CAFETERIA OPERATORS LP, S-1/A, 1996-06-27

CAFETERIA OPERATORS LP
S-1/A, 1996-06-27
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As filed with the Securities and Exchange Commission on June 27, 1996
Registration No. 333-4578

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

AMENDMENT NO. 1 TO

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

CAFETERIA OPERATORS, L.P
Exact name of registrant as specified in its charter

DELAWARE 5812 75-2186655
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification Number)
incorporation or Classification Code
organization) Number)

6901 QUAKER AVENUE
LUBBOCK, TEXAS 79413
(806) 792-7151
Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices

KEVIN E. LEWIS
CAFETERIA OPERATORS, L.P
6901 QUAKER AVENUE
LUBBOCK, TEXAS 79413
806) 792-7151
Name, address, including zip code, and telephone number
including area code, of agent for service

WITH A COPY TO
PATRICK J. FOYE, ESQ
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 THIRD AVENUE
NEW YORK, NY 10022
212) 735-3000

Approximate date of commencement of proposed sale of securities to the public

From time to time after this Registration Statement becomes effective

If the securities being registered on this Form are being offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. (X)

CALCULATION OF REGISTRATION FEE

Title of Proposed Proposed
Securities Maximum Maximum Amount of
to be Amount to be Offering Price Aggregate Registration
Registered Registered Per Unit Offering Price Fee
12% Senior $42,299,505.79 100%(1) $42,299,505.79 (3)
Secured Notes
due December
31, 2001

Guarantees of $42,299,505.79 (2) (2) *
12% Senior
Secured Notes
due December
31, 2001

(1) Estimated solely for the purpose of calculating the registration fee.
(2) No separate consideration will be received for the guarantees.
(3) Previously paid in accordance with Rule 457(f).

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

CAFETERIA OPERATORS, L.P.

Cross reference Sheet Showing Location in Prospectus
of Information Required by Form S-1

Registration Statement Item Location in Prospectus

A. Information About the Transaction

1. Forepart of Registration Facing Page; Cross
Statement and Outside Front Reference Sheet; Front
Cover Page of Prospectus Cover Page

2. Inside Front and Outside Inside Front Cover Page
Back Cover Pages of
Prospectus

3. Summary Information, Risk Prospectus Summary; Risk
Factors and Ratio of Factors
Earnings to Fixed Charges

4. Use of Proceeds Use of Proceeds

5. Determination of Offering *
Price

6. Dilution *

7. Selling Security Holders Selling Security Holders

8. Plan of Distribution Plan of Distribution

9. Description of Securities Description of Notes
to be Registered

10. Interests of Named Experts Legal Matters; Experts
and Counsel

11. Information With Respect to Outside Front Cover Page;
the Registrant Available Information;
Prospectus Summary;
Background; The
Restructuring; Business;
Risk Factors; Selected
Historical Financial
Data; Management's
Discussion and Analysis
of Results of Operations
and Financial Condition;
Management; Security
Ownership of Certain
Beneficial Owners and
Management; Financial
Statements

12. Disclosure of Commission *
Position on Indemnification
for Securities Act
Liabilities

______________________

* Omitted because the item is inapplicable or the answer is
negative.

SUBJECT TO COMPLETION, PRELIMINARY PROSPECTUS DATED JUNE 27, 1996
PROSPECTUS
CAFETERIA OPERATORS, L.P.
$42,299,505.79 12% SENIOR SECURED NOTES DUE DECEMBER 31, 2001
________________________

This Prospectus relates to the public offering by the
selling security holders (the "Selling Security Holders") of
$42,299,505.79 aggregate principal amount of 12% Senior Secured
Notes due December 31, 2001 (the "Notes") of Cafeteria Operators,
L.P. (the "Company"), a Delaware limited partnership and indirect
wholly owned partnership subsidiary of Furr's/Bishop's,
Incorporated, a Delaware corporation (the "Parent"). The Notes
were originally issued by the Company pursuant to the Amended and
Restated Indenture (the "Indenture") dated as of November 15,
1995 between the Company and Fleet National Bank of Massachusetts
(f/k/a Shawmut Bank, N.A.), as trustee (the "Trustee"). The
Notes being offered hereby represent substantially all Notes issued
under the Indenture. Interest on the Notes is payable semi-
annually on March 31 and September 30 of each year, commencing
March 31, 1996. The Notes are redeemable at the option of
the Company at any time, upon not less than thirty nor more than
sixty days' notice, in whole or in part, at 103% of the principal
amount if the redemption occurs on or before September 30, 1998
and at 100% of the principal amount if the redemption occurs
after September 30, 1998, in each case together with the accrued
interest thereon to the redemption date. The Company is required
to redeem Notes from the proceeds of certain property transfers
and casualty losses which are not, within 180 days of the date of
receipt thereof, applied, in the case of transfer, to purchase
certain assets used or useful in the business of the Company, or,
in the case of casualty loss, to either repair or replace the
property that gave rise to such casualty loss. The obligations
under the Notes are secured by a security interest in
substantially all of the property and assets of the Company,
including the Company's partnership interest in Furr's/Bishop's
Specialty Group, L.P. ("Specialty"). The obligations of the
Company in respect of the Notes and the Indenture are fully and
unconditionally guaranteed by Specialty, which guarantee is
secured by a security interest in substantially all of the
property and assets of Specialty. Specialty, however, has no
material assets. The Notes rank pari passu with all existing and
future senior indebtedness of the Company. As of the date
hereof, there is no senior indebtedness outstanding. The Indenture
contains limitations with respect to the amount of additional indebt-
edness that can be incurred by the Company and its subsidiaries. The
Company, however, may obtain a revolving credit facility in the
amount of $5.0 million and, under certain circumstances, release
certain collateral, or subordinate to such facility the liens, securing
the Notes.

SEE "RISK FACTORS" ON PAGE 9 FOR A DISCUSSION OF CERTAIN
RISKS INVOLVED IN THE PURCHASE OF THE NOTES.

________________

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE
________________

The Selling Security Holders directly or through agents
dealers or underwriters may sell the Notes from time to time on
terms to be determined at the time of sale. To the extent required,
the specific Notes to be sold, the names of the Selling
Security Holders, the respective purchase prices and public
offering prices, the names of any agent, dealer or underwriter
and applicable commissions or discounts with respect to a
particular offering will be set forth in an accompanying
Prospectus Supplement or, if appropriate, a post-effective
amendment to the Registration Statement of which this Prospectus
is a part. See "Plan of Distribution." Each of the Selling
Security Holders reserves the sole right to accept or to reject,
in whole or in part, any proposed purchase of the Notes.

The Company will not receive any proceeds from this
offering but, by agreement, will pay substantially all expenses
of this offering, other than the commissions or discounts of
underwriters, dealers or agents, but including the fees and
disbursements of one counsel to certain of the Selling Security
Holders. The Selling Security Holders, and any underwriters,
dealers or agents that participate with the Selling Security
Holders in the distribution of the Notes, may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933,
as amended (the "Securities Act"), and any commissions received
by them and any profit on the resale of the Notes purchased by
them may be deemed to be underwriting commissions or discounts
under the Securities Act. See "Plan of istribution" and
"Description of Notes" for a description of indemnification
arrangements between the Company and the Selling Security Holders
and indemnification arrangements for underwriters.

THE DATE OF THIS PROSPECTUS IS JUNE [ ], 1996

NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING
MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
PURCHASE ANY SECURITY OTHER THAN THE SECURITIES OFFERED HEREBY,
NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO PURCHASE ANY SECURITIES OFFERED HEREBY TO ANY PERSON IN
ANY JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION TO SUCH PERSON. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY DISTRIBUTION OF THE SECURITIES OFFERED HEREBY
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION SET FORTH HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT
TO THE DATE HEREOF.

AVAILABLE INFORMATION

The Parent is subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy
statements, and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Parent can be
inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the regional
offices of the Commission at Citicorp Center, 500 West Madison
Street, Chicago, Illinois 60661 and Seven World Trade Center,
13th Floor, New York, New York 10048. Copies of such material
also can be obtained from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. In addition,
material filed by the Parent can also be inspected at the offices
of the New York Stock Exchange ("NYSE"), 20 Broad Street, Seventh
Floor, New York, New York 10005.

The Company has filed with the Commission a Registration
Statement on Form S-1 (together with any amendments thereto, the
"Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act") with respect to the Notes. This
Prospectus does not contain all the information set forth or
incorporated by reference in the Registration Statement and the
exhibits and schedules relating thereto, certain portions of
which have been omitted as permitted by the rules and regulations
of the Commission. For further information, reference is made to
the Registration Statement and the exhibits filed or incorporated
as a part thereof, which are on file at the offices of the
Commission and may be obtained upon payment of the fee prescribed
by the Commission, or may be examined without charge at the
offices of the Commission. Statements contained in this
Prospectus as to the contents of other documents referred to
herein are complete in all material respects, and in each
instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement or
such other document, and each such statement is qualified in all
respects by such reference.

The Indenture pursuant to which the Notes were issued
requires the Company to distribute to the Trustee and holders of
the Notes copies of quarterly, annual and current reports and of
other information, documents and other reports which the Company
is required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Exchange Act or the rules and regulations of
the Commission promulgated thereunder.

CONCURRENT FILING

The Parent has filed a separate Registration Statement
(File No. 333-4576) with the Commission under the Securities Act
with respect to up to 44,751,247 shares of common stock, par
value $.01 per share ("Common Stock"), which may be offered from
time to time for the accounts of the holders of the Common Stock.
Such holders of common stock include certain of the Selling
Security Holders. See "Background; The Restructuring."

_________________________________________________________

TABLE OF CONTENTS

Page Page

Prospectus Summary . . . . 4 Management . . . . . . . . 28
Risk Factors . . . . . . . 9 Security Ownership of Certain
Capitalization . . . . . . 12 Beneficial Owners and
Use of Proceeds . . . . . . 12 Management. . . . . . . . 33
Background; The
Restructuring . . . . . . 12 Selling Security Holders . 34
Selected Historical Financial Plan of Distribution . . . 36
Information . . . . . . . 14 Description of Notes . . . 37
Management's Discussion and Certain Relationships and
Analysis of Results Related Transactions . . 61
of Operations and Financial Legal Matters . . . . . . . 61
Financial Condition . . . 15 Experts . . . . . . . . . . 61
Business . . . . . . . . . 21 Index to Consolidated
Financial Statements . . F-1

PROSPECTUS SUMMARY

The following is a summary of certain information contained
elsewhere in this Prospectus. It is not, and is not intended to
be complete. Reference is made to, and this summary is qualified
in its entirety by, the more detailed information contained
elsewhere in this Prospectus. Unless otherwise defined,
capitalized terms used in this Summary have the meanings ascribed
to them elsewhere in this Prospectus. Prospective purchasers are
encouraged to read carefully all of the information contained in
this Prospectus in its entirety.

THE COMPANY

Cafeteria Operators, L.P., a Delaware limited partnership
(the "Company"), was formed on June 22, 1987. The Company's sole
general partner is Furr's/Bishop's, Incorporated, a Delaware
corporation (the "Parent") and its sole limited partner is
Furr's/Bishop's Cafeterias, L.P., a Delaware limited partnership
and indirect wholly owned partnership subsidiary of the Parent
("FBLP"). The principal executive offices of the Company and the
Parent are located at 6901 Quaker Avenue, Lubbock, Texas 79413,
and the telephone number is (806) 792-7151. Unless the context
otherwise requires, all references in this Prospectus to the
"Company" include the Company and its subsidiaries.

The Company is one of the largest operators of family-style
cafeteria restaurants in the United States (based on the number
of cafeterias operated). The Company believes that its
cafeterias and buffets, which are operated under the "Furr's" and
"Bishop's" names, are well recognized in their regional markets
for their value, convenience, food quality and friendly service.
The Company's 110 cafeterias and one buffet are located in
thirteen states in the Southwest, West and Midwest. The Company
also operates two specialty restaurants in Lubbock, Texas under
the name Zoo-Kini's Soups, Salads and Grill. In addition, the
Company operates Dynamic Foods, its food preparation, processing
and distribution division in Lubbock, Texas. Dynamic Foods
provides approximately 85% of the food and supply requirements of
the Company's cafeteria and buffet restaurants. Dynamic Foods
also sells pre-cut produce, bakery items, meats and seafood and
various prepared foods to the restaurant, food service and retail
markets. See "Business."

BACKGROUND; THE RESTRUCTURING

The Parent and the Company recently completed a
comprehensive restructuring of their financial obligations (the
"Restructuring"). As part of the Restructuring, the Company
executed the Amended and Restated Indenture (the "Indenture")
dated as of November 15, 1995 between the Company and Fleet
National Bank of Massachusetts (f/k/a Shawmut Bank, N.A.), as
trustee (the "Trustee"), pursuant to which, among other things,
the terms of $40.0 million aggregate principal amount outstanding
under the Company's 11% Senior Secured Notes due June 30, 1998
(the "11% Notes") issued pursuant to the Indenture dated as of
March 27, 1992 between the Company and Shawmut Bank, N.A., as
collateral agent (the "Old Indenture"), were amended, with the
consent of holders of the 11% Notes at such time (the "Original
11% Noteholders"), to constitute $40.0 million (subject to the
issuance of additional Notes in payment of the first interest
installment) aggregate principal amount of Notes issued pursuant
to the Indenture. In addition, the Company issued a Note in the
original principal amount of $1.7 million to the Trustees of
General Electric Pension Trust ("GEPT") in settlement of a $5.4
million (plus interest) judgment against FBLP. As part of the
Restructuring, Wells Fargo Bank, National Association ("Wells
Fargo") received an option to purchase 2.5% of the outstanding
Common Stock (the "Wells Fargo Option") in satisfaction of
approximately $6.1 million principal amount (plus approximately
$1.6 million of accrued and unpaid interest) of indebtedness of a
subsidiary of the Parent.

As a result of the Restructuring, indebtedness of the
Company in the amount of approximately $153 million aggregate
principal amount (plus approximately $46.6 million in accrued and
unpaid interest) outstanding under the Old Indenture was
exchanged by holders on January 2, 1996 of the 11% Notes (the
"Exchanging 11% Noteholders" and together with the Original 11%
Noteholders, the "former 11% Noteholders") for an aggregate of
95% of the limited partnership interests of the Company and the
right to put such limited partnership interests to the Parent in
exchange for 95% of the outstanding Common Stock (the "Put
Option"). In addition, outstanding warrants to purchase Common
Stock held by certain of the Exchanging 11% Noteholders were
cancelled.

On March 12, 1996, a majority of the Exchanging 11%
Noteholders exercised the Put Option and, accordingly, all
Exchanging 11% Noteholders put their limited partnership
interests to the Parent in exchange for 95% of the outstanding
Common Stock. On March 15, 1996, Wells Fargo exercised the Wells
Fargo Option, thereby becoming the beneficial owner of 2.5% of
the outstanding Common Stock. As of the date of this Prospectus,
the Exchanging 11% Noteholders no longer own any limited
partnership interests of the Company; however, they and their
successors and assigns own an aggregate of 95.0% of the outstanding
Common Stock of the Parent. See "Background; The Restructuring"
and "Risk Factors -- Ownership of the Parent."

RISK FACTORS

For a discussion of certain factors that should be
considered in evaluating an investment in the Notes, see "Risk
Factors" on page 9.

THE OFFERING

Securities Offered . . $42,299,505.79 aggregate principal amount
of 12% Senior Secured Notes due December
31, 2001 (the "Notes") held by selling
security holders (the "Selling Security
Holders"). Notes in the aggregate
principal amount of $40.0 million were
originally issued in a private placement
by the Company pursuant to the Amended
and Restated Indenture (the "Indenture")
dated as of November 15, 1995 between
the Company and Fleet National Bank of
Massachusetts (f/k/a Shawmut Bank,
N.A.), as trustee (the "Trustee"), in
exchange for 11% Notes of the Company.
A Note in the original principal amount
of $1.7 million was issued to GEPT in
settlement of a judgment and Notes in
the aggregate principal amount of
approximately $4.1 million were issued
in payment of the first interest
installment under the Indenture. The
Notes offered hereby are being offered
for sale by the Selling Security Holders
and the Company will not receive any
part of the proceeds from any sale
thereof. No additional Notes were
issued or may be issued pursuant to the
Indenture.

Interest Rate . . . . . 12% per annum, except that upon a default in
the payment of interest for thirty days or
principal at maturity, such interest rate
shall be increased to the lesser of 13% per
annum and the highest rate allowed by
applicable law.

Interest Payment Dates. January 24, 1996 and each March 31 and
September 30 thereafter, commencing on
March 31, 1996. Interest accrued from
April 1, 1995 through January 24, 1996
was paid on January 24, 1996 by the
issuance of additional Notes. All
future interest payments must be
made in cash.

Maturity Date . . . . . December 31, 2001.

Optional Redemption . . The Notes are redeemable at the option
of the Company at any time, upon not
less than thirty nor more than sixty
days notice, in whole or in part, at
103% of the principal amount if the
redemption occurs on or before September
30, 1998 and at 100% of the principal
amount of the Notes to be redeemed if
the redemption occurs after September
30, 1998, in each case together with the
accrued interest thereon to the
redemption date.

Required Redemption . . The Company is required to redeem Notes
from the proceeds of certain transfers
of property and casualty losses which
are not, within 180 days of the date of
receipt thereof, applied, in the case of
transfer, to purchase certain assets
used or useful in the business of the
Company or its subsidiaries, or, in the
case of casualty loss, to either repair
or replace the property that gave rise
to such casualty loss.

Ranking . . . . . . The Notes are senior obligations of the
Company. The obligations under the Notes are
secured by a security interest in
substantially all of the property and assets
of the Company. The Notes rank pari passu
with all existing and future senior
indebtedness of the Company. As of the
date hereof, there is no other senior indebted-
ness outstanding. The Indenture contains
limitations with respect to the amount of
additional indebtedness that can be incurred by
the Company and its subsidiaries. The Company
may obtain a revolving credit facility in the
amount of $5.0 million and, under certain
circumstances, release certain collateral,
or subordinate to such facility the liens,
securing the Notes. See "Description of the
Notes -- Security and Guaranty."

Security and Guaranty . Pursuant to the Collateral
Documents (as defined in the
Indenture), the Notes are secured
by a valid, perfected security
interest in certain assets and
property of the Company, including,
without limitation, certain real
property, inventory, equipment,
accounts receivable and
intellectual property of the
Company, and by a pledge of the
partnership interest of the Company
in and to Furr's/Bishop's Specialty
Group, L.P. ("Specialty"). The
obligations of the Company in
respect of the Notes and the
Indenture are fully and
unconditionally guaranteed by
Specialty, which guarantee is
secured by a security interest in
substantially all of the property
and assets of Specialty.
Specialty, however, has no material
assets. The liens and security
interests with respect to certain
property may be subject to prior
liens and encumbrances, including
liens which may be created to
secure a working capital facility
not exceeding $5.0 million. In
addition, collateral may be
released in connection with a
permitted sale of assets by the
Company. There can be no assurance
that the amount realized upon any
enforcement in respect of such
collateral would be sufficient to
satisfy the Company's payment
obligations in respect of the
Notes.

Covenants . . . . . . . In addition to certain customary affirmative
covenants, the Indenture contains covenants
that, among other things, restrict the
ability of the Company and each of its
subsidiaries, subject to certain exceptions
contained therein, to (i) create, incur,
assume or guarantee any indebtedness, (ii)
consolidate or merge with, or transfer
substantially all of its assets and
properties to any other person or entity,
(iii) make certain investments, (iv) make any
dividend or other distribution to the holders
of its partnership interests, make any
payment on account of the purchase,
redemption, retirement or acquisition of its
partnership interests or make any optional
prepayment of any subordinated indebtedness,
(v) create or permit to exist any liens
(other than liens securing the Notes and
certain purchase money liens) securing any
indebtedness upon certain of the properties
and assets owned by the Company or any of its
subsidiaries, or agree for the benefit of
certain other creditors to restrict its right
to create any such liens, (vi) transfer all
or any part of its assets (other than
transfers of inventory in the ordinary course
of business), (vii) enter into any
transaction with any affiliate of the Company
or any subsidiary thereof on terms that would
be less favorable than those obtained through
an arm's length negotiation with an
unaffiliated third party or (vii) permit any
subsidiary of the Company to enter into
certain agreements, restricting the
subsidiary's ability to pay dividends and
make distributions to, create or pay
indebtedness owing to or transfer any of its
property to, the Company.

Defaults and Remedies . If the Company or certain of its
subsidiaries shall (i) fail to pay
amounts due, or observe any other
covenant beyond certain grace
periods, in respect of the Notes,
the Indenture or the Credit
Documents relating thereto, (ii)
default in the payment of certain
other indebtedness or allow to
remain unpaid certain judgments,
(iii) become the subject of certain
events of bankruptcy or insolvency
or (iv) sustain uninsured
casualties in respect of certain of
their properties; or if certain
events rendering unenforceable the
obligations of the Company or the
liens granted for the benefit of
the holders of the Notes shall have
occurred and be continuing, then
the Trustee or the holders of a
majority in principal amount of the
Notes may accelerate the maturity
of the Notes, and the Trustee may
(and upon direction by holders of a
majority of the outstanding
principal amount of the Notes
shall) proceed against the
collateral securing the Notes and
pursue all other available legal
remedies.

SUMMARY FINANCIAL DATA

The following table presents, in summary form, historical
financial data derived from the audited and unaudited historical
consolidated financial statements of the Company and
subsidiaries. The interim unaudited financial statements have
been prepared pursuant to the rules and regulations of the
Commission. In management's opinion, all adjustments and
eliminations, consisting only of normal recurring adjustments,
necessary for a fair presentation of the financial statements,
have been made. The results of operations for such interim
period are not necessarily indicative of the results of
operations for the full year. The data should be read in
conjunction with the historical financial statements, and the
respective notes thereto, and "Management's Discussion and
Analysis of Results of Operations and Financial Condition,"
included elsewhere in this Prospectus. See "Selected Historical
Financial Information" and "Management's Discussion and Analysis
of Results of Operations and Financial Condition."

CAFETERIA OPERATORS, L.P. AND SUBSIDIARIES
SUMMARY FINANCIAL DATA

(Dollars in thousands)

THIRTEEN THIRTEEN
WEEKS WEEKS
ENDED ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
APRIL 2, APRIL 4, JAN. 2, JAN. 3, DEC. 28, JAN. 2, DEC. 28,
1996 1995 1996 1995 1993 1993 1991
------------ ------------ -------------- -------------- -------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:

Net Sales............ $48,817 $52,754 $210,093 $225,186 $253,700 $268,057 $267,601
Gross Profit......... 33,651 35,907 142,330 154,998 177,910 189,568 187,560
Income (Loss)
Before Interest,
Taxes and

Extraordinary Items.. 2,148 697 (10,945)a 3,860 (141,281)b 20,936 (6,394)
Net Income
(Loss) from
Continuing
Operations........... 2,084 (5,683) (37,154)a (19,710) (163,386)b (457) (24,623)
BALANCE SHEET
DATA:

Cash................. 2,026 1,833 964 1,475 2,891 8,624 7,803
Net Working
Capital
Deficiency........... (20,623) (242,160) (20,323) (237,344) (223,931) (7,139) (36,471)
Total Assets......... 86,518 103,907 86,066 103,430 111,615 257,238 250,588
Total Debt........... 77,387 192,908 78,408 226,824c 203,808c 193,014 183,293
Partners'
Capital (DefiCit).... (32,862) (165,803) (34,946) (160,120) (144,775) 22,077 (6,158)
Ratio
(Deficit) of
Earnings to Fixed
Charges.............. 2.45:1d 0.11:1 (0.42):1 0.16:1 (6.39):1 0.98:1 (0.35):1
Amount of
Coverage
Deficiency........... n/a 5,683 37,154 19,710 163,386 457 24,623

<FN>
a) Does not include a net gain of $157,619 from financial restructuring transactions in the
fourth quarter of the fiscal year ended January 2, 1996.
b) Includes a write-off of goodwill of approximately $135,208 in the fourth quarter of the fiscal
year ended December 28, 1993.
c) Includes interest subject to restructuring of $33,903 and $10,838 at January 3, 1995 and
December 28,1993, respectively.
d) Includes $1,373 interest not expensed in accordance with SFAS 15.
</TABLE>

RISK FACTORS

In considering the matters set forth in this Prospectus,
prospective investors should carefully consider, among other
things, the significant factors described below which are
associated with the Notes before making an investment in the
Notes.

CAPITAL EXPENDITURES

The Company currently plans to make significant capital
expenditures in each of the next three fiscal years to remodel
existing cafeterias, implement special programs to enhance
customer traffic and develop new restaurants. See "Business --
Capital Expenditure Program." The Company believes that its
planned capital expenditure program is necessary to enable the
Company to increase revenues and attain profitability in order to
service its remaining obligations under the Indenture. The
Indenture limits the Company's ability to make future capital
expenditures. There can be no assurance that the Company will be
able to complete its capital expenditure program, service its
financial obligations and meet the financial covenants contained
in the Indenture. See "Management's Discussion and Analysis of
Results of Operations and Financial Condition."

LEVERAGE

As of January 2, 1996, the Company's total consolidated
indebtedness was approximately $78.4 million, consisting of an
aggregate of approximately $45.5 million principal amount (plus
approximately $32.9 million interest) outstanding under the
Indenture. Pursuant to the Indenture, the Company may obtain a
revolving credit or similar facility in an amount not to exceed
$5.0 million. See "Description of Notes -- Certain Covenants --
Limitations on Indebtedness." As of January 2, 1996, the
Company's consolidated total assets were approximately $86.1
million. For fiscal years 1995, 1994 and 1993, the Company's
earnings were insufficient to cover fixed charges by
approximately $37.2 million, $19.7 million and $163.4 million,
respectively. There can be no assurance that the Company's
earnings will be sufficient to cover its fixed charges in the
future.

In addition to certain customary affirmative covenants, the
Indenture contains covenants that, among other things, restrict
the ability of the Company and each of its subsidiaries, subject
to certain exceptions contained therein, to (i) create, incur,
assume or guarantee any indebtedness, (ii) consolidate or merge
with, or transfer substantially all of its assets and properties
to any other person or entity, (iii) make certain investments,
(iv) make any dividend or other distribution to the holders of
its partnership interests, make any payment on account of the
purchase, redemption, retirement or acquisition of its
partnership interests or make any optional prepayment of any
subordinated indebtedness, (v) create or permit to exist any
liens (other than liens securing the Notes and a revolving credit
facility and certain purchase money liens) securing any
indebtedness upon certain of the properties and assets owned by
the Company or any of its subsidiaries, or agree for the benefit
of certain other creditors to restrict its right to create any
such liens, (vi) transfer all or any part of its assets (other
than transfers of inventory in the ordinary course of business),
(vii) enter into any transaction with any affiliate of the
Company or any subsidiary thereof on terms that would be less
favorable than those obtained through an arm's length negotiation
with an unaffiliated third party, or (vii) permit any subsidiary
of the Company to enter into certain agreements, restricting the
subsidiary's ability to pay dividends and make distributions to,
create or pay indebtedness owing to or transfer any of its
property to, the Company. The restrictions may limit the ability
of the Company to expand its business and take other actions that
the Parent considers to be in the best interest of the Company.
Any failure to comply with these or other covenants in such
agreements could result in a default thereunder, which in turn
could cause such indebtedness to be declared immediately due and
payable. The Company believes that any refinancing or other
indebtedness incurred by the Company or its subsidiaries would
contain financial and restrictive covenants generally similar to
those in the Indenture. See "Description of Notes -- Certain
Covenants."

The Company and its subsidiaries presently have significant
annual interest payment obligations under the Indenture. The
ability of the Company and its subsidiaries to satisfy their
respective obligations are dependent upon their future
performances, which will be subject to financial, business and
other factors affecting the business and operations of the
Company, including factors beyond the control of the Company and
its subsidiaries, such as prevailing economic conditions. Over
the long term, the Company's performance will be dependent upon,
among other things, its ability to implement successfully its
expansion strategies and control costs. See "Business -- Capital
Expenditure Program" and "Management's Discussion and Analysis of
Results of Operations and Financial Condition -- Liquidity and
Capital Resources." If the Company is unable to comply with the
terms of the Indenture and any future debt instruments and fails
to generate sufficient cash flow from operations in the future,
it may be required to refinance all or a portion of its existing
debt or to obtain additional financing. There can be no
assurance that any such refinancing would be possible or that any
additional financing could be obtained, particularly in view of
the Company's anticipated high levels of debt and the fact that a
significant portion of the Company's consolidated tangible assets
have been pledged as collateral to secure indebtedness. These
factors could have a material adverse effect on the marketability
and value of the Notes.

OWNERSHIP OF THE PARENT

As a result of the comprehensive Restructuring of the
Company and the Parent, the Selling Security Holders own
approximately 88.8% of the outstanding common stock of the
Parent. The Selling Security Holders, however, are comprised of
twelve separate holders (or groups of affiliated holders) who
are entitled to, and intend to, vote separately upon all matters
submitted to a vote of security holders of the Parent (including
any mergers, sales of all or substantially all of the assets of
the Parent or the Company and going private transactions). There
are no agreements, arrangements or understandings among any of
the Selling Security Holders concerning the voting or disposition
of any of such Common Stock or any other matter regarding the
Company or the Parent or which might be the subject of a vote of
the Parent's stockholders. Also, no Selling Security Holder (or
affiliated group of Selling Security Holders) is a beneficial
owner of more than 18% of the Common Stock; accordingly, no
single Selling Security Holder or affiliated group could itself
approve any matter regarding the Company or the Parent or which
might be the subject of a vote of the Parent's stockholders.

In addition, as a part of the Restructuring, Original 11%
Noteholders designated for nomination a majority of the members
of the Board of Directors of the Parent. These directors were
duly nominated and elected by holders of the former classes of
the Parent's capital stock at a meeting of the stockholders held
prior to the Exchanging 11% Noteholders having exercised the Put
Option. Such directors will generally have the power to direct
the Parent's operations. None of such directors, however, is
affiliated with any former 11% Noteholder or Selling Security
Holders, and there is no agreement, understanding or arrangement
among any former 11% Noteholders, Selling Security Holders or any
such director concerning any matter regarding the governance of
the Parent or the Company.

HISTORY OF OPERATING LOSSES

The Company has not reported net income since fiscal year
1990. The Company has reported net losses (before extraordinary
items) of approximately $37.2 million, $19.7 million and $163.4
million for the fiscal years 1995, 1994 and 1993, respectively.

ABSENCE OF PUBLIC MARKET

The Notes are not listed or admitted for trading on any
securities exchange or national market system, and the Company
does not anticipate obtaining any such listing or admission to
trading. At present, the Notes are owned by a small number of
institutional investors, and there is no public market for the
Notes. No assurance can be given as to the prices or liquidity
of, or trading markets for, the Notes. The liquidity of any
market for the Notes will depend upon the number of holders of
Notes, interest of securities dealers in making a market in the
Notes and other factors. The absence of any active market for
the Notes could adversely affect the liquidity of the Notes. The
liquidity of, and trading markets for, the Notes may also be
adversely affected by general declines in the market for similar
grade debt. Such declines may adversely affect the liquidity of,
and the trading markets for, the Notes, independent of the
financial performance of, and the prospects for, the Company.
Accordingly, no assurance can be given that a holder of the Notes
will be able to sell its Notes in the future or that any future
sale can be consummated at a price equal to or higher than the
price at which the Notes were originally purchased.

LEVENSON LITIGATION

On August 11, 1995, a complaint was filed in the District
Court of Travis County, Texas by former chairman of the board of
the Parent, Michael J. Levenson, both individually and on behalf
of his minor son Jonathan Jacob Levenson, James Rich Levenson,
Benjamin Aaron Levenson, S.D. Levenson, General Consulting Group,
Inc. and Cerros Morado (such lawsuit being the "Levenson
Litigation"). The complaint named as defendants the Parent, the
Company, Furr's/Bishop's Cafeterias, L.P., a Delaware limited
partnership and indirect wholly owned subsidiary of the Parent
("FBLP"), Cavalcade & Co., Inc., a dissolved Delaware corporation
and former general partner of the Company ("CCI"), individual
members of the board of directors of the Parent, Houlihan, Lokey,
Howard & Zukin, KL Park, Associates, L.P., a Delaware limited
partnership controlled by Kevin E. Lewis, Chairman, President and
Chief Executive Officer of the Parent ("KL Park"), KL Group,
Inc., a Delaware corporation controlled by Mr. Lewis ("KL
Group"), Skadden, Arps, Slate, Meagher & Flom, certain Original
11% Noteholders, Deloitte & Touche LLP, Kmart Corporation
("Kmart") and certain partners and employees of the foregoing.

The complaint alleged, among other things, that the Parent
and certain defendants conspired to wrest control of the Parent
away from the Levensons by fraudulently inducing them to transfer
their working control of the Parent through a series of
transactions in which the Levensons transferred capital stock of
the Parent and stock options in the Parent to KL Park and KL
Group. Plaintiffs initially sought actual damages of
approximately $16.4 million, as well as punitive damages. In a
Third Amended Complaint filed January 15, 1996, plaintiffs sought
an unspecified amount of actual damages, alleging only that their
actual damages claim is "no more than $400 million." The
Parent's management believes the complaint is completely without
merit and intends to defend the action vigorously.

On October 6, 1995, the Levensons filed a Notice of Non-Suit
as to certain of the defendants, including the Parent, the
Company, FBLP, CCI and specific individual members of the Board
of Directors (other than William E. Prather and Kevin E. Lewis).
As a result of such Notice of Non-Suit, the named entities and
individuals are no longer defendants in the Levenson Litigation.

The Parent and the Company are required under certain
circumstances to indemnify certain of the defendants originally
named in the Levensons' complaint, including the individual
members of the board of directors, former 11% Noteholders, KL
Group, KL Park and Kmart, from and against all claims, actions,
suits and other legal proceedings, damages, costs, interest,
charges, counsel fees and other expenses and penalties which such
entity may sustain or incur to any person whatsoever by reason of
or arising out of the Levenson Litigation. The Company is not
required to indemnify KL Group and KL Park for any judgments and
settlements in respect of the Levenson Litigation and under no
circumstances will the Company be obligated to indemnify any
party for any liability resulting from such party's willful
misconduct or bad faith. On June 7, 1996, the Company, the
Parent and Kevin E. Lewis entered into the Consulting and
Indemnity Agreement and General Release pursuant to which the
Company and the Parent agreed to release any claims it may have
against Mr. Lewis and indemnify and hold harmless Mr.
Lewis, to the fullest extent permitted by law, from and against
all judgements, costs, interest, charges, counsel fees and other
expenses relating to or in connection with any claims, actions,
suits and other proceedings by reason of or arising out of any
action or inaction by Mr. Lewis in his capacity as an officer,
director, employee or agent of the Parent and its affiliates,
including the Company, except to the extent that such claim or
indemnification arises directly from any claim or cause of action
that the Parent or its affiliates may have that relates to or
arises from Mr. Lewis' knowingly fraudulent, dishonest or willful
misconduct, or receipt of any personal profit or advantage that
he is not legally entitled to receive.

The amount of any legal fees and other expenses paid in
respect of the Levenson Litigation decreases the amount of cash
available to the Company to pay its outstanding indebtedness,
including the Notes, and other financial obligations. As of
April 2, 1996, the Company had paid approximately $960 thousand
in legal fees and other expenses in respect of the Levenson
Litigation. In addition, claims for indemnification of fees and
expenses aggregating approximately $632,828 have been submitted
to the Company by former 11% Noteholders, which, to date, have
not been paid. An adverse judgment against the Company or any of
the other defendants which the Company is required to indemnify,
a settlement by any defendant which the Company is required to
indemnify or the continued payment of substantial legal fees and
other expenses would likely have a material adverse effect
against the Company's ability to pay the interest and principal
amount of the Notes when due and payable.

CAPITALIZATION

The following table sets forth the debt and capitalization
of the Company at April 2, 1996. The information set forth below
should be read in conjunction with the Company's financial
statements appearing elsewhere in this Prospectus.

Short-term debt and current portion of long-term debt $ 5,493

Long-term debt (excluding current portion):
12% Notes, including $32,913 interest accrued through
maturity $ 71,894

Partners' Capital (Deficit) $ (32,862)

Total Capitalization $ 44,525

USE OF PROCEEDS

The Company will not receive any proceeds from the sale of
the Notes offered pursuant to this Prospectus. The Selling
Security Holders will receive all of the net proceeds from any
sale of the Notes offered hereby.

BACKGROUND; THE RESTRUCTURING

The Parent and the Company recently completed a
comprehensive restructuring of their financial obligations (the
"Restructuring"). As part of the Restructuring, the Company
executed the Amended and Restated Indenture (the "Indenture")
dated as of November 15, 1995 between the Company and Fleet
National Bank of Massachusetts (f/k/a Shawmut Bank, N.A.), as
trustee (the "Trustee"), pursuant to which, among other things,
the terms of $40.0 million aggregate principal amount outstanding
under the Company's 11% Senior Secured Notes due June 30, 1998
(the "11% Notes") issued pursuant to the Indenture dated as of
March 27, 1992 between the Company and Shawmut Bank, N.A., as
collateral agent (the "Old Indenture"), were amended, with the
consent of holders of the 11% Notes at such time (the "Original
11% Noteholders"), to constitute $40.0 million (subject to the
issuance of additional Notes in payment of the first interest
installment) aggregate principal amount of Notes issued pursuant
to the Indenture. In addition, the Company issued a Note in the
original principal amount of $1.7 million to the Trustees of
General Electric Pension Trust ("GEPT") in settlement of a $5.4
million (plus interest) judgment against FBLP and Wells Fargo
Bank, National Association ("Wells Fargo") received an option to
purchase 2.5% of the outstanding Common Stock (the "Wells Fargo
Option") in satisfaction of approximately $6.1 million principal
amount (plus approximately $1.6 million of accrued and unpaid
interest) of indebtedness of a subsidiary of the Parent.

On March 12, 1996, a majority of the Exchanging 11%
Noteholders exercised the Put Option and, accordingly, all
Exchanging 11% Noteholders put their limited partnership
interests to the Parent in exchange for 95% of the outstanding
Common Stock. On March 15, 1996, Wells Fargo exercised the Wells
Fargo Option, thereby becoming the beneficial owner of 2.5% of
the outstanding Common Stock. As of the date of this Prospectus,
the Exchanging 11% Noteholders no longer own any limited
partnership interests of the Company, however, they and their
successors and assigns own an aggregate of 95.0% of the outstanding
Common Stock of the Parent. See "Risk Factors -- Ownership of
the Company."

The Company and the Parent have agreed to indemnify and hold
harmless certain parties in the Restructuring against certain
potential claims, actions and liabilities (and related costs and
expenses, including counsel fees) in connection with the
Restructuring. The Company and the Parent are not aware of any
such claim, action or liability. In addition, the Company and
the Parent have agreed to pay, and have paid, certain expenses
(including legal fees and expenses) of the former 11% Noteholders
in connection with the Restructuring.

SELECTED HISTORICAL FINANCIAL INFORMATION

The following table presents summary historical financial
data derived from the audited and unaudited historical financial
statements of the Company and subsidiaries. The interim
unaudited financial statements have been prepared pursuant to the
rules and regulations of the Commission. In management's
opinion, all adjustments and eliminations, consisting only of
normal recurring adjustments, necessary for a fair presentation
of the financial statements, have been made. The results of
operations for such interim period are not necessarily indicative
of the results of operations for the full year. The data should
be read in conjunction with the historical financial statements
of the Company and the respective notes thereto, and
"Management's Discussion and Analysis of Results of Operations
and Financial Condition," included elsewhere in this Prospectus.

CAFETERIA OPERATORS, L.P. AND SUBSIDIARIES
SUMMARY FINANCIAL DATA

(Dollars in thousands)

THIRTEEN THIRTEEN
WEEKS WEEKS
ENDED ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
APRIL 2, APRIL 4, JAN. 2, JAN. 3, DEC. 28, JAN. 2, DEC. 28,
1996 1995 1996 1995 1993 1993 1991
----------- ------------ ------------- -------------- ------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:

Net Sales................ $48,817 $52,754 $210,093 $225,186 $253,700 $268,057 $267,601
Gross Profit............. 33,651 35,907 142,330 154,998 177,910 189,568 187,560
Income (Loss)
Before Inter- est,
Taxes and Extraordi-

nary Items............... 2,148 697 (10,945)a 3,860 (141,281)b 20,936 (6,394)
Net Income (Loss)
from Continuing

Operations............... 2,084 (5,683) (37,154)a (19,710) (163,386)b (457) (24,623)
BALANCE SHEET
DATA:

Cash..................... 2,026 1,833 964 1,475 2,891 8,624 7,803
Net Working
Capital
Deficiency............... (20,623) (242,160) (20,323) (237,344) (223,931) (7,139) (36,471)
Total Assets............. 86,518 103,907 86,066 103,430 111,615 257,238 250,588
Total Debt............... 77,387 192,908 78,408 226,824c 203,808c 193,014 183,293
Partners'

Capital (Deficit)........ (32,862) (165,803) (34,946) (160,120) (144,775) 22,077 (6,158)
Ratio (Deficit)
of Earnings to Fixed
Charges.................. 2.45:1d 0.11:1 (0.42):1 0.16:1 (6.39):1 0.98:1 (0.35):1
Amount of Coverage
Defi- ciency............. n/a 5,683 37,154 19,710 163,386 457 24,623

<FN>
a) Does not include a net gain of $157,619 from financial restructuring transactions in the
fourth quarter of the fiscal year ended January 2, 1996.

b) Includes a write-off of goodwill of approximately $135,208 in the fourth quarter of the fiscal
year ended December 28, 1993.

c) Includes interest subject to restructuring of $33,903 and $10,838 at January 3, 1995 and
December 28,1993, respectively.
d) Includes $1,373 interest not expensed in accordance with SFAS 15.
</TABLE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION

The Company's fiscal year is a 52-53 week year. Fiscal 1995
included 52 weeks and fiscal 1994 included 53 weeks. During
1993, the Company changed its fiscal year to end on the Tuesday
nearest December 31. Prior years ended on the Saturday nearest
December 31. This change resulted in fiscal 1993 ending on
December 28, 1993 and including 51 weeks and 3 days.

The following table sets forth certain statement of
operations data and restaurant data for the periods indicated
(dollars in thousands, except sales per unit):

<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
APRIL 2, 1996 APRIL 4, 1995 1995 1994 1993
------------- ------------- ---- ---- ----
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:

Sales $ 48,817 $ 52,754 $210,093 $225,186 $253,700
Costs and expenses
Cost of sales (excluding deprecia-

tion) 15,161 16,847 67,763 70,188 75,790
As a percent of sales 31.1% 31.9% 32.3% 31.2% 29.9%
Selling, general and administrative 29,154 31,870 127,000 137,604 158,190
As a percent of sales 59.7% 60.4% 60.4% 61.1% 62.4%
Depreciation and amortization 2,349 3,340 14,002 11,320 13,926
Special charges - - 12,273 2,214 11,867
Goodwill write-off - - - - 135,208
------------- ------------ ------------ ------------ ---------

Total costs and expenses 46,669 52,057 221,038 221,326 394,981
-------- -------- --------- --------- --------
Operating income (loss) 2,148 697 (10,945) 3,860 (141,281)
Interest expense 64 6,380 26,209 23,570 22,105
----------- --------- ---------- ---------- ----------
Loss before extraordinary credit $ 2,084 $ (5,683) $ (37,154) $(19,710) $(163,386)
======== ========= =========== ========= ==========

Restaurant Units in Operation:

Beginning of period 129 142 147
Opened - 1 -
Closed (14) (14) (5)
----------- ------------ ------------
End of Period 115 129 142
=========== =========== ============
Restaurant units reserved to be closed
at the end of period 2 4 13
============ ============ ============
Average weekly sales per restaurant unit
(for units open at year end and which
operated the full year) $ 32,916 $ 32,533 $ 33,970
======== ========= =========
</TABLE>

On January 2, 1996, at a special meeting of the Parent,
stockholders approved the Restructuring. A series of financial
restructuring transactions resulted in the recognition of a
$157,619 extraordinary credit in the fiscal year ended January 2,
1996.

THIRTEEN WEEKS ENDED APRIL 2, 1996

Results of operations. Sales for the first fiscal quarter
of 1996 were $48.8 million, a decrease of $3.9 million from the
same quarter of 1995. Operating income for the first quarter of
1996 was $2.1 million compared to $697 thousand in the prior
year. Net income for the first quarter of 1996 was $2.1 million
compared to a net loss of $5.7 million in the first quarter of
1995. During the first quarter of 1996, sales were negatively
impacted primarily by including fewer units in the operating
results.

Sales. Restaurant sales in comparable units were 0.3% lower
in the first quarter of 1996 than the same quarter of 1995.
Sales for the first fiscal quarter were $3.3 million lower than
the prior year due to there being 12 fewer units included in
operating results. Sales in the first quarter included $837
thousand of Dynamic Foods sales to third parties.

Cost of sales. Excluding depreciation, cost of sales was
31.1% of sales for the first quarter of 1996 as compared to 31.9%
for the same quarter of 1995. The decrease in the percentage of
revenues was the result of changes in the menu mix and lower
product costs.

Selling, general and administrative. Selling, general and
administrative ("SG&A") expense was lower in the aggregate by
$2.7 million in the first quarter of 1996 due primarily to there
being fewer units included in the operating results. SG&A
expense was $2.4 million lower than the prior year due to there
being 12 fewer units included in operating results. The change
in SG&A expense included increases of $409 thousand in salaries,
wages and related benefits, and decreases of $1.1 million in
marketing expense.

Depreciation and amortization. Depreciation and
amortization expense was lower by $991 thousand in the first
quarter of 1996 due to the reduction of certain depreciable
assets in 1995 in accordance with Statement of Financial
Accounting Standard No. 121 and the reduction in the useful lives
of certain depreciable assets in the prior year.

Interest expense. Interest expense was lower than the prior
year by $6.3 million as a result of the Restructuring. In
accordance with Statement of Financial Accounting Standard No.
15, the restructured debt was recorded at the sum of all future
principal and interest payments and there is no recognition of
interest expense thereon.

FIFTY-TWO WEEKS ENDED JANUARY 2, 1996

Results of operations. Sales for the fifty-two week fiscal
year ended January 2, 1996 were $210.1 million, a decrease of
$15.1 million from the fifty-three week fiscal year ended January
3, 1995. The operating loss for the fiscal year ended 1995 was
$10.9 million compared to income of $3.9 million in fiscal year
1994. The operating results of fiscal 1995 included special
charges of $12.3 million compared to $2.2 million in the prior
year. Net loss before extraordinary items for fiscal 1995 was
$37.2 million, compared to $19.7 million for fiscal 1994.

Sales. Restaurant sales in comparable units were 2.2% lower
in fiscal 1995 than 1994. For the units that were open for the
entire year, average weekly sales were $32,916 in fiscal 1995.
Sales in 1995 were lower than the prior year by $6.8 million as a
result of sixteen fewer units being included in the results of
operations in the current year and were lower by $2.7 million as
a result of three fewer specialty restaurants being included in
the results of operations in the current year. Sales were lower
in fiscal 1995 by approximately $3.7 million due to there being
one less week than the prior fiscal year. Sales in fiscal year
1995 included $4.6 million of Dynamic Foods sales to third
parties and $1.9 million from the two Zoo-Kini's Soups, Salads
and Grill restaurants.

Cost of sales. Excluding depreciation, cost of sales was
32.1% of sales for fiscal year 1995 compared to 31.0% for fiscal
year 1994. The increase in the percentage of sales was the
result of continued changes in the menu mix designed to improve
food quality and variety and to create a better value for the
guest.

Selling, general and administrative. SG&A expense was lower
in the aggregate by $10.6 million in fiscal year 1995 than in
fiscal year 1994. Of the decrease, $6.3 million was due to
operating results including sixteen fewer units and $2.0 million
due to operating three fewer specialty restaurants. SG&A expense
includes decreases of $2.8 million in salaries, wages and related
benefits, $3.5 million in marketing expense, including discounts,
$902 thousand in taxes, and $442 thousand in travel and related
expenses. SG&A expense includes increases of $878 thousand in
professional service expenses and $417 thousand in repair and
maintenance expenses. Corporate overhead expense in fiscal 1995
(included in the variances above) was $1.0 million lower than the
prior year.

Special charges. The loss from operations for the fiscal
year ended January 2, 1996 includes special charges of $12.3
million, which includes charges to reserves of $4.5 million
related to the closing of fourteen units, including two units to
be closed in future periods, and adjustments to the units
previously reserved. Also included is $7.8 million to recognize
the write-down of certain assets to estimated fair values in
accordance with the adoption of SFAS 121. The loss from
operations for the fiscal year ended January 3, 1995 includes
special charges of $2.7 million resulting primarily from the
closing of one buffet restaurant and one specialty restaurant and
a credit of $442 thousand related to the settlement of a lawsuit.

Depreciation and amortization. Depreciation and
amortization expense was $2.7 million higher than the prior year,
due primarily to the reduction in the estimated useful lives of
certain depreciable assets.

Interest expense. Interest expense was $2.6 million higher
than the prior year as a result of the deferral of the interest
payments that were due on dates from December 31, 1993, through
and including December 31, 1995 and the related interest thereon.

Extraordinary credit. The results of fiscal year 1995
include an extraordinary credit of $157.6 million relating to the
reduction of debt in a series of financial restructuring
transactions.

FIFTY-THREE WEEKS ENDED JANUARY 3, 1995

Results of operations. Sales for the fifty-three week
fiscal year ended January 3, 1995 were $225.2 million, a decrease
of $28.5 million from the fifty-one and one half week fiscal year
ended December 28, 1993. Operating income for fiscal year 1994
was $3.9 million compared to an operating loss of $141.3 million
in fiscal year 1993. The net loss for fiscal year 1994 was $19.7
million compared to a net loss of $163.4 million in fiscal year
1993. The losses in fiscal 1993 include the effect of the
Company's decision to write off $135.2 million of goodwill. (See
discussion below.) During fiscal year 1994, revenues were
negatively impacted by several factors including fewer units
included in the operating results, extreme winter weather early
in the year, and increased competition in the Company's major
markets and a reduced price, value oriented marketing campaign.
Fiscal 1994 revenues were positively impacted by the inclusion of
one and one half additional weeks of operating results.

Sales. The average guest count in comparable units was 5.4%
lower in fiscal year 1994 than fiscal year 1993 due, in part, to
extreme winter weather early in the year, while the average guest
ticket was 1.7% lower reflecting price reductions and value
oriented marketing. For the units that were open for the entire
year, average weekly sales were $32,533 in fiscal 1994. Sales in
1994 were lower than the prior year by $16.1 million as a result
of eighteen fewer units being included in the results of
operations in the current year. Sales were also lower by $2.8
million due to the sale of one unit and the loss of another unit
in a fire in February of 1994. Sales were lower by $2.3 million
due to the closing of one specialty restaurant and the
disposition of two others. Sales were higher in fiscal 1994 by
approximately $5.9 million due to an additional one and one half
week of operating results. Sales in fiscal year 1994 included
$3.9 million of Dynamic Foods sales to third parties, $2.7
million from the three El Paso Bar-B-Que restaurants (for the
first two quarters only) and $2.1 million from the two Zoo-Kini's
Soups, Salads and Grill restaurants.

