from the sale of the Junior
Subordinated Notes to its general funds, to be used for general corporate
purposes, including the Corporation's working capital needs, the funding of
investments in, or extensions of credit to, its banking and nonbanking
subsidiaries, possible acquisitions of other financial institutions or their
assets or liabilities, possible acquisitions of or investments in other
businesses of a type eligible for bank holding companies and possible reduction
of outstanding indebtedness or repurchase of outstanding equity securities of
the Corporation. Pending such use, the Corporation may temporarily invest the
net proceeds in investment grade securities. The Corporation may, from time to
time, engage in additional capital financings of a character and in amounts to
be determined by the Corporation in light of its needs at such time or times and
in light of prevailing market conditions. If the Corporation elects at the time
of issuance of Junior Subordinated Notes to make different or more specific use
of proceeds other than that set forth herein, such use will be described in the
Prospectus Supplement relating to such Junior Subordinated Notes.
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RATIOS OF EARNINGS TO FIXED CHARGES AND TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following are the Corporation's consolidated ratios of earnings to
fixed charges and ratios of earnings to combined fixed charges and preferred
stock dividend requirements for the nine months ended September 30, 1996 and for
each of the years in the five-year period ended December 31, 1995:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits...................................... 1.8 1.7 1.9 2.3 2.4 1.1
Including interest on deposits...................................... 1.5 1.4 1.5 1.5 1.4 1.0
Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends:
Excluding interest on deposits...................................... 1.8 1.6 1.8 2.3 2.3 1.1
Including interest on deposits...................................... 1.5 1.4 1.5 1.5 1.4 1.0
</TABLE>
For purposes of computing the consolidated ratios, earnings represent net
income of the Corporation plus applicable income taxes and fixed charges, less
capitalized interest and the equity in undistributed earnings of unconsolidated
subsidiaries and associated companies. Fixed charges represent interest expense
(exclusive of interest on deposits in one case and inclusive of such interest in
the other), capitalized interest, amortization of debt discount and appropriate
issuance costs and one-third (the amount deemed to represent an appropriate
interest factor) of net rent expense under all lease commitments. Preferred
stock dividend requirements represent dividend requirements on the outstanding
preferred stock adjusted to reflect the pre-tax earnings that would be required
to cover such dividend requirements.
PLAN OF DISTRIBUTION
This Prospectus Supplement and accompanying Prospectus are to be used by
NationsBanc Capital Markets, Inc. ("NCMI"), a broker-dealer and a direct wholly
owned subsidiary of NationsBank, in connection with offers and sales of Offered
Securities in secondary market transactions at negotiated prices relating to
prevailing prices at the time of sale or otherwise. NCMI may act as principal or
agent in such transactions. The participation of NCMI in the offer and sale of
the Offered Securities complies with the requirements of Section 2720 of the
Conduct Rules of the National Association of Securities Dealers, Inc. (the
"NASD") regarding underwriting of securities of an affiliate. NCMI will not
execute a transaction in the Offered Securities in a discretionary account
without the prior written specific approval of NCMI's customer. NCMI has no
obligation to make a market in the Offered Securities, and if commenced, may
discontinue its market-making activities at any time without notice, at its sole
discretion. Furthermore, NCMI may be required to discontinue its market-marking
activities during periods when the Corporation is involved in a distribution of
certain of its securities or when NCMI, by virtue of its affiliation with the
Corporation, is aware of material non-public information relating to the
Corporation. In such instance, NCMI would not be able to recommence its
market-making activities until such distribution has been completed or such
information has become publicly available. It is not possible to determine the
impact, if any, that any such dicontinuance may have on the market for the
Offered Securities. While other broker-dealers may make a market in the Offered
Securities from time to time, there can be no assurance that any other
broker-dealer will do so at any time when NCMI discontinues its market-making
activities.
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DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES
THE FOLLOWING DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES SETS FORTH
CERTAIN GENERAL TERMS AND PROVISIONS OF THE JUNIOR SUBORDINATED NOTES TO WHICH
ANY PROSPECTUS SUPPLEMENT MAY RELATE. THE PARTICULAR TERMS OF THE JUNIOR
SUBORDINATED NOTES OFFERED BY A PROSPECTUS SUPPLEMENT AND THE EXTENT, IF ANY, TO
WHICH SUCH GENERAL PROVISIONS MAY APPLY TO THE JUNIOR SUBORDINATED NOTES SO
OFFERED WILL BE DESCRIBED IN SUCH PROSPECTUS SUPPLEMENT.
Junior Subordinated Notes may be issued from time to time in one or more
series under an Indenture (the "Indenture") between the Corporation and The Bank
of New York, as Trustee (in such capacity, the "Debt Trustee"). The Indenture is
incorporated by reference as an exhibit to the Registration Statement of which
this Prospectus forms a part. The terms of the Junior Subordinated Notes will
include those terms stated in the Indenture and those terms made part of the
Indenture by reference to the Trust Indenture Act. The following summary of
certain provisions of the Indenture does not purport to be complete and is
subject in all respects to the provisions of, and is qualified in its entirety
by reference to, the Indenture and the Trust Indenture Act. Unless otherwise
indicated, capitalized terms shall have the meanings ascribed to them in the
Indenture.
GENERAL
The Junior Subordinated Notes will be unsecured, subordinated obligations
of the Corporation. The Indenture does not limit the aggregate principal amount
of Junior Subordinated Notes which may be issued thereunder and provides that
the Junior Subordinated Notes may be issued from time to time in one or more
series. Each series of Junior Subordinated Notes shall be issued pursuant to an
indenture supplemental to the Indenture or a resolution of the Corporation's
Board of Directors or a special committee appointed thereby (each, a
"Supplemental Indenture"). With respect to any particular series of Junior
Subordinated Notes, the term "Indenture" shall be deemed to include any
Supplemental Indenture(s) with respect to such series of Junior Subordinated
Notes.
In the event Junior Subordinated Notes are issued to an NB Capital Trust or
a trustee of such Trust in connection with the issuance of Trust Securities by
such Trust, such Junior Subordinated Notes subsequently may be distributed pro
rata to the holders of such Trust Securities in connection with the dissolution
of such Trust upon the occurrence of certain events, as will be described in the
Prospectus Supplement relating to such Trust Securities. Only one series of
Junior Subordinated Notes will be issued to an NB Capital Trust or a trustee of
such Trust in connection with the issuance of Trust Securities by such Trust.
