8-K: Current report filing

As filed with the Securities and Exchange Commission
on January 16, 1997


SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549




FORM 8-K


CURRENT REPORT


PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES EXCHANGE ACT OF 1934, AS AMENDED


Date of Report (Date of Earliest Event Reported): December 31, 1996



NATIONSBANK CORPORATION

(Exact Name of Registrant as Specified in its Charter)



North Carolina 1-6523 56-0906609
(State of Incorporation) (Commission (IRS Employer
File Number) Identification No.)




NationsBank Corporate Center, Charlotte, North Carolina 28255
(Address of Principal Executive Offices) (Zip Code)


(704) 386-5000
(Registrant's Telephone Number, including Area Code)



ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS

Effective January 7, 1997, Boatmen's Bancshares, Inc. ("Boatmen's")
merged with and into NB Holdings Corporation ("Holdings"), a Delaware
corporation and wholly owned subsidiary of the Registrant, pursuant to an
Agreement and Plan of Merger, dated as of August 29, 1996, as amended,
among Boatmen's, Holdings and the Registrant (the "Merger Agreement").
Pursuant to the Merger Agreement, upon consummation of the Merger on
January 7, 1997 (the "Effective Date"), each share of Boatmen's common
stock, $1.00 par value per share ("Boatmen's Common Stock"), was converted
into the right to receive 0.6525 of a share of the Registrant's common stock
("NationsBank Common Stock"), with cash in lieu of fractional shares;
provided that, in lieu of all or a portion of the NationsBank Common Stock to
which they would be entitled under the Merger Agreement, holders of
Boatmen's Common Stock could elect to receive cash in an amount equal to the
average closing price of NationsBank Common Stock on the New York Stock
Exchange during the ten consecutive trading day period ending on the tenth
calendar day immediately prior to the Effective Date. A copy of the press
release announcing the closing of the Merger is filed as Exhibit 99.1 to this
Current Report on Form 8-K.

The Registrant's Registration Statement on Form S-4 (Registration No.
333-16189), which was declared effective by the Securities and Exchange
Commission on December 18, 1996 (the "Registration Statement"), sets forth
certain information regarding the Merger, the Registrant and Boatmen's,
including, but not limited to, the date and manner of the Merger, a description
of the assets involved, the nature and amount of consideration paid by the
Registrant therefor, the method used for determining the amount of such
consideration, the nature of any material relationships between Boatmen's and
the Registrant or any officer or director of the Registrant or any associate of
any such officer or director, the nature of Boatmen's business and the
Registrant's intended use of the assets acquired in the Merger. In addition,
the information set forth under section heading "A" of Item 5 of this Current
Report on Form 8-K is incorporated herein by reference.

ITEM 5. OTHER EVENTS

A. Matters Related to the Acquisition of Boatmen's Bancshares, Inc.

Merger Consideration. By election of the holders of the Boatmen's
Common Stock, approximately four percent of the shares of Boatmen's Common Stock
were exchanged in the Merger for cash and the remaining approximately 96 percent
of the shares of Boatmen's Common Stock were exchanged in the Merger for
approximately 98 million shares of NationsBank Common Stock. The Registrant
intends to continue its program of repurchasing shares of NationsBank Common
Stock so that the net shares of NationsBank Common Stock issued in connection
with the Merger represent 60 percent of the total consideration paid by the
Registrant in the Merger. To achieve this allocation of the Merger
consideration, the Registrant intends to repurchase from time to time in open
market or private transactions approximately 37 million shares of NationsBank
Common Stock. A copy of the press release announcing the election of the
Boatmen's shareholders to


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receive in the Merger shares of NationsBank Common Stock or cash and the
Registrant's intent to repurchase shares of NationsBank Common Stock is filed
as Exhibit 99.2 to this Current Report on Form 8-K.

Exchange of Preferred Stock. On the Effective Date, (i) each share of
Cumulative Convertible Preferred Stock, Series A, of Boatmen's (the "Boatmen's
Series A Preferred Stock") was converted into one share of the Registrant's
Cumulative Convertible Preferred Stock, Series A (the "NationsBank New Series A
Preferred Stock"); (ii) each share of 7% Cumulative Redeemable Preferred Stock,
Series B, of Boatmen's (the "Boatmen's Series B Preferred Stock") was converted
into one share of the Registrant's 7% Cumulative Redeemable Preferred Stock,
Series B (the "NationsBank New Series B Preferred Stock"); and (iii) each
depositary share relating to the Boatmen's Series A Preferred Stock (the
"Boatmen's Depositary Shares") was converted into one depositary share of the
Registrant (the "NationsBank Depositary Shares"). The NationsBank New Series A
Preferred Stock, NationsBank New Series B Preferred Stock and NationsBank
Depositary Shares have rights, preferences and terms substantially identical to
the rights, preferences and terms of the Boatmen's Series A Preferred Stock,
Boatmen's Series B Preferred Stock and Boatmen's Depositary Shares,
respectively.

Board of Directors. On the Effective Date, the following persons, who
were immediately prior thereto serving as members of the Board of Directors of
Boatmen's, became members of the Board of Directors of the Registrant: Andrew B.
Craig, III, previously Chairman and CEO of Boatmen's; B.A. Bridgewater, Jr.,
Chairman, President and CEO of Brown Group, Inc.; C. Ray Holman, Chairman and
CEO of Mallinckrodt, Inc.; Russell W. Meyer, Jr., Chairman and CEO of The
Cessna Aircraft Company; and Albert E. Suter, Senior Vice Chairman and COO of
Emerson Electric Co. On the Effective Date, Mr. Craig became Chairman of the
Board of Directors of the Registrant and a member of its Executive Committee.

In addition, on January 1, 1997, Richard B. Priory, President and COO
of Duke Power Company, became a member of the Registrant's Board of Directors. A
copy of the press release announcing the election of the new members of the
Board of Directors of the Registrant is filed as Exhibit 99.3 to this Current
Report on Form 8-K.

