Exhibit 3(i)
RESTATED
ARTICLES OF INCORPORATION
OF
NATIONSBANK CORPORATION
NationsBank Corporation, a business corporation incorporated under the North
Carolina Business Corporation Act, pursuant to action by its Board of
Directors, hereby sets forth its Restated Articles of Incorporation:
1. The name of the Corporation is NationsBank Corporation.
2. The purposes for which the Corporation is organized are to engage in any
lawful act or activity for which corporations may be organized under Chapter 55
of the North Carolina General Statutes, as amended.
3. The number of shares the Corporation is authorized to issue is Eight
Hundred Forty-Five Million (845,000,000), divided into the following classes:
Class Number of Shares
----- ----------------
Common . . . . . . . . . . . . . . . . . . . . . . . . . . . .800,000,000
Preferred . . . . . . . . . . . . . . . . . . . . . . . . . . .45,000,000
The class of common has unlimited voting rights and, after satisfaction of
claims, if any, of the holders of preferred shares, is entitled to receive the
net assets of the Corporation upon distribution.
The Board of Directors of the Corporation shall have full power and
authority to establish one or more series within the class of preferred shares
(the "Preferred Shares"), to define the designations, preferences, limitations
and relative rights (including conversion rights) of shares within such class
and to determine all variations between series.
The Board of Directors of the Corporation has designated, established and
authorized the following series of Preferred Shares:
(a) ESOP Convertible Preferred Stock, Series C.
------------------------------------------
The shares of the ESOP Convertible Preferred Stock, Series C, of the
Corporation shall be designated "ESOP Convertible Preferred Stock, Series
C," and the number of shares constituting such series shall be 3,000,000.
The ESOP Convertible Preferred Stock, Series C, shall hereinafter be
referred to as the "ESOP Preferred Stock."
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A. Special Purpose Restricted Transfer Issue.
Shares of ESOP Preferred Stock shall be issued only to a trustee acting
on behalf of an employee stock ownership plan or other employee benefit plan
of the Corporation or any subsidiary of the Corporation. In the event of
any transfer of shares of ESOP Preferred Stock to any person other than any
such plan trustee or the Corporation, the shares of ESOP Preferred Stock so
transferred, upon such transfer and without any further action by the
Corporation or the holder, shall be automatically converted into shares of
Common Stock on the terms otherwise provided for the conversion of shares of
ESOP Preferred Stock into shares of Common Stock pursuant to paragraph E
hereof and no such transferee shall have any of the voting powers,
preferences and relative, participating, optional or special rights ascribed
to shares of ESOP Preferred Stock hereunder but, rather, only the powers and
rights pertaining to the Common Stock into which such shares of ESOP
Preferred Stock shall be so converted. Certificates representing shares of
ESOP Preferred Stock shall be legended to reflect such restrictions on
transfer. Notwithstanding the foregoing provisions of this paragraph A,
shares of ESOP Preferred Stock (i) may be converted into shares of Common
Stock as provided by paragraph E hereof and the shares of Common Stock
issued upon such conversion may be transferred by the holder thereof as
permitted by law and (ii) shall be redeemable by the Corporation upon the
terms and conditions provided by paragraphs F, G and H hereof.
B. Dividends and Distributions.
(1) Subject to the provisions for adjustment hereinafter set forth, the
holders of shares of ESOP Preferred Stock shall be entitled to receive, when,
as and if declared by the Board of Directors out of funds legally available
therefor, cash dividends ("Preferred Dividends") in an amount equal to $3.30
per share per annum, and no more, payable semi-annually, one-half on the first
day of January and one-half on the first day of July of each year (each a
"Dividend Payment Date") commencing the first such day following the effective
time of the Merger (as defined below), to holders of record at the start of
business on such Dividend Payment Date. Preferred Dividends shall begin to
accrue on shares of ESOP Preferred Stock on the last dividend payment date on
the outstanding shares of ESOP Convertible Preferred Stock, Series C, of
C&S/Sovran Corporation ("C&S/Sovran") (which shares are to be converted on a
one-for-one basis into shares of ESOP Preferred Stock at the effective time of
the merger (the "Merger") of C&S/Sovran Merger Corporation ("Merger
Corporation"), a Delaware corporation and a wholly owned subsidiary of the
Corporation, with and into C&S/Sovran, as provided in the Agreement and Plan of
Consolidation, dated July 21, 1991, between the Corporation and C&S/Sovran).
Preferred Dividends shall accrue on a daily basis whether or not the
Corporation shall have earnings or surplus at the time, but Preferred Dividends
on the shares of ESOP Preferred Stock for any period less than a full
semi-annual period between Dividend Payment Dates shall be computed on the
basis of a 360-day year of 30-day months. Accumulated but unpaid Preferred
Dividends shall accumulate as of the Dividend Payment Date on which they first
become payable, but no interest shall accrue on accumulated but unpaid
Preferred Dividends.
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(2) So long as any ESOP Preferred Stock shall be outstanding, no dividend
shall be declared or paid or set apart for payment on any other series of stock
ranking on a parity with the ESOP Preferred Stock as to dividends, unless there
shall also be or have been declared and paid or set apart for payment on the
ESOP Preferred Stock, like dividends for all dividend payment periods of the
ESOP Preferred Stock ending on or before the dividend payment date of such
parity stock, ratably in proportion to the respective amounts of dividends
accumulated and unpaid through such dividend payment period on the ESOP
Preferred Stock and accumulated and unpaid or payable on such parity stock
through the dividend payment period on such parity stock next preceding such
Dividend Payment Date. In the event that full cumulative dividends on the ESOP
Preferred Stock have not been declared and paid or set apart for payment when
due, the Corporation shall not declare or pay or set apart for payment any
dividends or make any other distributions on, or make any payment on account of
the purchase, redemption or other retirement of any other class of stock or
series thereof of the Corporation ranking, as to dividends or as to
distributions in the event of a liquidation, dissolution or winding-up of the
Corporation, junior to the ESOP Preferred Stock until full cumulative dividends
on the ESOP Preferred Stock shall have been paid or declared and provided for;
provided, however, that the foregoing shall not apply to (i) any dividend
payable solely in any shares of any stock ranking, as to dividends or as to
distributions in the event of the liquidation, dissolution or winding-up of the
Corporation, junior to the ESOP Preferred Stock, or (ii) the acquisition of
shares of any stock ranking, as to dividends or as to distributions in the
event of a liquidation, dissolution or winding-up of the Corporation, junior to
the ESOP Preferred Stock either (A) pursuant to any employee or director
incentive or benefit plan or arrangement (including any employment, severance
or consulting agreement) of the Corporation or any subsidiary of the
Corporation heretofore or hereafter adopted or (B) in exchange solely for
shares of any other stock ranking junior to the ESOP Preferred Stock.
