EXHIBIT 3.1
FORM OF
RESTATED
ARTICLES OF INCORPORATION
OF
NATIONSBANK CORPORATION
NationsBank Corporation, a business corporation incorporated under the
North Carolina Business Corporation Act, pursuant to action by its Board of
Directors, hereby sets forth its Restated Articles of Incorporation:
1. The name of the Corporation is NationsBank Corporation.
2. The purposes for which the Corporation is organized are to engage
in any lawful act or activity for which corporations may be organized under
Chapter 55 of the North Carolina General Statutes, as amended.
3. The number of shares the Corporation is authorized to issue is One
Billion Two Hundred Ninety-Five Million (1,295,000,000), divided into the
following classes:
Class Number of Shares
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Common . . . . . . . . . . . . . . . . . . . . . . 1,250,000,000
Preferred . . . . . . . . . . . . . . . . . . . . 45,000,000
The class of common has unlimited voting rights and, after satisfaction
of claims, if any, of the holders of preferred shares, is entitled to receive
the net assets of the Corporation upon distribution.
The Board of Directors of the Corporation shall have full power and
authority to establish one or more series within the class of preferred shares
(the "Preferred Shares"), to define the designations, preferences, limitations
and relative rights (including conversion rights) of shares within such class
and to determine all variations between series.
The Board of Directors of the Corporation has designated, established and
authorized the following series of Preferred Shares:
(a) Cumulative Convertible Preferred Stock, Series A.
A. Designation.
The designation of the series of Preferred Stock created by this
resolution shall be Cumulative Convertible Preferred Stock, Series A,
$100 stated value, of the Corporation (hereinafter referred to as "Series
A Preferred Stock"), and the number of shares constituting such series
shall be 250,000, which number may be increased (but not
above the total number of shares of Preferred Stock of the Corporation then
authorized by the Restated Articles of Incorporation, as amended from time to
time) or decreased (but not below the number of shares then outstanding) from
time to time by the Board of Directors. The Series A Preferred Stock shall rank
prior to the Common Stock, the 7% Cumulative Redeemable Preferred Stock, Series
B, $100 stated value per share, and the ESOP Convertible Preferred Stock,
Series C, with respect to the payment of dividends and the distribution of
assets.
B. Dividend Rights.
(1) The holders of shares of Series A Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors, out of
funds legally available therefor, cash dividends, accruing from the date of
initial issuance, at the annual rate of 7.00% of the liquidation preference per
annum, and no more, payable, when and as declared by the Board of Directors,
quarterly on March 1, June 1, September 1, and December 1 of each year (each
quarterly period ending on any such date being hereinafter referred to as a
"dividend period"), commencing on the first March 1, June 1, September 1, or
December 1 to occur after the Issue Date (as hereafter defined), at such annual
rate. Each dividend will be payable to holders of record as they appear on the
stock books of the Corporation on such record dates as shall be fixed by the
Board of Directors of the Corporation. The date of initial issuance of shares
of Series A Preferred Stock is hereinafter referred to as the "Issue Date".
Dividends payable on the Series A Preferred Stock (i) for any period other than
a full dividend period shall be computed on the basis of a 360-day year
consisting of twelve 30-day months and (ii) for each full dividend period shall
be computed by dividing the annual dividend rate by four.
(2) Dividends on shares of Series A Preferred Stock shall be
cumulative from the Issue Date whether or not there shall be funds legally
available for the payment thereof. If there shall be outstanding shares of any
other series of Preferred Stock ranking junior to or on a parity with the
Series A Preferred Stock as to dividends, no dividends shall be declared or
paid or set apart for payment on any such other series for any period unless
full cumulative dividends have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof is set apart for such
payment on the Series A Preferred Stock for all dividend periods terminating on
or prior to the date of payment of such dividends. If
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dividends on the Series A Preferred Stock and on any other series of Preferred
Stock ranking on a parity as to dividends with the Series A Preferred Stock are
in arrears, in making any dividend payment on account of such arrears, the
Corporation shall make payments ratably upon all outstanding shares of the
Series A Preferred Stock and shares of such other series of Preferred Stock in
proportion to the respective amounts of dividends in arrears on the Series A
Preferred Stock and on such other series of Preferred Stock to the date of such
dividend payment. Holders of shares of the Series A Preferred Stock shall not
be entitled to any dividend, whether payable in cash, property or stock, in
excess of full cumulative dividends on such shares. No interest or sum of money
in lieu of interest shall be payable in respect of any dividend payment or
payments which may be in arrears.
(3) Unless full cumulative dividends on all outstanding shares of
the Series A Preferred Stock shall have been paid or declared and set aside for
payment for all past dividend periods, no dividend (other than a dividend in
Common Stock or in any other stock ranking junior to the Series A Preferred
Stock as to dividends and the distribution of assets upon liquidation,
dissolution or winding up) shall be declared upon the Common Stock or upon any
other stock ranking junior to the Series A Preferred Stock as to dividends and
the distribution of assets upon liquidation, dissolution, or winding up, nor
shall any Common Stock or any other stock of the Corporation ranking junior to
or on a parity with the Series A Preferred Stock as to dividends or upon the
distribution of assets upon liquidation, dissolution or winding up be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any shares of any
such stock) by the Corporation (except by conversion into or exchange for stock
of the Corporation ranking junior to the Series A Preferred Stock as to
dividends and the distribution of assets upon liquidation, dissolution or
winding up).
C. Liquidation Preferences.
(1) In the event of any liquidation, dissolution or winding up of
the affairs of the Corporation, whether voluntary or involuntary, the holders
of Series A Preferred Stock shall be entitled to receive out of the assets of
the Corporation available for distribution to stockholders an amount equal to
$400.00 per share plus an amount equal to any accrued and unpaid dividends
thereon to and including the date of such distribution, and no more, before any
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distribution shall be made to the holders of Common Stock or any other class of
stock of the Corporation ranking junior to the Series A Preferred Stock as to
the distribution of assets. After payment of such liquidating distributions,
the holders of shares of Series A Preferred Stock will not be entitled to any
further participation in any distribution of assets by the Corporation.
(2) In the event the assets of the Corporation available for
distribution to stockholders upon any liquidation, dissolution or winding up of
the affairs of the Corporation, whether voluntary or involuntary, shall be
insufficient to pay in full the amounts payable with respect to the Series A
Preferred Stock and any other shares of Preferred Stock ranking on a parity
with the Series A Preferred Stock as to the distribution of assets, the holders
of Series A Preferred Stock and the holders of such other Preferred Stock shall
share ratably in any distribution of assets of the Corporation in proportion to
the full respective preferential amounts to which they are entitled.
(3) The merger or consolidation of the Corporation into or with any
other corporation, the merger or consolidation of any other corporation into or
with the Corporation or the sale of the assets of the Corporation substantially
as an entirety shall not be deemed a liquidation, dissolution or winding up of
the affairs of the Corporation within the meaning of this Section 3.
D. Redemption.
(1) Subject to obtaining the prior approval of the Board of
Governors of the Federal Reserve System, the Corporation, at its option, may
redeem any or all shares of Series A Preferred Stock, at any time or from time
to time, on or after March 1, 1997 at a redemption price of $400.00 per share,
plus an amount equal to accrued and unpaid dividends thereon to and including
the date of redemption (the "Redemption Price").
(2) If less than all the outstanding shares of Series A Preferred
Stock are to be redeemed, the shares to be redeemed shall be selected pro rata
as nearly as practicable or by lot, or by such other method as the Board of
Directors may determine to be fair and appropriate.