Cost of sales. Excluding depreciation, cost of sales was
31.0% of sales for fiscal year 1994 compared to 29.7% for fiscal
year 1993. The increase in the percentage of revenues was the
result of changes in the menu mix designed to improve food
quality and variety and to create a better value for the guest.

Selling, general and administrative. Selling, general and
administrative expense was lower in the aggregate by $20.6
million in fiscal year 1994 than in fiscal year 1993. SG&A
expense in 1994 was $13.2 million lower than the prior year due
to operating results including eighteen fewer units and was lower
by $1.8 million due to operating results including three fewer
specialty restaurants during the year. SG&A was also lower than
in fiscal year 1993 by $1.6 million due to the sale of one unit
and the loss of another unit in a fire in 1994. The change in
SG&A expense also included increases of $688 thousand from one
additional Zoo-Kini unit and $1.6 million in salaries, wages and
related benefits, and supplies and taxes were higher in the
aggregate by $495 thousand. Marketing expense was $3.0 million
lower than the prior year, professional fees were lower by $2.0
million and moving, travel, public relations, insurance and
utility expenses were lower by an aggregate of $1.4 million.
Corporate overhead expense in fiscal year 1994 (included in the
variances above) was $2.3 million lower than the prior year.
SG&A expense in fiscal 1993 was offset in part by a gain of $1.3
million related to the termination of a lease agreement.

Special Charges. The loss from operations for the fiscal
year ended January 3, 1995 includes special charges of $2.7
million resulting primarily from the decision to close one buffet
restaurant and one specialty restaurant and adjustments to units
previously reserved to be closed. Also included is a credit of
$442 thousand related to the settlement of a lawsuit previously
filed against the Company by the Internal Revenue Service.

The operating results of fiscal 1993 include special charges
aggregating $11.9 million. These charges include approximately
$8.0 million related to store closings, $1.5 million of estimated
operating and financial restructuring costs, $385 thousand for
writing down the values of certain non-operating assets, $741
thousand of estimated costs related to certain lawsuits, $761
thousand for writing down the values of certain operating assets
and $515 thousand for severance amounts payable to the former
Chairman of the Board.

Goodwill. After a careful analysis of the Company's
financial condition, as part of management's periodic review of
the carrying amount of goodwill, the Company determined at the
end of fiscal 1993, based upon historical operating trends, and
without anticipating the effects of any potential restructuring
of its debts and other obligations, that its projected results
would not support the future recovery of the Company's goodwill
balance of $135.2 million. Accordingly, the Company wrote off
its goodwill balance in the fourth quarter of 1993.

Depreciation and amortization. Depreciation and
amortization expense was lower by $2.6 million in fiscal year
1994 due primarily to the elimination of goodwill amortization at
the end of fiscal 1993.

Interest expense. Interest expense was higher than the
prior year by $1.5 million primarily as a result of the deferral
of the interest payments that were due on December 31, 1993,
March 31, 1994, June 30, 1994, September 30, 1994 and December
31, 1994 and the related interest thereon.

NEW ACCOUNTING PRONOUNCEMENTS

In October 1995, the Financial Accounting Standards Board
adopted Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"), which
requires companies to adopt a method of accounting for valuing
compensation attributable to stock options. SFAS 123 is
effective for fiscal years beginning after December 15, 1995. As
allowed under the provisions of SFAS 123, the Company has elected
to continue accounting for such compensation as provided by
Accounting Principles Board Opinion No. 25, which will not have
any effect on the Company's consolidated financial statements,
except for additional disclosure.

Effective January 2, 1996, the Company adopted the
provisions of Statement of Financial Accounting Standards No.

121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" ("SFAS 121") and recorded a
special charge of $7.8 million to recognize the write-down of
certain assets in property, plant and equipment to estimated fair
value, based on expected future cash flows. SFAS 121 requires
that long-lived assets and certain identifiable intangibles be
reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may
not be recoverable.

LIQUIDITY AND CAPITAL RESOURCES

During fiscal 1995, cash provided from operating activities
of the Company was $9.9 million compared to $7.0 million in 1994.
Cash used for the payment of interest was approximately $36
thousand in 1995 compared to $242 thousand during 1994. On
December 30, 1993, $10.6 million of interest that was due
December 31, 1993, was deferred until January 15, 1995 and
remained unpaid until such interest was forgiven in partial
exchange for limited partnership interests issued to Exchanging
11% Noteholders in the Restructuring on January 2, 1996. Also,
$10.6 million of interest payments due on June 30, 1994, December
31, 1994, June 30, 1995 and December 31, 1995 were unpaid or
deferred until the Restructuring on January 2, 1996. The Company
made capital expenditures of $8.0 million during 1995 compared to
$5.7 million during 1994. Cash, temporary investments and
marketable securities were $964 thousand at January 2, 1996
compared to $1.5 million at January 3, 1995. The cash balance at
both dates included $800 thousand which was restricted pursuant
to collateral requirements in a letter of credit agreement. The
current ratio of the Company was .30:1 at January 2, 1996
compared to .049:1 at January 3, 1995. The Company's total
assets at January 2, 1996 aggregated $86.1 million compared to
$103.4 million at January 3, 1995.

The Company's restaurants are a cash business. Funds
available from cash sales are not needed to finance receivables
and are not generally needed immediately to pay for food,
supplies and certain other expenses of the restaurants.
Therefore, the business and operations of the Company have not
historically required proportionately large amounts of working
capital, which is generally common among similar restaurant
companies. Should Dynamic Foods continue to expand its sales to
third parties, the accounts receivable and inventory related to
such sales could require the Company to maintain additional
working capital.

The Company has outstanding $78.4 million of 12% Notes due
December 31, 2001, including $32.9 million of accrued interest.
Under the terms of the 12% Notes, a semi-annual cash interest
payment of approximately $2.7 million is due on each March 31 and
September 30. The obligations of the Company under the 12% Notes
are secured by a security interest in and a lien on substantially
all of the personal property of the Company and mortgages on all
fee (but not leasehold) real properties of the Company. See
"Description of Notes." Such liens and security interests may be
subject to prior liens and encumbrances, including liens which
may be created to secure a working capital facility not exceeding
$5.0 million. The Indenture limits the Company's ability to
incur debt for working capital requirements and to finance
capital expenditures. The restrictions may limit the ability of
the Company to expand its business and take other actions that
the Parent considers to be in the best interest of the Company.

The Company intends to pursue a program of remodeling
existing cafeterias, opening new restaurants, and possibly
acquiring existing restaurants or food service companies. The
Company anticipates expending approximately $9 million in fiscal
1996 to remodel existing cafeterias and open new restaurants and
to make other capital expenditures. No assurance can be given
that the Company will generate sufficient funds from operations
or obtain alternative financing sources to enable it to make the
anticipated capital expenditures.

The Company, the sponsor of the Cavalcade Pension Plan, has
agreed to provide for funding at least two-thirds of the $4.6
million of the unfunded current liability which existed at the
end of fiscal 1992 by the end of 1998. If the agreed upon
funding is not satisfied by the minimum required annual
contributions, as adjusted for the deficit reduction contribution
and determined under Section 412 of the Internal Revenue Code,
the Company will make contributions in excess of the minimum
annual requirement.

On November 15, 1993, the Company entered into the Amendment
to Master Sublease Agreement, dated as of December 1, 1986, with
Kmart pursuant to which, among other things, the aggregate
monthly rent for the period August 1, 1993 through and including
December 31, 1996 was reduced by 25%, or approximately $1.6
million annually, and the aggregate monthly rent for the period
January 1, 1997 through and including December 31, 1999 was
reduced by 20%, or approximately 1.2 million annually; provided
that, during such period, among other things, Kevin E. Lewis
remains as Chairman of the Board of the Company. On June 7,
1996, the Company entered into an agreement with Mr. Lewis
pursuant to which Mr. Lewis will resign as Chairman of the Board
on December 31, 1996, unless requested by the Board of Directors
to continue until December 31, 1997. See "Management --
Executive Compensation -- Employment and Consulting
Arrangements."

BUSINESS

GENERAL

The Company is one of the largest operators of family-style
cafeteria restaurants in the United States. The Company believes
that its cafeterias and buffet, which are operated under the
"Furr's" and "Bishop's" names, are well recognized in their
regional markets for their value, convenience, food quality and
friendly service. The Company's 110 cafeterias and one buffet
are located in thirteen states in the Southwest, West and
Midwest. The Company also operates two specialty restaurants in
Lubbock, Texas under the name Zoo-Kini's Soups, Salads and Grill.
In addition, the Company operates Dynamic Foods, its food
preparation, processing and distribution division in Lubbock,
Texas. Dynamic Foods provides in excess of 85% of the food and
supply requirements of the Company's cafeteria and buffet
restaurants. Dynamic Foods also sells pre-cut produce, bakery
items, meats and seafood and various prepared foods to the
restaurant, food service and retail markets.

FAMILY DINING DIVISION

The Family Dining Division consists of the Company's 110
cafeterias and one pay-at-the-door buffet-style restaurant.

Cafeterias. Cafeterias occupy a long standing niche in the
food service industry, providing the customer with a pleasant,
moderately-priced alternative to fast-food chains and
conventional full-service restaurants. The Company's cafeterias
offer a wide variety of meals appealing to a broad range of
personal tastes, including chicken, beef, fish and pasta entrees;
soup, salad and vegetable choices; non-alcoholic beverages; and
freshly baked pies and cakes. The food is prepared for serving
by the individual cafeteria. The Company's cafeterias are
generally characterized by quick service and modest prices per
guest. Guest tickets for the fiscal years ended January 2, 1996
and January 3, 1995 averaged approximately $5.14 and $5.06,
respectively. The Company's cafeterias average approximately
10,000 square feet in size and have average seating capacity for
approximately 300 guests. Virtually all of the Company's
cafeterias feature "All-You-Can-Eat" at a fixed price all day,
every day, as well as the traditional "a la carte" pricing
alternative.

Management believes that the "Furr's" and "Bishop's" names
are widely recognized in their regional markets. Management's
emphasis on consistent food quality, variety, cleanliness and
service has led to a loyal guest base. The Company's customer
base consists principally of people over 45 years of age,
shoppers, working people and young families.

The Company considers its cafeteria business to be a
relatively mature business, but believes that earnings growth can
be achieved through successful implementation of its cost
control, remodeling, marketing and growth strategies. Since the
fourth quarter of fiscal 1992, the Company has undertaken
programs to increase cafeteria traffic by remodeling existing
cafeterias and repositioning the cafeteria concept to attract a
wider array of customers. The Company believes that for a
relatively modest capital investment of approximately $100,000 to
$150,000 per unit, it can freshen the appearance of an existing
cafeteria and thereby enhance its customer appeal. An average
cafeteria remodeling project lasts for a four to six week period
and can typically be accomplished without closing the restaurant.

Virtually all cafeterias offer the choice of "All-You-Can-
Eat" and "a la carte" pricing options. As a result, customers
choose the pricing and dining format which they find most
attractive. The Company's goal is to be the value leader in its
segment. The Company has also introduced "Kids' Bars" to all of
its cafeterias and buffets. The "Kids' Bar" is a free-standing
service area at which children under 10 may serve themselves, on
child-size plates, from foods selected to appeal directly to
children. The Company believes that the installation of "Kids'
Bars" increases the attractiveness of the Company's cafeterias
and buffet to younger family diners.

Buffet. The Company's buffet-style restaurant features
traditional American and ethnic foods at a fixed price that
entitles each guest to unlimited servings of all menu items and
beverages. Food items are served in a "scatter bar" format at
buffet islands centrally located in the restaurant's food service
area. The "scatter-bar" buffet format emphasizes customer choice
by allowing customers to select at their own pace in self
selected portions, thereby improving the restaurant experience
for the guest. The buffet unit is approximately 10,000 square
feet in size and has seating capacity for approximately 300
guests. Guest tickets for the fiscal years ended January 2, 1996
and January 3, 1995 averaged approximately $5.26 and $5.12,
respectively.

ZOO-KINI'S SOUPS, SALADS AND GRILL

The Company's two Zoo-Kini's Soups, Salads and Grill
restaurants are located in Lubbock, Texas. The concept has
appealed to younger age groups than the cafeterias and is
particularly well-liked by high school and college students, as
well as baby boomers. Zoo-Kini's Soups, Salads and Grill
restaurants are known for an extensive Soup, Salad and Potato
Bar, as well as a selection of healthy grilled items and
specialty foods. Selected specials are added to the menu on a
daily basis. Zoo-Kini's Soups, Salads and Grill restaurants
offer full table service and serve several varieties of wine and
beer as well as flavored cappuccino and espresso. Mixed drinks
are available, but do not represent a significant portion of
sales. There is no bar area in either restaurant, but an outdoor
patio area at one location with seating for 55 serves as a bar
during the warmer months.

Zoo-Kini's Soups, Salads and Grill restaurants are known for
the signature neon animals in their windows and a large interior
mural emphasizing wildlife themes. Zoo-Kini's Soups, Salads and
Grill restaurants are currently approximately 4,700 square feet
in size and have seating capacity for 135-200 guests. Guest
tickets for the fiscal years ended January 2, 1996 and January 3,
1995 averaged approximately $5.96 and $5.78, respectively.

MARKETING AND ADVERTISING

The Company's marketing program utilizes a variety of media
to attract customers to the Company's restaurants and to create a
targeted image for the Company's restaurants. First, the Company
utilizes point of sale advertising within its restaurants, to
focus customers on the various food items and promotions being
offered at the restaurant. Billboard advertising, newspaper and
direct mail programs within the communities in which the Company
has a large presence are used to direct customers to the
Company's restaurants and to promote specific programs, including
the one-price "All-You-Can-Eat" concept. Radio and television
advertisements are also used by the Company to enhance its image
with respect to food quality and value pricing and to support and
introduce new concepts or programs at its restaurants. The
Company frequently uses all of its marketing tools together to
introduce or promote one concept or program. In addition, store
managers and other personnel are encouraged to participate in
local public relations and promotional efforts.

DYNAMIC FOODS

The Company operates Dynamic Foods, a food preparation,
processing and distribution facility in Lubbock, Texas which
supplies in excess of 85% of the food and supply requirements of
the Company's family dining restaurants, providing the Company
with uniform quality control and the ability to make volume
purchases. In addition, management believes that there is
significant potential for utilizing the available excess capacity
at Dynamic Foods by increasing sales to third parties of pre-cut
produce and other prepared foods.

Dynamic Foods prepares and processes approximately 250
separate food items, including over 50 salad and other fresh
vegetable offerings under the "Dynamic Foods" and "Furr's Carry
Out Kitchen" labels. Currently, approximately 90% of Dynamic
Food's manufacturing output is used at the Company's restaurants
and the remainder is sold to third parties.

In 1993, Dynamic Foods commenced third party sales of pre-
cut produce, meats and seafood, bakery goods and other prepared
foods and entrees. In fiscal years 1993, 1994 and 1995, third
party sales by Dynamic Foods aggregated $1.7 million, $3.9
million and $4.6 million, respectively.

RESTAURANT MANAGEMENT

The success of each restaurant's operation is largely
dependent upon the quality of in-store management and mid-level
supervisory management. Experienced and well trained in-store
management is important to assure good service, quality food and
the cleanliness of each restaurant, to control costs, and to
monitor local eating habits and traffic.

Each cafeteria and buffet is operated under the supervision
of a general manager, a food and beverage manager and one or two
associate managers. Each cafeteria generally employs between 40
and 70 workers of whom approximately 33% are part-time workers.
The buffet-style restaurant typically employs fewer persons as
the "scatter-bar" concept reduces service staffing requirements.

The general managers of the Company's family dining
restaurants report to twelve regional managers who report to the
Vice President, Field Operations, who reports to the Chief
Executive Officer of the Company. The general managers have
responsibility for day-to-day operations, including food
ordering, labor scheduling, menu planning, customer relations and
personnel hiring and supervision. The regional managers visit
each restaurant regularly and work with the in-store managers to
evaluate maintenance of overall operating standards. They also
make quality control checks, train personnel in operating
procedures and evaluate procedures developed by cafeteria and
buffet personnel for possible use in all Company owned family
dining units.

The management team for a Zoo-Kini's Soups, Salads & Grill
restaurant consists of one general manager and two or three
assistant managers. Each specialty restaurant employs a high
proportion of part-time hourly employees, most of whom work for
an average hourly wage significantly less than employees earn at
cafeterias and buffets, due to the larger possible tip income at
the restaurants. Working in concert with the general managers,
the Company's senior management defines operational and
performance objectives for each specialty restaurant.

SERVICE MARKS AND TRADEMARKS

The Company utilizes and is dependent upon certain
registered service marks, including "Furr's Cafeterias" and
"Bishop Buffets", and a stylized "F" trademarked by Furr's. The
Company has applied for trademark registration for its Zoo-Kini's
Soups, Salads and Grill restaurants as well as its Dynamic Foods
manufacturing division. Other trademarks are current and are
renewable on dates ranging from July 1996 to February 2008. The
Company is not aware of any party who could prevail in a contest
of the validity of such service marks and trademarks. In October
1994, the Company licensed the use of its "El Paso Bar-B-Que
Company" and related trademarks to M&B Restaurants, L.C. under a
License and Development Agreement. The agreement requires M&B
Restaurants, L.C. to pay royalties and new unit opening fees on
25 units required to be opened over the term of the agreement.
The Notes are secured by a security interest in all material service
marks and trademarks of the Parent and the Company, including those
which have been licensed.

SEASONALITY

Customer volume on a Company-wide basis at most established
restaurants is generally somewhat lower in the winter months, due
primarily to weather conditions in certain of the markets for the
Company's restaurants. As a consequence, the first and fourth
quarters of the year historically produce lower sales and results
of operations. A harsh winter season has a negative effect on
the Company's revenues, results of operations and liquidity.

WORKING CAPITAL REQUIREMENTS

The Company's restaurants are a cash business. Funds
available from cash sales are not needed to finance receivables
and are generally not needed immediately to pay for food,
supplies and certain other expenses of the restaurants.
Therefore, the business and operations of the Company have not
historically required proportionately large amounts of working
capital, which is generally common among similar restaurant
companies. Should Dynamic Foods continue to expand its sales to
third parties, the accounts receivables and inventory related to
such sales could require it to maintain additional working
capital. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital
Resources."

COMPETITION

The food service business is highly competitive in each of
the markets in which the Company's restaurants operate and is
often affected by changes in consumer tastes, economic conditions
and demographic and local traffic patterns. In each area in
which the Company's restaurants operate, there is a large number
of other food service outlets including other cafeterias, buffets
and fast-food and limited-menu restaurants which compete directly
and vigorously with the Company's restaurants in all aspects,
including quality and variety of food, price, customer service,
location and the quality of the overall dining experience.

Neither the Company nor any of its competitors has a
significant share of the total food service market in any area in
which the Company competes. The Company believes that its
principal competitors are other cafeterias and buffets;
moderately-priced, conventional restaurants, fast-food outlets,
and eat-at-home alternatives. Many of the Company's competitors,
including its primary cafeteria and buffet competitors, have
greater financial resources, lower total debt-to-equity ratios
and lower debt costs than does the Company. The Company competes
with other food service outlets for management personnel based on
salary, opportunity for advancement and stability of employment.
The Company believes it offers existing and prospective
management personnel an attractive compensation and benefits
package with opportunity for advancement in a stable segment of
the food service industry.

The food manufacturing and distribution business is highly
competitive and many of Dynamic Foods' competitors are large
regional or national food processors and distributors with
significantly greater financial resources than the Company.
Accordingly, there can be no assurance that Dynamic Foods will be
able to penetrate the food distribution market or generate
significantly higher revenue or increase the profitability of the
Company.

CAPITAL EXPENDITURE PROGRAM

During the fiscal years ended January 2, 1996, January 3,
1995 and December 28, 1993, the Company expended $8.0 million,
$5.7 million and $15.7 million, respectively, principally to
maintain and remodel existing cafeterias, convert selected units
to buffets or specialty formats and improve the facility operated
by Dynamic Foods. The Company believes that the aggregate level
of capital expenditures over such period has been below that
required to expand the Company's cafeteria operations and to
remodel existing cafeterias as required by competitive conditions
in the restaurant industry. The Company's capital expenditure
program is necessary to enable the Company and its subsidiaries
to increase their revenue and profitability.

Subject to its ability to generate necessary funds from
operations or to obtain funds from other sources, the Company
intends to pursue an active program of remodeling existing
restaurants and opening new restaurants. The Company anticipates
expending approximately $9 million in each of fiscal years 1996
and 1997 to open new restaurants, remodel existing cafeterias and
make other capital expenditures. No assurance can be given that
the Company will generate sufficient funds from operations or
obtain alternative financing to enable it to make the desired
capital expenditures. The Company's ability to open new
restaurants will also depend, among other things, upon its
ability to secure appropriate store locations on favorable terms
and to identify, hire and train personnel for expansion. See
"Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources."

EMPLOYEES

As of March 13, 1996, the Company employed approximately
6,400 persons, of whom approximately 4,000 were employed on a
full-time basis. The Company employed approximately 400 persons
as managers or assistant managers of its restaurants, twelve
persons as regional managers and approximately 75 persons in
executive, administrative or clerical positions in the corporate
office. None of the Company's employees are covered by
collective bargaining agreements. The Company believes that its
relations with its employees are satisfactory.

The majority of the Company's restaurants pay average wages
in excess of the current minimum wage standards. However, any
future increase in the federal minimum wage could have the effect
of increasing the Company's labor costs. In recent years, the
market for those employees who have traditionally been employed
in the restaurant industry has become increasingly competitive
due to fewer persons entering this category of wage earner and
the increased government regulation of immigrants entering and
working in the United States. In response to this decrease in
the available labor pool, the Company has increased its average
hourly wage and expanded its hiring and training efforts.

REGULATION

The Company's restaurants are subject to numerous federal,
state and local laws affecting health, sanitation, waste water,
fire and safety standards, as well as to state and local
licensing regulating the sale of alcoholic beverages.

The Federal Americans With Disabilities Act prohibits
discrimination on the basis of disability in public
accommodations and employment. Such Act became effective as to
public accommodations and employment in 1992. Because of the
absence of comprehensive regulations thereunder, the Company is
unable to predict the extent to which the Act may affect the
Company; however, the Company could be required to expend funds
to modify its restaurants in order to provide service to, or make
reasonable accommodations for the employment of, disabled
persons.

The Company believes that it is in substantial compliance
with applicable laws and regulations governing its operations.

PROPERTIES AND RESTAURANT LOCATIONS

The following table sets forth the number of restaurants
that the Company operates in certain states as of March 28, 1996.

STATE NUMBER OF RESTAURANTS

Arkansas 2
Arizona 8
California 5
Colorado 10
Iowa 7
Illinois 2
Kansas 8
Missouri 3
Nebraska 1
New Mexico 15
Nevada 2
Oklahoma 11
Texas 39
113

Site Selection. The Company generally intends to open new
restaurants or reposition existing restaurants in markets in
which the Company's restaurants are presently located and in
adjacent markets, in order to improve the Company's competitive
position and increase operating margins by obtaining economies of
scale in merchandising, advertising, distribution, purchasing and
supervision. The primary criteria considered by the Company in
selecting new locations are a high level of customer traffic,
convenience to both lunch and dinner customers in demographic
groups that tend to favor the Company's restaurants, and the
occupancy cost of the proposed restaurant. The ability of the
Company to open new restaurants depends on a number of factors,
including its ability to find suitable locations and negotiate
acceptable leases, its ability to attract and retain a sufficient
number of qualified restaurant managers, and the availability of
sufficient financing. The Company actively and continuously
attempts to identify and negotiate leases for additional new
locations.

Properties. Fifty-four of the Company's restaurants are
leased from third parties, another 34 are subleased under a
master sublease agreement, 16 are owned and are situated on land
leased from third parties and nine are owned in fee simple. Most
of the leases have initial terms of from 10 to 20 years and
contain provisions permitting renewal for one or more specified
terms at specified rental rates. Some leases provide for fixed
annual rent plus rent based on a percentage of sales. The
average restaurant contains approximately 10,000 square feet and
seats approximately 300 guests.

Dynamic Foods' food manufacturing and distribution facility
contains approximately 175,000 square feet and is situated on
approximately 24 acres owned in fee simple by the Company in
Lubbock, Texas. In addition, a grocery warehouse of
approximately 36,000 square feet, a truck terminal of
approximately 7,200 square feet and a sales office of
approximately 4,000 square feet are located adjacent to the
distribution facility.

The Company's executive offices in Lubbock, Texas consist of
approximately 34,000 square feet situated on approximately three
acres of land owned in fee simple by the Company. The Company
believes that its properties will be adequate to conduct its
current operations for the foreseeable future.

The Company leases one property from a third party and seven
under a master sublease, owns eight buildings situated on land
leased from third parties and owns three buildings on land owned
in fee simple, which are not used in the Company's restaurant
business and are periodically leased to third parties.

The Company, from time to time, considers whether
dispositions of certain of its assets, including real estate
owned in fee simple and leasehold interests, or potential
acquisitions of assets would be beneficial or appropriate for the
long-term goals of the Company and in order to increase
stockholder value.

LEGAL PROCEEDINGS

(1) The Internal Revenue Service (the "Service") has
examined the federal income tax returns of certain subsidiaries
of the Parent, including (i) Cavalcade Foods, Inc. ("CFI") (for
the tax years ended December 31, 1986, 1987, 1988, and 1989),
(ii) Cavalcade Holdings, Inc. (for the tax years ended June 30,
1985, 1986, 1987, 1988, 1989 and 1990), (iii) CFI as successor in
interest to Bishop Buffets, Inc. (for the tax period ended
December 27, 1986), (iv) CFI as successor in interest to Furr's
Cafeterias, Inc. (for the period December 27, 1986), and (v) CCI
(for the tax years ended December 31, 1987, 1988 and 1989).

The Service has asserted federal income tax deficiencies of
up to $5.5 million plus interest from the date such amounts were
deemed payable, with respect to several of the above tax returns.
Petitions have been filed to dispute the claims. No trial date
has been set at this time.

(2) On August 11, 1995, a complaint was filed in the
District Court of Travis County, Texas by former chairman of the
board of the Parent, Michael J. Levenson, both individually and
on behalf of his minor son Jonathan Jacob Levenson, James Rich
Levenson, Benjamin Aaron Levenson, S.D. Levenson, General
Consulting Group, Inc. and Cerros Morado. The complaint named as
defendants the Parent, the Company, Furr's/Bishop's Cafeterias,
L.P., Cavalcade & Co., individual members of the Board of
Directors, Houlihan, Lokey, Howard & Zukin, Inc., KL Park, KL
Group, Skadden, Arps, Slate, Meagher & Flom, certain of the then
current and certain Original 11% Noteholders, Deloitte & Touche
LLP, Kmart and certain partners and employees of the foregoing.

PARTNERSHIP AGREEMENT

Pursuant to the Company's Partnership Agreement, subject to
certain circumstances, the Parent, as sole general partner, has
the power to, among other things, (i) make and enter into
contracts on behalf of the partnership, (ii) compromise claims in
favor of or against the partnership, (iii) make or revoke any
election for tax purposes, (iv) do all acts necessary or
appropriate for the preservation of the partnership's assets, (v)
make distributions and allocations to the partners, (vi) execute
documents or instruments to carry out the purposes of the
partnership, (vii) file state income tax returns, (viii) invest
partnership funds, (ix) select and dismiss employees, (x) borrow
money on behalf of the partnership, (xi) commence or defend
litigation, (xii) sell, transfer or assign assets of the
partnership and (xiii) enter into leases for real or personal
property. The Company may not, without the consent of the
limited partners, (i) sell, transfer or assign substantially all
of the partnership's assets, (ii) approve an amendment to the
Partnership Agreement and (iii) change the name of the
partnership.

The Parent, as sole general partner of the Company and sole
general partner of FBLP (FBLP being the sole limited partner of
the Company) may in its absolute discretion from time to time
amend any term of the Partnership Agreement.

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The Parent is the general partner of the Company. As the
sole general partner of the Company, the Parent will generally
have the exclusive right, responsibility and discretion in the
management and control of the Company. See "Business --
Partnership Agreement."

The names and ages of all current directors and executive
officers of the Parent are set forth below. The business address
of each of the directors and executive officers listed below is
c/o Furr's/Bishop's, Incorporated, 6901 Quaker Avenue, Lubbock,
Texas 79413. Pursuant to an agreement with the Company and the
Parent, Kevin E. Lewis will resign as President and Chief
Executive Officer by September 30, 1996 and Chairman of the Board
on December 31, 1996, unless requested by the Board of Directors
to continue until December 31, 1997. See "Management --
Executive Compensation -- Employment and Consulting
Arrangements." The Board of Directors has begun a search for an
individual to serve as President and Chief Executive Officer of
the Company.

Name Age Position

DIRECTORS:

Russell A. Belinsky 36 Director
Suzanne Hopgood 47 Director
Kevin E. Lewis 31 Chairman, President and Chief
Executive Officer
Gilbert C. Osnos 66 Director
Kenneth F. Reimer 56 Director
Sanjay Varma 42 Director
E.W. Williams, Jr. 69 Director

OTHER EXECUTIVE OFFICERS:

Donald M. Dodson 58 Vice President, Operations Services
Jim H. Hale 54 Vice President, Field Operations
Alton R. Smith 43 Executive Vice President

Russell A. Belinsky has been Managing Director of Chanin and
Company since 1990. The company is a specialty investment
banking firm, providing a wide range of services to middle market
companies in the area of financially distressed situations,
mergers and acquisitions and private placements. Mr. Belinsky is
currently a director of Fairfield Communities, Inc., one of the
leading vacation ownership companies.

Suzanne Hopgood has served as President of the Hopgood Group
since founding the company in 1985. The company provides
consulting and brokerage services to clients with hotel
investments.

Kevin E. Lewis was elected Chairman of the Board of the
Parent on June 24, 1993 and President and Chief Executive Officer
of the Parent in July 1994. Prior to serving as Chairman of the
Board, Mr. Lewis was a managing director in the New York office
of Houlihan, Lokey, Howard & Zukin, Inc., an investment banking
firm, where he had previously served as a Senior Vice President

(December 1991 - April 1993), Vice President (1989 - 1991) and
Associate (1988 - 1989). Mr. Lewis was a director of the LVI
Group, Inc. from December 1991 to May 1993 and has been a
director of Robertson-Ceco Corporation since July, 1993.

Gilbert C. Osnos has been President of Gilbert C. Osnos &
Co., Inc. since 1981, and a partner in Grisanti Galef & Osnos
Associates since 1981. Mr. Osnos was a director of the
Turnaround Management Association from 1988 to 1993 and was a
director of Trivest Financial Services Corporation and Reprise
Capital from 1989 to 1991. Mr. Osnos has also served on the
Board of Directors of Mrs. Fields, Inc. since 1983 and American
Mirrex since March 1996.

Kenneth F. Reimer has been Chairman and CEO of Reimer
Enterprises, Inc., since 1993. Mr. Reimer was a director of S A
Holdings, Inc. from 1993 to 1995. Prior to that, Mr. Reimer was
CEO, President and a director of Roma Corporation from 1984 to
1993.

Sanjay Varma has been a partner in Crescent Real Estate
Equities, Ltd. since 1994. Mr. Varma was Executive Vice
President of Walt Disney Company, responsible for the Euro Disney
Resort from 1989-1994 and Walt Disney World Resorts from 1986-
1989. Prior to 1986, Mr. Varma was Area Vice President of Food &
Beverage for the Marriott Hotels where he worked for eight years.

E.W. Williams, Jr. is Chairman of the Board of the Citizens
Bank in Slaton, Texas and Bank of Commerce in McLean, Texas;
Chairman of the Executive Committee of the Hale County State
Bank, Plainview, Texas and First National Bank in Clayton, New
Mexico. Mr. Williams is also Chairman of LubCo BancShares, Inc.,
HaleCo BancShares, Inc., GrayCo BancShares, Inc. and Union
Bancshares, Inc. and is Chairman of the Board of Coyote Lake
Feedyard, Inc., Muleshoe, Texas. Mr. Williams has held each of
these positions for longer than five years. Mr. Williams was
previously a director and executive committee member of the Texas
Tech University President's Council; founder of the West Texas
A&M University President's Council, and was previous director of
the Southern Methodist University Foundation and Alumni
Association. Mr. Williams also served as Chairman of the
Amarillo Hospital District. Mr. Williams currently has farming
and ranching interests in Garza County and Bailey County, Texas.

Donald M. Dodson has been Vice President of Operations
Services since 1993 and was formerly Vice President Food and
Beverage from 1990 until 1993. He was Vice President of
Operations from 1987 to 1990. Mr. Dodson joined the Company in
1958 and managed several cafeterias before becoming a District
Manager in 1968.

Jim H. Hale has been Vice President of Field Operations
since April 1996 and was formerly Regional Vice President of
Operations from 1975. Mr. Hale joined the Parent in 1964 and
managed several cafeterias before being promoted to regional
management.

Alton R. Smith has been Executive Vice President of the
Company since 1993, Secretary since 1995 and was formerly
Executive Vice President and Chief Financial Officer from 1989
until 1993. He was Vice President and Controller between 1986
and 1989. Prior to 1986, Mr. Smith served as Controller and
Assistant Secretary from 1985 until 1986. Mr. Smith was
Assistant Controller and Assistant Secretary from 1982 to 1985,
Director of Taxation from 1978 to 1982 and Tax Manager from 1974
to 1978. He is a certified public accountant and joined the
Company in 1974.

EXECUTIVE COMPENSATION

Shown below is information concerning the annual and long-
term compensation for services in all capacities to the Parent,
the Company and their subsidiaries for the fiscal years ended
January 2, 1996, January 3, 1995 and December 28, 1993 for those
persons who were, at January 2, 1996 (i) the chief executive
officer and, (ii) the four other most highly compensated
executive officers of the Parent, the Company and their
subsidiaries for the 1995 fiscal year (the "Named Officers"):

SUMMARY COMPENSATION TABLE
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
AWARDS PAYOUTS
STOCK LONG-TERM
NAME AND PRINCIPAL OPTIONS INCENTIVE ALL OTHER
POSITION YEAR SALARY BONUS OTHER (SHARES) PAYOUTS COMPENSATION
-------- ---- ------ ----- ----- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Kevin E. Lewis 1995 406,539 50,000 - - - -
Chairman, 1994 463,400 42,000 - - - -
President and
Chief Executive 1993 251,853(a) - - - - -
Officer

Alton Smith 1995 120,994 5,000 - - - -
Executive 1994 121,500 - - - - -
Vice President 1993 121,500 - - 15,000 - -

Jim Hale 1995 106,474 19,000 - - - -
Regional 1994 100,000 8,395 - - - -
Vice President 1993 91,250 21,047 - - - -

Donald M. 1995 120,994 2,500 - - - -
Dodson
Vice President 1994 125,000 10,000 - - - -
Operations 1993 135,563 - - - - -
Services

Kenneth Rue 1995 116,154 3,390 - - - -
Regional 1994 120,000 8,438 - - - -
Vice President 1993 114,695 19,136 - - - -

<FN>
- --------------------------
(a) The salary of Mr. Lewis includes a partial year beginning June, 1993.
</TABLE>

Option Grants

No grants of stock options were made during the fiscal year
ended January 2, 1996 to the Named Officers which are reflected
in the Summary Compensation Table. No stock appreciation rights
were granted during fiscal 1995.

Option Exercises and Fiscal Year-End Values

At January 2, 1996, there were no options outstanding. All
options that had been granted to executive officers in prior
years had terminated either by the termination of the employee or
by agreement between the Parent and the holders of the options.

Certain Compensation Plans

The Parent has a qualified defined benefit pension plan (the
"Pension Plan") covering employees and former employees of the
Company and its affiliates, including those who were participants
in the Kmart Corporation Employees' Retirement Pension Plan (the
"Kmart Pension Plan"). The Pension Plan assumed all of the
obligations of the Kmart Pension Plan relating to benefits that
accrued for employees and former employees of certain of the
Parent's subsidiaries through the consummation of the acquisition
of such subsidiaries from Kmart. Kmart agreed to transfer an
amount of plan assets equal to the actuarially computed
accumulated benefits applicable to the Parent's employees in the
Kmart Pension Plan.

Benefits for service prior to 1987 were based on the
provisions of the Kmart Pension Plan and are frozen for such
service. Effective December 31, 1988, the Pension Plan was
frozen for highly compensated participants and effective June 30,
1989 benefit accruals of all participants in the Pension Plan
were frozen indefinitely.

The Pension Plan covers all employees who are at least 21
years old and have one year or more of participation service and
is integrated with Social Security. A participant's benefit
under the Pension Plan will be the greater of (i) a benefit
provided by the participant's "cash balance account" (as defined
below), or (ii) the sum of (x) the participant's accrued benefit
under the Kmart Pension Plan plus (y) for each year of service
after 1986, 0.75% of the participant's "considered pay" (as
defined below) for the year plus (z) 0.75% of considered pay
exceeding the Social Security integration level for the year.
"Considered pay" is comprised of total W-2 compensation,
excluding extraordinary items, such as moving expenses and
imputed income, and including pre-tax amounts deferred under the
Employees' Savings Plan described below. The Social Security
integration level is one-half of the Social Security Taxable Wage
Base for the year, rounded to the next highest $1,000. A
participant's cash balance account will contain an amount equal
to the sum of (i) 2% of 1986 considered pay multiplied by the
number of years of benefit service prior to 1987, plus (ii) 2% of
considered pay for each year thereafter, plus (iii) 6% interest
per annum. The normal form of benefit under the Pension Plan
will be a life annuity for an unmarried participant and a 50%
joint and survivor annuity in the case of a married participant.
Alternatively, participants may elect an optional form of payment
which is the actuarial equivalent of the life annuity.
Participants are fully vested in accrued benefits under the
Pension Plan after five years of vesting service. Unreduced
benefits are payable at age 65, or, if earlier, when age plus
years of service equals ninety.

The following table shows the amounts payable using the
pension plan formula and the benefits accrued under the
predecessor plans.

Approximate Annual Pension at Age 65*

Current Total Service As of 12/31/88
Compensation 5 Years 15 Years 25 Years 35 Years

$ 75,000 $ 3,700 $ 9,500 $15,400 $21,400
100,000 5,000 13,500 21,800 30,100
125,000 6,300 17,300 28,000 38,600
150,000 7,700 21,100 34,200 47,200
175,000 9,000 25,000 40,300 55,700
200,000 10,400 28,800 46,500 64,200
225,000 11,700 32,600 52,700 72,800
325,000 17,000 48,300 77,800 94,023

* Estimates of frozen pension plan benefits.

The total plan years of service at June 30, 1989 (the date
benefit accruals were frozen) of the five Named Officers of the
Parent and its subsidiaries are Kevin E. Lewis 0, Alton R. Smith
15, Donald M. Dodson 31, Jim H. Hale 26, and Kenneth B. Rue 26.
If Mr. Smith, Mr. Dodson, Mr. Hale and Mr. Rue were to retire on
their respective retirement dates, they would receive monthly
payments of $848, $3,265, $2,027 and $2,401, respectively.

The Company established an Employees 401K Plan which is
qualified under Sections 401(a) and 401(k) of the Code (the "401K
Plan"). Under the 401K Plan, participants may elect to make pre-
tax contributions, in an amount equal to from 1% to 12% of
"considered pay", which consists of total W-2 compensation for
personal services, excluding extraordinary pay, such as moving
expenses and imputed income. Pre-tax contributions were limited
to $9,240 in 1995. Additionally, the Company may make
discretionary contributions to the 401K Plan. Employees will be
eligible to participate in the 401K Plan at age 21 with one year
of participation service.

Participants' contributions are always fully vested. The
Board of Directors of the Parent will either designate the Parent
and the Company contributions as fully vested when made, or the
Parent and the Company contributions will be subject to a vesting
schedule under which 100% of the Parent and the Company
contributions are vested after seven years. Employee
contributions may be invested either in a fixed income fund,
consisting of guaranteed interest contracts and government
securities, or five different equity funds with various growth
and income objectives. Loans from participants' pre-tax accounts
are permitted after two years of participation.

Participants may generally receive their vested account
balances at the earlier of retirement or separation from service.

Non-employee directors of the Parent receive a fee of $1,500
per month and $1,000 per board meeting attended as compensation
for their services. In addition, non-employee directors who are
members of any Committee of the Board receive $500 for each
meeting attended. Notwithstanding the foregoing, non-employee
director compensation shall not exceed $30,000 in any fiscal
year.

The Board of Directors of the Parent adopted, and on January
2, 1996 the stockholders approved, the 1995 Stock Option Plan
authorizing an aggregate of 40,540,795 shares of common stock
(the "1995 Option Plan"). After giving effect to the reverse
stock split, there are 2,702,720 shares of common stock reserved
for issuance pursuant to the 1995 Option Plan. A Committee of
the Board of Directors administers the 1995 Option Plan,
including determining the employees to whom awards will be made,
the size of such awards and the specific terms and conditions
applicable to awards, such as vesting periods, circumstances of
forfeiture and the form and timing of payment. Grants including
stock options, stock appreciation rights and restricted stock may
be made to selected employees of the Parent and its subsidiaries
and non-employee directors of the Parent. There are no options
outstanding under the 1995 Option Plan.

Employment and Consulting Arrangements

On January 25, 1995, each of Kevin E. Lewis, Alton R. Smith,
Donald M. Dodson, Carlene Stewart, John R. Egenbacher and Danny
K. Meisenheimer entered into an employment agreement with the
Parent and the Company pursuant to which he or she shall be paid
an annual base salary of $420,000, 125,000, 125,000, 115,000,
115,000 and 95,000, respectively, for the period ending January
25, 1996. If such persons' employment shall be terminated by the
Parent without cause or by such employee under certain
circumstances, the Parent shall pay to such employee his or her
annual base salary in effect on the date of termination for the
then remaining term in a lump sum payable on the date of
termination. On June 16, 1995, the board of directors voted to
extend the agreements for the individuals set forth above, except
Kevin E. Lewis, at his request, until a date six months after the
consummation of the Restructuring. As a result, the termination
date on the remaining employment agreements is July 2, 1996 and
Mr. Lewis's agreement expired by its terms on January 25, 1996.

On June 7, 1996, the Company, the Parent and Kevin E. Lewis
entered into the Consulting and Indemnity Agreement and General
Release (the "Consulting Agreement") pursuant to which, among
other things, Mr. Lewis will resign as President and Chief
Executive Officer by September 30, 1996 and Chairman of the Board
on December 31, 1996, unless requested by the Board of Directors
to continue until December 31, 1997. After his resignation as
President and Chief Executive Officer, Mr. Lewis will serve as a
consultant to the Company until December 31, 1997. Pursuant to
the Consulting Agreement, Mr. Lewis will receive an annual base
salary of $350,000 pro-rated through the end of 1996 and $250,000
through the end of 1997. Mr. Lewis received $75,000 upon the
execution of the Consulting Agreement and is entitled to receive
$75,000 when he resigns as President and Chief Executive Officer
and $100,000 on December 31, 1997. In addition, Mr. Lewis is
entitled to receive $100,000 if requested to assist in certain
negotiations on behalf of the Company and additional compensation
based upon the success of such negotiations. Furthermore, the
Company agreed to pay, among other things, certain legal expenses
of Mr. Lewis incurred in connection with the negotiation of the
Consulting Agreement and certain travel and moving related
expenses. The Board of Directors has begun a search for an
individual to serve as President and Chief Executive Officer of
the Company.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The Company is a Delaware limited partnership. Its sole
general partner is the Parent and its sole limited partner is
FBLP, an indirect wholly owned partnership subsidiary of the
Parent. The following table sets forth certain information, as
of June [ ], 1996, with respect to beneficial ownership of each
stockholder known by the Parent to be the beneficial owner of
more than five percent of its equity securities.

NAME AND ADDRESS OF NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES COMMON STOCK

Teachers Insurance and
Annuity Association of
America
730 Third Avenue
New York, NY 10011 8,607,637 17.7

The Equitable
Companies, Incorporated
1345 Avenue of the
Americas
New York, NY 10105 8,499,857 17.5

John Hancock Mutual
Life Insurance Company
P.O. Box 111
Boston, MA 02117 5,477,994 11.3

The Northwestern Mutual
Life Insurance Company
720 East Wisconsin
Avenue
Milwaukee, WI 53202 5,471,679 11.2

The Mutual Life
Insurance Company
of New York
1740 Broadway
New York, NY 10019 4,105,339 8.4

Principal Mutual Life
Insurance Company
711 High Street
Des Moines, IA 50392 3,286,701 6.8

Rock Finance, L.P.
1560 Sherman Avenue
Evanston, IL 60201 2,998,860 6.2

SC Fundamental Value
Fund, L.P.
712 5th Avenue
New York, NY 10019 2,949,620(1) 6.1

_______________
(1) Excludes 1,502,322 shares held by SC Fundamental Value BVI
Ltd. Gary N. Siegler and Peter M. Collery, controlling
persons of the general partner of the SC Fundamental Value
Fund, L.P. and the investment manager of the SC Fundamental
Value BVI Ltd., may be deemed to be beneficial owners of all
shares held of record by such entities.

The following table sets forth certain information, as of
June [ ], 1996, with respect to beneficial ownership of each
director, certain officers and all officers and directors as a
group. Unless otherwise indicated the business address of each
director and executive officer is 6901 Quaker Avenue, Lubbock,
Texas 79413.

NAME AND ADDRESS OF NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES COMMON STOCK

Russell A. Belinsky 0 0.0
Donald M. Dodson 2,063(1) *
Jim H. Hale 5,764(2) *
Suzanne Hopgood 0 0.0
Kevin E. Lewis 837,032(3) 1.7
Gilbert C. Osnos 0 0.0
Kenneth F. Reimer 0 0.0
Alton Smith 696(4) *
Sanjay Varma 0 0.0
E.W. Williams, Jr. 44,934(5) 0.1

All officers and
directors as a
group 900,813(6) 1.8

* Owns less than 0.1%
(1) Includes warrants to purchase 1,319 shares of common stock
at $1.11 per share.
(2) Includes warrants to purchase 3,691 shares of common stock
at $1.11 per share.
(3) Includes warrants to purchase 535,827 shares of common stock
at $1.11 per share.
(4) Includes warrants to purchase 445 shares of common stock at
$1.11 per share.
(5) Includes warrants to purchase 28,765 shares of common stock
at $1.11 per share.
(6) Includes warrants to purchase 573,342 shares of common stock
at $1.11 per share.

SELLING SECURITY HOLDERS

The following table provides certain information with
respect to the Notes held by each Selling Security Holder.
Except as otherwise noted in this Prospectus, none of the Selling
Security Holders listed below has had a material relationship
within the past three years with the Company or its subsidiaries,
other than as a result of the ownership or placement of the
Notes. As a result of the comprehensive Restructuring of the
Company and the Parent, Selling Security Holders own
approximately 88.8% of the outstanding common stock of the Parent.
See "Security Ownership of Certain Beneficial Owners and
Management." Since the Selling Security Holders may sell all or
some of their Notes, no estimate can be made of the aggregate
amount of the Notes that are to be offered hereby or that will be
owned by each Selling Security Holder upon completion of the
offering to which this Prospectus relates.

The Selling Security Holders are comprised of twelve
separate holders (or groups of affiliated holders) who are
entitled to, and intend to, vote separately upon all matters
submitted to a vote of security holders of the Parent (including
any mergers, sales of all or substantially all of the assets of
the Parent or the Company and going private transactions). There
are no agreements, arrangements or understandings among any of
the Selling Security Holders concerning the voting or disposition
of any of such Common Stock or any other matter regarding the
Company or the Parent or which might be the subject of a vote of
the Parent's stockholders. Also, no Selling Security Holder (or
affiliated group of Selling Security Holders) is a beneficial
owner of more than 18% of the Common Stock; accordingly, no
single Selling Security Holder or affiliated group could itself
approve any matter regarding the Company or the Parent or which
might be the subject of a vote of the Parent's stockholders.

In addition, as a part of the Restructuring, Original 11%
Noteholders designated for nomination a majority of the members
of the Board of Directors of the Parent. These directors were
duly nominated and elected by holders of the former classes of
the Parent's capital stock at a meeting of stockholders held
prior to the Exchanging 11% Noteholders having exercised the Put
Option. Such directors will generally have the power to direct
the Parent's operations. None of such directors, however, is
affiliated with any former 11% Noteholder or Selling Security
Holders, and there is no agreement, understanding or arrangement
among any former 11% Noteholders, Selling Security Holders or any
such director concerning any matter regarding the governance of
the Parent or the Company. See "Risk Factors -- Ownership of the
Parent."

The Notes offered by his Prospectus may be offered from time
to time by the Selling Security Holders named below:

Aggregate Amount of
Notes Beneficially
Owned and Being
Name Registered
Teachers Insurance and Annuity $8,177,438.84
Association of America
The Equitable Companies, Incorporated $8,075,045.42
John Hancock Mutual Life Insurance $5,204,211.54
Company
The Northwestern Mutual Life Insurance $5,198,212.13
Company
The Mutual Life Insurance Company $3,900,158.95
of New York
Principal Mutual Life Insurance Company $3,122,435.77
SC Fundamental Value Fund, L.P. $2,802,201.25
Trustees of General Electric $1,866,033.33
Pension Trust
SC Fundamental Value BVI Ltd. $1,427,237.67
The Ohio National Life Insurance Company $ 935,048.67
Century Life of America $ 908,477.67
Mark Zucker $ 227,669.07
BT Holdings (New York), Inc. $ 455,335.40

Equitable Real Estate, an affiliate of The Equitable
Companies, Incorporated, is the owner of seven properties in
Illinois, Iowa and South Dakota which are leased by the Company.
The aggregate amount paid by the Company to Equitable Real Estate
in respect of periodic rental installments during fiscal 1995 was
$641,402.97. Northwestern Mutual Life Insurance Company is a 50%
partner in Champion Investors, which owns property in Champaign,
Illinois which was leased by the Company. The aggregate amount
paid by the Company to Champion Investors in respect of periodic
rental installments during fiscal 1995 was $54,374.65. Such lease
was terminated on December 31, 1995. Each of such leases was entered
into by the Company and the respective affiliate or related person of
such Selling Security Holder prior to the acquisition by such Selling
Security Holder of any equity interest in the Company or the Parent
in connection with Restructuring, and each such lease was negotiated
at arm's length on terms no less favorable to the Company than would
have obtained from unrelated landlord.

PLAN OF DISTRIBUTION

The Company will receive none of the proceeds from this
offering. The Notes may be sold from time to time to purchasers
directly by any of the Selling Security Holders. Alternatively,
the Selling Security Holders may from time to time offer the
Notes through underwriters, brokers, dealers or agents, pursuant
to (a) a block trade in which a broker or dealer will attempt to
sell the Notes as agent but may position and resell a portion of
the block as principal to facilitate the transaction, (b)
purchases by a broker or dealer as principal and resale by such
broker or dealer for its account pursuant to this prospectus or
(c) ordinary brokerage transactions and transactions in which the
broker or dealer solicits purchasers. In effecting such sales,
underwriters, brokers or dealers engaged by the Selling Security
Holders may arrange for other brokers or dealers to participate
in the resales. Such sales may be effected at market prices and
on terms prevailing at the time of sale, at prices related to
such market prices, at negotiated prices or at fixed prices. In
addition, the Selling Security Holders may engage in hedging or
other similar transactions, and may pledge the Notes being
offered, and, upon default, the pledgee may effect sales of the
pledged Notes pursuant to this prospectus. Underwriters,
brokers, dealers and agents may receive compensation in the form
of underwriting discounts, concessions or commissions from the
Selling Security Holders or the purchasers of Notes for whom they
may act as agent. The Selling Security Holders and any
underwriters, dealers or agents that participate in the
distribution of Notes may be deemed to be "underwriters" within
the meaning of the Securities Act and any profit on the sale of
Notes by them and any discounts, commissions or concessions
received by any such underwriters, dealers or agents might be
deemed to be underwriting discounts and commissions under the
Securities Act.