C. Voting Rights.
The holders of shares of ESOP Preferred Stock shall have the following
voting rights:
(1) The holders of ESOP Preferred Stock shall be entitled to vote on all
matters submitted to a vote of the holders of Common Stock of the
Corporation, voting together with the holders of Common Stock as one class.
Each share of the ESOP Preferred Stock shall be entitled to the number of
votes equal to the number of shares of Common Stock into which such share of
ESOP Preferred Stock could be converted on the record date for determining
the shareholders entitled to vote, rounded to the nearest whole vote; it
being understood that whenever the "Conversion Price" (as defined in paragraph
E hereof) is adjusted as provided in paragraph I hereof, the voting rights of
the ESOP Preferred Stock shall also be similarly adjusted.
(2) Except as otherwise required by the North Carolina Business Corporation
Act or set forth in paragraph C(1), holders of ESOP Preferred Stock shall have
no special voting rights and their consent shall not be required for the taking
of any corporate action.
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D. Liquidation, Dissolution or Winding-Up.
(1) Upon any voluntary or involuntary liquidation, dissolution or winding-up
of the Corporation, the holders of ESOP Preferred Stock shall be entitled to
receive out of the assets of the Corporation which remain after satisfaction in
full of all valid claims of creditors of the Corporation and which are
available for payment to shareholders and subject to the rights of the holders
of any stock of the Corporation ranking senior to or on a parity with the ESOP
Preferred Stock in respect of distributions upon liquidation, dissolution or
winding-up of the Corporation, before any amount shall be paid or distributed
among the holders of Common Stock or any other shares ranking junior to the
ESOP Preferred Stock in respect of the distributions upon liquidation,
dissolution or winding-up of the Corporation, liquidating distributions in the
amount of $42.50 per share, plus an amount equal to all accrued and unpaid
dividends thereon to the date fixed for distribution, and no more. If upon any
liquidation, dissolution or winding-up of the Corporation, the amounts payable
with respect to the ESOP Preferred Stock and any other stock ranking as to any
such distribution on a parity with the ESOP Preferred Stock are not paid in
full, the holders of the ESOP Preferred Stock and such other stock shall share
ratably in any distribution of assets in proportion to the full respective
preferential amounts to which they are entitled. After payment of the full
amount to which they are entitled as provided by the foregoing provisions of
this paragraph D(1), the holders of shares of ESOP Preferred Stock shall not be
entitled to any further right or claim to any of the remaining assets of the
Corporation.
(2) Neither the merger or consolidation of the Corporation with or into any
other corporation, nor the merger or consolidation of any other corporation
with or into the Corporation, nor the sale, transfer or lease of all or any
portion of the assets of the Corporation, shall be deemed to be a dissolution,
liquidation or winding-up of the affairs of the Corporation for purposes of
this paragraph D, but the holders of ESOP Preferred Stock shall nevertheless be
entitled in the event of any such merger or consolidation to the rights
provided by paragraph H hereof.
(3) Written notice of any voluntary or involuntary liquidation, dissolution
or winding-up of the Corporation, stating the payment date or dates when, and
the place or places where, the amounts distributable to holders of ESOP
Preferred Stock in such circumstances shall be payable, shall be given by
first-class mail, postage prepaid, mailed not less than twenty (20) days prior
to any payment date stated therein, to the holders of ESOP Preferred Stock, at
the address shown on the books of the Corporation or any transfer agent for the
ESOP Preferred Stock.
E. Conversion into Common Stock.
(1) A holder of shares of ESOP Preferred Stock shall be entitled, at any
time prior to the close of business on the date fixed for redemption of such
shares pursuant to paragraphs F, G or H hereof, to cause any or all of such
shares to be converted into shares of Common Stock, initially at a conversion
rate equal to the ratio of 1.0 shares of ESOP Preferred Stock to 0.84 shares of
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Common Stock and a conversion price the amount of which initially shall be
$42.50 (as adjusted as hereinafter provided, the "Conversion Price") for,
initially, each 0.84 shares of Common Stock. Each of the Conversion Price and
the resulting conversion ratio are subject to adjustment as hereinafter
provided.
(2) Any holder of shares of ESOP Preferred Stock desiring to convert such
shares into shares of Common Stock shall surrender the certificate or
certificates representing the shares of ESOP Preferred Stock being converted,
duly assigned or endorsed for transfer to the Corporation (or accompanied by
duly executed stock powers relating thereto), at the principal executive office
of the Corporation or the offices of the transfer agent for the ESOP Preferred
Stock or such office or offices in the continental United States of an agent
for conversion as may from time to time be designated by notice to the holders
of the ESOP Preferred Stock by the Corporation or the transfer agent for the
ESOP Preferred Stock, accompanied by written notice of conversion. Such notice
of conversion shall specify (i) the number of shares of ESOP Preferred Stock to
be converted and the name or names in which such holder wishes the certificate
or certificates for Common Stock and for any shares of ESOP Preferred Stock not
to be so converted to be issued, and (ii) the address to which such holder
wishes delivery to be made of such new certificates to be issued upon such
conversion.