(3) Notice of any redemption shall be given by first class mail,
postage prepaid, mailed not less than 30 nor more than 60 days prior to the
date fixed for redemption to
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the holders of record of the shares of Series A Preferred Stock to be redeemed,
at their respective addresses appearing on the books of the Corporation. Notice
so mailed shall be conclusively presumed to have been duly given whether or not
actually received. Such notice shall state: (i) the date fixed for redemption;
(ii) the Redemption Price; (iii) that the holder has the right to convert such
shares into Common Stock until the close of business on the tenth day preceding
the redemption date; (iv) the then-effective conversion price and the place
where certificates for such shares may be surrendered for conversion; (v) the
number of shares of Series A Preferred Stock to be redeemed and if less than all
the shares held by such holder are to be redeemed, the number of such shares to
be so redeemed from such holder; (vi) the place where certificates for such
shares are to be surrendered for payment of the Redemption Price; and (vii) that
after such date fixed for redemption the shares to be redeemed shall not accrue
dividends. If such notice is mailed as aforesaid, and if on or before the date
fixed for redemption funds sufficient to redeem the shares called for redemption
are set aside by the Corporation in trust for the account of the holders of the
shares to be redeemed, notwithstanding the fact that any certificate for shares
called for redemption shall not have been surrendered for cancellation, on and
after the redemption date the shares represented thereby so called for
redemption shall be deemed to be no longer outstanding, dividends thereon shall
cease to accrue and all rights of the holders of such shares as stockholders of
the Corporation shall cease (except the right to receive the Redemption Price,
without interest, upon surrender of the certificate representing such shares).
Upon surrender in accordance with the aforesaid notice of the certificate for
any shares so redeemed (duly endorsed or accompanied by appropriate instruments
of transfer, if so required by the Corporation in such notice), the holders of
record of such shares shall be entitled to receive the Redemption Price, without
interest. Notwithstanding the foregoing, however, as and to the extent that the
Corporation is required or permitted under the abandoned property laws of any
jurisdiction to escheat any redemption funds held in trust for the benefit of
any holder, the Corporation shall be absolved of any further obligation or
liability to such holder to the full extent provided by any such law. In case
fewer than all the shares represented by any such certificate are redeemed, a
new certificate shall be issued representing the unredeemed shares without cost
to the holder thereof.
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(4) At the option of the Corporation, if notice of redemption is
mailed as aforesaid, and if prior to the date fixed for redemption funds
sufficient to pay in full the Redemption Price are deposited in trust, for the
account of the holders of the shares to be redeemed, with a bank or trust
company named in such notice doing business in the State of North Carolina or
the Borough of Manhattan, The City of New York, State of New York, and having
capital and surplus of at least $50 million (which bank or trust company also
may be the transfer agent and/or paying agent for the Series A Preferred Stock)
notwithstanding the fact that any certificate(s) for shares called for
redemption shall not have been surrendered for cancellation, on and after such
date of deposit the shares represented thereby so called for redemption shall be
deemed to be no longer outstanding, and all rights of the holders of such shares
as shareholders of the Corporation shall cease, except the right of the holders
thereof to convert such shares in accordance with the provisions of Section 5 at
any time prior to the close of business on the tenth day preceding the
redemption date and the right of the holders thereof to receive out of the funds
so deposited in trust the Redemption Price, without interest, upon surrender of
the certificate(s) representing such shares. Any funds so deposited with such
bank or trust company in respect of shares of Series A Preferred Stock converted
before the close of business on the tenth day preceding the redemption date
shall be returned to the Corporation upon such conversion. Unless otherwise
required by law, any funds so deposited with such bank or trust company which
shall remain unclaimed by the holders of shares called for redemption at the end
of two years after the redemption date shall be repaid to the Corporation, on
demand, and thereafter the holder of any such shares shall look only to the
Corporation for the payment, without interest, of the Redemption Price.
Notwithstanding the foregoing, however, as and to the extent that the
Corporation is required or permitted under the abandoned property laws of any
jurisdiction to escheat any redemption funds held in trust for the benefit of
any holder, the Corporation shall be absolved of any further obligation or
liability to such holder to the full extent provided by any such laws.
(5) Any provision of this Section 4 to the contrary
notwithstanding, in the event that any quarterly dividend payable on the Series
A Preferred Stock shall be in arrears and until all such dividends in arrears
shall have been paid or declared and set apart for payment, the Corporation
shall not redeem any shares of Series A Preferred Stock unless all outstanding
shares of Series A Preferred Stock
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are simultaneously redeemed and shall not purchase or otherwise acquire any
shares of Series A Preferred Stock except in accordance with a purchase or
exchange offer made on the same terms to all holders of record of Series A
Preferred Stock for the purchase of all outstanding shares thereof.
E. Conversion Rights.
The holders of shares of Series A Preferred Stock shall have the right,
at their option, to convert such shares into shares of Common Stock on the
following terms and conditions:
(1) Shares of Series A Preferred Stock shall be convertible at any
time into fully paid and nonassessable shares of Common Stock at a conversion
price of $44.44 per share of Common Stock (the "Conversion Price"). For purposes
of this Section 5, references to shares of Series A Preferred Stock shall apply
equally to fractional shares thereof, but only to the extent that such
fractional shares are integral multiples of 1/16 of one share. The Conversion
Price shall be subject to adjustment from time to time as hereinafter provided.
For purposes of such conversion, each share of Series A Preferred Stock will be
valued at $400. No payment or adjustment shall be made on account of any accrued
and unpaid dividends on shares of Series A Preferred Stock surrendered for
conversion prior to the record date for the determination of stockholders
entitled to such dividends or on account of any dividends on the shares of
Common Stock issued upon such conversion subsequent to the record date for the
determination of stockholders entitled to such dividends. If any shares of
Series A Preferred Stock shall be called for redemption, the right to convert
the shares designated for redemption shall terminate at the close of business on
the tenth day preceding the date fixed for redemption unless default is made in
the payment of the Redemption Price. In the event of default in the payment of
the Redemption Price, the right to convert the shares designated for redemption
shall terminate at the close of business on the business day immediately
preceding the date that such default is cured.
(2) In order to convert shares of Series A Preferred Stock into
Common Stock, the holder thereof shall surrender the certificates therefor, duly
endorsed if the Corporation shall so require, or accompanied by appropriate
instruments of transfer satisfactory to the Corporation, at the office of the
transfer agent for the Series A Preferred Stock, or at such other office as may
be designated by the Corpora-
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tion, together with written notice that such holder irrevocably elects to
convert such shares or any fraction of a share of Series A Preferred Stock
having a denominator of 16, each such fractional interest, measured in 1/16 of a
share, being valued for purposes of conversion at $25; references in this
Section 5 to the conversion of any share of Series A Preferred Stock shall also
apply, mutatis mutandis, to such fractional interests. Such notice shall also
state the name and address in which such holder wishes the certificate for the
shares of Common Stock issuable upon conversion to be issued. As soon as
practicable after receipt of the certificates representing the shares of Series
A Preferred Stock to be converted and the notice of election to convert the
same, the Corporation shall issue and deliver at said office a certificate for
the number of whole shares of Common Stock issuable upon conversion of the
shares of Series A Preferred Stock surrendered for conversion, together with a
cash payment in lieu of any fraction of a share, as hereinafter provided, to the
person entitled to receive the same. If more than one stock certificate for
Series A Preferred Stock shall be surrendered for conversion at one time by the
same holder, the number of full shares of Common Stock issuable upon conversion
thereof shall be computed on the basis of the aggregate number of shares
represented by all the certificates so surrendered. Shares of Series A Preferred
Stock shall be deemed to have been converted immediately prior to the close of
business on the date such shares are surrendered for conversion and notice of
election to convert the same is received by the Corporation in accordance with
the foregoing provision, and the person entitled to receive the Common Stock
issuable upon such conversion shall be deemed for all purposes as the record
holder of such Common Stock as of such date.