There is currently no public market for the Notes. The
Company does not currently anticipate listing the Notes on any
stock exchange. Therefore, any trading that does develop with
respect to the Notes will occur in the over-the-counter market.
The Company has not been advised by any broker or dealer that it
intends to make a market in the Notes.

At the time a particular offering of Notes is made, a
Prospectus Supplement or a post-effective amendment to the
Registration Statement, if required, will be distributed which
will set forth the aggregate amount and type of Notes being
offered and the terms of the offering, including the name or
names of any underwriters, dealers or agents, any discounts,
commissions and other terms constituting compensation from the
Selling Security Holders and any discounts, commissions or
concessions allowed or reallowed or paid to dealers.

To comply with the securities laws of certain jurisdictions,
if applicable, the Notes will be offered or sold in such
jurisdictions only through registered or licensed brokers or
dealers. In addition, in certain jurisdictions the Notes may not
be offered or sold unless they have been registered or qualified
for sale in such jurisdictions or an exemption from registration
or qualification is available and is complied with.

There is no assurance that the Selling Security Holders will
sell any of the Notes. In addition, any Notes covered by this
prospectus which qualify for sale pursuant to Rule 144 under the
Securities Act may be sold pursuant to Rule 144 rather than
pursuant to this prospectus.

Pursuant to the Exchange Agreement (the "Exchange
Agreement") dated as of November 15, 1995 between the Parent, the
Company and former 11% Noteholders, some of which are Selling
Security Holders, the Company will pay the expenses of former 11%
Noteholders incident to the offering and sale of the Notes to the
public, other than commissions, concessions and discounts of
underwriters, dealers or agents, but including the fees and
disbursements of one counsel to such Selling Security Holders.
In addition, the Company has agreed to indemnify the Selling
Security Holders, and, if requested, any underwriter they may
utilize, against certain civil liabilities, including liabilities
under the Securities Act and, if such indemnification is
unavailable, to contribute to payments required to be made by any
of them in respect of such liabilities. The Exchange Agreement
requires the Company to keep the registration statement of which
this prospectus is a part continuously effective until the
earlier of (a) , 1999, and (b) the date upon which
all Notes have either (i) been disposed of under this prospectus,
(ii) been distributed to the public pursuant to Rule 144 or Rule
145 under the Securities Act, (iii) been otherwise transferred
and subsequent disposition of them shall not require registration
or qualification of them under the Securities Act or any similar
state law then in force, or (iv) ceased to be outstanding.

DESCRIPTION OF NOTES

The following is only a summary of the material terms of the
Notes, does not purport to be a full description thereof and is
qualified in its entirety by reference to the Indenture, the
Notes and the other exhibits to the Indenture (including certain
terms defined in such documents), copies of which have been filed
as exhibits to the Registration Statement of which this
Prospectus is a part. See "Available Information." The terms of
the Notes include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of
1939, as in effect on the date of the Indenture (the "Trust
Indenture Act"). The definitions of the material terms used
herein are set forth in "Definitions" contained elsewhere in this
Prospectus.

GENERAL

Notes in the aggregate principal amount of $40.0 million
were originally issued in a private placement by the Company
pursuant to the Indenture in exchange for the 11% Notes of the
Company. In addition, a Note in the original principal amount of
$1.7 million was issued to GEPT in settlement of a judgment
against FBLP. On January 24, 1996, approximately $4.1 million
aggregate principal amount of Notes were issued in payment of the
first interest installment under the Indenture. No additional
Notes may be issued pursuant to the Indenture and all future
payments of interest must be made in cash. The maturity date of
the Notes is December 31, 2001. The Notes offered hereby are
being offered for sale by the Selling Security Holders and the
Company will not receive any part of the proceeds from any sale
thereof.

The Notes are issuable only in registered form without
coupons in denominations of one thousand dollars ($1,000) and any
integral multiple thereof, except as necessary to reflect
principal amounts not evenly divisible by one thousand dollars
($1,000). As provided in the Indenture and subject to certain
limitations therein, the Notes are exchangeable for a like
aggregate principal amount of Notes of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any registration of transfer
or exchange or redemption of Notes, but the Company may require
payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.

INTEREST

The Notes bear interest at 12% per annum, except that upon a
default in the payment of interest for thirty days or principal
at maturity, such interest rate shall be increased to the lesser
of 13% per annum and the highest rate allowed by applicable law.
Interest on the Notes is payable semi-annually on March 31 and
September 30. Interest on the Notes shall be computed on the
basis of a 360-day year of twelve 30-day months. Interest on the
Notes which is payable, and is punctually paid by the Company to
the Trustee or duly provided for, on any Interest Payment Date
shall be paid by the Trustee to the Person in whose name the
Notes are registered at the close of business on the Regular
Record Date for such interest. On January 24, 1996,
approximately $4.1 million aggregate principal amount of Notes
were issued in payment of the first interest installment. No
additional Notes are issuable under the Indenture and all future
interest payments shall be made in cash.

OPTIONAL REDEMPTION

The Notes are redeemable at the option of the Company at any
time, upon not less than thirty nor more than sixty days notice,
in whole or in part, at 103% of the principal amount of the Notes
to be redeemed if the redemption occurs on or before September
30, 1998 and at 100% of the principal amount if the redemption
occurs after September 30, 1998, in each case together with the
accrued interest thereon to the redemption date.

In the case of any redemption of Notes, interest
installments whose Stated Maturity is on or prior to the
Redemption Date will be payable to the Trustee for payment to the
Holders of record of such Notes at the close of business on the
relevant Regular Record Date. Notes (or portions thereof) for
whose redemption and payment provision is made in accordance with
the Indenture shall cease to bear interest from and after the
date fixed for redemption.

REQUIRED REDEMPTION

The Company is required to redeem Notes from the proceeds of
certain transfers of assets or property or casualty losses which
are not, within 180 days of the date of receipt thereof, applied,
in the case of transfer, to purchase certain assets used or
useful in the business of the Company, or, in the case of
casualty loss, to either repair or replace the property that gave
rise to such casualty loss except that such proceeds may not be
used to purchase assets if a Default or Event of Default shall
have occurred and be continuing.

In the event that a Specified Asset Sale shall be deemed to
have occurred, or a Specified Casualty Loss Event shall occur,
the Company shall irrevocably offer to redeem Notes without
premium in the aggregate principal amount equal to the Net Cash
Proceeds of such Specified Asset Sale, or an amount equal to such
Specified Casualty Loss Payment, as the case may be, if such
proceeds exceed $1.0 million. Notwithstanding the preceding
sentence, the Company is required to irrevocably offer to redeem
Notes without premium in the aggregate principal amount equal to
all Collected Amounts aggregating $1.0 million. Failure to
affirmatively accept such offer in the manner specified in the
Indenture shall be deemed to be a rejection of such prepayment
offer. A Holder may not elect to have redeemed less than or more
than all of the portion of the Securities held by such Holder
which the Company offers to redeem.

RANKING

The Notes are senior obligations of the Company. The
obligations under the Notes are secured by a security interest in
substantially all of the property and assets of the Company. See
"Security and Guaranty". The Notes rank pari passu with all
existing and future senior indebtedness of the Company. As
of the date hereof, there is no other senior indebtedness
outstanding. The Indenture contains limitations with respect
to the amount of additional indebtedness that can be incurred by
the Company and its subsidiaries. The Company may obtain a
revolving credit facility in the amount of $5.0 million and, under
certain circumstances, release certain collateral, or subordinate
to such facility the liens, securing the Notes. See "--Security
and Guaranty."

SECURITY AND GUARANTY

Pursuant to the Collateral Documents, the Notes are secured
by a valid, perfected security interest in substantially all of
the assets and property of the Company, including, without
limitation, certain real property, all inventory, equipment,
accounts receivable and intellectual property of the Company, and
by a pledge of the partnership interest of the Company in
Specialty. The obligations of the Company in respect of the Notes
and the Indenture are fully and unconditionally guaranteed by
Specialty, which guarantee is secured by a security interest in
substantially all of the property and assets of Specialty.
Specialty, however, has no material assets. The liens and
security interest with respect to certain property may be subject
to prior liens and encumbrances. In addition, property and
assets of the Company may be released from the liens of the
Collateral Documents in connection with a transfer permitted
under the provisions described in "Covenants -- Restricted
Transfers of Assets."

In the event the Company desires to obtain a revolving
credit or similar facility from another lender, the Trustee
shall, at the request of the Company, either (i) subordinate the
Liens of the Collateral Documents to the Lien of such lender in
an amount not to exceed $5.0 million or (ii) release the Lien of
the Collateral Documents upon particularly identified Collateral
which has a fair market value not to exceed $8.0 million.

CERTAIN COVENANTS

The Indenture contains, among other things, the following
covenants:

Restricted Payments and Restricted Investments.

The Company will not declare or make, or incur any liability
to declare or make, or permit any of its Subsidiaries to declare
or make, or incur any liability to declare or make, any
Restricted Payment or any Restricted Investment, except that, at
any time after the last day of the fiscal quarter during which
the Second Closing Date occurs, the Company may, and may permit
any Subsidiary to take the foregoing actions, so long as,
immediately prior to giving effect to such declaration or
payment, and immediately thereafter and after giving effect
thereto, both:

(a) no Default or Event of Default shall have occurred or
be continuing; and

(b) the aggregate amount of all Restricted Payments made
during the period (treated as a single accounting period)
beginning on the Second Closing Date and ending on such date,
plus the aggregate amount of all Restricted Investments made
after Second Closing Date and remaining outstanding on such
date, does not exceed the difference of:

(i) fifty percent (50%) of Consolidated Net Income accrued
during the period (treated as a single accounting period)
beginning on the Second Closing Date and ending on the last
day of the full fiscal quarter of the Company most recently
ended as of such date; minus

(ii) (A) if Consolidated Net Income for the period
commencing on the first day of the period of four (4) full
consecutive fiscal quarters then most recently ended (or, if
later, the Second Closing Date) and ending on the last day
of the fiscal quarter of the Company then most recently
ended as of such date is a loss, one hundred percent (100%)
of the positive amount of such loss; and

(B) if Consolidated Net Income for the period referred
to in (b)(ii)(A) above is not a loss, Zero Dollars
($0).

Limitations on Indebtedness.

The Company shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume, or Guarantee any
Indebtedness except:

(a) the Company and the Subsidiaries may create, incur,
assume or Guarantee Indebtedness pursuant to a revolving
credit or similar facility, and may from time to time obtain
advances in respect of such facility, so long as the aggregate
amount of Indebtedness outstanding thereunder at any time,
after giving effect to such creation, incurrence, assumption

or Guarantee, or such advance, shall not exceed Five Million
Dollars ($5,000,000); and

(b) any Subsidiary may incur unsecured Indebtedness to the
Company or any Guarantor Subsidiary, and the Company may incur
Subordinated Intercompany Indebtedness;

(c) the Company and its Subsidiaries may incur, create,
assume or Guarantee any other Indebtedness (including
Indebtedness in excess of Five Million Dollars ($5,000,000) in
respect of the revolving credit or similar facility referred
to in clause (a) above) so long as immediately after, and
after giving effect to, such creation, incurrence, assumption
or Guarantee and the concurrent prepayment, redemption,
retirement or acquisition of any Indebtedness of the Company
being prepaid, redeemed, retired or acquired concurrently with
the proceeds of such Indebtedness, the Pro Forma Interest
Coverage Ratio calculated at such time exceeds the
"Percentage" set forth in the following table below associated
with the period in which such date falls:

Period "Percentage"
the period beginning 250%
on the Second Closing
Date and ending on
(and including)
January 2, 1996

the period beginning 275%
on (and including)
January 3, 1996 and
ending on (and
including) January 7,
1997

the period beginning 300%
on (and including)
January 8, 1997 and
ending on (and
including) January 6,
1998

the period beginning 325%
on January 7, 1998

Negative Pledge.

The Company will not create or assume, or permit any of its
Subsidiaries to create or assume, any Lien securing any
Indebtedness on any asset or property, whether now owned or
hereafter acquired by it, except:

(a) Liens in favor of the Trustee, for the benefit of the
Trustee and the Holders, including such Liens contemplated by
the Collateral Documents;

(b) Liens upon property securing Indebtedness which
refinances, renews, replaces or extends Indebtedness secured
by Liens on such Property in existence on the date of the
Indenture, but not any increase in the principal amount of any
thereof or the extension thereof to any other property of the
Company or any of its Subsidiaries (except as otherwise
permitted by the Indebtedness covenant and clause (e) of this
covenant);

(c) Liens securing the revolving credit or similar facility
referred to in "Limitations on Indebtedness," so long as such
Liens secure an amount not in excess of Five Million Dollars
($5,000,000) (except as otherwise permitted by certain
provisions of the Indenture); with respect to such Liens, the
Trustee, if requested by the Company to take either the action
specified in clauses (i) or (ii) below (but not both) shall,
if the lender under such facility is unwilling to make such
facility available upon terms satisfactory to the Company
unless the Trustee takes the action requested by the Company,
either:

(i) enter into an agreement for the benefit of such lender
or lenders subordinating the Liens of the Collateral
Documents (but not the rights of the Holders to receive
payment generally) to the Lien of such lender securing the
obligations owing such lender under such facility, but only
insofar as such obligations do not exceed Five Million
Dollars ($5,000,000); or

(ii) release the Lien of the Collateral Documents upon
particularly identified Collateral specified in such Company
Order (but no other Collateral) including, without
limitation, any particularly identified Collateral
thereafter acquired, which specified Collateral has a fair
market value of not greater than Eight Million Dollars
($8,000,000) at any time;

(d) Purchase Money Mortgages by the Company or any of its
Subsidiaries (including, without limitation, Capital Leases),
so long as (i) such Purchase Money Mortgage secures only the
obligation to pay the purchase price of such asset (or the
obligations under such Capital Lease) or a Subsidiary being
acquired, together with related fees and expenses, (ii) the
initial amount secured by such Purchase Money Mortgage shall
not be more than one hundred percent (100%) of the purchase
price of such asset (or the obligation under such Capital
Lease) or such Subsidiary being acquired, together with
related fees and expenses, and (iii) the aggregate
Indebtedness secured by all such Purchase Money Mortgages
(other than Capital Leases) shall not exceed in the aggregate
for the Company and its Subsidiaries twenty percent (20%) of
the aggregate amount of assets reflected on a consolidated
balance sheet of the Company and the Subsidiaries, as at the
end of the fiscal quarter of the Company then most recently
ended; which Purchase Money Mortgages may rank senior to the
Lien, if any, of the Collateral Documents in respect of the
property or assets so acquired; provided, however, that in the
event that the Company or any Subsidiary shall apply any
Entire Cash Proceeds in respect of any Transfer, or any
Casualty Loss Payment in respect of any Casualty Loss, to the
purchase of any property or assets in accordance with certain
provisions of the Indenture, as the case may be, and the
purchase price of such property or assets exceeds the amount
of Entire Cash Proceeds or Casualty Loss Payment, the Company
or such Subsidiary (subject to certain provisions of the
Indenture) may finance the amount of such excess and may
secure such financing with a Purchase Money Mortgage upon such
property or assets, subject to the limitations set forth in
this paragraph, as if the "purchase price," as such term is
used above, were equal to the amount of such excess; and

(e) subject to the Liens described in clause (a) above,
other Liens securing Indebtedness, so long as, at the time
such Lien is created or assumed, the Indebtedness secured
thereby is permitted to be created and incurred pursuant to
the provisions restricting Indebtedness.

Limitations on Negative Pledges.

The Company will not, and will not permit any of its
Subsidiaries to enter into any agreement prohibiting the creation
or assumption of any Lien upon the properties or assets of the
Company or any of its Subsidiaries in favor of the Trustee
(except under Capital Leases and Purchase Money Mortgage or Lien
documents permitted hereunder but only to the extent such
prohibition relates solely to the property or asset purchased or
leased thereunder) or requiring an obligation to be secured if
any Obligations are secured.

Restricted Transfers of Assets.

The Company shall not, nor shall it permit any Subsidiary
to, Transfer all or any part of its assets (other than
conveyances or transfers of the properties and assets of the
Company substantially as an entirety in compliance with the
provisions of the Indenture governing successors and other than
Permitted Transfers) or agree to do any of the foregoing, unless
the Company, no later than the date following the date of such
Transfer, pays the Entire Cash Proceeds in respect of such
Transfer to the Trustee, subject to release to the Company. All
such Entire Cash Proceeds shall be held in trust for the equal
and ratable benefit of the Holders, and the Company granted to
the Trustee a Lien in all such Entire Cash Proceeds.

In the event that, within one hundred eighty (180) days
after the occurrence of any Transfer, the Company wishes to apply
all or a portion of the Entire Cash Proceeds therefrom to
purchase one or more assets constituting either fixed assets,
real property, machinery or equipment, in each case, used or
useful in the business of the Company or such Subsidiary, then,
so long as no Default or Event of Default shall have occurred and
be continuing, the Company may request the Trustee to pay to the
Company or to its order all or any portion of the amount of such
Entire Cash Proceeds actually applied to any such purchase;
provided, however, that the Company and its Subsidiaries shall
not be entitled to apply to any such purchase any Entire Cash
Proceeds, or any portion thereof, which have become Net Cash
Proceeds. As promptly as practicable following receipt by the
Trustee of a Company order specifying the amount of the Entire
Cash Proceeds to be paid by the Trustee, accompanied by an
officers' certificate certifying that such amount is to be
applied to purchase one or more assets constituting either fixed
assets, real property, leasehold improvements, machinery or
equipment, in each case, used or useful in the business of the
Company or such Subsidiary, the Trustee shall pay the requested
amount of such Entire Cash Proceeds to the Company or its order
in payment for the purchase price of such purchase, so long as
(i) at or prior to the time of such purchase, the Company or such
Subsidiary grants to the Trustee a Lien in such acquired property
and (ii) such acquired property shall be owned by the Company or
such Subsidiary, as the case may be, free and clear of all Liens,
other than Liens not securing Indebtedness and other than those
permitted by certain provisions of the Indenture.

Upon the transfer of property or assets permitted by these
provisions, the lien of the Collateral Documents in respect of
the property or assets so transferred shall be released, but the
lien of the Collateral Documents shall continue in the proceeds
of such transfer.

Limitations on Transactions with Affiliates.

The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, enter into any
transaction (including, without limitation, the purchase, sale or
exchange of property or the rendering of a service), whether or
not in the ordinary course of business, with any Affiliate of the
Company or such Subsidiary unless (a) such transaction is entered
into upon terms and conditions no less favorable to the Company,
or the affected Subsidiary, as those that would be obtained
through an arm's-length negotiation with an unaffiliated third
party, and (b) the terms of any such transaction shall be
approved by a majority of the directors who are not parties to,
and have no interest in, such transaction. The foregoing
restrictions shall not apply to (i) any issuance of capital stock
of the Parent, or options, stock appreciation rights or similar
rights in respect thereof, or other awards or grants, in cash or
otherwise, pursuant to, or the funding of, employee benefit plans
approved by a majority of the disinterested directors of the
board of directors of the General Partner (or, if the General
Partner is a partnership, the general partner of the General
Partner), (ii) loans or advances to employees in the ordinary
course of business, (iii) transactions between and among the
Company and the Guarantor Subsidiaries, (iv) transactions and the
making of payments contemplated by the Reimbursement Agreement
and (v) any agreements to do any of the foregoing acts described
in clauses (i) through (iv).

Future Property.

The Company will, with respect to all property (other than
real property and improvements thereon) acquired by the Company
after the date hereof (and, if such acquisition were financed, if
there were no prohibition in the documents governing such
financing to encumbrances on such property), duly execute and
deliver to the Trustee, not later than thirty (30) days after the
acquisition thereof, such pledge agreements, security agreements
or other like agreements with respect to such property creating
in the Trustee's favor for the ratable benefit of the Holders a
valid, perfected and enforceable first priority (except for Liens
permitted by certain provisions of the Indenture) Lien on such
property, such pledge agreements, security agreements or other
like agreements to be, to the extent applicable, substantially in
the forms of such agreements executed by the Company in favor of
the Trustee on the date of the Old Indenture (except for changes
authorized under the Indenture) reasonably acceptable to the
Trustee, together with such other documents, certificates,
opinions of counsel and the like as the Trustee shall reasonably
request in connection therewith.

The Company will, with respect to its real property and
improvements thereon (other than any leasehold interests of the
Company in real property and improvements thereon) acquired by
the Company after the date hereof (and, if such acquisition were
financed, if there was no prohibition in the documents governing
such financing to encumbrances on such property), duly execute
and deliver to the Trustee, not later than thirty (30) days after
the acquisition thereof, Mortgages creating in the Trustee's
favor for the ratable benefit of the Holders, upon recordation
thereof, a valid, perfected and enforceable first priority
(except for Liens permitted by certain provisions of the
Indenture) Lien on all such real property and improvements
thereon, such Mortgages to contain substantially the same terms
as the Mortgages securing the Obligations on the date after the
date of this Indenture and which shall be reasonably acceptable
to the Trustee, and the enforceability, proper filing and proper
recording of which shall be supported by an opinion of counsel
acceptable to the Trustee. The Company shall use its best
efforts to cause to be executed and delivered to the Trustee,
prior to or concurrently with the delivery by the Company of the
aforesaid Mortgages to the Trustee (or if such is not possible,
as promptly as possible thereafter), any and all necessary
estoppel certificates, non-disturbance agreements, waivers,
consents of third parties thereto to the extent deemed necessary
or appropriate by the Trustee, and the Company shall cause such
Mortgages to be duly recorded in the appropriate recording office
or offices and shall pay all fees and taxes payable in connection
therewith.

Maintenance of Liens.

Except for the filing of continuation statements and the
making of other filings by the Trustee as secured party or
assignee, the Company shall at all times take all action
necessary to maintain the Liens provided for under or pursuant to
the Collateral Documents as valid and perfected first priority
Liens on the property intended to be covered thereby (subject
only to Liens expressly permitted hereunder) and supply all
information to the Trustee necessary for such maintenance.

Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries.

The Company will not, and will not permit any of its
Subsidiaries to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any
kind on the ability of any such Subsidiary to (a) pay dividends
or make any other distribution on any of such Subsidiary's
Capital Stock owned by the Company or any Subsidiary of the
Company, (b) pay any Indebtedness owed to the Company or any
other Subsidiary, (c) make loans or advances to the Company or
any other Subsidiary, or (d) transfer any of its property or
assets to the Company or any other Subsidiary; except, in each
case, for (i) any restrictions created by the Credit Documents;
(ii) any restrictions existing under any agreements in effect on
the date of the Original Indenture; (iii) any renewals or
extensions of the restrictions referred to in clause (i) or (ii);
(iv) with respect to clause (d) above only, Capital Leases or
Purchase Money Mortgage or Lien documents permitted hereunder
(but only with respect to the property leased or purchased
thereunder), and customary non-assignment provisions of any
leases governing any leasehold interest or any supply, license or
other similar agreement entered into in the ordinary course of
business; and (v) any restrictions existing by reason of
applicable law.

Limitations on Merger, Consolidation and Sale of
Substantially All Assets

The Company shall not consolidate with or merge with or
into, Transfer its properties and assets substantially as an
entirety to or purchase or acquire the properties and assets
substantially as an entirety of any of the Parent Restricted
Subsidiaries. The Company shall not consolidate with or merge
with or into any other Person, or Transfer its properties and
assets substantially as an entirety to any Person, unless (a)
the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person
which acquires by Transfer the properties and assets of the
Company substantially as an entirety (the "Surviving Person")
shall be a corporation or partnership organized and existing
under the laws of the United States of America or any State or
the District of Columbia, and shall expressly assume the due and
punctual payment of the principal of (and premium, if any) and
interest on all the Notes, the performance of every covenant of
the Indenture and the other Credit Documents on the part of the
Company to be performed or observed, and all other Obligations of
the Company pursuant to the Indenture, the Notes and the Credit
Documents, (b) immediately after, and after giving effect to,
such transaction, no Default or Event of Default shall have
occurred and be continuing, (c) either (i) immediately after,
and after giving effect to, such transaction, both (A) the
Tangible Net Worth of the Company or the surviving person, as the
case may be, and its Subsidiaries on a consolidated basis shall
be equal to or greater than the Tangible Net Worth of the Company
and its Subsidiaries on a consolidated basis immediately prior to
the consummation of such transaction and (B) the Company or the
Surviving Person, as the case may be, shall be entitled to incur
at least One Dollar ($1.00) of additional Indebtedness pursuant
to certain provisions of the Indenture or (ii) such transaction
involves a merger of the Company with and into, or a Transfer of
its properties and assets substantially as an entirety to, the
Parent, so long as, but only so long as, the Parent shall not, at
any time prior to or contemporaneously with such transaction,
have consolidated with or merged with or into, Transferred its
properties and assets substantially as an entirety to or
purchased or acquired the properties and assets substantially as
an entirety of, any of the Parent Restricted Subsidiaries, and
(d) the Company or the Surviving Person, as the case may be, has
executed and delivered to the Trustee certain certificates and
opinions all necessary assignments, amendments to financing
statements under the Uniform Commercial Code of any jurisdiction
and other documents necessary to maintain the Trustee's right,
title and interest in and to the Trust Estate.

SEC Reports

Notwithstanding that the Company may not be required to
remain subject to the reporting requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"), the Company shall file with the Securities and Exchange
Commission (the "Commission") and provide the Trustee and Holders
with such annual reports and such information, documents and
other reports specified in Section 13 and 15(d) of the Exchange
Act.

EVENTS OF DEFAULT AND REMEDIES

The Indenture defines Event of Default as any one of the
following events: (a) if default shall be made in the due and
punctual payment of the principal, premium, if any, and interest
of any of the Notes when due and payable and in the case of
interest such default shall continue unremedied for a period of
thirty (30) days; (b) if (A) a default shall be made in the
performance or observance of any covenant, agreement or provision
described above in "-- Certain Covenants" and such default shall
continue unremedied for a period of thirty (30) days after any
officer of the General Partner becomes aware of such default, (B)
a default shall be made in the due and punctual payment of any
amounts payable under the Indenture or under any other Credit
Document when due and payable or a default shall be made in the
performance or observance of any covenant, agreement or provision
contained in the Indenture or the Notes or in any other Credit
Document, and such default shall continue unremedied for a period
of thirty (30) days after there has been given, in the manner
contemplated by the Indenture by the Holders of twenty-five
percent (25%) or more in aggregate principal amount of
outstanding Notes, a written notice specifying such default or
breach, requiring it to be remedied and stating that such notice
is a "Notice of Default," (C) the Indenture or any other Credit
Document shall terminate, be terminated or become void or
unenforceable without the prior written consent of the Holders,
or (D) any of the Liens created by the Collateral Documents shall
cease to be enforceable or shall not have the priority purported
to be created thereby with respect to Collateral having a fair
market value in excess of two million five hundred thousand
dollars ($2,500,000); (c) if a default shall occur (A) in the
payment of any principal or interest (after giving effect to any
applicable grace period) with respect to any Indebtedness of the
Company or any of its Subsidiaries or any General Partner (other
than the Notes) or (B) under any agreement pursuant to which any
such indebtedness may have been issued, created, assumed,
Guaranteed or secured by the Company or any of its Subsidiaries
or any General Partner, and, as a result thereof, such
Indebtedness shall be declared due and payable prior to the
stated maturity thereof or shall not be paid in full at the
stated maturity thereof, provided, however, that the aggregate
amount of all Indebtedness as to which such a payment default or
such other default causing acceleration shall occur exceeds (x)
one million dollars ($1,000,000) in Indebtedness other than Non-
Recourse Indebtedness or (y) two million five hundred thousand
dollars ($2,500,000) in Indebtedness consisting of Non-Recourse
Indebtedness; (d) if the Company or any of its Significant
Subsidiaries or any General Partner (A) is dissolved, (B) files a
petition to take advantage of any insolvency act, (C) makes an
assignment for the benefit of its creditors of itself or of the
whole or any substantial part of its property, (D) commences a
proceeding for the appointment of a receiver, trustee, liquidator
or conservator of itself or of the whole or any substantial part
of its property or (E) files a petition or answer seeking
reorganization or similar relief under applicable law or statute
of the United States of America, any state thereof or any foreign
country; (e) if a court of competent jurisdiction (A) shall enter
an order, judgment or decree appointing a custodian, receiver,
trustee, liquidator or conservator of the Company or any of its
Significant Subsidiaries or any General Partner or of the whole
or any substantial part of their respective properties, or
approve a petition filed against the Company or any of its
Significant Subsidiaries or any General Partner seeking
reorganization or similar relief under applicable law or statute
of the United States of America, any state thereof or any foreign
country, (B) under the provisions of any other law for the relief
or aid of debtors, shall assume custody or control of the Company
or any of its Significant Subsidiaries or any General Partner or
of the whole or any substantial part of their respective
properties, or (C) if there is commenced against the Company or
any of its Significant Subsidiaries or any General Partner any
proceeding for any of the foregoing relief and such proceeding
remains undismissed for a period of sixty (60) days or the
Company or any of its Significant Subsidiaries or any General
Partner by any act indicates its consent to or approval of any
such proceeding or petition; (f) if (A) one or more judgments
exceeding the insurance coverage in respect thereof by more than
two million five hundred thousand dollars ($2,500,000) in the
aggregate are rendered against any of the Company or any of its
Subsidiaries or any General Partner or (B) there are any
attachments or executions against any of the properties of the
Company or any of its Subsidiaries or any General Partner for
amounts in excess of two million five hundred dollars
($2,500,000) in the aggregate and (C) such judgments, attachments
or executions remain unpaid, unstayed or undismissed for any
period of sixty (60) consecutive days; (g) if there shall occur
the loss, theft, substantial damage to or destruction of any
portion of the Collateral not fully covered by insurance (less
deductibles in an amount permitted hereunder), which uncovered
portion of the Collateral by itself has a fair market value in
excess of two million five hundred thousand dollars ($2,500,000)
or with other such losses, thefts, damage or destruction of
uncovered portions of Collateral occurring while this Indenture
is in effect have an aggregate fair market value in excess of two
million five hundred thousand dollars ($2,500,000); or (h) the
partnership agreement of the Company shall be amended in any
manner so that the partnership agreement shall violate, conflict
with or breach any provision of the Indenture, any of the
Collateral Documents or any other document delivered thereunder
or the partnership agreement shall prohibit or prevent the
performance by the Company of any of its obligations or
agreements made in the Indenture, any of the Collateral Documents
or any other such documents.

If an Event of Default specified in clause (d) or (e) above
with respect to the Company occurs and is continuing, then the
principal amount of the Notes, together with accrued interest on
the principal amount of such Notes as well as all other
Obligations, shall automatically become immediately due and
payable, without any declaration or other act on the part of the
Trustee or any Holder. If an Event of Default (other than an
Event of Default specified in clause (d) or (e) above with
respect to the Company) occurs and is continuing, then and in
every such case the Holders of not less than a majority of the
principal amount of the Notes outstanding may, and the Trustee
upon the request of the Holders of not less than a majority of
the principal amount of the Notes outstanding shall, by written
notice to the Company (and to the Trustee if given by Holders)
declare the principal of the Notes, together with accrued
interest on the principal amount of such Notes as well as all
other Obligations, to be immediately due and payable and the same
shall become immediately due and payable without any further
declaration or other act on the part of the Trustee or any
Holder. Under certain circumstances, the Holders of the
Requisite Amount of the Notes outstanding may rescind any such
acceleration with respect to the Notes and its consequences.

The Holders of the Requisite Amount of the Notes Outstanding
may on behalf of the Holders of all the Notes waive any past
Default hereunder or under any other Credit Document and its
consequences, except a Default in the payment of the principal of
(or premium, if any) or interest on any Security or in respect of
a covenant or provision in the Indenture or under any other
Credit Document which under the provisions of the Indenture
cannot be modified or amended without the consent of the Holder
of each Outstanding Security affected. Upon any such waiver,
such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent
thereon.

The Holders of the Requisite Amount of the Notes outstanding
shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the
Trustee, whether before or after the occurrence of an Event of
Default, provided that such direction shall not be in conflict
with any rule of law or with the Indenture and the Trustee may,
but shall not be required to, take any other action deemed proper
by the Trustee which is not inconsistent with such direction.

In addition to exercise of all other rights and remedies
permitted to be exercised by the Trustee hereunder, in the event
that either (a) the Stated Maturity of the Notes is accelerated
in accordance with the provisions of the Indenture or (b) under
certain circumstances, an Event of Default has occurred and is
continuing, and the Trustee is directed to do so in writing by
the Holders of the Requisite Amount of Notes, then the Trustee
shall proceed, subject to certain provisions of the Indenture, to
enforce the rights of the Trustee and the Holders of Notes
pursuant to the provisions of the Collateral Documents. In no
event may a Holder exercise any right or remedy with respect to
any Collateral under any Collateral Document, such right of
exercise being vested solely in the Trustee as herein provided
and as provided in the Collateral Documents.

No Holder of any Notes shall have any right to institute any
proceeding, judicial or otherwise, with respect to the Indenture,
or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless (a) such Holder has previously given
written notice to the Trustee of a continuing Event of Default,
(b) the Holders of not less than twenty-five percent (25%) in
principal amount of the Outstanding Notes shall have made written
request to the Trustee to institute proceedings in respect of
such Event of Default in its own name as Trustee hereunder, (c)
such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request, (d) the Trustee for
sixty (60) days after its receipt of such notice, request and
offer of indemnity has failed to institute any such proceeding,
and (e) no direction inconsistent with such written request has
been given to the Trustee during such sixty (60) day period by
the Holders of the Requisite Amount of the Notes outstanding; it
being understood and intended that no one or more Holders shall
have any right in any manner whatever by virtue of, or by
availing of, any provision of the Indenture to affect, disturb or
prejudice the rights of any other Holders, or to obtain priority
or preference over any other Holders or to enforce any right
under the Indenture, except in the manner herein provided and for
the equal and ratable benefit of all the Holders.

The Company will be required to furnish annually to the
Trustee a statement as to the performance by the Company of
certain of its obligations under the Indenture and as to any
default in such performance.

AMENDMENTS AND WAIVERS

Without prior notice to or the Consent of the Holders of
Notes outstanding, the Company (and additionally for any Credit
Document as to which the Company is not the sole obligor, such
other obligor(s); or for any Credit Document as to which the
Company is not the obligor, the obligor of such document) and the
Trustee may enter into an indenture or indentures supplemental to
the Indenture or amendments or waivers to other Credit Documents
constituting Collateral Documents or Guarantees, but solely for
one or more of the following purposes (a) to evidence the
succession of a successor to the Company or such obligor, and the
assumption by such successor of the covenants of the Company or
such obligor under the Indenture, in the Notes and in the other
Credit Documents to which the Company or such obligor is a party
contained, (b) to add to the covenants of the Company or such
other obligor, for the benefit of the Holders, or to surrender
any right or power herein or therein conferred upon the Company
or such other obligor, (c) to cure any ambiguity, to correct or
supplement any provision of the Indenture which may be
inconsistent with any other provision of the Indenture or in such
Credit Documents or to make any other provisions with respect to
matters arising thereunder which shall not be inconsistent with
the provisions of the Indenture; provided, however, such action
shall not adversely affect the interests of the Holders, and (d)
to modify, eliminate or add to the provisions of the Indenture to
the extent necessary to effect the qualification of the Indenture
under, or the compliance by the Indenture with the provisions of,
the Trust Indenture Act.

With the Consent of the Holders, the Company (and
additionally for any Credit Document as to which the Company is
not the sole obligor, such other obligor(s); or for any Credit
Document as to which the Company is not the obligor, the obligor
of such document) and the Trustee may enter into an indenture or
indentures supplemental to the Indenture or amendments or waivers
to other Credit Documents constituting Collateral Documents or
Guarantees for the purpose of adding, amending or waiving
compliance with any provisions of the Indenture or any such other
Credit Document or of modifying in any manner the rights of the
Holders under the Indenture or under any such other Credit
Document; provided, however, that no such supplemental indenture,
amendment or waiver shall, without the consent of the Holder of
each outstanding Note affected thereby (a) change the Stated
Maturity of or any Redemption Date with respect to the principal
of, or of any installment of interest on or any premium payable
upon the redemption of, any Note, or reduce the principal amount
thereof or the rate of interest thereon payable upon the
redemption or other payment thereof, or change the coin or
currency in which, any Note or the interest thereon is payable,
or impair the right to institute suit for the enforcement of any
such payment after the Stated Maturity thereof (or, in the case
of redemption, on or after any Redemption Date), (b) reduce the
percentage in principal amount of the outstanding Notes, the
consent of whose Holders is required for any such supplemental
indenture, amendment or waiver, (c) modify certain remedial
provisions of the Indenture, except to increase any such
percentage or to provide that certain or other provisions of this
Indenture cannot be modified or waived without the consent of the
Holder of each Note affected thereby, (d) waive a Default or
Event of Default in the payment of principal of or interest on,
or redemption payment with respect to, any Security, or (e)
modify any of the provisions of the Indenture relating to the pro
rata redemption of Notes.

It shall not be necessary for the Holders to approve the
particular form of any proposed supplemental indenture, amendment
or waiver, but it shall be sufficient if they shall approve the
substance thereof.

After a supplemental indenture, amendment or waiver under
the Indenture with respect to a Credit Document is effective, the
Company shall mail to each Holder a copy of such supplemental
indenture, amendment or waiver. Any failure of the Company to so
mail such copy shall not, however, in any way impair or affect
the validity of any such supplemental indenture, amendment or
waiver.

TRANSFER

The Notes will be issued in registered form in denominations
of one thousand dollars ($1,000) and any integral multiple
thereof, except as necessary to reflect principal amounts not
evenly divisible by one thousand dollars ($1,000), and will be
transferable only upon surrender of the Notes being transferred
for registration of transfer. The Company may require payment of
a sum sufficient to cover any tax or other governmental charge
payable in connection with certain transfers and exchanges.

DEFEASANCE

The Indenture shall cease to be of further effect (except as
to any surviving rights of transfer or exchange of Notes
expressly provided for), and the Trustee, on demand of and at the
expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture and
release of the Liens of the Collateral Documents securing the
Obligations, when (a) either (i) all Notes theretofore
authenticated and delivered (other than Notes which have been
destroyed, lost or stolen and which have been replaced) have been
delivered to the Trustee cancelled or for cancellation or (ii)
all such Notes not theretofore delivered to the Trustee cancelled
or for cancellation (A) have become due and payable in full, or
(B) will become due and payable at their Stated Maturity within
six (6) months or (C) are to be called for redemption within six
(6) months under arrangements satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in the name, and at
the expense, of the Company; and the Company, in the case of (A),
(B) or (C) above, has deposited or caused to be deposited with
the Trustee as trust funds in trust for the purpose an amount in
cash sufficient (without giving effect to any income or gain in
respect of the investment of such amount) to pay and discharge
the entire indebtedness on such Securities not theretofore
delivered to the Trustee cancelled or for cancellation, for
principal (and premium, if any) and interest to the date of such
deposit (in the case of Notes which have become due and payable),
or to the Stated Maturity or Redemption Date, as the case may be
(b) the Company has paid or caused to be paid all other sums
payable hereunder by the Company and (c) the Company has
delivered to the Trustee certain officers' certificates and
opinions of counsel. Notwithstanding the satisfaction and
discharge of the Indenture, the obligations of the Company
pursuant to certain Sections of the Indenture shall survive.

INFORMATION CONCERNING THE TRUSTEE

The Trustee and its subsidiaries may from time to time in
the future provide the Company and its Subsidiaries with banking
and financial services in the ordinary course of their business.

DEFINITIONS

Affiliate -- means, with respect to any Person, any other
Person (the "Subject Affiliate") that, directly or indirectly
through one or more intermediaries, controls, or is controlled
by, or is under common control with, such Person and, without
limiting the generality of the foregoing, includes:

(a) any Subject Affiliate which beneficially owns or holds
ten percent (10%) or more of any class of voting securities of
such Person or ten percent (10%) or more of the equity
interest in such Person;

(b) any Subject Affiliate ten percent (10%) or more of any
class of voting securities (or, in the case of any Person
which is not a corporation, ten percent (10%) or more of the
equity interest) in which is held by such Person; and

provided, however, that in no event shall any Person who was a
holder of Original Securities on the day prior to the date of the
Indenture be deemed, at any time or for any purpose under the
Indenture, to be an Affiliate of the Company, the Parent, and
General Partner or any of their respective Subsidiaries; and
provided, further, that the Parent, the General Partner and their
respective Subsidiaries shall be deemed to be Affiliates of the
Company whether or not they would otherwise be included by virtue
of the foregoing provisions of this definition.

The term "control" (including, with correlative meanings,
the terms "controlled by" and "under common control") means the
possession, directly or indirectly, of the power either to direct
or cause the direction of the management or policies of a Person,
or to vote a majority of the securities having ordinary voting
power for the election of directors of such Person, in either
case whether through the ownership of voting securities, by
contract, by proxy or otherwise. The term "Affiliate," when used
with respect to any particular Person, means an Affiliate of the
Company.

Capital Expenditures -- means, with respect to any Person,
any item which, pursuant to GAAP, would be classified on the
financial statements of such Person as a "capital expenditure."

Capital Lease -- means, as to any Person, any lease of
property, real or personal, the obligations under which are, or
should be in conformity with GAAP, capitalized on a consolidated
balance sheet of such Person.

Casualty Loss -- means and includes each separate loss,
damage or injury to any tangible property subject to the Lien of
the Trustee or any condemnation or eminent domain proceedings in
respect of any such property.

Casualty Loss Payment -- means and includes any payment of
proceeds of any insurance required to be maintained on account of
each separate loss, damage or injury to any tangible property
subject to the Lien of the Trustee or any payment of proceeds of
any condemnation or eminent domain proceedings in respect of any
such property.

Collateral -- means all property and interests therein (real
and personal, tangible and intangible) in which a Lien is now or
hereafter held by the Trustee or granted by the Company or any
other Person to the Trustee for the ratable benefit of the
Holders as security for the payment and performance of any or all
of the Obligations.

Collateral Documents -- means and includes each document,
agreement, assignment, mortgage or deed of trust executed or
delivered with the Old Indenture, the Indenture or from time to
time granting a Lien in any property in favor of the Trustee for
the ratable benefit of the Holders to secure the payment and
performance of any or all of the Obligations.

Collected Amount -- Redemption Amounts less than $1,000,000
plus certain excess amounts of past Redemption Amounts.

Consent of the Holders -- means the requisite principal
amount of the Securities Outstanding with respect to any consent
of the Holders pursuant to the Indenture which, except as
otherwise specifically stated in any provision of the Indenture,
shall be more than fifty percent (50%) of the principal amount of
the Securities Outstanding.

Consolidated Cash Flow -- means, for any period, the sum of:

(a) Consolidated Net Income for such period; provided,
however, that for purposes of calculating Consolidated Cash
Flow only:

(i) extraordinary non-cash charges (to the extent deducted
in calculating Consolidated Net Income) shall be added back
to Consolidated Net Income; and

(ii) extraordinary non-cash revenue (to the extent included
in calculating Consolidated Net Income) shall be deducted
from Consolidated Net Income;

plus

(b) the sum of (but in each case, only to the extent not
included in Consolidated Net Income for such period) the
following, without duplication:

(i) Consolidated Interest Expense; plus

(ii) Consolidated Income Tax Expense; plus

(iii) Consolidated Depreciation and Amortization Expense.

Consolidated Depreciation and Amortization Expense -- means,
for any period, the consolidated depreciation and amortization
expense of the Company and its Subsidiaries for such period,
calculated on a consolidated basis in accordance with GAAP.

Consolidated Income Tax Expense -- means, for any period,
the aggregate of all current and deferred taxes based upon income
and franchise tax expense of the Company and its Subsidiaries for
such period determined on a consolidated basis in accordance with
GAAP.

Consolidated Interest Expense -- means, for any period, the
interest expense of the Company and its Subsidiaries (including
amortization of original issue discount on any Indebtedness, the
interest portion of any deferred payment obligation, the net
costs associated with interest rate swap obligations or
agreements and the interest component of rentals in respect of
Capital Leases) for such period calculated on a consolidated
basis, such consolidation to be performed in accordance with
GAAP.

Consolidated Net Income -- means, for any period, the
aggregate of the Net Income of the Company and its Subsidiaries,
determined on a consolidated basis.

Consolidated Revenues -- means, for any period, the
aggregate revenue for such period of the Company and its
Subsidiaries, determined on a consolidated basis in accordance
with GAAP.

Credit Documents -- means, collectively, the Indenture, the
Securities, the Collateral Documents, the Specialty Guaranty, any
other Guarantees of any or all of the Obligations and any and all
other documents, instruments and agreements now or hereafter
executed and/or delivered in connection therewith.

Default -- means an event, act or condition that, with
notice or lapse of time, or both, would become an Event of
Default.

Defaulted Interest -- any interest which is payable, but is
not punctually paid or duly provided for on any Interest Payment
Date.

Entire Cash Proceeds -- means, with respect to any Transfer
of assets, the difference of:

(a) the cash proceeds (whenever received) actually received
by the Company or any Subsidiary of the Company from such
Transfer; minus

(b) the sum of:

(i) commissions and other fees and expenses (including
fees and expenses of counsel, accountants and investment
bankers) related to such Transfer; plus

(ii) provisions for all taxes paid or payable as a result
thereof and in connection therewith and payments made to
retire Indebtedness (other than the Securities or the
Original Securities) secured by or otherwise relating
directly to such assets being sold or otherwise disposed of
where payment of such Indebtedness is required in connection
therewith.

Event of Default -- has the meaning described in
"Description of Notes -- Events of Default."

GAAP -- means generally accepted accounting principles in
effect from time to time in the United States applied on a
consistent basis.

General Partner -- means the Parent or any other general
partner of the Company.

Governmental Authority -- means any federal, state, local,
foreign or other governmental or administrative body,
instrumentality, department or agency or any court, tribunal,
administrative hearing body, arbitration panel, commission or
other similar dispute resolving panel or body.

Guarantee -- means, with respect to any Person, any
guarantee or other contingent liability (other than any
endorsement for collection or deposit in the ordinary course of
business), direct or indirect, of such Person with respect to any
obligation of another Person, through an agreement or otherwise,
including, without limitation:

(a) any other endorsement or discount with recourse or
undertaking substantially equivalent to or having economic
effect similar to a guarantee in respect of any such
obligation; and

(b) any agreement:

(i) to purchase, or to advance or supply funds for the
payment or purchase of, any such obligation;

(ii) to purchase, sell or lease property, products,
materials, supplies, transportation or services, to enable
such other Person to pay any such obligation or to assure
the owner thereof against loss regardless of the delivery or
nondelivery of the property, products, materials, supplies,
transportation or services; or

(iii) to make any Investment in, or to otherwise provide
funds to or for, such other Person to enable such Person to
satisfy any obligation (including any liability for a
dividend, stock liquidation payment or expense) or to assure
a minimum equity, working capital or other balance sheet
condition in respect of any such obligation.

The amount of any Guarantee shall be equal to the outstanding
amount of the obligation directly or indirectly guaranteed. The
term "Guarantee" used as a verb has a corresponding meaning.

Guarantor Subsidiary -- means Specialty.

Holder -- means a Person in whose name a Security is
registered in the Security register.

Indebtedness -- of a Person means, without duplication:

(a) all indebtedness of such Person for borrowed money or
evidenced by bonds, notes, debentures or similar instruments;

(b) all obligations of such Person under leases which have
been or, in accordance with GAAP, should be, recorded as
Capital Leases;

(d) the face amount of all letters of credit (other than
letters of credit securing solely the payment of insurance
premiums) issued for the account of such Person and, without
duplication, all drafts drawn thereunder;

(e) all liabilities secured by any Lien on any property
owned by such Person, to the extent attributable to such
Person's interest in such property, even though such Person
has not assumed or become liable for the payment thereof;

(f) all obligations of such Person under any interest rate
swap, interest rate future, interest rate cap, interest rate
option or other form of interest rate hedging agreement or
arrangement designed to protect against fluctuations in
interest rates; and

(g) any Guarantee of such Person with respect to
Indebtedness of another Person.

Investment -- means any investment in any Person, whether by
means of asset or share or equity purchase, capital contribution,
loan, advance, time deposit, purchase of notes, bonds or other
evidences of Indebtedness or otherwise, other than:

(a) the purchase by such Person of assets either
constituting Capital Expenditures or made in the ordinary
course of such Person's business;

(b) the exchange of the Original Securities pursuant to the
provisions of, and the consummation of the transactions
contemplated by, the Exchange Agreement; and

Junior Indebtedness -- means any Indebtedness of the Company
which is subordinated to the Securities in right of payment.

Lien -- means any mortgage, deed of trust, pledge,
hypothecation, assignment for security, deposit arrangement,
encumbrance, lien (statutory or other), security interest,
easement, defect in or exception to title or preference, priority
or other security agreement or preferential arrangement of any
kind or nature whatsoever, including, without limitation, any
conditional sale or other title retention agreement, any Capital
Lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement (other than
notice filings not perfecting a security interest) under the
Uniform Commercial Code or comparable law of any jurisdiction in
respect of any of the foregoing.

Mortgages -- means each and every mortgage, deed of trust,
collateral assignment of leases, collateral assignment of rents
or similar instrument granting the Trustee an interest in or Lien
upon any real property and securing the Obligations, in each
case, as amended through and including the date hereof and as
hereafter amended.

Net Cash Proceeds -- means:

(a) in respect of a Specified Asset Sale described in
clause (a) of the definition of "Specified Asset Sale", the
Entire Cash Proceeds with respect to such Specified Asset
Sale; and

(b) in respect of a Specified Asset Sale described in
clause (b) of the definition of "Specified Asset Sale", an
amount equal to the difference of:

(i) the Entire Cash Proceeds in respect of such Transfer;
minus

(ii) the amount of such Entire Cash Proceeds in respect of
such Transfer actually applied to purchase assets used or
useful in the business of the Company or its Subsidiaries;

together, in either case, with any amounts previously retained by
the Trustee required to be added thereto.

Net Income -- means, for any Person and for any period, the
net income (loss) of such Person for such period, determined in
accordance with GAAP; provided, however, that:

(a) no gains and no losses realized by such Person and its
Subsidiaries upon the sale or other disposition (including,
without limitation, pursuant to Sale-Leaseback Transactions,
sales or disposals of business segments, or sales or
abandonment of properties, plants and equipment of such Person
and its Subsidiaries) of property or assets which are not sold
or otherwise disposed of in the ordinary course of business,
or pursuant to the sale of any Capital Stock of or other
equity or ownership interest in such Person or any Subsidiary,
shall be considered in calculating Net Income;

(b) no writedowns, writeoffs or writeups by such Person and
its Subsidiaries of receivables, inventories, fixed assets,
real property, real estate leasehold interests or intangible
assets (not including amortization of intangible assets in
accordance with GAAP) shall be considered in calculating Net
Income;

(c) net income or net loss of any Person combined with such
Person on a "pooling of interests" basis attributable to any
period prior to the date of such combination shall not be
considered in calculating Net Income; and

(d) net income or net loss of any Person which is not
consolidated with such Person shall not be considered in
calculating Net Income except to the extent of the amount of
dividends or distributions paid to such Person or any of its
Subsidiaries.