(3) Upon surrender of a certificate representing a share or shares of ESOP
Preferred Stock for conversion, the Corporation shall issue and send by hand
delivery (with receipt to be acknowledged) or by first-class mail, postage
prepaid, to the holder thereof or to such holder's designee, at the address
designated by such holder, a certificate or certificates for the number of
shares of Common Stock to which such holder shall be entitled upon conversion.
In the event that there shall have been surrendered a certificate or
certificates representing shares of ESOP Preferred Stock, only part of which
are to be converted, the Corporation shall issue and deliver to such holder or
such holder's designee a new certificate or certificates representing the
number of shares of ESOP Preferred Stock which shall not have been converted.
(4) The issuance by the Corporation of shares of Common Stock upon a
conversion of shares of ESOP Preferred Stock into shares of Common Stock made
at the option of the holder thereof shall be effective as of the earlier of (i)
the delivery to such holder or such holder's designee of the certificate or
certificates representing the shares of Common Stock issued upon conversion
thereof or (ii) the commencement of business on the second business day after
the surrender of the certificate or certificates for the shares of ESOP
Preferred Stock to be converted, duly assigned or endorsed for transfer to the
Corporation (or accompanied by duly executed stock powers relating thereto) as
provided hereby. On and after the effective date of conversion, the person or
persons entitled to receive the Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such
shares of Common Stock, but no allowance or adjustment shall be made in respect
of dividends payable to holders of Common Stock in respect of any period prior
to such effective date. The Corporation shall not be obligated to pay any
dividends which shall have been declared and shall be payable to holders of
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shares of ESOP Preferred Stock on a Dividend Payment Date if such Dividend
Payment Date for such dividend shall coincide with or be on or subsequent to
the effective date of conversion of such shares.
(5) The Corporation shall not be obligated to deliver to holders of ESOP
Preferred Stock any fractional share or shares of Common Stock issuable upon
any conversion of such shares of ESOP Preferred Stock, but in lieu thereof may
make a cash payment in respect thereof in any manner permitted by law.
(6) The Corporation shall at all times reserve and keep available out of its
authorized and unissued Common Stock, solely for issuance upon the conversion
of shares of ESOP Preferred Stock as herein provided, free from any preemptive
rights, such number of shares of Common Stock as shall from time to time be
issuable upon the conversion of all shares of ESOP Preferred Stock then
outstanding. The Corporation shall prepare and shall use its best efforts to
obtain and keep in force such governmental or regulatory permits or other
authorizations as may be required by law, and shall comply with all
requirements as to registration or qualification of the Common Stock, in order
to enable the Corporation lawfully to issue and deliver to each holder of
record of ESOP Preferred Stock such number of shares of its Common Stock as
shall from time to time be sufficient to effect the conversion of all shares of
ESOP Preferred Stock then outstanding and convertible into shares of Common
Stock.
F. Redemption At the Option of the Corporation.
(1) The ESOP Preferred Stock shall be redeemable, in whole or in part, at
the option of the Corporation at any time after July 1, 1992, or on or before
July 1, 1992 if permitted by paragraphs F(3) or F(4), at the following
redemption prices per share (except as to redemption pursuant to paragraph
F(3)):
During the Twelve-Month Price Per
Period Beginning July 1, Share
- ----------------------- ---------
1991 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $45.14
1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.81
1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.48
1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.15
1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.82
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.49
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.16
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.83
and thereafter at $42.50 per share, plus, in each case, an amount equal to all
accrued and unpaid dividends thereon to the date fixed for redemption. Payment
of the redemption price shall be made by the Corporation in cash or shares of
Common Stock, or a combination thereof, as permitted by paragraph F(5). From
and after the date fixed for redemption, dividends on shares of
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ESOP Preferred Stock called for redemption will cease to accrue, such shares
will no longer be deemed to be outstanding and all rights in respect of such
shares of the Corporation shall cease, except the right to receive the
redemption price. If less than all of the outstanding shares of ESOP Preferred
Stock are to be redeemed, the Corporation shall either redeem a portion of the
shares of each holder determined pro rata based on the number of shares held by
each holder or shall select the shares to be redeemed by lot, as may be
determined by the Board of Directors of the Corporation.
(2) Unless otherwise required by law, notice of redemption will be sent to
the holders of ESOP Preferred Stock at the address shown on the books of the
Corporation or any transfer agent for the ESOP Preferred Stock by first-class
mail, postage prepaid, mailed not less than twenty (20) days nor more than
sixty (60) days prior to the redemption date. Each such notice shall state:
(i) the redemption date; (ii) the total number of shares of the ESOP Preferred
Stock to be redeemed and, if fewer than all the shares held by such holder are
to be redeemed, the number of such shares to be redeemed from such holder;
(iii) the redemption price; (iv) the place or places where certificates for
such shares are to be surrendered for payment of the redemption price; (v) that
dividends on the shares to be redeemed will cease to accrue on such redemption
date; and (vi) the conversion rights of the shares to be redeemed, the period
within which conversion rights may be exercised, and the Conversion Price and
number of shares of Common Stock issuable upon conversion of a share of ESOP
Preferred Stock at the time. These notice provisions may be supplemented if
necessary in order to comply with optional redemption provisions for preferred
stock which may be required under the Internal Revenue Code of 1986, as
amended, or the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). Upon surrender of the certificates for any shares so called for
redemption and not previously converted (properly endorsed or assigned for
transfer, if the Board of Directors of the Corporation shall so require and the
notice shall so state), such shares shall be redeemed by the Corporation at the
date fixed for redemption and at the applicable redemption price set forth in
this paragraph F.
