Exhibit 99.2
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of August 29, 1996 (the
"Agreement"), by and between BOATMEN'S BANCSHARES, INC., a Mis-
souri corporation ("Issuer"), and NATIONSBANK CORPORATION, a
North Carolina corporation ("Grantee").
RECITALS
(A) Merger Agreement. Grantee and Issuer have, on the
date hereof, entered into an Agreement and Plan of Merger (the
"Merger Agreement"), providing for, among other things, the
merger of Issuer with and into a wholly owned subsidiary of
Grantee, with such subsidiary being the surviving corporation.
(B) Condition to Merger Agreement. As a condition and
inducement to Grantee's pursuit of the transactions contem-
plated by the Merger Agreement, and in consideration therefor,
Issuer has agreed to grant Grantee the Option (as hereinafter
defined).
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agree-
ments set forth herein and in the Merger Agreement, and intend-
ing to be legally bound hereby, Issuer and Grantee agree as
follows:
1. Defined Terms. Capitalized terms which are used but
not defined herein shall have the meanings ascribed to such
terms in the Merger Agreement.
2. Grant of Option. Subject to the terms and conditions
set forth herein, Issuer hereby grants to Grantee an irrevo-
cable option (the "Option") to purchase a number of shares of
common stock, par value $1.00 per share ("Issuer Common"), of
Issuer up to 31,218,660 of such shares (as adjusted as set
forth herein, the "Option Shares", which shall include the Op-
tion Shares before and after any transfer of such Option
Shares, but in no event shall the number of Option Shares for
which this Option is exercisable exceed 19.9% of the issued and
outstanding shares of Issuer Common) at a purchase price per
Option Share (as adjusted as set forth herein, the "Purchase
Price") equal to $43.375.
3. Exercise of Option.
(a) Provided that (i) Grantee or Holder (as herein-
after defined), as applicable, shall not be in material breach
of the agreements or covenants contained in this Agreement or
the Merger Agreement, and (ii) no preliminary or permanent in-
junction or other order against the delivery of shares covered
by the Option issued by any court of competent jurisdiction in
the United States shall be in effect, the Holder may exercise
the Option, in whole or in part, at any time and from time to
time following the occurrence of a Purchase Event (as hereinaf-
ter defined); provided that the Option shall terminate and be
of no further force or effect upon the earliest to occur of (A)
the Effective Time, (B) termination of the Merger Agreement in
accordance with the terms thereof prior to the occurrence of a
Purchase Event or a Preliminary Purchase Event (as hereinafter
defined) other than a termination thereof by Grantee pursuant
to Section 8.01(b) of the Merger Agreement (but only if the
breach of Issuer giving rise to such termination was willful)
(a termination of the Merger Agreement by Grantee pursuant to
Section 8.01 (b) thereof as a result of a willful breach by
Issuer being referred to herein as a "Default Termination"),
(C) fifteen (15) months after a Default Termination, or (D)
fifteen (15) months after termination of the Merger Agreement
(other than by reason of a Default Termination) following the
occurrence of a Purchase Event or a Preliminary Purchase Event;
provided, however, that any purchase of shares upon exercise of
the Option shall be subject to compliance with applicable law.
The term "Holder" shall mean the holder or holders of the Op-
tion from time to time, and which initially is Grantee. The
rights set forth in Section 8 hereof shall terminate when the
right to exercise the Option terminates (other than as a result
of a complete exercise of the Option) as set forth herein.
(b) As used herein, a "Purchase Event" means any of
the following events:
(i) Without Grantee's prior written consent,
Issuer shall have recommended, publicly proposed or pub-
licly announced an intention to authorize, recommend or
propose, or entered into an agreement with any person
(other than Grantee or any subsidiary of Grantee) to ef-
fect (A) a merger, consolidation or similar transaction
involving Issuer or any of its significant subsidiaries
(other than transactions solely between Issuer's subsid-
iaries that are not violative of the Merger Agreement),
(B) the disposition, by sale, lease, exchange or other-
wise, of assets or deposits of Issuer or any of its sig-
nificant subsidiaries representing in either case 25% or
more of the consolidated assets or deposits of Issuer and
its subsidiaries, or (C) the issuance, sale or other dis-
position by Issuer of (including by way of merger, con-
solidation, share exchange or any similar transaction)
securities representing 25% or more of the voting power of
Issuer or any of its significant subsidiaries, other than,
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in each case of (A), (B), or (C), any merger, consolida-
tion or similar transaction involving Issuer or any of its
significant subsidiaries in which the voting securities of
Issuer outstanding immediately prior thereto continue to
represent (by either remaining outstanding or being con-
verted into the voting securities of the surviving entity
of any such transaction) at least 65% of the combined vot-
ing power of the voting securities of the Issuer or the
surviving entity outstanding immediately after the consum-
mation of such merger, consolidation, or similar transac-
tion (provided any such transaction is not violative of
the Merger Agreement) (each of (A), (B), or (C), an "Ac-
quisition Transaction"); or
(ii) any person (other than Grantee or any sub-
sidiary of Grantee) shall have acquired beneficial owner-
ship (as such term is defined in Rule 13d-3 promulgated
under the Exchange Act) of or the right to acquire benefi-
cial ownership of, or any "group" (as such term is defined
in Section 13(d)(3) of the Exchange Act), other than a
group of which Grantee or any subsidiary of Grantee is a
member, shall have been formed which beneficially owns, or
has the right to acquire beneficial ownership of, 25% or
more of the voting power of Issuer or any of its signifi-
cant subsidiaries.