Grant of Options. As a result of the Merger, on the Effective Date
options to purchase approximately five million shares of NationsBank Common
Stock were granted to approximately 19,700 qualified employees of Boatmen's
under the terms of the NationsBank Corporation 1996 Associates Stock Option
Award Plan. The exercise price for such options is $98.875, equal to the
closing price of NationsBank Common Stock on the Effective Date. Fifty percent
of options granted to qualified Boatmen's employees may be exercised as
early as April 1, 1997 after NationsBank Common Stock closes at or above
$100 a share on the New York Stock Exchange for ten consecutive trading days.
The remaining 50 percent may be exercised after NationsBank Common Stock
closes at or above $120 per share on the New York Stock Exchange for ten
consecutive trading days. Regardless of the price of NationsBank Common
Stock, the options will vest fully on July 1, 2000 and expire on June 29,
2001.


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Results of Operations of Boatmen's. Filed as Exhibit 99.4 to this
Current Report on Form 8-K is a summary of selected financial information
reflecting the results of operations of Boatmen's for the fiscal year ended
December 31, 1996.

B. Restated Articles of Incorporation.

Effective January 2, 1997, the Registrant's Articles of Incorporation
were amended and restated to (i) increase the number of shares of NationsBank
Common Stock authorized for issuance from 800,000,000 to 1,250,000,000; and (ii)
designate the preferences, limitations and relative rights of the NationsBank
New Series A Preferred Stock and NationsBank New Series B Preferred Stock. A
copy of the Registrant's Restated Articles of Incorporation is filed as Exhibit
3.1 to this Current Report on Form 8-K.

C. Release of Fiscal Year Earnings.

On January 13, 1997, the Registrant announced financial results for the
fiscal year ended December 31, 1996, reporting net income of $2.38 billion and
earnings per common share of $8.00. A copy of the press release announcing the
results of the Registrant's fiscal year ended December 31, 1996 is filed as
Exhibit 99.5 to this Current Report on Form 8-K.

D. Description of NationsBank Common Stock

The following is an updated Description of Common Stock of NationsBank
Corporation, which has been previously filed with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and updated and amended from time to time. The following description
reflects an increase in the authorized capital stock of the Registrant and the
designation of the preferences, limitations and relative rights of the
NationsBank New Series A Preferred Stock and NationsBank New Series B Preferred
Stock. To the extent the following description is inconsistent with prior
filings, it modifies and supersedes such filings.

NationsBank Common Stock

General. The Registrant is authorized to issue 1,250,000,000 shares of
NationsBank Common Stock, of which 384,488,669 shares were outstanding
as of January 7, 1997. NationsBank Common Stock is traded on the New York
Stock Exchange and the Pacific Stock Exchange under the trading symbol "NB."
NationsBank Common Stock is also listed on the London Stock Exchange and certain
shares are listed and traded on the Tokyo Stock Exchange. As of January 7,
1997, (i) approximately 65.3 million shares of NationsBank Common Stock were
reserved for issuance under various employee benefit plans and the directors'
stock plan of the Registrant and upon conversion of the ESOP Convertible
Preferred Stock, Series C, of the Registrant (the "NationsBank ESOP Preferred
Stock"); (ii) approximately 2.8 million shares were reserved for issuance
under the NationsBank Dividend Reinvestment and Stock Purchase Plan;
(iii) approximately 1.8 million shares were reserved for issuance upon
conversion of the NationsBank New Series A Preferred Stock;
(iv) approximately 25,000 shares were reserved for issuance upon the

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conversion of the Registrant's 6.25% Convertible Subordinated Debentures due May
1, 2011; and (v) approximately 1.5 million shares were reserved for issuance in
connection with the acquisition of First Federal Savings Bank of Brunswick,
Georgia. After taking into account the shares reserved as described above, the
number of authorized shares of NationsBank Common Stock available for other
corporate purposes as of January 7, 1997 is approximately 794 million.

Voting and Other Rights. The holders of NationsBank Common Stock are
entitled to one vote per share, and, in general, a majority of votes cast with
respect to a matter is sufficient to authorize action upon routine matters.
Directors are elected by a plurality of the votes cast, and each shareholder
entitled to vote in such election is entitled to vote each share of stock for as
many persons as there are directors to be elected. In elections for directors,
such shareholders do not have the right to cumulate their votes, so long as the
Registrant has a class of shares registered under Section 12 of the Exchange Act
(unless action is taken to provide otherwise by charter amendment, which action
management does not currently intend to propose). In general, (i) amendments to
the Registrant's Articles of Incorporation must be approved by each voting group
entitled to vote separately thereon by a majority of the votes cast by that
voting group, unless the amendment creates dissenters' rights for a particular
voting group, in which case such amendment must be approved by a majority of the
votes entitled to be cast by such voting group; (ii) a merger or share exchange
required to be approved by the shareholders must be approved by each voting
group entitled to vote separately thereon by a majority of the votes entitled to
be cast by that voting group; and (iii) the dissolution of the Registrant, or
the sale of all or substantially all of the property of the Registrant other
than in the usual and regular course of business, must be approved by a majority
of all votes entitled to be cast thereon.

In the event of liquidation, holders of NationsBank Common Stock would
be entitled to receive pro rata any assets legally available for distribution to
shareholders with respect to shares held by them, subject to any prior rights of
any the Registrant's preferred stock (as described below) then outstanding.

NationsBank Common Stock does not have any preemptive rights,
redemption privileges, sinking fund privileges or conversion rights. All the
outstanding shares of NationsBank Common Stock are validly issued, fully paid
and nonassessable.

ChaseMellon Shareholder Services, L.L.C. acts as transfer agent and registrar
for NationsBank Common Stock.

Distributions. The holders of NationsBank Common Stock are entitled to
receive such dividends or distributions as the Board of Directors of the
Registrant (the "NationsBank Board") may declare out of funds legally available
for such payments. The payment of distributions by the Registrant is subject to
the restrictions of North Carolina law applicable to the declaration of
distributions by a business corporation. A corporation generally may not
authorize and make distributions if, after giving effect thereto, it would be
unable to meet its debts as they become due in the usual course of business or
if the corporation's total assets would be less than the sum of its total
liabilities plus the amount that would be needed, if it were to be dissolved at
the time of distribution, to satisfy claims upon dissolution of shareholders who
have preferential rights superior to the rights of the


5

holders of its common stock. In addition, the payment of distributions to
shareholders is subject to any prior rights of outstanding preferred stock of
the Registrant. Share dividends, if any are declared, may be paid from
authorized but unissued shares.