Non-Recourse Indebtedness -- owing by any Person means
Indebtedness for money borrowed or evidenced by a Lien, wherein
liability is limited solely to the security therefor without any
liability on the part of such Person for any deficiency, or with
respect to which the holder of such Indebtedness has irrevocably
made the election under Section 1111(b)(1)(A)(i) of Title 11 of
the United States Code, as amended.

Obligations -- means any and all obligations and liabilities
of the Company, now or hereafter incurred, under or with respect
to the Securities, the Indenture, the Collateral Documents or any
other Credit Document, whether or not such obligations and
liabilities are reduced to judgment, liquidated, unliquidated,
evidenced by any note or other instrument, direct or indirect,
absolute or contingent, due or to become due, disputed,
undisputed, legal, equitable, secured or unsecured, and whether
or not any such obligations and liabilities are discharged,
stayed or otherwise affected by any dissolution, insolvency or
similar proceeding such obligations and liabilities to include
without limitation:

(a) the payment of the principal and interest (and premium,
if any) on all of the Securities now and hereafter issued and
delivered and outstanding;

(b) the payment of all other sums owing hereunder and under
each of the other Credit Documents to any Holder or to the
Trustee;

(d) the performance of the respective covenants of the
Company herein and in each of the other Credit Documents
contained.

Omnibus Amendment -- means that certain Omnibus Amendment
Agreement, dated as of the date hereof, among the Company,
Specialty and the Trustee.

Original Holders -- means the holders of the Original
Securities on the day preceding the date of the Indenture.

Parent Restricted Subsidiaries -- means and includes
Cavalcade Holdings, Inc.; Cavalcade Foods, Inc.; Cavalcade
Development, L.P.; Furr's/Bishop's Cafeterias, L.P.; any of their
respective subsidiaries; or any of their respective successors
and assigns.

Paying Agent -- means the Person or Persons authorized by
the Company to pay the principal of (and premium, if any) or
interest on any Securities on behalf of the Company. The Company
initially appoints the Trustee to act as Paying Agent. For
purposes of redemption of the Notes, neither the Company nor any
Affiliate may act as Paying Agent.

Permitted Transfers -- means and includes:

(a) sales of inventory in the ordinary course of business;

(b) Transfers of obsolete or worn-out machinery and
equipment, and subleases of leased property, no longer used or
useful in the conduct of the business of the Company and its
Subsidiaries;

(c) Transfers of assets from any Subsidiary of the Company
to the Company; and Transfers from the Company to any
Guarantor Subsidiary;

(d) with respect to cafeteria or other restaurant
properties acquired after the date hereof and in accordance
with the terms hereof, Transfers of land adjacent to or in the
immediate proximity of any such cafeteria or restaurant not
necessary for the operation of such cafeteria's or
restaurant's business;

(e) so long as no Default or Event of Default shall have
occurred and be continuing, with respect to any land,
buildings or equipment acquired after the date hereof and in
accordance with the terms hereof, Sale-Leaseback Transactions
of any such assets; and

(f) so long as no Default or Event of Default shall have
occurred and be continuing, Transfers of any assets or
property of the Company, so long as the aggregate fair market
value for all such assets or property so sold or disposed of
in any one calendar year does not exceed Five Million Dollars
($5,000,000).

Person -- means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust,
unincorporated organization or Governmental Authority or any
agency or political subdivision thereof.

Priority Indebtedness -- means and includes, without
duplication:

(a) Indebtedness secured by any Lien (including, without
limitation, any Purchase Money Mortgage) on any property owned
by the Company or any of its Subsidiaries, to the extent
attributable to such Person's interest in such property,
whether or not such Person has not assumed or become liable
for the payment thereof;

(b) all Indebtedness of, and all preferred stock (valued at
the liquidation preference thereof), of Subsidiaries of the
Company (other than Guarantor Subsidiaries), except:

(i) such Indebtedness owing to, or such preferred stock
beneficially owned by, the Company; and

(ii) in the case of any such Indebtedness owing to, or
preferred stock beneficially owned by, a Subsidiary of the
Company, for the amount thereof owing (directly or
indirectly through Subsidiaries of the Company) to the
Company; and

(c) with respect to any Sale-Leaseback Transaction, the net
amount of all rent required to be paid in respect of the lease
of the property subject thereto by the Company or any of its
Subsidiaries during the remaining primary term thereof,
discounted from the respective due dates thereof to such date
at the rate per annum implicit in such lease.

Pro Forma - means, for any period, with respect to any
calculation of Consolidated Cash Flow or Consolidated Interest
Expense, in connection with the incurrence of any Indebtedness
during such period, the amount of Consolidated Cash Flow or
Consolidated Interest Expense, as the case may be, which would
have resulted during and for such period, assuming that:

(a) any assets acquired with the proceeds of the
Indebtedness being incurred had been acquired, and such
Indebtedness had been incurred, created, assumed or
Guaranteed, on the first day of such period;

(b) any other Indebtedness repaid with the proceeds of such
Indebtedness had been repaid on the first day of such period;

(c) the rate of interest in effect for floating rate
Indebtedness shall at all times be the rate of interest in
effect on the date of determination;

(d) the entire principal amount of such newly incurred
Indebtedness shall be outstanding for each day during such
period; and

(e) if the Second Closing Date occurred during such period,
the Second Closing Date had occurred, and the transactions
contemplated to occur on the Second Closing Date pursuant to
the provisions of the Exchange Agreement had occurred, on the
first day of such period.

Pro Forma Interest Coverage Ratio -- means, at any time of
calculation, the ratio, expressed as a percentage, of:

(a) Pro Forma Consolidated Cash Flow for the period of four
(4) full consecutive fiscal quarters of the Company most
recently ended at such time; to

(b) Pro Forma Consolidated Interest Expense for such
period.

Purchase Money Mortgage -- means:

(a) a Lien held by any Person (whether or not the seller of
such assets) on tangible property (other than assets acquired
to replace, repair, upgrade or alter tangible property owned
by the Company or any of its Subsidiaries on the date hereof)
acquired or constructed by the Company or any of its
Subsidiaries after the date hereof, which Lien secures all or
a portion of the related purchase price or construction costs
of such property; provided, however, that such Lien is created
not later than one hundred eighty (180) days after acquisition
or completion of construction of such property;

(b) any Lien existing on any fixed assets at the time such
fixed assets are acquired by the Company or any of its
Subsidiaries; and

(c) any Lien existing on any fixed assets of any Person at
the time it becomes a direct or indirect Subsidiary of the
Company;

provided, however, that no such Lien extends to any other asset
or property of the Company or any of its Subsidiaries.

Redemption Amount -- the aggregate Net Cash Proceeds and
Specified Casualty Loss Payments prompting an offer of
redemption.

Redemption Date -- when used with respect to any Securities
to be redeemed means the date fixed for such redemption by or
pursuant to the Indenture.

Redemption Price -- when used with respect to any Security
to be redeemed means the price at which it is to be redeemed
pursuant to the Indenture (including, without limitation, any
accrued and unpaid interest thereon payable with respect to such
redemption).

Regular Record Date -- for the interest payable on any
Interest Payment Date (other than the first Interest Payment Date
and other than on December 31, 2001) means the March 15 or
September 15 (whether or not a Business Day), as the case may be,
next preceding such Interest Payment Date or, in the case of the
first Interest Payment Date, the Second Closing Date.

Reimbursement Agreement -- means the Reimbursement
Agreement, dated as of the date hereof, among the Company, the
Parent and Furr's/Bishop's Cafeterias, L.P., a Delaware limited
partnership.

Requisite Amount -- means the requisite principal amount of
the Securities Outstanding with respect to any request, demand or
other action of the Holders pursuant to the Indenture which,
except as otherwise specifically stated in any provision of the
Indenture, shall be more than fifty percent (50%) of the
principal amount of the Notes outstanding.

Restricted Investment -- means any Investment made by the
Company or any Subsidiary of the Company except:

(a) Investments in stock or partnership interests of any
Subsidiaries of the Company existing on the date hereof, but
not any increase in the amount thereof;

(b) Temporary Cash Investments, which shall be pledged to
the Trustee for the ratable benefit of the Holders as
collateral security for the payment of the Obligations
pursuant to a pledge agreement in form and substance stated in
an opinion of counsel to be effective to accomplish the valid
pledge thereof to the Trustee; provided, however, that to the
extent that such pledge agreement and such opinion of counsel
covers specified after-acquired Temporary Cash Investments, no
new pledge agreement or opinion of counsel shall be necessary
upon the subsequent acquisition of such after-acquired
Temporary Cash Investments if the Lien thereupon is perfected
in the manner contemplated in such opinion of counsel and the
Company so states in an officers' certificate delivered to the
Trustee;

(c) Investments in Guarantor Subsidiaries or Persons which,
contemporaneously with the making of such Investment become
Guarantor Subsidiaries;

(d) for the formation of other Subsidiaries of the Company
created and utilized solely to satisfy state and local
alcoholic beverage licensing requirements for the Company's
businesses and any of its current or future retail liquor
sales establishments; and

(e) Investments in Subsidiaries of the Company:

(i) in which the Company has contributed less than One
Million Dollars ($1,000,000) (whether in cash, property,
assets or otherwise) in the aggregate, which contributions
(to the extent subject to a Lien in favor of the Trustee)
shall remain subject to the Lien of the Trustee after giving
effect to such contribution (and such Subsidiaries shall
acknowledge same); and

(ii) so long as the Company has no Indebtedness and no
other obligations owing to such Subsidiaries or to any third
party with respect to such Subsidiary.

Restricted Payment -- means, with respect to any Person:

(a) any dividend or other distribution in respect of such
Person's capital stock, or incurrence of a liability for such
dividend or distribution, in cash, properties or other assets,
on any shares of such Person's capital stock, but excluding
any dividend or distribution consisting solely of capital
stock of such Person;

(b) any payment (including, without limitation, the setting
aside of assets or the deposit of funds therefor) on account
of the purchase, redemption, retirement or acquisition of:

(i) any capital stock of such Person, the Company or any
of its Subsidiaries; or

(ii) any option, warrant or other right to acquire any
security or interest described in the immediately preceding
clause (i); and

(c) any optional payment or prepayment of principal or
premium on account of Junior Indebtedness (other than Non-
Recourse Indebtedness paid solely out of the property or
assets securing such Non-Recourse Indebtedness) or any
optional purchase, defeasance, redemption, retirement or
acquisition of any principal on any such Junior Indebtedness
(including, without limitation, the setting aside of assets or
the deposit of funds therefor);

provided, however, that:

(A) no such dividend, distribution or payment made by
any Subsidiary to the Company or any Guarantor
Subsidiary shall be deemed to be a Restricted Payment;

(B) no such dividend, distribution or payment made by
any Subsidiary to another Subsidiary shall be deemed to
be a Restricted Payment to the extent of the Company's
direct or indirect equity interest in such Subsidiary;

(C) the exchange, conversion or exercise of any
option on the part of holders of the limited
partnership interests of the Company to exchange,
convert, exercise or otherwise transfer such interests
to the Parent or any Affiliate of the Parent, solely in
exchange for Capital Stock of the Parent or such
Affiliate, shall not constitute a Restricted Payment;
and

(D) payments made by the Company and the Subsidiaries
pursuant to the Reimbursement Agreement shall not
constitute Restricted Payments; and

(E) payments made by the Company to any Person which
is or was a partner of the Company solely to reimburse
such Person for income taxes payable and paid by such
partner in respect of the income of the Company for any
period, shall not constitute a Restricted Payment.

Sale-Leaseback Transaction -- means any arrangements,
directly or indirectly, with any Person, whereby the Company or
any of its Subsidiaries shall sell or transfer any property,
whether now owned or hereafter acquired, used or useful in its
business, in connection with the rental or lease of the property
so sold or transferred or of other property which the Company or
such Subsidiary intends to use for substantially the same purpose
or purposes as the property so sold or transferred.

Second Closing Date -- January 2, 1996.

Significant Subsidiary -- means a Subsidiary, including its
Subsidiaries, which meets any of the following conditions:

(a) the Company's and its other Subsidiaries' investments
in and advances to the Subsidiary exceed ten percent (10%) of
the total assets of the Company and its Subsidiaries
consolidated as of the end of the most recently completed
fiscal year of the Company; or

(b) the total assets (after intercompany eliminations) of
the Subsidiary exceed ten percent (10%) of the total assets of
the Company and its Subsidiaries consolidated as of the end of
the most recently completed fiscal year of the Company; or

(c) the Company's and its other Subsidiaries' equity in the
income from continuing operations before income taxes,
extraordinary items and cumulative effect of a change in
accounting principle of the Subsidiary exceeds ten percent
(10%) of such income of the Company and its Subsidiaries
consolidated for the most recently completed fiscal year of
the Company.

Specialty Guaranty -- means that certain Unlimited Guaranty
of Specialty, dated March 27, 1992, for the benefit of the
Trustee, as amended by the Omnibus Amendment and as thereafter
amended from time to time.

Specified Asset Sales -- means:

(a) the receipt by the Company or any of its Subsidiaries
of any Entire Cash Proceeds in respect of any Transfer (other
than Permitted Transfers), if any Default or Event of Default
is continuing at the time of receipt of such proceeds; and

(b) the failure of the Company to apply the entire amount
of Entire Cash Proceeds from any such Transfer to purchase
assets used or useful in the business of the Company or its
Subsidiaries within one hundred eighty (180) days of the date
of receipt thereof.

Specified Casualty Loss Event -- means:

(a) the receipt by the Company or any of its Subsidiaries
of any Casualty Loss Payment in respect of any Casualty Loss,
if any Default or Event of Default is continuing at the time
of receipt of such Casualty Loss Payment; and

(b) the failure of the Company to apply the entire amount
of any Casualty Loss Payment to either repair or replace the
property that gave rise to such Casualty Loss within one
hundred eighty (180) days of the date of receipt thereof.

Specified Casualty Loss Payment -- means:

(a) in respect of a Specified Casualty Loss Event described
in clause (a) of the definition of "Specified Casualty Loss
Event", the entire Casualty Loss Payment with respect to such
Specified Casualty Loss Event; and

(b) in respect of a Specified Casualty Loss Event described
in clause (b) of the definition of "Specified Casualty Loss
Event", an amount equal to the difference of:

(i) the entire Casualty Loss Payment in respect of such
Casualty Loss; minus

(ii) the amount of such Casualty Loss Payment in respect of
such Casualty Loss actually applied to either repair or
replace the property that gave rise to such Casualty Loss;

together, in either case, with any excess amounts previously
retained by the Trustee and required to be added thereto.

Stated Maturity -- when used with respect to any Security or
any installment of interest thereon means the date specified in
such Security as the fixed date on which the principal of such
Security (disregarding any mandatory redemption payments required
by the terms of the Indenture) or such installment of interest is
due and payable.

Subordinated Intercompany Indebtedness -- means unsecured
Indebtedness of the Company or any Guarantor Subsidiary, owing
solely to one or more Guarantor Subsidiaries, which is
subordinated to the Securities in right of payment and the terms
of which do not permit the Company to make any payment in respect
thereof at any time:

(a) during which an Event of Default shall have occurred or
shall be continuing; or

(b) following acceleration of the maturity of the
Securities or the exercise of any other remedy in respect
thereof, pursuant to any Collateral Document or otherwise,
until after the final and indefeasible payment in full of all
the Securities.

Subsidiary -- means, with respect to any Person, any
corporation or other Person with respect to which more than fifty
percent (50%) of the Capital Stock or other equity or ownership
interests having ordinary voting power (other than stock or other
equity or ownership interests having such power only by reason of
the happening of a contingency) is at the time owned by such
Person or by one or more Subsidiaries of such Person or by such
Person and one or more Subsidiaries of such Person.

Tangible Net Worth -- means, with respect to any Person or
group of consolidated Persons, at any time, the difference of:

(a) the stockholders' equity (or, in the case of a
partnership, the partners' equity) of such Person or group
determined on a consolidated basis in accordance with GAAP at
such time; minus

(b) the sum of:

(i) the aggregate amount of deferred assets, other than
prepaid insurance and prepaid taxes;

(ii) patents, copyrights, trademarks, trade names,
franchises, goodwill and other similar intangible assets;
and

(iii) unamortized debt discount and expense;

of such Person or group of consolidated Persons at such time.

Temporary Cash Investments -- means and includes Investments
in:

(a) securities issued or directly and fully guaranteed or
insured by the United States Government or any agency or
instrumentality thereof having maturities of not more than one
(1) year from the date of acquisition;

(b) certificates of deposit and Eurodollar time deposits
with maturities of not more than six (6) months from the date
of acquisition, bankers' acceptances with maturities not
exceeding six (6) months and overnight bank deposits, in each
case, with:

(i) Amarillo National Bank;

(ii) any domestic commercial bank having capital and
surplus in excess of One Hundred Million Dollars
($100,000,000) and a long-term unsecured debt rating from
both Moody's Investors Services, Inc. and Standard & Poor's
Ratings Group (a division of McGraw Hill, Inc.) of at least
"A";

(c) repurchase obligations with respect to securities of
the types described in clauses (a) and (b), entered into with
any financial institution meeting the qualifications specified
in clause (b) above and having a term not in excess of
fourteen (14) days;

(d) commercial paper rated at least A-2 or the equivalent
thereof by Standard & Poor's Ratings Group (a division of
McGraw Hill, Inc.) or at least P-2 or the equivalent thereof
by Moody's Investors Service, Inc. and in either case maturing
within six (6) months after the date of acquisition;

(e) certificates of deposit with maturities of not greater
than six (6) months from the date of acquisition with any
domestic commercial bank at which the Company has an operating
account aggregating not greater than One Hundred Thousand
Dollars ($100,000) at any one time outstanding for all such
certificates of deposit at any one such bank and not greater
than Five Hundred Thousand Dollars ($500,000) at any one time
outstanding for all such certificates of deposits under this
clause (e); and

(f) money market mutual funds subject to regulation as
investment companies under the Investment Company Act of 1940,
as amended, so long as such mutual fund:

(i) has assets of at least One Hundred Million Dollars
($100,000,000);

(ii) is either:

(A) an Affiliate of, or managed by, Fidelity
Management & Research Company; or

(B) rated "A" or better by Standard & Poor's Ratings
Group (a division of McGraw Hill, Inc.) or an
equivalent rating by another nationally recognized
rating service;

(iii) invests solely in Investments listed in clause (a) and
clause (c) of this definition of "Temporary Cash
Investments;"

(iv) permits redemptions to be made on any Business Day;
and

(v) has as a fundamental investment goal the maintenance
of a constant net asset value.

Transfer -- means, with respect to any assets or property,
to sell, lease, transfer, convey or otherwise dispose of such
assets or property.

Trust Estate -- means all Collateral granted to the Trustee.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On September 28, 1994, the Company and M&B Restaurants, L.C
. ("M&B") entered into a Lease and Sublease Agreement (the
"Lease") and a Trademark License and Development Agreement (the
"License"). Under the terms of the Lease, the Company leases the
two existing El Paso Bar-B-Que facilities to M&B, a company
controlled by William Prather, formerly CEO of the Company, for
an initial term ending December 31, 2003. Pursuant to the
License, M&B agreed to pay opening fees of $25,000 per unit and
royalties based on sales on 31 units required to be opened by
December 31, 2003 and to acquire the trademarks and other
intangibles used by the El Paso Bar-B-Que Company by December 31,
2003, but not earlier than December 31, 1997, for a cash payment
of seven times the prior four quarterly payments under the
License. The Company received approximately $16,000 in 1995
relating to the lease. On November 10, 1995, Amendment One to
Trademark License and Development Agreement (the "Amendment") was
executed. The Amendment modified to 25 the number of new units
required to be opened by December 31, 2003 and on which M&B
agreed to pay opening fees and royalties. The Amendment also
modified the earliest buyout date to December 31, 1999. The
Company and M&B have held preliminary discussions and
negotiations regarding the acceleration of the earliest buyout
date under the License and certain modifications to the Lease.

Chanin and Company received approximately $1.2 million from
the Company for providing investment banking services to the
former 11% Noteholders in connection with the Restructuring.
Russell A. Belinsky, a director of the Company, is and, at all
relevant times, was a Managing Director of Chanin and Company.

As of March 31, 1996, Kenneth F. Reimer received
compensation of approximately $29,000 for certain consulting
activities on behalf of the Company and the Parent during fiscal
1996.

LEGAL MATTERS

Certain legal matters in connection with the Notes offered
hereby are being passed upon for the Company by Skadden, Arps,
Slate, Meagher & Flom.

EXPERTS

The consolidated balance sheets as of January 2, 1996 and
January 3, 1995 and the related consolidated statements of
operations, changes in partners' capital (deficit) and cash flows
for the fifty-two week year ended January 2, 1996, the fifty-
three week year ended January 3, 1995 and the fifty-one and one-
half week year ended December 28, 1993, in this Prospectus, have
been audited by Deloitte & Touche LLP, independent certified
public accountants, as stated in their report appearing herein
and have been so included in reliance upon the report of such
firm given upon their authority as experts in accounting and
auditing.

CAFETERIA OPERATORS, L.P. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

PAGE NO.

CAFETERIA OPERATORS, L.P. AND SUBSIDIARIES
Independent Auditors' Report F-2

Consolidated Balance Sheets, at April 2, 1996 (unaudited)
and for years ended January 2, 1996 and January 3, 1995 F-3

Consolidated Statements of Operations
Thirteen weeks ended April 2, 1996 (unaudited),
thirteen weeks ended April 4, 1995 (unaudited),
fifty-two weeks ended January 2, 1996, fifty-three
weeks ended January 3, 1995 and fifty-one
and one-half weeks ended December 28, 1993 F-5

Consolidated Statements of Partners' Capital (Deficit)
Years ended December 28, 1993, January 3, 1995,
January 2, 1996 and thirteen weeks ended
April 2, 1996 (unaudited) F-6

Consolidated Statements of Cash Flows
Thirteen weeks ended April 2, 1996 (unaudited),
thirteen weeks ended April 4, 1995 (unaudited),
fifty-two weeks ended January 2, 1996, fifty-three
weeks ended January 3, 1995 and fifty-one
and one-half weeks ended December 28, 1993 F-7

Notes to Consolidated Financial Statements
Fifty-two weeks ended January 2, 1996, fifty-three weeks
ended January 3, 1995, and fifty-one and one half
weeks ended December 28, 1993 F-8

INDEPENDENT AUDITORS' REPORT

To the Partners of
Cafeteria Operators, L.P.
Lubbock, Texas

We have audited the accompanying consolidated balance sheets of Cafeteria
Operators, L.P. (a Delaware limited partnership indirectly owned by
Furr's/Bishop's, Incorporated) and subsidiaries (collectively, the
Partnership) as of January 2, 1996 and January 3, 1995, and the related
consolidated statements of operations, changes in partners' capital
(deficit) and cash flows for the 52-week year ended January 2, 1996, the
53-week year ended January 3, 1995 and the 51-1/2-week year ended December
28, 1993. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the consolidated financial position of Cafeteria Operators, L.P.
and subsidiaries as of January 2, 1996 and January 3, 1995 and the
consolidated results of their operations and their cash flows for the 52-
week year ended January 2, 1996, the 53-week year ended January 3, 1995 and
the 51-1/2-week year ended December 28, 1993, in conformity with generally
accepted accounting principles.

In our report dated March 2, 1995, we included an explanatory paragraph
which identified factors which raised substantial doubt about the
Partnership's ability to continue as a going concern. As discussed in Note
2 to the consolidated financial statements, the shareholders of
Furr's/Bishop's, Incorporated approved a financial restructuring which
significantly reduced the Partnership's large debt burden and resulting
interest expense. Accordingly, our present opinion on the January 3, 1995
and December 28, 1993 consolidated financial statements, as expressed
herein, is different from that expressed in our previous report.

As discussed in Notes 1 and 10 to the consolidated financial statements
effective January 2, 1996, the Partnership changed its method of accounting
for impairment of long-lived assets and for long-lived assets to be
disposed of to conform to Statement of Financial Accounting Standards No.
121.

/s/ Deloitte & Touche LLP
March 28, 1996
Dallas, Texas

CAFETERIA OPERATORS, L.P. AND SUBSIDIARIES
(A Delaware Limited Partnership Indirectly Owned by Furr's/Bishop's,
Incorporated)

CONSOLIDATED BALANCE SHEETS
APRIL 2, 1996 (UNAUDITED), JANUARY 2, 1996 AND JANUARY 3, 1995
(Dollars in Thousands)

April 2, January 2, January 3,
ASSETS 1996 1996 1995
(Unaudited)

CURRENT ASSETS:
Cash and cash equivalents
($800 restricted in both
years) $2,026 $964 $ 1,475
Accounts and notes receivable
(net of allowance for
doubtful accounts of $27
and $64, respectively) 603 745 912
Inventories 5,641 5,831 6,478
Prepaid expenses and other 1,553 1,355 3,475

Total current assets 9,823 8,895 12,340

PROPERTY, PLANT AND EQUIPMENT:
Land 10,424 10,424 10,424
Buildings 40,771 40,623 44,886
Leasehold improvements 21,062 21,139 20,228
Equipment 45,653 45,762 45,212
Construction in progress 1,353 442 282

119,263 118,390 121,032

Less accumulated depre-
ciation and amortization (53,732) (52,263) (40,099)

Total property, plant
and equipment 65,531 66,127 80,933

RECEIVABLE FROM AFFILIATE, NET 10,671 10,503 9,972

OTHER ASSETS 493 541 185

TOTAL ASSETS $86,518 $86,066 $103,430

CAFETERIA OPERATORS, L.P. AND SUBSIDIARIES
(A Delaware Limited Partnership Indirectly Owned by Furr's/Bishop's,
Incorporated)

CONSOLIDATED BALANCE SHEETS
APRIL 2, 1996 (UNAUDITED), JANUARY 2, 1996 AND JANUARY 3, 1995
(Dollars in Thousands)

April 2, January 2, January 3,
LIABILITIES AND PARTNER'S 1996 1996 1995
CAPITAL (DEFICIT) (Unaudited)

CURRENT LIABILITES:
Trade accounts payable $ 5,100 $ 5,074 $ 6,221

Other payables and
accrued expenses 17,666 18,13 414,890

Accrued interest subject
to restructuring -- -- 33,903

Reserve for store closings
- current portion 2,187 2,21 21,762

Current maturities of
long-term debt 5,493 3,798 54

Long-term debt classified
as current 192,854

Total current liabiliities 30,446 29,218 249,684

RESERVE FOR STORE CLOSINGS 3,217 3,443 1,531

LONG-TERM DEBT 71,894 74,610 13

OTHER PAYABLES, INCLUDING
ACCRUED PENSION COST 9,845 9,611 7,361

EXCESS OF FUTURE LEASE PAYMENTS
OVER FAIR VALUE, NET OF
AMORTIZATION 3,978 4,130 4,961

PARTNERS' CAPITAL (DEFICIT) (32,862) (34,946) (160,120)

TOTAL LIABILITIES AND PARTNERS'

CAPITAL (DEFICIT) $ 86,518 $ 86,066 $ 103,430

CAFETERIA OPERATORS, L.P. AND SUBSIDIARIES
(A Delaware Limited Partnership Indirectly Owned by
Furr's/Bishop's, Incorporated)

CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands)

Unaudited Unaudited Fifty-One and
Thirteen Thirteen Fifty-Two Fifty-Three One-Half
Weeks Ended Weeks Ended Weeks Ended Weeks Ended Weeks Ended
April 2, April 4, January 2, January 3, December 28,
1996 1995 1996 1996 1996
REVENUES

Sales $ 48,817 $ 52,754 $ 210,093 $ 225,186 $ 253,700

EXPENSES:

Cost of
sales
(excluding
depreciation) 15,166 16,847 67,763 70,188 75,790

Selling,
general and
administra-
tive 29,154 31,870 127,000 137,604 158,190

Depreciation
and
amortization 2,349 3,340 14,002 11,320 13,926

Special
charges -- -- 12,273 2,214 11,867

Goodwill
charge -- -- -- -- 135,208

46,669 52,057 221,038 221,326 394,981

Operating
income (loss) 2,148 697 (10,945) 3,860 (141,281)

Interest 64 6,380 26,209 23,570 22,105

Income (Loss)
before
extraordinary
item 2,084 (5,683) (37,154) (19,710) (163,386)

Extraordinary
item: net gain
on financial
restructuring -- -- 157,619 -- --

NET INCOME
(LOSS) $2,084 $(5,683) $ 120,465 $(19,710) $(163,386)

See notes to consolidated financial statements.

CAFETERIA OPERATORS, L.P. AND SUBSIDIARIES
(A Delaware Limited Partnership Indirectly Owned by
Furr's/Bishop's, Incorporated)

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
FISCAL YEARS ENDED DECEMBER 28, 1993, JANUARY 3, 1995 AND JANUARY
2, 1996 AND THIRTEEN WEEKS ENDED APRIL 2, 1996 (UNAUDITED)
(Dollars in Thousands)
Total
Partners'
General Limited Capital
Partner Partners (Deficit)

BALANCE, JANUARY 2, 1993 $ (7,585) $ 29,662 $22,077

Net loss from operations (137,155) (26,231) (163,386)

Pension liability adjustment 35) (3,431) (3,466)

BALANCE, DECEMBER 28, 1993 (144,775) - (144,775)

Net loss from operations (15,388) (4,322) (19,710)

Pension liability adjustment 43 4,322 4,365

BALANCE, JANUARY 3, 1995 (160,120) - (160,120)

Net income 115,452 5,013 120,465

Capital contribution - 9,742 9,742

Distributions declared - (3,041) (3,041)

Pension liability adjustment (20) (1,972) (1,992)

BALANCE, JANUARY 2, 1996 (44,688) 9,742 (34,946)

Net income 2,084 - 2,084

BALANCE, APRIL 2, 1996 $(42,604) $9,742 $(32,862)
(Unaudited)

See notes to consolidated financial statements.

CAFETERIA OPERATORS, L. P. AND SUBSIDIARIES
(A Delaware Limited Partnership Indirectly Owned by Furr's/Bishop's,
Incorporated)

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
Fifty-
One
and
Fifty- Fifty- One-
Two Three Half
Weeks Weeks Weeks
(Unaudited) Ended Ended Ended
Thirteen Weeks Ended January January December
April 2, April 4, 2, 3, 28,
1996 1995 1996 1995 1993

CASH FLOWS FROM (USED IN)
OPERATING ACTIVITIES:
Net income (loss) $2,084 $(5,683) $120,465 $(19,710) $(163,386)
Adjustments to reconcile
net loss to net cash
provided by operating
activities:
Depreciation and
amortization 2,349 3,340 14,002 11,320 13,926
Goodwill charge 135,208
(Gain) loss on sale of
property, plant and
equipment and other
assets (28) 50 203 111 (906)
Provision for (reversal
of) closed store
reserves 92 (247) (339) (645) 286
Special charges 12,273 2,214 11,867
Stock options issued
by parent as
compensation 125
Deferred charges 203 65 499 853 284
Extraordinary credit (157,619)
Changes in operating
assets and liabilities:
(Increase) decrease
in accounts and notes
receivable 142 2 167 943 (693)
Decrease in restricted
cash 1,200
Decrease in inventories 190 (321) 647 1,512 149
(Increase) decrease
in prepaid expenses
and other (197) (798) (3,501) (3,126) 342
Increase (decrease)
in trade accounts 26 1,752 (1,147) (4,572) 4,820
payable
Increase in other
payables and accrued (469) 5,056 24,821 18,899 10,375
expenses
Decrease in other
payables, including
accrued pension cost 50 50 (547) (826) 0
Net cash from
operating
activities 4,442 3,266 9,924 6,973 13,597
CASH FLOWS FROM (USED IN)
INVESTING ACTIVITIES:
Capital expenditures (1,928) (2,136) (8,019) (5,695) (15,749)
Expenditures charged to
reserve for store
closings (342) (467) (1,794) (2,330) (2,014)
Proceeds from the sale
of property, plant and
equipment and other
assets 59 4 41 700 619
Other, net (8) (1) (34) (40)
Net cash used in
investing
activities (2,151) (2,607) (9,773) (7,359) (17,184)
CASH FLOWS FROM (USED IN)
FINANCING ACTIVITIES:
Repayment of borrowings (1,021) (13) (53) (49) (44)
Paid to affiliates (169) (239) (530) (761) (1,070)
Other, Net (37) (49) (79) (220) 168
Net cash used in
financing
activities (1,227) (301) (662) (1,030) (946)
INCREASE (DECREASE) IN
UNRESTRICTED
CASH AND CASH EQUIVALENTS 1,062 358 (511) (1,416) (4,533)
UNRESTRICTED CASH AND
CASH EQUIVALENTS AT
BEGINNING OF PERIOD 164 675 675 2,091 6,624
UNRESTRICTED CASH AND
CASH EQUIVALENTS AT END
OF PERIOD $1,226 $1,033 $ 164 $ 675 $2,091

SUPPLEMENTAL DISCLOSURE
OF CASH FLOW INFORMATION:
Interest paid excluding
SFAS 15 interest $ 7 $ 9 $ 36 $ 242 $10,553

Pension liability
adjustment 0 0 $ 1,992 $ (4,365) $ 3,466
Deferred asset
associated with the
stock warrant issued 0 0 0 0 $ 425
by parent

See notes to consolidated financial statements.

CAFETERIA OPERATORS, L.P. AND SUBSIDIARIES
(A Delaware Limited Partnership Indirectly Owned by
Furr's/Bishop's, Incorporated)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FISCAL YEARS ENDED JANUARY 2, 1996 AND JANUARY 3, 1995
(Dollars in Thousands)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation - Cafeteria Operators, L.P. (the
"Partnership"), a Delaware limited partnership, is indirectly
owned by Furr's/Bishop's, Incorporated (the "Company") and
operates cafeterias and specialty restaurants. COLP Sales, L. P.
and Furr's/Bishop's Specialty Group, L. P. are wholly owned
subsidiaries of the Partnership. The financial statements
presented herein are the consolidated financial statements of
Cafeteria Operators, L.P. and its subsidiaries and all material
intercompany transactions and account balances have been
eliminated in consolidation.

The financial statements at January 2, 1996 reflect the results
of a series of transactions relating to the financial
restructuring of the Company, as described in Note 2.

The activities of the Partnership are governed by the terms of
the partnership agreement, as amended (the "Partnership
Agreement"). Prior to the financial restructuring described in
Note 2, the Company owned the 1% general partner interest in the
Partnership and indirectly owned the 99% limited partner interest
through its wholly owned subsidiary Furr's/Bishop's Cafeterias,
L.P. (the "Holding Partnership"). As a result of a series of
transactions relating to the financial restructuring, 95% of the
limited partner interest was transferred to the Company. The
Company, as the general partner, has exclusive and complete
discretion in managing the business and operations of the
Partnership, as provided in the Partnership Agreement.

Fiscal Year - The Partnership operates on a 52- or 53-week fiscal
year ending on the Tuesday nearest December 31. The fiscal years
ended January 2, 1996 and January 3, 1995 represent a 52-week
year and a 53-week year, respectively. As of December 28, 1993,
the year end was changed from the Saturday nearest December 31 to
the Tuesday nearest December 31. As a result, the fiscal year
ended December 28, 1993 contains 51 weeks plus three days.

Business Segments - The Partnership operates in a single business
segment, namely the operation of cafeterias and restaurants which
includes retailing, food processing, warehousing and distribution
of food products, and real estate in thirteen states in the
Southwest, West and Midwest areas of the United States.

Cash and Cash Equivalents - The Partnership has a cash management
program which provides for the investment of excess cash balances
in short-term investments. These investments have original or
remaining maturities of three months or less at date of
acquisition, are highly liquid and are considered to be cash
equivalents for purposes of the consolidated balance sheets and
consolidated statements of cash flows.

Interim Unaudited Financial Statements - The interim unaudited
financial statements have been prepared pursuant to the rules and
regulations of the Commission. In management's opinion, all
adjustments and eliminations, consisting only of normal recurring
adjustments, necessary for a fair presentation of the financial
statements, have been made. The results of operations for such
interim period are not necessarily indicative of the results of
operations for the full year.

Inventories - Inventories are stated at the lower of cost (first-
in, first-out method) or market.

Prepaid Expenses and Other - Direct costs comprising legal and
consulting fees of $2,144 relating to the proposed restructuring
discussed in Note 2 were capitalized as of January 3, 1995 and as
of January 2, 1996 were charged off as a part of the
extraordinary item. As of January 2, 1996 and January 3, 1995,
this account balance included prepaid rent of $748 and $762,
respectively, along with other assets recorded in the ordinary
course of business.

Property, Plant and Equipment - Property, plant and equipment is
generally recorded at cost, while certain assets considered to be
impaired are recorded at the estimated fair value. All property,
plant and equipment is depreciated at annual rates based upon the
estimated useful lives of the assets using the straight-line
method. Restaurant equipment is generally depreciated over a
period of 1 to 5 years, while the useful life of manufacturing
equipment is considered to be 5 to 10 years. Buildings are
depreciated over a 30 year useful life, while repairs and
improvements to owned buildings have estimated useful lives of 3
to 5 years. Provisions for amortization of leasehold
improvements are made at annual rates based upon the estimated
useful lives of the assets or terms of the leases, whichever is
shorter.

Excess of Cost Over Fair Value of Net Assets Acquired - The
excess of cost over the fair value of net assets acquired was
being amortized using the straight-line method over 40 years
(approximately 36 years as to goodwill resulting from the merger
in March 1991). Effective December 28, 1993, the remaining
balance of goodwill was written off (see Note 13).

Valuation of Long-Lived Assets - Effective January 2, 1996, the
Partnership adopted the provisions of Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
("SFAS 121") and recorded a special charge of $7,772 to recognize
the write-down of certain assets in property, plant and equipment
to estimated fair value, based on expected future cash flows.
SFAS 121 requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset
may not be recoverable.

Start-Up and Closing Costs of Restaurants - Start-up and
preopening costs incurred in connection with a new restaurant
becoming operational are charged to expense over the fiscal year
in which the restaurant is opened.

When the decision to close a restaurant is made, the present
value of all fixed and determinable costs are accrued. These
fixed and determinable costs primarily consist of obligations
defined in lease agreements such as rent and common area
maintenance, reduced by sublease income, if any. If a decision
is made to keep or reopen such restaurants, the remaining costs
are reversed.

Unfavorable Leases - For leases acquired through purchase, the
net excess of future lease rental payments over the fair value of
these payments is being amortized over the lives of the leases to
which the differences relate.

Income Taxes - For state and federal income tax purposes, the
Partnership is not a tax-paying entity. As a result, the taxable
income or loss, which may vary substantially from income or loss
reported for financial reporting purposes, should be included in
the state and federal tax returns of the individual partners.
Accordingly, no provision for income taxes is reflected in the
accompanying financial statements.

Allocation of Results of Operations - Each item of income, gain,
loss and deduction is allocated in accordance with the
Partnership Agreement.

Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect reported
amounts of certain assets, liabilities, revenues and expenses as
of and for the reporting periods and actual results may differ
from such estimates.

Reclassification - Certain amounts in the prior year financial
statements have been reclassified to conform with current year
classification.

2. RESTRUCTURING

On January 25, 1995, the Company announced that it had entered
into an Agreement in Principle dated as of January 24, 1995 (the
"Agreement in Principle") among the Company, its subsidiaries,
the holders of the 11% Senior Secured Notes of the Partnership
(as defined in Note 4), the holder of the 9% Note of Cavalcade
Foods, Inc., ("Foods"), the Trustees of General Electric Pension
Trust ("GEPT"), and Kmart Corporation ("Kmart").

The Agreement in Principle sets forth the principal terms and
conditions relating to the proposed restructuring of the Company.
It provided for (i) the exchange of an aggregate of approximately
$249,344 of debt of the Partnership for the issuance of $40,000
principal amount of new senior secured notes of the Partnership
due 2001 pursuant to a new indenture and 95% of the limited
partner interest of the Partnership, (ii) the exchange of
warrants to purchase an aggregate of approximately 21.5% of the
Company's common stock for options to acquire an aggregate of 95%
of a new class of common stock of the Company ("Common Stock")
and new five year warrants to purchase an aggregate of 1% of the
fully diluted Common Stock, (iii) the exchange of $6,117 of other
obligations of the Partnership for the issuance of $1,700
principal amount of new senior secured notes of the Partnership
due 2001 pursuant to a new indenture, (iv) the exchange of
$11,737 of debt of Foods, an indirect subsidiary of the Company,
for options to acquire 2.5% of the Common Stock and an interest
in certain land owned by a subsidiary of the Company and (v) the
exchange of the Company's outstanding shares of Class A Common,
Class B Common and Convertible Preferred Stock for an aggregate
of 2.5% of the Common Stock and five year warrants to purchase an
aggregate of 4% of the fully diluted Common Stock (together, the
"Restructuring"). The Restructuring became effective upon
approval of the stockholders of the Company at a meeting held
January 2, 1996.

The Restructuring has been accounted for in accordance with
Statement of Financial Accounting Standard No. 15, "Accounting by
Debtors and Creditors for Troubled Debt Restructurings" ("SFAS
15"), under which the transactions include both a partial
settlement and modification of terms. The fair value of the 95%
limited partner interest issued by the Partnership as partial
settlement of indebtedness in connection with the Restructuring
was estimated based upon discounted cash flows anticipated from
the reorganized business. The remaining indebtedness was
recorded at the sum of all future principal and interest payments
and there will be no recognition of interest expense in future
periods. The amounts of indebtedness subject to modification
less than the amount recorded in accordance with SFAS 15 was
recorded as an extraordinary gain of $157,619, net of all
expenses associated with the Restructuring. The extraordinary
item is made up of the following:

Long-term debt reclassified as current $ 192,854
Accrued interest subject to restructuring 60,118
Partnership distribution 3,041
Long-term debt, issued for payment of
interest (3,627)
Capital contribution (9,742)
Expenses related to series of financial
transactions (10,415)
Long-term debt, including accrued interest (74,610)

On October 4, 1993, an arbitration panel granted a $5,408 award
against the Holding Partnership in favor of GEPT. The
arbitration award related to the March 1991 merger of the Holding
Partnership into the Company pursuant to which GEPT had sought an
appraisal of the value of the subordinated partnership units of
the Holding Partnership. On February 6, 1994, the Delaware Court
of Chancery confirmed and entered judgment on the arbitrators'
award in the aggregate amount of $5,408 together with post-
judgment interest at the legal rate from the date of the Court's
Order. The Partnership issued 12% Notes in the amount of $1,700
as a distribution to the Holding Partnership. The liability for
the notes was recorded as $3,041, including interest accrued
through maturity of the notes in accordance with SFAS 15. The
Holding Partnership transferred the 12% Notes to GEPT in full
satisfaction of the outstanding judgement including all accrued
interest thereon.

3. OTHER PAYABLES AND ACCRUED EXPENSES

Other payables and accrued expenses consist of the following:

January 2, January 3,
1996 1995

Salaries, wages and commissions $ 3,441 $ 3,983
Rent 1,072 1,121
Taxes other than income taxes 3,892 4,603
Restructuring expenses 4,795
Insurance 2,152 2,000
Gift certificates outstanding 1,045 1,218
Utilities 728 617
Other payables and accrued expenses 1,009 1,348

$ 18,134 $ 14,890

4. NOTES PAYABLE AND LONG-TERM DEBT

In 1992, the Partnership consummated a restructuring with all of
the holders of the then outstanding indebtedness and issued
$187,422 of 11% Senior Secured Notes, due June 30, 1998 (the "11%
Notes"), to replace its entire indebtedness, including all
interest accrued thereon. Additional 11% Notes were issued in
June 1992 for the $5,432 interest payment then due. The 11%
Notes were amended at various times in 1993 and 1994 to modify or
waive covenants that were not being met, including to allow the
Partnership to receive a going concern opinion, and to defer the
due date of interest payments. The last payment of interest by
the Partnership on the 11% Notes was June 30, 1993 and at January
2, 1996, before the series of financial restructuring
transactions, a total of $56,493 of interest was accrued and
outstanding, and the Partnership was in default on the 11% Notes
since October 1994 due to, among other things, missed payments of
interest.

Effective January 2, 1996, as part of a series of financial
restructuring transactions, the Partnership issued $41,700 of 12%
Senior Secured Notes, due December 31, 2001 (the "12% Notes"), to
replace $40,000 of 11% Notes and the interest accrued thereon and
to terminate a $5,408 judgement and the interest accrued thereon.
In January 1996, the Partnership also issued $3,781 of 12% Notes
as payment in kind for all interest accrued as of January 2,
1996. Substantially all of the assets of the Partnership are
pledged as collateral security on behalf of the holders of the
12% Notes. The Partnership also issued limited partner interests
equal to 95% of the outstanding partnership interests in exchange
for and in full satisfaction of the remaining $152,854 of 11%
Notes, together with all interest accrued thereon. Subsequent to
year end, the holder of such partnership interests put such
interests to the Company in exchange for common stock of the
Company.

Payments of interest on the 12% Notes will be due each March 31
and September 30. While payments of interest will be due during
the life of the 12% Notes, there will not be any interest expense
recorded under SFAS 15, as all of the interest through maturity
has been recorded as a liability.

The Partnership has other mortgages outstanding on certain real
estate properties totaling $14 due in 1996.

Long-term debt consists of the following:

Stated
Maturity January 2, January 3,
Date 1996 1995

12% Notes, including
$32,913 interest
accrued through
maturity 2001 $ 78,394 -
11% Notes 1998 - $ 192,854
Real estate mortgages 1996 14 67

78,408 192,921

Interest classified as
current maturities of
long-term debt (3,784) -
Current maturities of
long-term debt (14) (54)
Long-term debt classified
as current - (192,854)

Long-term debt $ 74,610 $ 13

At January 2, 1996, the scheduled aggregate amount of all
maturities of long-term debt and interest classified as long-term
debt for the next five years is as follows:

1996 $ 3,798
1997 5,493
1998 5,493
1999 5,493
2000 5,493
Thereafter 52,638
$ 78,408

5. PARTNERS' CAPITAL

On January 2, 1996, the Partnership issued an aggregate 95%
limited partner interest to the holders of the 11% Notes in
exchange for reductions of debt and interest thereon, as
described in Note 2. Subsequent to year end, the holders of the
95% limited partner interest exercised their option to put the
limited partner interest to the Company in exchange for common
stock of the Company. As a result of a series of financial
restructuring transactions, the Company owns a 1% general partner
interest and 95% limited partner interest and indirectly owns the
remaining 4% limited partner interest through the Holding
Partnership.

The Partnership made a distribution to the Holding Partnership in
fiscal 1996 by issuing 12% Notes in the amount of $1,700. The
liability for the notes was recorded as $3,041, including
interest accrued through maturity of the notes in accordance with
SFAS 15.

Each item of income, gain, loss and deduction is allocated in
accordance with the Partnership Agreement based on the partners'
respective percentage interest. The allocation of losses and
deductions, including those of subsidiary partnerships, are
limited to the respective partners' basis.

6. INCOME TAXES

The Partnership is currently a nontaxable entity.

The Internal Revenue Service ("IRS") has examined the federal
income tax returns of certain of the Company's subsidiaries and
of their former majority stockholder, Mr. Michael J. Levenson,
for years prior to 1990. The IRS has asserted claims of
approximately $5,500, plus interest, against certain of the
Company's subsidiaries and/or the shareholder's tax liability.
Certain of the Company's subsidiary corporations may have
obligations for federal, state, local or other taxes incurred or
assessed against persons or entities as a result of being, or
being treated by any taxing authority as, a direct or indirect
shareholder of the subsidiary corporations, under certain
circumstances. The Company intends to vigorously contest the IRS
assessment and believes that the outcome of these audits will not
have a material adverse effect on its equity, results of
operations, and liquidity and capital resources after
consideration of the applicable amounts previously accrued.

7. EMPLOYEE BENEFIT PLANS

The Partnership has a noncontributory defined benefit pension
plan for which benefit accruals were frozen effective June 30,
1989. The funding policy is to make the minimum annual
contribution required by applicable regulations. The
Partnership, the sponsor of the plan, agreed to provide for
funding by the 1998 plan year, of at least two-thirds of the
$4,569 of the unfunded current liability which existed at the
beginning of the 1993 plan year. If the agreed upon funding is
not satisfied by the minimum required annual contributions, as
adjusted for the deficit reduction contribution, determined under

Section 412 of the Internal Revenue Code, the Partnership will
make contributions in excess of the minimum annual requirement.
Pension expense was $592, $785 and $1,013 for the years ended
January 2, 1996, January 3, 1995 and December 28, 1993,
respectively.

Beginning January 1, 1989, the Partnership was required to
recognize the additional minimum liability aspects of Statement
of Financial Accounting Standards No. 87, "Employers' Accounting
for Pensions" ("SFAS 87"). SFAS 87 requires the recognition of
an additional pension liability in the amount of the
Partnership's unfunded accumulated benefit obligation in excess
of accrued pension cost with an equal amount to be recognized as
either an intangible asset or a reduction of equity. Based upon
plan actuarial and asset information as of December 28, 1993,
January 3, 1995 and January 2, 1996, the Partnership recorded an
increase at December 28, 1993, a decrease at January 3, 1995 and
an increase at January 2, 1996 to the noncurrent pension
liability and a corresponding decrease or increase to partners'
capital of approximately $3,466, $4,365 and $1,992 because the
unfunded accumulated benefit obligation increased or decreased,
respectively.

The funded status of the plan amounts recognized in the balance
sheets and major assumptions used to determine these amounts are
as follows.

Years Ended
January 2, January 3, December 28,
1996 1995 1993

Components of pension expense:
Interest cost $ 966 $ 972 $ 1,171
Actual return on plan assets (1,475) (74) (306)
Net amortization and deferral 1,101 (113) 148
Service cost

Net pension expense $ 592 $ 785 $ 1,013

Actuarial present value of
projected benefit obligations:
Vested $(14,211) $11,492)

Plan assets at fair value
(primarily money market
cash investments, corporate
equities and corporate bonds) 10,349 9,117

Projected benefit obligation in
excess of plan assets (3,862) (2,375)
Net loss 5,283 3,291
Additional liability for unfunded
accumulated benefit obligation (5,283) (3,291)

Accrued pension cost $(3,862) $(2,375)

Major assumptions at beginning
of year:

Discount rate 7.00% 8.50%
Expected long-term rate of
return on plan assets 9.00% 9.00%

Effective January 2, 1996, for purposes of calculating benefit
obligations, the assumed discount rate was changed from 8.50% to
7.00% to reflect the current financial market for high-quality
debt instruments. There have been no other changes in the plan's
major actuarial assumptions for the three years ended January 2,
1996.

The Partnership also has a voluntary savings plan (401(k) plan)
covering all eligible employees of the Partnership and affiliates
through which it contributes discretionary amounts as approved by
the Board of Directors of the general partner. Administrative
expenses paid by the Partnership for the years ended January 2,
1996, January 3, 1995 and December 28, 1993 amounted to $2, $24
and $24, respectively.

8. COMMITMENTS AND CONTINGENCIES

The Partnership leases restaurant properties under various
noncancelable operating lease agreements which expire between
1996 and 2015 and require various minimum annual rentals.
Certain leases contain escalation clauses. Further, many leases
have renewal options ranging from one five-year period to ten
five-year periods.

Certain of the leases also require the payment of property taxes,
maintenance charges, advertising charges, insurance and parking
lot charges, and additional rentals based on percentages of sales
in excess of specified amounts.

On November 15, 1993, the Partnership entered into an amendment
of a master sublease agreement pursuant to which it leased 43
properties from Kmart. Pursuant to the amendment and subject to
the terms and conditions thereof, two properties were removed
from the master sublease, and the aggregate monthly rent for the
period August 1, 1993 through and including December 31, 1996 has
been reduced by 25% and the aggregate monthly rent for period
January 1, 1997 through and including December 31, 1999 has been
reduced by 20%. The reductions in rent are subject to
termination by Kmart if Kevin E. Lewis ceases to be Chairman of
the Board of Directors of the Company. In consideration, the
Company had granted Kmart warrants to purchase 1.7 million shares
of Class A Common Stock of the Company on or prior to September
1, 2003, at $.75 per share. As a part of the Restructuring,
effective January 2, 1996, these warrants were terminated and
replaced with warrants to purchase 8,108,159 shares of Common
Stock on or before January 2, 2001, at $0.074 per share, and
following the reverse stock split, Kmart retained warrants to
purchase 540,544 shares at $1.11 per share.

The total minimum annual rental commitment and future minimum
sublease rental income under noncancelable operating leases are
as follows as of January 2, 1996:

MINIMUM SUBLEASE
YEAR RENT INCOME

1996 $ 10,099 $ 461
1997 9,623 530
1998 8,930 510
1999 8,393 510
2000 8,972 420
For the remaining terms of the leases 50,742 1,059

Total rental expense included in the statements of operations is
$11,929, $12,408 and $13,510, which includes $1,187, $1,095 and
$1,526 of additional rent based on net sales for the years ended
January 2, 1996, January 3, 1995 and December 28, 1993,
respectively.

The results of operations include sublease rent income of $717,
$312 and $178 for the years ended January 2, 1996, January 3,
1995 and December 28, 1993, respectively.

The Partnership has letters of credit outstanding at January 2,
1996 and January 3, 1995, amounting to approximately $1,000 each
year, which are required under its insurance program. A
restricted cash deposit balance of $800 at January 2, 1996 and
January 3, 1995 serves as collateral for these letters of credit.

The Partnership, in the ordinary course of business, is a party
to various legal actions. In the opinion of management, these
actions ultimately will be disposed of in a manner which will not
have a material adverse effect upon the Partnership's capital,
results of operations, and liquidity and capital resources after
consideration of the applicable amounts previously accrued.

On August 11, 1995, a complaint was filed in the District Court
of Travis County, Texas by former chairman of the board of the
Company, Michael J. Levenson, both individually and on behalf of
his minor son Jonathan Jacob Levenson, James Rich Levenson,
Benjamin Aaron Levenson, S.D. Levenson, General Consulting Group,
Inc. and Cerros Morado. The complaint named as defendants the
Company, the Holding Partnership, the Partnership, Cavalcade &
Co., individual members of the Board of Directors, Houlihan,
Lokey, Howard & Zukin, Inc., KL Park, KL Group, Skadden, Arps,
Slate, Meagher & Flom, certain of the then current and former 11%
Noteholders, Deloitte & Touche LLP, Kmart and certain partners
and employees of the foregoing.

The complaint alleged, among other things, that the Company and
certain defendants conspired to wrest control of the Company away
from the Levensons by fraudulently inducing them to transfer
their working control of the Company through a series of
transactions in which the Levensons transferred Class B Common
Stock and stock options in the Company to KL Park and KL Group.
Plaintiffs sought actual damages of approximately $16,425, as
well as punitive damages.

On October 6, 1995, the Levensons filed a Notice of Non-Suit as
to certain of the defendants, including the Company, the
Partnership, the Holding Partnership, Cavalcade & Co. and
specific individual members of the Board of Directors (other than
William E. Prather and Kevin E. Lewis) and amended their
complaint. As a result of such Notice of Non-Suit, the named
entities and individuals are no longer defendants in the Levenson
litigation.

The Company is required to indemnify certain of the defendants
originally named in the Levensons' complaint, including the
individual members of the Board of Directors and certain of their
affiliated entities pursuant to the Company's Certificate of
Incorporation and otherwise, for any and all damages that may
result from such complaint. As part of the Restructuring, the
Company also agreed to indemnify certain parties named as
defendants in the Levensons' complaint, including the holders of
the 11% Notes, KL Group, KL Park and Kmart, from and against all
claims, actions, suits and other legal proceedings, damages,
costs, interest, charges, counsel fees and other expenses and
penalties which such entity may sustain or incur to any person
whatsoever (excluding judgments in the case of KL Group and KL
Park) by reason of or arising out of the Levenson litigation.
Under no circumstances will the Company be obligated to indemnify
any party for any liability resulting from such party's willful
misconduct or bad faith.

9. RELATED PARTY TRANSACTIONS

The Partnership had receivables of $28 and $72 at January 2, 1996
and January 3, 1995, respectively, from the general partner.

The receivable from affiliates consists primarily of obligations
from the Holding Partnership, the Company and Cavalcade
Development, L.P. and includes accounts receivable transferred to
the Partnership and receivables for the funding of operating
expenses of these entities, as these affiliates have limited
income sources.

In June, 1993, Michael J. Levenson resigned from his position of
Chairman of the Board and was terminated without cause as an
employee of the Company. The Company and certain of its
affiliates entered into an agreement with Mr. Levenson which
provided for quarterly payments of his severance and provision of
certain benefits to Mr. Levenson for a period of twenty-six
months versus the forty-five months he would have otherwise
received under his existing employment agreement. In September,
1993, this agreement was amended to substantially reduce the
severance compensation claims of Mr. Levenson to a period of
twelve months. During 1993, the Company paid $496 to Mr.
Levenson pursuant to the severance agreement. Mr. Levenson
released the Company from any future compensation obligations on
the consulting agreement with his affiliate and the funding
obligations on the Split-Dollar Life Insurance policy beyond
December 2, 1993. Mr. Levenson retained the right to acquire the
Company's receivable with respect to such policy from the Company
at its discounted present value. The option to purchase the
policy receivable expires on December 15, 1997. As a result of
these activities, the receivable was fully reserved by the
Company in the fourth quarter of 1993.

On September 28, 1994, the Partnership and M & B Restaurants, L.
C. ("M&B") entered into a Lease and Sublease Agreement (the
"Lease") and a Trademark License and Development Agreement (the
"License"). Under the terms of the Lease, the Partnership leases
two El Paso Bar-B-Que facilities to M&B, a company controlled by
William Prather, former CEO of the Company, for an initial term
ending December 31, 2003. Pursuant to the License, M&B agreed to
pay opening fees and royalties on 31 units required to be opened
by December 31, 2003 and to acquire the trademarks and other
intangibles used by The El Paso Bar-B-Que Company by December 31,
2003, but not earlier than December 31, 1997, for a cash payment
of seven times the prior four quarterly payments under the
License. The Partnership received $16 relating to the lease
during 1995. On November 10, 1995, Amendment One to Trademark
License and Development Agreement (the "Amendment") was executed
to modify to 25 the number of new units required to be opened by
December 31, 2003 and on which M&B agreed to pay opening fees and
royalties. The Amendment also modified the earliest buyout date
to December 31, 1999.

10. SPECIAL CHARGES

The loss from operations for the fifty-two week period ended
January 2, 1996 includes special charges of $12,273, which
includes $4,501 related to the reserve for store closings. Also
included in the special charges is $7,772 to recognize the write-
down of certain assets in property, plant and equipment to
estimated fair values in accordance with the adoption of SFAS
121.

Special charges for the fifty-three week period ended January 3,
1995 includes charges to reserves of $2,656 for the estimated
costs of closing five cafeteria locations and one specialty
restaurant, including approximately $1,164 for the write-down of
certain assets in property, plant and equipment to estimated fair
value. Also included is a credit of $442 related to the
settlement of a lawsuit by the Internal Revenue Service.

The loss from operations for the fifty-one and one-half week
period ended December 28, 1993 includes special charges of
$11,867. These include charges of $8,729 reflecting management's
intention to close thirteen restaurants, including the write-down
of certain assets in property, plant and equipment to estimated
fair value, and to adjust the units previously reserved for
closing; a special credit of $1,937 for the reversal of
liabilities accrued relative to two cafeterias which were
previously closed and for which the lease agreements were
terminated; $1,209 for the estimated costs of closing one
specialty unit (closed May 1993) and two nonrestaurant units
(closed in January and February 1994), and charges of $515 for
severance amounts payable to the former Chairman of the Board per
the terms of an agreement dated June 24, 1993, and amended
September 30, 1993 (see Note 9). Also included are special
charges of $1,464 for the Company's operating and financial
restructuring, $761 for writing down the values of certain
operating assets, $741 of estimated costs related to certain
lawsuits, including an action filed in U.S. District Court for
the Northern District of Lubbock by the Internal Revenue Service
against Cafeteria Operators, et al. as alleged successors by
merger to Bishop Buffets, Inc., alleging the Internal Revenue
Service issued an erroneous refund to Bishop Buffets, Inc. on
December 6, 1988, and $385 for writing down the values of certain
non-operating assets.

11. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of
Statement of Financial Accounting Standards No. 107, "Disclosures
About Fair Value of Financial Instruments" ("SFAS 107"). The
estimated fair value amounts have been determined by the
Partnership using available market information and appropriate
valuation methodologies. However, considerable judgment is
necessarily required in interpreting market data to develop the
estimates of fair value. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts that the
Partnership could realize in a current market exchange. The use
of different market assumptions and/or estimation methodologies
may have a material effect on the estimated fair value amounts.

At January 2, 1996, the carrying amount and the fair value of the
Partnership's financial instruments, as determined under
SFAS 107, were as follows:

CARRYING ESTIMATED
AMOUNT FAIR VALUE

Long-term debt, including current
portion and interest accrued
through maturity $ 78,408 $45,495

The Partnership's long-term debt is not publicly traded, and as a
result, market quotes are not readily available. The fair value
of the long-term debt at January 2, 1996 is based upon the face
amount of the debt resulting from the Restructuring described in
Note 2 as management believes that this is most indicative of the
fair value. The carrying amount of the debt at January 3, 1995
was $192,921. The debt instruments were held by a limited number
of holders, were not publicly traded and, due to the pending
Restructuring, an estimated fair value was not practicable to
determine.

12. CONDENSED PRO FORMA INFORMATION (UNAUDITED)

The financial restructuring transactions have been accounted for
in accordance with SFAS 15 and accordingly, the indebtedness was
recorded at the sum of all future principal and interest payments
and there will be no recognition of interest expense in future
periods. Following is condensed pro forma information for the
fiscal year ended January 2, 1996, reflecting the elimination of
$25,973 interest expense related to such indebtedness.

Revenues $210,093

Cost of Sales 67,763
Selling, general and
administrative 127,000
Depreciation and amortization 14,002
Selling Charges 12,273

Operating Loss (10,945)

Interest Expense 236

Net Loss (11,181)

13. GOODWILL

After a careful analysis of the Company's financial condition as
part of management's periodic review of the carrying amount of
goodwill, the Company determined at the end of fiscal 1993, based
upon historical operating trends, and without anticipating the
effects of any potential restructuring of its debts and other
obligations, that its projected results would not support the
future amortization of the Company's goodwill balance of
$135,479, including the Operating Partnership's goodwill balance
of $135,208. Accordingly, the Company wrote off its goodwill
balance, including the goodwill balance of the Operating
Partnership, in the fourth quarter of 1993.

14. QUARTERLY FINANCIAL DATA (UNAUDITED)

Thirteen weeks ended
April 4, 1995 July 4, 1995 Oct. 3, 1995 Jan. 2, 1996
Years ended
January 2, 1996:
Sales $ 52,754 $54,216 $53,944 $49,179
Gross profit(1) 35,711 36,282 36,528 33,100
Loss before
extraordinary
item (2) (5,683) (5,851) (6,539) (19,081)
Net income
(loss) (2)(3) (5,683) (5,851) (6,539) 138,538

Fourteen
Thirteen weeks ended weeks ended
Mar. 29, 1994 June 28, 1994 Sept. 27, 1994 Jan. 3, 1995
Years ended
January 3,
1995:
Sales $ 54,209 $ 56,046 $ 56,526 $ 58,405
Gross
profit(1) 37,192 38,344 39,119 39,752
Net loss (2) (5,194) (3,895) (4,903) (5,718)

(1) Gross profit is computed using cost of sales including
depreciation expense.
(2) See Note 10 Special Charges.
(3) See Note 2 Restructuring.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 15. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, to be paid in connection
with the sale of the Notes being registered, all of which will be
paid by the registrant. All amounts are estimates except the
registration fee.

Registration Fee . . . . . . . . . . . . . . . $ 15,784
Accounting Fees and Expenses . . . . . . . . . $ 20,000
Legal Fees and Expenses . . . . . . . . . . . $ 75,000
Trustee's Fees and Expenses . . . . . . . . . $ 5,000
Printing and Engraving Fees and Expenses . . . $ 5,000
Miscellaneous . . . . . . . . . . . . . . . . $ 10,000
--------
Total . . . . . . . . . . . . . . . . . . $130,784
========

ITEM 16. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 102(b)(7) of the General Corporation Law of Delaware
enables a Delaware corporation to provide in its certificate of
incorporation, and the Parent has so provided in its Restated
Certificate of Incorporation, for the elimination or limitation
of the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as
a director; provided, however, that a director's liability is not
eliminated or limited: (1) for any breach of the director's duty
of loyalty to the corporation or its stockholders; (2) for acts
or omissions not in good faith or which involve an intentional
misconduct or a knowing violation of law; (3) under Section 174
of the General Corporation Law of Delaware (which imposes
liability on directors for unlawful payment of dividends or
unlawful stock purchases or redemptions); or (4) for any
transaction from which the director derived an improper personal
benefit. The Restated Certificate of Incorporation further
provides that if the Delaware General Corporation Law is amended
to authorize the further elimination or limitation of the
liability of directors, then the liability of a director shall be
eliminated or limited to the fullest extent permitted by the
Delaware General Corporation Law, as amended.

Section 145 of the General Corporation Law of Delaware empowers a
corporation to indemnify any person who was or is a party or
witness or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that
he or she is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation or enterprise. Depending on the character of the
proceeding, a corporation may indemnify against expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with
such action, suit or proceeding if the person indemnified acted
in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. If
the person indemnified is not wholly successful in such action,
suit or proceeding, but is successful, on the merits or
otherwise, in one or more but less than all claims, issues or
matters in such proceeding, he or she may be indemnified against
expenses actually and reasonably incurred in connection with each
successfully resolved claim, issue or matter. In the case of an
action or suit by or in the right of the corporation, no
indemnification may be made in respect to any claim, issue or
matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was
brought shall determine that despite the adjudication of
liability such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
Section 145 provides that to the extent a director, officer,
employee or agent of a corporation has been successful in the
defense of any action, suit or proceeding referred to above or in
the defense of any claim, issue or manner therein, he or she
shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him or her in connection
therewith.

The By-laws of the Parent provide that, to the fullest
extent permitted by the General Corporation Law of the State of
Delaware, the Parent shall indemnify any person who was or is a
party or is threatened to be made a party to any action, suit or
proceeding of the type described above by reason of the fact that
he or she is or was a director or officer of the Parent or is or
was serving at the request of the Parent as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise. No expenses will be paid in
advance except, as authorized by the Board of Directors, to a
director or officer for expenses incurred while acting in his or
her capacity as a director or officer, who has delivered an
undertaking to the corporation to repay all amounts advanced if
it should be later determined that such director or officer was
not entitled to indemnification. The By-laws further provide
that the above rights of indemnification are not exclusive of any
other rights of indemnification that a director or officer may be
entitled to from any other source.

In addition, the Partnership Agreement of the Company
provides that the Company shall indemnify and hold harmless each
general partner, and any former general partner, of the Company,
their respective affiliates and all officers, directors,
partners, employees and agents of each general partner, former
general partner and their respective affiliates (individually,
an "Indemnitee"; provided, however, under no circumstances shall
Michael J. Levenson or any of his affiliates be considered an
Indemnitee) from and against all losses, claims, demands, costs,
damages, liabilities, joint and several, expenses (including
attorneys' fees and disbursements), judgments, fines, settlements
and other amounts arising from any and all claims, demands,
actions, suits, or proceedings, civil, criminal, administrative
or investigative, in which an Indemnitee may be involved, or
threatened to be involved, as a party or otherwise, relating to
or arising out of the Company, its property, business or affairs,
regardless of whether the Indemnitee continues to be a general
partner, an affiliate or an officer, director, partner, employee
or agent of a general partner or an affiliate at the time any
such liability or expense is paid or incurred, if the Indemnitee
acted in good faith and in a manner the Indemnitee reasonably
believed to be in the best interest of the Company and the
Indemnitee's course of conduct does not constitute actual fraud,
gross negligence or willful or wanton misconduct; provided,
however, that such indemnification will be recoverable only out
of the assets of the Company. The indemnification provided by
the Partnership Agreement of the Company is in addition to any
other rights to which the Indemnitee may be entitled to under any
agreement with the Company or by vote of the partners, as a
matter of law, or otherwise, as to both an action in the
Indemnitee's capacity and any action in another capacity, and
shall continue as to Indemnitee who has ceased to serve in such
capacity and shall inure to the benefit of the heirs, successors,
assigns, administrators, and personal representatives of the
Indemnitee. An Indemnitee shall not be denied indemnification
because the Indemnitee had an interest in the transaction with
respect to which the indemnification applies if the transaction
was not prohibited by the terms of the Partnership Agreement of
the Company.

Expenses incurred (including legal fees and expenses)
by, or on behalf of, the Indemnitee shall, from time to time, be
paid by the Company in advance of any final disposition upon the
approval of the general partner and the receipt of a written
undertaking by, or on behalf of, the Indemnitee to repay such
amounts if it shall ultimately be determined by a final, non-
appealable judgment of a court of competent jurisdiction that the
Indemnitee is not entitled to be indemnified by the Company. The
Company may purchase and maintain insurance on behalf of any
Indemnitee, enter into indemnity contracts with Indemnitees and
adopt written procedures pursuant to which arrangements are made
for the advancement of expenses and the funding of
indemnification obligations.

Each current director of the Parent has entered into an
Indemnification Agreement dated as of January 2, 1996 by and
between the Parent and such director pursuant to which the Parent
will indemnify such director and hold such director harmless from
any and all losses, expenses and fines to the fullest extent
authorized, permitted or not prohibited (i) by the Delaware
General Corporation Law or any other applicable law (including
judicial, regulatory or administrative interpretations or
readings thereof), the Parent's Certificate of Incorporation or
By-laws as in effect on the date of execution of the agreement or
other statutory provision authorizing such indemnification that
is adopted after January 2, 1996. In the event that after the
date of the agreements the Parent provides any greater right of
indemnification, in any respect, to any other person serving as
an officer or director of the Parent, then such greater right of
indemnification shall inure to the benefit of the respective
director and shall be deemed to be incorporated in the relevant
agreement as a basis for indemnity, at each director's election,
together with the indemnity expressly set forth therein.

ITEM 17. RECENT SALES OF UNREGISTERED SECURITIES.

On November 30, 1995, as part of the Restructuring, the
Company issued to former 11% Noteholders $40.0 million aggregate
principal amount of 12% Notes in exchange for $40.0 million
aggregate principal amount of 11% Notes in reliance upon the
exemptions provided by Sections 4(2) and 3(a)(9) of the
Securities Act.

On January 2, 1996, as part of the Restructuring, the
Company issued to former 11% Noteholders an aggregate of 95% of
the limited partnership interests of the Company in exchange for
approximately $153 aggregate principal amount (plus approximately
$46.6 million in accrued and unpaid interest) of 11% Notes in
reliance upon the exemptions provided by Sections 4(2) and
3(a)(9) of the Securities Act.

On January 2, 1996, as part of the Restructuring, the
Company issued a 12% Note in the principal amount of $1.7 million
to the Trustees of General Electric Pension Trust in settlement
of a $5.4 million, plus interest, judgment against
Furr's/Bishop's Cafeterias, L.P. in reliance upon the exemption
provided by Section 4(2) of the Securities Act.

ITEM 18. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

EXHIBITS DESCRIPTION

3.1 Certificate of Amendment to the Certificate of Limited
Partnership of Cafeteria Operators, L.P dated July 11,
1995.

3.2 Second Amended and Restated Agreement of Limited
Partnership of Cafeteria Operators, L.P. (included as
Exhibit I to the Exchange Agreement filed as Exhibit
10.1)

*4.1 Amended and Restated Indenture, dated as of November
15, 1995, by and between Cafeteria Operators, L.P. and
Fleet National Bank of Massachusetts (f/k/a Shawmut
Bank, N.A.).

**4.2 First Supplemental Indenture dated as of January 24,
1996 by and between Cafeteria Operators, L.P. and Fleet
National Bank of Massachusetts (f/k/a Shawmut Bank,
N.A.).

4.3 General Security Agreement dated March 27, 1992 by and
between Cafeteria Operators, L.P. and Shawmut Bank,
N.A.

4.4 Security Agreement dated March 27, 1992 by and between
Cafeteria Operators, L.P. and Shawmut Bank, N.A.

4.5 Form of Assignment and Security Agreements relating to
deposits at Amarillo National Bank and Carlsbad
National Bank dated March 27, 1992 by and between
Cafeteria Operators, L.P. and Shawmut Bank, N.A.

4.6 General Security Agreement dated March 27, 1992 by and
between Furr's/Bishop's Specialty Group, L.P. and
Shawmut Bank, N.A.

4.7 Assignment for Security (Trademarks) dated March 27,
1992 by Cafeteria Operators, L.P. filed with the Patent
and Trademark Office.

4.8 Assignment for Security (Trademarks) dated as of
December 28, 1995 by Cafeteria Operators, L.P. filed
with the Patent and Trademark Office.

4.9 Assignment for Security (Trademarks) dated as of
December 28, 1995 by Furr's/Bishop's Specialty Group,
L.P. filed with the Patent and Trademark Office.

4.10 Amended and Restated Security Agreement and Mortgage --
Trademarks and Patents dated as of December 31, 1995 by
and among Cafeteria Operators, L.P., Furr's/Bishop's
Specialty Group, L.P. and Fleet National Bank of
Massachusetts (f/k/a Shawmut Bank, N.A.).

4.11 Special Power of Attorney by dated March 27, 1992 by
Cafeteria Operators, L.P..

4.12 Special Power of Attorney dated as of December 28, 1995
by Cafeteria Operators, L.P.

4.13 Special Power of Attorney dated as of December 28, 1995
by Furr's/Bishop's Specialty Group, L.P.

4.14 Omnibus Agreement dated November 15, 1996 by and among
Cafeteria Operators, L.P., Specialty Group, L.P. and
Fleet National Bank of Massachusetts (f/k/a Shawmut
Bank, N.A.) (included as Exhibit E to the Exchange
Agreement filed as Exhibit 10.1)

4.15 First Amendment to Deed of Trust, dated as of November
15, 1995 by and between Cafeteria Operators, L.P. and
Fleet National Bank of Massachusetts (f/k/a Shawmut
Bank, N.A.) for premises located at Pima County,
Arizona

4.16 First Amendment to Deed of Trust, dated as of November
15, 1995 by and between Cafeteria Operators, L.P. and
Fleet National Bank of Massachusetts (f/k/a Shawmut
Bank, N.A.) for premises located at Jefferson County,
Colorado.

4.17 First Amendment to Deed of Trust, dated as of November
15, 1995 by and between Cafeteria Operators, L.P. and
Fleet National Bank of Massachusetts (f/k/a Shawmut
Bank, N.A.) for premises located at Clark County,
Nevada.

4.18 First Amendment to Deed of Trust, Security Agreement,
Financing Statement, Fixture Filing and Assignment of
Rents and Leases, dated as of November 15, 1995 by and
between Cafeteria Operators, L.P. and Fleet National
Bank of Massachusetts (f/k/a Shawmut Bank, N.A.) for
premises located at San Bernardino County, California.

4.19 First Amendment to Mortgage, Security Agreement and
Assignment of Leases and Rents, dated as of November
15, 1995 by and between Cafeteria Operators, L.P. and
Fleet National Bank of Massachusetts (f/k/a Shawmut
Bank, N.A.) for premises located at Johnson County,
Kansas.

4.20 First Amendment to Deed of Trust, Security Agreement
and Assignment of Leases and Rents, dated as of
November 15, 1995 by and between Cafeteria Operators,
L.P. and Fleet National Bank of Massachusetts (f/k/a
Shawmut Bank, N.A.) for premises located at St. Louis
County, Missouri.

4.21 First Amendment to New Mexico Deed of Trust, dated as
of November 15, 1995 by and between Cafeteria
Operators, L.P. and Fleet National Bank of
Massachusetts (f/k/a Shawmut Bank, N.A.) for premises
located at Bernalillo County, New Mexico.

4.22 First Amendment to Mortgage with Power of Sale, dated
as of November 15, 1995 by and between Cafeteria
Operators, L.P. and Fleet National Bank of
Massachusetts (f/k/a Shawmut Bank, N.A.) for premises
located at Tulsa County, Oklahoma.

4.23 First Amendment to Deed of Trust, Security Agreement
and Assignment of Leases, dated as of November 15, 1995
by and between Cafeteria Operators, L.P. and Fleet
National Bank of Massachusetts (f/k/a Shawmut Bank,
N.A.) for premises located at Taylor County, Texas.

4.24 First Amendment to Deed of Trust, Security Agreement
and Assignment of Leases, dated as of November 15, 1995
by and between Cafeteria Operators, L.P. and Fleet
National Bank of Massachusetts (f/k/a Shawmut Bank,
N.A.) for premises located at Cameron County, Texas.

4.25 First Amendment to Deed of Trust, Security Agreement
and Assignment of Leases, dated as of November 15, 1995
by and between Cafeteria Operators, L.P. and Fleet
National Bank of Massachusetts (f/k/a Shawmut Bank,
N.A.) for premises located at Dallas County, Texas.

4.26 First Amendment to Deed of Trust, Security Agreement
and Assignment of Leases, dated as of November 15, 1995
by and between Cafeteria Operators, L.P. and Fleet
National Bank of Massachusetts (f/k/a Shawmut Bank,
N.A.) for premises located at Lubbock County, Texas.

4.27 First Amendment to Deed of Trust, Security Agreement
and Assignment of Leases, dated as of November 15, 1995
by and between Cafeteria Operators, L.P. and Fleet
National Bank of Massachusetts (f/k/a Shawmut Bank,
N.A.) for premises located at Grayson County, Texas.

4.28 First Amendment to Deed of Trust, Security Agreement
and Assignment of Leases, dated as of November 15, 1995
by and between Cafeteria Operators, L.P. and Fleet
National Bank of Massachusetts (f/k/a Shawmut Bank,
N.A.) for premises located at Hopkins County, Texas.

***5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom.

*10.1 Exchange Agreement, dated as of November 15, 1995,
among Furr's/Bishop's, Incorporated, Cafeteria
Operators, L.P. and holders of the 11% Senior Secured
Notes.

12.1 Statement re Computation of Ratios.

**21.1 Subsidiaries of the Registrant.

***23.1 Consent of Deloitte & Touche LLP, as independent public
accountants.

***23.2 Consent of Skadden, Arps, Slate, Meagher & Flom
(included in their opinion filed as Exhibit 5.1).

***24.1 Power of Attorney (included in the Signature Page to
this Registration Statement).

***25.1 Statement of Eligibility of Trustee.

***27.1 Financial Data Schedule

(b) Financial Statement Schedules

Schedule Description Page

II Consolidated Valuation and S-1
Qualifying Accounts

* Incorporated by reference from Furr's/Bishop's,
Incorporated's Registration Statement on Form S-4, File
No. 33-38978.
** Incorporated by reference from Furr's/Bishop's,
Incorporated's Form 10-K for the year ended January 2,
1996.

*** Filed herewith.

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement;

(ii) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;

(iii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
registration statement;

(iv) To include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.

(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.

(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold as of the termination of the offering.

The undersigned Registrant hereby undertakes that:

(1) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant pursuant to
the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.

(2) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this Registration Statement in
reliance upon Rule 430A and contained in a form of prospectus
filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of
this Registration Statement as of the time it was declared
effective.

(3) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.

SIGNATURES

Pursuant to the requirements of the Securities Act of
1933, the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on June 27,
1996.

FURR'S/BISHOP'S INCORPORATED

By: /s/ Kevin E. Lewis
-------------------
Kevin E. Lewis
Chairman, President and Chief
Executive Officer

POWER OF ATTORNEYS

KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Kevin E. Lewis,
E.W. Williams, Jr. and Alton R. Smith, and each of them, his true
and lawful attorneys-in-fact and agents, with full power of
substitution and restitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration
Statement and to file the same with all exhibits thereto, and
other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to
be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do
or cause to be done by virtue thereof.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF
1933, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED:

Signature Title Date

/s/ Kevin E. Lewis Chairman, President and
___________________ Chief Executive Officer June 27, 1996
Kevin E. Lewis

*
/s/ ___________________ Director June 27, 1996
E. W. Williams, Jr.

___________________ Director
Russell A. Belinsky

*
/s/___________________ Director June 27, 1996
Suzanne Hopgood

*
/s/___________________ Director June 27, 1996
Gilbert C. Osnos

*
/s/__________________ Director June 27, 1996
Kenneth R. Reimer

*
/s/___________________ Director June 27, 1996
Sanjay Varma

/s/ Alton R. Smith Principal Accounting June 27, 1996
___________________ and Principal Financial
Alton R. Smith Officer

*By /s/ Kevin E. Lewis
___________________
Kevin E. Lewis
Attorney-in-Fact

INDEPENDENT AUDITORS' REPORT

To the Partners of
Cafeteria Operators, L.P.
Lubbock, Texas

We have audited the consolidated balance sheets of Cafeteria
Operators, L.P. (a Delaware limited partnership indirectly owned
by Furr's/Bishop's, Incorporated) and subsidiaries (collectively,
the Partnership) as of January 2, 1996 and January 3, 1995 and
the related consolidated statements of operations, changes in
partners' capital (deficit) and cash flows for the 52-week year
ended January 2, 1996, the 53-week year ended January 3, 1995,
and the 51-1/2-week year ended December 28, 1993, and have issued
our report thereon dated March 28, 1996 (included elsewhere in
this Registration Statement). Our audits also included the
financial statement schedules listed in Part II, Item 16(b) of
this Registration Statement. These financial statement schedules
are the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In
our opinion, such financial statement schedules, when considered
in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth
therein.

/s/ Deloitte Touche LLP
March 28, 1996
Dallas, Texas

Schedule II

CAFETERIA OPERATORS, L.P. AND SUBSIDIARIES

CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
(Dollars in Thousands)

Additions
Balance at Charged to Charged to Balance at
Beginning Costs and Other End of
Description of Period Expenses Accounts Deductions Period

QUARTER ENDED
APRIL 2, 1996:
Reserve for
store closing $ 5,655 $ 92 $ -- $ 342(1) $5,405

Allowance for
doubtful
accounts
receivable $ 27 $ 4 $ -- $ 2(3) $ 29

Other
valuation
accounts $ -- $ -- $ -- $ -- $ --

YEAR ENDED
JANUARY 2, 1996:
Reserve for
store closing $ 3,293 $4,156 $ -- $ 1,794(1) $5,655

Allowance for
doubtful
accounts
receivable $ 64 $ (16)(2) $ -- $ 21(3) $ 27

Other valuation
accounts $ -- $ -- $ -- $ -- $ --

YEAR ENDED
JANUARY 3, 1995:
Reserve for
store closing $ 4,657 $ 966 $ -- $2,330(1) $3,293

Allowance for
doubtful
accounts
receivable $ 35 $ 29 $ -- $ -- $ 64

Other valuation
accounts $ -- $ -- $ -- $ -- $ --

YEAR ENDED
DECEMBER 28, 1993:
Reserve for
store closing $3,317 $3,354 $ -- $2,014(1) $4,657

Allowance for
doubtful
accounts
receivable $ 129 $ (83)(4) $ -- 11(3) $ 35

Other
valuation
accounts $ -- $ -- $ -- $ -- $ --

(1) Includes costs and expenses incurred during the year on
closed units and severance payments.
(2) Net adjustment reflects 16 reversal of expense.
(3) Related asset account was written off.
(4) Net adjustment reflects 23 expense for additional reserves
and 106 reduction for related asset account being written
off.

June 27, 1996

Board of Directors
Furr's/Bishop's, Incorporated
6901 Quaker Avenue
Lubbock, Texas 79413

Re: Cafeteria Operators, L.P.
Registration Statement on Form S-1

Ladies and Gentlemen:

We have acted as special counsel to Cafeteria Opera-
tors, L.P., a Delaware limited partnership (the "Compa-
ny"), in connection with the sale by the selling security
holders named in the Registration Statement referred to
below of up to $42,299,505.79 aggregate principal amount of
12% Senior Secured Notes due December 31, 2001 (the
"Notes") of the Company.

This opinion is delivered in accordance with the
requirements of Item 601 (b)(5) of Regulation S-K under
the Securities Act of 1933, as amended.

In connection with this opinion, we have examined
and are familiar with originals or copies, certified or
otherwise identified to our satisfaction, of (i) the
Registration Statement of the Company on Form S-1 filed
with the Securities and Exchange Commission (the "Commis-
sion") on the date hereof (the "Registration Statement"),
(ii) the Amended and Restated Indenture dated as of
November 15, 1995 by and between the Company and Fleet
National Bank of Massachusetts (f/k/a Shawmut Bank,
N.A.), as trustee (the "Indenture"), (iii) the certifi-
cates evidencing the Notes, (iv) the Certificate of
Limited Partnership and Limited Partnership Agreement of
the Company, as amended to date, and (v) resolutions
adopted by the general partner of the Company relating
to, among other things, the issuance of the Notes. We
have also examined originals or copies, certified or
otherwise identified to our satisfaction, of such records
of the Company and such agreements, certificates of
public officials, certificates of officers or other
representatives of the Company and others, and such other
documents, certificates and records as we have deemed
necessary or appropriate as a basis for the opinion set
forth herein.

In our examination, we have assumed the genuineness
of all signatures, the legal capacity of all natural
persons, the authenticity of all documents submitted to
us as originals, the conformity to original documents of
all documents submitted to us as certified, conformed or
photostatic copies, and the authenticity of originals of
such copies. As to any facts material to this opinion
which we did not independently establish or verify, we
have relied upon statements or representations of offi-
cers and other representatives of the Company and others.

Members of this firm are admitted to the bar in the
States of Delaware and New York, and we express no opin-
ion as to the laws of any other jurisdiction.

Based upon the foregoing, we are of the opinion that
the Notes are valid and binding obligations of the Compa-
ny entitled to the benefits of the Indenture and enforce-
able against the Company in accordance with their terms,
except to the extent that (a) enforcement thereof may be
limited by (1) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (2)
general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in
equity) and (b) any waiver with respect to the exercise
of remedies against the collateral granted pursuant to
the Collateral Documents (as defined in the Indenture)
may be deemed unenforceable.

We hereby consent to the filing of this opinion with
the Commission as Exhibit 5.1 to the Registration State-
ment. We also consent to the reference to our firm under
the caption "Legal Matters" in the Registration State-
ment. In giving such consent we do not thereby admit
that we are in the category of persons whose consent is
required under Section 7 of the Act or the rules and
regulations of the Commission.

Very truly yours,

/s/ SKADDEN, ARPS, SLATE,
MEAGHER & FLOM

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Registration Statement of Cafeteria Operators,
L.P. on Form S-1 of our report dated March 28, 1996, relating to Cafeteria
Operators, L.P. (the Partnership) appearing in the Prospectus, which is part
of this Registration Statement.

We also consent to the reference to us under the heading "Experts" in such
Prospectus.

/s/Deloitte & Touche LLP
Dallas, Texas
June 27, 1996

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

----------

FORM T-1

----------

STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE
TRUST INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE

----------

/ / CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(B)(2)

FLEET NATIONAL BANK
---------------------------------------------------------
(Exact name of trustee as specified in its charter)

<TABLE>
<S> <C>
Not applicable 04-317415
- ------------------------------- -----------------------------
(State of incorporation (I.R.S. Employer
if not a national bank) Identification No.)

One Monarch Place, Springfield, MA 01102
- ---------------------------------------- -----------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>

Pat Beaudry, 777 Main Street, Hartford, CT 06115 (203) 728-2065
--------------------------------------------------------------
(Name, address and telephone number of agent for service)

CAFETERIA OPERATORS, L.P.
---------------------------------------------------
(Exact name of obligor as specified in its charter)

Delaware 75-2186655
- ------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

6901 Quaker Avenue, Lubbock, Texas 79413
- ---------------------------------------- -----------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>

12% Senior Secured Notes Due December 31, 2001
------------------------------------------------------------------
(Title of the indenture securities)

<PAGE>

Item 1. General Information.

Furnish the following information as to the trustee:

(a) Name and address of each examining or supervising authority to
which it is subject,

The Comptroller of the Currency,
Washington, D.C.

Federal Reserve Bank of Boston
Boston, Massachusetts

Federal Deposit Insurance Corporation
Washington, D.C.

(b) Whether it is authorized to exercise
corporate trust powers:

The trustee is so authorized.

Item 2. Affiliations with obligor and underwriter. If the obligor or
any underwriter for the obligor is an affiliate of the trustee,
describe each such affiliation.

None with respect to the trustee.

Item 16. List of exhibits.

List below all exhibits filed as a part of this statement of
eligibility and qualification.

(1) A copy of the Articles of Association of the trustee as
now in effect.

(2) A copy of the Certificate of Authority of the trustee
to do business.

(3) A copy of the Certification of Fiduciary Powers of the
trustee.

(4) A copy of the By-Laws of the trustee as now in effect.

(5) Consent of the trustee required by Section 321(b)
of the Act.

(6) A copy of the latest Consolidated Reports of Condition
and Income of the trustee published pursuant to law or
the requirements of its supervising or examining authority.

NOTES

In as much as this Form T-1 is filed prior to the ascertainment by the trustee
of all facts on which to base answers to Item 2, the answers to said Items are
based upon imcomplete information. Said Items may, however, be considered
correct unless amended by an amendment to this Form T-1.

<PAGE>

SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939,
the trustee, Fleet National Bank, a national banking association organized and
existing under the laws of the United States, has duly caused this statement of
of eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Hartford, and State of
Connecticut, on the 6th day of June, 1996.

FLEET NATIONAL BANK,
AS TRUSTEE

By: /s/ Frank Kimball
-------------------------
Frank Kimball
Its Vice President

<PAGE>

EXHIBIT 1

ARTICLES OF ASSOCIATION
OF
FLEET NATIONAL BANK

FIRST. The title of this Association, which shall carry on the business of
banking under the laws of the United States, shall be "Fleet National Bank."

SECOND. The main office of the Association shall be in Springfield, Hampden
County Commonwealth of Massachusetts. The general business of the Association
shall be conducted at its main office and its branches.

THIRD. The board of directors of this Association shall consist of not less
than five (5) nor more than twenty-five (25) shareholders, the exact number of
directors within such minimum and maximum limits to be fixed and determined
from time to time by resolution of a majority of the full board of directors or
by resolution of the shareholders at any annual or special meeting thereof.
Unless otherwise provided by the laws of the United States, any vacancy in the
board of directors for any reason, including an increase in the number thereof,
may be filled by action of the board of directors.

FOURTH. The annual meeting of the shareholders for the election of directors
and the transaction of whatever other business may be brought before said
meeting shall be held at the main office or such other place as the board of
directors may designate, on the day of each year specified therefore in the
bylaws, but if no election is held on that day, it may be held on any
subsequent day according to the provisions of law; and all elections shall be
held according to such lawful regulations as may be prescribed by the board of
directors.

FIFTH. The authorized amount of capital stock of this Association shall be
eight million five hundred thousand (8,500,000) shares of which three million
five hundred thousand (3,500,000) shares shall be common stock with a
par value of six and 25/100 dollars ($6.25) each, and of which five million
(5,000,000) shares without par value shall be preferred stock. The capital
stock may be increased or decreased from time to time, in accordance with
the provisions of the laws of the United States.

No holder of shares of the capital stock of any class of the Association shall
have any pre-emptive or preferential right of subscription to any shares of any
class of stock of the Association, whether now or hereafter authorized, or to
any obligations convertible into stock of the Association, issued or sold, nor
any right of subscription to any thereof other than such, if any, as the board
of directors, in its discretion, may from time to time determine and at such
price as the board of directors may from time to time fix.

<PAGE>

The board of directors of the Association is authorized, subject to limitations
prescribed by law and the provisions of this Article, to provide for the
issuance from time to time in one or more series of any number of the preferred
shares, and to establish the number of shares be included in each series, and
to fix the designation, relative rights, preferences, qualifications and
limitations of the shares of each such series. The authority of the board of
directors with respect to each series shall include, but not be limited to,
determination of the following:

a. The number of shares constituting that series and the distinctive
designation of that series;

b. The dividend rate on the shares of that series, whether dividends shall be
cumulative, and, if so, from which date or dates, and whether they shall be
payable in preference to, or in another relation to, the dividends payable
to any other class or classes or series of stock;

c. Whether that series shall have voting rights, in addition to the voting
rights provided by law, and, if so, the terms of such voting rights;

d. Whether that series shall have conversion or exchange privileges, and,
if so, the terms and conditions of such conversion or exchange, including
provision for the adjustment of the conversion or exchange rate in such
events as the board of directors shall determine;

e. Whether or not the shares of that series shall be redeemable, and, if so,
the terms and conditions of such redemption, including the manner of
selecting shares for redemption if less than all shares are to be redeemed,
the date or dates upon or after which they shall be redeemable, and the
amount per share payable in case of redemption, which amount may vary under
different conditions and at different redemption dates;

f. Whether that series shall be entitled to the benefit of a sinking fund to
be applied to the purchase or redemption of shares of that series, and, if
so, the terms and amounts of such sinking fund;

g. The right of the shares of that series to the benefit of conditions and
restrictions upon the creation of indebtedness of the Association or any
subsidiary, upon the issue of any additional stock (including additional
shares of such series or of any other series) and upon the payment of
dividends or the making of other distributions on, and the purchase,
redemption or other acquisition by the Association or any subsidiary of
any outstanding stock of the Association;

h. The right of the shares of that series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the Association and
whether such rights shall be in preference to, or in another relation to,
the comparable rights of any other class or classes or series of stock; and

i. Any other relative, participating, optional or other special rights,
qualifications, limitations or restrictions of that series.

Shares of any series of preferred stock which have been redeemed (whether
through the operation of a sinking fund or otherwise) or which, if convertible
or exchangeable, have been converted into or exchanged for shares of stock of
any other class or classes shall have the status of authorized and unissued
shares of preferred stock of the same series and may be reissued as a part of
the series of which they were originally a part or may be reclassified and
reissued as part of a new series of preferred stock to be created by resolution
or resolutions of the board of directors or as part of any other series or
preferred stock, all subject to the conditions and the restrictions adopted by
the board of directors providing for the issue of any series of preferred
stock and by the provisions of any applicable law.

Subject to the provisions of any applicable law, or except as otherwise
provided by the resolution or resolutions providing for the issue of any series
of preferred stock, the holders of outstanding shares of common stock shall
exclusively possess voting power for the election of directors and for all
purposes, each holder of record of shares of common stock being entitled to one
vote for each share of common stock standing in his name on the books of the
Association.

Except as otherwise provided by the resolution or resolutions providing for the
issue of any series of preferred stock, after payment shall have been made to
the holders of preferred stock of the full amount of dividends to which they
shall be entitled pursuant to the resolution or resolutions providing for the
issue of any other series of preferred stock, the holders of common stock shall
be entitled, to the exclusion of the holders of preferred stock of any and all
series, to receive such dividends as from time to time may be declared by the
board of directors.

Except as otherwise provided by the resolution or resolutions for the issue
of any series of preferred stock, in the event of any liquidation, dissolution
or winding up of the Association, whether voluntary or involuntary, after
payment shall have been made to the holders of preferred stock of the full
amount to which they shall be entitled pursuant to the resolution or
resolutions providing for the issue of any series of preferred stock the
holders of common stock shall be entitled, to the exclusion of the holders of
preferred stock of any and all series, to share, ratable according to the
number of shares of common stock held by them, in all remaining assets of the
Association available for distribution to its shareholders.

The number of authorized shares of any class may be increased or decreased by
the affirmative vote of the holders of a majority of the stock of the
Association entitled to vote.

<PAGE>

SIXTH. The board of directors shall appoint one of its members president of
this Association, who shall be chairman of the board, unless the board appoints
another director to be the chairman. The board of directors shall have the
power to appoint one or more vice presidents; and to appoint a secretary and
such other officers and employees as may be required to transact the business
of this Association.

The board of directors shall have the power to define the duties of the
officers and employees of the Association; to fix the salaries to be paid to
them; to dismiss them; to require bonds from them and to fix the penalty
thereof; to regulate the manner in which any increase of the capital of the
Association shall be made; to manage and administer the business and affairs of
the Association; to make all bylaws that it may be lawful for them to make; and
generally to do and perform all acts that it may be legal for a board of
directors to do and perform.

SEVENTH. The board of directors shall have the power to change the location of
the main office to any other place within the limits of the City of Hartford,
Connecticut, without the approval of the shareholders but subject to the
approval of the Comptroller of the Currency; and shall have the power to
establish or change the location of any branch or branches of the Association
to any other location, without the approval of the shareholders but subject to
the approval of the Comptroller of the Currency.

EIGHTH. The corporate existence of this Association shall continue until
terminated in accordance with the laws of the United States.

NINTH. The board of directors of this Association, or any three or more
shareholders owning, in the aggregate, not less than ten percent (10%) of the
stock of this Association, may call a special meeting of shareholders at any
time. Unless otherwise provided by the laws of the United States, a notice of
the time, place and purpose of every annual and special meeting of the
shareholders shall be given by first class mail, postage prepaid, mailed at
least ten (10) days prior to the date of such meeting to each shareholder of
record at his address as shown upon the books of this Association.

TENTH. (a) Right to Indemnification. Each person who was or is made a party
or is threatened to be made a party to any threatened, pending or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative (hereinafter a "proceeding"), by reason of the fact that he or
she is or was a director, officer or employee of the Association or is or was
serving at the request of the Association as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, limited
liability company, trust, or other enterprise, including service with respect
to an employee benefit plan, shall be indemnified and held harmless by the
Association to the fullest extent authorized by the law of the state in which
the Association's ultimate parent company is incorporated, except as provided
in subsection (b). The aforesaid indemnity shall protect the indemnified
person against all expense, liability and loss (including attorney's fees,
judgements, fines ERISA excise taxes or penalties, and amounts paid in
settlement) reasonably incurred by such person in connection with such a
proceeding. Such indemnification shall continue as to a person who has ceased
to be a director, officer or employee and shall inure to the benefit of his or
her heirs, executors, and administrators, but shall only cover such person's
period of service with the Association. The Association may, by action of its
Board of Directors, grant rights to indemnification to agents of the
Association and to any director, officer, employee or agent of any of its
subsidiaries with the same scope and effect as the foregoing indemnification
of directors and officers.

(b) Restrictions on Indemnification. Notwithstanding the foregoing, (i) no
person shall be indemnified hereunder by the Association against expenses,
penalties, or other payments incurred in an administrative proceeding or action
instituted by a federal bank regulatory agency which proceeding or action
results in a final order assessing civil money penalties against that person,
requiring affirmative action by that person in the form of payments to the
Association, or removing or prohibiting that person from service with the
Association, and any advancement of expenses to that person in that proceeding
must be repaid; and (ii) no person shall be indemnified hereunder by the
Association and no advancement of expenses shall be made to any person
hereunder to the extent such indemnification or advancement of expenses would
violate or conflict with any applicable federal statute now or hereafter in
force or any applicable final regulation or interpretation now or hereafter
adopted by the Office of the Comptroller of the Currency ("OCC") or the Federal
Deposit Insurance Corporation ("FDIC"). The Association shall comply with any
requirements imposed on it by any such statue or regulation in connection with
any indemnification or advancement of expenses hereunder by the Association.
With respect to proceedings to enforce a claimant's rights to indemnification,
the Association shall indemnify any such claimant in connection with such a
proceeding only as provided in subsection (d) hereof.

(c) Advancement of Expenses. The conditional right to indemnification
conferred in this section shall be a contract right and shall include the
right to be paid by the Association the reasonable expenses (including
attorney's fees) incurred in defending a proceeding in advance of its final
disposition (an "advancement of expenses"); provided, however, that an
advancement of expenses shall be made only upon (i) delivery to the Association
of a binding written undertaking by or on behalf of the person receiving the
advancement to repay all amounts so advanced if it is ultimately determined
that such person is not entitled to be indemnified in such proceeding,
including if such proceeding results in a final order assessing civil money
penalties against that person, requiring affirmative action by that person
in the form of payments to the Association, or removing or prohibiting that
person from service with the Association, and (ii) compliance with any other
actions or determinations required by applicable law, regulation or OCC or FDIC
interpretation to be taken or made by the Board of Directors of the Association
or other persons prior to an advancement of expenses. The Association shall
cease advancing expenses at any time its Board of Directors believes that any
of the prerequisites for advancement of expenses are no longer being met.

(d) Right of Claimant to Bring Suit. If a claim under subsection (a) of the
section is not paid in full by the Association within thirty (30) days after
written claim has been received by the Association, the claimant may at any time
thereafter bring suit against the Association to recover the unpaid amount
of the claim. If successful in whole or in part in any such suit, or in a
suit brought by the Association to recover an advancement of expenses pursuant
to the terms of an undertaking, the claimant shall be entitled to be paid also
the expense of prosecuting or defending such claim. It shall be a defense to
any such action brought by the claimant to enforce a right to indemnification
hereunder (other than an action brought to enforce a claim for an advancement
of expenses where the required undertaking, if any, has been tendered to the
Association) that the claimant has not met any applicable standard for
indemnification under the law of the state in which the Association's ultimate
parent company is incorporated. In any suit brought by the Association to
recover an advancement of expenses pursuant to the terms of an undertaking, the
Association shall be entitled to recover such expenses upon a final
adjudication that the claimant has not met any applicable standard for
indemnification standard for indemnification under the law of the state in
which the Association's ultimate parent company is incorporated.

(e) Non-Exclusivity of Rights. The rights to indemnification and the
advancement of expenses conferred in this section shall not be exclusive of any
other right which any person may have or hereafter acquired under any statute,
agreement, vote of stockholders or disinterested directors or otherwise.