(3) In the case of any share of Series A Preferred Stock which is
converted after any record date with respect to the payment of a dividend on
the Series A Preferred Stock and on or prior to the date on which such dividend
is payable by the Corporation (the "Dividend Due Date"), the dividend due on
such Dividend Due Date shall be payable on such Dividend Due Date to the holder
of record of such shares as of such preceding record date notwithstanding such
conversion. Shares of Series A Preferred Stock surrendered for conversion
during the period from the close of business on any record date with respect to
the payment of a dividend on the Series A Preferred Stock next preceding any
Dividend Due Date to the opening of business on such Dividend Due Date shall
(except in the case of shares of Series A Preferred Stock which have been
called for
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redemption on a redemption date within such period) be accompanied by payment in
New York Clearing House funds or other funds acceptable to the Corporation of an
amount equal to the dividend payable on such Dividend Due Date on the shares of
Series A Preferred Stock being surrendered for conversion. The dividend with
respect to a share of Series A Preferred Stock called for redemption on a
redemption date during the period from the close of business on any record date
with respect to the payment of a dividend on the Series A Preferred Stock next
preceding any Dividend Due Date to the opening of business on such Dividend Due
Date shall be payable on such Dividend Due Date to the holder of record of such
share on such dividend record date, notwithstanding the conversion of such share
of Series A Preferred Stock after such record date and prior to such Dividend
Due Date, and the holder converting such share of Series A Preferred Stock
called for redemption need not include a payment of such dividend amount upon
surrender of such share of Series A Preferred Stock for conversion. Except as
provided in this subsection, no payment or adjustment shall be made upon any
conversion on account of any dividends accrued on shares of Series A Preferred
Stock surrendered for conversion or on account of any dividends on the shares of
Common Stock issued upon conversion.
(4) No fractional shares of Common Stock shall be issued upon
conversion of any shares of Series A Preferred Stock. If more than one share of
Series A Preferred Stock is surrendered at one time by the same holder, the
number of full shares issuable upon conversion thereof shall be computed on the
basis of the aggregate number of shares so surrendered. If the conversion of any
shares of Series A Preferred Stock results in a fractional share of Common
Stock, the Corporation shall pay cash in lieu thereof in an amount equal to such
fraction multiplied by the closing price, determined as provided in subsection
(vi) of Section 5(e) below, on the date on which the shares of Series A
Preferred Stock were duly surrendered for conversion, or if such date is not a
trading date, on the next succeeding trading date.
(5) The Conversion Price shall be adjusted from time to time as
follows:
(i) In case the Corporation shall pay or make a
dividend or other distribution on shares of Common Stock in Common
Stock, the Conversion Price in effect at the opening of business on the
date following the date fixed for the determination of stock-
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holders entitled to receive such dividend or other distribution shall
be reduced by multiplying such Conversion Price by a fraction of which
the numerator shall be the number of shares of Common Stock outstanding
at the close of business on the date fixed for such determination and
the denominator shall be the sum of such number of shares and the total
number of shares constituting such dividend or other distribution, such
reduction to become effective immediately after the opening of business
on the day following the date fixed for such determination. For
purposes of this subsection, the number of shares of Common Stock at
any time outstanding shall not include shares held in the treasury of
the Corporation but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The
Corporation will not pay any dividend or make any distribution on
shares of Common Stock held in the treasury of the Corporation.
(ii) In case the Corporation shall issue additional rights
or warrants to all holders of its Common Stock entitling them to subscribe for
or purchase shares of Common Stock at a price per share less than the then
current market price per share (determined as provided in subsection (vi)
below) of the Common Stock on the date fixed for the determination of
stockholders entitled to receive such rights or warrants (other than pursuant
to a dividend reinvestment plan), the Conversion Price in effect at the opening
of business on the day following the date fixed for such determination shall be
reduced by multiplying such Conversion Price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the
close of business on the date fixed for such determination plus the number of
shares of Common Stock which the aggregate of the offering price of the total
number of shares of Common Stock so offered for subscription or purchase would
purchase at such current market price (determined as provided in subsection
(vi) below) and the denominator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such determination
plus the number of shares of Common Stock so offered for subscription or
purchase, such reduction to become effective immediately after the opening of
business on the day following the date fixed for such determination. For the
purposes of this subsection (ii), the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of the
Corporation but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions
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of shares of Common Stock. The Corporation will not issue any rights or
warrants in respect of shares of Common Stock held in the treasury of the
Corporation during the period so held.
(iii) In case outstanding shares of Common Stock
shall be subdivided into a greater number of shares of Common Stock, the
Conversion Price in effect at the opening of business on the day following the
day upon which such subdivision becomes effective shall be proportionately
reduced, and, conversely, in case outstanding shares of Common Stock shall be
combined into a smaller number of shares of Common Stock, the Conversion Price
in effect at the opening of business on the day following the day upon which
such combination becomes effective shall be proportionately increased, such
reduction or increase, as the case may be, to become effective immediately
after the opening of business on the day following the day upon which such
subdivision or combination becomes effective.
(iv) In case the Corporation shall, by dividend or
otherwise, distribute to all holders of its Common Stock evidences of its
indebtedness or assets (including securities, but excluding (1) any rights or
warrants referred to in subsection (ii) above, (2) any dividend or distribution
paid in cash out of the retained earnings of the Corporation and (3) any
dividend or distribution referred to in subsection (i) above), the Conversion
Price shall be adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the close of
business on the date fixed for the determination of stockholders entitled to
receive such distribution by a fraction of which the numerator shall be the
current market price per share (determined as provided in subsection (vi)
below) of the Common Stock on the date fixed for such determination less the
then fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and shall be described in a statement filed
with the transfer agent for the Series A Preferred Stock) of the portion of the
evidences of indebtedness or assets so distributed applicable to one share of
Common Stock and the denominator shall be such current market price per share
of the Common Stock, such adjustment to become effective immediately prior to
the opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such distribution.
(v) For the purposes of this Section 5, the
reclassification of Common Stock into securities including
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securities other than Common Stock (other than any reclassification upon a
consolidation or merger to which Section 5(g) below applies) shall be deemed to
involve (A) a distribution of such securities other than Common Stock to all
holders of Common Stock (and the effective date of such reclassification shall
be deemed to be "the date fixed for the determination of stockholders entitled
to receive such distribution" and the "date fixed for such determination" within
the meaning of subsection (iv) above), and (B) a subdivision or combination, as
the case may be, of the number of shares of Common Stock outstanding immediately
prior to such reclassification into the number of shares of Common Stock
outstanding immediately thereafter (and the effective date of such
reclassification shall be deemed to be "the day upon which such subdivision
became effective" or "the day upon which such combination becomes effective" as
the case may be, and "the day upon which such subdivision or combination becomes
effective" within the meaning of subsection (iii) above).
(vi) For the purpose of any computation under subsections
(ii) and (iv) above, the current market price per share of Common Stock on any
day shall be deemed to be the average of the daily closing prices for the 30
consecutive trading days commencing 45 trading days before the day in question.
The closing price for each day shall be as reported on the New York Stock
Exchange Composite Tape or, if the Common Stock is no longer listed on such
exchange, as reported on the principal national securities exchange or national
automated stock quotation system on which the Common Stock is listed, traded or
quoted, or, if the Common Stock is not listed, traded or quoted on any national
securities exchange or national automated stock quotation system, the closing
price shall be deemed to be the average of the closing bid and asked prices in
the over-the-counter market as furnished by any New York Stock Exchange member
firm selected from time to time by the Board of Directors for that purpose.
(vii) Notwithstanding the foregoing, no adjustment in the
Conversion Price for the Series A Preferred Shares shall be required unless such
adjustment would require an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason of this subsection (vii)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section shall be made to
the nearest cent or to the nearest one-hundredth of a share, as the case may be.
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(6) Whenever the Conversion Price shall be adjusted as herein
provided (i) the Corporation shall forthwith make available at the office of the
transfer agent for the Series A Preferred Stock a statement describing in
reasonable detail the adjustment, the facts requiring such adjustment and the
method of calculation used; and (ii) the Corporation shall cause to be mailed by
first class mail, postage prepaid, as soon as practicable to each holder of
record of shares of Series A Preferred Stock a notice stating that the
Conversion Price has been adjusted and setting forth the adjusted Conversion
Price.
(7) In the event of any consolidation of the Corporation with or
merger of the Corporation into any other corporation (other than a merger in
which the Corporation is the surviving corporation) or a sale, lease or
conveyance of the assets of the Corporation as an entirety or substantially as
an entirety, or any statutory exchange of securities with another corporation,
the holder of each share of Series A Preferred Stock shall have the right,
after such consolidation, merger, sale or exchange, to convert such share into
the number and kind of shares of stock or other securities and the amount and
kind of property which such holder would have been entitled to receive upon
such consolidation, merger, sale or exchange of the number of shares of Common
Stock that would have been issued to such holder had such shares of Series A
Preferred Stock been converted immediately prior to such consolidation, merger
or sale. The provisions of this Section 5(g) shall similarly apply to
successive consolidations, mergers, sales or exchanges.