Capital Guidelines. The ability of the Registrant to pay dividends in
the future is influenced by the various minimum capital requirements and the
capital and non-capital standards established under the Federal Deposit
Insurance Corporation Improvement Act of 1991.

The Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), the Office of the Comptroller of the Currency and the Federal
Deposit Insurance Corporation have issued substantially similar risk-based and
leverage capital guidelines applicable to United States banking
organizations. In addition, those regulatory agencies may from time to time
require that a banking organization maintain capital above the minimum levels,
whether because of its financial condition or actual or anticipated growth.

The Federal Reserve Board's risk-based guidelines define a two-tier
capital framework. Tier 1 capital consists of common and qualifying preferred
shareholders' equity, less certain intangibles and other adjustments. Tier 2
capital consists of subordinated and other qualifying debt, and the allowance
for credit losses up to 1.25 percent of risk-weighted assets. The sum of Tier 1
and Tier 2 capital less investments in unconsolidated subsidiaries represents
qualifying total capital, at least 50 percent of which must consist of Tier 1
capital. Risk-based capital ratios are calculated by dividing Tier 1 and total
capital by risk-weighted assets. Asset and off-balance sheet exposures are
assigned to one of four categories of risk weights, based primarily on relative
credit risk. The minimum Tier 1 capital ratio is four percent and the minimum
total capital ratio is eight percent.

The leverage ratio is determined by dividing Tier 1 capital by total
adjusted assets. Although the stated minimum ratio is three percent, most
banking organizations are required to maintain ratios of at least 100 to
200 basis points above three percent.

Covenants Restricting Dividends. Various indentures and other
instruments under which the Registrant has issued debt securities, or under
which the Registrant has assumed the obligations of such issuer, contain certain
provisions prohibiting the Registrant from paying dividends on its capital
stock, or purchasing, redeeming, or otherwise acquiring or making distributions
with respect to its capital stock if, after giving effect thereto, certain
financial conditions are not met. The Registrant believes that these provisions
will not materially affect the Registrant's ability to pay dividends on its
capital stock.

NationsBank Preferred Stock

The Registrant has authorized 45,000,000 shares of preferred stock and
may issue such preferred stock in one or more series, each with such
preferences, limitations, designations, conversion rights, voting rights,
distribution rights, voluntary and


6

involuntary liquidation rights and other rights as it may determine. The
Registrant has designated 3,000,000 shares of NationsBank ESOP Preferred Stock,
of which 2,319,060 shares were issued and outstanding as of January
7, 1997. In connection with the Merger, the Registrant designated out of its
authorized preferred stock 250,000 shares of NationsBank New Series A Preferred
Stock and 35,045 shares of NationsBank New Series B Preferred Stock
(collectively, the "NationsBank New Preferred Stock"). As of January 7, 1997,
203,087 shares of NationsBank New Series A Preferred Stock and 9,341 shares of
NationsBank New Series B Preferred Stock were issued and outstanding.

NationsBank ESOP Preferred Stock

The NationsBank ESOP Preferred Stock was first issued in the
transaction by which the Registrant was formed from the merger of NCNB
Corporation and C&S/Sovran Corporation in 1991 upon the conversion of shares of
ESOP Convertible Preferred Stock, Series C of C&S/Sovran Corporation. All shares
are held by the trustee under the NationsBank Corporation Retirement Savings
Plan (the "ESOP"). The NationsBank ESOP Preferred Stock ranks senior to the
NationsBank Common Stock, but ranks junior to the NationsBank New Preferred
Stock, with respect to dividends and distributions upon liquidation.

Preferential Rights. Shares of NationsBank ESOP Preferred Stock have no
preemptive or preferential rights to purchase or subscribe for shares of the
Registrant's capital stock of any class and are not subject to any sinking fund
or other obligation of the Registrant to repurchase or retire the series, except
as discussed below.

Dividends. Each share of NationsBank ESOP Preferred Stock is entitled
to an annual dividend, subject to certain adjustments, of $3.30 per share,
payable semiannually. Unpaid dividends accumulate as of the date on which they
first became payable, without interest. So long as any shares of NationsBank
ESOP Preferred Stock are outstanding, no dividend may be declared, paid or set
apart for payment on any other series of stock ranking on a parity with
NationsBank ESOP Preferred Stock as to dividends, unless like dividends have
been declared and paid, or set apart for payment, on the NationsBank ESOP
Preferred Stock for all dividend payment periods ending on or before the
dividend payment date for such parity stock, ratably in proportion to their
respective amounts of accumulated and unpaid dividends. The Registrant generally
may not declare, pay or set apart for payment any dividends (except for, among
other things, dividends payable solely in shares of stock ranking junior to the
NationsBank ESOP Preferred Stock as to dividends or upon liquidation) on, make
any other distribution on, or make payment on account of the purchase,
redemption or other retirement of, any other class or series of the Registrant's
capital stock ranking junior to the NationsBank ESOP Preferred Stock as to
dividends or upon liquidation, until full cumulative dividends on the
NationsBank ESOP Preferred Stock have been declared and paid or set apart for
payment when due.

Voting Rights. The holder of the NationsBank ESOP Preferred Stock is
entitled to vote on all matters submitted to a vote of the holders of
NationsBank Common Stock and


7

votes together with the holders of NationsBank Common Stock as one class. Except
as otherwise required by applicable law, the holder of the NationsBank ESOP
Preferred Stock has no special voting rights. To the extent that the holder of
such shares is entitled to vote, each share is entitled to the number of votes
equal to the number of shares of NationsBank Common Stock into which such share
of NationsBank ESOP Preferred Stock could be converted on the record date for
determining the shareholders entitled to vote, rounded to the nearest whole
vote.

Shares of the NationsBank ESOP Preferred Stock initially are
convertible into NationsBank Common Stock at a conversion rate equal to 0.84
shares of NationsBank Common Stock per share of NationsBank ESOP Preferred
Stock, and a conversion price of $42.50 per 0.84 shares of NationsBank Common
Stock, subject to certain customary anti-dilution adjustments.