(c) As used herein, a "Preliminary Purchase Event"
means any of the following events:
(i) any person (other than Grantee or any sub-
sidiary of Grantee) shall have commenced (as such term is
defined in Rule 14d-2 under the Exchange Act) or shall
have filed a registration statement under the Securities
Act, with respect to, a tender offer or exchange offer to
purchase any shares of Issuer Common such that, upon con-
summation of such offer, such person would own or control
15% or more of the then outstanding shares of Issuer Com-
mon (such an offer being referred to herein as a "Tender
Offer" or an "Exchange Offer," respectively); or
(ii)) the shareholders shall not have approved
the Merger Agreement by the requisite vote at the Company
Meeting, the Company Meeting shall not have been held or
shall have been canceled prior to termination of the Mer-
ger Agreement, or Issuer's Board of Directors shall have
withdrawn or modified in a manner adverse to Grantee the
recommendation of Issuer's Board of Directors with respect
to the Merger Agreement, in each case after it shall have
been publicly announced that any person (other than
Grantee or any subsidiary of Grantee) shall have (A) made,
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or disclosed an intention to make, a bona fide proposal to
engage in an Acquisition Transaction, (B) commenced a
Tender Offer or filed a registration statement under the
Securities Act with respect to an Exchange Offer, or (C)
filed an application (or given a notice), whether in draft
or final form, under the Home Owners' Loan Act, as
amended, the Bank Holding Company Act of 1956, as amended,
the Bank Merger Act, as amended, or the Change in Bank
Control Act of 1978, as amended, for approval to engage in
an Acquisition Transaction; or
(iii) any person (other than Grantee or any
subsidiary of Grantee) shall have made a bona fide pro-
posal to Issuer or its shareholders by public announce-
ment, or written communication that is or becomes the sub-
ject of public disclosure, to engage in an Acquisition
Transaction; or
(iv) after a proposal is made by a third party
to Issuer or its shareholders to engage in an Acquisition
Transaction, or such third party states its intention to
the Issuer to make such a proposal if the Merger Agreement
terminates, Issuer shall have breached any representation,
warranty, covenant or agreement contained in the Merger
Agreement and such breach would entitle Grantee to termi-
nate the Merger Agreement under Article VIII thereof (wit-
hout regard to the cure period provided for therein unless
such cure is promptly effected without jeopardizing
consummation of the Merger pursuant to the terms of the
Merger Agreement); or
(v) any person (other than Grantee or any sub-
sidiary of Grantee), other than in connection with a
transaction to which Grantee has given its prior written
consent, shall have filed an application or notice with
any Regulatory Authority for approval to engage in an Ac-
quisition Transaction.
As used in this Agreement, "person" shall have the meaning
specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) Issuer shall notify Grantee promptly in writing
of the occurrence of any Preliminary Purchase Event or Purchase
Event, it being understood that the giving of such notice by
Issuer shall not be a condition to the right of Holder to exer-
cise the Option.
(e) In the event Holder wishes to exercise the Op-
tion, it shall send to Issuer a written notice (the date of
which being herein referred to as the "Notice Date") specifying
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(i) the total number of Option Shares it intends to purchase
pursuant to such exercise and (ii) a place and date not earlier
than three (3) business days nor later than fifteen (15) busi-
ness days from the Notice Date for the closing (the "Closing")
of such purchase (the "Closing Date"); provided that the first
notice of exercise shall be sent to Issuer within one hundred
eighty (180) days after the first Purchase Event of which
Grantee has been notified. If prior notification to or ap-
proval of any Regulatory Authority is required in connection
with such purchase, Issuer shall cooperate with the Holder in
the filing of the required notice or application for approval
and the obtaining of such approval and the Closing shall occur
immediately following such regulatory approvals (and any manda-
tory waiting periods). Any exercise of the Option shall be
deemed to occur on the Notice Date relating thereto.
4. Payment and Delivery of Certificates.
(a) On each Closing Date, Holder shall (i) pay to
Issuer, in immediately available funds by wire transfer to a
bank account designated by Issuer, an amount equal to the Pur-
chase Price multiplied by the number of Option Shares to be
purchased on such Closing Date, and (ii) present and surrender
this Agreement to the Issuer at the address of the Issuer spec-
ified in Section 13(f).
(b) At each Closing, simultaneously with the deliv-
ery of immediately available funds and surrender of this Agree-
ment as provided in Section 4(a), (i) Issuer shall deliver to
Holder (A) a certificate or certificates representing the Op-
tion Shares to be purchased at such Closing, which Option
Shares shall be free and clear of all liens and subject to no
preemptive rights, and (B), if the Option is exercised in part
only, an executed new agreement with the same terms as this
Agreement evidencing the right to purchase the balance of the
shares of Issuer Common purchasable hereunder, and (ii) Holder
shall deliver to Issuer a letter agreeing that Holder shall not
offer to sell or otherwise dispose of such Option Shares in
violation of applicable federal and state law or of the provi-
sions of this Agreement.
(c) In addition to any other legend that is required
by applicable law, certificates for the Option Shares delivered
at each Closing shall be endorsed with a restrictive legend
which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE
IS SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND PURSUANT TO THE TERMS OF A
STOCK OPTION AGREEMENT DATED AS OF AUGUST 29, 1996. A
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COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER
HEREOF WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A
WRITTEN REQUEST THEREFOR.
It is understood and agreed that the portion of the above leg-
end relating to the Securities Act shall be removed by delivery
of substitute certificate(s) without such legend if Holder
shall have delivered to Issuer a copy of a letter from the
staff of the SEC, or an opinion of counsel in form and sub-
stance reasonably satisfactory to Issuer and its counsel, to
the effect that such legend is not required for purposes of the
Securities Act.