(8) The Corporation shall pay any taxes that may be payable in
respect of the issuance of shares of Common Stock upon conversion of shares of
Series A Preferred Stock, but the Corporation shall not be required to pay any
taxes which may be payable in respect of any transfer involved in the issuance
of shares of Common Stock in the name other than that in which the shares of
Series A Preferred Stock so converted are registered, and the Corporation shall
not be required to issue or deliver any such shares unless and until the person
requesting such issuance shall have paid to the Corporation the amount of any
such taxes, or shall have established to the satisfaction of the Corporation
that such taxes have been paid.
(9) The Corporation may (but shall not be required to) make such
reductions in the Conversion Price, in addition to those required by subsections
(i) through (iv) of Section 5(e) above, as it considers to be advisable in
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order that any event treated for federal income tax purposes as a dividend of
stock or stock rights shall not be taxable to the recipients.
(10) The Corporation shall at all times reserve and keep available out
of its authorized but unissued Common Stock the full number of shares of Common
Stock issuable upon the conversion of all shares of Series A Preferred Stock
then outstanding.
(11) In the event that:
(i) the Corporation shall declare a dividend or any other
distribution on its Common Stock, payable otherwise than in cash out of
retained earnings; or
(ii) the Corporation shall authorize the granting to the
holders of its Common Stock of rights to subscribe for or purchase any shares
of capital stock of any class or of any other rights; or
(iii) any capital reorganization of the Corporation,
reclassification of the capital stock of the Corporation, consolidation or
merger of the Corporation with or into another corporation (other than a merger
in which the Corporation is the surviving corporation), or sale, lease or
conveyance of the assets of the Corporation as an entirety or substantially as
an entirety to another corporation occurs; or
(iv) the voluntary or involuntary dissolution, liquidation
or winding up of the Corporation occurs, the Corporation shall cause to be
mailed to the holders of record of Series A Preferred Stock at least 15 days
prior to the applicable date hereinafter specified a notice stating (x) the date
on which a record is to be taken for the purpose of such dividend, distribution
of rights or, if a record is not to be taken, the date as of which the holders
of Common Stock of record to be entitled to such dividend, distribution or
rights are to be determined or (y) the date on which such reorganization,
reclassification, consolidation, merger, sale, lease, conveyance, dissolution,
liquidation or winding up is expected to take place, and the date, if any is to
be fixed, as of which holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, lease, conveyance, dissolution, liquidation or winding up. Failure to give
such notice, or any defect therein, shall not
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affect the legality or validity of such dividend, distribution, reorganization,
reclassification, consolidation, merger, sale, lease, conveyance, dissolution,
liquidation or winding up.
F. Voting Rights.
Other than as required by applicable law, the Series A Preferred Stock
shall not have any voting powers either general or special, except that:
(1) Unless the vote or consent of the holders of a greater number
of shares shall then be required by law, the affirmative vote or consent of the
holders of at least 66-2/3% of all of the shares of the Series A Preferred
Stock, and any one or more other series of preferred stock of the Corporation
similarly affected, at the time outstanding, given in person or by proxy,
either in writing or by a vote at a meeting called for the purpose at which the
holders of shares of the Series A Preferred Stock and any such other series of
preferred stock shall vote together as a separate class, shall be necessary for
authorizing, effecting or validating the amendment, alteration or repeal of any
of the provisions of the Restated Articles of Incorporation, as amended, or of
any amendment or supplement thereto (including any certificate of designation
or any similar document relating to any series of preferred stock) of the
Corporation, which would adversely affect the preferences, rights, powers or
privileges, qualifications, limitations and restrictions of the Series A
Preferred Stock.
(2) Unless the vote or consent of the holders of a greater number
of shares shall then be required by law, the affirmative vote or consent of the
holders of at least 66-2/3% of all of the shares of the Series A Preferred
Stock and any other series of preferred stock of the Corporation ranking on a
parity with shares of the Series A Preferred Stock, either as to dividends or
the distribution of assets upon liquidation, dissolution or winding up, at the
time outstanding, given in person or by proxy, either in writing or by a vote
at a meeting called for the purpose at which the holders of shares of the
Series A Preferred Stock and any such other series of preferred stock of the
Corporation shall vote together as a single class without regard to series,
shall be necessary to create, authorize or issue, or reclassify any authorized
stock of the Corporation into, or create, authorize or issue any obligation or
security convertible into or evidencing a right to purchase, any shares of any
class of stock of the
-15-
Corporation ranking prior to the Series A Preferred Stock or ranking prior to
any other series of preferred stock of the Corporation which ranks on a parity
with the Series A Preferred Stock as to dividends or upon the distribution of
assets upon liquidation, dissolution or winding up. Subject to the foregoing,
the Corporation's Restated Articles of Incorporation, as amended, may be
amended to increase the number of authorized shares of preferred stock without
the vote of the holders of preferred stock, including the Series A Preferred
Stock.
(3) Whenever, at any time or times, dividends payable on the
shares of Series A Preferred Stock shall be in arrears in an amount equal to at
least six full quarterly dividends on shares of the Series A Preferred Stock at
the time outstanding, the holders of the outstanding shares of Series A
Preferred Stock shall have the exclusive right, voting separately as a class
together with holders of shares of any one or more other series of preferred
stock ranking on a parity with the Series A Preferred Stock either as to
dividends or the distribution of assets upon liquidation, dissolution or
winding up and upon which like voting rights have been conferred and are
exercisable, to elect two directors of the Corporation for one-year terms at
the Corporation's next annual meeting of stockholders and at each subsequent
annual meeting of stockholders. At elections for such directors, each holder of
Series A Preferred Stock shall be entitled to one vote for each share held (the
holders of shares of any other series of preferred stock ranking on such a
parity being entitled to such number of votes, if any, for each share of stock
held as may be granted to them). Upon the vesting of such right of the holders
of Series A Preferred Stock, the maximum authorized number of members of the
Board of Directors shall automatically be increased by two and the two
vacancies so created shall be filled by vote of the holders of the outstanding
shares of Series A Preferred Stock (either alone or together with the holders
of shares of any one or more other series of preferred stock ranking on such a
parity) as hereinafter set forth. The right of the holders of Series A
Preferred Stock, voting separately as a class to elect (either alone or
together with the holders of shares of any one or more other series of
preferred stock ranking on such a parity) members of the Board of Directors of
the Corporation as aforesaid shall continue until such time as all dividends
accumulated on the Series A Preferred Stock shall have been paid in full or
declared and set apart for payment, at which time such right shall immediately
terminate, except as herein or by law expressly
-16-
provided, subject to revesting in the event of each and every subsequent
default of the character above mentioned.
(4) Upon termination of such special voting rights attributable to
all holders of the Series A Preferred Stock and any other series or preferred
stock ranking on a parity with the Series A Preferred Stock as to dividends or
the distribution of assets upon liquidation, dissolution or winding up and upon
which like voting rights have been conferred and are exercisable, the term of
office of each director elected by the holders of shares of Series A Preferred
Stock and such parity preferred stock (a "Preferred Stock Director") pursuant
to such special voting rights shall immediately terminate and the number of
directors constituting the entire Board of Directors shall be reduced by the
number of Preferred Stock Directors. Any Preferred Stock Director may be
removed by, and shall not be removed otherwise than by, the vote of the holders
of record of a majority of the outstanding shares of Series A Preferred Stock
and all other series of preferred stock ranking on a parity with the Series A
Preferred Stock with respect to dividends who were entitled to participate in
such Preferred Stock Director's election, voting as a separate class, at a
meeting called for such purposes. If the office of any Preferred Stock Director
becomes vacant by reason of death, resignation, retirement, disqualification,
removal from office, or otherwise, the remaining Preferred Stock Director may
choose a successor who shall hold office for the unexpired term in respect of
which such vacancy occurred.