Distributions. In the event of any voluntary or involuntary
dissolution, liquidation or winding-up of the Registrant, the holder of the
NationsBank ESOP Preferred Stock will be entitled to receive out of the assets
of the Registrant available for distribution to shareholders, subject to the
rights of the holders of any of the Registrant's preferred stock ranking senior
to or on a parity with the NationsBank ESOP Preferred Stock as to distributions
upon liquidation, dissolution or winding-up but before any amount will be paid
or distributed among the holders of NationsBank Common Stock or any other shares
ranking junior to the NationsBank ESOP Preferred Stock as to such distributions,
liquidating distributions of $42.50 per share plus all accrued and unpaid
dividends thereon to the date fixed for distribution. If, upon any voluntary or
involuntary dissolution, liquidation or winding-up of the Registrant, the
amounts payable with respect to the NationsBank ESOP Preferred Stock and any
other stock ranking on a parity therewith as to any such distribution are not
paid in full, the holder of the NationsBank ESOP Preferred Stock and such other
stock will share ratably in any distribution of assets in proportion to the full
respective preferential amounts to which they are entitled. After payment of the
full amount of the liquidating distribution to which it is entitled, the holder
of the NationsBank ESOP Preferred Stock will not be entitled to any further
distribution of assets by the Registrant. Neither a merger or consolidation of
the Registrant with or into any other corporation, nor a merger or consolidation
of any other corporation with or into the Registrant nor a sale, transfer or
lease of all or any portion of the Registrant's assets, will be deemed to be a
dissolution, liquidation or winding-up of the Registrant.

Redemption. The NationsBank ESOP Preferred Stock is redeemable, in
whole or in part, at the option of the Registrant, at any time. The redemption
price for the shares of the NationsBank ESOP Preferred Stock will depend upon
the time of redemption. Specifically, the redemption price for the 12-month
period that began on July 1, 1996, is $43.49 per share; on each succeeding July
1, the redemption price will be reduced by $.33 per share, except that on and
after July 1, 1999, the redemption price will be $42.50 per share, and the
redemption price may be paid in cash or shares of NationsBank Common Stock. In
each case, the redemption price also must include all accrued and unpaid
dividends to the date of redemption. To the extent that the NationsBank ESOP
Preferred Stock is treated as Tier 1


8


capital for bank regulatory purposes, the approval of the Federal Reserve Board
may be required for redemption of the NationsBank ESOP Preferred Stock.

The Registrant is required to redeem shares of the NationsBank ESOP
Preferred Stock at the option of the holder of such shares to the extent
necessary either to provide for distributions required to be made under the ESOP
or to make payments of principal, interest or premium due and payable on any
indebtedness incurred by the holder of the shares for the benefit of the ESOP.
The redemption price in such case will be the greater of $42.50 per share plus
accrued and unpaid dividends to the date of redemption or the fair market value
of the aggregate number of shares of NationsBank Common Stock into which a share
of NationsBank ESOP Preferred Stock then is convertible.

NationsBank Depositary Shares

General. The shares of NationsBank New Series A Preferred Stock are
represented by the NationsBank Depositary Shares. Each NationsBank Depositary
Share represents a 1/16th interest in a share of NationsBank New Series A
Preferred Stock. The NationsBank Depositary Shares are freely transferable under
the Securities Act, subject to certain restrictions on resales by affiliates.

The shares of the NationsBank New Series A Preferred Stock underlying
the NationsBank Depositary Shares have been deposited under a separate Deposit
Agreement, dated as of February 24, 1992, and amended January 31, 1996 (the
"Deposit Agreement") between Boatmen's and BANK IV, N.A. (the "Depositary") and,
following the closing of the Merger, are evidenced by NationsBank Depositary
Receipts. Pursuant to the Merger Agreement, the Deposit Agreement was
automatically assumed by Holdings, was assigned by it to the Registrant and
thereafter relates to the shares of NationsBank New Series A Preferred Stock
issued in the Merger. Subject to the terms of the Deposit Agreement, each owner
of a NationsBank Depositary Share is entitled, in proportion to the applicable
fractional interest in a share of NationsBank New Series A Preferred Stock
underlying such NationsBank Depositary Share, to all the rights and preferences
of the NationsBank New Series A Preferred Stock underlying such NationsBank
Depositary Share (including dividend, voting, redemption, conversion, and
liquidation rights).

Dividends and Other Distributions. The Depositary will distribute all
cash dividends or other cash distributions received in respect of the
NationsBank New Series A Preferred Stock to the record holders of NationsBank
Depositary Shares relating to such NationsBank New Series A Preferred Stock in
proportion to the numbers of such NationsBank Depositary Shares owned by such
holders on the relevant record date. The Depositary shall distribute only such
amount, however, as can be distributed without attributing to any holder of
NationsBank Depositary Shares a fraction of one cent, and any balance not so
distributed shall be added to and treated as part of the next sum received by
the Depositary for distribution to record holders of NationsBank Depositary
Shares.

In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of NationsBank
Depositary Shares entitled


9

thereto, unless the Depositary, after consultation with the Registrant,
determines that it is not feasible to make such distribution, in which case the
Depositary may, with the approval of the Registrant, sell such property and
distribute the net proceeds from such sale to such holders.

Conversion. A holder of NationsBank Depositary Shares will be able to
participate in the conversion of the NationsBank New Series A Preferred Stock as
discussed below under "NationsBank New Series A Preferred Stock." If the
NationsBank Depositary Shares represented by a NationsBank Depositary Receipt
are to be converted in part only, a new NationsBank Depositary Receipt will be
issued by the Depositary for the NationsBank Depositary Shares which are not to
be converted. No fractional shares of NationsBank Common Stock will be issued
upon conversion, and if such conversion would result in a fractional share being
issued, an amount will be paid in cash by the Registrant equal to the value of
the fractional interest, based upon the closing price of the NationsBank Common
Stock on the last business day prior to the date of conversion.