(3) In the event of a change in the federal tax law of the United States of
America which has the effect of precluding the Corporation from claiming any of
the tax deductions for dividends paid on the ESOP Preferred Stock when such
dividends are used as provided under Section 404(k)(2) of the Internal Revenue
Code of 1986, as amended and in effect on the date shares of ESOP Preferred
Stock are initially issued, the Corporation may, within 180 days following the
effective date of such tax legislation and implementing regulations of the
Internal Revenue Service, if any, in its sole discretion and notwithstanding
anything to the contrary in paragraph F(1), elect to redeem any or all such
shares for the amount payable in respect of the shares upon liquidation of the
Corporation pursuant to paragraph D.
(4) In the event the C&S/Sovran Retirement Savings, ESOP and Profit Sharing
Plan (as amended, together with any successor plan, the "Plan") is terminated,
the Corporation shall, notwithstanding anything to the contrary in paragraph
F(1), redeem all shares of ESOP Preferred Stock for the amount payable in
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respect of the shares upon redemption of the ESOP Preferred Stock pursuant to
paragraph F(1) hereof.
(5) The Corporation, at its option, may make payment of the redemption price
required upon redemption of shares of ESOP Preferred Stock in cash or in shares
of Common Stock, or in a combination of such shares and cash, any such shares
to be valued for such purpose at their Fair Market Value (as defined in
paragraph I(7) hereof).
G. Other Redemption Rights.
Shares of ESOP Preferred Stock shall be redeemed by the Corporation at a
price which is the greater of the Conversion Value (as defined in paragraph I)
of the ESOP Preferred Stock on the date fixed for redemption or a redemption
price of $42.50 per share plus accrued and unpaid dividends thereon to the date
fixed for redemption, for shares of Common Stock (any such shares of Common
Stock to be valued for such purpose as provided by paragraph F(5) hereof), at
the option of the holder, at any time and from time to time upon notice to the
Corporation given not less than five (5) business days prior to the date fixed
by the Corporation in such notice for such redemption, when and to the extent
necessary (i) to provide for distributions required to be made under, or to
satisfy an investment election provided to participants in accordance with, the
Plan to participants in the Plan or (ii) to make payment of principal, interest
or premium due and payable (whether as scheduled or upon acceleration) on any
indebtedness incurred by the holder or Trustee under the Plan for the benefit
of the Plan.
H. Consolidation, Merger, etc.
(1) In the event that the Corporation shall consummate any consolidation or
merger or similar transaction, however named, pursuant to which the outstanding
shares of Common Stock are by operation of law exchanged solely for or changed,
reclassified or converted solely into stock of any successor or resulting
company (including the Corporation and any company that directly or indirectly
owns all of the outstanding capital stock of such successor or resulting
company) that constitutes "qualifying employer securities" with respect to a
holder of ESOP Preferred Stock within the meaning of Section 409(1) of the
Internal Revenue Code of 1986, as amended, and Section 407(d)(5) of ERISA, or
any successor provisions of law, and, if applicable, for a cash payment in lieu
of fractional shares, if any, the shares of ESOP Preferred Stock of such holder
shall be assumed by and shall become preferred stock of such successor or
resulting company, having in respect of such company insofar as possible the
same powers, preferences and relative, participating, optional or other special
rights (including the redemption rights provided by paragraphs F, G and H
hereof), and the qualifications, limitations or restrictions thereon, that the
ESOP Preferred Stock had immediately prior to such transaction, except that
after such transaction each share of the ESOP Preferred Stock shall be
convertible, otherwise on the terms and conditions provided by paragraph E
hereof, into the qualifying employer securities so receivable by a holder of
the number of shares of Common Stock into which such shares of ESOP Preferred
Stock could have been converted immediately prior to such transaction if such
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holder of Common Stock failed to exercise any rights of election to receive any
kind or amount of stock, securities, cash or other property (other than such
qualifying employer securities and a cash payment, if applicable, in lieu of
fractional shares) receivable upon such transaction (provided that, if the kind
or amount of qualifying employer securities receivable upon such transaction is
not the same for each non-electing share, then the kind and amount of
qualifying employer securities receivable upon such transaction for each
non-electing share shall be the kind and amount so receivable per share by a
plurality of the non-electing shares). The rights of the ESOP Preferred Stock
as preferred stock of such successor or resulting company shall successively be
subject to adjustments pursuant to paragraph I hereof after any such
transaction as nearly equivalent to the adjustments provided for by such
paragraph prior to such transaction. The Corporation shall not consummate any
such merger, consolidation or similar transaction unless all then outstanding
shares of the ESOP Preferred Stock shall be assumed and authorized by the
successor or resulting company as aforesaid.
(2) In the event that the Corporation shall consummate any consolidation or
merger or similar transaction, however named, pursuant to which the outstanding
shares of Common Stock are by operation of law exchanged for or changed,
reclassified or converted into other stock or securities or cash or any other
property, or any combination thereof, other than any such consideration which
is constituted solely of qualifying employer securities (as referred to in
paragraph H(1)) and cash payments, if applicable, in lieu of fractional shares,
outstanding shares of ESOP Preferred Stock shall, without any action on the
part of the Corporation or any holder thereof (but subject to paragraph H(3)),
be deemed converted by virtue of such merger, consolidation or similar
transaction immediately prior to such consummation into the number of shares of
Common Stock into which such shares of ESOP Preferred Stock could have been
converted at such time, and each share of ESOP Preferred Stock shall, by virtue
of such transaction and on the same terms as apply to the holders of Common
Stock, be converted into or exchanged for the aggregate amount of stock,
securities, cash or other property (payable in like kind) receivable by a
holder of the number of shares of Common Stock into which such shares of ESOP
Preferred Stock could have been converted immediately prior to such transaction
if such holder of Common Stock failed to exercise any rights of election as to
the kind or amount of stock, securities, cash or other property receivable upon
such transaction (provided that, if the kind or amount of stock, securities,
cash or other property receivable upon such transaction is not the same for
each non-electing share, then the kind and amount of stock, securities, cash or
other property receivable upon such transaction for each non-electing share
shall be the kind and amount so receivable per share by a plurality of the
non-electing shares).