G. Reacquired Shares.
Shares of Series A Preferred Stock converted, redeemed, or otherwise
purchased or acquired by the Corporation shall be restored to the status of
authorized but unissued shares of Series A Preferred Stock without designation
as to series.
H. Ranking.
Any class or classes of stock of the Corporation shall be deemed to
rank:
(1) prior to the Series A Preferred Stock, as to dividends or as
to distribution of assets upon liquidation, dissolution or winding up, if the
holders of such class shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up,
-17-
as the case may be, in preference or priority to the holders of the Series A
Preferred Stock;
(2) on a parity with the Series A Preferred Stock, as to dividends
or as to distribution of assets upon liquidation, dissolution or winding up,
whether or not the dividend rates, dividend payment dates or redemption or
liquidation prices per share thereof be different from those of the Series A
Preferred Stock, if the holders of such class of stock and the Series A
Preferred Stock shall be entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in proportion to their respective amounts of accrued and unpaid dividends per
share or liquidation prices, without preference or priority one over the other;
and
(3) junior to the Series A Preferred Stock, as to dividends or as
to the distribution of assets upon liquidation, dissolution or winding up, if
such stock shall be Common Stock or if the holders of Series A Preferred Stock
shall be entitled to receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of shares of such stock.
I. No Sinking Fund.
Shares of Series A Preferred Stock are not subject to the operation of
a sinking fund or other obligation of the Corporation to redeem or retire the
Series A Preferred Stock.
(b) 7% Cumulative Redeemable Preferred Stock, Series B.
A. Designation.
The designation of this series is "7% Cumulative Redeemable Preferred
Stock, Series B" (hereinafter referred to as the "Series B Preferred Stock")
and the number of shares constituting such series is Thirty-Five Thousand and
Forty-Five (35,045). Shares of Series B Preferred Stock shall have a stated
value of $100.00 per share.
B. Dividends.
The holders of record of the shares of the Series B Preferred Stock
shall be entitled to receive, when and as declared by the Board of Directors of
the corporation, out of any funds legally available for such purpose,
cumulative
-18-
cash dividends at an annual dividend rate per share of 7% of the stated value
thereof, which amount is $7.00 per annum, per share, and no more. Such
dividends shall be payable each calendar quarter at the rate of $1.75 per share
on such dates as shall be fixed by resolution of the Board of Directors of the
Corporation. The date from which dividends on such shares shall be cumulative
shall be the first day after said shares are issued. Accumulations of
dividends shall not bear interest. No cash dividend shall be declared, paid or
set apart for any shares of Common Stock unless all dividends on all shares of
the Series B Preferred Stock at the time outstanding for all past dividend
periods and for the then current dividend shall have been paid, or shall have
been declared and a sum sufficient for the payment thereof, shall have been set
apart. Subject to the foregoing provisions of this paragraph (2), cash
dividends or other cash distributions as may be determined by the Board of
Directors of the Corporation, may be declared and paid upon the shares of the
Common Stock of the corporation from time to time out of funds legally
available therefor, and the shares of the Series B Preferred Stock shall not be
entitled to participate in any such cash dividend or other such cash
distribution so declared and paid or made on such shares of Common Stock.
C. Redemption.
From and after October 31, 1988, any holder may, by written request,
call upon the Corporation to redeem all or any part of said holder's shares of
said Series B Preferred Stock at a redemption price of $100.00 per share plus
accumulated unpaid dividends to the date said request for redemption is
received by the Corporation and no more (the "Redemption Price"). Any such
request for redemption shall be accompanied by the certificates for which
redemption is requested, duly endorsed or with appropriate stock power
attached, in either case with signature guaranteed. Upon receipt by the
Corporation of any such request for redemption from any holder of the Series B
Preferred Stock, the Corporation shall forthwith redeem said stock at the
Redemption Price, provided that: (i) full cumulative dividends have been paid
or declared and set apart for payment upon all shares of any series of
preferred stock ranking superior to the Series B Preferred Stock as to
dividends or other distributions (collectively the "Superior Stock"); and (ii)
the Corporation is not then in default or in arrears with respect to any
sinking or analogous fund or call for tenders obligation or agreement for the
purchase, redemption or retirement of any shares of Superior Stock. In the
event that, upon receipt of a re-
-19-
quest for redemption, either or both of the conditions set forth in clauses (i)
and (ii) above are not met, the Corporation shall forthwith return said request
to the submitting shareholder along with a statement that the Corporation is
unable to honor such request and explanation of the reasons therefor. From and
after the receipt by the Corporation of a request for redemption from any
holder of said Series B Preferred Stock, which request may be honored
consistent with the foregoing provisions, all rights of such holder in the
Series B Preferred Stock for which redemption is requested shall cease and
terminate, except only the right to receive the Redemption Price thereof, but
without interest.
D. Liquidation Preference.
In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the corporation, the holders of the Series B Preferred Stock
shall be entitled to receive, subject to the provisions of paragraph 7 and
before any payment shall be made to the holders of the shares of Common Stock,
the amount of $100.00 each share, plus accumulated dividends. After payment to
the holders of the Series B Preferred Stock of the full amount as aforesaid,
the holders of the Series B Preferred Stock as such shall have no right or
claim to any of the remaining assets which shall be distributed ratably to the
holders of the Common Stock. If, upon any such liquidation, dissolution or
winding up, the assets available therefore are not sufficient to permit
payments to the holders of Series B Preferred Stock of the full amount as
aforesaid, then subject to the provisions of paragraph 7, the holders of the
Series B Preferred Stock then outstanding shall share ratably in the
distribution of assets in accordance with the sums which would be payable if
such holders were to receive the full amounts as aforesaid.
E. Sinking Fund.
There shall be no sinking fund applicable to the shares of Series B
Preferred Stock.
F. Conversion.
The shares of Series B Preferred Stock shall not be convertible into
any shares of Common Stock or any other class of shares, nor exchanged for any
shares of Common Stock or any other class of shares.
G. Superior Stock.
-20-
The corporation may issue stock with preferences superior or equal to
the shares of the Series B Preferred Stock without the consent of the holders
thereof.
H. Voting rights.
Each share of the Series B Preferred Stock shall be entitled to equal
voting rights, share for share, with each share of the Common Stock.
(c) ESOP Convertible Preferred Stock, Series C.
The shares of the ESOP Convertible Preferred Stock, Series C, of the
Corporation shall be designated "ESOP Convertible Preferred Stock, Series C,"
and the number of shares constituting such series shall be 3,000,000. The ESOP
Convertible Preferred Stock, Series C, shall hereinafter be referred to as the
"ESOP Preferred Stock."
A. Special Purpose Restricted Transfer Issue.
Shares of ESOP Preferred Stock shall be issued only to a trustee acting
on behalf of an employee stock ownership plan or other employee benefit plan of
the Corporation or any subsidiary of the Corporation. In the event of any
transfer of shares of ESOP Preferred Stock to any person other than any such
plan trustee or the Corporation, the shares of ESOP Preferred Stock so
transferred, upon such transfer and without any further action by the
Corporation or the holder, shall be automatically converted into shares of
Common Stock on the terms otherwise provided for the conversion of shares of
ESOP Preferred Stock into shares of Common Stock pursuant to paragraph E hereof
and no such transferee shall have any of the voting powers, preferences and
relative, participating, optional or special rights ascribed to shares of ESOP
Preferred Stock hereunder but, rather, only the powers and rights pertaining to
the Common Stock into which such shares of ESOP Preferred Stock shall be so
converted. Certificates representing shares of ESOP Preferred Stock shall be
legended to reflect such restrictions on transfer. Notwithstanding the foregoing
provisions of this paragraph A, shares of ESOP Preferred Stock (i) may be
converted into shares of Common Stock as provided by paragraph E hereof and the
shares of Common Stock issued upon such conversion may be transferred by the
holder thereof as permitted by law and (ii) shall be redeemable by the
Corporation upon the terms and conditions provided by paragraphs F, G and H
hereof.