Redemption of NationsBank Depositary Shares. If the NationsBank New
Series A Preferred Stock is redeemed, the NationsBank Depositary Shares will be
redeemed from the proceeds received by the Depositary resulting from the
redemption, in whole or in part, of the NationsBank New Series A Preferred Stock
held by the Depositary. The Depositary will mail notice of redemption not less
than 30 and not more than 60 days prior to the date fixed for redemption to the
record holders of the NationsBank Depositary Shares to be so redeemed at their
respective addresses appearing in the books of the Depositary. The redemption
price per NationsBank Depositary Share will be equal to the applicable fraction
of the redemption price per share payable with respect to the NationsBank New
Series A Preferred Stock. Whenever the Registrant redeems shares of NationsBank
New Series A Preferred Stock held by the Depositary, the Depositary will redeem
as of the same redemption date the number of NationsBank Depositary Shares
relating to shares of NationsBank New Series A Preferred Stock so redeemed. If
less than all the NationsBank Depositary Shares are to be redeemed, the
NationsBank Depositary Shares to be redeemed will be selected by lot or pro rata
as may be determined by the Depositary.

After the date fixed for redemption, the NationsBank Depositary Shares
so called for redemption will no longer be deemed to be outstanding and all
rights of the holders of the NationsBank Depositary Shares will cease, except
the right to receive the moneys payable upon such redemption and any money or
other property to which the holders of such NationsBank Depositary Shares were
entitled upon such redemption upon surrender to the Depositary of the
NationsBank Depositary Receipts evidencing such NationsBank Depositary Shares.

Voting the NationsBank New Series A Preferred Stock. Upon receipt of
notice of any meeting at which the holders of the NationsBank New Series A
Preferred Stock are entitled to vote as discussed below under "NationsBank New
Series A Preferred Stock", the Depositary will mail the information contained in
such notice of meeting to the record holders of the NationsBank Depositary
Shares relating to such NationsBank New Series A Preferred Stock. Each record
holder of such NationsBank Depositary Shares on the record


10

date (which will be the same date as the record date for the NationsBank New
Series A Preferred Stock) will be entitled to instruct the Depositary as to the
exercise of the voting rights pertaining to the number of shares of NationsBank
New Series A Preferred Stock underlying such holder's NationsBank Depositary
Shares. The Depositary will endeavor, insofar as practicable, to vote the number
of shares of NationsBank New Series A Preferred Stock underlying such
NationsBank Depositary Shares in accordance with such instructions, and the
Registrant will agree to take all action which may be deemed necessary by the
Depositary in order to enable the Depositary to do so. The Depositary will
abstain from voting shares of NationsBank New Series A Preferred Stock to the
extent it does not receive specific instructions from the holders of NationsBank
Depositary Shares relating to such NationsBank New Series A Preferred Stock.

Amendment and Termination of Deposit Agreement. The form of NationsBank
Depositary Receipt evidencing the NationsBank Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Registrant, as assignee of Holdings (successor by merger with
Boatmen's), and the Depositary. Any amendment, however, which materially and
adversely alters the rights of the holders of NationsBank Depositary Shares will
not be effective unless such amendment has been approved by the record holders
of at least a majority of the NationsBank Depositary Shares then outstanding.
The Deposit Agreement may be terminated by the Registrant or the Depositary if,
among other reasons, (i) all outstanding NationsBank Depositary Shares have been
redeemed or converted into NationsBank Common Stock, or (ii) there has been a
final distribution in respect of the NationsBank New Series A Preferred Stock in
connection with any liquidation, dissolution or winding up of the Registrant and
such distribution has been distributed to the holders of the related NationsBank
Depositary Shares.

Charges of Depositary. The Registrant will pay all transfer and other
taxes and governmental charges arising solely from the existence of the Deposit
Agreement. The Registrant will pay charges of the Depositary in connection with
the initial deposit of the NationsBank New Series A Preferred Stock and any
redemption of the NationsBank New Series A Preferred Stock. Holders of
NationsBank Depositary Shares will pay other transfer and other taxes and
governmental charges and such other charges as are expressly provided in the
Deposit Agreement to be for their accounts.

Miscellaneous. The Depositary will forward to the holders of
NationsBank Depositary Shares all reports and communications from the Registrant
which are delivered to the Depositary and which the Registrant is required to
furnish to the holders of the NationsBank New Series A Preferred Stock.

Neither the Depositary nor the Registrant will be liable if it is
prevented or delayed by law or any circumstance beyond its control in performing
its obligations under the Deposit Agreement. The obligations of the Registrant
and the Depositary under the Deposit Agreement will be limited to performance in
good faith of their duties thereunder and they will not be obligated to
prosecute or defend any legal proceeding in respect of any NationsBank
Depositary Shares or NationsBank New Series A Preferred Stock unless
satisfactory indemnity is furnished. They may rely upon written advice of
counsel or


11

accountants, holders of NationsBank Depositary Shares or other persons believed
to be competent and on documents believed to be genuine.

Resignation and Removal of Depositary. The Depositary may resign at any
time by delivering to the Registrant notice of its election to do so, and the
Registrant may at any time remove the Depositary, any such resignation or
removal to take effect upon the appointment of a successor Depositary and its
acceptance of such appointment. Such successor Depositary must be appointed
within 60 days after delivery of the notice of resignation or removal and must
be a bank or trust company having its principal office in the United States and
having a combined capital and surplus of at least $50,000,000.

NationsBank New Series A Preferred Stock

The shares of NationsBank New Series A Preferred Stock rank prior to
the shares of NationsBank New Series B Preferred Stock and NationsBank ESOP
Preferred Stock as to dividends and upon liquidation.

Dividends. Holders of the NationsBank New Series A Preferred Stock will
be entitled to receive, when and as declared by the NationsBank Board, out of
assets of the Registrant legally available for payment, cash dividends at the
rate of 7.00% of the liquidation preference per annum (equivalent to $1.75 per
annum per NationsBank Depositary Share). Dividends will be calculated on the
basis of a 360-day year consisting of twelve 30-day months and will be payable
quarterly on March 1, June 1, September 1, and December 1 of each year.
Dividends on the NationsBank New Series A Preferred Stock will be cumulative
from the date of original issue. Each dividend will be payable to holders of
record as they appear on the stock register of the Registrant on the record
dates fixed by the NationsBank Board.