(d) Upon the giving by Holder to Issuer of the writ-
ten notice of exercise of the Option provided for under Section
3(e), the tender of the applicable purchase price in immedi-
ately available funds and the tender of this Agreement to
Issuer, Holder shall be deemed to be the holder of record of
the shares of Issuer Common issuable upon such exercise, not-
withstanding that the stock transfer books of issuer shall then
be closed or that certificates representing such shares of Is-
suer Common shall not then be actually delivered to Holder.
Issuer shall pay all expenses, and any and all United States
federal, state, and local taxes and other charges that may be
payable in connection with the preparation, issuance and deliv-
ery of stock certificates under this Section in the name of
Holder or its assignee, transferee, or designee.
(e) Issuer agrees (i) that it shall at all times
maintain, free from preemptive rights, sufficient authorized
but unissued or treasury shares of Issuer Common so that the
Option may be exercised without additional authorization of
Issuer Common after giving effect to all other options, war-
rants, convertible securities and other rights to purchase Is-
suer Common, (ii) that it will not, by charter amendment or
through reorganization, consolidation, merger, dissolution or
sale of assets, or by any other voluntary act, avoid or seek to
avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereun-
der by Issuer, (iii) promptly to take all action as may from
time to time be required (including (A) complying with all pre-
merger notification, reporting and waiting period requirements,
and (B) in the event prior approval of or notice to any Regula-
tory Authority is necessary before the Option may be exercised,
cooperating fully with Holder in preparing such applications or
notices and providing such information to such Regulatory Au-
thority as it may require) in order to permit Holder to exer-
cise the Option and Issuer duly and effectively to issue shares
of the Issuer Common pursuant hereto, and (iv) promptly to take
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all action provided herein to protect the rights of Holder
against dilution.
5. Representations and Warranties of Issuer. Issuer
hereby represents and warrants to Grantee (and Holder, if dif-
ferent than Grantee) as follows:
(a) Corporate Authority. Issuer has full corporate
power and authority to execute and deliver this Agreement and
to consummate the transactions contemplated hereby; the execu-
tion and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Issuer, and no other
corporate proceedings on the part of Issuer are necessary to
authorize this Agreement or to consummate the transactions so
contemplated; this Agreement has been duly and validly executed
and delivered by Issuer.
(b) Beneficial Ownership. To the best knowledge of
Issuer, as of the date of this Agreement, no person or group
has beneficial ownership of more than 10% of the issued and
outstanding shares of Issuer Common.
(c) Shares Reserved for Issuance; Capital Stock.
Issuer has taken all necessary corporate action to authorize
and reserve and permit it to issue, and at all times from the
date hereof through the termination of this Agreement in ac-
cordance with its terms, will have reserved for issuance upon
the exercise of the Option, that number of shares of Issuer
Common equal to the maximum number of shares of Issuer Common
at any time and from time to time purchasable upon exercise of
the Option, and all such shares, upon issuance pursuant to the
Option, will be duly authorized, validly issued, fully paid and
nonassessable, and will be delivered free and clear of all
claims, liens, encumbrances, and security interests (other than
those created by this Agreement) and not subject to any preemp-
tive rights.
(d) No Violations. The execution, delivery and per-
formance of this Agreement does not or will not, and the con-
summation by Issuer of any of the transactions contemplated
hereby will not, constitute or result in (A) a breach or viola-
tion of, or a default under, its certificate of incorporation
or by-laws, or the comparable governing instruments of any of
its subsidiaries, or (B) a breach or violation of, or a default
under, any agreement, lease, contract, note, mortgage, inden-
ture, arrangement or other obligation of it or any of its sub-
sidiaries (with or without the giving of notice, the lapse of
time or both) or under any law, rule, ordinance or regulation
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or judgment, decree, order, award or governmental or non-
governmental permit or license to which it or any of its sub-
sidiaries is subject, that would, in any case give any other
person the ability to prevent or enjoin Issuer's performance
under this Agreement in any material respect.
6. Representations and Warranties of Grantee. Grantee
hereby represents and warrants to Issuer that Grantee has full
corporate power and authority to enter into this Agreement and,
subject to obtaining the approvals referred to in this Agree-
ment, to consummate the transactions contemplated by this
Agreement; the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part
of Grantee; and this Agreement has been duly executed and de-
livered by Grantee.
7. Adjustment upon Changes in Issuer Capitalization,
etc.
(a) In the event of any change in Issuer Common by
reason of a stock dividend, stock split, split-up, recapital-
ization, combination, exchange of shares or similar transac-
tion, the type and number of shares or securities subject to
the Option, and the Purchase Price therefor, shall be adjusted
appropriately, and proper provision shall be made in the agree-
ments governing such transaction so that Holder shall receive,
upon exercise of the Option, the number and class of shares or
other securities or property that Holder would have received in
respect of Issuer Common if the Option had been exercised im-
mediately prior to such event, or the record date therefor, as
applicable. If any additional shares of Issuer Common are is-
sued after the date of this Agreement (other than pursuant to
an event described in the first sentence of this Section 7(a),
upon exercise of any option to purchase Issuer Common outstand-
ing on the date hereof or upon conversion into Issuer Common of
any convertible security of Issuer outstanding on the date
hereof), the number of shares of Issuer Common subject to the
Option shall be adjusted so that, after such issuance, it, to-
gether with any shares of Issuer Common previously issued pur-
suant hereto, equals 19.9% of the number of shares of Issuer
Common then issued and outstanding, without giving effect to
any shares subject to or issued pursuant to the Option. No
provision of this Section 7 shall be deemed to affect or
change, or constitute authorization for any violation of, any
of the covenants or representations in the Merger Agreement.
(b) In the event that Issuer shall enter into an
agreement (i) to consolidate with or merge into any person,
other than Grantee or one of its subsidiaries, and shall not be
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the continuing or surviving corporation of such consolidation
or merger, (ii) to permit any person, other than Grantee or one
of its subsidiaries, to merge into Issuer and Issuer shall be
the continuing or surviving corporation, but, in connection
with such merger, the then outstanding shares of Issuer Common
shall be changed into or exchanged for stock or other securi-
ties of Issuer or any other person or cash or any other prop-
erty or the outstanding shares of Issuer Common immediately
prior to such merger shall after such merger represent less
than 50% of the outstanding shares and share equivalents of the
merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets or deposits to any person,
other than Grantee or one of its subsidiaries, then, and in
each such case, the agreement governing such transaction shall
make proper provisions so that the Option shall, upon the con-
summation of any such transaction and upon the terms and condi-
tions set forth herein, be converted into, or exchanged for, an
option (the "Substitute Option"), at the election of Holder, of
either (x) the Acquiring Corporation (as hereinafter defined),
(y) any person that controls the Acquiring Corporation, or (z)
in the case of a merger described in clause (ii), Issuer (such
person being referred to as "Substitute Option Issuer").
(c) The Substitute Option shall have the same terms
as the Option, provided, that, if the terms of the Substitute
Option cannot, for legal reasons, be the same as the Option,
such terms shall be as similar as possible and in no event less
advantageous to Holder. Substitute Option Issuer shall also
enter into an agreement with Holder in substantially the same
form as this Agreement, which shall be applicable to the Sub-
stitute Option.
(d) The Substitute Option shall be exercisable for
such number of shares of Substitute Common (as hereinafter de-
fined) as is equal to the Assigned Value (as hereinafter de-
fined) multiplied by the number of shares of Issuer Common for
which the Option was theretofore exercisable, divided by the
Average Price (as hereinafter defined). The exercise price of
Substitute Option per share of Substitute Common (the "Substi-
tute Option Price") shall then be equal to the Purchase Price
multiplied by a fraction in which the numerator is the number
of shares of Issuer Common for which the Option was theretofore
exercisable and the denominator is the number of shares of the
Substitute Common for which the Substitute Option is exercis-
able.
(e) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the
continuing or surviving corporation of a consolidation or
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merger with Issuer (if other than Issuer), (ii) Issuer in
a merger in which Issuer is the continuing or surviving
person, or (iii) the transferee of all or substantially
all of Issuer's assets (or a substantial part of the as-
sets of its subsidiaries taken as a whole).
(2) "Substitute Common" shall mean the shares
of capital stock (or similar equity interest) with the
greatest voting power in respect of the election of direc-
tors (or persons similarly responsible for the direction
of the business and affairs) of the Substitute Option Is-
suer.
(3) "Assigned Value" shall mean the highest of
(w) the price per share of Issuer Common at which a Tender
Offer or an Exchange Offer therefor has been made, (x) the
price per share of Issuer Common to be paid by any third
party pursuant to an agreement with Issuer, (y) the high-
est closing price for shares of Issuer Common within the
six (6) month period immediately preceding the consolida-
tion, merger, or sale in question and (z) in the event of
a sale of all or substantially all of Issuer's assets or
deposits an amount equal to (i) the sum of the price paid
in such sale for such assets (and/or deposits) and the
current market value of the remaining assets of Issuer, as
determined by a nationally recognized investment banking
firm selected by Holder divided by (ii) the number of
shares of Issuer Common outstanding at such time. In the
event that a Tender Offer or an Exchange Offer is made for
Issuer Common or an agreement is entered into for a merger
or consolidation involving consideration other than cash,
the value of the securities or other property issuable or
deliverable in exchange for Issuer Common shall be deter-
mined by a nationally recognized investment banking firm
selected by Holder.
(4) "Average Price" shall mean the average
closing price of a share of Substitute Common for the one
year immediately preceding the consolidation, merger, or
sale in question, but in no event higher than the closing
price of the shares of Substitute Common on the day pre-
ceding such consolidation, merger or sale; provided that
if Issuer is the issuer of the Substitute Option, the Av-
erage Price shall be computed with respect to a share of
common stock issued by Issuer, the person merging into
Issuer or by any company which controls such person, as
Holder may elect.
(f) In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for more
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than 19.9 % of the aggregate of the shares of Substitute Common
outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more
than 19.9% of the aggregate of the shares of Substitute Common
but for the limitation in the first sentence of this Section
7(f), Substitute Option Issuer shall make a cash payment to
Holder equal to the excess of (i) the value of the Substitute
Option without giving effect to the limitation in the first
sentence of this Section 7(f) over (ii) the value of the Sub-
stitute Option after giving effect to the limitation in the
first sentence of this Section 7(f). This difference in value
shall be determined by a nationally-recognized investment bank-
ing firm selected by Holder.
(g) Issuer shall not enter into any transaction de-
scribed in Section 7(b) unless the Acquiring Corporation and
any person that controls the Acquiring Corporation assume in
writing all the obligations of Issuer hereunder and take all
other actions that may be necessary so that the provisions of
this Section 7 are given full force and effect (including,
without limitation, any action that may be necessary so that
the holders of the other shares of common stock issued by Sub-
stitute Option Issuer are not entitled to exercise any rights
by reason of the issuance or exercise of the Substitute Option
and the shares of Substitute Common are otherwise in no way
distinguishable from or have lesser economic value (other than
any diminution in value resulting from the fact that the Sub-
stitute Common are restricted securities, as defined in Rule
144 under the Securities Act or any successor provision) than
other shares of common stock issued by Substitute Option Is-
suer).