(f) Insurance. The Association may purchase, maintain, and make payment or
reimbursement for reasonable premiums on, insurance to protect itself and any
director, officer, employee or agent of the Association or another corporation,
partnership, joint venture, trust or other enterprise against any expense,
liability or loss, whether or not the Association would have the power to
indemnify such person against such expense, liability or loss under the law of
the state in which the Association's ultimate parent company is incorporated;
provided however, that such insurance shall explicitly exclude insurance
coverage for a final order of a federal bank regulatory agency assessing civil
money penalties against an Association director, officer, employee or agent.

ELEVENTH. These articles of association may be amended at any regular or
special meeting of the shareholders by the affirmative vote of the holders of a
majority of the stock of this Association, unless the vote of the holders of
greater amount of stock is required by law, and in that case by the vote of the
holders of such greater amount. The notice of any shareholders' meeting at
which an amendment to the articles of association of this Association is to be
considered shall be given as hereinabove set forth.

I hereby certify that the articles of association of this Association, in their
entirety, are listed above in items first through eleventh.

Secretary/Assistant Secretary
- --------------------------------------------------

Dated at , as of .
--------------------------------------- --------------------

Revision of February 15, 1996

<PAGE>

EXHIBIT 2

[LOGO]

- --------------------------------------------------------------------------------
COMPTROLLER OF THE CURRENCY
ADMINISTRATOR OF NATIONAL BANKS
- --------------------------------------------------------------------------------

Washington, D.C. 20219

CERTIFICATE

I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify
that:

(1) The Comptroller of the Currency, pursuant to Revised Statutes
324, et seq., as amended, 12 U.S.C. 1, et seq., as amended, has possession,
custody and control of all records pertaining to the chartering, regulation and
supervision of all National Banking Associations.

(2) "Fleet National Bank of Connecticut", Hartford, Connecticut,
(Charter No. 1338), is a National Banking Association formed under the
laws of the United States and is authorized thereunder to transact the
business of banking on the date of this Certificate.

IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal of
office to be affixed to these presents at
the Treasury Department, in the City of
Washington and District of Columbia, this
4th day of April, 1996.

/s/ EUGENE A. LUDWIG
----------------------------------
Comptroller of the Currency

<PAGE>
EXHIBIT 2

[LOGO]

Washington, D.C. 20219

Certification of Fiduciary Powers

I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify
the records in this Office evidence "Fleet National Bank of Connecticut",
Hartford, Connecticut, (Charter No. 1338), was granted, under the hand
and seal of the Comptroller, the right to act in all fiduciary capacities
authorized under the provisions of The Act of Congress approved
September 28, 1962, 76 Stat. 668, 12 U.S.C. 92a. I further certify the
authority so granted remains in full force and effect.

IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal of
Office of the Comptroller of the Currency
to be affixed to these presents at the
Treasury Department, in the City of
Washington and District of Columbia, this
4th day of April, 1996.

/s/ EUGENE A. LUDWIG
----------------------------------
Comptroller of the Currency

<PAGE>

EXHIBIT 4

AMENDED AND RESTATED BY-LAWS OF

FLEET NATIONAL BANK

ARTICLE I

MEETINGS OF SHAREHOLDERS

Section 1. Annual Meeting. The regular annual meeting of the shareholders for
the election of Directors and the transaction of any other business that may
properly come before the meeting shall be held at the Main Office of the
Association, or such other place as the Board of Directors may designate, on
the fourth Thursday of April in each year at 1:15 o'clock in the afternoon
unless some other hour of such day is fixed by the Board of Directors.

If, from any cause, an election of Directors is not made on such day, the Board
of Directors shall order the election to be held on some subsequent day, of
which special notice shall be given in accordance with the provisions of law,
and of these bylaws.

Section 2. Special Meetings. Special meetings of the shareholders may be called
at any time by the Board of Directors, the President, or any shareholders
owning not less than twenty-five percent (25%) of the stock of the Association.

Section 3. Notice of Meetings of Shareholders. Except as otherwise provided
by law, notice of the time and place of annual or special meetings of the
shareholders shall be mailed, postage prepaid, at least ten (10) days before
the date of the meeting to each shareholder of record entitled to vote thereat
at his address as shown upon the books of the Association; but any failure to
mail such notice to any shareholder or any irregularity therein, shall not
affect the validity of such meeting or of any of the proceedings thereat.
Notice of a special meeting shall also state the purpose of the meeting.

Section 4. Quorum; Adjourned Meetings. Unless otherwise provided by law, a
quorum for the transaction of business at every meeting of the shareholders
shall consist of not less than two-fifths (2/5) of the outstanding capital
stock represented in person or by proxy; less than such quorum may adjourn the
meeting to a future time. No notice need be given of an adjourned annual or
special meeting of the shareholders if the adjournment be to a definite place
and time.

Section 5. Votes and Proxies. At every meeting of the shareholders, each
share of the capital stock shall be entitled to one vote except as otherwise
provided by law. A majority of the votes cast shall decide every question
or matter submitted to the shareholder at any meeting, unless otherwise
provided by law or by the Articles of Association or these By-laws. Share-
holders may vote by proxies duly authorized in writing and filed with the
Cashier, but no officer, clerk, teller or bookeeper of the Association may act
as a proxy.

<PAGE>

Section 6. Nominations to Board of Directors. At any meeting of shareholders
held for the election of Directors, nominations for election to the Board of
Directors may be made, subject to the provisions of this section, by any share-
holder of record of any outstanding class of stock of the Association entitled
to vote for the election of Directors. No person other than those whose names
are stated as proposed nominees in the proxy statement accompanying the notice
of the meeting may be nominated as such meeting unless a shareholder shall have
given to the President of the Association and to the Comptroller of the
Currency, Washington, DC written notice of intention to nominate such other
person mailed by certified mail or delivered not less than fourteen (14) days
nor more than fifty (50) days prior to the meeting of shareholders at which
such nomination is to be made; provided, however, that if less than twenty-one
(21) days' notice of such meeting is given to shareholders, such notice of
intention to nominate shall be mailed by certified mail or delivered to said
President and said Comptroller on or before the seventh day following the day
on which the notice of such meeting was mailed. Such notice of intention to
nominate shall contain the following information to the extent known to the
notifying shareholder: (a) the name and address of each proposed nominee; (b)
the principal occupation of each proposed nominee; (c) the total number of
shares of capital stock of the Association that will be voted for each proposed
nominee; (d) the name and residence address of the notifying shareholder; and
(e) the number of shares of capital stock of the Association owned by the
notifying shareholder. In the event such notice is given, the proposed nominee
may be nominated either by the shareholder giving such notice or by any other
shareholder present at the meeting at which such nomination is to be made.
Such notice may contain the names of more than one proposed nominee, and if
more than one is named, any one or more of those named may be nominated.

Section 7. Action Taken Without a Shareholder Meeting. Any action requiring
shareholder approval or consent may be taken without a meeting and without
notice of such meeting by written consent of the shareholders.

ARTICLE II

DIRECTORS

Section 1. Number. The Board of Directors shall consist of such number of
shareholders, not less than five (5) nor more than twenty-five (25), as from
time to time shall be determined by a majority of the votes to which all of its
shareholders are at the time entitled, or by the Board of Directors as
hereinafter provided.

Section 2. Mandatory Retirement for Directors. No person shall be elected a
director who has attained the age of 68 and no person shall continue to serve
as a director after the date of the first meeting of the stockholders of the
Association held on or after the date on which such person attains the age of
68; provided, however, that any director serving on the Board as of December
15, 1995 who has attanined the age of 65 on or prior to such date shall be
permitted to continue to serve as a director until the date of the first
meeting of the stockholders of the Association held on or after the date on
which such person attains the age of 70.

-2-

<PAGE>

Section 3. General Powers. The Board of Directors shall exercise all the
coporate powers of the Association, except as expressly limited by law, and
shall have the control, management, direction and dispositon of all its
property and affairs.

Section 4. Annual Meeting. Immediately following a meeting of shareholders
held for the election of Directors, the Cashier shall notify the directors-
elect who may be present of their election and they shall then hold a meeting
at the Main Office of the Association, or such other place as the Board of
Directors may designate, for the purpose of taking their oaths, organizing the
new Board, electing officers and transacting any other business that may come
before such meeting.

Section 5. Regular Meeting. Regular meetings of the Board of Directors shall
be held without notice at the Main Office of the Association, or such other
place as the Board of Directors may designate, at such dates and times as the
Board shall determine. If the day designated for a regular meeting falls on a
legal holiday, the meeting shall be held on the next business day.

Section 6. Special Meetings. A special meeting of the Board of Directors may
be called at anytime upon the written request of the Chairman of the Board, the
President, or of two Directors, stating the purpose of the meeting. Notice of
the time and place shall be given not later than the day before the date of the
meeting, by mailing a notice to each Director at his last known address, by
delivering such notice to him personally, or by telephoning.

Section 7. Quorum; Votes. A majority of the Board of Directors at the time
holding office shall constitute a quorum for the transaction of all business,
except when otherwise provided by law, but less than a quorum may adjourn
a meeting from time to time, and the meeting may be held, as adjourned, without
further notice. If a quorum is present when a vote is taken, the affirmative
vote of a majority of Directors present is the act of the Board of Directors.

Section 8. Action by Directors Without a Meeting. Any action requiring
Director approval or consent may be taken without a meeting and without notice
of such meeting by written consent of all the Directors.

Section 9. Telephonic Participation in Directors' Meetings. A Director or
member of a Committee of the Board of Directors may participate in a meeting of
the Board or of such Committee may participate in a meeting of the Board or of
such Committee by means of a conference telephone or similar communications
equipment enabling all Directors participating in the meeting to hear one
another, and participation in such a meeting shall constitute presence in person
at such a meeting.

Section 10. Vacancies. Vacancies in the Board of Directors may be filled by
the remaining members of the Board at any regular or special meeting of the
Board.

Section 11. Interim Appointments. The Board of Directors shall, if the share-
holders at any meeting for the election of Directors have determined a number
of Directors less than twenty-five (25), have the power, by affirmative vote of
the majority of all the Directors, to increase such number of Directors to not
more than twenty-five (25) and to elect Directors to fill the resulting
vacancies and to serve until the next annual meeting of shareholders or the
next election of Directors; provided, however, that the number of Directors
shall not be so increased by more than two (2) if the number last determined
by shareholders was fifteen (15) or less, or increased by more than four (4) if
the number last determined by shareholders was sixteen (16) or more.

Section 12. Fees. The Board of Directors shall fix the amount and direct the
payment of fees which shall be paid to each Director for attendance at any
meeting of the Board of Directors or of any Committees of the Board.

ARTICLE III

COMMITTEES OF THE BOARD

Section 1. Executive Committee. The Board of Directors shall appoint from its
members an Executive Committee which shall consist of such number of persons as
the Board of Directors shall determine; the Chairman of the Board and the
President shall be members ex-officio of the Executive Committee with full
voting power. The Chairman of the Board or the President may from time to time
appoint from the Board of Directors as temporary additional members of the
Executive Committee, with full voting powers, not more than two members to serve
for such periods as the Chairman of the Board or the President may determine.
The Board of Directors shall designate a member of the Executive Committee to
serve as Chairman thereof. A meeting of the Executive Committee may be called
at any time upon the written request of the Chairman of the Board, the President
or the Chairman of the Executive Committee, stating the purpose of the meeting.
Not less than twenty four hours' notice of said meeting shall be given to each
member of the Committee personally, by telephoning, or by mail. The Chairman of
the Executive Committee or, in his absence, a member of the Committee chosen by
a majority of the members present shall preside at meetings of the Executive
Committee.

-3-

<PAGE>
The Executive Committee shall possess and may exercise all the powers of the
Board when the Board is not in session except such as the Board, only, by law,
is authorized to exercise; it shall keep minutes of its acts and proceedings
and cause same to be presented and reported at every regular meeting and at any
special meeting of the Board including specifically, all its actions relating
to loans and discounts.

All acts done and powers and authority conferred by the Executive Committee,
from time to time, within the scope of its authority, shall be deemed to be,
and may be certified as being, the acts of and under the authority of the
Board.

Section 2. Risk Management Committee. The Board shall appoint from its
members a Risk Management Committee which shall consist of such number as the
Board shall determine. The Board shall designate a member of the Risk
Management Committee to serve as Chairman thereof. It shall be the duty of the
Risk Management Committee to (a) serve as the channel of communication with
management and the Board of Directors of Fleet Financial Group, Inc. to assure
that formal processes supported by management information systems are in place
for the identification, evaluation and management of significant risks inherent
in or associated with lending activities, the loan portfolio, asset-liablity
management, the investment portfolio, trust and investment advisory activities,
the sale of nondeposit investment products and new products and services and
such additional activities or functions as the Board may determine from time
to time; (b) assure the formulation and adoption of policies approved by the
Risk Management Committee or Board governing lending activities, management of
the loan portfolio, the maintenance of an adequate allowance for loan and lease
losses, asset-liability management, the investment portfolio, the retail
sale of non-deposit investment products, new products and services and such
additional activities or functions as the Board may determine from time to time
(c) assure that a comprehensive independent loan review program is in place for
the early detection of problem loans and review significant reports of the loan
review department, management's responses to those reports and the risk
attributed to unresolved issues; (d) subject to control of the Board, exercise
general supervision over trust activities, the investment of trust funds, the
disposition of trust investments and the acceptance of new trusts and the terms
of such acceptance, and (e) perform such additional duties and exercise such
additional powers of the Board as the Board may determine from time to time.

Section 3. Audit Committee. The Board shall appoint from its memebers and
Audit Committee which shall consist of such number as the Board shall determine
no one of whom shall be an active officer or employee of the Association or
Fleet Financial Group, Inc. or any of its affiliates. In addition, members of
the Audit Committee must not (i) have served as an officer or employee of the
Association or any of its affiliates at any time during the year prior to their
appointment; or (ii) own, control, or have owned or controlled at any time
during the year prior to appointment, ten percent (10%) or more of any
outstanding class of voting securities of the Association. At least two (2)
members of the Audit Committee must have significant executive, professional,
educational or regulatory experience in financial, auditing, accounting,
or banking matters. No member of the Audit Commitee may have significant
direct or indirect credit or other relationships with the Association, the
termination of which would materially adversely affect the Association's
financial condition or results of operations.

The Board shall designate a member of the Audit Committee to serve as Chairman
thereof. It shall be the duty of the Audit Committee to (a) cause a continuous
audit and examination to be made on its behalf into the affairs of the
Association and to review the results of such examination; (b) review
significant reports of the internal auditing department, management's responses
to those reports and the risk attributed to unresolved issues; (c) review the
basis for the reports issued under Section 112 of The Federal Deposit Insurance
Corporation Improvement Act of 1991; (d) consider, in consultation with the
independent auditor and an internal auditing executive, the adequacy of the
Association's internal controls, including the resolution of identified material
weakness and reportable conditions; (e) review regulatory communications
received from any federal or state agency with supervisory jurisdiction or
other examining authority and monitor any needed corrective action by
management; (f) ensure that a formal system of internal controls is in place
for maintaining compliance with laws and regulations; (g) cause an audit of the
Trust Department at least once during each calendar year and within 15 months
of the last such audit or, in liew thereof, adopt a continuous audit system and
report to the Board each calendar year and within 15 months of the previous
report on the performance of such audit function; and (h) perform such
additional duties and exercise such additional powers of the Board as the Board
may determine from time to time.

The Audit Committee may consult with internal counsel and retain its own
outside counsel without approval (prior or otherwise) from the Board or
management and obligate the Association to pay the fees of such counsel.

-4-

<PAGE>

Section 4. Community Affairs Committee. The Board shall appoint from its
members a Community Affairs Committee which shall consist of such number as the
Board shall determine. The Board shall designate a member of the Community
Affairs Committee to serve as Chairman thereof. It shall be the duty of the
Commmunity Affairs Committee to (a) oversee compliance by the Association with
the Community Reinvestment Act of 1977, as amended, and the regulations
promulgated thereunder; and (b) perform such additional duties and exercise such
additional powers of the Board as the Board may determine from time to time.

Section 5. Regular Meetings. Except for the Executive Committee which shall
meet on an ad hoc basis as set forth in Section 1 of this Article, regular
meetings of the Committees of the Board of Directors shall be held, without
notice, at such time and place as the Committee or the Board of Directors may
appoint and as often as the business of the Association may require.

Section 6. Special Meetings. A Special Meeting of any of the Committees of
the Board of Directors may be called upon the written request of the Chairman
of the Board or the President, or of any two members of the respective
Committee, stating the purpose of the meeting. Not less than twenty-four
hours' notice of such special meeting shall be given to each member of the
Committee personally, by telephoning, or by mail.

Section 7. Emergency Meetings. An Emergency Meeting of any of the Committees
of the Board of Directors may be called at the request of the Chairman of the
Board or the President, who shall state that an emergency exists, upon not
less than one hour's notice to each member of the Committee personally or by
telephoning.

Section 8. Action Taken Without a Committee Meeting. Any Committee of the
Board of Directors may take action without a meeting and without notice of such
meeting by resolution assented to in writing by all members of such Committee.

Section 9. Quorum. A majority of a Committee of the Board of Directors shall
constitute a quorum for the transaction of any business at any meeting of such
Committee. If a quorum is not available, the Chairman of the Board or the
President shall have power to make temporary appointments to a Committee of-
members of the Board of Directors, to act in the place and stead of members who
temporarily cannot attend any such meeting; provided, however, that any
temporary appointment to the Audit Committee must meet the requirements for
members of that Committee set forth in Section 3 of this Article.

Section 10. Record. The committes of the Board of Directors shall keep a
record of their respective meetings and proceedings which shall be presented
at the regular meeting of the Board of Directors held in the calendar month
next following the meetings of the Committees. If there is no regular Board
of Directors meeting held in the calendar month next following the meeting of
a Committee, then such Committee's records shall be presented at the next
regular Board of Directors meeting held in a month subsequent to such Committee
meeting.

Section 11. Changes and Vacancies. The Board of Directors shall have power
to change the members of any Committee at any time and to fill vacancies on any
Committee; provided, however, that any newly appointed member of the Audit
Committee must meet the requirements for members of that Committee set forth in
Section 3 of this Article.

Section 12. Other Committees. The Board of Directors may appoint, from time
to time, other committees of one or more persons, for such purposes and with
such powers as the Board may determine.

ARTICLE IV

WAIVER OF NOTICE OF MEETINGS

Section 1. Waiver. Whenever notice is required to be given to any shareholder,
Director, or member of a Committee of the Board of Directors, such notice may
be waived in writing either before or after such meeting by any shareholder,
Director or Committee member respectively, as the case may be, who may be
entitled to such notice; and such notice will be deemed to be waived by
attendance at any such meeting.

-5-

<PAGE>

ARTICLE V

OFFICERS AND AGENTS

Section 1. Officers. The Board shall appoint a Chairman of the Board and a
President, and shall have the power to appoint one or more Executive Vice
Presidents, one or more Senior Vice Presidents, one or more Vice Presidents, a
Cashier, a Secretary, an Auditor, a Controller, one or more Trust Officers and-
such other officers as are deemed necessary or desirable for the proper
transaction of business of the Association. The Chairman of the Board and the
President shall be appointed from members of the Board of Directors. Any two
or more offices, except those of President and Cashier, or Secretary, may be
held by the same person. The Board may, from time to time, by resolution
passed by a majority of the entire Board, designate one or more officers of the
Association or of an affiliate or of Fleet Financial Group, Inc. with power to
appoint one or more Vice Presidents and such other officers of the Association
below the level of Vice President as the officer or officers designated in such
resolution deem necessary or desirable for the proper transaction of the
business of the Association.

Section 2. Chairman of the Board. The chairman of the Board shall preside at
all meetings of the Board of Directors. Subject to definition by the Board of
Directors, he shall have general executive powers and such specific powers and
duties as from time to time may be conferred upon or assigned to him by the
Board of Directors.

Section 3. President. The President shall preside at all meetings of the
Board of Directors if there be no Chairman or if the Chairman be absent.
Subject to definition by the Board of Directors, he shall have general
executive powers and such specific powers and duties as from time to time may
be conferred upon or assigned to him by the Board of Directors.

-6-

<PAGE>

Section 4. Cashier and Secretary. The Cashier shall be the Secretary of the
Board and of the Executive Committee, and shall keep accurate minutes of their
meetings and of all meetings of the shareholders. He shall attend to the
giving of all notices required by these By-laws. He shall be custodian of the
corporate seal, records, documents and papers of the Association. He shall
have such powers and perform such duties as pertain by law or regulation to the
office of Cashier, or as are imposed by these By-laws, or as may be delegated
to him from time to time by the Board of Directors, the Chairman of the Board
or the President.

Section 5. Auditor. The Auditor shall be the chief auditing officer of the
Association. He shall continuously examine the affairs of the Association and
from time to time shall report to the Board of Directors. He shall have such
powers and perform such duties as are conferred upon, or assigned to him by
these By-laws, or as may be delegated to him from time to time by the Board
of Directors.

Section 6. Officers Seriatim. The Board of Directors shall designate from
time to time not less than two officers who shall in the absence or disability
of the Chairman or President or both, succeed seriatim to the duties and
responsibilities of the Chairman and President respectively.

Section 7. Clerks and Agents. The Board of Directors may appoint, from time
to time, such clerks, agents and employees as it may deem advisable for the
prompt and orderly transaction of the business of the Association, define
their duties, fix the salaries to be paid them and dismiss them. Subject to
the authority of the Board of Directors, the Chairman of the Board or the
President, or any other officer of the Association authorized by either of them
may appoint and dismiss all or any clerks, agents and employees and prescribe
their duties and the conditions of their employment, and from time to time
fix their compensation.

Section 8. Tenure. The Chairman of the Board of Directors and the President
shall, except in the case of death, resignation, retirement or disqualification
under these By-laws, or unless removed by the affirmative vote of at least two-
thirds of all of the members of the Board of Directors, hold office for the
term of one year or until their respective successors are appointed. Either
of such officers appointed to fill a vacancy occurring in an unexpired term
shall serve for such unexpired term of such vacancy. All other officers,
clerks, agents, attorneys-in-fact and employees of the Association shall hold
office during the pleasure of the Board of Directors or of the officer or
committee appointing them respectively.

ARTICLE VI

TRUST DEPARTMENT

Section 1. General Powers and Duties. All fiduciary powers of the Association
shall be exercised through the Trust Department, subject to such regulations as
the Comptroller of the Currency shall from time to time establish. The Trust
Department shall be to placed under the management and immediate supervision
of an officer or officers appointed by the Board of Directors. The duties of
all officers of the Trust Department shall be to cause the policies and
instructions of the Board and the Risk Management Committee with respect to the
trusts under their supervision to be carried out, and to supervise the due
performance of the trusts and agencies entrusted to the Association and under
their supervision, in accordance with law and in accordance with the terms of
such trusts and agencies.

-7-

<PAGE>

ARTICLE VII

BRANCH OFFICES

Section 1. Establishment. The Board of Directors shall have full power to
establish, to discontinue, or, from time to time, to change the location of any
branch office, subject to such limitations as may be provided by law.

Section 2. Supervision and Control. Subject to the general supervision and
control of the Board of Directors, the affairs of branch offices shall be
under the immediate supervision and control of the President or of such other
officer or officers, employee or employees, or other individuals as the Board
of Directors may from time to time determine, with such powers and duties as
the Board of Directors may confer upon or assign to him or them.

ARTICLE VIII

SIGNATURE POWERS

Section 1. Authorization. The power of officers, employees, agents and
attorneys to sign on behalf of and to affix the seal of the Association shall
be prescribed by the Board of Directors or by the Executive Committee or by
both; provided that the President is authorized to restrict such power of any
officer, employee, agent or attorney to the business of a specific department
or departments, or to a specific branch office or branch offices. Facsimile
signatures may be authorized.

-8-

<PAGE>

ARTICLE IX

STOCK CERTIFICATES AND TRANSFERS

Section 1. Stock Records. The Trust Department shall have custody of the
stock certificate books and stock ledgers of the Association, and shall make
all transfers of stock, issue certificates thereof and disburse dividends
declared thereon.

Section 2. Form of Certificate. Every shareholder shall be entitled to a
certificate conforming to the requirements of law and otherwise in such form
as the Board of Directors may approve. The certificates shall state on the
face thereof that the stock is transferable only on the books of the
Association and shall be signed by such officers as may be prescribed from time
to time by the Board of Directors or Executive Committee. Facsimile signatures
may be authorized.

Section 3. Transfers of Stock. Transfers of stock shall be made only on the
books of the Association by the holder in person, or by attorney duly
authorized in writing, upon surrender of the certificate therefor properly
endorsed, or upon the surrender of such certificate accompanied by a properly
executed written assignment of the same, or a written power of attorney to
sell, assign or transfer the same or the shares represented thereby.

Section 4. Lost Certificate. The Board of Directors or Executive Committee
may order a new certificate to be issued in place of a certificate lost or
destroyed, upon proof of such loss or destruction and upon tender to the
Association by the shareholder, of a bond in such amount and with or without
surety, as may be ordered, indemnifying the Association against all liability,
loss, cost and damage by reason of such loss or destruction and the issuance
of a new certificate.

Section 5. Closing Transfer Books. The Board of Directors may close the
transfer books for a period not exceeding thirty days preceding any regular
or special meeting of the shareholders, or the day designated for the payment
of a dividend or the allotment of rights. In lieu of closing the transfer
books the Board of Directors may fix a day and hour not more than thirty days
prior to the day of holding any meeting of the shareholders, or the day
designated for the payment of a dividend, or the day designated for the
allotment of rights, or the day when any change of conversion or exchange of
capital stock is to go into effect, as the day as of which shareholders
entitled to notice of and to vote at such meetings or entitled to such dividend
or to such allotment of rights or to exercise the rights in respect of any
such change, conversion or exchange of capital stock, shall be determined, and
only such shareholders as shall be shareholders of record on the day and hour
so fixed shall be entitled to notice of and to vote at such meeting or to
receive payment of such dividend or to receive such allotment of rights or to
exercise such rights, as the case may be.

ARTICLE X

THE CORPORATE SEAL

Section 1. Seal. The following is an impression of the seal of the
Association adopted by the Board of Directors.

ARTICLE XI

BUSINESS HOURS

Section 1. Business Hours. The main office of this Association and each
branch office thereof shall be open for business on such days, and for such
hours as the Chairman, or the President, or any Executive Vice President, or
such other officer as the Board of Directors shall from time to time
designate, may determine as to each office to conform to local custom and
convenience, provided that any one or more of the main and branch offices or
certain departments thereof may be open for such hours as the President, or
such other officer as the Board of Directors shall from time to time designate,
may determine as to each office or department on any legal holiday on which
work is not prohibited by law, and provided further that any one or more of
the main and branch offices or certain departments thereof may be ordered
closed or open on any day for such hours as to each office or department as
the President, or such other officer as the Board of Directors shall from time
to time designate, subject to applicable laws regulations, may determine when
such action may be required by reason of disaster or other emergency condition.

ARTICLE IX

CHANGES IN BY-LAWS

Section 1. Amendments. These By-laws may be amended upon vote of a majority
of the entire Board of Directors at any meeting of the Board, provided ten (10)
day's notice of the proposed amendment has been given to each member of the
Board of Directors. No amendment may be made unless the By-law, as amended, is
consistent with the requirements of law and of the Articles of Association.
These By-laws may also be amended by the Association's shareholders.

A true copy

Attest:

Secretary/Assistant Secretary
- ---------------------------------------

Dated at , as of .
--------------------------------------- ----------------------

Revision of January 11, 1993

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<PAGE>
EXHIBIT 1

CONSENT OF THE TRUSTEE
REQUIRED BY SECTION 321(b)
OF THE TRUST INDENTURE ACT OF 1939

The undersigned, as Trustee under the Indenture to be entered into between
Hills Stores Company and Fleet National Bank, as Trustee, does
hereby consent that, pursuant to Section 321(b) of the Trust Indenture Act of
1939, reports of examinations with respect to the undersigned by Federal,
State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon request therefor.

FLEET NATIONAL BANK,
AS TRUSTEE

By /s/ Stephen M. Maceroni
-------------------------------
Stephen M. Maceroni
Its: Vice President

Dated:

<PAGE>

EXHIBIT 6

<TABLE>
<S> <C>
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036

Federal Deposit Insurance Corporation
OMB Number: 3064-0052

Office of the Comptroller of the Currency
OMB Number: 1557-0081

FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL Expires March 31, 1999
- -----------------------------------------------------------------------------------------------------------------------------

Please refer to page i, / 1 /
[LOGO] Table of Contents, for
the required disclosure
of estimated burden.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC AND FOREIGN OFFICES--FFIEC 031
(960331)
REPORT AT THE CLOSE OF BUSINESS March 31, 1996 -----------
(RCRI 9999)

This report is required by law: 12 U.S.C. Section 324 (State member banks);
12 U.S.C. Section 1817 (State nonmember banks); and 12 U.S.C. Section 161
(National banks).

This report form is to be filed by banks with branches and consolidation
subsidiaries in U.S. territories and possessions, Edge or Agreement
subsidiaries, foreign branches, consolidated foreign subsidiaries, or
International Banking Facilities.

- --------------------------------------------------------------------------------

NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National banks.

I, Giro S. DeRosa, Vice President and Controller
-----------------------------------------------------------------------------
Name and Title of Officer Authorized to Sign Report

of the named bank do hereby declare that these Reports of Condition and
Income (including the supporting schedules) have been prepared in conformance
with the instructions issued by the appropriate Federal regulatory authority
and are true to the best of my knowledge and belief.

/s/ GIRO DEROSA
- --------------------------------------------------------------------------------
Signature of Officer Authorized to Sign Report

April 25, 1996
- --------------------------------------------------------------------------------
Date of Signature

The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions. NOTE: These instructions may in
some cases differ from generally accepted accounting principles.

We, the undersigned directors (trustees), attest to the correctness of this
Report of Condition (including the supporting schedules) and declare that it has
been examined by us and to the best of our knowledge and belief has been
prepared in conformance with the instructions issued by the appropriate Federal
regulatory authority and is true and correct.

/s/
- --------------------------------------------------------------------------------
Director (Trustee)

- --------------------------------------------------------------------------------

<PAGE>

FOR BANKS SUBMITTING HARD COPY REPORT FORMS:

STATE MEMBER BANKS: Return the original and one copy to the appropriate Federal
Feserve District Bank.

STATE NONMEMBER BANKS: Return the original only in the special return address
envelope provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.

NATIONAL BANKS: Return the original only in the special return address envelope
provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
___
FDIC Certificate Number | 1 | 0 | 5 | 8 | 2 | |
______________________ CALL NO. 190 31 03-31-96
(RCRI 9050)
CERT: 02499 10582 STBK 09-0590

FLEET NATIONAL BANK OF CONNECTICUT
777 MAIN STREET
HARTFORD, CT 06115
| |
___ ___
<FN>
Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency
</TABLE>

<PAGE>
FFIEC 031
Page i
/2/
Consolidated Reports of Condition and Income for
A Bank With Domestic and Foreign Offices
________________________________________________________________________________

TABLE OF CONTENTS

SIGNATURE PAGE Cover

REPORT OF INCOME

Schedule RI--Income Statement...........................................RI-1,2,3
Schedule RI-A--Changes in Equity Capital....................................RI-3
Schedule RI-B--Charge-offs and Recoveries and
Changes in Allowance for Loan and Lease
Losses..................................................................RI-4,5
Schedule RI-C--Applicable Income Taxes by
Taxing Authority..........................................................RI-5
Schedule RI-D--Income from
International Operations..................................................RI-6
Schedule RI-E--Explanations...............................................RI-7,8

REPORT OF CONDITION

Schedule RC--Balance Sheet................................................RC-1,2
Schedule RC-A--Cash and Balances Due
From Depository Institutions..............................................RC-3
Schedule RC-B--Securities...............................................RC-3,4,5
Schedule RC-C--Loans and Lease Fianancing
Receivables:
Part I. Loans and Leases..............................................RC-6,7
Part II. Loans to Small Businesses and
Small Farms (included in the forms for
June 30 only).....................................................RC-7a,7b
Schedule RC-D--Trading Assets and Liabilities
(to be completed only by selected banks)..................................RC-8
Schedule RC-E--Deposit Liabilities....................................RC-9,10,11
Schedule RC-F--Only Assets.................................................RC-11
Schedule RC-G--Other Liabilities...........................................RC-11
Schedule RC-H--Selected Balance Sheet Items for
Domestic Offices.........................................................RC-12
Schedule RC-I--Selected Assets and Liabilities
of IBF's.................................................................RC-13
Schedule RC-K--Quarterly Averages..........................................RC-13
Schedule RC-L--Off-Balance Sheet Items...............................RC-14,15,16
Schedule RC-M--Memoranda................................................RC-17,18
Schedule RC-N--Past Due and Nonaccrual Loans,
Leases, and Other Assets..............................................RC-19,20
Schedule RC-O--Other Data for Deposit
Insurance Assessments.................................................RC-21,22
Schedule RC-R--Risk-Based Captial.......................................RC-23,24
Optional Narrative Statement Concerning the
Amounts Reported in the Reports of
Conditions and Income....................................................RC-25
Special Report (TO BE COMPLETED BY ALL BANKS)
Schedule RC-J--Repricing Opportunities (sent only to
and to be completed only by savings banks)

<PAGE>

DISCLOSURE OF ESTIMATED BURDEN

The estimated average burden associated with this information collection is
32.2 hours per respondent and is estimated to vary from 15 to 230 hours per
response, depending on individual circumstances. Burden estimates include the
time for reviewing instructions, gathering and maintaining data in the required
form, and completing the information collection, but exclude the time for
compiling and maintaining business records in the normal course of a
respondent's activities. Comments concerning the accuracy of this burden
estimate and suggestions for reducing this burden should be directed to the
Office of Information and Regulatory Affairs. Office of Management and Budget,
Washington, D.C. 20503, and to one of the following:

Secretary
Board of Governors of the Federal Reserve System
Washington, D.C. 20551

Legislative and Regulatory Analysis Division
Office of the Comptroller of the Currency
Washington, D.C. 20219

Assistant Executive Secretary
Federal Deposit Insurance Corporation
Washington, D.C. 20429

For information or assistance, national and state nonmember banks should
contact the FDIC's Call Reports Analysis Unit, 550 17th Street, NW, Washington,
D.C. 20429, toll free on (800)688-FDIC (3342), Monday through Friday between
8:00 a.m. and 5:00 p.m., Eastern time. State member banks should contact their
Federal Reserve District Bank.
<TABLE>
<S> <C>
___________
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
<C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-1
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|

Consolidated Report of Income
for the period January 1, 1996 - March 31, 1996

All Report of Income schedules are to be reported on a calendar year-to-date basis in thousands of dollars.
file
Schedule RI--Income Statement ________
| I480 |
Dollar Amounts in Thousands RIAD Bil Mil Thou__|
_______________________________________________________________________________________________ ___________|________|
<S> <C> <C>
1. Interest income: | ////////////////// |
a. Interest and fee income on loans: | ////////////////// |
(1) In domestic offices: | ////////////////// |
(a) Loans secured by real estate ................................................... | 4011 68,007 | 1.a.(1)(a)
(b) Loans to depository institutions ............................................... | 4019 0 | 1.a.(1)(b)
(c) Loans to finance agricultural production and other loans to farmers ............ | 4024 42 | 1.a.(1)(c)
(d) Commercial and industrial loans ................................................ | 4012 119,467 | 1.a.(1)(d)
(e) Acceptances of other banks ..................................................... | 4026 22 | 1.a.(1)(e)
(f) Loans to individuals for household, family, and other personal expenditures: | ////////////////// |
(1) Credit cards and related plans ............................................. | 4054 1,870 | 1.a.(1)(f)(1)
(2) Other ...................................................................... | 4055 11,553 | 1.a.(1)(f)(2)
(g) Loans to foreign governments and official institutions ......................... | 4056 0 | 1.a.(1)(g)
(h) Obligations (other than securities and leases) of states and political | ////////////////// |
subdivisions in the U.S.: | ////////////////// |
(1) Taxable obligations ........................................................ | 4503 0 | 1.a.(1)(h)(1)
(2) Tax-exempt obligations ..................................................... | 4504 469 | 1.a.(1)(h)(2)
(i) All other loans in domestic offices ............................................ | 4058 14,004 | 1.a.(1)(i)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs ...................... | 4059 0 | 1.a.(2)
b. Income from lease financing receivables: | ////////////////// |
(1) Taxable leases ..................................................................... | 4505 192 | 1.b.(1)
(2) Tax-exempt leases .................................................................. | 4307 0 | 1.b.(2)
c. Interest income on balances due from depository institutions:(1) | ////////////////// |
(1) In domestic offices ................................................................ | 4105 0 | 1.c.(1)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs ...................... | 4106 26 | 1.c.(2)
d. Interest and dividend income on securities: | ////////////////// |
(1) U.S. Treasury securities and U.S. Government agency and corporation obligations .... | 4027 33,725 | 1.d.(1)
(2) Securities issued by states and political subdivisions in the U.S.: | ////////////////// |
(a) Taxable securities ............................................................. | 4506 0 | 1.d.(2)(a)
(b) Tax-exempt securities .......................................................... | 4507 1 | 1.d.(2)(b)
(3) Other domestic debt securities ..................................................... | 3657 7,306 | 1.d.(3)
(4) Foreign debt securities ............................................................ | 3658 49 | 1.d.(4)
(5) Equity securities (including investments in mutual funds) .......................... | 3659 1,888 | 1.d.(5)
e. Interest income from trading assets..................................................... | 4069 0 | 1.e.
______________________
<FN>
____________
(1) Includes interest income on time certificates of deposit not held for trading.
</TABLE>

<PAGE>

<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-2
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI--Continued
________________
Dollar Amounts in Thousands | Year-to-date |
___________________________________________________________________________________ ______________
<S> <C> <C>
1. Interest income (continued) | RIAD Bil Mil Thou |
f. Interest income on federal funds sold and securities purchased | ////////////////// |
under agreements to resell in domestic offices of the bank and of | ////////////////// |
its Edge and Agreement subsidiaries, and in IBFs .................... | 4020 292 | 1.f.
g. Total interest income (sum of items 1.a through 1.f) ................ | 4107 258,913 | 1.g.
2. Interest expense: | ////////////////// |
a. Interest on deposits: | ////////////////// |
(1) Interest on deposits in domestic offices: | ////////////////// |
(a) Transaction accounts (NOW accounts, ATS accounts, and | ////////////////// |
telephone and preauthorized transfer accounts) .............. | 4508 519 | 2.a.(1)(a)
(b) Nontransaction accounts: | ////////////////// |
(1) Money market deposit accounts (MMDAs) ................... | 4509 6,345 | 2.a.(1)(b)(1)
(2) Other savings deposits .................................. | 4511 11,368 | 2.a.(1)(b)(2)
(3) Time certificates of deposit of $100,000 or more ........ | 4174 21,500 | 2.a.(1)(b)(3)
(4) All other time deposits ................................. | 4512 31,522 | 2.a.(1)(b)(4)
(2) Interest on deposits in foreign offices, Edge and Agreement | ////////////////// |
subsidiaries, and IBFs .......................................... | 4172 4,742 | 2.a.(2)
b. Expense of federal funds purchased and securities sold under | ////////////////// |
agreements to repurchase in domestic offices of the bank and of | ////////////////// |
its Edge and Agreement subsidiaries, and in IBFs .................... | 4180 35,405 | 2.b.
c. Interest on demand notes issued to the U.S. Treasury, trading | ////////////////// |
liabilities, and other money borrowed ............................... | 4185 29,123 | 2.c.
d. Interest on mortgage indebtedness and obligations under | ////////////////// |
capitalized leases .................................................. | 4072 106 | 2.d.
e. Interest on subordinated notes and debentures ....................... | 4200 2,993 | 2.e.
f. Total interest expense (sum of items 2.a through 2.e) ............... | 4073 143,623 | 2.f.
___________________________
3. Net interest income (item 1.g minus 2.f) ............................... | ////////////////// | RIAD 4074 | 115,290 | 3.
___________________________
4. Provisions: | ////////////////// |
___________________________
a. Provision for loan and lease losses ................................. | ////////////////// | RIAD 4230 | 1,911 | 4.a.
b. Provision for allocated transfer risk ............................... | ////////////////// | RIAD 4243 | 0 | 4.b.
___________________________
5. Noninterest income: | ////////////////// |
a. Income from fiduciary activities .................................... | 4070 21,652 | 5.a.
b. Service charges on deposit accounts in domestic offices ............. | 4080 15,687 | 5.b.
c. Trading revenue (must equal Schedule RI, sum of Memorandum | ////////////////// |
items 8.a through 8.d)............................................... A220 78 5.c.
d. Other foreign transaction gains (losses) ............................ | 4076 6 | 5.d.
e. Not applicable....................................................... | ////////////////// |
f. Other noninterest income: | ////////////////// |
(1) Other fee income ................................................ | 5407 13,425 | 5.f.(1)
(2) All other noninterest income* ................................... | 5408 43,419 | 5.f.(2)
___________________________
g. Total noninterest income (sum of items 5.a through 5.f) ............. | ////////////////// | RIAD 4079 | 94,267 | 5.g.
6. a. Realized gains (losses) on held-to-maturity securities .............. | ////////////////// | RIAD 3521 | 1 | 6.a.
b. Realized gains (losses) on available-for-sale securities ............ | ////////////////// | RIAD 3196 | 11,352 | 6.b.
| ////////////////// |___________________________
7. Noninterest expense: | ////////////////// |
a. Salaries and employee benefits ...................................... | 4135 36,676 | 7.a.
b. Expenses of premises and fixed assets (net of rental income) | ////////////////// |
(excluding salaries and employee benefits and mortgage interest) .... | 4217 14,846 | 7.b.
c. Other noninterest expense* .......................................... | 4092 57,219 | 7.c.
___________________________
d. Total noninterest expense (sum of items 7.a through 7.c) ............ | ////////////////// | RIAD 4093 | 108,741 | 7.d.
___________________________
8. Income (loss) before income taxes and extraordinary items and other | ////////////////// |
___________________________
adjustments (item 3 plus or minus items 4.a, 4.b, 5.g, 6.a, 6.b, and 7.d)| ////////////////// | RIAD 4301 | 110,258 | 8.
9. Applicable income taxes (on item 8) .................................... | ////////////////// | RIAD 4302 | 51,617 | 9.
___________________________
10. Income (loss) before extraordinary items and other adjustments | ////////////////// |
___________________________
(item 8 minus 9) ....................................................... | ////////////////// | RIAD 4300 | 58,641 | 10.
_________________________________________________
<FN>
____________
*Describe on Schedule RI-E--Explanations.
</TABLE>

<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-3
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI--Continued
________________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
___________________________________________________________________________________ ______________
<S> <C> <C>
11. Extraordinary items and other adjustments: | ////////////////// |
a. Extraordinary items and other adjustments, gross of income taxes* . | 4310 0 | 11.a.
b. Applicable income taxes (on item 11.a)* ........................... | 4315 0 | 11.b.
c. Extraordinary items and other adjustments, net of income taxes | ////////////////// |
___________________________
(item 11.a minus 11.b) ............................................ | ////////////////// | RIAD 4320 | 0 | 11.c.
12. Net income (loss) (sum of items 10 and 11.c) ......................... | ////////////////// | RIAD 4340 | 58,641 | 12.
_________________________________________________
</TABLE>
<TABLE>
<CAPTION> __________
______|__I481__|
Memoranda | Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
______________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Interest expense incurred to carry tax-exempt securities, loans, and leases acquired after | ////////////////// |
August 7, 1986, that is not deductible for federal income tax purposes .......................... | 4513 0 | M.1.
2. Income from the sale and servicing of mutual funds and annuities in domestic offices | ////////////////// |
(included in Schedule RI, item 8) ............................................................... | 8431 0 | M.2.
3.-4. Not applicable | ////////////////// |
5. Number of full-time equivalent employees on payroll at end of current period (round to | //// Number |
nearest whole number) ........................................................................... | 4150 1,831 | M.5.
6. Not applicable | ////////////////// |
7. If the reporting bank has restated its balance sheet as a result of applying push down | //// MM DD YY |
accounting this calendar year, report the date of the bank's acquisition ........................ | 9106 00/00/00 | M.7.
8. Trading revenue (from cash instruments and off-balance sheet derivative instruments) | ////////////////// |
(sum of Memorandum items 8.a through 8.d must equal Schedule RI, item 5.c): | //// Bil Mil Thou |
a. Interest rate exposures ...................................................................... | 8757 11 | M.8.a.
b. Foreign exchange exposures ................................................................... | 8758 67 | M.8.b.
c. Equity security and index exposures .......................................................... | 8759 0 | M.8.c.
d. Commodity and other exposures ................................................................ | 8760 0 | M.8.d.
9. Impact on income of off-balance sheet derivatives held for purposes other than trading: | ////////////////// |
a. Net increase (decrease) to interest income.....................................................| 8761 (2,618)| M.9.a.
b. Net (increase) decrease to interest expense ...................................................| 8762 (2,834)| M.9.b.
c. Other (noninterest) allocations ...............................................................| 8763 0 | M.9.c.
10. Credit losses on off-balance sheet derivatives (see instructions).................................| A251 0 | M.10.

____________
*Describe on Schedule RI-E--Explanations.

<PAGE>

</TABLE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-4
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-A--Changes in Equity Capital

Indicate decreases and losses in parentheses. _________
| I483 |
_____________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
______________________________________________________________________________________________________|____________________|
<S> <C> <C>
1. Total equity capital originally reported in the December 31, 1995, Reports of Condition | ////////////////// |
and Income ...................................................................................... | 3215 1,342,473 | 1.
2. Equity capital adjustments from amended Reports of Income, net* ................................. | 3216 0 | 2.
3. Amended balance end of previous calendar year (sum of items 1 and 2) ............................ | 3217 1,342,473 | 3.
4. Net income (loss) (must equal Schedule RI, item 12) ............................................. | 4340 58,641 | 4.
5. Sale, conversion, acquisition, or retirement of capital stock, net .............................. | 4346 0 | 5.
6. Changes incident to business combinations, net .................................................. | 4356 0 | 6.
7. LESS: Cash dividends declared on preferred stock ................................................ | 4470 0 | 7.
8. LESS: Cash dividends declared on common stock ................................................... | 4460 10,922 | 8.
9. Cumulative effect of changes in accounting principles from prior years* (see instructions | ////////////////// |
for this schedule) .............................................................................. | 4411 0 | 9.
10. Corrections of material accounting errors from prior years* (see instructions for this schedule) | 4412 0 | 10.
11. Change in net unrealized holding gains (losses) on available-for-sale securities ................ | 8433 (10,978)| 11.
12. Foreign currency translation adjustments ........................................................ | 4414 0 | 12.
13. Other transactions with parent holding company* (not included in items 5, 7, or 8 above) ........ | 4415 0 | 13.
14. Total equity capital end of current period (sum of items 3 through 13) (must equal Schedule RC, | ////////////////// |
item 28) ........................................................................................ | 3210 1,379,214 | 14.
______________________
<FN>
____________
*Describe on Schedule RI-E--Explanations.
</TABLE>

<TABLE>
<CAPTION>
Schedule RI-B--Charge-offs and Recoveries and Changes
in Allowance for Loan and Lease Losses

Part I. Charge-offs and Recoveries on Loans and Leases

Part I excludes charge-offs and recoveries through
the allocated transfer risk reserve.
__________
| I486 | <-
_________________________________ ________
| (Column A) | (Column B) |
| Charge-offs | Recoveries |
____________________ ____________________
| Calendar year-to-date |
_________________________________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou | RIAD Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
1. Loans secured by real estate: | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ......................................... | 4651 6,328 | 4661 3,137 | 1.a.
b. To non-U.S. addressees (domicile) ..................................... | 4652 0 | 4662 0 | 1.b.
2. Loans to depository institutions and acceptances of other banks: | ////////////////// | ////////////////// |
a. To U.S. banks and other U.S. depository institutions .................. | 4653 0 | 4663 0 | 2.a.
b. To foreign banks ...................................................... | 4654 0 | 4664 0 | 2.b.
3. Loans to finance agricultural production and other loans to farmers ...... | 4655 2 | 4665 21 | 3.
4. Commercial and industrial loans: | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ......................................... | 4645 5,700 | 4617 1,564 | 4.a.
b. To non-U.S. addressees (domicile) ..................................... | 4646 0 | 4618 0 | 4.b.
5. Loans to individuals for household, family, and other personal | ////////////////// | ////////////////// |
expenditures: | ////////////////// | ////////////////// |
a. Credit cards and related plans ........................................ | 4656 290 | 4666 10 | 5.a.
b. Other (includes single payment, installment, and all student loans) ... | 4657 2,187 | 4667 702 | 5.b.
6. Loans to foreign governments and official institutions ................... | 4643 0 | 4627 0 | 6.
7. All other loans .......................................................... | 4644 0 | 4628 298 | 7.
8. Lease financing receivables: | ////////////////// | ////////////////// |
a. Of U.S. addressees (domicile) ......................................... | 4658 0 | 4668 0 | 8.a.
b. Of non-U.S. addressees (domicile) ..................................... | 4659 0 | 4669 0 | 8.b.
9. Total (sum of items 1 through 8) ......................................... | 4635 14,507 | 4605 5,732 | 9.
___________________________________________

</TABLE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-5
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-B--Continued

Part I. Continued

Memoranda

_________________________________ ________
| (Column A) | (Column B) |
| Charge-offs | Recoveries |
____________________ ____________________
| Calendar year-to-date |
_________________________________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou | RIAD Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
1-3. Not applicable | ////////////////// | ////////////////// |
4. Loans to finance commercial real estate, construction, and land | ////////////////// | ////////////////// |
development activities (not secured by real estate) included in | ////////////////// | ////////////////// |
Schedule RI-B, part I, items 4 and 7, above .............................. | 5409 71 | 5410 667 | M.4.
5. Loans secured by real estate in domestic offices (included in | ////////////////// | ////////////////// |
Schedule RI-B, part I, item1, above): | ////////////////// | ////////////////// |
a. Construction and land development ..................................... | 3582 102 | 3583 142 | M.5.a.
b. Secured by farmLand ................................................... | 3584 75 | 3585 4 | M.5.b.
c. Secured by 1-4 family residential properties: | ////////////////// | ////////////////// |
(1) Revolving, open-end loans secured by 1-4 family residential | ////////////////// | ////////////////// |
properties and extended under lines of credit ..................... | 5411 963 | 5412 0 | M.5.c.(1)
(2) All other loans secured by 1-4 family residential properties ...... | 5413 2,574 | 5414 642 | M.5.c.(2)
d. Secured by multifamily (5 or more) residential properties ............. | 3588 78 | 3589 211 | M.5.d.
e. Secured by nonfarm nonresidential properties .......................... | 3590 2,536 | 3591 2,138 | M.5.e.
|_________________________________________|

Part II. Changes in Allowance for Loan and Lease Losses
_____________________

Dollar Amounts in Thousands | RIAD Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
1. Balance originally reported in the December 31, 1995, Reports of Condition and Income.......... | 3124 266,943 | 1.
2. Recoveries (must equal part I, item 9, column B above) ........................................ | 4605 5,732 | 2.
3. LESS: Charge-offs (must equal part I, item 9, column A above) ................................. | 4635 14,507 | 3.
4. Provision for loan and lease losses (must equal Schedule RI, item 4.a)......................... | 4230 1,911 | 4.
5. Adjustments* (see instructions for this schedule) ................................ ............ | 4815 0 | 5.
6. Balance end of current period (sum of items 1 through 5) (must equal Schedule RC, | ////////////////// |
item 4.b) ..................................................................................... | 3123 260,079 | 6.
|____________________|
____________
*Describe on Schedule RI-E--Explanations.

Schedule RI-C--Applicable Income Taxes by Taxing Authority

Schedule RI-C is to be reported with the December Report of Income.
| I489 | <-
____________ ________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Federal ....................................................................................... | 4780 N/A | 1.
2. State and local................................................................................ | 4790 N/A | 2.
3. Foreign ....................................................................................... | 4795 N/A | 3.
4. Total (sum of items 1 through 3) (must equal sum of Schedule RI, items 9 and 11.b) ............ | 4770 N/A | 4.
____________________________| |
5. Deferred portion of item 4 ........................................ | RIAD 4772 | N/A | ////////////////// | 5.
__________________________________________________

</TABLE>

<PAGE>

<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-6
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-D--Income from International Operations

For all banks with foreign offices, Edge or Agreement subsidiaries, or IBFs where international operations
account for more than 10 percent of total revenues, total assets, or net income.

Part I. Estimated Income from International Operations

__________
| I492 | <-
______ ________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
_________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Interest income and expense booked at foreign offices, Edge and Agreement subsidiaries, | ////////////////// |
and IBFs: | ////////////////// |
a. Interest income booked ................................................................... | 4837 N/A | 1.a.
b. Interest expense booked .................................................................. | 4838 N/A | 1.b.
c. Net interest income booked at foreign offices, Edge and Agreement subsidiaries, and IBFs | ////////////////// |
(item 1.a minus 1.b) ..................................................................... | 4839 N/A | 1.c.
2. Adjustments for booking location of international operations: | ////////////////// |
a. Net interest income attributable to international operations booked at domestic offices .. | 4840 N/A | 2.a.
b. Net interest income attributable to domestic business booked at foreign offices .......... | 4841 N/A | 2.b.
c. Net booking location adjustment (item 2.a minus 2.b) ..................................... | 4842 N/A | 2.c.
3. Noninterest income and expense attributable to international operations: | ////////////////// |
a. Noninterest income attributable to international operations .............................. | 4097 N/A | 3.a.
b. Provision for loan and lease losses attributable to international operations ............. | 4235 N/A | 3.b.
c. Other noninterest expense attributable to international operations ....................... | 4239 N/A | 3.c.
d. Net noninterest income (expense) attributable to international operations (item 3.a | ////////////////// |
minus 3.b and 3.c) ....................................................................... | 4843 N/A | 3.d.
4. Estimated pretax income attributable to international operations before capital allocation | ////////////////// |
adjustment (sum of items 1.c, 2.c, and 3.d) ................................................. | 4844 N/A | 4.
5. Adjustment to pretax income for internal allocations to international operations to reflect | ////////////////// |
the effects of equity capital on overall bank funding costs ................................. | 4845 N/A | 5.
6. Estimated pretax income attributable to international operations after capital allocation | ////////////////// |
adjustment (sum of items 4 and 5) ........................................................... | 4846 N/A | 6.
7. Income taxes attributable to income from international operations as estimated in item 6 .... | 4797 N/A | 7.
8. Estimated net income attributable to international operations (item 6 minus 7) .............. | 4341 N/A | 8.
______________________
<CAPTION>
Memoranda ______________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
_________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Intracompany interest income included in item 1.a above ..................................... | 4847 N/A | M.1.
2. Intracompany interest expense included in item 1.b above .................................... | 4848 N/A | M.2.
______________________
</TABLE>
<TABLE>
<CAPTION>
Part II. Supplementary Details on Income from International Operations Required
by the Departments of Commerce and Treasury for Purposes of the U.S.
International Accounts and the U.S. National Income and Product Accounts
________________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
_________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Interest income booked at IBFs .............................................................. | 4849 N/A | 1.
2. Interest expense booked at IBFs ............................................................. | 4850 N/A | 2.
3. Noninterest income attributable to international operations booked at domestic offices | ////////////////// |
(excluding IBFs): | ////////////////// |
a. Gains (losses) and extraordinary items ................................................... | 5491 N/A | 3.a.
b. Fees and other noninterest income ........................................................ | 5492 N/A | 3.b.
4. Provision for loan and lease losses attributable to international operations booked at | ////////////////// |
domestic offices (excluding IBFs) ........................................................... | 4852 N/A | 4.
5. Other noninterest expense attributable to international operations booked at domestic offices | ////////////////// |
(excluding IBFs) ............................................................................ | 4853 N/A | 5.
______________________
</TABLE>

<PAGE>

<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-7
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-E--Explanations

Schedule RI-E is to be completed each quarter on a calendar year-to-date basis.

Detail all adjustments in Schedules RI-A and RI-B, all extraordinary items and other adjustments in Schedule RI, and all
significant items of other noninterest income and other noninterest expense in Schedule RI. (See instructions for details.)
__________
| I495 | <-
______ ________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. All other noninterest income (from Schedule RI, item 5.f.(2)) | ////////////////// |
Report amounts that exceed 10% of Schedule RI, item 5.f.(2): | ////////////////// |
a. Net gains on other real estate owned ..................................................... | 5415 0 | 1.a.
b. Net gains on sales of loans .............................................................. | 5416 0 | 1.b.
c. Net gains on sales of premises and fixed assets .......................................... | 5417 0 | 1.c.
Itemize and describe the three largest other amounts that exceed 10% of | ////////////////// |
Schedule RI, item 5.f.(2): | ////////////////// |
_____________
d. | TEXT 4461 |______________________________________________________________________________| |
___________ Gain on Sale of Branches 4461 27,961 1.d.
e. | TEXT 4462 |______________________________________________________________________________| 4462 | 1.e.
___________ 4463 1.f.
f. | TEXT 4463 |______________________________________________________________________________| |
_____________
2. Other noninterest expense (from Schedule RI, item 7.c): | ////////////////// |
a. Amortization expense of intangible assets ................................................ | 4531 5,424 | 2.a.
Report amounts that exceed 10% of Schedule RI, item 7.c: | ////////////////// |
b. Net losses on other real estate owned .................................................... | 5418 0 | 2.b.
c. Net losses on sales of loans ............................................................. | 5419 0 | 2.c.
d. Net losses on sales of premises and fixed assets ......................................... | 5420 0 | 2.d.
Itemize and describe the three largest other amounts that exceed 10% of | ////////////////// |
Schedule RI, item 7.c: | ////////////////// |
_____________
e. | TEXT 4464 |______________________________________________________________________________| |
___________ Intercompany Data Processing & Programming Charges 4464 19,616 2.e.
f. | TEXT 4467 |______________________________________________________________________________| 4467 11,457 | 2.f.
___________ Intercompany Corporate Support Function Charges 4468 2.g.
g. | TEXT 4468 |______________________________________________________________________________| |
_____________
3. Extraordinary items and other adjustments (from Schedule RI, item 11.a) and | ////////////////// |
applicable income tax effect (from Schedule RI, item 11.b) (itemize and describe | ////////////////// |
all extraordinary items and other adjustments): | ////////////////// |
_____________
a. (1) | TEXT 4469 |__________________________________________________________________________| 4469 | 3.a.(1)
_____________
(2) Applicable income tax effect | RIAD 4486 | | ////////////////// | 3.a.(2)
_____________ ____________________________
b. (1) | TEXT 4487 |__________________________________________________________________________| 4487 | 3.b.(1)
_____________
(2) Applicable income tax effect | RIAD 4488 | | ////////////////// | 3.b.(2)
_____________ ____________________________
c. (1) | TEXT 4489 |__________________________________________________________________________| 4489 | 3.c.(1)
_____________
(2) Applicable income tax effect | RIAD 4491 | | ////////////////// | 3.c.(2)
____________________________
4. Equity capital adjustments from amended Reports of Income (from Schedule RI-A, | ////////////////// |
item 2) (itemize and describe all adjustments): | ////////////////// |
_____________
a. | TEXT 4492 |______________________________________________________________________________| 4492 | 4.a.
___________
b. | TEXT 4493 |______________________________________________________________________________| 4493 | 4.b.
_____________
5. Cumulative effect of changes in accounting principles from prior years (from | ////////////////// |
Schedule RI-A, item 9) (itemize and describe all changes in accounting principles): | ////////////////// |
_____________
a. | TEXT 4494 |______________________________________________________________________________| 4494 | 5.a.
___________
b. | TEXT 4495 |______________________________________________________________________________| 4495 | 5.b.
_____________
6. Corrections of material accounting errors from prior years (from Schedule RI-A, | ////////////////// |
item 10) (itemize and describe all corrections): | ////////////////// |
_____________
a. | TEXT 4496 |______________________________________________________________________________| 4496 | 6.a.
___________
b. | TEXT 4497 |______________________________________________________________________________| 4497 | 6.b.
_____________
______________________
</TABLE>

<PAGE>

<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-8
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-E--Continued
________________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
7. Other transactions with parent holding company (from Schedule RI-A, item 13) | ////////////////// |
(itemize and describe all such transactions): | ////////////////// |
_____________
a. | TEXT 4498 |______________________________________________________________________________| 4498 | 7.a.
___________
b. | TEXT 4499 |______________________________________________________________________________| 4499 | 7.b.
_____________
8. Adjustments to allowance for loan and lease losses (from Schedule RI-B, part II, | ////////////////// |
item 5) (itemize and describe all adjustments): | ////////////////// |
_____________
a. | TEXT 4521 |
|______________________________________________________________________________| 4521 | 8.a.
_____________
b. | TEXT 4522 |______________________________________________________________________________| 4522 | 8.b.
_____________
____________________
9. Other explanations (the space below is provided for the bank to briefly describe, | I498 | I499 | <-
______________________
at its option, any other significant items affecting the Report of Income):
___
No comment |X| (RIAD 4769)
___
Other explanations (please type or print clearly):
(TEXT 4769)
</TABLE>

<PAGE>

<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-1
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for March 31, 1996

All schedules are to be reported in thousands of dollars. Unless otherwise indicated,
report the amount outstanding as of the last business day of the quarter.

Schedule RC--Balance Sheet
__________
| C400 | <-
____________ ________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
ASSETS | ////////////////// |
1. Cash and balances due from depository institutions (from Schedule RC-A): | ////////////////// |
a. Noninterest-bearing balances and currency and coin(1) ................................... | 0081 644,422 | 1.a.
b. Interest-bearing balances(2) ............................................................ | 0071 175 | 1.b.
2. Securities: | ////////////////// |
a. Held-to-maturity securities (from Schedule RC-B, column A) .............................. | 1754 3,192 | 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D) ............................ | 1773 1,806,430 | 2.b.
3. Federal funds sold and securities purchased under agreements to resell in domestic offices | ////////////////// |
of the bank and of its Edge and Agreement subsidiaries, and in IBFs: | ////////////////// |
a. Federal funds sold ...................................................................... | 0276 0 | 3.a.
b. Securities purchased under agreements to resell ......................................... | 0277 0 | 3.b.
4. Loans and lease financing receivables: ____________________________| ////////////////// |
a. Loans and leases, net of unearned income (from Schedule RC-C) | RCFD 2122 | 10,679,728 | ////////////////// | 4.a.
b. LESS: Allowance for loan and lease losses ................... | RCFD 3123 | 260,079 | ////////////////// | 4.b.
c. LESS: Allocated transfer risk reserve ....................... | RCFD 3128 | 0 | ////////////////// | 4.c.
____________________________
d. Loans and leases, net of unearned income, | ////////////////// |
allowance, and reserve (item 4.a minus 4.b and 4.c) ..................................... | 2125 10,419,649 | 4.d.
5. Trading assets (from schedule RC-D )........................................................ | 3545 484 | 5.
6. Premises and fixed assets (including capitalized leases) ................................... | 2145 146,450 | 6.
7. Other real estate owned (from Schedule RC-M) ............................................... | 2150 871 | 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) ... | 2130 0 | 8.
9. Customers' liability to this bank on acceptances outstanding ............................... | 2155 6,513 | 9.
10. Intangible assets (from Schedule RC-M) ..................................................... | 2143 283,894 | 10.
11. Other assets (from Schedule RC-F) .......................................................... | 2160 615,485 | 11.
12. Total assets (sum of items 1 through 11) ................................................... | 2170 13,927,565 | 12.
______________________
<FN>
____________
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
</TABLE>

<PAGE>

<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-2
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC--Continued
___________________________
Dollar Amounts in Thousands | ///////// Bil Mil Thou |
_______________________________________________________________________________________________ _________________________
<S> <C> <C>
LIABILITIES | /////////////////////// |
13. Deposits: | /////////////////////// |
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part I) ..... | RCON 2200 8,134,739 | 13.a.
____________________________
(1) Noninterest-bearing(1) ................................ | RCON 6631 2,366,568 | /////////////////////// | 13.a.(1)
(2) Interest-bearing ...................................... | RCON 6636 5,768,171 | /////////////////////// | 13.a.(2)
____________________________
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, | /////////////////////// |
part II) .............................................................................. | RCFN 2200 261,352 | 13.b.
____________________________
(1) Noninterest-bearing ................................... | RCFN 6631 0 | /////////////////////// | 13.b.(1)
(2) Interest-bearing ...................................... | RCFN 6636 261,352 | /////////////////////// | 13.b.(2)
____________________________
14. Federal funds purchased and securities sold under agreements to repurchase in domestic | /////////////////////// |
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: | /////////////////////// |
a. Federal funds purchased ............................................................... | RCFD 0278 2,009,304 | 14.a.
b. Securities sold under agreements to repurchase ........................................ | RCFD 0279 55,853 | 14.b.
15. a. Demand notes issued to the U.S. Treasury .............................................. | RCON 2840 170,257 | 15.a.
b. Trading liabilities (from Schedule RC-D) .............................................. | RCFD 3548 460 | 15.b.
16. Other borrowed money: | /////////////////////// |
a. With a remaining maturity of one year or less.......................................... | RCFD 2332 954,145 | 16.a.
b. With a remaining maturity of more than one year........................................ | RCFD 2333 143,887 | 16.b.
17. Mortgage indebtedness and obligations under capitalized leases ........................... | RCFD 2910 8,762 | 17.
18. Bank's liability on acceptances executed and outstanding ................................. | RCFD 2920 6,513 | 18.
19. Subordinated notes and debentures ........................................................ | RCFD 3200 440,000 | 19.
20. Other liabilities (from Schedule RC-G) ................................................... | RCFD 2930 363,079 | 20.
21. Total liabilities (sum of items 13 through 20) ........................................... | RCFD 2948 12,548,351 | 21.
| /////////////////////// |
22. Limited-life preferred stock and related surplus ......................................... | RCFD 3282 0 | 22.
EQUITY CAPITAL | /////////////////////// |
23. Perpetual preferred stock and related surplus ............................................ | RCFD 3838 125,000 | 23.
24. Common stock ............................................................................. | RCFD 3230 19,487 | 24.
25. Surplus (exclude all surplus related to preferred stock).................................. | RCFD 3839 955,984 | 25.
26. a. Undivided profits and capital reserves ................................................ | RCFD 3632 286,513 | 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities ................ | RCFD 8434 (7,770)| 26.b.
27. Cumulative foreign currency translation adjustments ...................................... | RCFD 3284 0 | 27.
28. Total equity capital (sum of items 23 through 27) ........................................ | RCFD 3210 1,379,214 | 28.
29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22, | /////////////////////// |
and 28) .................................................................................. | RCFD 3300 13,927,565 | 29.
___________________________
</TABLE>
<TABLE>
<CAPTION>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the Number
most comprehensive level of auditing work performed for the bank by independent external __________________
auditors as of any date during 1995 ............................................................... | RCFD 6724 2 | M.1.
__________________
<S> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
<FN>
____________
(1) Includes total demand deposits and noninterest-bearing time and savings deposits.
</TABLE>

<PAGE>

<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-3
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-A--Cash and Balances Due From Depository Institutions
Exclude assets held for trading.
__________
| C405 | <-
_________________________________ ________
| (Column A) | (Column B) |
| Consolidated | Domestic |
| Bank | Offices |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou |
_____________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
1. Cash items in process of collection, unposted debits, and currency and | ////////////////// | ////////////////// |
coin .................................................................... | 0022 553,818 | ////////////////// | 1.
a. Cash items in process of collection and unposted debits .............. | ////////////////// | 0020 418,841 | 1.a.
b. Currency and coin .................................................... | ////////////////// | 0080 134,977 | 1.b.
2. Balances due from depository institutions in the U.S. ................... | ////////////////// | 0082 89,741 | 2.
a. U.S. branches and agencies of foreign banks (including their IBFs) ... | 0083 0 | ////////////////// | 2.a.
b. Other commercial banks in the U.S. and other depository institutions | ////////////////// | ////////////////// |
in the U.S. (including their IBFs) ................................... | 0085 89,741 | ////////////////// | 2.b.
3. Balances due from banks in foreign countries and foreign central banks .. | ////////////////// | 0070 1,038 | 3.
a. Foreign branches of other U.S. banks ................................. | 0073 0 | ////////////////// | 3.a.
b. Other banks in foreign countries and foreign central banks ........... | 0074 1,038 | ////////////////// | 3.b.
4. Balances due from Federal Reserve Banks ................................. | 0090 0 | 0090 0 | 4.
5. Total (sum of items 1 through 4) (total of column A must equal | ////////////////// | ////////////////// |
Schedule RC, sum of items 1.a and 1.b) .................................. | 0010 644,597 | 0010 644,597 | 5.
___________________________________________
<CAPTION>
______________________
Memorandum Dollar Amounts in Thousands | RCON Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Noninterest-bearing balances due from commercial banks in the U.S. (included in item 2, | ////////////////// |
column B above) .............................................................................. | 0050 89,566 | M.1.
______________________
</TABLE>

Schedule RC-B--Securities
Exclude assets held in trading accounts.
<TABLE>
_______
| C410 |

___________________________________________________________________________ ________
| Held-to-maturity | Available-for-sale |
_________________________________________ _________________________________________
| (Column A) | (Column B) | (Column C) | (Column D) |
| Amortized Cost | Fair Value | Amortized Cost | Fair Value(1) |
____________________ ____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________ ____________________ ____________________ ____________________ ____________________
<S> <C> <C> <C> <C> <C>
1. U.S. Treasury securities ......... | 0211 250 | 0213 250 | 1286 843,487 | 1287 829,503 | 1.
2. U.S. Government agency | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
and corporation obligations | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
(exclude mortgage-backed | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
securities): | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
a. Issued by U.S. Govern- | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
ment agencies(2) .............. | 1289 0 | 1290 0 | 1291 0 | 1293 0 | 2.a.
b. Issued by U.S. | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
Government-sponsored | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
agencies(3) ................... | 1294 0 | 1295 0 | 1297 0 | 1298 0 | 2.b.
_____________________________________________________________________________________
<FN>
_____________
(1) Includes equity securities without readily determinable fair values at historical cost in item 6.c, column D.
(2) Includes Small Business Administration "Guaranteed Loan Pool Certificates," U.S. Maritime Administration obligations, and
Export-Import Bank participation certificates.
(3) Includes obligations (other than mortgage-backed securities) issued by the Farm Credit System, the Federal Home
Loan Bank System, the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Financing
Corporation, Resolution Funding Corporation, the Student Loan Marketing Association, and the Tennessee Valley Authority.
</TABLE>

<PAGE>

<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-4
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-B--Continued

_____________________________________________________________________________________
| Held-to-maturity | Available-for-sale |
_________________________________________ _________________________________________
| (Column A) | (Column B) | (Column C) | (Column D) |
| Amortized Cost | Fair Value | Amortized Cost | Fair Value(1) |
____________________ ____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
____________________________________ ____________________ ____________________ ____________________ ____________________
<S> <C> <C> <C> <C>
3. Securities issued by states | ////////////////// |/ //////////////// | ////////////////// | ///////////////// |
and political subdivisions | ////////////////// |////////////////// | ////////////////// | ///////////////// |
in the U.S.: | ////////////////// |////////////////// | ////////////////// | ////////// ////// |
a. General obligations ......... | 1676 0 |1677 0 | 1678 0 | 1679 0 | 3.a.
b. Revenue obligations ......... | 1681 42 |1686 45 | 1690 0 | 1691 0 | 3.b.
c. Industrial development ...... | ////////////////// |////////////////// | ////////////////// | ///////////////// |
and similiar obligations ........| 1694 0 |1695 0 | 1696 0 | 1697 0 | 3.c.
4. Mortgage-backed: | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities (MBS): | ////////////////// |////////////////// | ////////////////// | ///////////////// |
a. Pass-through securities: | ////////////////// |////////////////// | ////////////////// | ///////////////// |
(1) Guaranteed by | ////////////////// |////////////////// | ////////////////// | ///////////////// |
GNMA ....................... | 1698 0 |1699 0 | 1701 849 | 1702 849 | 4.a.(1)
(2) Issued by FNMA | ////////////////// |////////////////// | ////////////////// | ///////////////// |
and FHLMC ................. | 1703 0 |1705 0 | 1706 847,095 | 1707 849,756 | 4.a.(2)
(3) Other pass-through | ////////////////// |////////////////// | ///////////////////| ///////////////// |
secruities ................. | 1709 0 |1710 0 | 1711 0 | 1713 0 | 4.a.(3)
b. Other mortgage-backed | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities (include CMO's, | ////////////////// |////////////////// | ////////////////// | ///////////////// |
REMICs, and stripped | ////////////////// |////////////////// | ////////////////// | ///////////////// |
MBS): | ////////////////// |////////////////// | ////////////////// | ///////////////// |
(1) Issued or guaranteed | ////////////////// |////////////////// | ////////////////// | ///////////////// |
by FNMA, FHLMC, | ////////////////// |////////////////// | ////////////////// | ///////////////// |
or GNMA ............... | 1714 0 |1715 0 | 1716 0 | 1717 0 | 4.b.(1)
(2) Collateralized | ////////////////// |////////////////// | ////////////////// | ///////////////// |
by MBS issued or | ////////////////// |////////////////// | ////////////////// | ///////////////// |
guaranteed by FNMA | ////////////////// |////////////////// | ////////////////// | ///////////////// |
FHLMC, or GNMA ........ | 1718 0 |1719 0 | 1731 0 | 1732 0 | 4.b.(2)
(3) All other mortgage- | ////////////////// |////////////////// | ////////////////// | //////////////// |
backed securities ..... | 1733 0 |1734 0 | 1735 0 | 1736 0 | 4.b.(3)
5. Other debt securities: | ////////////////// |////////////////// | ////////////////// | ///////////////// |
a. Other domestic debt | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities | 1737 0 |1738 0 | 1739 478 | 1741 475 | 5.a.
b. Foreign debt | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities ................. | 1742 2,900 |1743 2,900 | 1744 0 | 1746 0 | 5.b.
6. Equity securities: | ////////////////// |////////////////// | ////////////////// | ///////////////// |
a. Investments in mutual | ////////////////// |////////////////// | ////////////////// | ///////////////// |
funds ...................... | ////////////////// |////////////////// | 1747 9,427 | 1748 9,427 | 6.a.
b. Other equity securities | ////////////////// |////////////////// | ////////////////// | ///////////////// |
with readily determin- | ////////////////// |////////////////// | ////////////////// | ///////////////// |
able fair values ........... | ////////////////// |////////////////// | 1749 0 | 1751 0 | 6.b.
c. All other equity | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities (1) ............. | ////////////////// |////////////////// | 1752 116,420 | 1753 116,420 | 6.c.
7. Total (sum of items 1 | ////////////////// |////////////////// | ////////////////// | ///////////////// |
through 6) (total of | ////////////////// |////////////////// | ////////////////// | ///////////////// |
column A must equal | ////////////////// |////////////////// | ////////////////// | ///////////////// |
Schedule RC, item 2.a) | ////////////////// |////////////////// | ////////////////// | ///////////////// |
(total of column D must | ////////////////// |////////////////// | ////////////////// | ///////////////// |
equal Schedule RC, | ////////////////// |////////////////// | ////////////////// | ///////////////// |
item 2.b) ..................... | 1754 3,192 | 1771 3,195 | 1772 1,817,756 | 1773 1,806,430 | 7.
____________ |__________________________________________________________________________________|
1) Includes equity securities without readily determinable fair values at historical cost in item 6.c, column D.

</TABLE>
14

<PAGE>

<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-5
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-B--Continued

<CAPTION>
___________
Memoranda | C412 | <-
___________ _________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Pledged securities(2) ......................................................................... | 0416 934,681 | M.1.
2. Maturity and repricing data for debt securities(2)(3)(4) (excluding those in nonaccrual status):| ////////////////// |
a. Fixed rate debt securities with a remaining maturity of: | ////////////////// |
(1) Three months or less ................................................................... | 0343 5,621 | M.2.a.(1)
(2) Over three months through 12 months .................................................... | 0344 0 | M.2.a.(2)
(3) Over one year through five years ....................................................... | 0345 1,548,431 | M.2.a.(3)
(4) Over five years ........................................................................ | 0346 27,232 | M.2.a.(4)
(5) Total fixed rate debt securities (sum of Memorandum items 2.a.(1) through 2.a.(4)) ..... | 0347 1,581,284 | M.2.a.(5)
b. Floating rate debt securities with a repricing frequency of: | ////////////////// |
(1) Quarterly or more frequently ........................................................... | 4544 99,741 | M.2.b.(1)
(2) Annually or more frequently, but less frequently than quarterly ........................ | 4545 2,750 | M.2.b.(2)
(3) Every five years or more frequently, but less frequently than annually ................. | 4551 0 | M.2.b.(3)
(4) Less frequently than every five years .................................................. | 4552 0 | M.2.b.(4)
(5) Total floating rate debt securities (sum of Memorandum items 2.b.(1) through 2.b.(4)) .. | 4553 102,491 | M.2.b.(5)
c. Total debt securities (sum of Memorandum items 2.a.(5) and 2.b.(5)) (must equal total debt | ////////////////// |
securities from Schedule RC-B, sum of items 1 through 5, columns A and D, minus nonaccrual | ////////////////// |
debt securities included in Schedule RC-N, item 9, column C) ............................... | 0393 1,683,775 | M.2.c.
3. Not applicable | ////////////////// |
4. Held-to-maturity debt securities restructured and in compliance with modified terms (included | ////////////////// |
in Schedule RC-B, items 3 through 5, column A, above) ......................................... | 5365 0 | M.4.
5. Not applicable | ////////////////// |
6. Floating rate debt securities with a remaining maturity of one year or less(2)(4) (included in | ////////////////// |
Memorandum items 2.b(1) through 2.b.(4) above)................................................. | 5519 1,000 | M.6.
7. Amortized cost of held-to-maturity securities sold or transferred to available-for-sale or | ////////////////// |
trading securities during the calendar year-to-date (report the amortized cost at date of sale. | ////////////////// |
or transfer ................................................................................... | 1778 0 | m.7.
8. High-Risk mortgage securities (included in the held-to-maturity and available-for-sale | ////////////////// |
accounts in Schedule RC-B, item 4.b): | ////////////////// |
a. Amortized cost ............................................................................. | 8780 0 | M.8.a.
b. Fair Value ................................................................................. | 8781 0 | M.8.b.
9. Structured notes (included in the held-to-maturity and available-for-sale accounts in | ////////////////// |
Schedule RC-B, items.2, 3, and 5): | ////////////////// |
a. Amortized cost ............................................................................. | 8782 0 | M.9.a.
b. Fair Value ................................................................................. | 8783 0 | M.9.b.
----------------------
____________
(2) Includes held-to-maturity securities at amortized cost and available-for-sale securities at fair value.
(3) Exclude equity securities, e.g., investments in mutual funds, Federal Reserve stock, common stock, and preferred stock.
(4) Memorandum items 2 and 6 are not applicable to savings banks that must complete supplemental Schedule RC-J.

</TABLE>

Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT
Address: 777 MAIN STREET Call Date: 3/31/96 ST-BK: 09-0590 FFIEC 031
City, State Zip: HARTFORD, CT 06115 Page RC-6

<CAPTION>
Schedule RC-C--Loans and Lease Financing Receivables

Part I. Loans and Leases

Do not deduct the allowance for loan and lease losses from amounts __________
reported in this schedule. Report total loans and leases, net of unearned _________________________________| C415 | <-
income. Exclude assets held for trading. | (Column A) | (Column B) |
| Consolidated | Domestic |
| Bank | Offices |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou |
_____________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
1. Loans secured by real estate ........................................... | 1410 3,574,653 | ////////////////// | 1.
a. Construction and land development ................................... | ////////////////// | 1415 51,282 | 1.a.
b. Secured by farmland (including farm residential and other | ////////////////// | ////////////////// |
improvements) ....................................................... | ////////////////// | 1420 307 | 1.b.
c. Secured by 1-4 family residential properties: | ////////////////// | ////////////////// |
(1) Revolving, open-end loans secured by 1-4 family residential | ////////////////// | ////////////////// |
properties and extended under lines of credit ................... | ////////////////// | 1797 325,605 | 1.c.(1)
(2) All other loans secured by 1-4 family residential properties: | ////////////////// | ////////////////// |
(a) Secured by first liens ...................................... | ////////////////// | 5367 2,073,517 | 1.c.(2)(a)
(b) Secured by junior liens ..................................... | ////////////////// | 5368 172,054 | 1.c.(2)(b)
d. Secured by multifamily (5 or more) residential properties ........... | ////////////////// | 1460 65,430 | 1.d.
e. Secured by nonfarm nonresidential properties ........................ | ////////////////// | 1480 886,458 | 1.e.
2. Loans to depository institutions: | ////////////////// | ////////////////// |
a. To commercial banks in the U.S. ..................................... | ////////////////// | 1505 204,042 | 2.a.
(1) To U.S. branches and agencies of foreign banks .................. | 1506 0 | ////////////////// | 2.a.(1)
(2) To other commercial banks in the U.S. ........................... | 1507 204,042 | ////////////////// | 2.a.(2)
b. To other depository institutions in the U.S. ........................ | 1517 0 | 1517 0 | 2.b.
c. To banks in foreign countries ....................................... | ////////////////// | 1510 0 | 2.c.
(1) To foreign branches of other U.S. banks ......................... | 1513 0 | ////////////////// | 2.c.(1)
(2) To other banks in foreign countries ............................. | 1516 0 | ////////////////// | 2.c.(2)
3. Loans to finance agricultural production and other loans to farmers .... | 1590 1,568 | 1590 1,568 | 3.
4. Commercial and industrial loans: | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ....................................... | 1763 5,397,715 | 1763 5,397,715 | 4.a.
b. To non-U.S. addressees (domicile) ................................... | 1764 0 | 1764 0 | 4.b.
5. Acceptances of other banks: | ////////////////// | ////////////////// |
a. Of U.S. banks ....................................................... | 1756 1,538 | 1756 1,538 | 5.a.
b. Of foreign banks .................................................... | 1757 0 | 1757 0 | 5.b.
6. Loans to individuals for household, family, and other personal | ////////////////// | ////////////////// |
expenditures (i.e., consumer loans) (includes purchased paper) ......... | ////////////////// | 1975 548,048 | 6.
a. Credit cards and related plans (includes check credit and other | ////////////////// | ////////////////// |
revolving credit plans) ............................................. | 2008 25,114 | ////////////////// | 6.a.
b. Other (includes single payment, installment, and all student loans) . | 2011 522,934 | ////////////////// | 6.b.
7. Loans to foreign governments and official institutions (including | ////////////////// | ////////////////// |
foreign central banks) ................................................. | 2081 0 | 2081 0 | 7.
8. Obligations (other than securities and leases) of states and political | ////////////////// | ////////////////// |
subdivisions in the U.S. (includes nonrated industrial development | ////////////////// | ////////////////// |
obligations) ........................................................... | 2107 27,864 | 2107 27,864 | 8.
9. Other loans ............................................................ | 1563 934,616 | ////////////////// | 9.
a. Loans for purchasing or carrying securities (secured and unsecured) . | ////////////////// | 1545 155,278 | 9.a.
b. All other loans (exclude consumer loans) ............................ | ////////////////// | 1564 779,338 | 9.b.
10. Lease financing receivables (net of unearned income) ................... | ////////////////// | 2165 7,297 | 10.
a. Of U.S. addressees (domicile) ....................................... | 2182 7,297 | ////////////////// | 10.a.
b. Of non-U.S. addressees (domicile) ................................... | 2183 0 | ////////////////// | 10.b.
11. LESS: Any unearned income on loans reflected in items 1-9 above ........ | 2123 17,613 | 2123 17,613 | 11.
12. Total loans and leases, net of unearned income (sum of items 1 through | ////////////////// | ////////////////// |
10 minus item 11) (total of column A must equal Schedule RC, item 4.a) . | 2122 10,679,728 | 2122 10,679,728 | 12.
___________________________________________
</TABLE>

<PAGE>

<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC031
Address: 777 MAIN STREET Page: RC-7
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-C--Continued

Part I. Continued
___________________________________________
| (Column A) | (Column B) |
| Consolidated | Domestic |
Memoranda | Bank | Offices |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou |
_____________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
1. Commercial paper included in Schedule RC-C, part I, above .............. | 1496 0 | 1496 0 | M.1.
2. Loans and leases restructured and in compliance with modified terms | ////////////////// | ////////////////// |
(included in Schedule RC-C, part I, above and not reported as past due | ////////////////// | ////////////////// |
or nonaccrual in Schedule RC-N, Memorandum item 1): | ////////////////// | ////////////////// |
a. Loans secured by real estate: | ////////////////// | ////////////////// |
(1) To U.S. addressees (domicile) ................................... | 1687 19,431 | M.2.a.(1)
(2) To non-U.S. addressees (domicile) ............................... | 1689 0 | M.2.a.(2)
b. All other loans and all lease financing receivables (exclude loans | ////////////////// |
to individuals for household, family, and other personal expenditures)| 8691 0 | M.2.b.
c. Commercial and industrial loans to and lease financing receivables | ////////////////// |
of non-U.S. addressees (domicile) included in Memorandum item 2.b | ////////////////// |
above ............................................................... | 8692 0 | M.2.c.
3. Maturity and repricing data for loans and leases(1) (excluding those | ////////////////// |
in nonaccrual status): | ////////////////// |
a. Fixed rate loans and leases with a remaining maturity of: | ////////////////// |
(1) Three months or less ............................................ | 0348 4,174,641 | M.3.a.(1)
(2) Over three months through 12 months ............................. | 0349 85,961 | M.3.a.(2)
(3) Over one year through five years ................................ | 0356 965,740 | M.3.a.(3)
(4) Over five years ................................................. | 0357 1,877,648 | M.3.a.(4)
(5) Total fixed rate loans and leases (sum of | ////////////////// |
Memorandum items 3.a.(1) through 3.a.(4)) ....................... | 0358 7,103,990 | M.3.a.(5)
b. Floating rate loans with a repricing frequency of: | ////////////////// |
(1) Quarterly or more frequently .................................... | 4554 2,937,472 | M.3.b.(1)
(2) Annually or more frequently, but less frequently than quarterly . | 4555 547,425 | M.3.b.(2)
(3) Every five years or more frequently, but less frequently than | ////////////////// |
annually ........................................................ | 4561 20,958 | M.3.b.(3)
(4) Less frequently than every five years ........................... | 4564 0 | M.3.b.(4)
(5) Total floating rate loans (sum of Memorandum items 3.b.(1) | ////////////////// |
through 3.b.(4)) ................................................ | 4567 3,505,855 | M.3.b.(5)
c. Total loans and leases (sum of Memorandum items 3.a.(5) and 3.b.(5)) | ////////////////// |
(must equal the sum of total loans and leases, net, from | ////////////////// |
Schedule RC-C, part I, item 12, plus unearned income from | ////////////////// |
Schedule RC-C, part I, item 11, minus total nonaccrual loans and | ////////////////// |
leases from Schedule RC-N, sum of items 1 through 8, column C) ...... | 1479 10,609,845 | M.3.c.
d. Floating rate loans with a remaining maturity of one year or less | ////////////////// |
(included in Memorandum items 3.b.(1) through 3.b.(4) above)......... | A246 277,721 | M.3.d.
4. Loans to finance commercial real estate, construction, and land | ////////////////// |
development activities (not secured by real estate) included in | ////////////////// |
Schedule RC-C, part I, items 4 and 9, column A, page RC-6(2) ........... | 2746 47,652 | M.4.
5. Loans and leases held for sale (included in Schedule RC-C, part I, | ////////////////// |
above .................................................................. | 5369 0 | M.5.
6. Adjustable rate closed-end loans secured by first liens on 1-4 family | ////////////////// |_____________________
residential properties (included in Schedule RC-C, part I, item | ////////////////// | RCON Bil Mil Thou |
| ////////////////// |____________________
1.c.(2)(a), column B, page RC-6) ....................................... | ////////////////// | 5370 425,358 | M.6.
___________________________________________
<FN>
_____________________________
(1) Memorandum item 3 is not applicable to savings banks that must complete supplememtal Schedule RC-J.
(2) Exclude loans secured by real estate that are included in Schedule RC-C, part I, item 1, column A.

Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-8
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________

Schedule RC-D--Trading Assets and Liabilities _________

Schedule RC-D is to be completed only by banks with $1 billion or more intotal assets or with $2 billion or more in par/notional
amount of off-balance sheet derivative contracts (as reported in Schedule RC-L, items 14.a through 14.e, columns A through D).

| C420 |
Dollar Amounts in Thousands ////////// Bil Mil Thou
__________________________________________________________________________________________________ _______________|________|
<S> <C> <C>
ASSETS | /////////////////////// |
1. U.S. Treasury securities in domestic offices ................................................ | RCON 3531 0 | 1.
2. U.S. Government agency and corporation obligations in domestic offices (exclude mortgage- | /////////////////////// |
backed securities) .......................................................................... | RCON 3532 0 | 2.
3. Securities issued by states and political subdivisions in the U.S. in domestic offices ...... | RCON 3533 0 | 3.
4. Mortgage-backed securities (MBS) in domestic offices ........................................ | /////////////////////// |
a. Pass-through securities issued or guaranteed by FNMA, FHLMC, or GNMA ..................... | RCON 3534 0 | 4.a.
b. Other mortgage-backed securities issued or guaranteed by FNMA, FHLMC, or GNMA | /////////////////////// |
(include CMOs, REMICs, and stripped MBS) ................................................. | RCON 3535 0 | 4.b.
c. All other mortgage-backed securities ......................................................| RCON 3536 0 | 4.c.
5. Other debt securities in domestic offices ................................................... | RCON 3537 0 | 5.
6. Certificates of deposit in domestic offices ................................................. | RCON 3538 0 | 6.
7. Commercial paper in domestic offices ........................................................ | RCON 3539 0 | 7.
8. Bankers acceptances in domestic offices ..................................................... | RCON 3540 0 | 8.
9. Other trading assets in domestic offices .................................................... | RCON 3541 0 | 9.
10. Trading assets in foreign offices ........................................................... | RCFN 3542 0 | 10.
11. Revaluation gains on interest rate, foreign exchange rate, and other commodity and equity | /////////////////////// |
contracts: | /////////////////////// |
a. In domestic offices ...................................................................... | RCON 3543 484 | 11.a.
b. In foreign offices ....................................................................... | RCFN 3544 0 | 11.b.
12. Total trading assets (sum of items 1 through 11) (must equal Schedule RC, item 5) ........... | RCFD 3545 484 | 12.
<CAPTION>
___________________________
___________________________
| ///////// Bil Mil Thou |
LIABILITIES _________________________
<S> <C> <C>
13. Liability for short positions ............................................................... | RCFD 3546 0 | 13.
14. Revaluation losses on interest rate, foreign exchange rate, and other commodity and equity | /////////////////////// |
contracts ................................................................................... | RCFD 3547 460 | 14.
15. Total trading liabilities (sum of items 13 and 14) (must equal Schedule RC, item 15.b) ...... | RCFD 3548 460 | 15.
___________________________
</TABLE>

<PAGE>

<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-9
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-E--Deposit Liabilities

Part I. Deposits in Domestic Offices
__________
| C425 | <-
______________________________________________________ ________
| | Nontransaction |
| Transaction Accounts | Accounts |
_________________________________________ ____________________
| (Column A) | (Column B) | (Column C) |
| Total transaction | Memo: Total | Total |
| accounts (including| demand deposits | nontransaction |
| total demand | (included in | accounts |
| deposits) | column A) | (including MMDAs) |
____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCON Bil Mil Thou | RCON Bil Mil Thou | RCON Bil Mil Thou |
__________________________________________________________ ____________________ ____________________ ____________________
<S> <C> <C> <C> <C>
Deposits of: | ////////////////// | ////////////////// | ////////////////// |
1. Individuals, partnerships, and corporations .......... | 2201 1,870,879 | 2240 1,790,783 | 2346 5,557,638 | 1.
2. U.S. Government ...................................... | 2202 32,574 | 2280 32,277 | 2520 0 | 2.
3. States and political subdivisions in the U.S. ........ | 2203 150,578 | 2290 127,109 | 2530 106,071 | 3.
4. Commercial banks in the U.S. ......................... | 2206 202,546 | 2310 202,546 | 2550 100 | 4.
5. Other depository institutions in the U.S. ............ | 2207 174,699 | 2312 174,699 | 2349 500 | 5.
6. Banks in foreign countries ........................... | 2213 318 | 2320 318 | 2236 0 | 6.
7. Foreign governments and official institutions | ////////////////// | ////////////////// | ////////////////// |
(including foreign central banks) .................... | 2216 0 | 2300 0 | 2377 0 | 7.
8. Certified and official checks ........................ | 2330 38,836 | 2330 38,836 | ////////////////// | 8.
9. Total (sum of items 1 through 8) (sum of | ////////////////// | ////////////////// | ////////////////// |
columns A and C must equal Schedule RC, | ////////////////// | ////////////////// | ////////////////// |
item 13.a) ........................................... | 2215 2,470,430 | 2210 2,366,568 | 2385 5,664,309 | 9.
________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
______________________
Memoranda Dollar Amounts in Thousands | RCON Bil Mil Thou |
____________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Selected components of total deposits (i.e., sum of item 9, columns A and C): | ////////////////// |
a. Total Individual Retirement Accounts (IRAs) and Keogh Plan accounts ......................... | 6835 698,350 | M.1.a.
b. Total brokered deposits ..................................................................... | 2365 974,688 | M.1.b.
c. Fully insured brokered deposits (included in Memorandum item 1.b above): | ////////////////// |
(1) Issued in denominations of less than $100,000 ........................................... | 2343 60 | M.1.c.(1)
(2) Issued either in denominations of $100,000 or in denominations greater than $100,000 | ////////////////// |
and participated out by the broker in shares of $100,000 or less ........................ | 2344 974,628 | M.1.c.(2)
d. Maturity data for brokered deposits: | ////////////////// |
(1) Brokered deposits issued in denominations of less than $100,000 with a remaining | ////////////////// |
maturity of one year or less (included in Memorandum item 1.c.(1) above)................. | A243 40 | M.1.d.(1)
(2) Brokered deposits issued in denominations of $100,000 or more with a remaining | ////////////////// |
maturity of one year or less (included in memorandum item 1.b above)..................... | A244 348,862 | M.1.d.(2)
e. Preferred deposits (uninsured deposits of states and political subdivisions in the U.S. | ////////////////// |
reported in item 3 above which are secured or collateralized as required under state law) ... | 5590 250,556 | M.1.e.
2. Components of total nontransaction accounts (sum of Memoranda items 2.a through 2.d must | ////////////////// |
equal item 9, column C above): | ////////////////// |
a. Savings deposits: | ////////////////// |
(1) Money market deposit accounts (MMDAs) ................................................... | 6810 2,070,204 | M.2.a.(1)
(2) Other savings deposits (excludes MMDAs) ................................................. | 0352 607,255 | M.2.a.(2)
b. Total time deposits of less than $100,000 ................................................... | 6648 1,723,479 | M.2.b.
c. Time certificates of deposit of $100,000 or more ............................................ | 6645 1,263,371 | M.2.c.
d. Open-account time deposits of $100,000 or more .............................................. | 6646 0 | M.2.d.
3. All NOW accounts (included in column A above) .................................................. | 2398 103,862 | M.3.
4. Not applicable.
______________________
</TABLE>

<PAGE>

<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-10
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
<CAPTION>
Schedule RC-E--Continued

Part I. Continued

Memoranda (continued)
_________________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
______________________
Dollar Amounts in Thousands | RCON Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
5. Maturity and repricing data for time deposits of less than $100,000 (sum of | ////////////////// |
Memorandum items 5.a.(1) through 5.b.(3) must equal Memorandum item 2.b above):(1) | ////////////////// |
a. Fixed rate time deposits of less than $100,000 with a remaining maturity of: | ////////////////// |
(1) Three months or less.................................................................... | A225 606,686 | M.5.a.(1)
(2) Over three months through 12 months..................................................... | A226 797,678 | M.5.a.(2)
(3) Over one year........................................................................... | A227 271,853 | M.5.a.(3)
b. Floating rate time deposits of less than $100,000 with a repricing frequency of: | ////////////////// |
(1) Quarterly or more frequently............................................................ | A228 47,262 | M.5.b.(1)
(2) Annually or more frequently, but less frequently than quarterly......................... | A229 0 | M.5.b.(2)
(3) Less frequently than annually........................................................... | A230 0 | M.5.b.(3)
c. Floating rate time deposits of less than $100,000 with a remaining maturity of | ////////////////// |
one year or less (included in Memorandum items 5.b.(1) through 5.b.(3) above)............... | A231 28,168 | M.5.c.
6. Maturity and repricing data for time deposits of $100,000 or more (i.e., time certificates | ////////////////// |
of deposits of $100,000 or more and open-account time deposits of $100,000 or more) | ////////////////// |
(sum of Memorandum items 6.a.(1) through 6.b.(4) must equal the sum of Memorandum | ////////////////// |
items 2.c and 2.d above):(1) | ////////////////// |
a. Fixed rate time deposits of $100,000 or more wiht a remaining maturity of: | ////////////////// |
(1) Three months or less ................................................................... | A232 270,543 | M.6.a.(1)
(2) Over three months through 12 months .................................................... | A233 297.457 | M.6.a.(2)
(3) Over one year through five years ....................................................... | A234 695,371 | M.6.a.(3)
(4) Over five years ........................................................................ | A235 0 | M.6.a.(4)
b. Floating rate time deposits of $100,000 or more with a repricing frequency of: | ////////////////// |
(1) Quarterly or more frequently ........................................................... | A236 0 | M.6.b.(1)
(2) Annually or more frequently, but less frequently than quarterly ........................ | A237 0 | M.6.b.(2)
(3) Every five years or more frequently, but less frequently than annually ................. | A238 0 | M.6.b.(3)
(4) Less frequently than every five years .................................................. | A239 0 | M.6.b.(4)
c. Floating rate time deposits of $100,000 or more with a remaining maturity of | ////////////////// |
one year or less (included in Memorandum items 6.b.(1) through 6.b.(4) above)............... | A240 0 | M.6.c.
______________________
<FN>
_____________
(1) Memorandum items 5 and 6 are not applicable to savings banks that must complete supplemental Schedule RC-J.
</TABLE>

<PAGE>

<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-11
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-E--Continued

Part II. Deposits in Foreign Offices (including Edge and
Agreement subsidiaries and IBFs)

______________________
Dollar Amounts in Thousands | RCFN Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
Deposits of: | ////////////////// |
1. Individuals, partnerships, and corporations ................................................... | 2621 256,352 | 1.
2. U.S. banks (including IBFs and foreign branches of U.S. banks) ................................ | 2623 0 | 2.
3. Foreign banks (including U.S. branches and agencies of foreign banks, including their IBFs).... | 2625 5,000 | 3.
4. Foreign governments and official institutions (including foreign central banks) ............... | 2650 0 | 4.
5. Certified and official checks ................................................................. | 2330 0 | 5.
6. All other deposits ............................................................................ | 2668 0 | 6.
7. Total (sum of items 1 through 6) (must equal Schedule RC, item 13.b) .......................... | 2200 261,352 | 7.