If at any time there are outstanding shares of any other series of
preferred stock ranking junior to or on a parity with the NationsBank New Series
A Preferred Stock as to dividends, no dividends will be declared or paid or set
apart for payment on any such other series for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for such payment on the
NationsBank New Series A Preferred Stock for all dividend payment periods
terminating on or prior to the date of payment of such dividends. If dividends
on the NationsBank New Series A Preferred Stock and on any other series of
preferred stock ranking on a parity as to dividends with the NationsBank New
Series A Preferred Stock are in arrears, in making any dividend payment on
account of such arrears, the Registrant will make payments ratably upon all
outstanding shares of the NationsBank New Series A Preferred Stock and shares of
such other series of preferred stock in proportion to the respective amounts of
dividends in arrears on the NationsBank New Series A Preferred Stock and on such
other series of preferred stock to the date of such dividend payment. Holders of
shares of the NationsBank New Series A Preferred Stock will not be entitled to
any dividend, whether payable in cash, property or stock, in excess of full
cumulative dividends.


12


Unless full cumulative dividends on all outstanding shares of the
NationsBank New Series A Preferred Stock will have been paid or declared and set
aside for payment for all past dividend payment periods, no dividends (other
than a dividend in NationsBank Common Stock or in any other stock ranking junior
to the NationsBank New Series A Preferred Stock as to dividends and upon
liquidation) will be declared upon the NationsBank Common Stock or upon any
other stock ranking junior to the NationsBank New Series A Preferred Stock as to
dividends and upon liquidation, nor will any NationsBank Common Stock or any
other stock of the Registrant ranking junior to or on a parity with the
NationsBank New Series A Preferred Stock as to dividends or upon liquidation, be
redeemed, purchased or otherwise acquired for any consideration (or any moneys
be paid to or made available for a sinking fund for the redemption of any shares
of any such stock) by the Registrant (except by conversion into or exchange for
stock of the Registrant ranking junior to the NationsBank New Series A Preferred
Stock as to dividends and upon liquidation). No interest, or sum of money in
lieu of interest, will be payable in respect of any dividend payment or payments
on the NationsBank New Series A Preferred Stock which may be in arrears.

Conversion Rights. Shares of the NationsBank New Series A Preferred
Stock are convertible at any time at the option of the holder into shares of
NationsBank Common Stock at a conversion price of $44.44 per share of
NationsBank Common Stock (equivalent to a conversion rate of approximately 0.562
share of NationsBank Common Stock for each NationsBank Depositary Share),
subject to adjustment as described below (except that a share of NationsBank New
Series A Preferred Stock that has been called for redemption will be convertible
up to and including but not after the close of business on the tenth day
preceding the date fixed for redemption).

The conversion price is subject to adjustment upon certain events,
including the issuance of NationsBank Common Stock as a dividend or distribution
on shares of NationsBank Common Stock; subdivisions, splits, combinations or
reclassifications of outstanding shares of NationsBank Common Stock; the
issuance to holders of NationsBank Common Stock generally of rights or warrants
to subscribe for NationsBank Common Stock at less than the then current market
price; or the distribution to holders of the NationsBank Common Stock of
evidences of indebtedness, assets (excluding cash dividends or distributions
payable out of consolidated earnings or earned surplus), or rights or warrants
to subscribe for securities of the Registrant other than those mentioned above.

In the case of (i) any consolidation or merger to which the Registrant
is a party (other than one in which the Registrant is the continuing corporation
and the outstanding shares of the NationsBank Common Stock are not changed into
or exchanged for stock or other securities of any other person or cash or other
property as a result of or in connection with the consolidation or merger), (ii)
a sale or conveyance of the properties and assets of the Registrant as, or
substantially as, an entirety, or (iii) any statutory exchange of securities
with another corporation, there will be no adjustment of the conversion price,
but the holder of each share of NationsBank New Series A Preferred Stock then
outstanding will have the right thereafter to convert such share into the kind
and amount of securities, cash, or other property that the holder would have
owned or been entitled to receive


13

immediately after such consolidation, merger, statutory exchange, sale or
conveyance if such share had been converted immediately before the effective
date of such consolidation, merger, statutory exchange, sale or conveyance.

Upon conversion, no adjustments will be made for accrued dividends and,
therefore, NationsBank Depositary Shares surrendered for conversion after the
record date next preceding a dividend payment date for the NationsBank New
Series A Preferred Stock and before the dividend payment date must be
accompanied by payment of an amount equal to the dividend thereon which is to be
paid on such dividend payment date (unless the NationsBank Depositary Shares
surrendered for conversion have been called for redemption prior to such
dividend payment date).

No adjustment of the conversion price will be required to be made in
any case unless the adjustment amounts to 1% or more of the conversion price,
but any adjustment not made by reason of this limitation will be required to be
carried forward cumulatively and taken into account in any subsequent
adjustments.

If at any time the Registrant makes a distribution of property to its
shareholders which would be taxable to such shareholders as a dividend for
federal income tax purposes (e.g., distributions of evidences of indebtedness or
assets of the Registrant, but generally not stock dividends or rights to
subscribe to capital stock) and, pursuant to the antidilution provisions
described above, the conversion price of the NationsBank New Series A Preferred
Stock is reduced, such reduction may be deemed to be the receipt of taxable
income by holders of the NationsBank Depositary Shares.

A holder may effect the conversion of any whole number of NationsBank
Depositary Shares (whether or not evenly divisible by sixteen) by delivering the
NationsBank Depositary Receipts evidencing such shares to the Depositary. the
Registrant will issue to the Depositary a certificate for any fractional share
of NationsBank New Series A Preferred Stock remaining unconverted.

Fractional shares of NationsBank Common Stock will not be delivered
upon conversion. Instead, a cash adjustment will be paid in respect of such
fractional interest, based on the then current market price of NationsBank
Common Stock.

Redemption. Shares of NationsBank New Series A Preferred Stock will not
be redeemable prior to March 1, 1997. Subject to obtaining the prior approval of
the Federal Reserve Board, if required, the shares of NationsBank New Series A
Preferred Stock will be redeemable at the option of the Registrant, in whole or
in part, at any time or from time to time, on and after March 1, 1997, on not
less than 30 nor more than 60 days' notice by mail, at a redemption price of
$400 per share (equivalent to $25 per NationsBank Depositary Share) plus accrued
and unpaid dividends to the redemption date.