B. Dividends and Distributions.
-21-
(1) Subject to the provisions for adjustment hereinafter set
forth, the holders of shares of ESOP Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds
legally available therefor, cash dividends ("Preferred Dividends") in an amount
equal to $3.30 per share per annum, and no more, payable semi-annually,
one-half on the first day of January and one-half on the first day of July of
each year (each a "Dividend Payment Date") commencing the first such day
following the effective time of the Merger (as defined below), to holders of
record at the start of business on such Dividend Payment Date. Preferred
Dividends shall begin to accrue on shares of ESOP Preferred Stock on the last
dividend payment date on the outstanding shares of ESOP Convertible Preferred
Stock, Series C, of C&S/Sovran Corporation ("C&S/Sovran") (which shares are to
be converted on a one-for-one basis into shares of ESOP Preferred Stock at the
effective time of the merger (the "Merger") of C&S/Sovran Merger Corporation
("Merger Corporation"), a Delaware corporation and a wholly owned subsidiary of
the Corporation, with and into C&S/Sovran, as provided in the Agreement and
Plan of Consolidation, dated July 21, 1991, between the Corporation and
C&S/Sovran). Preferred Dividends shall accrue on a daily basis whether or not
the Corporation shall have earnings or surplus at the time, but Preferred
Dividends on the shares of ESOP Preferred Stock for any period less than a full
semi-annual period between Dividend Payment Dates shall be computed on the
basis of a 360-day year of 30-day months. Accumulated but unpaid Preferred
Dividends shall accumulate as of the Dividend Payment Date on which they first
become payable, but no interest shall accrue on accumulated but unpaid
Preferred Dividends.
(2) So long as any ESOP Preferred Stock shall be outstanding, no
dividend shall be declared or paid or set apart for payment on any other series
of stock ranking on a parity with the ESOP Preferred Stock as to dividends,
unless there shall also be or have been declared and paid or set apart for
payment on the ESOP Preferred Stock, like dividends for all dividend payment
periods of the ESOP Preferred Stock ending on or before the dividend payment
date of such parity stock, ratably in proportion to the respective amounts of
dividends accumulated and unpaid through such dividend payment period on the
ESOP Preferred Stock and accumulated and unpaid or payable on such parity stock
through the dividend payment period on such parity stock next preceding such
Dividend Payment Date. In the event that full cumulative dividends on the ESOP
Preferred Stock have not been declared and paid or set apart for
-22-
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.
-23-
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,
-24-
shall be given by first-class mail, postage prepaid, mailed not less than
twenty (20) days prior to any payment date stated therein, to the holders of
ESOP Preferred Stock, at the address shown on the books of the Corporation or
any transfer agent for the ESOP Preferred Stock.
E. Conversion into Common Stock.
(1) A holder of shares of ESOP Preferred Stock shall be entitled,
at any time prior to the close of business on the date fixed for redemption of
such shares pursuant to paragraph F, G or H hereof, to cause any or all of such
shares to be converted into shares of Common Stock, initially at a conversion
rate equal to the ratio of 1.0 shares of ESOP Preferred Stock to 0.84 shares of
Common Stock and a conversion price the amount of which initially shall be
$42.50 (as adjusted as hereinafter provided, the "Conversion Price") for,
initially, each 0.84 shares of Common Stock. Each of the Conversion Price and
the resulting conversion ratio is subject to adjustment as hereinafter
provided.
(2) Any holder of shares of ESOP Preferred Stock desiring to
convert such shares into shares of Common Stock shall surrender the certificate
or certificates representing the shares of ESOP Preferred Stock being
converted, duly assigned or endorsed for transfer to the Corporation (or
accompanied by duly executed stock powers relating thereto), at the principal
executive office of the Corporation or the offices of the transfer agent for
the ESOP Preferred Stock or such office or offices in the continental United
States of an agent for conversion as may from time to time be designated by
notice to the holders of the ESOP Preferred Stock by the Corporation or the
transfer agent for the ESOP Preferred Stock, accompanied by written notice of
conversion. Such notice of conversion shall specify (i) the number of shares of
ESOP Preferred Stock to be converted and the name or names in which such holder
wishes the certificate or certificates for Common Stock and for any shares of
ESOP Preferred Stock not to be so converted to be issued, and (ii) the address
to which such holder wishes delivery to be made of such new certificates to be
issued upon such conversion.
(3) Upon surrender of a certificate representing a share or shares
of ESOP Preferred Stock for conversion, the Corporation shall issue and send by
hand delivery (with receipt to be acknowledged) or by first-class mail, postage
prepaid, to the holder thereof or to such holder's designee, at the address
designated by such holder, a cer-
-25-
tificate or certificates for the number of shares of Common Stock to which such
holder shall be entitled upon conversion. In the event that there shall have
been surendered a certificate or certificates representing shares of ESOP
Preferred Stock, only part of which are to be converted, the Corporation shall
issue and deliver to such holder or such holder's designee a new certificate or
certificates representing the number of shares of ESOP Preferred Stock which
shall not have been converted.
(4) The issuance by the Corporation of shares of Common Stock upon
a conversion of shares of ESOP Preferred Stock into shares of Common Stock made
at the option of the holder thereof shall be effective as of the earlier of (i)
the delivery to such holder or such holder's designee of the certificate or
certificates representing the shares of Common Stock issued upon conversion
thereof or (ii) the commencement of business on the second business day after
the surrender of the certificate or certificates for the shares of ESOP
Preferred Stock to be converted, duly assigned or endorsed for transfer to the
Corporation (or accompanied by duly executed stock powers relating thereto) as
provided hereby. On and after the effective date of conversion, the person or
persons entitled to receive the Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such
shares of Common Stock, but no allowance or adjustment shall be made in respect
of dividends payable to holders of Common Stock in respect of any period prior
to such effective date. The Corporation shall not be obligated to pay any
dividends which shall have been declared and shall be payable to holders of
shares of ESOP Preferred Stock on a Dividend Payment Date if such Dividend
Payment Date for such dividend shall coincide with or be on or subsequent to
the effective date of conversion of such shares.
(5) The Corporation shall not be obligated to deliver to holders
of ESOP Preferred Stock any fractional share or shares of Common Stock issuable
upon any conversion of such shares of ESOP Preferred Stock, but in lieu thereof
may make a cash payment in respect thereof in any manner permitted by law.
(6) The Corporation shall at all times reserve and keep available
out of its authorized and unissued Common Stock, solely for issuance upon the
conversion of shares of ESOP Preferred Stock as herein provided, free from any
preemptive rights, such number of shares of Common Stock as shall from time to
time be issuable upon the conversion of all shares of ESOP Preferred Stock then
outstanding. The
-26-
Corporation shall prepare and shall use its best efforts to obtain and keep in
force such governmental or regulatory permits or other authorizations as may be
required by law, and shall comply with all requirements as to registration or
qualification of the Common Stock, in order to enable the Corporation lawfully
to issue and deliver to each holder of record of ESOP Preferred Stock such
number of shares of its Common Stock as shall from time to time be sufficient
to effect the conversion of all shares of ESOP Preferred Stock then outstanding
and convertible into shares of Common Stock.
F. Redemption At the Option of the Corporation.
(1) The ESOP Preferred Stock shall be redeemable, in whole or in
part, at the option of the Corporation at any time after July 1, 1992, or on or
before July 1, 1992 if permitted by paragraph F(3) or F(4), at the following
redemption prices per share (except as to redemption pursuant to paragraph
F(3)):
During the Twelve-Month Price Per
Period Beginning July 1, Share
- ------------------------ ---------
1991 . . . . . . . . . . . . . . . . . $45.14
1992 . . . . . . . . . . . . . . . . . 44.81
1993 . . . . . . . . . . . . . . . . . 44.48
1994 . . . . . . . . . . . . . . . . . 44.15
1995 . . . . . . . . . . . . . . . . . 43.82
1996 . . . . . . . . . . . . . . . . . 43.49
1997 . . . . . . . . . . . . . . . . . 43.16
1998 . . . . . . . . . . . . . . . . . 42.83
and thereafter at $42.50 per share, plus, in each case, an amount equal to all
accrued and unpaid dividends thereon to the date fixed for redemption. Payment
of the redemption price shall be made by the Corporation in cash or shares of
Common Stock, or a combination thereof, as permitted by paragraph F(5). From
and after the date fixed for redemption, dividends on shares of ESOP Preferred
Stock called for redemption will cease to accrue, such shares will no longer be
deemed to be outstanding and all rights in respect of such shares of the
Corporation shall cease, except the right to receive the redemption price. If
less than all of the outstanding shares of ESOP Preferred Stock are to be
redeemed, the Corporation shall either redeem a portion of the shares of each
holder determined pro rata based on the number of shares held by each holder or
shall select the shares to be redeemed by lot, as may be determined by the
Board of Directors of the Corporation.