8. Repurchase at the Option of Holder.
(a) Subject to the last sentence of Section 3(a), at
the request of Holder at any time commencing upon the first
occurrence of a Repurchase Event (as defined in Section 8(d))
and ending twelve (12) months immediately thereafter, Issuer
shall repurchase from Holder (i) the Option, and (ii) all
shares of Issuer Common purchased by Holder pursuant hereto
with respect to which Holder then has beneficial ownership.
The date on which Holder exercises its rights under this Sec-
tion 8 is referred to as the "Request Date". Such repurchase
shall be at an aggregate price (the "Section 8 Repurchase Con-
sideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder
for any shares of Issuer Common acquired pursuant to the
Option with respect to which Holder then has beneficial
ownership;
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(ii) the excess, if any, of (x) the Applicable
Price (as defined below) for each share of Issuer Common
over (y) the Purchase Price (subject to adjustment pursu-
ant to Section 7), multiplied by the number of shares of
Issuer Common with respect to which the Option has not
been exercised; and
(iii) the excess, if any, of the Applicable
Price over the Purchase Price (subject to adjustment pur-
suant to Section 7) paid (or, in the case of Option Shares
with respect to which the Option has been exercised but
the Closing Date has not occurred, payable) by Holder for
each share of Issuer Common with respect to which the Op-
tion has been exercised and with respect to which Holder
then has beneficial ownership, multiplied by the number of
such shares.
(b) If Holder exercises its rights under this Sec-
tion 8, Issuer shall, within ten (10) business days after the
Request Date, pay the Section 8 Repurchase Consideration to
Holder in immediately available funds, and contemporaneously
with such payment, Holder shall surrender to Issuer the Option
and the certificates evidencing the shares of Issuer Common
purchased thereunder with respect to which Holder then has ben-
eficial ownership, and Holder shall warrant that it has sole
record and beneficial ownership of such shares and that the
same are then free and clear of all liens. Notwithstanding the
foregoing, to the extent that prior notification to or approval
of any Regulatory Authority is required in connection with the
payment of all or any portion of the Section 8 Repurchase Con-
sideration, Holder shall have the ongoing option to revoke its
request for repurchase pursuant to Section 8, in whole or in
part, or to require that Issuer deliver from time to time that
portion of the Section 8 Repurchase Consideration that it is
not then so prohibited from paying and promptly file the re-
quired notice or application for approval and expeditiously
process the same (and each party shall cooperate with the other
in the filing of any such notice or application and the obtain-
ing of any such approval). If any Regulatory Authority disap-
proves of any part of Issuer's proposed repurchase pursuant to
this Section 8, Issuer shall promptly give notice of such fact
to Holder. If any Regulatory Authority prohibits the repur-
chase in part but not in whole, then Holder shall have the
right (i) to revoke the repurchase request, or (ii) to the ex-
tent permitted by such Regulatory Authority, determine whether
the repurchase should apply to the Option and/or Option Shares
and to what extent to each, and Holder shall thereupon have the
right to exercise the Option as to the number of Option Shares
for which the Option was exercisable at the Request Date less
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the sum of the number of shares covered by the Option in re-
spect of which payment has been made pursuant to Section
8(a)(ii) and the number of shares covered by the portion of the
Option (if any) that has been repurchased. Holder shall notify
Issuer of its determination under the preceding sentence within
five (5) business days of receipt of notice of disapproval of
the repurchase.
Notwithstanding anything herein to the contrary,
all of Holder's rights under this Section 8 shall terminate on
the date of termination of this Option pursuant to Section
3(a).
(c) For purposes of this Agreement, the "Applicable
Price" means the highest of (i) the highest price per share of
Issuer Common paid for any such share by the person or groups
described in Section 8(d)(i), (ii) the price per share of Is-
suer Common received by holders of Issuer Common in connection
with any merger or other business combination transaction de-
scribed in Section 7(b)(i), 7(b)(ii) or 7(b)(iii), or (iii) the
highest closing sales price per share of Issuer Common on Nas-
daq (or if Issuer Common is not traded on Nasdaq, the highest
bid price per share as quoted on the principal trading market
or securities exchange on which such shares are traded as re-
ported by a recognized source chosen by Holder) during the
forty (40) business days preceding the Request Date; provided,
however, that in the event of a sale of less than all of
Issuer's assets, the Applicable Price shall be the sum of the
price paid in such sale for such assets and the current market
value of the remaining assets of Issuer as determined by a na-
tionally recognized investment banking firm selected by Holder,
divided by the number of shares of the Issuer Common outstand-
ing at the time of such sale. If the consideration to be of-
fered, paid or received pursuant to either of the foregoing
clauses (i) or (ii) shall be other than in cash, the value of
such consideration shall be determined in good faith by an in-
dependent nationally recognized investment banking firm se-
lected by Holder and reasonably acceptable to Issuer, which
determination shall be conclusive for all purposes of this
Agreement.
(d) As used herein, "Repurchase Event" shall occur
if (i) any person (other than Grantee or any subsidiary of
Grantee) shall have acquired beneficial ownership of (as such
term is defined in Rule 13d-3 promulgated under the Exchange
Act), or the right to acquire beneficial ownership of, or any
"group" (as such term is defined under the Exchange Act) shall
have been formed which beneficially owns or has the right to
-13-
acquire beneficial ownership of, 50% or more of the then out-
standing shares of Issuer Common, or (ii) any of the transac-
tions described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii) shall
be consummated.