(3) In the event the Corporation shall enter into any agreement providing
for any consolidation or merger or similar transaction described in paragraph
H(2), then the Corporation shall as soon as practicable thereafter (and in any
event at least ten (10) business days before consummation of such transaction)
give notice of such agreement and the material terms thereof to each holder of
ESOP Preferred Stock and each such holder shall have the right to elect, by
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written notice to the Corporation, to receive, upon consummation of such
transaction (if and when such transaction is consummated), from the Corporation
or the successor of the Corporation, in redemption and retirement of such ESOP
Preferred Stock, a cash payment equal to the amount payable in respect of
shares of ESOP Preferred Stock upon redemption pursuant to paragraph F(1)
hereof. No such notice of redemption shall be effective unless given to the
Corporation prior to the close of business on the second business day prior to
consummation of such transaction, unless the Corporation or the successor of
the Corporation shall waive such prior notice, but any notice of redemption so
given prior to such time may be withdrawn by notice of withdrawal given to the
Corporation prior to the close of business on the second business day prior to
consummation of such transaction.
I. Anti-dilution Adjustments.
(1) In the event the Corporation shall, at any time or from time to time
while any of the shares of the ESOP Preferred Stock are outstanding, (i) pay a
dividend or make a distribution in respect of the Common Stock in shares of
Common Stock, (ii) subdivide the outstanding shares of Common Stock, or (iii)
combine the outstanding shares of Common Stock into a smaller number of shares,
in each case whether by reclassification of shares, recapitalization of the
Corporation (including a recapitalization effected by a merger or consolidation
to which paragraph H hereof does not apply) or otherwise, the Conversion Price
in effect immediately prior to such action shall be adjusted by multiplying
such Conversion Price by the fraction the numerator of which is the number of
shares of Common Stock outstanding immediately before such event and the
denominator of which is the number of shares of Common Stock outstanding
immediately after such event. An adjustment made pursuant to this paragraph
I(1) shall be given effect, upon payment of such a dividend or distribution, as
of the record date for the determination of shareholders entitled to receive
such dividend or distribution (on a retroactive basis) and in the case of a
subdivision or combination shall become effective immediately as of the
effective date thereof.
(2) In the event that the Corporation shall, at any time or from time to
time while any of the shares of ESOP Preferred Stock are outstanding, issue to
holders of shares of Common Stock as a dividend or distribution, including by
way of a reclassification of shares or a recapitalization of the Corporation,
any right or warrant to purchase shares of Common Stock (but not including as
such a right or warrant any security convertible into or exchangeable for
shares of Common Stock) at a purchase price per share less than the Fair Market
Value (as hereinafter defined) of a share of Common Stock on the date of
issuance of such right or warrant, then, subject to the provisions of
paragraphs I(5) and I(6), the Conversion Price shall be adjusted by multiplying
such Conversion Price by the fraction the numerator of which shall be the
number of shares of Common Stock outstanding immediately before such issuance
of rights or warrants plus the number of shares of Common Stock which could be
purchased at the Fair Market Value of a share of Common Stock at the time of
such issuance for the maximum aggregate consideration payable upon exercise in
full of all such rights or warrants and the denominator of which shall be the
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number of shares of Common Stock outstanding immediately before such issuance
of rights or warrants plus the maximum number of shares of Common Stock that
could be acquired upon exercise in full of all such rights and warrants.
(3) In the event the Corporation shall, at any time and from time to time
while any of the shares of ESOP Preferred Stock are outstanding, issue, sell or
exchange shares of Common Stock (other than pursuant to any right or warrant to
purchase or acquire shares of Common Stock (including as such a right or
warrant any security convertible into or exchangeable for shares of Common
Stock) and other than pursuant to any dividend reinvestment plan or employee or
director incentive or benefit plan or arrangement, including any employment,
severance or consulting agreement, of the Corporation or any subsidiary of the
Corporation heretofore or hereafter adopted) for a consideration having a Fair
Market Value on the date of such issuance, sale or exchange less than the Fair
Market Value of such shares on the date of such issuance, sale or exchange,
then, subject to the provisions of paragraphs I(5) and (6), the Conversion
Price shall be adjusted by multiplying such Conversion Price by the fraction
the numerator of which shall be the sum of (i) the Fair Market Value of all the
shares of Common Stock outstanding on the day immediately preceding the first
public announcement of such issuance, sale or exchange plus (ii) the Fair
Market Value of the consideration received by the Corporation in respect of
such issuance, sale or exchange of shares of Common Stock, and the denominator
of which shall be the product of (i) the Fair Market Value of a share of Common
Stock on the day immediately preceding the first public announcement of such
issuance, sale or exchange multiplied by (ii) the sum of the number of shares
of Common Stock outstanding on such day plus the number of shares of Common
Stock so issued, sold or exchanged by the Corporation. In the event the
Corporation shall, at any time or from time to time while any shares of ESOP
Preferred Stock are outstanding, issue, sell or exchange any right or warrant
to purchase or acquire shares of Common Stock (including as such a right or
warrant any security convertible into or exchangeable for shares of Common
Stock), other than any such issuance to holders of shares of Common Stock as a
dividend or distribution (including by way of a reclassification of shares or a
recapitalization of the Corporation) and other than pursuant to any dividend
reinvestment plan or employee or director incentive or benefit plan or
arrangement (including any employment, severance or consulting agreement) of
the Corporation or any subsidiary of the Corporation heretofore or hereafter
adopted, for a consideration having a Fair Market Value on the date of such
issuance, sale or exchange less than the Non-Dilutive Amount (as hereinafter
defined), then, subject to the provisions of paragraphs I(5) and (6), the
Conversion Price shall be adjusted by multiplying such Conversion Price by a
fraction the numerator of which shall be the sum of (a) the Fair Market Value
of all the shares of Common Stock outstanding on the day immediately preceding
the first public announcement of such issuance, sale or exchange plus (b) the
Fair Market Value of the consideration received by the Corporation in respect
of such issuance, sale or exchange of such right or warrant plus (c) the Fair
Market Value at the time of such issuance of the consideration which the
Corporation would receive upon exercise in full of all such rights or warrants,
and the denominator of which shall be the product of (a) the Fair Market Value
of a share of Common Stock on the day immediately preceding the first public
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announcement of such issuance, sale or exchange multiplied by (b) the sum of
the number of shares of Common Stock outstanding on such day plus the maximum
number of shares of Common Stock which could be acquired pursuant to such right
or warrant at the time of the issuance, sale or exchange of such right or
warrant (assuming shares of Common Stock could be acquired pursuant to such
right or warrant at such time).
(4) In the event the Corporation shall, at any time or from time to time
while any of the shares of ESOP Preferred Stock are outstanding, make any
Extraordinary Distribution (as hereinafter defined) in respect of the Common
Stock, whether by dividend, distribution, reclassification of shares or
recapitalization of the Corporation (including a recapitalization or
reclassification effected by a merger or consolidation to which paragraph H
hereof does not apply) or effect a Pro Rata Repurchase (as hereinafter defined)
of Common Stock, the Conversion Price in effect immediately prior to such
Extraordinary Distribution or Pro Rata Repurchase shall, subject to paragraphs
I(5) and (6), be adjusted by multiplying such Conversion Price by the fraction
the numerator of which is (a) the product of (i) the number of shares of Common
Stock outstanding immediately before such Extraordinary Distribution or Pro
Rata Repurchase multiplied by (ii) the Fair Market Value (as herein defined) of
a share of Common Stock on the Valuation Date (as hereinafter defined) with
respect to an Extraordinary Distribution, or on the applicable expiration date
(including all extensions thereof) of any tender offer which is a Pro Rata
Repurchase, or on the date of purchase with respect to any Pro Rata Repurchase
which is not a tender offer, as the case may be, minus (b) the Fair Market
Value of the Extraordinary Distribution or the aggregate purchase price of the
Pro Rata Repurchase, as the case may be, and the denominator of which shall be
the product of (i) the number of shares of Common Stock outstanding immediately
before such Extraordinary Distribution or Pro Rata Repurchase minus, in the
case of a Pro Rata Repurchase, the number of shares of Common Stock repurchased
by the Corporation multiplied by (ii) the Fair Market Value of a share of
Common Stock on the record date with respect to an Extraordinary Distribution
or on the applicable expiration date (including all extensions thereof) of any
tender offer which is a Pro Rata Repurchase or on the date of purchase with
respect to any Pro Rata Repurchase which is not a tender offer, as the case may
be. The Corporation shall send each holder of ESOP Preferred Stock (x) notice
of its intent to make any Extraordinary Distribution and (y) notice of any
offer by the Corporation to make a Pro Rata Repurchase, in each case at the
same time as, or as soon as practicable after, such offer is first communicated
(including by announcement of a record date in accordance with the rules of any
stock exchange on which the Common Stock is listed or admitted to trading) to
holders of Common Stock. Such notice shall indicate the intended record date
and the amount and nature of such dividend or distribution, or the number of
shares subject to such offer for a Pro Rata Repurchase and the purchase price
payable by the Corporation pursuant to such offer, as well as the Conversion
Price and the number of shares of Common Stock into which a share of ESOP
Preferred Stock may be converted at such time.
(5) Notwithstanding any other provisions of this paragraph I, the
Corporation shall not be required to make any adjustment of the Conversion
Price unless such adjustment would require an increase or decrease of at least
54
one percent (1%) in the Conversion Price. Any lesser adjustment shall be
carried forward and shall be made no later than the time of, and together with,
the next subsequent adjustment which, together with any adjustment or
adjustments so carried forward, shall amount to an increase or decrease of at
least one percent (1%) in the Conversion Price.
(6) If the Corporation shall make any dividend or distribution on the Common
Stock or issue any Common Stock, other capital stock or other security of the
Corporation or any rights or warrants to purchase or acquire any such security,
which transaction does not result in an adjustment to the Conversion Price
pursuant to the foregoing provisions of this paragraph I, the Board of
Directors of the Corporation shall consider whether such action is of such a
nature that an adjustment to the Conversion Price should equitably be made in
respect of such transaction. If in such case the Board of Directors of the
Corporation determines that the adjustment to the Conversion Price should be
made, an adjustment shall be made effective as of such date, as determined by
the Board of Directors of the Corporation. The determination of the Board of
Directors of the Corporation as to whether an adjustment to the Conversion
Price should be made pursuant to the foregoing provisions of this paragraph
I(6), and, if so, as to what adjustment should be made and when, shall be final
and binding on the Corporation and all shareholders of the Corporation. The
Corporation shall be entitled to make such additional adjustments in the
Conversion Price, in addition to those required by the foregoing provisions of
this paragraph I, as shall be necessary in order that any dividend or
distribution in shares of capital stock of the Corporation, subdivision,
reclassification or combination of shares of stock of the Corporation or any
recapitalization of the Corporation shall not be taxable to holders of the
Common Stock.
(7) For purposes of this paragraph I, the following definitions shall apply:
"Conversion Value" shall mean the Fair Market Value of the aggregate number
of shares of Common Stock into which a share of ESOP Preferred Stock is
convertible.
"Extraordinary Distribution" shall mean any dividend or other distribution
(effected while any of the shares of ESOP Preferred Stock are outstanding) (a)
of cash, where the aggregate amount of such cash dividend and distribution
together with the amount of all cash dividends and distributions made during
the preceding period of 12 months, when combined with the aggregate amount of
all Pro Rata Repurchases (for this purpose, including only that portion of the
aggregate purchase price of such Pro Rata Repurchase which is in excess of the
Fair Market Value of the Common Stock repurchased as determined on the
applicable expiration date (including all extensions thereof) of any tender
offer or exchange offer which is a Pro Rata Repurchase, or the date of purchase
with respect to any other Pro Rata Repurchase which is not a tender offer or
exchange offer made during such period), exceeds Twelve and One-Half percent
(12.5%) of the aggregate Fair Market Value of all shares of Common Stock
outstanding on the record date for determining the shareholders entitled to
receive such Extraordinary Distribution and (b) any shares of capital stock of
the Corporation (other than shares of Common Stock), other securities of the
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Corporation (other than securities of the type referred to in paragraph I(2)),
evidence of indebtedness of the Corporation or any other person or any other
property (including shares of any subsidiary of the Corporation), or any
combination thereof. The Fair Market Value of an Extraordinary Distribution
for purposes of paragraph I(4) shall be the sum of the Fair Market Value of
such Extraordinary Distribution plus the amount of any cash dividends which are
not Extraordinary Distributions made during such twelve-month period and not
previously included in the calculation of an adjustment pursuant to paragraph
I(4).
"Fair Market Value" shall mean, as to shares of Common Stock or any other
class of capital stock or securities of the Corporation or any other issuer
which are publicly traded, the average of the Current Market Prices (as
hereinafter defined) of such shares or securities for each day of the
Adjustment Period (as hereinafter defined). "Current Market Price" of publicly
traded shares of Common Stock or any other class of capital stock or other
security of the Corporation or any other issuer for a day shall mean the last
reported sales price, regular way, or, in case no sale takes place on such day,
the average of the reported closing bid and asked prices, regular way, in
either case as reported on the New York Stock Exchange Composite Tape or, if
such security is not listed or admitted to trading on the New York Stock
Exchange, on the principal national securities exchange on which such security
is listed or admitted to trading or, if not listed or admitted to trading on
any national securities exchange, on the NASDAQ National Market System or, if
such security is not quoted on such National Market System, the average of the
closing bid and asked prices on each such day in the over-the-counter market as
reported by NASDAQ or, if bid and asked prices for such security on each such
day shall not have been reported through NASDAQ, the average of the bid and
asked prices for such day as furnished by any New York Stock Exchange member
firm selected for such purpose by the Board of Directors of the Corporation or
a committee thereof on each trading day during the Adjustment Period.
"Adjustment Period" shall mean the period of five (5) consecutive trading days
preceding the date as of which the Fair Market Value of a security is to be
determined. The "Fair Market Value" of any security which is not publicly
traded or of any other property shall mean the fair value thereof as determined
by an independent investment banking or appraisal firm experienced in the
valuation of such securities or property selected in good faith by the Board of
Directors of the Corporation or a committee thereof, or, if no such investment
banking or appraisal firm is in the good faith judgment of the Board of
Directors or such committee available to make such determination, as determined
in good faith by the Board of Directors of the Corporation or such committee.
"Non-Dilutive Amount" in respect of an issuance, sale or exchange by the
Corporation of any right or warrant to purchase or acquire shares of Common
Stock (including any security convertible into or exchangeable for shares of
Common Stock) shall mean the remainder of (a) the product of the Fair Market
Value of a share of Common Stock on the day preceding the first public
announcement of such issuance, sale or exchange multiplied by the maximum
number of shares of Common Stock which could be acquired on such date upon the
exercise in full of such rights and warrants (including upon the conversion or
56
exchange of all such convertible or exchangeable securities), whether or not
exercisable (or convertible or exchangeable) at such date, minus (b) the
aggregate amount payable pursuant to such right or warrant to purchase or
acquire such maximum number of shares of Common Stock; provided, however, that
in no event shall the Non-Dilutive Amount be less than zero. For purposes of
the foregoing sentence, in the case of a security convertible into or
exchangeable for shares of Common Stock, the amount payable pursuant to a right
or warrant to purchase or acquire shares of Common Stock shall be the Fair
Market Value of such security on the date of the issuance, sale or exchange of
such security by the Corporation.
"Pro Rata Repurchase" shall mean any purchase of shares of Common Stock by
the Corporation or any subsidiary thereof, whether for cash, shares of capital
stock of the Corporation, other securities of the Corporation, evidences of
indebtedness of the Corporation or any other person or any other property
(including shares of a subsidiary of the Corporation), or any combination
thereof, effected while any of the shares of ESOP Preferred Stock are
outstanding, pursuant to any tender offer or exchange offer subject to Section
13(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or any successor provision of law, or pursuant to any other offer available to
substantially all holders of Common Stock; provided, however, that no purchase
of shares by the Corporation or any subsidiary thereof made in open market
transactions shall be deemed a Pro Rata Repurchase. For purposes of this
paragraph I(7), shares shall be deemed to have been purchased by the
Corporation or any subsidiary thereof "in open market transactions" if they
have been purchased substantially in accordance with the requirements of Rule
10b-18 as in effect under the Exchange Act, on the date shares of ESOP
Preferred Stock are initially issued by the Corporation or on such other terms
and conditions as the Board of Directors of the Corporation or a committee
thereof shall have determined are reasonably designed to prevent such purchases
from having a material effect on the trading market for the Common Stock.
"Valuation Date" with respect to an Extraordinary Distribution shall mean
the date that is five (5) business days prior to the record date for such
Extraordinary Distribution.
(8) Whenever an adjustment to the Conversion Price is required pursuant
hereto, the Corporation shall forthwith place on file with the transfer agent
for the Common Stock and the ESOP Preferred Stock if there be one, and with the
Secretary of the Corporation, a statement signed by two officers of the
Corporation, stating the adjusted Conversion Price determined as provided
herein and the resulting conversion ratio, and the voting rights (as
appropriately adjusted), of the ESOP Preferred Stock. Such statement shall set
forth in reasonable detail such facts as shall be necessary to show the reason
and the manner of computing such adjustment, including any determination of
Fair Market Value involved in such computation. Promptly after each adjustment
to the Conversion Price and the related voting rights of the ESOP Preferred
Stock, the Corporation shall mail a notice thereof and of the then prevailing
conversion ratio to each holder of shares of the ESOP Preferred Stock.
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J. Ranking; Retirement of Shares.
(1) The ESOP Preferred Stock shall rank (a) senior to the Common Stock as to
the payment of dividends and the distribution of assets on liquidation,
dissolution and winding-up of the Corporation, (b) junior to the shares of
Series B Cumulative Perpetual Convertible Preferred Stock, no par value per
share, of the Corporation as to the payment of dividends and the distribution
of assets on liquidation, dissolution or winding-up of the Corporation, and (c)
unless otherwise provided in the Articles of Incorporation of the Corporation
or an amendment to such Articles of Incorporation relating to a subsequent
series of Preferred Stock, without par value, of the Corporation (the
"Preferred Stock"), junior to all other series of the Preferred Stock as to the
payment of dividends and the distribution of assets on liquidation, dissolution
or winding-up.
(2) Any shares of ESOP Preferred Stock acquired by the Corporation by reason
of the conversion or redemption of such shares as provided hereby, or otherwise
so acquired, shall be retired as shares of ESOP Preferred Stock and restored to
the status of authorized but unissued shares of Preferred Stock, undesignated
as to series, and may thereafter be reissued as part of a new series of such
Preferred Stock as permitted by law.
K. Miscellaneous
(1) All notices referred to herein shall be in writing, and all notices
hereunder shall be deemed to have been given upon the earlier of receipt
thereof or three (3) business days after the mailing thereof if sent by
registered mail (unless first-class mail shall be specifically permitted for
such notice under the terms hereof) with postage prepaid, addressed: (a) if to
the Corporation, to its office at NationsBank Corporate Center, Charlotte,
North Carolina 28255 (Attention: Treasurer) or to the transfer agent for the
ESOP Preferred Stock, or other agent of the Corporation designated as permitted
hereby or (b) if to any holder of the ESOP Preferred Stock or Common Stock, as
the case may be, to such holder at the address of such holder as listed in the
stock record books of the Corporation (which may include the records of any
transfer agent for the ESOP Preferred Stock or Common Stock, as the case may
be) or (c) to such other address as the Corporation or any such holder, as the
case may be, shall have designated by notice similarly given.
(2) The term "Common Stock" as used herein means the Corporation's Common
Stock, as the same existed at the date of filing of the Amendment to the
Corporation's Articles of Incorporation relating to the ESOP Preferred Stock
or any other class of stock resulting from successive changes or
reclassification of such Common Stock consisting solely of changes in par
value, or from par value to no par value. In the event that, at any time as a
result of an adjustment made pursuant to paragraph I hereof, the holder of any
share of the ESOP Preferred Stock upon thereafter surrendering such shares for
conversion shall become entitled to receive any shares or other securities of
the Corporation other than shares of Common Stock, the Conversion Price in
respect of such other shares or securities so receivable upon conversion of
shares of ESOP Preferred Stock shall thereafter be adjusted, and shall be
58
subject to further adjustment from time to time, in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to Common Stock
contained in paragraph I hereof, and the provisions of paragraphs A through H,
J, and K hereof with respect to the Common Stock shall apply on like or similar
terms to any such other shares or securities.
(3) The Corporation shall pay any and all stock transfer and documentary
stamp taxes that may be payable in respect of any issuance or delivery of
shares of ESOP Preferred Stock or shares of Common Stock or other securities
issued on account of ESOP Preferred Stock pursuant hereto or certificates
representing such shares or securities. The Corporation shall not, however, be
required to pay any such tax which may be payable in respect of any transfer
involved in the issuance or delivery of shares of ESOP Preferred Stock or
Common Stock or other securities in a name other than that in which the shares
of ESOP Preferred Stock with respect to which such shares or other securities
are issued or delivered were registered, or in respect of any payment to any
person with respect to any such shares or securities other than a payment to
the registered holder thereof, and shall not be required to make any such
issuance, delivery or payment unless and until the person otherwise entitled to
such issuance, delivery or payment has paid to the Corporation the amount of
any such tax or has established, to the satisfaction of the Corporation, that
such tax has been paid or is not payable.
(4) In the event that a holder of shares of ESOP Preferred Stock shall not
by written notice designate the name in which shares of Common Stock to be
issued upon conversion of such shares should be registered or to whom payment
upon redemption of shares of ESOP Preferred Stock should be made or the address
to which the certificate or certificates representing such shares, or such
payment, should be sent, the Corporation shall be entitled to register such
shares, and make such payment, in the name of the holder of such ESOP Preferred
Stock as shown on the records of the Corporation and to send the certificate or
certificates representing such shares, or such payment, to the address of such
holder shown on the records of the Corporation.
(5) The Corporation may appoint, and from time to time discharge and change,
a transfer agent for the ESOP Preferred Stock. Upon any such appointment or
discharge of a transfer agent, the Corporation shall send notice thereof by
first-class mail, postage prepaid, to each holder of record of ESOP Preferred
Stock.
4. The address of the registered office of the Corporation is NationsBank
Corporate Center, NC1-007-56, Charlotte, Mecklenburg County, North Carolina
28255, and the name of its registered agent at such address is James W. Kiser.
5. No holder of any stock of the Corporation of any class now or hereafter
authorized shall have any preemptive right to purchase, subscribe for, or
otherwise acquire any shares of stock of the Corporation of any class now or
hereafter authorized, or any securities exchangeable for or convertible into
any such shares, or any warrants or other instruments evidencing rights or
options to subscribe for, purchase or otherwise acquire any such shares whether
59
such shares, securities, warrants or other instruments be unissued, or issued
and thereafter acquired by the Corporation.
6. To the fullest extent permitted by the North Carolina Business
Corporation Act, as the same exists or may hereafter be amended, a director of
the Corporation shall not be personally liable to the Corporation, its
shareholders or otherwise for monetary damage for breach of his duty as a
director. Any repeal or modification of this Article shall be prospective only
and shall not adversely affect any limitation on the personal liability of a
director of the Corporation existing at the time of such repeal or
modification.
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