The NationsBank New Series A Preferred Stock will not be subject to any
sinking fund or other obligation of the Registrant to redeem or retire the
NationsBank New Series A Preferred Stock.


14

At its election, the Registrant, before the redemption date, may
deposit the funds for such redemption, in trust, with a designated depositary
and authorize such depositary to complete the redemption notice, and, after such
deposit, all rights of the holders of NationsBank New Series A Preferred Stock
and related NationsBank Depositary Shares so called for redemption will cease,
except the right to receive the redemption price. As and to the extent, however,
that the Registrant or the Depositary is required or permitted under the
abandoned property laws of any jurisdiction to escheat any redemption funds held
for the benefit of any holder, the Registrant and the Depositary will be
absolved of any further liability or obligation to such holder to the full
extent provided by law. Notwithstanding the foregoing, if any dividends on the
NationsBank New Series A Preferred Stock are in arrears, no shares of
NationsBank New Series A Preferred Stock or NationsBank Depositary Shares may be
redeemed unless all outstanding shares of NationsBank New Series A Preferred
Stock are simultaneously redeemed, and the Registrant will not purchase or
otherwise acquire any shares of NationsBank New Series A Preferred Stock or
NationsBank Depositary Shares; provided, however, that the foregoing will not
prevent the purchase or acquisition of shares of NationsBank New Series A
Preferred Stock or NationsBank Depositary Shares by the Registrant pursuant to a
purchase or exchange offer made on the same terms to holders of all outstanding
shares of NationsBank New Series A Preferred Stock or NationsBank Depositary
Shares.

If a notice of redemption has been given, from and after the redemption
date for the shares of NationsBank New Series A Preferred Stock called for
redemption (unless default will be made by the Registrant in providing money for
the payment of the redemption price of the shares so called for redemption),
dividends on the NationsBank New Series A Preferred Stock so called for
redemption will cease to accrue and such shares will no longer be deemed to be
outstanding, and all rights of the holders thereof as shareholders of the
Registrant (except the right to receive the redemption price) will cease. Upon
surrender in accordance with such notice of the certificates representing any
shares so redeemed (properly endorsed or assigned for transfer, if the
NationsBank Board will so require and the notice will so state), the redemption
price set forth above will be paid out of funds provided by the Registrant. If
fewer than all of the shares represented by any such certificates are redeemed,
a new certificate will be issued representing the unredeemed shares without cost
to the holder thereof.

Liquidation Rights. In the event of any voluntary or involuntary
dissolution, liquidation, or winding up of the Registrant, the holders of the
NationsBank New Series A Preferred Stock will be entitled to receive and to be
paid out of assets of the Registrant available for distribution to its
shareholders, before any payment or distribution is made to holders of
NationsBank Common Stock or any other class of stock ranking junior to the
NationsBank New Series A Preferred Stock upon liquidation, a liquidating
distribution of $400 per share of NationsBank New Series A Preferred Stock
(equivalent to $25 per NationsBank Depositary Share) plus accrued and unpaid
dividends. After payment of the full amount of the liquidating distributions to
which they are entitled, the holders of the NationsBank New Series A Preferred
Stock will have no right or claim to any of the remaining assets of the
Registrant. If, upon any voluntary or involuntary dissolution,


15

liquidation, or winding up of the Registrant, the amounts payable with respect
to the NationsBank New Series A Preferred Stock and any other shares of stock of
the Registrant ranking as to any such distribution on a parity with the
NationsBank New Series A Preferred Stock are not paid in full, the holders of
the NationsBank New Series A Preferred Stock and of such other shares will share
ratably in any such distribution of assets of the Registrant in proportion to
the full respective distributable amounts to which they are entitled. Neither
the sale of all or substantially all the property or business of the Registrant,
nor the merger or consolidation of the Registrant into or with any other
corporation will be deemed to be a dissolution, liquidation, or winding up,
voluntary or involuntary, of the Registrant.

Voting. Except as otherwise expressly required by applicable law or as
described below, holders of the NationsBank Depositary Shares or the NationsBank
New Series A Preferred Stock will not be entitled to vote on any matter,
including but not limited to any merger, consolidation or transfer of assets,
and will not be entitled to notice of any meeting of shareholders of the
Registrant. Whenever the approval or other action of holders of the NationsBank
New Series A Preferred Stock is required by applicable law or by the NationsBank
Articles of Incorporation, each share of the NationsBank New Series A Preferred
Stock will be entitled to one vote and, except as described below, the
affirmative vote of a majority of such shares at a meeting at which a majority
of such shares are present or represented will be sufficient to constitute such
approval or other action. Holders of NationsBank Depositary Shares will be
entitled to vote the shares of NationsBank New Series A Preferred Stock which
their NationsBank Depositary Shares represent.

The affirmative vote of the holders of at least 66 2/3% of the
outstanding shares of NationsBank New Series A Preferred Stock is required to
(i) authorize, effect or validate the amendment, alteration or repeal of any
provision of the NationsBank Articles of Incorporation which would adversely
affect the preferences, rights, powers or privileges, qualifications,
limitations and restrictions of the NationsBank New Series A Preferred Stock and
(ii) create, authorize or issue, or reclassify any authorized stock of the
Registrant into, or create, authorize or issue any obligation or security
convertible into or evidencing a right to purchase any shares of any class of
stock ranking on a parity with or prior to the NationsBank New Series A
Preferred Stock in respect of dividends or distribution of assets on
liquidation.

If at any time the Registrant falls in arrears in the payment of
dividends on the NationsBank New Series A Preferred Stock in an aggregate amount
at least equal to the full accrued dividends for six quarterly dividend periods,
the number of directors of the Registrant will be increased by two and the
holders of the NationsBank New Series A Preferred Stock (and all classes of
preferred stock ranking on parity thereto), voting separately as a single class,
will have the exclusive right to elect two directors to fill the positions so
created, and such right will continue annually until all dividends in arrears
for any past dividend period have been paid in full or declared or set aside for
payment. Immediately upon the cessation of such special voting rights the terms
of the directors so elected will terminate.