9. Registration Rights.
(a) Demand Registration Rights. Issuer shall, sub-
ject to the conditions of Section 9(c) below, if requested by
any Holder, including Grantee and any permitted transferee
("Selling Shareholder"), as expeditiously as possible prepare
and file a registration statement under the Securities Act if
such registration is necessary in order to permit the sale or
other disposition of any or all shares of Issuer Common or
other securities that have been acquired by or are issuable to
the Selling Shareholder upon exercise of the Option in ac-
cordance with the intended method of sale or other disposition
stated by the Selling Shareholder in such request, including
without limitation a "shelf" registration statement under Rule
415 under the Securities Act or any successor provision, and
Issuer shall use its best efforts to qualify such shares or
other securities for sale under any applicable state securities
laws.
(b) Additional Registration Rights. If Issuer at
any time after the exercise of the Option proposes to register
any shares of Issuer Common under the Securities Act in connec-
tion with an underwritten public offering of such Issuer Com-
mon, Issuer will promptly give written notice to the Selling
Shareholders of its intention to do so and, upon the written
request of any Selling Shareholder given within thirty (30)
days after receipt of any such notice (which request shall
specify the number of shares of Issuer Common intended to be
included in such underwritten public offering by the Selling
Shareholder), Issuer will cause all such shares for which a
Selling Shareholder requests participation in such registra-
tion, to be so registered and included in such underwritten
public offering; provided, however, that Issuer may elect to
not cause any such shares to be so registered (i) if the under-
writers in good faith object for valid business reasons, or
(ii) in the case of a registration solely to implement an em-
ployee benefit plan or a registration filed on Form S-4 of the
Securities Act or any successor Form; provided, further, how-
ever, that such election pursuant to (i) may only be made two
times. If some but not all the shares of Issuer Common, with
respect to which Issuer shall have received requests for regis-
tration pursuant to this Section 9(b), shall be excluded from
such registration, Issuer shall make appropriate allocation of
shares to be registered among the Selling Shareholders desiring
to register their shares pro rata in the proportion that the
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number of shares requested to be registered by each such Sell-
ing Shareholder bears to the total number of shares requested
to be registered by all such Selling Shareholders then desiring
to have Issuer Common registered for sale.
(c) Conditions to Required Registration. Issuer
shall use all reasonable efforts to cause each registration
statement referred to in Section 9(a) above to become effective
and to obtain all consents or waivers of other parties which
are required therefor and to keep such registration statement
effective; provided, however, that Issuer may delay any regis-
tration of Option Shares required pursuant to Section 9(a)
above for a period not exceeding ninety (90) days provided Is-
suer shall in good faith determine that any such registration
would adversely affect an offering or contemplated offering of
other securities by Issuer, and Issuer shall not be required to
register Option Shares under the Securities Act pursuant to
Section 9(a) above:
(i) prior to the earliest of (a) termination of
the Merger Agreement pursuant to Article VIII thereof, (b)
failure to obtain the requisite shareholder approval pur-
suant to Section 7.01 of the Merger Agreement, and (c) a
Purchase Event or a Preliminary Purchase Event;
(ii) on more than one occasion during any cal-
endar year;
(iii) within ninety (90) days after the effec-
tive date of a registration referred to in Section 9(b)
above pursuant to which the Selling Shareholder or Selling
Shareholders concerned were afforded the opportunity to
register such shares under the Securities Act and such
shares were registered as requested; and
(iv) unless a request therefor is made to Is-
suer by Selling Shareholders that hold at least 25% or
more of the aggregate number of Option Shares (including
shares of Issuer Common issuable upon exercise of the Op-
tion) then outstanding.
In addition to the foregoing, Issuer shall not be
required to maintain the effectiveness of any registration
statement after the expiration of nine (9) months from the ef-
fective date of such registration statement. Issuer shall use
all reasonable efforts to make any filings, and take all steps,
under all applicable state securities laws to the extent neces-
sary to permit the sale or other disposition of the Option
Shares so registered in accordance with the intended method of
distribution for such shares; provided, however, that Issuer
-15-
shall not be required to consent to general jurisdiction or
qualify to do business in any state where it is not otherwise
required to so consent to such jurisdiction or to so qualify to
do business.
(d) Expenses. Except where applicable state law
prohibits such payments, Issuer will pay all expenses (includ-
ing without limitation registration fees, qualification fees,
blue sky fees and expenses (including the fees and expenses of
counsel), legal expenses, including the reasonable fees and
expenses of one counsel to the holders whose Option Shares are
being registered, printing expenses and the costs of special
audits or "cold comfort" letters, expenses of underwriters,
excluding discounts and commissions but including liability
insurance if Issuer so desires or the underwriters so require,
and the reasonable fees and expenses of any necessary special
experts) in connection with each registration pursuant to Sec-
tion 9(a) or 9(b) above (including the related offerings and
sales by holders of Option Shares) and all other qualifica-
tions, notifications or exemptions pursuant to Section 9(a) or
9(b) above.
(e) Indemnification. In connection with any regis-
tration under Section 9(a) or 9(b) above, Issuer hereby indem-
nities the Selling Shareholders, and each underwriter thereof,
including each person, if any, who controls such holder or un-
derwriter within the meaning of Section 15 of the Securities
Act, against all expenses, losses, claims, damages and li-
abilities caused by any untrue, or alleged untrue, statement of
a material fact contained in any registration statement or pro-
spectus or notification or offering circular (including any
amendments or supplements thereto) or any preliminary prospec-
tus, or caused by any omission, or alleged omission, to state
therein a material fact required to be stated therein or neces-
sary to make the statements therein not misleading, except in-
sofar as such expenses, losses, claims, damages or liabilities
of such indemnified party are caused by any untrue statement or
alleged untrue statement that was included by Issuer in any
such registration statement or prospectus or notification or
offering circular (including any amendments or supplements
thereto) in reliance upon and in conformity with, information
furnished in writing to issuer by such indemnified party ex-
pressly for use therein, and Issuer and each officer, director
and controlling person of Issuer shall be indemnified by such
Selling Shareholders, or by such underwriter, as the case may
be, for all such expenses, losses, claims, damages and liabil-
ities caused by any untrue, or alleged untrue, statement, that
was included by issuer in any such registration statement or
prospectus or notification or offering circular (including any
amendments or supplements thereto) in reliance upon, and in
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conformity with, information furnished in writing to issuer by
such holder or such underwriter, as the case may be, expressly
for such use.
Promptly upon receipt by a party indemnified under
this Section 9(e) of notice of the commencement of any action
against such indemnified party in respect of which indemnity or
reimbursement may be sought against any indemnifying party un-
der this Section 9(e), such indemnified party shall notify the
indemnifying party in writing of the commencement of such ac-
tion, but the failure so to notify the indemnifying party shall
not relieve it of any liability which it may otherwise have to
any indemnified party under this Section 9(e). In case notice
of commencement of any such action shall be given to the indem-
nifying party as above provided, the indemnifying party shall
be entitled to participate in and, to the extent it may wish,
jointly with any other indemnifying party similarly notified,
to assume the defense of such action at its own expense, with
counsel chosen by it and satisfactory to such indemnified
party. The indemnified party shall have the right to employ
separate counsel in any such action and participate in the de-
fense thereof, but the fees and expenses of such counsel (other
than reasonable costs of investigation) shall be paid by the
indemnified party unless (i) the indemnifying party either
agrees to pay the same, (ii) the indemnifying party fails to
assume the defense of such action with counsel satisfactory to
the indemnified party, or (iii) the indemnified party has been
advised by counsel that one or more legal defenses may be
available to the indemnifying party that may be contrary to the
interest of the indemnified party, in which case the indemnify-
ing party shall be entitled to assume the defense of such ac-
tion notwithstanding its obligation to bear fees and expenses
of such counsel. No indemnifying party shall be liable for any
settlement entered into without its consent, which consent may
not be unreasonably withheld.
If the indemnification provided for in this Section
9(e) is unavailable to a party otherwise entitled to be indem-
nified in respect of any expenses, losses, claims, damages or
liabilities referred to herein, then the indemnifying party, in
lieu of indemnifying such party otherwise entitled to be indem-
nified, shall contribute to the amount paid or payable by such
party to be indemnified as a result of such expenses, losses,
claims, damages or liabilities in such proportion as is ap-
propriate to reflect the relative benefits received by issuer,
the Selling Shareholders and the underwriters from the offering
of the securities and also the relative fault of Issuer, the
Selling Shareholders and the underwriters in connection with
the statements or omissions which resulted in such expenses,
losses, claims, damages or liabilities, as well as any other
-17-
relevant equitable considerations. The amount paid or payable
by a party as a result of the expenses, losses, claims, damages
and liabilities referred to above shall be deemed to include
any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action
or claim, provided, however, that in no case shall any Selling
Shareholder be responsible, in the aggregate, for any amount in
excess of the net offering proceeds attributable to its Option
Shares included in the offering. No person guilty of fraudu-
lent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
Any obligation by any holder to indemnify shall be several and
not joint with other holders.
In connection with any registration pursuant to Sec-
tion 9(a) or 9(b) above, Issuer and each Selling Shareholder
(other than Grantee) shall enter into an agreement containing
the indemnification provisions of this Section 9(e).
(f) Miscellaneous Reporting. Issuer shall comply
with all reporting requirements and will do all such other
things as may be necessary to permit the expeditious sale at
any time of any Option Shares by the Selling Shareholders
thereof in accordance with and to the extent permitted by any
rule or regulation promulgated by the SEC from time to time,
including, without limitation, Rule 144A. Issuer shall at its
expense provide the Selling Shareholders with any information
necessary in connection with the completion and filing of any
reports or forms required to be filed by them under the Securi-
ties Act or the Exchange Act, or required pursuant to any state
securities laws or the rules of any stock exchange.
(g) Issue Taxes. Issuer will pay all stamp taxes in
connection with the issuance and the sale of the Option Shares
and in connection with the exercise of the Option, and will
save the Selling Shareholders harmless, without limitation as
to time, against any and all liabilities, with respect to all
such taxes.
10. Quotation; Listing. If Issuer Common or any other
securities to be acquired in connection with the exercise of
the Option are then authorized for quotation or trading or
listing on any securities exchange, Issuer, upon the request of
Holder, will promptly file an application, if required, to au-
thorize for quotation or trading or listing the shares of Is-
suer Common or other securities to be acquired upon exercise of
the Option on such securities exchange and will use its best
efforts to obtain approval, if required, of such quotation or
listing as soon as practicable.
-18-
11. Division of Option. This Agreement (and the Option
granted hereby) are exchangeable, without expense, at the op-
tion of Holder, upon presentation and surrender of this Agree-
ment at the principal office of Issuer for other Agreements
providing for Options of different denominations entitling the
holder thereof to purchase in the aggregate the same number of
shares of Issuer Common purchasable hereunder. The terms
"Agreement" and "Option" as used herein include any other
Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by
Issuer of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Agreement, and (in the
case of loss, theft or destruction) of reasonably satisfactory
indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new
Agreement of like tenor and date. Any such new Agreement ex-
ecuted and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement
so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
12. Limitation on Total Profit and Notional Total Profit.
(a) Notwithstanding anything to the contrary con-
tained herein, in no event shall Grantee's Total Profit (as
defined below in Section 12(c) hereof) exceed $250 million and,
if it otherwise would exceed such amount, Grantee, at its sole
election, shall either (i) reduce the number of shares of Is-
suer Common subject to the Option, (ii) deliver to Issuer for
cancellation Option Shares previously purchased by Grantee,
(iii) pay cash to Issuer, or (iv) any combination thereof, so
that Grantee's actually realized Total Profit shall not exceed
$250 million after taking into account the foregoing actions.