Reference is made to the Prospectus Supplement relating to the particular
Junior Subordinated Notes being offered thereby for the following terms: (i) the
designation of such Junior Subordinated Notes; (ii) the aggregate principal
amount of such Junior Subordinated Notes; (iii) the percentage of their
principal amount at which such Junior Subordinated Notes will be issued; (iv)
the date or dates on which such Junior Subordinated Notes will mature and the
right, if any, to extend such date or dates; (v) the rate or rates, if any, per
annum, at which such Junior Subordinated Notes will bear interest, or the method
of determination of such rate or rates; (vi) the date or dates from which such
interest shall accrue, the interest payment dates on which such interest will be
payable or the manner of determination of such interest payment dates and the
record dates for the determination of holders to whom interest is payable on any
such interest payment dates; (vii) the right to extend the interest payment
periods and the duration of such extension; (viii) provisions for a sinking
purchase or other analogous fund, if any; (ix) the period or periods, if any,
within which, the price or prices of which, and the terms and conditions upon
which such Junior Subordinated Notes may be redeemed, in whole or in part, at
the option of the Corporation or the holder; (x) the form of such Junior
Subordinated Notes; and (xi) any other specific terms of the Junior Subordinated
Notes. Principal, premium, if any, and any interest will be payable, and the
Junior Subordinated Notes will be transferable, at the corporate trust office of
the Debt Trustee in New York, New York, provided that payment of interest, if
any, may be made at the option of the Corporation by check mailed to the address
of the person entitled thereto as it appears in the Security Register.
The ability of NationsBank to make payments of principal of and premium, if
any, and any interest on the Junior Subordinated Notes may be affected by the
ability of the Banks to pay dividends. The ability of the Banks, as well as of
the Corporation, to pay dividends in the future currently is, and could be
further, influenced by bank regulatory requirements and capital guidelines. See
"NATIONSBANK CORPORATION -- Supervision and Regulation."
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The covenants contained in the Indenture would not necessarily afford
protection to holders of the Junior Subordinated Notes in the event of a decline
in credit quality resulting from takeovers, recapitalization or similar
restructuring.
FORM, EXCHANGE, REGISTRATION, TRANSFER AND PAYMENT
Unless otherwise specified in the Prospectus Supplement relating to a
series of Junior Subordinated Notes, the Junior Subordinated Notes will be
issued in fully registered form without coupons and in denominations of $1,000
and multiples of $1,000. No service charge will be made for any transfer or
exchange of the Junior Subordinated Notes, but the Corporation or the Debt
Trustee may require payment of a sum sufficient to cover any tax or other
government charge payable in connection therewith.
Unless otherwise provided in the Prospectus Supplement relating to a series
of Junior Subordinated Notes, principal, premium, if any, or any interest will
be payable and the Junior Subordinated Notes may be surrendered for payment or
transferred at the offices of the Debt Trustee, as paying and authenticating
agent, provided that payment of interest on registered securities that are not
issued to an NB Capital Trust may be made at the option of the Corporation by
check mailed to the address of the person entitled thereto as it appears in the
Security Register.
BOOK-ENTRY JUNIOR SUBORDINATED NOTES
The Junior Subordinated Notes of a series may be issued in whole or in part
in the form of one or more Global Securities that will be deposited with, or on
behalf of, a depositary (the "Depositary"), or its nominee, identified in the
Prospectus Supplement relating to such Junior Subordinated Notes. In such case,
one or more Global Securities will be issued in a denomination or aggregate
denomination equal to the portion of the aggregate principal amount of
outstanding Junior Subordinated Notes of the series to be represented by such
Global Security or Securities. Unless and until it is exchanged in whole or in
part for Junior Subordinated Notes in definitive registered form, a Global
Security may not be registered for transfer or exchange except as a whole by the
Depositary for such Global Security to a nominee for such Depositary and except
in the circumstances described in the Prospectus Supplement relating to such
Junior Subordinated Notes.
The specific terms of the depositary arrangement with respect to any
portion of a series of Junior Subordinated Notes to be represented by a Global
Security and a description of the Depositary will be provided in the Prospectus
Supplement relating to such Junior Subordinated Notes.
SUBORDINATION
The Junior Subordinated Notes of a series will be subordinated and junior
in right of payment to other indebtedness of the Corporation to the extent set
forth in the Prospectus Supplement relating to such Junior Subordinated Notes.
CERTAIN COVENANTS OF THE CORPORATION
If Junior Subordinated Notes of a series are issued to an NB Capital Trust
or a trustee of such Trust in connection with the issuance of Trust Securities
by such Trust and (i) there shall have occurred and be continuing any event that
would constitute an Event of Default (as defined herein) or any nonpayment of
principal, premium, if any, or interest, when due on such Junior Subordinated
Notes (a "Note Payment Failure"), or (ii) the Corporation shall be in default
with respect to its payment of any obligations under the related Preferred
Securities Guarantee or Common Securities Guarantee (as defined herein), or
(iii) if applicable, the Corporation shall have given notice of its election to
defer payments of interest on such Junior Subordinated Notes by extending the
interest payment period as provided in the Indenture and described in the
Prospectus Supplement relating to such Junior Subordinated Notes and such
period, or any extension thereof, shall be continuing, then (a) the Corporation
shall not declare or pay any dividend on, make any distributions with respect
to, or redeem, purchase or make a liquidation payment with respect to, any of
its capital stock (other than (i) purchases or acquisitions of shares of its
Common Stock in connection with the satisfaction by it of its obligations under
any employee benefit plans, (ii) as a result of a reclassification of its
capital stock or the exchange or conversion of one class or series of its
capital stock for another class or series of its capital stock or
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(iii) the purchase of fractional interests in shares of its capital stock
pursuant to an acquisition or the conversion or exchange provisions of its
capital stock or the security being converted or exchanged (collectively,
"Permitted Purchases/Exchanges")) or make any guarantee payments with respect to
the foregoing, and (b) the Corporation shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities (including guarantees) issued by the Corporation which rank pari
passu with or junior to such Junior Subordinated Notes.
If Junior Subordinated Notes of a series are issued to an NB Capital Trust
or a trustee of such Trust in connection with the issuance of Trust Securities
by such Trust, for so long as such Trust Securities remain outstanding, the
Corporation will (i) directly or indirectly maintain 100 percent ownership of
the Common Securities of such Trust (provided, however, that any permitted
successor of the Corporation under the Indenture may succeed to the
Corporation's ownership of such Common Securities); (ii) use its reasonable
efforts to cause such Trust (a) to remain a statutory business trust, except in
connection with the distribution of Junior Subordinated Notes to the holders of
such Trust Securities in liquidation of such Trust, the redemption of all of
such Trust Securities, or certain mergers, consolidations or amalgamations, each
as permitted by the Declaration of such Trust, and (b) to otherwise continue not
to be classified as an association taxable as a corporation or partnership for
United States federal income tax purposes; and (iii) use its reasonable efforts
to cause each holder of such Trust Securities to be treated as owning an
undivided beneficial interest in such Junior Subordinated Notes.
LIMITATION ON MERGERS AND SALES OF ASSETS
The Corporation shall not consolidate with, or merge into, any corporation
or convey or transfer its properties and assets substantially as an entirety to
any Person unless (a) the successor entity shall be a corporation organized
under the laws of the United States or any State or the District of Columbia and
shall expressly assume the obligations of the Corporation under the Indenture
and the respective Preferred Securities Guarantees and (b) after giving effect
thereto, no Default shall have occurred and be continuing under the Indenture.
EVENTS OF DEFAULT, WAIVER AND NOTICE
The Indenture provides that any one or more of the following described
events which has occurred and is continuing constitutes an "Event of Default"
with respect to a series of Junior Subordinated Notes:
(a) certain events involving the bankruptcy, insolvency or reorganization
of the Corporation; or
(b) if Junior Subordinated Notes of such series are issued to an NB Capital
Trust or a trustee of such Trust in connection with the issuance of Trust
Securities by such Trust, the voluntary or involuntary dissolution, winding-up
or termination of such Trust, except in connection with the distribution of such
Junior Subordinated Notes to the holders of such Trust Securities in liquidation
of such Trust, the redemption of all of the Trust Securities of such Trust, or
certain mergers, consolidations or amalgamations, each as permitted by the
Declaration of such Trust.
The Indenture provides that, if an Event of Default on a series of Junior
Subordinated Notes shall have occurred and be continuing, either the Debt
Trustee or the holders of 25 percent in principal amount of such Junior
Subordinated Notes then outstanding may declare the principal (or, if such
Junior Subordinated Notes were issued with original issue discount, such portion
of the principal amount as may be specified in the terms of such series) of all
such Junior Subordinated Notes and any interest accrued thereon to be due and
payable immediately. The holders of a majority in aggregate outstanding
principal amount of such series of Junior Subordinated Notes may annul such
declaration in certain circumstances and waive such default. Prior to any such
declaration of acceleration, the holders of a majority in aggregate principal
amount of a series of Junior Subordinated Notes generally may waive on behalf of
the holders of all such Junior Subordinated Notes any default or Event of
Default other than a default (i) in the payment of principal of, premium, if
any, or interest on such Junior Subordinated Notes, (ii) in respect of covenants
that cannot be modified or amended without the consent of each holder of such
Junior Subordinated Notes, or (iii) in respect of certain other covenants of the
Corporation; PROVIDED, HOWEVER, that if such Junior Subordinated Notes are
issued to an NB Capital Trust or a trustee of such Trust, such waiver or
modification to such waiver shall not be effective until a majority in
liquidation amount of the Trust Securities of such Trust have consented to such
waiver or modification. See " -- Certain Covenants of the Corporation" and
" -- Modification of the Indenture."
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The holders of a majority in principal amount of the Junior Subordinated
Notes of any and all series affected and then outstanding generally shall have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Debt Trustee under the Indenture, provided that the
holders of such Junior Subordinated Notes shall have offered to the Debt Trustee
reasonable indemnity against expenses and liabilities. Notwithstanding the
foregoing, subject to any subordination provisions, as set forth in the
Prospectus Supplement relating to a series of Junior Subordinated Notes, the
right of any holder of Junior Subordinated Notes to receive payment of the
principal of and premium, if any, and interest on such Junior Subordinated Notes
on or after the due dates therefor, as the same may be extended in accordance
with the terms of such Junior Subordinated Notes, or to institute suit for the
enforcement of any such payment provisions, shall not be impaired or affected
without the consent of such holder.
If Junior Subordinated Notes of a series are issued to an NB Capital Trust,
the same rights with respect to such Junior Subordinated Notes will extend to
the holders of the Preferred Securities issued by such Trust. The Indenture
requires the annual filing by the Corporation with the Debt Trustee of a
certificate as to the absence of certain defaults under the Indenture.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Corporation and the Debt
Trustee, with the consent of the holders of not less than a majority in
principal amount of the Junior Subordinated Notes of all series affected by such
modification at the time outstanding, to modify the Indenture or enter into any
supplemental indenture or modify the rights of the holders of such Junior
Subordinated Notes; PROVIDED, HOWEVER, that no such modification shall (i)
extend the fixed maturity of any Junior Subordinated Note, or reduce the
principal amount thereof (including in the case of a discounted Junior
Subordinated Note the amount payable thereon in the event of acceleration or the
amount provable in bankruptcy) or any redemption premium thereon, or reduce the
rate or extend the time of payment of interest thereon, or make the principal
of, or interest or premium on, such Junior Subordinated Notes payable in any
coin or currency other than that provided in such Junior Subordinated Notes, or
impair or affect the right of any holder of such Junior Subordinated Notes to
institute suit for the payment thereof or the right of prepayment, if any, at
the option of the holder, without the consent of the holder of each such Junior
Subordinated Note so affected, or (ii) reduce the aforesaid percentage of Junior
Subordinated Notes the consent of the holders of which is required for any such
modification without the consent of the holders of each such Junior Subordinated
Note so affected. The Indenture further provides that if Junior Subordinated
Notes of a series are held by an NB Capital Trust or a trustee of such Trust, no
modification of the Indenture shall be effective until the holders of a majority
in liquidation preference of the Trust Securities of such NB Capital Trust shall
have consented to such modification and that, whenever the consent of the
holders of all outstanding Junior Subordinated Notes is required with respect to
a modification of the Indenture, such modification shall not be effective until
each holder of such Trust Securities shall have consented to such modification.
As a result of these pass-through voting rights with respect to modifications to
the Indenture, no modification thereto shall be effective until the holders of a
majority in liquidation preference of the Trust Securities of an NB Capital
Trust consent to such modification and no modification described in clauses (i)
or (ii) shall be effective without the consent of each holder of Preferred
Securities and each holder of Common Securities of such NB Capital Trust.
DEFEASANCE AND DISCHARGE
The Indenture provides that, if no Event of Default generally shall have
occured and be continuing, the Corporation (a) will be discharged from any and
all obligations in respect of the Junior Subordinated Notes of a series (except
for certain obligations to register the transfer or exchange of Junior
Subordinated Notes, replace stolen, lost or mutilated Junior Subordinated Notes,
maintain paying agencies and hold moneys for payment in trust) or (b) need not
comply with certain restrictive covenants of the Indenture (including those
described under " -- Certain Covenants of the Corporation"), in each case if the
Corporation, at its option, deposits, in trust with the Debt Trustee or any
Defeasance Agent, money or U.S. Government Obligations which through the payment
of interest thereon and principal thereof in accordance with their terms will
provide money, in an amount sufficient to pay all the principal of, and premium,
if any, and any interest on, the Junior Subordinated Notes of such series on the
dates such payments are due in accordance with the terms of such Junior
Subordinated Notes. To exercise any such option, the Corporation is required to
deliver to the Debt Trustee and the
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Defeasance Agent, if any, an opinion of counsel to the effect that (i) the
deposit and related defeasance would not cause the holders of the Junior
Subordinated Notes of such series to recognize income, gain or loss for United
States federal income tax purposes, with such opinion to be accompanied by a
private letter ruling to that effect received by the Corporation from the United
States Internal Revenue Service or a revenue ruling pertaining to a comparable
form of transaction to that effect published by the United States Internal
Revenue Service, and (ii) if listed on any national securities exchange, such
Junior Subordinated Notes would not be delisted from such exchange as a result
of the exercise of such option.