-27-
(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.
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(4) In the event the C&S/Sovran Retirement Savings, ESOP and
Profit Sharing Plan (as amended, together with any successor plan, the "Plan")
is terminated, the Corporation shall, notwithstanding anything to the contrary
in paragraph F(1), redeem all shares of ESOP Preferred Stock for the amount
payable in respect of the shares upon redemption of the ESOP Preferred Stock
pursuant to paragraph F(1) hereof.
(5) The Corporation, at its option, may make payment of the
redemption price required upon redemption of shares of ESOP Preferred Stock in
cash or in shares of Common Stock, or in a combination of such shares and cash,
any such shares to be valued for such purpose at their Fair Market Value (as
defined in paragraph I(7) hereof).
G. Other Redemption Rights.
Shares of ESOP Preferred Stock shall be redeemed by the Corporation at
a price which is the greater of the Conversion Value (as defined in paragraph
I) of the ESOP Preferred Stock on the date fixed for redemption or a redemption
price of $42.50 per share plus accrued and unpaid dividends thereon to the date
fixed for redemption, for shares of Common Stock (any such shares of Common
Stock to be valued for such purpose as provided by paragraph F(5) hereof), at
the option of the holder, at any time and from time to time upon notice to the
Corporation given not less than five (5) business days prior to the date fixed
by the Corporation in such notice for such 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
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securities" with respect to a holder of ESOP Preferred Stock within the meaning
of Section 409(l) of the Internal Revenue Code of 1986, as amended, and Section
407(d)(5) of ERISA, or any successor provisions of law, and, if applicable, for
a cash payment in lieu of fractional shares, if any, the shares of ESOP
Preferred Stock of such holder shall be assumed by and shall become preferred
stock of such successor or resulting company, having in respect of such company
insofar as possible the same powers, preferences and relative, participating,
optional or other special rights (including the redemption rights provided by
paragraphs F, G and H hereof), and the qualifications, limitations or
restrictions thereon, that the ESOP Preferred Stock had immediately prior to
such transaction, except that after such transaction each share of the ESOP
Preferred Stock shall be convertible, otherwise on the terms and conditions
provided by paragraph E hereof, into the qualifying employer securities so
receivable by a holder of the number of shares of Common Stock into which such
shares of ESOP Preferred Stock could have been converted immediately prior to
such transaction if such holder of Common Stock failed to exercise any rights
of election to receive any kind or amount of stock, securities, cash or other
property (other than such qualifying employer securities and a cash payment, if
applicable, in lieu of fractional shares) receivable upon such transaction
(provided that, if the kind or amount of qualifying employer securities
receivable upon such transaction is not the same for each non-electing share,
then the kind and amount of qualifying employer securities receivable upon such
transaction for each non-electing share shall be the kind and amount so
receivable per share by a plurality of the non-electing shares). The rights of
the ESOP Preferred Stock as preferred stock of such successor or resulting
company shall successively be subject to adjustments pursuant to paragraph I
hereof after any such transaction as nearly equivalent to the adjustments
provided 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
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constituted solely of qualifying employer securities (as referred to in
paragraph H(1)) and cash payments, if applicable, in lieu of fractional shares,
outstanding shares of ESOP Preferred Stock shall, without any action on the
part of the Corporation or any holder thereof (but subject to paragraph H(3)),
be deemed converted by virtue of such merger, consolidation or similar
transaction immediately prior to such consummation into the number of shares of
Common Stock into which such shares of ESOP Preferred Stock could have been
converted at such time, and each share of ESOP Preferred Stock shall, by virtue
of such transaction and on the same terms as apply to the holders of Common
Stock, be converted into or exchanged for the aggregate amount of stock,
securities, cash or other property (payable in like kind) receivable by a
holder of the number of shares of Common Stock into which such shares of ESOP
Preferred Stock could have been converted immediately prior to such transaction
if such holder of Common Stock failed to exercise any rights of election as to
the kind or amount of stock, securities, cash or other property receivable upon
such transaction (provided that, if the kind or amount of stock, securities,
cash or other property receivable upon such transaction is not the same for
each non-electing share, then the kind and amount of stock, securities, cash or
other property receivable upon such transaction for each non-electing share
shall be the kind and amount so receivable per share by a plurality of the
non-electing shares).
(3) In the event the Corporation shall enter into any agreement
providing for any consolidation or merger or similar transaction described in
paragraph H(2), then the Corporation shall as soon as practicable thereafter
(and in any event at least ten (10) business days before consummation of such
transaction) give notice of such agreement and the material terms thereof to
each holder of ESOP Preferred Stock and each such holder shall have the right
to elect, by written notice to the Corporation, to receive, upon consummation
of such transaction (if and when such transaction is consummated), from the
Corporation or the successor of the Corporation, in redemption and retirement
of such ESOP Preferred Stock, a cash payment equal to the amount payable in
respect of shares of ESOP Preferred Stock upon redemption pursuant to paragraph
F(1) hereof. No such notice of 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
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withdrawal given to the Corporation prior to the close of business on the
second business day prior to consummation of such transaction.
I. Anti-dilution Adjustments.
(1) In the event the Corporation shall, at any time or from time to time
while any of the shares of the ESOP Preferred Stock are outstanding, (i) pay a
dividend or make a distribution in respect of the Common Stock in shares of
Common Stock, (ii) subdivide the outstanding shares of Common Stock, or (iii)
combine the outstanding shares of Common Stock into a smaller number of shares,
in each case whether by reclassification of shares, recapitalization of the
Corporation (including a recapitalization effected by a merger or consolidation
to which paragraph H hereof does not apply) or otherwise, the Conversion Price
in effect immediately prior to such action shall be adjusted by multiplying such
Conversion Price by the fraction the numerator of which is the number of shares
of Common Stock outstanding immediately before such event and the denominator of
which is the number of shares of Common Stock outstanding immediately after such
event. An adjustment made pursuant to this paragraph I(l) shall be given effect,
upon payment of such a dividend or distribution, as of the record date for the
determination of shareholders entitled to receive such dividend or distribution
(on a retroactive basis) and in the case of a subdivision or combination shall
become effective immediately as of the effective date thereof.
(2) In the event that the Corporation shall, at any time or from time to
time while any of the shares of ESOP Preferred Stock are outstanding, issue to
holders of shares of Common Stock as a dividend or distribution, including by
way of a reclassification of shares or a recapitalization of the Corporation,
any right or warrant to purchase shares of Common Stock (but not including as
such a right or warrant any security convertible into or exchangeable for shares
of Common Stock) at a purchase price per share less than the Fair Market Value
(as hereinafter defined) of a share of Common Stock on the date of issuance of
such right or warrant, then, subject to the provisions of paragraphs I(5) and
I(6), the Conversion Price shall be adjusted by multiplying such Conversion
Price by the fraction the numerator of which shall be the number of shares of
Common Stock outstanding immediately before such issuance of rights or warrants
plus the number of shares of Common Stock which could be purchased at the Fair
Market Value of a share of Common Stock at the time of such issuance for
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the maximum aggregate consideration payable upon exercise in full of all such
rights or warrants and the denominator of which shall be the number of shares of
Common Stock outstanding immediately before such issuance of rights or warrants
plus the maximum number of shares of Common Stock that could be acquired upon
exercise in full of all such rights and warrants.