(b) Notwithstanding anything to the contrary con-
tained herein, the Option may not be exercised for a number of
shares as would, as of the date of exercise, result in a No-
tional Total Profit (as defined below in Section 14(d) hereof)
of more than $250 million; provided, that nothing in this sen-
tence shall restrict any exercise of the Option permitted
hereby on any subsequent date.
(c) As used herein, the term "Total Profit" shall
mean the aggregate amount (before taxes) of the following: (i)
the amount received by Grantee pursuant to Issuer's repurchase
of the Option (or any portion thereof) pursuant to Section 8
hereof, (ii)(x) the amount received by Grantee pursuant to
Issuer's repurchase of Option Shares pursuant to Section 8
hereof, less (y) Grantee's purchase price for such Option
-19-
Shares, (iii)(x) the net cash amounts received by Grantee pur-
suant to the sale of Option Shares (or any other securities
into which such Option Shares shall be converted or exchanged)
to any unaffiliated party, less (y) Grantee's purchase price of
such Option Shares, (iv) any amounts received by Grantee on the
transfer of the Option (or any portion thereof) to any unaf-
filiated party, and (v) any equivalent amount with respect to
the Substitute Option.
(d) As used herein, the term "Notional Total Profit"
with respect to any number of shares as to which Grantee may
propose to exercise the Option shall be the Total Profit deter-
mined as of the date of such proposed exercise assuming that
the Option were exercised on such date for such number of
shares and assuming that such shares, together with all other
Option Shares held by Grantee and its affiliates as of such
date, were sold for cash at the closing market price for the
Issuer Common as of the close of business on the preceding
trading day (less customary brokerage commissions).
(e) Grantee agrees, promptly following any exercise
of all or any portion of the Option, and subject to its rights
under Section 8 hereof, to use commercially reasonable efforts
promptly to maximize the value of Option Shares purchased tak-
ing into account market conditions, the number of Option
Shares, the potential negative impact of substantial sales on
the market price for Issuer Common, and the availability of an
effective registration statement to permit public sale of Op-
tion Shares.
13. Miscellaneous.
(a) Expenses. Each of the parties hereto shall bear
and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this
Agreement may be waived at any time by the party that is en-
titled to the benefits of such provision. This Agreement may
not be modified, amended, altered or supplemented except upon
the execution and delivery of a written agreement executed by
the parties hereto.
(c) Entire Agreement: No Third-Party Beneficiaries;
Severability. This Agreement, together with the Merger Agree-
ment and the other documents and instruments referred to herein
and therein, between Grantee and Issuer (i) constitutes the
-20-
entire agreement and supersedes all prior agreements and under-
standings, both written and oral, between the parties with re-
spect to the subject matter hereof, and (ii) is not intended to
confer upon any person other than the parties hereto (other
than the indemnified parties under Section 9(e) and any trans-
ferees of the Option Shares or any permitted transferee of this
Agreement pursuant to Section 13(h)) any rights or remedies
hereunder. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or
Regulatory Authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions
of this Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated. If for
any reason such court or Regulatory Authority determines that
the Option does not permit Holder to acquire, or does not re-
quire Issuer to repurchase, the full number of shares of Issuer
Common as provided in Section 3 (as may be adjusted herein), it
is the express intention of Issuer to allow Holder to acquire
or to require Issuer to repurchase such lesser number of shares
as may be permissible without any amendment or modification
hereof.
(d) Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of Mis-
souri without regard to any applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings
contained herein are for convenience of reference only and
shall not affect in any way the meaning or interpretation of
this Agreement.
(f) Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if de-
livered personally, telecopied (with confirmation) or mailed by
registered or certified mail (return receipt requested) to the
parties at the addresses set forth in the Merger Agreement (or
at such other address for a party as shall be specified by like
notice).
(g) Counterparts. This Agreement and any amendments
hereto may be executed in two counterparts, each of which shall
be considered one and the same agreement and shall become ef-
fective when both counterparts have been signed and delivered,
it being understood that both parties need not sign the same
counterpart.
(h) Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder or under the
Option shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written
-21-
consent of the other party, except that Holder may assign this
Agreement to a wholly-owned subsidiary of Holder and Holder may
assign its rights hereunder in whole or in part after the oc-
currence of a Purchase Event. Subject to the preceding sen-
tence, this Agreement shall be binding upon, inure to the ben-
efit of and be enforceable by the parties and their respective
successors and assigns.
(i) Further Assurances. In the event of any exer-
cise of the Option by the Holder, Issuer and the Holder shall
execute and deliver all other documents and instruments and
take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto agree
that this Agreement may be enforced by either party through
specific performance, injunctive relief and other equitable
relief. Both parties further agree to waive any requirement
for the securing or posting of any bond in connection with the
obtaining of any such equitable relief and that this provision
is without prejudice to any other rights that the parties
hereto may have for any failure to perform this Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused
this Stock Option Agreement to be signed by their respective
officers thereunto duly authorized, all as of the day and year
first written above.
BOATMEN'S BANCSHARES, INC.
By /s/ Andrew B. Craig, III
Andrew B. Craig, III
Chairman and Chief
Executive Officer
NATIONSBANK CORPORATION
By /s/ Hugh L. McColl, Jr.
Hugh L. McColl, Jr.
Chairman and Chief
Executive Officer
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