Memorandum
Dollar Amounts in Thousands |RCFN Bil Mil Thou |
1. Time deposits with a remaining maturity of one year or less (included in Part II, item 7 above) |A245 261,352 | M.1.
______________________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-F--Other Assets
__________
| C430 | <-
_________________ ________
Dollar Amounts in Thousands | ////////// Bil Mil Thou |
__________________________________________________________________________________________________ _________________________
<S> <C> <C>
1. Income earned, not collected on loans ........................................................ | RCFD 2164 51,988 | 1.
2. Net deferred tax assets(1) ................................................................... | RCFD 2148 166,839 | 2.
3. Excess residential mortgage servicing fees receivable ........................................ | RCFD 5371 17,484 | 3.
4. Other (itemize and describe amounts that exceed 25% of this item)............................. | RCFD 2168 379,174 | 4.
_____________ ___________________________
a. | TEXT 3549 |____________________________________________________| RCFD 3549 | | /////////////////////// | 4.a.
___________
b. | TEXT 3550 |____________________________________________________| RCFD 3550 | | /////////////////////// | 4.b.
___________
c. | TEXT 3551 |____________________________________________________| RCFD 3551 | | /////////////////////// | 4.c.
_____________
___________________________
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 11) ........................... | RCFD 2160 615,485 | 5.
___________________________
<CAPTION>
Memorandum ___________________________
Dollar Amounts in Thousands | ////////// Bil Mil Thou |
__________________________________________________________________________________________________ _________________________
<S> <C> <C>
1. Deferred tax assets disallowed for regulatory capital purposes ............................... | RCFD 5610 0 | M.1.
___________________________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-G--Other Liabilities
__________
| C435 | <-
_________________ ________
Dollar Amounts in Thousands | ////////// Bil Mil Thou |
__________________________________________________________________________________________________ _________________________
<S> <C> <C>
1. a. Interest accrued and unpaid on deposits in domestic offices(2) ............................ | RCON 3645 24,670 | 1.a.
b. Other expenses accrued and unpaid (includes accrued income taxes payable) ................. | RCFD 3646 305,857 | 1.b.
2. Net deferred tax liabilities(1) .............................................................. | RCFD 3049 0 | 2.
3. Minority interest in consolidated subsidiaries ............................................... | RCFD 3000 0 | 3.
4. Other (itemize and describe amounts that exceed 25% of this item)............................. | RCFD 2938 32,552 | 4.
_____________ ___________________________
a. | TEXT 3552 |____________________________________________________| RCFD 3552 | | /////////////////////// | 4.a.
___________
b. | TEXT 3553 |____________________________________________________| RCFD 3553 | | /////////////////////// | 4.b.
___________
c. | TEXT 3554 |____________________________________________________| RCFD 3554 | | /////////////////////// | 4.c.
_____________
___________________________
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 20) ........................... | RCFD 2930 363,079 | 5.
___________________________
<FN>
____________
(1) See discussion of deferred income taxes in Glossary entry on "income taxes."
(2) For savings banks, include "dividends" accrued and unpaid on deposits.
</TABLE>

<PAGE>

<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-12
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-H--Selected Balance Sheet Items for Domestic Offices
__________
| C440 | <-
____________ ________
| Domestic Offices |
____________________
Dollar Amounts in Thousands | RCON Bil Mil Thou |
_____________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Customers' liability to this bank on acceptances outstanding .................................... | 2155 6,513 | 1.
2. Bank's liability on acceptances executed and outstanding ........................................ | 2920 6,513 | 2.
3. Federal funds sold and securities purchased under agreements to resell .......................... | 1350 0 | 3.
4. Federal funds purchased and securities sold under agreements to repurchase ...................... | 2800 2,065,157 | 4.
5. Other borrowed money ............................................................................ | 3190 1,098,032 | 5.
EITHER | ////////////////// |
6. Net due from own foreign offices, Edge and Agreement subsidiaries, and IBFs ..................... | 2163 N/A | 6.
OR | ////////////////// |
7. Net due to own foreign offices, Edge and Agreement subsidiaries, and IBFs ....................... | 2941 261,771 | 7.
8. Total assets (excludes net due from foreign offices, Edge and Agreement subsidiaries, and IBFs) . | 2192 13,927,565 | 8.
9. Total liabilities (excludes net due to foreign offices, Edge and Agreement subsidiaries, and IBFs)| 3129 12,286,580 | 9.
______________________

</TABLE>
<TABLE>
<CAPTION>
Items 10-17 include held-to-maturity and available-for-sale securities in domestic offices. ______________________
| RCON Bil Mil Thou |
____________________
<S> <C> <C>
10. U.S. Treasury securities ....................................................................... | 1779 829,753 | 10.
11. U.S. Government agency and corporation obligations (exclude mortgage-backed | ////////////////// |
securities) .................................................................................... | 1785 0 | 11.
12. Securities issued by states and political subdivisions in the U.S. ............................. | 1786 42 | 12.
13. Mortgage-backed securities (MBS): | ////////////////// |
a. Pass-through securities: | ////////////////// |
(1) Issued or guaranteed by FNMA, FHLMC, or GNMA ............................................ | 1787 850,605 | 13.a.(1)
(2) Other pass-through securities ........................................................... | 1869 0 | 13.a.(2)
b. Other mortgage-backed securities (include CMOs, REMICs, and stripped MBS): | ////////////////// |
(1) Issued or guaranteed by FNMA, FHLMC, or GNMA ............................................ | 1877 0 | 13.b.(1)
(2) All other mortgage-backed securities..................................................... | 2253 0 | 13.b.(2)
14. Other domestic debt securities ................................................................. | 3159 475 | 14.
15. Foreign debt securities ........................................................................ | 3160 2,900 | 15.
16. Equity securities: | ////////////////// |
a. Investments in mutual funds ................................................................. | 3161 9,427 | 16.a.
b. Other equity securities with readily determinable fair values ............................... | 3162 0 | 16.b.
c. All other equity securities ................................................................. | 3169 116,420 | 16.c.
17. Total held-to-maturity and available-for-sale securities (sum of items 10 through 16) .......... | 3170 1,809,622 | 17.
______________________

</TABLE>
<TABLE>
<CAPTION>
Memorandum (to be completed only by banks with IBFs and other "foreign" offices)

______________________
Dollar Amounts in Thousands | RCON Bil Mil Thou |
_____________________________________________________________________________________________________ ____________________
<S> <C> <C>
EITHER | ////////////////// |
1. Net due from the IBF of the domestic offices of the reporting bank .............................. | 3051 N/A | M.1.
OR | ////////////////// |
2. Net due to the IBF of the domestic offices of the reporting bank ................................ | 3059 N/A | M.2.
______________________
</TABLE>

<PAGE>

<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-13
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-I--Selected Assets and Liabilities of IBFs

To be completed only by banks with IBFs and other "foreign" offices. __________
| C445 | <-
____________ ________
Dollar Amounts in Thousands | RCFN Bil Mil Thou |
_____________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Total IBF assets of the consolidated bank (component of Schedule RC, item 12) .................. | 2133 N/A | 1.
2. Total IBF loans and lease financing receivables (component of Schedule RC-C, part I, item 12, | ////////////////// |
column A) ...................................................................................... | 2076 N/A | 2.
3. IBF commercial and industrial loans (component of Schedule RC-C, part I, item 4, column A) ..... | 2077 N/A | 3.
4. Total IBF liabilities (component of Schedule RC, item 21) ...................................... | 2898 N/A | 4.
5. IBF deposit liabilities due to banks, including other IBFs (component of Schedule RC-E, | ////////////////// |
part II, items 2 and 3) ........................................................................ | 2379 N/A | 5.
6. Other IBF deposit liabilities (component of Schedule RC-E, part II, items 1, 4, 5, and 6) ...... | 2381 N/A | 6.
______________________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-K--Quarterly Averages (1)
__________
| C455 | <-
_________________ ________
Dollar Amounts in Thousands | ///////// Bil Mil Thou |
_______________________________________________________________________________________________ _________________________
<S> <C> <C>
ASSETS | /////////////////////// |
1. Interest-bearing balances due from depository institutions ............................... | RCFD 3381 1,841 | 1.
2. U.S. Treasury securities and U.S. Government agency and corporation obligations(2) ....... | RCFD 3382 2,327,287 | 2.
3. Securities issued by states and political subdivisions in the U.S.(2) .................... | RCFD 3383 42 | 3.
4. a. Other debt securities(2) .............................................................. | RCFD 3647 537,639 | 4.a.
b. Equity securities(3) (includes investments in mutual funds and Federal Reserve stock) . | RCFD 3648 124,253 | 4.b.
5. Federal funds sold and securities purchased under agreements to resell in domestic offices | /////////////////////// |
of the bank and of its Edge and Agreement subsidiaries, and in IBFs ...................... | RCFD 3365 24,049 | 5.
6. Loans: | /////////////////////// |
a. Loans in domestic offices: | /////////////////////// |
(1) Total loans ....................................................................... | RCON 3360 11,036,031 | 6.a.(1)
(2) Loans secured by real estate ...................................................... | RCON 3385 3,924,553 | 6.a.(2)
(3) Loans to finance agricultural production and other loans to farmers ............... | RCON 3386 1,787 | 6.a.(3)
(4) Commercial and industrial loans ................................................... | RCON 3387 5,456,987 | 6.a.(4)
(5) Loans to individuals for household, family, and other personal expenditures ....... | RCON 3388 620,136 | 6.a.(5)
| /////////////////////// |
b. Total loans in foreign offices, Edge and Agreement subsidiaries, and IBFs ............. | RCFN 3360 0 | 6.b.
7. Trading assets ........................................................................... | RCFD 3401 658 | 7.
8. Lease financing receivables (net of unearned income) ..................................... | RCFD 3484 9,155 | 8.
9. Total assets (4) ......................................................................... | RCFD 3368 15,745,746 | 9.
LIABILITIES | /////////////////////// |
10. Interest-bearing transaction accounts in domestic offices (NOW accounts, ATS accounts, | /////////////////////// |
and telephone and preauthorized transfer accounts) (exclude demand deposits) ............. | RCON 3485 145,491 | 10.
11. Nontransaction accounts in domestic offices: | /////////////////////// |
a. Money market deposit accounts (MMDAs) ................................................. | RCON 3486 1,367,351 | 11.a.
b. Other savings deposits ................................................................ | RCON 3487 1,715,719 | 11.b.
c. Time certificates of deposit of $100,000 or more ...................................... | RCON 3345 1,290,422 | 11.c.
d. All other time deposits ............................................................... | RCON 3469 2,270,162 | 11.d.
12. Interest-bearing deposits in foreign offices, Edge and Agreement subsidiaries, and IBFs .. | RCFN 3404 357,799 | 12.
13. Federal funds purchased and securities sold under agreements to repurchase in domestic | /////////////////////// |
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs .............. | RCFD 3353 2,634,782 | 13.
14. Other borrowed money ..................................................................... | RCFD 3355 1,058,218 | 14.
___________________________
<FN>
_____________
(1) For all items, banks have the option of reporting either (1) an average of daily figures for the quarter, or
(2) an average of weekly figures (i.e., the Wednesday of each week of the quarter).
(2) Quarterly averages for all debt securities should be based on amortized cost.
(3) Quarterly averages for all equity securities should be based on historical cost.
(4) The quarterly average for total assets should reflect all debt securities (not held for trading) at amortized
cost, equity securities with readily determinable fair values at the lower of cost or fair value, and equity
securities without readily determinable fair values at historical cost.
</TABLE>

<PAGE>

<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-14
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-L--Off-Balance Sheet Items

Please read carefully the instructions for the preparation of Schedule RC-L. Some of the amounts
reported in Schedule RC-L are regarded as volume indicators and not necessarily as measures of risk. __________
| C460 | <-
____________ ________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
____________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Unused commitments: | ////////////////// |
a. Revolving, open-end lines secured by 1-4 family residential properties, e.g., home | ////////////////// |
equity lines ............................................................................... | 3814 404,731 | 1.a.
b. Credit card lines .......................................................................... | 3815 0 | 1.b.
c. Commercial real estate, construction, and land development: | ////////////////// |
(1) Commitments to fund loans secured by real estate ....................................... | 3816 112,242 | 1.c.(1)
(2) Commitments to fund loans not secured by real estate ................................... | 6550 4,610 | 1.c.(2)
d. Securities underwriting .................................................................... | 3817 0 | 1.d.
e. Other unused commitments ................................................................... | 3818 5,996,651 | 1.e.
2. Financial standby letters of credit and foreign office guarantees ............................. | 3819 1,038,270 | 2.
___________________________
a. Amount of financial standby letters of credit conveyed to others | RCFD 3820 | 1,075 | ////////////////// | 2.a.
___________________________
3. Performance standby letters of credit and foreign office guarantees ........................... | 3821 48,181 | 3.
a. Amount of performance standby letters of credit conveyed to | ////////////////// |
___________________________
others .......................................................... | RCFD 3822 | 0 | ////////////////// | 3.a.
___________________________
4. Commercial and similar letters of credit ...................................................... | 3411 129,940 | 4.
5. Participations in acceptances (as described in the instructions) conveyed to others by | ////////////////// |
the reporting bank ............................................................................ | 3428 0 | 5.
6. Participations in acceptances (as described in the instructions) acquired by the reporting | ////////////////// |
(nonaccepting) bank ........................................................................... | 3429 0 | 6.
7. Securities borrowed ........................................................................... | 3432 0 | 7.
8. Securities lent (including customers' securities lent where the customer is indemnified | ////////////////// |
against loss by the reporting bank) ........................................................... | 3433 0 | 8.
9. Loans transferred (i.e., sold or swapped) with recourse that have been treated as sold for | ////////////////// |
Call Report purposes: | ////////////////// |
a. FNMA and FHLMC residential mortgage loan pools: | ////////////////// |
(1) Outstanding principal balance of mortgages transferred as of the report date ........... | 3650 60,259 | 9.a.(1)
(2) Amount of recourse exposure on these mortgages as of the report date ................... | 3651 54,182 | 9.a.(2)
b. Private (nongovernment-issued or -guaranteed) residential mortgage loan pools: | ////////////////// |
(1) Outstanding principal balance of mortgages transferred as of the report date ........... | 3652 0 | 9.b.(1)
(2) Amount of recourse exposure on these mortgages as of the report date ................... | 3653 0 | 9.b.(2)
c. Farmer Mac agricultural mortgage loan pools: | ////////////////// |
(1) Outstanding principal balance of mortgages transferred as of the report date ........... | 3654 0 | 9.c.(1)
(2) Amount of recourse exposure on these mortgages as of the report date ................... | 3655 0 | 9.c.(2)
d. Small business obligations transferred with recourse under Section 208 of the | ////////////////// |
Riegle Community Development and Regulatory Improvement Act of 1994: | ////////////////// |
(1) Outstanding principal balance of small business obligations transferred | ////////////////// |
as of the report date................................................................... | A249 0 | 9.d.(1)
(2) Amount of retained recourse on these obligations as of the report date.................. | A250 0 | 9.d.(2)
10. When-issued securities: | ////////////////// |
a. Gross commitments to purchase .............................................................. | 3434 0 | 10.a.
b. Gross commitments to sell .................................................................. | 3435 0 | 10.b.
11. Spot foreign exchange contracts ............................................................... | 8765 0 | 11.
12. All other off-balance sheet liabilities (exclude off-balance sheet derivatives ) (itemize and | ////////////////// |
describe each component of this item over 25% of Schedule RC, item 28, "Total equity capital") | 3430 0 | 12.
a. | TEXT 3555 |______________________________________________________| RCFD 3555 | | ////////////////// | 12.a.

b. | TEXT 3556 |______________________________________________________| RCFD 3556 | | ////////////////// | 12.b.
___________
c. | TEXT 3557 |______________________________________________________| RCFD 3557 | | ////////////////// | 12.c.
_____________
d. | TEXT 3558 |______________________________________________________| RCFD 3558 | | ////////////////// | 12.d.
_____________

Dollar Amounts in Thousands RCFD Bil Mil Thou
13. All other off-balance sheet assets (exclude off-balance sheet derivatives) (itemize and | ////////////////// |
describe each component of this item over 25% of Schedule RC,item 28,"Total equity capital") | 5591 0 | 13.

_____________ __________________________
a. | TEXT 5592 |______________________________________________________| RCFD 5592 | | ////////////////// | 13.a.
___________
b. | TEXT 5593 |______________________________________________________| RCFD 5593 | | ////////////////// | 13.b.
___________
c. | TEXT 5594 |______________________________________________________| RCFD 5594 | | ////////////////// | 13.c.
_____________
d. | TEXT 5595 |______________________________________________________| RCFD 5595 | | ////////////////// | 13.d.
_____________
________________________________________________

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-15
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|

Schedule RC-L -- Continued

_____________
| C461 | <-
_________________________________________ ____________________________|___________|
| (Column A) | (Column B) | (Column C) | (Column D) |
| Interest Rate | Foreign Exchange | Equity Derivative | Commodity and other|
| Contracts | Contracts | Contracts | Contracts |
|___________________|____________________|____________________|____________________|
Dollar Amounts in Thousands |Tril Bil Mil Thou | Tril Bil Mil Thou | Tril Bil Mil Thou | Tril Bil Mil Thou |
______________________________________________________________________________________________________________________|
<S> <C> <C> <C> <C> <C>
| Off-balance Sheet Derivatives | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
| Position Indicators | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
___________________________________| ///////////////// | ////////////////// | ////////////////// | ////////////////// |
14. Gross amounts (e.g., notional | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
amounts) (for each column, sum of | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
items 14.a through 14.e must equal| ///////////////// | ////////////////// | ////////////////// | ////////////////// |
sum of items 15, 16.a, and 16.b): |___________________|____________________|___________________ |____________________|
a. Future contracts .............. | 0 | 0 | 0 | 0 | 14.a.
| RCFD 8693 | RCFD 8694 | RCFD 8695 | RCFD 8696 |
b. Forward contracts ............. | 0 | 0 | 0 | 0 | 14.b.
| RCFD 8697 | RCFD 8698 | RCFD 8699 | RCFD 8700 |
c. Exchange-traded option contracts| ///////////////// | ////////////////// | ////////////////// | ////////////////// |
(1) Written options .......... | 0 | 0 | 0 | 0 | 14.c.(1)
| RCFD 8701 | RCFD 8702 | RCFD 8703 | RCFD 8704 |
(2) Purchased options ........ | 0 | 0 | 0 | 0 | 14.c.(2)
| RCFD 8705 | RCFD 8706 | RCFD 8707 | RCFD 8708 |
d. Over-the-counter option contracts: | //////////////////| ///////////////// | ///////////////// | //////////////// |
(1) Written options .......... | 68,500 | 0 | 0 | 0 | 14.d.(1)
| RCFD 8709 | RCFD 8710 | RCFD 8711 | RCFD 8712 |
(2) Purchased options ........ | 368,500 | 0 | 0 | 0 | 14.d.(2)
| RCFD 8713 | RCFD 8714 | RCFD 8715 | RCFD 8716 |
e. Swaps ............................ | 4,553,328 | 0 | 0 | 0 | 14.e.
| RCFD 3450 | RCFD 3826 | RCFD 8719 | RCFD 8720 |
15. Total gross notional amount of | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
derivative contracts held for | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
trading ......................... | 160,000 | 0 | 0 | 0 | 15.
| RCFD A126 | RFD A127 | RCFD 8723 | RCFD 8724 |
16. Total gross notional amount of | ///////////////// | //////////////// | ///////////////// | ////////////////// |
derivative contracts held for | ///////////////// | ///////////////// | ///////////////// | ////////////////// |
purposes other than trading: | ///////////////// | ///////////////// | ///////////////// | ////////////////// |
a. Contracts marked to market ... | 0 | 0 | 0 | 0 | 16.a.
| RCFD 8725 | RCFD 8726 | RCF 8727 | RCFD 8728 |
b. Contracts not marked to market | 4,830,328 | 0 | 0 | 0 | 16.b.
| RCFD 8729 | RCFD 8730 | RFD 8731 | RCFD 8732 |
___________________________________________________________________________________|
</TABLE>

<PAGE>
25

Schedule RC-L -- Continued

<CAPTION>
_________________________________________ _________________________________________
| (Column A) | (Column B) | (Column C) | (Column D) |
| Interest Rate | Foreign Exchange | Equity Derivative | Commodity and other|
| Contracts | Contracts | Contracts | Contracts |
|___________________|____________________|____________________|____________________|
Dollar Amounts in thousands |RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________________________________________________________________________|
<S> <C> <C> <C> <C> <C>
| Off-balance Sheet Derivatives | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
| Position Indicators | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
___________________________________| ///////////////// | ////////////////// | ////////////////// | ////////////////// |
| ///////////////// | ////////////////// | ////////////////// | ////////////////// |
17. Gross fair values of | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
derivative contracts: | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
a. Contracts held for | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
trading: | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
(1) Gross positive | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value ................... | 8733 484 | 8734 0 | 8735 0 | 8736 0 | 17.a.(1)
(2) Gross negative | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value ................... | 8737 460 | 8738 0 | 8739 0 | 8740 0 | 17.a.(2)
b. Contracts held for | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
purposes other than | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
trading that are marked | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
to market: | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
(1) Gross positive | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value ................... | 8741 0 | 8742 0 | 8743 0 | 8744 0 | 17.b.(1)
(2) Gross negative | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value ................... | 8745 0 | 8746 0 | 8747 0 | 8748 0 | 17.b.(2)
c. Contracts held for | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
purposes other than | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
trading that are not | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
marked to market: | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
(1) Gross positive | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value .................. | 8749 5,594 | 8750 0 | 8751 0 | 8752 0 | 17.c.(1)
(2) Gross negative | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value ................... | 8753 44,514 | 8754 0 | 8755 0 | 8756 0 | 17.c.(2)
|__________________________________________________________________________________|

______________________
Memoranda Dollar Amounts in Thousands | RCFD Bil Mil Thou |
_________________________________________________________________________________________________________________________
1. -2. Not applicable | ////////////////// |
3. Unused commitments with an original maturity exceeding one year that are reported in | ////////////////// |
Schedule RC-L, items 1.a through 1.e, above (report only the unused portions of commitments | ////////////////// |
that are fee paid or otherwise legally binding) ................................................ | 3833 4,493,867 | M.3.
a. Participations in commitments with an original maturity | ////////////////// |
exceeding one year conveyed to others ................................|RCFD 3834 | 93,830 | ////////////////// | M.3.a.
________________________
4. To be completed only by banks with $1 billion or more in total assets: | ////////////////// |
Standby letters of credit and foreign office guarantees (both financial and performance) issued | ////////////////// |
to non-U.S. addressees (domicile) included in Schedule RC-L, items 2 and 3, above .............. | 3377 317,126 | M.4.
5. Installment loans to individuals for household, family, and other personal expenditures that | ////////////////// |
have been securitized and sold without recourse (with servicing retained), amounts outstanding | ////////////////// |
by type of loan: | ////////////////// |
a. Loans to purchase private passenger automobiles (to be completed for the | ////////////////// |
September report only)....................................................................... | 2741 N/A | M.5.a.
b. Credit cards and related plans (TO BE COMPLETED QUARTERLY)................................... | 2742 0 | M.5.b.
c. All other consumer installment credit (including mobile home loans)(to be completed for the | ////////////////// |
September report only........................................................................ | 2743 N/A | M.5.c
<PAGE>
</TABLE>

<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-17
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9| _____________
| C465 |
_________|___________|
Schedule RC-M--Memoranda | |
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
______________________________________________________________________________________________________|____________________|
<S> <C> <C>
1. Extensions of credit by the reporting bank to its executive officers, directors, principal | ////////////////// |
shareholders, and their related interests as of the report date: | ////////////////// |
a. Aggregate amount of all extensions of credit to all executive officers, directors, principal | ////////////////// |
shareholders and their related interests ..................................................... | 6164 159,583 | 1.a.
b. Number of executive officers, directors, and principal shareholders to whom the amount of all | ////////////////// |
extensions of credit by the reporting bank (including extensions of credit to | ////////////////// |
related interests) equals or exceeds the lesser of $500,000 or 5 percent Number | ////////////////// |
___________________________| ////////////////// |
of total capital as defined for this purpose in agency regulations. | RCFD 6165 | 7 | ////////////////// |
___________________________| ////////////////// | 1.b.
2. Federal funds sold and securities purchased under agreements to resell with U.S. branches | ////////////////// |
and agencies of foreign banks(1) (included in Schedule RC, items 3.a and 3.b) .................... | 3405 0 | 2.
3. Not applicable. | ////////////////// |
4. Outstanding principal balance of 1-4 family residential mortgage loans serviced for others | ////////////////// |
(include both retained servicing and purchased servicing): | ////////////////// |
a. Mortgages serviced under a GNMA contract ...................................................... | 5500 20,866 | 4.a.
b. Mortgages serviced under a FHLMC contract: | ////////////////// |
(1) Serviced with recourse to servicer ........................................................ | 5501 11,305 | 4.b.(1)
(2) Serviced without recourse to servicer ..................................................... | 5502 1,163,045 | 4.b.(2)
c. Mortgages serviced under a FNMA contract: | ////////////////// |
(1) Serviced under a regular option contract .................................................. | 5503 48,954 | 4.c.(1)
(2) Serviced under a special option contract .................................................. | 5504 2,112,518 | 4.c.(2)
d. Mortgages serviced under other servicing contracts ............................................ | 5505 3,306,908 | 4.d.
5. To be completed only by banks with $1 billion or more in total assets: | ////////////////// |
Customers' liability to this bank on acceptances outstanding (sum of items 5.a and 5.b must | ////////////////// |
equal Schedule RC, item 9): | ////////////////// |
a. U.S. addressees (domicile) .................................................................... | 2103 6,513 | 5.a.
b. Non-U.S. addressees (domicile) ................................................................ | 2104 0 | 5.b.
6. Intangible assets: | ////////////////// |
a. Mortgage servicing rights ..................................................................... | 3164 28,816 | 6.a.
b. Other identifiable intangible assets: | ////////////////// |
(1) Purchased credit card relationships ....................................................... | 5506 0 | 6.b.(1)
(2) All other identifiable intangible assets .................................................. | 5507 0 | 6.b.(2)
c. Goodwill ...................................................................................... | 3163 255,078 | 6.c.
d. Total (sum of items 6.a through 6.c) (must equal Schedule RC, item 10) ........................ | 2143 283,894 | 6.d.
e. Amount of intangible assets (included in item 6.b.(2) above) that have been grandfathered or | ////////////////// |
are otherwise qualifying for regulatory capital purposes ...................................... | 6442 0 | 6.e.
7. Mandatory convertible debt, net of common or perpetual preferred stock dedicated to | ////////////////// |
redeem the debt ...................................................................................| 3295 0 | 7.
______________________

- ------------
(1) Do not report federal funds sold and securities purchased under agreements to resell with other
commercial banks in the U.S. in this item.

</TABLE>
27

<PAGE>

<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATINAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-18
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|

Schedule RC-M--Continued ________________________
Dollar Amounts in Thousands | Bil Mil Thou|
_____________________________________________________________________________________________ |_______________________|
<S> <C> C>
8. a. Other real estate owned: | /////////////////////// |
(1) Direct and indirect investments in real estate ventures ......................... | RCFD 5372 0 | 8.a.(1)
(2) All other real estate owned: | /////////////////////// |
(a) Construction and land development in domestic offices ....................... | RCON 5508 74 | 8.a.(2)(a)
(b) Farmland in domestic offices ................................................ | RCON 5509 0 | 8.a.(2)(b)
(c) 1-4 family residential properties in domestic offices ....................... | RCON 5510 596 | 8.a.(2)(c)
(d) Multifamily (5 or more) residential properties in domestic offices .......... | RCON 5511 192 | 8.a.(2)(d)
(e) Nonfarm nonresidential properties in domestic offices ....................... | RCON 5512 9 | 8.a.(2)(e)
(f) In foreign offices .......................................................... | RCFN 5513 0 | 8.a.(2)(f)
(3) Total (sum of items 8.a.(1) and 8.a.(2)) (must equal Schedule RC, item 7) ....... | RCFD 2150 871 | 8.a.(3)
b. Investments in unconsolidated subsidiaries and associated companies: | /////////////////////// |
(1) Direct and indirect investments in real estate ventures ......................... | RCFD 5374 0 | 8.b.(1)
(2) All other investments in unconsolidated subsidiaries and associated companies ... | RCFD 5375 0 | 8.b.(2)
(3) Total (sum of items 8.b.(1) and 8.b.(2)) (must equal Schedule RC, item 8) ....... | RCFD 2130 0 | 8.b.(3)
c. Total assets of unconsolidated subsidiaries and associated companies ................ | RCFD 5376 0 | 8.c.
9. Noncumulative perpetual preferred stock and related surplus included in Schedule RC, | /////////////////////// |
item 23, "Perpetual preferred stock and related surplus" ............................... | RCFD 3778 0 | 9.
10. Mutual fund and annuity sales in domestic offices during the quarter (include | /////////////////////// |
proprietary, private label, and third party products): | /////////////////////// |
a. Money market funds .................................................................. | RCON 6441 0 | 10.a.
b. Equity securities funds ............................................................. | RCON 8427 0 | 10.b.
c. Debt securities funds ............................................................... | RCON 8428 0 | 10.c.
d. Other mutual funds .................................................................. | RCON 8429 0 | 10.d.
e. Annuities ........................................................................... | RCON 8430 0 | 10.e.
f. Sales of proprietary mutual funds and annuities (included in itmes 10.a through | /////////////////////// |
10.e. above) ........................................................................... | RCON 8784 0 | 10.f.
_________________________
</TABLE>
<TABLE>
<CAPTION>
_________________________________________________________________________________________________________________________________
| |
______________________
|Memorandum Dollar Amounts in Thousands | RCFD Bil Mil Thou | |
_________________________________________________________________________________________________ ____________________
<S> <C> <C>
|1. Interbank holdings of capital instruments (to be completed for the December report only): | ////////////////// | |
| a. Reciprocal holdings of banking organizations' capital instruments ........................ | 3836 N/A | M.1.a. |
| b. Nonreciprocal holdings of banking organizations' capital instruments ..................... | 3837 N/A | M.1.b. |
______________________
| |
_________________________________________________________________________________________________________________________________
</TABLE>

<PAGE>

<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-19
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-N--Past Due and Nonaccrual Loans, Leases,
and Other Assets

The FFIEC regards the information reported in __________
all of Memorandum item 1, in items 1 through 10, | C470 | <-
column A, and in Memorandum items 2 through 4, ______________________________________________________ ________
column A, as confidential. | (Column A) | (Column B) | (Column C) |
| Past due | Past due 90 | Nonaccrual |
| 30 through 89 | days or more | |
| days and still | and still | |
| accruing | accruing | |
____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________ ____________________ ____________________ ____________________
<S> <C> <C> <C> <C>
1. Loans secured by real estate: | ////////////////// | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ................ | 1245 | 1246 18,232 | 1247 53,840 | 1.a.
b. To non-U.S. addressees (domicile) ............ | 1248 | 1249 0 | 1250 0 | 1.b.
2. Loans to depository institutions and | ////////////////// | ////////////////// | ////////////////// |
acceptances of other banks: | ////////////////// | ////////////////// | ////////////////// |
a. To U.S. banks and other U.S. depository | ////////////////// | ////////////////// | ////////////////// |
institutions ................................. | 5377 | 5378 0 | 5379 0 | 2.a.
b. To foreign banks ............................. | 5380 | 5381 0 | 5382 0 | 2.b.
3. Loans to finance agricultural production and | ////////////////// | ////////////////// | ////////////////// |
other loans to farmers .......................... | 1594 | 1597 0 | 1583 100 | 3.
4. Commercial and industrial loans: | ////////////////// | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ................ | 1251 | 1252 1,756 | 1253 31,162 | 4.a.
b. To non-U.S. addressees (domicile) ............ | 1254 | 1255 0 | 1256 0 | 4.b.
5. Loans to individuals for household, family, and | ////////////////// | ////////////////// | ////////////////// |
other personal expenditures: | ////////////////// | ////////////////// | ///////////////// |
a. Credit cards and related plans ............... | 5383 | 5384 183 | 5385 184 | 5.a.
b. Other (includes single payment, installment, | ////////////////// | ////////////////// | ////////////////// |
and all student loans) ....................... | 5386 | 5387 1,542 | 5388 2,138 | 5.b.
6. Loans to foreign governments and official | ////////////////// | ////////////////// | ////////////////// |
institutions .................................... | 5389 | 5390 0 | 5391 0 | 6.
7. All other loans ................................. | 5459 | 5460 253 | 5461 72 | 7.
8. Lease financing receivables: | ////////////////// | ////////////////// | ////////////////// |
a. Of U.S. addressees (domicile) ................ | 1257 | 1258 0 | 1259 0 | 8.a.
b. Of non-U.S. addressees (domicile) ............ | 1271 | 1272 0 | 1791 0 | 8.b.
9. Debt securities and other assets (exclude other | ////////////////// | ////////////////// | ////////////////// |
real estate owned and other repossessed assets) . | 3505 | 3506 0 | 3507 0 | 9.
________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================

Amounts reported in items 1 through 8 above include guaranteed and unguaranteed portions of past due and nonaccrual loans and
leases. Report in item 10 below certain guaranteed loans and leases that have already been included in the amounts reported in
items 1 through 8.

________________________________________________________________
| RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
____________________ ____________________ ____________________
<S> <C> <C> <C> <C>
10. Loans and leases reported in items 1 | | | |
through 8 above which are wholly or partially | ////////////////// | ////////////////// | ////////////////// |
guaranteed by the U.S. Government ............... | 5612 | 5613 324 | 5614 317 | 10.
a. Guaranteed portion of loans and leases | ////////////////// | ////////////////// | ////////////////// |
included in item 10 above .................... | 5615 | 5616 256 | 5617 263 | 10.a.
________________________________________________________________
</TABLE>

<PAGE>

<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-20
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-N--Continued
__________
| C473 | <-
______________________________________________________ ________
| (Column A) | (Column B) | (Column C) |
| Past due | Past due 90 | Nonaccrual |
| 30 through 89 | days or more | |
| days and still | and still | |
Memoranda | accruing | accruing | |
____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________ ____________________ ____________________ ____________________
<S> <C> <C> <C> <C>
1. Restructured loans and leases included in | ////////////////// | /////////////////// | ///////////////// |
Schedule RC-N, items 1 through 8, above (and not | ////////////////// | /////////////////// | ///////////////// |
reported in Schedule RC-C, part I, Memorandum | ////////////////// | /////////////////// | ///////////////// |
item 2) ......................................... | 1658 | | | M.1.
2. Loans to finance commercial real estate, | ////////////////// | /////////////////// | ///////////////// |
construction, and land development activities | ////////////////// | /////////////////// | ///////////////// |
(not secured by real estate) included in | ////////////////// | /////////////////// | ///////////////// |
Schedule RC-N, items 4 and 7, above ............. | 6558 | 6559 593 | 6560 26 | M.2.
|____________________|____________________ |___________________
3. Loans secured by real estate in domestic offices | RCON Bil Mil Thou | RCON Bil Mil Thou | RCON Bil Mil Thou|
|___________________ |____________________ ____________________
(included in Schedule RC-N, item 1, above): | ////////////////// | ////////////////// | ////////////////// |
a. Construction and land development ............ | 2759 | 2769 0 | 3492 1,108 | M.3.a.
b. Secured by farmland .......................... | 3493 | 3494 0 | 3495 0 | M.3.b.
c. Secured by 1-4 family residential properties: | ////////////////// | ////////////////// | ////////////////// |
(1) Revolving, open-end loans secured by | ////////////////// | ////////////////// | ////////////////// |
1-4 family residential properties and | ////////////////// | ////////////////// | ////////////////// |
extended under lines of credit ........... | 5398 | 5399 1,772 | 5400 2,746 | M.3.c.(1)
(2) All other loans secured by 1-4 family | ////////////////// | ////////////////// | ////////////////// |
residential properties ................... | 5401 | 5402 12,822 | 5403 13,798 | M.3.c.(2)
d. Secured by multifamily (5 or more) | ////////////////// | ////////////////// | ////////////////// |
residential properties ....................... | 3499 | 3500 1,426 | 3501 1,352 | M.3.d.
e. Secured by nonfarm nonresidential properties . | 3502 | 3503 2,212 | 3504 34,836 | M.3.e.
________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
___________________________________________
| (Column A) | (Column B) |
| Past due 30 | Past due 90 |
| through 89 days | days or more |
____________________ ____________________
| RCFD Bil Mil Thou | RCFD Bil Mil Thou |
____________________ ____________________
<S> <C> <C> <C>
4. Interest rate, foreign exchange rate, and other | ////////////////// | ////////////////// |
commodity and equity contracts: | ////////////////// | ////////////////// |
a. Book value of amounts carried as assets ...... | 3522 | 3528 0 | M.4.a.
b. Replacement cost of contracts with a | ////////////////// | ////////////////// |
positive replacement cost .................... | 3529 | 3530 0 | M.4.b.
___________________________________________
</TABLE>

<PAGE>

<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-21
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION> ______________________
Schedule RC-O--Other Data for Deposit Insurance Assessments | C475 |
|____________________|
Dollar Amounts in Thousands | RCON Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Unposted debits (see instructions): | ////////////////// |
a. Actual amount of all unposted debits ...................................................... | 0030 0 | 1.a.
OR | ////////////////// |
b. Separate amount of unposted debits: | ////////////////// |
(1) Actual amount of unposted debits to demand deposits ................................... | 0031 N/A | 1.b.(1)
(2) Actual amount of unposted debits to time and savings deposits(1) ...................... | 0032 N/A | 1.b.(2)
2. Unposted credits (see instructions): | ////////////////// |
a. Actual amount of all unposted credits ..................................................... | 3510 0 | 2.a.
OR | ////////////////// |
b. Separate amount of unposted credits: | ////////////////// |
(1) Actual amount of unposted credits to demand deposits .................................. | 3512 N/A | 2.b.(1)
(2) Actual amount of unposted credits to time and savings deposits(1) ..................... | 3514 N/A | 2.b.(2)
3. Uninvested trust funds (cash) held in bank's own trust department (not included in total | ////////////////// |
deposits in domestic offices) ................................................................ | 3520 28,655 | 3.
4. Deposits of consolidated subsidiaries in domestic offices and in insured branches in | ////////////////// |
Puerto Rico and U.S. territories and possessions (not included in total deposits): | ////////////////// |
a. Demand deposits of consolidated subsidiaries .............................................. | 2211 3,266 | 4.a.
b. Time and savings deposits(1) of consolidated subsidiaries ................................. | 2351 5,000 | 4.b.
c. Interest accrued and unpaid on deposits of consolidated subsidiaries ...................... | 5514 2 | 4.c.
5. Deposits in insured branches in Puerto Rico and U.S. territories and possessions: | ////////////////// |
a. Demand deposits in insured branches (included in Schedule RC-E, Part II) .................. | 2229 0 | 5.a.
b. Time and savings deposits(1) in insured branches (included in Schedule RC-E, Part II) ..... | 2383 0 | 5.b.
c. Interest accrued and unpaid on deposits in insured branches | ////////////////// |
(included in Schedule RC-G, item 1.b) ..................................................... | 5515 0 | 5.c.
______________________
______________________
Item 6 is not applicable to state nonmember banks that have not been authorized by the | ////////////////// |
Federal Reserve to act as pass-through correspondents. | ////////////////// |
6. Reserve balances actually passed through to the Federal Reserve by the reporting bank on | ////////////////// |
behalf of its respondent depository institutions that are also reflected as deposit liabilities| ////////////////// |
of the reporting bank: | ////////////////// |
a. Amount reflected in demand deposits (included in Schedule RC-E, item 4 or 5, column B)..... | 2314 0 | 6.a.
b. Amount reflected in time and savings deposits(1) (included in Schedule RC-E, | ////////////////// |
item 4 or 5, column A or C, but not column B).............................................. | 2315 0 | 6.b.
7. Unamortized premiums and discounts on time and savings deposits:(1) | ////////////////// |
a. Unamortized premiums ...................................................................... | 5516 0 | 7.a.
b. Unamortized discounts ..................................................................... | 5517 0 | 7.b.
______________________

_______________________________________________________________________________________________________________________________
| |
|8. To be completed by banks with "Oakar deposits." |
______________________
| Total "Adjusted Attributable Deposits" of all institutions acquired under Section 5(d)(3) of | ////////////////// | |
| the Federal Deposit Insurance Act (from most recent FDIC Oakar Transaction Worksheet(s)) .... | 5518 864,186 | 8. |
______________________
| |
_______________________________________________________________________________________________________________________________
______________________
9. Deposits in lifeline accounts ................................................................ | 5596 ///////////// | 9.
10. Benefit-responsive "Depository Institution Investment Contracts" (included in total | ////////////////// |
deposits in domestic offices) ................................................................ | 8432 0 | 10.
______________________
<FN>
______________
(1) For FDIC insurance assessment purposes, "time and savings deposits" consists of nontransaction
accounts and all transaction accounts other than demand deposits.
</TABLE>

<PAGE>

<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-22
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-O--Continued

Dollar Amounts in Thousands | RCON Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
11. Adjustments to demand deposits in domestic offices reported in Schedule RC-E for | ////////////////// |
certain reciprocal demand balances: | ////////////////// |
a. Amount by which demand deposits would be reduced if reciprocal demand balances | ////////////////// |
between the reporting bank and savings associations were reported on a net basis | ////////////////// |
rather than a gross basis in Schedule RC-E .................................................. | 8785 0 | 11.a.
b. Amount by which demand deposits would be increased if reciprocal demand balances | ////////////////// |
between the reporting bank and U.S. branches and agencies of foreign banks were | ////////////////// |
reported on a gross basis rather than a net basis in Schedule RC-E .......................... | A181 0 | 11.b.
c. Amount by which demand deposits would be reduced if cash items in process of | ////////////////// |
collections were included in the calculation of net reciprocal demand balances between | ////////////////// |
the reporting bank and the domestic offices of U.S. banks and savings associations | ////////////////// |
in Schedule RC-E ............................................................................ | A182 0 | 11.c.
____________________

Memoranda (to be completed each quarter except as noted) Dollar Amounts in Thousands | RCON Bil Mil Thou |
________________________________________________________________________________________________|____________________|
1. Total deposits in domestic offices of the bank (sum of Memorandum items 1.a. (1) and | ////////////////// |
1.b.(1) must equal Schedule RC, item 13.a): | ////////////////// |
a. Deposits accounts of $100,000 or less: | ////////////////// |
(1) amount of deposit accounts of $100,000 or less .................................... | 2702 4,389,311 | M.1.a.(1)
(2) Number of deposit accounts of $100,000 or less (to be Number | ////////////////// |
completed for the June report only) ..........................|RCON 3779________N/A | ////////////////// | M.1.a.(2)
b. Deposit accounts of more than $100,000: | ////////////////// |
(1) Amount of deposit accounts of more than $100,000 .................................. | 2710 3,745,428 | M.1.b.(1)
Number | ////////////////// |
(2) Number of deposit accounts of more than $100,000 .............|RCON 2722______6,366 | ////////////////// | M.1.b.(2)
2. Estimated amount of uninsured deposits in domestic offices of the bank:
a. An estimate of your bank's uninsured deposits can be determined by mutiplying the
number of deposit accounts of more than $100,000 reported in Memorandum item 1.b.(2)
above by $100,000 and subtracting the result from the amount of deposit accounts of
more than $100,000 reported in Memorandum item 1.b.(1) above.

Indicate in the appropriate box at the right whether your bank has a method or
procedure for determining a better estimate of uninsured deposits that the ____________YES_______NO__
estimated described above ............................................................... |RCON 6861| |///| x | M.2.a.

____________________
b. If the box marked YES has been checked, report the estimate of uninsured deposits |RCON Bil Mil Thou|
determined by using your bank's method or procedure .................................... | 5597 N/A | M.2.b.

<S>

_____________________________________________________________________________________________________________________________
| C477 | <-
Person to whom questions about the Reports of Condition and Income should be directed: __________

PAMELA S. FLYNN, VICE PRESIDENT (401) 278-5194
___________________________________________________________________________________ ______________________________________
Name and Title (TEXT 8901) Area code and phone number (TEXT 8902)

</TABLE>

<PAGE>

<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-23
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-R--Regulatory Capital

This schedule must be completed by all banks as follows: Banks that reported total assets of $1 billion or more in Schedule RC,
item 12, for June 30, 1995, must complete items 2 through 9 and Memoranda items 1 and 2. Banks with assets of less than
$1 billion must complete items 1 through 3 below or Schedule RC-R in its entirety, depending on their response to item 1 below.
<S> <C>
____________
| C480 | <-
1. Test for determining the extent to which Schedule RC-R must be completed. To be completed _____|__________|
only by banks with total assets of less than $1 billion. Indicate in the appropriate | YES NO |
box at the right whether the bank has total capital greater than or equal to eight percent___________ _______________
of adjusted total assets ............................................................... | RCFD 6056 | |////| | 1.
_____________________________
For purposes of this test, adjusted total assets equals total assets less cash, U.S. Treasuries, U.S. Government
agency obligations, and 80 percent of U.S. Government-sponsored agency obligations plus the allowance for loan
and lease losses and selected off-balance sheet items as reported on Schedule RC-L (see instructions).
If the box marked YES has been checked, then the bank only has to complete items 2 and 3 below. If the box marked
NO has been checked, the bank must complete the remainder of this schedule.
A NO response to item 1 does not necessarily mean that the bank's actual risk-based capital ratio is less than eight
percent or that the bank is not in compliance with the risk-based capital guidelines.
</TABLE>
<TABLE>
<CAPTION>
___________________________________________
| (Column A) | (Column B) |
|Subordinated Debt(1)| Other |
| and Intermediate | Limited- |
Items 2 and 3 are to be completed by all banks. | Term Preferred | Life Capital |
| Stock | Instruments |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
2. Subordinated debt(1) and other limited-life capital instruments (original | ////////////////// | ////////////////// |
weighted average maturity of at least five years) with a remaining | ////////////////// | ////////////////// |
maturity of: | ////////////////// | ////////////////// |
a. One year or less ...................................................... | 3780 0 | 3786 0 | 2.a.
b. Over one year through two years ....................................... | 3781 0 | 3787 0 | 2.b.
c. Over two years through three years .................................... | 3782 0 | 3788 0 | 2.c.
d. Over three years through four years ................................... | 3783 0 | 3789 0 | 2.d.
e. Over four years through five years .................................... | 3784 0 | 3790 0 | 2.e.
f. Over five years ....................................................... | 3785 440,000 | 3791 0 | 2.f.
3. Amounts used in calculating regulatory capital ratios (report amounts | ////////////////// | ////////////////// |
determined by the bank for its own internal regulatory capital analyses): | ////////////////// | RCFD Bil Mil Thou |
a. Tier 1 capital......................................................... | ////////////////// | 8274 1,131,906 | 3.a.
b. Tier 2 capital......................................................... | ////////////////// | 8275 614,539 | 3.b.
c. Total risk-based capital............................................... | ////////////////// | 3792 1,746,445 | 3.c.
d. Excess allowance for loan and lease losses............................. | ////////////////// | A222 85,540 | 3.d.
e. Risk-weighted assets................................................... | ////////////////// | A223 13,877,543 | 3.e.
f. "Average total assets"................................................. | ////////////////// | A224 15,490,668 | 3.f.
___________________________________________
| (Column A) | (Column B) |
Items 4-9 and Memoranda items 1 and 2 are to be completed | Assets | Credit Equiv- |
by banks that answered NO to item 1 above and | Recorded | alent Amount |
by banks with total assets of $1 billion or more. | on the | of Off-Balance |
| Balance Sheet | Sheet Items(2) |
____________________ ____________________
| RCFD Bil Mil Thou | RCFD Bil Mil Thou |
____________________ ____________________
<S> <C> <C> <C>
4. Assets and credit equivalent amounts of off-balance sheet items assigned | | |
to the Zero percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet: | ////////////////// | ////////////////// |
(1) Securities issued by, other claims on, and claims unconditionally | ////////////////// | ////////////////// |
guaranteed by, the U.S. Government and its agencies and other | ////////////////// | ////////////////// |
OECD central governments .......................................... | 3794 848,861 | ////////////////// | 4.a.(1)
(2) All other ......................................................... | 3795 168,507 | ////////////////// | 4.a.(2)
b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3796 0 | 4.b.
___________________________________________
<FN>
______________
(1) Exclude mandatory convertible debt reported in Schedule RC-M, item 7.
(2) Do not report in column B the risk-weighted amount of assets reported in column A.
</TABLE>

<PAGE>

<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-24
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-R--Continued
___________________________________________
| (Column A) | (Column B) |
| Assets | Credit Equiv- |
| Recorded | alent Amount |
| on the | of Off-Balance |
| Balance Sheet | Sheet Items(1) |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
5. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// |
assigned to the 20 percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet: | ////////////////// | ////////////////// |
(1) Claims conditionally guaranteed by the U.S. Government and its | ////////////////// | ////////////////// |
agencies and other OECD central governments ....................... | 3798 21,083 | ////////////////// | 5.a.(1)
(2) Claims collateralized by securities issued by the U.S. Govern- | ////////////////// | ////////////////// |
ment and its agencies and other OECD central governments; by | ////////////////// | ////////////////// |
securities issued by U.S. Government-sponsored agencies; and | ////////////////// | ////////////////// |
by cash on deposit ................................................ | 3799 0 | ////////////////// | 5.a.(2)
(3) All other ......................................................... | 3800 1,567,242 | ////////////////// | 5.a.(3)
b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3801 67,114 | 5.b.
6. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// |
assigned to the 50 percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet .................................. | 3802 2,037,765 | ////////////////// | 6.a.
b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3803 116,963 | 6.b.
7. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// |
assigned to the 100 percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet .................................. | 3804 9,551,472 | ////////////////// | 7.a.
b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3805 3,288,367 | 7.b.
8. On-balance sheet asset values excluded from the calculation of the | ////////////////// | ////////////////// |
risk-based capital ratio(2) .............................................. | 3806 (7,286)| ////////////////// | 8.
9. Total assets recorded on the balance sheet (sum of | ////////////////// | ////////////////// |
items 4.a, 5.a, 6.a, 7.a, and 8, column A)(must equal Schedule RC, | ////////////////// | ////////////////// |
item 12 plus items 4.b and 4.c) .......................................... | 3807 14,187,644 | ////////////////// | 9.
___________________________________________

Memoranda
______________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
1.Current credit exposure across all off-balance sheet derivative contracts covered by the | ///////////////// |
risked-based capital standards ...................................................................| 8764 6,077| M.1.
|___________________|

________________________________________________________________
| With a remaining maturity of |
|______________________________________________________________|
| (Column A) | (Column B) | (Column C) |
| | | |
| One year or less | Over one year | Over five years |
| | through five years | |
|______________________________________________________________|
|RCFD Tril Bil Mil Th|RCFD Tril Bil Mil Th|RCFD Tril Bil Mil Th|
|____________________|____________________|____________________|
2. Notional principal amounts of <C> <C> <C> <C>
off-balance sheet derivative contracts(3):| | | |
a. Interest rate contracts ................. | 3809 1,308,203 | 8766 3,328,625 | 8767 0 | M.2.a.
b. Foreign exchange contracts .............. | 3812 0 | 8769 0 | 8770 0 | M.2.b.
c. Gold contracts .......................... | 8771 0 | 8772 0 | 8773 0 | M.2.c.
d. Other precious metals contracts ......... | 8774 0 | 8775 0 | 8776 0 | M.2.d.
e. Other commodity contracts ............... | 8777 0 | 8778 0 | 8779 0 | M.2.e.
f. Equity derivative contracts ............. | A000 0 | A001 0 | A002 0 | M.2.f.
|______________________________________________________________|

_________________
1) Do not report in column B the risk-weighted amount of assets reported in column A.
2) Include the difference between the fair value and the amortized cost of available-for-sale securities in item 8 and report
the amortized cost of these securities in items 4 through 7 above. Item 8 also includes on-balance sheet asset values (or
portions thereof) of off-balance sheet interest rate, foreign exchange rate, and commodity contracts and those contracts (e.g.,
futures contracts) not subject to risk-based capital. Exclude from item 8 margin accounts and accrued receivables as well as
any portion of the allowance for loan and lease losses in excess of the amount that may be included in Tier 2 capital.
3) Exclude foreign exchange contracts with an original maturity of 14 days or less and all futures contracts.

</TABLE>

<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 03/31/96 ST-BK: 09-0590
Address: 777 MAIN STREET
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|

THIS PAGE IS TO BE COMPLETED BY ALL BANKS
- -------------------------------------------------------------------------------------------------------------------------------
| OMB No. For OCC: 1557-0081
Name and address of Bank | OMB No. For FDIC: 3064-0052
| OMB No. For Federal Reserve: 7100-0036
| Expiration Date: 3/31/96
|
PLACE LABEL HERE |
| SPECIAL REPORT
| (Dollar Amounts in Thousands)
|
|___________________________________________________________________
| CLOSE OF BUSINESS| FDIC Certificate Number | |
| DATE | | C-700 | <-
| 12/31/95 | |0|2|4|9|9 | |
__________________________________________________________________________________________________________________________________
LOANS TO EXECUTIVE OFFICERS (Complete as of each Call Report Date)
- ----------------------------------------------------------------------------------------------------------------------------------
The following information is required by Public Laws 90-44 and 102-242, but does not constitute a part of the Report of Condition.
With each Report of Condition, these Laws require all banks to furnish a report of all loans or other extensions of credit to
their executive officers made since the date of the previous Report of Condition. Data regarding individual loans or other
extensions of credit are not required. If no such loans or other extensions of credit were made during the period, insert "none"
against subitem (a). (Exclude the first $15,000 of indebtedness of each executive officer under bank credit card plan.) See
Sections 215.2 and 215.3 of Title 12 of the Code of Federal Regulations (Federal Reserve Board Regulation 0) for the definitions
of "executive officer" and "extension of credit," respectively. Exclude loans and other extensions of credit to directors and
principal shareholders who are not executive officers.
________________________________________________________________________________________________________________________________

________________________________________________________________________________________________________________________________

________________________________________________________________________________________________________________________________
SIGNATURE OF TITLE OF OFFICER AUTHORIZED TO SIGN REPORT | DATE (Month, Day, Year)
|
|
________________________________________________________________________________________________________________________________
NAME AND TITLE OF PERSON TO WHOM INQUIRIES MAY BE DIRECTED (TEXT 8903) | AREA CODE/PHONE NUMBER/EXTENSION
| (TEXT 8904)
|
ROBERT P. DUFF VICE PRESIDENT | (203) 986-2474
|
________________________________________________________________________________________________________________________________
FDIC 8040/53 (6-95)

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