(3) In the event the Corporation shall, at any time and from time to
time while any of the shares of ESOP Preferred Stock are outstanding, issue,
sell or exchange shares of Common Stock (other than pursuant to any right or
warrant to purchase or acquire shares of Common Stock (including as such a right
or warrant any security convertible into or exchangeable for shares of Common
Stock) and other than pursuant to any dividend reinvestment plan or employee or
director incentive or benefit plan or arrangement, including any employment,
severance or consulting agreement, of the Corporation or any subsidiary of the
Corporation heretofore or hereafter adopted) for a consideration having a Fair
Market Value on the date of such issuance, sale or exchange less than the Fair
Market Value of such shares on the date of such issuance, sale or exchange,
then, subject to the provisions of paragraphs I(5) and (6), the Conversion Price
shall be adjusted by multiplying such Conversion Price by the fraction the
numerator of which shall be the sum of (i) the Fair Market Value of all the
shares of Common Stock outstanding on the day immediately preceding the first
public announcement of such issuance, sale or exchange plus (ii) the Fair Market
Value of the consideration received by the Corporation in respect of such
issuance, sale or exchange of shares of Common Stock, and the denominator of
which shall be the product of (i) the Fair Market Value of a share of Common
Stock on the day immediately preceding the first public announcement of such
issuance, sale or exchange multiplied by (ii) the sum of the number of shares of
Common Stock outstanding on such day plus the number of shares of Common Stock
so issued, sold or exchanged by the Corporation. In the event the Corporation
shall, at any time or from time to time while any shares of ESOP Preferred Stock
are outstanding, issue, sell or exchange any right or warrant to purchase or
acquire shares of Common Stock (including as such a right or warrant any
security convertible into or exchangeable for shares of Common Stock), other
than any such issuance to holders of shares of Common Stock as a dividend or
distribution (including by way of a reclassification of shares or a
recapitalization of the Corporation) and other than pursuant to any dividend
reinvestment plan or employee or director incentive or benefit plan or
arrangement
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(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 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
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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 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
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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
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of all shares of Common Stock outstanding on the record date for determining
the shareholders entitled to receive such Extraordinary Distribution and (b)
any shares of capital stock of the Corporation (other than shares of Common
Stock), other securities of the Corporation (other than securities of the type
referred to in paragraph I(2)), evidence of indebtedness of the Corporation or
any other person or any other property (including shares of any subsidiary of
the Corporation), or any combination thereof. The Fair Market Value of an
Extraordinary Distribution for purposes of paragraph I(4) shall be the sum of
the Fair Market Value of such Extraordinary Distribution plus the amount of any
cash dividends which are not Extraordinary Distributions made during such
twelve-month period and not previously included in the calculation of an
adjustment pursuant to paragraph I(4).
"Fair Market Value" shall mean, as to shares of Common Stock or any
other class of capital stock or securities of the Corporation or any other
issuer which are publicly traded, the average of the Current Market Prices (as
hereinafter defined) of such shares or securities for each day of the Adjustment
Period (as hereinafter defined). "Current Market Price" of publicly traded
shares of Common Stock or any other class of capital stock or other security of
the Corporation or any other issuer for a day shall mean the last reported sales
price, regular way, or, in case no sale takes place on such day, the average of
the reported closing bid and asked prices, regular way, in either case as
reported on the New York Stock Exchange Composite Tape or, 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
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thereof as determined by an independent investment banking or appraisal firm
experienced in the valuation of such securities or property selected in good
faith by the Board of Directors of the Corporation or a committee thereof, or,
if no such investment banking or appraisal firm is in the good faith judgment of
the Board of Directors or such committee available to make such determination,
as determined in good faith by the Board of Directors of the Corporation or such
committee.
"Non-Dilutive Amount" in respect of an issuance, sale or exchange by the
Corporation of any right or warrant to purchase or acquire shares of Common
Stock (including any security convertible into or exchangeable for shares of
Common Stock) shall mean the remainder of (a) the product of the Fair Market
Value of a share of Common Stock on the day preceding the first public
announcement of such issuance, sale or exchange multiplied by the maximum number
of shares of Common Stock which could be acquired on such date upon the exercise
in full of such rights and warrants (including upon the conversion or exchange
of all such convertible or exchangeable securities), whether or not exercisable
(or convertible or exchangeable) at such date, minus (b) the aggregate amount
payable pursuant to such right or warrant to purchase or acquire such maximum
number of shares of Common Stock; provided, however, that in no event shall the
Non-Dilutive Amount be less than zero. For purposes of the foregoing sentence,
in the case of a security convertible into or exchangeable for shares of Common
Stock, the amount payable pursuant to a right or warrant to purchase or acquire
shares of Common Stock shall be the Fair Market Value of such security on the
date of the issuance, sale or exchange of such security by the Corporation.
"Pro Rata Repurchase" shall mean any purchase of shares of Common Stock
by the Corporation or any subsidiary thereof, whether for cash, shares 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
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shall be deemed a Pro Rata Repurchase. For purposes of this paragraph I(7),
shares shall be deemed to have been purchased by the Corporation or any
subsidiary thereof "in open market transactions" if they have been purchased
substantially in accordance with the requirements of Rule 10b-18 as in effect
under the Exchange Act, on the date shares of ESOP Preferred Stock are initially
issued by the Corporation or on such other terms and conditions as the Board of
Directors of the Corporation or a committee thereof shall have determined are
reasonably designed to prevent such purchases from having a material effect on
the trading market for the Common Stock.
"Valuation Date" with respect to an Extraordinary Distribution shall
mean the date that is five (5) business days prior to the record date for such
Extraordinary Distribution.
(8) Whenever an adjustment to the Conversion Price is required pursuant
hereto, the Corporation shall forthwith place on file with the transfer agent
for the Common Stock and the ESOP Preferred Stock if there be one, and with the
Secretary of the Corporation, a statement signed by two officers of the
Corporation, stating the adjusted Conversion Price determined as provided herein
and the resulting conversion ratio, and the voting rights (as appropriately
adjusted), of the ESOP Preferred Stock. Such statement shall set forth in
reasonable detail such facts as shall be necessary to show the reason and the
manner of computing such adjustment, including any determination of Fair Market
Value involved in such computation. Promptly after each adjustment to the
Conversion Price and the related voting rights of the ESOP Preferred Stock, the
Corporation shall mail a notice thereof and of the then prevailing conversion
ratio to each holder of shares of the ESOP Preferred Stock.
J. Ranking; Retirement of Shares.
(1) The ESOP Preferred Stock shall rank (a) senior to the Common Stock
as to the payment of dividends and the distribution of assets on liquidation,
dissolution and winding-up of the Corporation, (b) junior to the 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 Pre-
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ferred 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
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securities so receivable upon conversion of shares of ESOP Preferred Stock
shall thereafter be adjusted, and shall be subject to further adjustment from
time to time, in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to Common Stock contained in paragraph I hereof,
and the provisions of paragraphs A through H, J, and K hereof with respect to
the Common Stock shall apply on like or similar terms to any such other shares
or securities.
(3) The Corporation shall pay any and all stock transfer and documentary
stamp taxes that may be payable in respect of any issuance or delivery of shares
of ESOP Preferred Stock or shares of Common Stock or other securities issued on
account of ESOP Preferred Stock pursuant hereto or certificates representing
such shares or securities. The Corporation shall not, however, be required to
pay any such tax which may be payable in respect of any transfer involved in the
issuance or delivery of shares of ESOP Preferred Stock or Common Stock or other
securities in a name other than that in which the shares of ESOP Preferred Stock
with respect to which such shares or other securities are issued or delivered
were registered, or in respect of any payment to any person with respect to any
such shares or securities other than a payment to the registered holder thereof,
and shall not be required to make any such issuance, delivery or payment unless
and until the person otherwise entitled to such issuance, delivery or payment
has paid to the Corporation the amount of any such tax or has established, to
the satisfaction of the Corporation, that such tax has been paid or is not
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
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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 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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