GOVERNING LAW
The Indenture and the Junior Subordinated Notes will be governed by, and
construed in accordance with, the internal laws of the State of New York.
THE DEBT TRUSTEE
The Corporation and certain of its affiliates have from time to time
maintained deposit accounts and conducted other banking transactions with the
Debt Trustee and its affiliated entities in the ordinary course of business. The
Debt Trustee also serves as trustee for certain series of the Corporation's
outstanding indebtedness under other indentures.
DESCRIPTION OF THE PREFERRED SECURITIES
THE FOLLOWING DESCRIPTION OF THE PREFERRED SECURITIES SETS FORTH CERTAIN
GENERAL TERMS AND PROVISIONS OF THE PREFERRED SECURITIES OF ANY OF THE NB
CAPITAL TRUSTS TO WHICH ANY PROSPECTUS SUPPLEMENT MAY RELATE. THE PARTICULAR
TERMS OF THE PREFERRED SECURITIES OF AN NB CAPITAL TRUST OFFERED BY A PROSPECTUS
SUPPLEMENT AND THE EXTENT, IF ANY, TO WHICH SUCH GENERAL PROVISIONS MAY APPLY TO
THE PREFERRED SECURITIES SO OFFERED WILL BE DESCRIBED IN SUCH PROSPECTUS
SUPPLEMENT.
GENERAL
The Declaration of each NB Capital Trust authorizes the Regular Trustees of
such Trust to issue on behalf of such Trust one series of Preferred Securities.
Such NB Capital Trust may issue from time to time such series of Preferred
Securities in amounts, at prices and on terms described in the Prospectus
Supplement relating thereto. Each Declaration will be qualified as an indenture
under the Trust Indenture Act. The Bank of New York will act as indenture
trustee under the respective Declarations for the purposes of the Trust
Indenture Act. The Preferred Securities of an NB Capital Trust will have such
terms, including distributions, redemption, voting, liquidation rights and such
other preferred, deferred or other special rights or such restrictions, as shall
be set forth in its Declaration or made part of such Declaration by the Trust
Indenture Act and which will mirror the terms of the Junior Subordinated Notes
to be purchased and held by such NB Capital Trust and described in the
Prospectus Supplement relating thereto. As the terms regarding redemption of the
Preferred Securities of an NB Capital Trust will mirror the redemption terms of
the Junior Subordinated Notes to be purchased and held by such NB Capital Trust,
if any such Junior Subordinated Notes are redeemed, an equivalent portion of the
related Preferred Securities will be redeemed on a pro rata basis. Reference is
made to the Prospectus Supplement relating to the Preferred Securities of an NB
Capital Trust for specific terms, including (i) the distinctive designation of
such Preferred Securities; (ii) the number of Preferred Securities issued by
such NB Capital Trust; (iii) the annual distribution rate (or method of
determining such rate) for Preferred Securities issued by such NB Capital Trust
and the date or dates upon which such distributions shall be payable; (iv)
whether distributions on Preferred Securities issued by such NB Capital Trust
shall be cumulative, and, in the case of Preferred Securities having cumulative
distribution rights, the date or dates or method of determining the date or
dates from which distributions on Preferred Securities issued by such Trust
shall be cumulative; (v) the amount or amounts which shall be paid out of the
assets of such NB Capital Trust to the holders of its Preferred Securities upon
voluntary or involuntary dissolution, winding-up or termination of such Trust;
(vi) the obligation, if any, of such NB Capital Trust to purchase or redeem its
Preferred Securities and the price or prices at which, the period or periods
within which, and the terms and conditions upon which, such Preferred Securities
shall be purchased or redeemed, in whole or in part, pursuant to such
obligation; (vii) the voting rights, if any, of Preferred Securities issued by
such NB Capital Trust in addition to those required by law, including the number
of votes per Preferred Security and any requirement for the approval by the
holders of such Preferred Securities, or of Preferred Securities issued by one
or more NB Capital Trusts, or of both, as a condition to specified action or
amendments to the Declaration of such NB Capital Trust; (viii) the terms and
conditions, if any, upon which the Junior Subordinated Notes to be purchased and
held by such NB
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Capital Trust may be distributed to holders of its Preferred Securities; (ix) if
applicable, any securities exchange upon which the Preferred Securities of such
NB Capital Trust shall be listed; and (x) any other relevant rights,
preferences, privileges, limitations or restrictions of Preferred Securities of
such NB Capital Trust not inconsistent with the Declaration of such Trust or
with applicable law. Such Prospectus Supplement also will contain specific
information regarding any special redemption provisions of the Preferred
Securities offered thereby. The Indenture provides pass-through voting rights to
the holders of the Trust Securities of each NB Capital Trust, including the
Preferred Securities of any such Trust, with respect to modifications to the
Indenture. As a result, the holders of Preferred Securities of an NB Capital
Trust have a right to vote (in some cases as a class with holders of Common
Securities of such Trust) on changes to the term of the Junior Subordinated
Notes held by such Trust. See "DESCRIPTION OF THE JUNIOR SUBORDINATED
NOTES -- Modification of the Indenture."
The Preferred Securities Guarantee relating to the Preferred Securities of
an NB Capital Trust, when taken together with the Corporation's obligations
under the Junior Subordinated Notes held by such Trust, the Indenture and the
Declaration of such Trust, including the Corporation's obligations to pay costs,
expenses, debts and liabilities of such Trust (other than with respect to the
Trust Securities of such Trust), will provide a full and unconditional guarantee
on a subordinated basis by the Corporation of payments due on the Preferred
Securities of such Trust. See "DESCRIPTION OF THE PREFERRED SECURITIES
GUARANTEES."
The Declaration of each NB Capital Trust authorizes its Regular Trustees to
issue on behalf of such Trust one series of Common Securities having such terms,
including distribution, redemption, voting or liquidation rights or other
restrictions, as shall be set forth therein. Except for the voting rights noted
below, the terms of the Common Securities issued by an NB Capital Trust will be
substantially identical to the terms of the Preferred Securities issued by such
Trust, and such Common Securities will rank pari passu, and payments will be
made thereon pro rata, with such Preferred Securities except that, upon an Event
of Default under the Declaration of such Trust, the rights of the holders of
such Common Securities to payment in respect of distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of the
holders of such Preferred Securities. Except in certain limited circumstances,
the Common Securities of an NB Capital Trust will also carry the right to vote
to appoint, remove or replace any of the NB Trustees of such Trust. All of the
Common Securities of each NB Capital Trust will be directly or indirectly owned
by the Corporation.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If an Event of Default under the Declaration of an NB Capital Trust occurs
and is continuing, then the holders of Preferred Securities of such Trust would
rely on the enforcement by the Trust's Property Trustee of its rights, as a
holder of the applicable series of Junior Subordinated Notes held by such Trust,
against the Corporation. In addition, the holders of a majority in liquidation
amount of the Preferred Securities of such Trust will have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to such Property Trustee or to direct the exercise of any trust or power
conferred upon such Property Trustee under the Declaration of such Trust,
including the right to direct such Property Trustee to exercise the remedies
available to it as a holder of such Junior Subordinated Notes. If such Property
Trustee fails to enforce its rights under the applicable series of Junior
Subordinated Notes, a holder of Preferred Securities of such Trust may, to the
extent permitted by applicable law, institute a legal proceeding directly
against the Corporation to enforce such Property Trustee's rights under the
applicable series of Junior Subordinated Notes without first instituting any
legal proceeding against such Property Trustee or any other person or entity.
Notwithstanding the foregoing, if NationsBank fails to pay interest or
principal on a series of Junior Subordinated Notes on the date such interest or
principal is otherwise payable (or in the case of redemption, on the redemption
date) and such Note Payment Failure is continuing, a holder of Preferred
Securities of the NB Capital Trust holding such series of Junior Subordinated
Notes may directly institute a proceeding for enforcement of payment to such
holder of the principal of or interest on such series of Junior Subordinated
Notes having a principal amount equal to the aggregate liquidation amount of the
Preferred Securities of such Trust (a "Direct Action") after the respective due
date specified in such series of Junior Subordinated Notes. In connection with
such Direct Action, the Corporation will be subrogated to the rights of such
holder of Preferred Securities under the Declaration of such Trust to the extent
of any payment made by the Corporation to such holder of Preferred Securities in
such Direct Action.
PROPOSED TAX LEGISLATION
On March 19, 1996, President Clinton proposed certain tax law changes that
would, among other things, generally deny corporate issuers a deduction for
interest in respect of certain debt obligations issued on or after December 7,
1995 (the "Proposed Legislation") if such debt obligations have a maximum term
in excess of 20
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years and are not shown as indebtedness on the issuer's applicable consolidated
balance sheets. On March 29, 1996, Senate Finance Committee Chairman William V.
Roth, Jr. and House Ways and Means Committee Chairman Bill Archer issued a joint
statement (the "Joint Statement") indicating their intent that certain
legislative proposals initiated by the Clinton administration, including the
Proposed Legislation, that may be adopted by either of the tax-writting
committees of Congress would have an effective date that is no earlier than the
date of "appropriate Congressional action." In addition, subsequent to the
publication of the Joint Statement, Senator Daniel Patrick Moynihan and
Representatives Sam M. Gibbons and Charles B. Rangel wrote letters to Treasury
Department officials concurring with the views expressed in the Joint Statement
(the "Democrat Letters"). Based upon the Joint Statement and the Democrat
Letters, it is expected that if the Proposed Legislation were to be enacted,
such legislation would not apply to the Junior Subordinated Notes. There can be
no assurances, however, that the effective date guidance contained in the Joint
Statement and the Democrat Letters will be incorporated into the Proposed
Legislation, if enacted, or that other legislation enacted after the date hereof
will not otherwise adversely affect the ability of the Corporation to deduct the
interest payable on the Junior Subordinated Notes.
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary for
the Preferred Securities issued by an NB Capital Trust. Such Preferred
Securities will be issued only as fully-registered securities registered in the
name of Cede & Co. (DTC's nominee). One or more fully-registered global
Preferred Securities certificates, representing the total aggregate number of
such Preferred Securities, will be issued to and deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Participants in DTC
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. DTC is owned by a number of its
Participants and by the New York Stock Exchange, the American Stock Exchange,
Inc., and the National Association of Securities Dealers, Inc. Access to the DTC
system is also available to others, such as securities brokers and dealers,
banks and trust companies that clear transactions through or maintain a direct
or indirect custodial relationship with a Participant either directly or
indirectly ("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the Commission.
Purchases of Preferred Securities within the DTC system must be made by or
through Participants, which will receive a credit for such Preferred Securities
on DTC's records. The ownership interest of each actual purchaser of each
Preferred Security ("Beneficial Owner") is in turn to be recorded on the
Participants' and Indirect Participants' records. Beneficial Owners will not
receive written confirmation from DTC of their purchases, but Beneficial Owners
are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the
Participants or Indirect Participants through which the Beneficial Owners
purchased Preferred Securities. Transfers of ownership interests in Preferred
Securities are to be accomplished by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in Preferred Securities,
except in the event that use of the book-entry system for Preferred Securities
is discontinued.
DTC has no knowledge of the actual Beneficial Owners of any such Preferred
Securities. DTC's records reflect only the identity of the Participants to whose
accounts such Preferred Securities are credited, which may or may not be the
Beneficial Owners. The Participants and Indirect Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
So long as DTC, or its nominee, is the registered owner or holder of a
global Preferred Security, DTC or such nominee, as the case may be, will be
considered the sole owner or holder of the Preferred Securities represented
thereby for all purposes under the applicable Declaration and the Preferred
Securities. No beneficial owner of an interest in a global Preferred Security
will be able to transfer that interest except in accordance with DTC's
applicable procedures, in addition to those provided for under the applicable
Declaration.
DTC has advised the Corporation that it will take any action permitted to
be taken by a holder of Preferred Securities (including presentation of
Preferred Securities for exchange as described below) only at the direction
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of one or more Participants to whose account the interests in global Preferred
Securities are credited and only in respect of such portion of the aggregate
liquidation amount of Preferred Securities as to which such Participant or
Participants has or have given such direction. However, if there is an Event of
Default under any Preferred Securities, DTC will exchange the global Preferred
Securities representing such Preferred Securities for certificated securities,
which it will distribute to its Participants.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants, and by Participants and Indirect
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Redemption notices, if applicable, in respect of any Preferred Securities
held in book-entry form will be sent to Cede & Co. If less than all of such
Preferred Securities are being redeemed, DTC will determine the amount of the
interest of each Participant to be redeemed in accordance with its procedures.
Although voting with respect to any of the Preferred Securities is limited,
in those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to such Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to the applicable NB Capital Trust
as soon as possible after the record date. The Omnibus Proxy assigns Cede &
Co.'s consenting or voting rights to those Participants to whose accounts such
Preferred Securities are credited on the record date (identified in a listing
attached to the Omnibus Proxy).
Distributions on Preferred Securities held in book-entry form will be made
to DTC in immediately available funds. DTC's practice is to credit Participants'
accounts on the relevant payment date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe that it will
not receive payments on such payment date. Payments by Participants and Indirect
Participants to Beneficial Owners will be governed by standing instructions and
customary practices and will be the responsibility of such Participants and
Indirect Participants and not of DTC, the applicable NB Capital Trust or the
Corporation, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of distributions to DTC is the responsibility
of the applicable NB Capital Trust, disbursement of such payments to
Participants is the responsibility of DTC, and disbursement of such payments to
the Beneficial Owners is the responsibility of Participants and Indirect
Participants.
Except as provided herein, a Beneficial Owner of an interest in a global
Preferred Security will not be entitled to receive physical delivery of the
Preferred Securities represented thereby. Accordingly, each Beneficial Owner
must rely on the procedures of DTC to exercise any rights under such Preferred
Securities.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in global Preferred Securities among Participants of DTC,
DTC is under no obligation to perform or continue to perform such procedures,
and such procedures may be discontinued at any time. Neither the Corporation,
any of the NB Capital Trusts nor the trustees of any such Trust will have any
responsibility for the performance by DTC or its Participants or Indirect
Participants under the rules and procedures governing DTC. DTC may discontinue
providing its services as securities depositary with respect to any of the
Preferred Securities at any time by giving notice to the applicable NB Capital
Trust. Under such circumstances, in the event that a successor securities
depositary is not obtained, Preferred Security certificates are required to be
printed and delivered. Additionally, the applicable NB Capital Trust (with the
consent of the Corporation) may decide to discontinue use of the system of
book-entry transfers through DTC (or a successor depositary). In that event,
certificates for such Preferred Securities will be printed and delivered. In
each of the above circumstances, the Corporation will appoint a paying agent
with respect to such Preferred Securities.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in Preferred Securities
represented by a global Preferred Security.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEES
Set forth below is a summary of information concerning the Preferred
Securities Guarantees which will be executed and delivered by NationsBank for
the benefit of the holders from time to time of Preferred Securities. Each
Preferred Securities Guarantee will be qualified as an indenture under the Trust
Indenture Act. The Bank of New York will act as indenture trustee under each
Preferred Securities Guarantee for purposes of the Trust Indenture Act (in such
capacity, the "Preferred Guarantee Trustee"). The terms of each Preferred
Securities Guarantee will be those set forth in such Preferred Securities
Guarantee and those made part of such Preferred Securities Guarantee by the
Trust Indenture Act. The following summary of the material terms of
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the Preferred Securities Guarantees does not purport to be complete and is
subject in all respects to the provisions of, and is qualified in its entirety
by reference to, the form of Preferred Securities Guarantee, which is filed as
an exhibit to the Registration Statement of which this Prospectus forms a part,
and the Trust Indenture Act. Each Preferred Securities Guarantee will be held by
the Preferred Guarantee Trustee for the benefit of the holders of the Preferred
Securities of the applicable NB Capital Trust.
GENERAL
Pursuant to each Preferred Securities Guarantee, the Corporation will, to
the extent the applicable NB Capital Trust shall have funds available therefor,
agree to pay in full, to the holders of the Preferred Securities issued by such
Trust, the Guarantee Payments (as defined herein) (except to the extent paid by
such Trust), as and when due, regardless of any defense, right of set-off or
counterclaim which such Trust may have or assert. The following payments (the
"Guarantee Payments") with respect to Preferred Securities issued by an NB
Capital Trust, to the extent not paid by such Trust will be subject to the
Preferred Securities Guarantee thereon (without duplication): (i) any accrued
and unpaid distributions which are required to be paid on such Preferred
Securities, to the extent such Trust shall have funds available therefor; (ii)
the redemption price, including all accrued and unpaid distributions (the
"Redemption Price") with respect to any Preferred Securities called for
redemption by such Trust to the extent such Trust shall have funds available
therefor and (iii) upon a voluntary or involuntary dissolution, winding-up or
termination of such Trust (other than in connection with the distribution of
Junior Subordinated Notes held by such Trust to the holders of Preferred
Securities of such Trust or the redemption of all of such Preferred Securities),
the lesser of (a) the aggregate of the liquidation amount and all accrued and
unpaid distributions on such Preferred Securities to the date of payment, to the
extent such Trust shall have funds available therefor and (b) the amount of
assets of such Trust remaining available for distribution to holders of such
Preferred Securities in liquidation of such NB Capital Trust. The redemption
price and liquidation amount of any Preferred Securities will be fixed at the
time such Preferred Securities are issued and will be described in the
Prospectus Supplement relating to such Preferred Securities. The Corporation's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Corporation to the holders of Preferred Securities or by
causing the applicable NB Capital Trust to pay such amounts to such holders.
A Preferred Securities Guarantee will not apply to any payment of
distributions except to the extent the related NB Capital Trust shall have funds
available therefor. If the Corporation does not make interest payments on the
Junior Subordinated Notes held by an NB Capital Trust, such Trust will not pay
distributions on its Preferred Securities and will not have funds available
therefor. See "DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES -- Certain Covenants
of the Corporation." The Preferred Securities Guarantee relating to the
Preferred Securities of an NB Capital Trust, when taken together with the
Corporation's obligations under the Junior Subordinated Notes held by such
Trust, the Indenture and the Declaration of such Trust, including the
Corporation's obligations to pay costs, expenses, debts and liabilities of such
Trust (other than with respect to the Trust Securities of such Trust), will
provide a full and unconditional guarantee on a subordinated basis by the
Corporation of payments due on such Preferred Securities.
The Corporation has also agreed separately to irrevocably and
unconditionally guarantee the obligations of the NB Capital Trusts with respect
to each Trust's Common Securities (collectively, the "Common Securities
Guarantees") to the same extent as the Preferred Securities Guarantees, except
that upon an Event of Default under the Indenture, holders of Preferred
Securities shall have priority over holders of Common Securities with respect to
distributions and payments on liquidation, redemption or otherwise.
CERTAIN COVENANTS OF THE CORPORATION
In each Preferred Securities Guarantee, the Corporation will covenant that,
so long as any Preferred Securities issued by the applicable NB Capital Trust
remain outstanding, if there shall have occurred any event that would constitute
an Event of Default under such Preferred Securities Guarantee or the Declaration
of such Trust, then (a) the Corporation shall not declare or pay any dividend
on, make any distributions with respect to, or redeem, purchase or make a
liquidation payment with respect to, any of its capital stock (other than
Permitted Purchases/Exchanges) or make any guarantee payments with respect to
the foregoing, (b) the Corporation shall not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase or make a
liquidation payment with respect to, any of its preferred stock (other than
Permitted Purchases/Exchanges) except that the Corporation may meet the same
proportion of its payment obligations with respect to its preferred stock that
it meets under such Preferred Securities Guarantee and (c) the Corporation shall
not make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem
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any debt securities (including guarantees) issued by the Corporation which rank
pari passu with or junior to the Junior Subordinated Notes held by such Trust.
MODIFICATION OF THE PREFERRED SECURITIES GUARANTEES; ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of Preferred Securities (in which case no vote will be required),
each Preferred Securities Guarantee may be amended only with the prior approval
of the holders of not less than a majority in liquidation amount of the
outstanding Preferred Securities of the applicable NB Capital Trust. The manner
of obtaining any such approval of holders of such Preferred Securities will be
set forth in the Prospectus Supplement relating to such Preferred Securities.
All guarantees and agreements contained in a Preferred Securities Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
the Corporation and shall inure to the benefit of the holders of the Preferred
Securities of the applicable NB Capital Trust then outstanding.
TERMINATION
Each Preferred Securities Guarantee will terminate as to the Preferred
Securities of the applicable NB Capital Trust (a) upon full payment of the
Redemption Price of all such Preferred Securities, (b) upon distribution of the
Junior Subordinated Notes held by such Trust to the holders of such Preferred
Securities or (c) upon full payment of the amounts payable in accordance with
the Declaration of such Trust upon liquidation of such Trust. Each Preferred
Securities Guarantee will continue to be effective or will be reinstated, as the
case may be, if at any time any holder of Preferred Securities of the applicable
NB Capital Trust must restore payment of any sums paid under such Preferred
Securities or such Preferred Securities Guarantee.
EVENTS OF DEFAULT
An event of default under a Preferred Securities Guarantee will occur upon
the failure of the Corporation to perform any of its payment or other
obligations thereunder.
The holders of a majority in liquidation amount of the Preferred Securities
relating to such Preferred Securities Guarantee have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Preferred Guarantee Trustee in respect of the Preferred Securities Guarantee
or to direct the exercise of any trust or power conferred upon the Preferred
Guarantee Trustee under such Preferred Securities Guarantee. If the Preferred
Guarantee Trustee fails to enforce such Preferred Securities Guarantee, any
holder of Preferred Securities to which such Preferred Securities Guarantee
relates may institute a legal proceeding directly against the Corporation to
enforce the Preferred Guarantee Trustee's rights under such Preferred Securities
Guarantee, without first instituting a legal proceeding against the applicable
NB Capital Trust, the Preferred Guarantee Trustee or any other person or entity.
Notwithstanding the foregoing, if the Corporation has failed to make a guarantee
payment, a holder of Preferred Securities may directly institute a proceeding
against the Corporation for enforcement of the Preferred Securities Guarantee
for such payment. The Corporation waives any right or remedy to require that any
action be brought first against such NB Capital Trust or any other person or
entity before proceeding directly against the Corporation.
STATUS OF THE PREFERRED SECURITIES GUARANTEES
The Preferred Securities Guarantees will constitute unsecured obligations
of the Corporation and will rank (i) subordinate and junior in right of payment
to all other liabilities, including contingent liabilities, of the Corporation,
(ii) pari passu with the most senior preferred or preference stock now or
hereafter issued by the Corporation and with any guarantee now or hereafter
entered into by the Corporation in respect of any preferred or preference stock
of any affiliate of the Corporation, and (iii) senior to the Corporation's
common stock. The terms of the Preferred Securities provide that each holder of
Preferred Securities issued by the applicable NB Capital Trust by acceptance
thereof agrees to the subordination provisions and other terms of the Preferred
Securities Guarantee relating thereto.
The Preferred Securities Guarantees will constitute a guarantee of payment
and not of collection (that is, the guaranteed party may institute a legal
proceeding directly against the guarantor to enforce its rights under the
Preferred Securities Guarantee without instituting a legal proceeding against
any other person or entity).
INFORMATION CONCERNING THE PREFERRED GUARANTEE TRUSTEE
The Preferred Guarantee Trustee, prior to the occurrence of a default with
respect to a Preferred Securities Guarantee, undertakes to perform only such
duties as are specifically set forth in such Preferred Securities Guarantee and,
after default, shall exercise the same degree of care as a prudent individual
would exercise in the conduct of his or her own affairs. Subject to such
provisions, the Preferred Guarantee Trustee is under no obligation to exercise
any of the powers vested in it by a Preferred Securities Guarantee at the
request of any
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holder of Preferred Securities, unless offered reasonable indemnity against the
costs, expenses and liabilities which might be incurred thereby.
The Corporation and certain of its affiliates have from time to time
maintained deposit accounts and conducted other banking transactions with the
Preferred Guarantee Trustee and its afifiliated entities in the ordinary course
of business. The Preferred Guarantee Trustee also serves as trustee for certain
series of the Corporation's outstanding indebtedness under other indentures.
GOVERNING LAW
The Preferred Securities Guarantees will be governed by and construed in
accordance with, the internal laws of the State of New York.
EFFECT OF OBLIGATIONS UNDER THE
JUNIOR SUBORDINATED NOTES AND THE GUARANTEE
As set forth in each Declaration, the sole purpose of each of the NB
Capital Trusts is to issue the Trust Securities evidencing undivided beneficial
interests in the assets of such NB Capital Trust and to invest the proceeds from
such issuance and sale in Junior Subordinated Notes.
As long as payments of interest and other payments are made when due on the
Junior Subordinated Notes of a series held by an NB Capital Trust, such payments
will be sufficient to cover distributions and payments due on the Trust
Securities of such Trust because of the following factors: (i) the aggregate
principal amount of such Junior Subordinated Notes will be equal to the sum of
the aggregate stated liquidation amount of such Trust Securities; (ii) the
interest rate and the interest and other payment dates on such Junior
Subordinated Notes will match the distribution rate and distribution and other
payment dates for the Preferred Securities of such Trust; (iii) NationsBank
shall pay all, and such Trust shall not be obligated directly or indirectly to
pay any, costs, expenses, debts and obligations of such Trust (other than with
respect to its Trust Securities); and (iv) each Declaration further provides
that the NB Trustees of the respective NB Capital Trust shall not take or cause
or permit such Trust to, among other things, engage in any activity that is not
consistent with the purposes of such Trust.
Pursuant to the Preferred Securities Guarantee, payments of distributions
and other payments due on the Preferred Securities are guaranteed by NationsBank
to the extent the applicable NB Capital Trust has funds available to make such
distributions or payments. If NationsBank does not make interest payments on the
Junior Subordinated Notes held by an NB Capital Trust, such Trust will not have
sufficient funds to pay distributions on its Preferred Securities and the
related Preferred Securities Guarantee will not apply, because the Preferred
Securities Guarantee covers the payment of distributions and other payments on
the Preferred Securities only if and to the extent that NationsBank has made a
payment of interest or principal on the Junior Subordinated Notes held by such
Trust as its sole asset. However, the Preferred Securities Guarantee of an NB
Capital Trust, when taken together with the Corporation's obligations under the
Junior Subordinated Notes held by such Trust, the Indenture and the Declaration
of such Trust, including the Corporation's obligations to pay costs, expenses,
debts and liabilities of such Trust (other than with respect to the Trust
Securities of such Trust), provide a full and unconditional guarantee on a
subordinated basis by the Corporation of payment due on such Preferred
Securities.
If NationsBank fails to make interest or other payments on the Junior
Subordinated Notes held by an NB Capital Trust when due (taking account of any
Extension Period), the Declaration of such Trust provides a mechanism whereby
the holders of the Preferred Securities affected thereby, using the procedures
described in the Prospectus Supplement relating to such Preferred Securities,
may direct the Property Trustee to enforce its rights under such Junior
Subordinated Notes. If the Property Trustee fails to enforce its rights under
such Junior Subordinated Notes, a holder of Preferred Securities of such NB
Capital Trust may, to the extent permitted by applicable law, institute a legal
proceeding against NationsBank to enforce the Property Trustee's rights under
such Junior Subordinated Notes without first instituting any legal proceeding
against the Property Trustee or any other person or entity. Notwithstanding the
foregoing, if a Note Payment Failure has occurred and is continuing, a holder of
Preferred Securities of an NB Capital Trust may institute a Direct Action for
payment after the respective due date specified in the Junior Subordinated Notes
held by such Trust. In connection with such Direct Action, NationsBank will be
subrogated to the rights of such holder of Preferred Securities under the
Declaration of such NB Capital Trust to the extent of any payment made by
NationsBank to such holder of Preferred Securities in such Direct Action.
NationsBank, under each Preferred
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Securities Guarantee, acknowledges that the Preferred Guarantee Trustee shall
enforce the Preferred Securities Guarantee on behalf of the holders of the
Preferred Securities to which such Preferred Securities Guarantee relates.
Notwithstanding the foregoing, if NationsBank fails to make payments under a
Preferred Securities Guarantee, the Preferred Securities Guarantee provides a
mechanism whereby the holders of the Preferred Securities to which such
Preferred Securities Guarantee relates may direct the Preferred Guarantee
Trustee to enforce its rights thereunder. Any holder of such Preferred
Securities may institute a legal proceeding directly against NationsBank to
enforce the Preferred Guarantee Trustee's rights under the Preferred Securities
Guarantee without first instituting a legal proceeding against the applicable NB
Capital Trust, the Preferred Guarantee Trustee or any other person or entity.
The above mechanisms and obligations, taken together, provide a full and
unconditional guarantee, on a subordinated basis, by NationsBank of payments due
on the Preferred Securities. See "DESCRIPTION OF THE PREFERRED SECURITIES
GUARANTEES -- General."
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon on behalf of the NB Capital Trusts by Richards,
Layton & Finger, special Delaware counsel to the NB Preferred Trusts. The
validity of the Junior Subordinated Notes and the Preferred Securities
Guarantees and certain matters relating thereto will be passed upon for
NationsBank by Smith Helms Mulliss & Moore, L.L.P. and for the underwriters by
Stroock & Stroock & Lavan. Certain United States federal income taxation matters
will be passed upon for NationsBank and the NB Capital Trusts by Stroock &
Stroock & Lavan, special tax counsel to NationsBank and the NB Capital Trusts.
Smith Helms Mulliss & Moore, L.L.P. and Stroock & Stroock & Lavan will rely on
the opinion of Richards, Layton & Finger as to matters of Delaware law. As of
the date of this Prospectus, certain members of Smith Helms Mulliss & Moore,
L.L.P. beneficially own approximately 50,000 shares of the Corporation's Common
Stock.
EXPERTS
The consolidated financial statements of the Corporation incorporated in
this Prospectus by reference to the Corporation's Annual Report on Form 10-K for
the year ended December 31, 1995, have been so incorporated in reliance on the
report of Price Waterhouse LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
The supplemental consolidated financial statements of Boatmen's Bancshares,
Inc. at December 31, 1995 and 1994, and for the three years ended December 31,
1995, incorporated herein by reference from the Corporation's Current Report on
Form 8-K filed on September 6, 1996, have been audited by Ernst & Young LLP,
independent auditors, as set forth in its report thereon incorporated herein in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS GLOBAL PROSPECTUS SUPPLEMENT OR THE PROSPECTUS
IN CONNECTION WITH THE OFFER MADE BY THIS GLOBAL PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY NATIONSBANK CORPORATION, NB CAPITAL
TRUST III OR NATIONSBANC CAPITAL MARKETS, INC. NEITHER THE DELIVERY OF THIS
GLOBAL PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER AND
THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF NATIONSBANK CORPORATION OR NB CAPITAL TRUST III
SINCE THE DATE HEREOF. THIS GLOBAL PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO
NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. THIS GLOBAL PROSPECTUS SUPPLEMENT AND THE
RELATED PROSPECTUS ARE TO BE USED BY NATIONSBANC CAPITAL MARKETS, INC., A
BROKER-DEALER AND A DIRECT WHOLLY OWNED SUBSIDIARY OF THE CORPORATION, IN
CONNECTION WITH OFFERS AND SALES RELATED TO SECONDARY MARKET TRANSACTIONS.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
GLOBAL PROSPECTUS SUPPLEMENT
NationsBank Corporation............................... S-5
NB Capital Trust...................................... S-5
NationsBank Corporation Selected Financial Data....... S-6
Recent Developments................................... S-7
Risk Factors.......................................... S-8
Capitalization........................................ S-13
Ratios of Earnings to Fixed Charges................... S-15
Accounting Treatment.................................. S-15
Use of Proceeds....................................... S-15
Description of the Junior Subordinated Notes.......... S-16
Description of the Capital Securities................. S-22
Description of the Capital Securities Guarantee....... S-34
Effect of Obligations Under the Junior Subordinated
Notes and the Capital Securities Guarantee.......... S-34
United States Federal Income Taxation................. S-35
Certain United States Federal Income Tax Consequences
to Foreign Investors................................ S-38
ERISA Considerations.................................. S-39
Plan of Distribution.................................. S-41
Legal Matters......................................... S-41
Listing of Capital Securities and Related Matters..... S-41
<CAPTION>
PROSPECTUS
<S> <C>
Incorporation of Certain Documents by Reference....... 3
Available Information................................. 3
NationsBank Corporation............................... 4
The Trusts............................................ 8
Use of Proceeds....................................... 9
Ratios of Earnings to Fixed Charges and to Combined
Fixed Charges and Preferred Stock Dividends......... 10
Plan of Distribution.................................. 10
Description of the Junior Subordinated Notes.......... 11
Description of the Preferred Securities............... 15
Description of the Preferred Securities Guarantees.... 18
Effect of Obligations Under the Junior Subordinated
Notes and the Guarantee............................. 21
Legal Matters......................................... 22
Experts............................................... 22
</TABLE>
500,000 FLOATING RATE CAPITAL SECURITIES
NB CAPITAL TRUST III
FLOATING RATE CAPITAL SECURITIES
GUARANTEED AS
SET FORTH HEREIN BY
NATIONSBANK(Register mark)
GLOBAL PROSPECTUS SUPPLEMENT
NATIONSBANC CAPITAL MARKETS, INC.
JANUARY 22, 1997