16


Other Aspects. Holders of the NationsBank New Series A Preferred Stock
will have no preemptive rights. Shares of NationsBank New Series A Preferred
Stock are validly issued, fully paid and nonassessable.

NationsBank New Series B Preferred

Dividend Rights. Holders of shares of NationsBank New Series B
Preferred Stock are entitled to receive, when and as declared by the NationsBank
Board, out of any funds legally available for such purpose, cumulative cash
dividends at an annual dividend rate per share of 7% of the stated value
thereof, payable quarterly. Dividends on NationsBank New Series B Preferred
Stock will be cumulative and no cash dividends can be declared or paid on any
shares of NationsBank Common Stock unless full cumulative dividends on
NationsBank New Series B Preferred Stock have been paid, or declared and funds
sufficient for the payment thereof set apart.

Liquidation Rights. In the event of the dissolution, liquidation or
winding up of the Registrant, the holders of NationsBank New Series B Preferred
Stock will be entitled to receive, after payment of the full liquidation
preference on shares of any class of preferred stock ranking superior to
NationsBank New Series B Preferred Stock (if any such shares are then
outstanding) but before any distribution on shares of NationsBank Common Stock,
liquidating dividends of $100 per share plus accumulated dividends.

Redemption. Shares of NationsBank New Series B Preferred Stock are
redeemable, in whole or in part, at the option of the holders thereof, at the
redemption price of $100 per share plus accumulated dividends, provided, that
(i) full cumulative dividends have been paid, or declared and funds sufficient
for payment set apart, upon any class or series of preferred stock ranking
superior to NationsBank New Series B Preferred Stock; and (ii) the Registrant is
not then in default or arrears with respect to any sinking or analogous fund or
call for tenders obligation or agreement for the purchase of any class or series
of preferred stock ranking superior to NationsBank New Series B Preferred Stock.

Voting Rights. Each share of NationsBank New Series B Preferred Stock
has equal voting rights, share for share, with each share of NationsBank Common
Stock.

Superior Stock. The Registrant may, without the consent of holders of
NationsBank New Series B Preferred Stock, issue preferred stock with superior or
equal rights or preferences. The shares of NationsBank New Series A Preferred
Stock issued in the Merger rank prior to, and the NationsBank ESOP Preferred
Stock and NationsBank Common Stock rank junior to, the NationsBank New Series B
Preferred Stock as to dividends and upon liquidation.

6.25% Convertible Subordinated Debentures due May 1, 2011

General. Pursuant to the Merger Agreement, on the Effective Date, the
Registrant assumed all of Boatmen's rights and obligations under the 6.25%
Convertible Subordinated Debentures due May 1, 2011 (the "Convertible
Debentures"), which had been


17

assumed by Boatmen's at the time it acquired Centerre Bancorporation. The terms
of the Convertible Debentures are set forth in the Indenture, dated as of May 1,
1986, between Centerre Bancorporation and The Boatmen's National Bank of St.
Louis, as trustee, a copy of which appears as Exhibit E-18 to the Merger
Agreement. As a result of the Merger, the Convertible Debentures are convertible
into shares of NationsBank Common Stock in accordance with the terms and
conditions set forth in the Indenture.

Conversion. The number of shares of NationsBank Common Stock issuable
upon conversion of a Convertible Debenture is determined by (i) dividing the
principal amount to be converted by the conversion price set forth in the
Convertible Debenture in effect on the date of conversion; and then (ii)
multiplying the resulting number by the 0.6525. Pursuant to the Indenture, if
NationsBank: (i) pays a dividend or makes a distribution on NationsBank Common
Stock in the form of shares of NationsBank Common Stock; (ii) subdivides the
outstanding shares of NationsBank Common Stock into a greater number of shares;
(iii) combines the outstanding shares of NationsBank Common Stock into a smaller
number of shares; (iv) makes a distribution on NationsBank Common Stock in
shares of its capital stock other than NationsBank Common stock; or (v) issues
by reclassification of NationsBank Common Stock any shares of its capital stock,
then, the conversion privilege and conversion price in effect immediately prior
to such action will be adjusted so that the holder of a Convertible Debenture
thereafter converted may receive the number of shares of capital stock of the
Registrant that such holder would have received immediately following such
action if the holder had converted the Convertible Debenture immediately prior
to such action. The conversion price is subject to further adjustment in the
event the Registrant (i) distributes any rights or warrants to all holders of
NationsBank Common Stock entitling them, for a period expiring within 60 days of
the record date for the determination of such holders, to purchase shares of
NationsBank Common Stock at a price per share less than the current market price
per share on such record date; or (ii) distributes to all holders of NationsBank
Common Stock any of its assets or debt securities or any rights or warrants to
purchase securities of the Registrant.

In all cases, no adjustment in the conversion price of the Convertible
Debentures is required to be made unless the adjustment would require an
increase or decrease of at least 1% in the conversion price. Any adjustments
that are not made because they fail to satisfy such requirement are carried
forward and taken into account in any subsequent adjustments. In addition, no
adjustment to the conversion price is required if holders of the Convertible
Debentures are to participate in the transaction otherwise triggering an
adjustment on a basis and with notice that the NationsBank Board determines to
be fair and appropriate in light of the basis and notice on which holders of
NationsBank Common Stock participate in the transaction. No adjustment to the
conversion price is required in connection with a grant of rights to purchase
NationsBank Common Stock pursuant to a plan of the Registrant for reinvestment
of dividends or interest.

The terms of the Indenture require the Registrant to reserve and have
available, free from any preemptive rights, out of its authorized but unissued
NationsBank Common Stock or NationsBank Common Stock held in treasury enough
shares of NationsBank Common Stock to permit the conversion of the Convertible
Debentures. All shares of


18

NationsBank Common Stock issued upon conversion of the Convertible Debentures
will be fully paid and nonassessable.

Effective Law

The rights of holders of NationsBank Common Stock are dependent,
directly or indirectly, on applicable state and federal statutes and regulations
which are subject to change from time to time. The Registrant has not undertaken
to update the foregoing description in each case where such a change may affect
the rights of shareholders.

ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS

The Registrant has filed all required financial statements, pro forma
financial information and exhibits required by Item 2 hereof with the Securities
and Exchange Commission as part of the Registration Statement.


The following exhibits are filed herewith: